The easiest and most effective way of starting a successful business is to find a solution for real-world problems. I personally believe that anyone who puts constant effort into noticing problems and identifying the solution for those problems has an improved ability to come up with new business ideas. So, all that you have to do is go and get good at identifying problems that are affecting a large community. The business model that we will be discussing today also came up as a solution to a problem, and this problem was- “a sewer pipeline.” So, without any further delay, let’s move on to discussing the EquipmentShare business model and understand- “How does EquipmentShare work?” and “How does EquipmentShare make money?”
What is EquipmentShare
EquipmentShare, based in Columbia, Missouri, is an American construction equipment rental firm. It is well-known for the trackers and access keypads that it installs on rental equipment. They’re used to keep track of who has access to the rented gear. The company has grown from a single market to over 60 since 2014. The firm is also involved in the development of construction automation.
The co-founders of the company are brothers William and Jabbok Schlacks.
The story behind EquipmentShare
While working in the construction industry, brothers Jabbok and Willy Schlacks discovered how difficult it was to rent construction equipment. With their own drill thousands of miles away, the Schlacks needed a drill as fast as possible.
At that time, Jabbok was 15 feet underground in the middle of a sewer pipeline, trying to get through the manhole. The brothers rented the equipment they needed to get out of the sticky situation, only to learn that the $300 rental cost for three days was the prevailing rate for a new drill when they returned it.
This was the time when they realized why high rental prices result in many contractors buying lesser equipment than the requirement, which leads to oversupply and underutilization problems. Also, back then, there was no way to connect contractors with an excess of unused construction equipment with those contractors who need that equipment. So, the two brothers decided to solve the problem themselves and hence came up with the idea- “EquipmentShare.”
For these brothers, EquipmentShare wasn’t their first business venture. They already had great experience in running startups. The pair had once started a computer company, some other service-based companies, and a few construction companies too. They had that exposure to the business world and were aware of the shortcomings that people face while running construction companies. So, when they started EquipmentShare, they already had a plan in their head. One of their prime goals was to bring EquipmentShare to Startup Weekend Columbia last fall. EquipmentShare took first place and $2,000 in starting money after a weekend of hard effort. Later that winter, the company was accepted into Y-Combinator, a Silicon Valley-based business incubator that has previously worked with Reddit, Dropbox, and Airbnb, and got mentoring and $120,000 in funding. And then, after a few months of testing and fundraising, it was finally launched.
Soon after the launch in 2014, the two brothers realized that to increase asset utilization for contractors and industrialists, they needed to first build a nationwide equipment distribution network and then create a platform that could capture utilization data from any and every rental equipment. Their main motive now was to change the way contractors manage their assets, people, and materials, via technology.
Who are EquipmentShare investors?
EquipmentShare is a company that serves the construction industry by offering equipment and digital services to help contractors accelerate productivity. Currently, it is headquartered in Columbia, Missouri, United States. The company has successfully raised a total funding amount of $354.1M in 10 funding rounds. EquipmentShare has 34 investors, out of which 5 are lead investors. RedBird Capital Partners and The Spruce House Partnership are its most recent investors (source crunchbase).
The company has made 3 investments, and their most recent investment was on 29th Sep 2021 when Soil Connect was raised.
Various investor names include:
- RedBird Capital Partners
- The Spruce House Partnership
- Insight Partners
- Sand Hill Angels
- Tiger Global Management
- Tru Arrow Partners
- Left Lane Capital
- Anchorage Capital Group LLC
- Romulus Capital
- 8090 investors
…and many more.
How does EquipmentShare work?
EquipmentShare is an online marketplace where contractors may borrow and rent equipment from other contractors for a fraction of the cost of renting through a rental company. It reduces the cost of renting construction equipment by 30% and also offers contractors a straightforward way to manage and make money from their equipment.
EquipmentShare installs a GPS tracker on all rental equipment so that contractors can easily track the details of the person using their equipment. The company also helps in saving its rental customers money on insurance. The company’s founder mentions that other companies charge an additional 12-20% for protection plans that cover damages already covered under contractor’s insurance policies. So, EquipmentShare came up with their solution to work with contractors without any extra costs to help them save those 12-20% additional costs.
Experts say that EquipmentShare is more than just a rental service provider; it is a free online management system for construction equipment.
The company is also called the Airbnb of the construction world.
On the one hand, Airbnb is a marketplace connecting people who want to rent out their homes to people who are looking for accommodations in specific locations similarly, on the other hand, we have Equipment Share, a marketplace that connects people who want to rent out their construction equipment to people who are looking for construction equipment for their industrial or business purpose.
EquipmentShare is the first of its type to solve industry concerns holistically by creating a construction ecosystem of connectivity, a sector that has historically been separated and underperforming in productivity advances.
By replacing manual and analog processes with technology, EquipmentShare assists contractors improve visibility, increasing efficiency and is built with control. Contractors may reach higher levels of profitability, efficiency, safety, and security by digitizing and linking all of the verticals of construction (assets, people, and materials) under one unified platform called T3.
- T3 is a cloud-based, fully integrated suite of tools that helps contractors reduce bottlenecks, including machine downtime and service events, late or inaccurate statements and invoices, reconciling timesheets and work pricing, and other issues that have a negative impact on budgets and schedules.
- T3, the OS for construction, restores complex visibility to the construction workplace and overall work operations, providing full information regarding the equipment that is under usage. This technology completely digitizes the manual work process.
- With EquipmentShare’s T3 software, contractors can keep a contrasting eye on the entire construction operations. It also gives alerts for direct attention to issues that arise during the process and also offers tools to mitigate expensive bottlenecks.
- The company has also developed very powerful fleet management systems and asset tracking technology using telematics and construction hardware.
- T3 has made it possible for contractors to manage their rentals from EquipmentShare as well as rented equipment from outside vendors all in one single platform.
How does EquipmentShare make money?
Every equipment rental business has a wide range of revenue generation channels. The most common ones are:
- Commission: The equipment owner earns a commission on every transaction that takes place on the platform, and the rest portion is charged by the platform itself.
- Advertising: The equipment owners can advertise their products on the platform. The advertising cost charged by the platform is decided on the basis of the number of clicks/views.
- Featured Listings: The equipment owners can pay a certain amount of money to add their listings in the featured section
- Subscriptions: Every platform has certain subscription plans that the sellers can buy to enjoy some added benefits with their usual operation on the platform, such as reduced delivery charges, discounts, etc.
But, the EquipmentShare business model is not just limited to the above-mentioned channels; rather, it has various other channels included. Through the official website, we can place an order for new or used equipment or contact a nearby dealer. We can even shop equipment parts- used/ unused any.
As already mentioned, EquipmentShare is more than just an equipment rental company. With their T3 technology platform, equipment rental services, retail, and service solutions, they are working to empower professionals in the construction field to build with control, save money and their time as well and achieve their goals more than ever before.
Conclusion
According to research, the global construction equipment rental market is estimated to reach 250.4 billion, at a CAGR of 3.8 between 2021-2026. This data clearly showcases the humongous profit in the equipment rental marketplace in the coming years. Renting equipment makes economic sense as it saves a comparatively huge amount of cost of buying new equipment and also brings down frequent expenses such as labor, maintenance, and operational costs.
With current sales of $37.43 billion in 2020-21 and expected revenue of $42.6 billion in 2024, the equipment rental industry is a substantial contributor to the US economy. This estimate includes short-term rental and leasing initiatives, showing that overall equipment rental activities are expected to rise.
If you are desirous to launch a platform similar to EquipmentShare or looking for an equipment rental script or a construction equipment management software, NCrypted Technologies has the right solutions developed by our capable and innovative workforce. We offer customized and innovative features as per your requirement to let you launch a successful construction equipment selling, purchasing, and renting marketplace similar to the EquipmentShare platform.
