You don’t need to be a parent to understand that sharing is probably one of the hardest concepts for kids to learn.
Elina Furman was surrounded by toys. Not only as mom to two children under the age of six, but as founder of A-List Mom, a media company with over 70,000 subscribers, she was inundated with sample products. When every day is like a birthday filled with new toys, Furman said her son was "turning into a little monster." In effort to redirect their attention to more constructive play, Furman says she spent a small fortune on new Lego sets. It wasn’t long before she figured there had to be a better way.
A look at her existing business with A-List moms provided the germ of an idea. Emailing and marketing to moms has to have a commerce component, she explains, so she started looking at different ways to monetize the subscriber list. "As we all see with Daily Candy and others, the ad model is hard," she says. And working with so many subscription companies that were constantly driving new users, made her "a little jealous."
When she couldn’t find a subscription service for the Lego bricks, Furman knew she was on to something. Research indicated that global sales of Lego sales rose to $4.6 billion in 2013, making it the biggest toy company in the world, and the market for all toys in the U.S. last year totaled $22.09 billion.
But she didn’t have a clue how to handle the logistics of a rental service. That’s when she was introduced to former investment banker Ranan Lachman and the two forged a partnership. Lachman was already playing with the idea of starting a toy service, says Furman. "He brought a lot of amazing ideas and really great insight on how to make shipping possible." Together they discussed how to refine their goals to have longevity, and offer items that would help kids learn and develop.
Pleygo, as it was called originally, launched last year and grew quickly from the two-person founding team to 23 staffers. Subscriptions range between $15, $25, and $39 depending on the size of Lego set. To date, the company has shipped over 75,000 sets to over 15,000 subscribers from its San Jose warehouse.
Cautious parents need not fear the downside of many tiny, bacteria-laden fingers on the bricks. The company says that 15 million bricks have been washed and dried in Pley’s eco-cleaning solution, a strategy that’s reduced waste by eliminating 90,200 pounds of ABS plastic from our landfills.
Pley’s done so well off the starting blocks that it just raised a $6.75 million round of Series A funding. The equity and debt financing was led by Allegro Venture Partners with participation from Floodgate, Correlation Ventures, Maven Ventures, and Western Technology Investments.
The sharing economy has its casualties, too. For every Zilok that’s still renting stuff, there’s a Rentalic that shuttered. The way Furman sees it, the biggest plus (or minus, depending on which founder you ask) is the fact that the operational aspects can be "a nightmare," not to mention expensive. Imagine how efficient you’d need to be to turn over a hundred-plus piece set every 2.5 minutes. "It’s our greatest strength," Furman underscores.
Like parenting, startups sometimes struggle with growing. But if you are not set up to fulfill the orders once they start flowing, all that growth will be for naught. Furman suggests asking what you can handle in terms of inventory growth and if that is aligned with operational capacity.
Some companies really succeed because they know their customer and deliver a great experience, Furman observes. "You can't just put things in a pretty box and see if [the customers] will like it," she explains. It’s hard for kids to give up a box of stuff they’ve been playing with for a while, so Furman’s tried to make it fun.
She started at home by telling her son that the set would go to another kid somewhere else in the country. "When I told my son he wanted to put a present in the box for the next kid," she explains. Encouraging children to put a note in the box for the next user makes the whole parting process a bit easier, she says, "like Sisterhood of the Traveling Legos, it gets them excited about that connection. Part of what we offer is a greater sense of purpose and belonging."
Passing the set along to another user also encouraging kids to be responsible with the sets and make sure none of the pieces go missing, so the next child will have a complete set.
Bottom Line: "You have to go to your customer and want to understand who they are," says Furman. A new program is not always the best thing to do, she points out, so it’s better to see what they’re already doing and find a way to make it fun. "With startups you have no time to focus on what they are doing, so just make it better and easier for customers to engage."