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Building commerce infrastructure to make the world more circular | Interview with Tuomo Laine, CEO and Co-Founder of Rentle

Europe aims to be the first climate-neutral continent by 2050 as set out in the European Green Deal. One of the key pillars of the European Green Deal is the circular economy action plan to reduce Europe’s dependence on new resources and create sustainable growth.

Fueling this transition are innovative European startups. One of these is Rentle, an innovative startup on a mission to empower merchants to enter circular business models by making renting as accessible as purchasing. They enable merchants to launch and manage rental propositions for their businesses and expand their commerce from unit sales to services, from ownership to access. Based in Helsinki, Rentle works with over 15k merchants across 40+ countries. Their customers range from small entrepreneur-led businesses to ski resorts and large retail brands such as Motonet and Decathlon UK. Since its 2018 launch, Rentle has raised a total of €5 million.

We caught up with Rentle’s CEO and Co-Founder, Tuomo Laine, to learn more about his journey of building Rentle and the future of the circular economy.

What inspired you to start Rentle?

In 2017, I and one of the co-founders, Toomas, were inspired by the local city-bike service, and driven by that were building tech solutions for a local convenience store chain. We were trying to enable them to productise goods as a service e.g. by offering power banks to be rented over the counter without any need for app installation or similar. Through those experiences, we started to understand that the biggest friction for the wider spread adoption of the circular economy was not consumer demand, nor merchants’ willingness to launch the services. Simply, it was the fact that all of the commerce software infrastructure, on top of which merchants build and scale their businesses, assumes and forces businesses to operate in a linear model.

It was from that point we decided that, if we want to change the world to be more circular, we need to build a commerce infrastructure that makes the complexity of two-directional inventory flows and the end-user purchasing experience more convenient, more profitable and more streamlined than linear commerce. This meant taking on the task of building the infrastructure on top of which circular commerce will be built. No small task, but we are up for it because it is great for the merchants’ long-term bottom line and even greater for the planet.

Could you tell us more about the early days of Rentle and navigating finding product-market fit?

I was recently listening to an interview with Doug Leone, who referred to finding product-market fit as a black box that only founders can figure out. We had a similar intuition early on and decided to take a straightforward approach to engage with the black box. Our goal was to find businesses already operating in a circular model, identify those with the biggest, messiest, and most demanding problems, and work with them to gain a deeper understanding of their pains and gains. We chose to work with the rental entrepreneurs of ski resorts, since they had thousands of inventory items that were in high demand, struggled with online sales due to the complexity of inventory double bookings, had peak seasons and peak hours, and sold both in retail and online.

To gain a thorough understanding of these businesses, my co-founders and I rented an RV and drove through every resort and rental store we could find in Finland. We even slept in the RV outside the resorts and spent our days working alongside resort owners and employees to understand every last detail. With our early employees, we even handled their annual inventory check for some of the largest resorts in Finland, working 24 hours straight labelling and categorizing skis. We knew that we can develop software, but we also understood that we needed to have a holistic understanding of our customers’ pains, gains and friction points to build a commerce infrastructure that could serve merchants in a deep and meaningful way.

These experiences have been our guiding lights as we’ve built and scaled our business model to the global range it has now. We recognized that building commerce infrastructure is not easy; most decisions are not only business critical for our customers but also interconnected to something else which is also business critical. However, through a deep understanding of our customers, we’ve been able to build something that serves them in a way that truly makes a difference. And of course, around which we can grow a globally scalable business to solve the world’s largest problems of how we go from linear to circular consumption in a way that increases the pie for all.

We noticed that you work with a range of companies from small businesses that are entrepreneur-led to large brand names like Decathlon and Rab. How do you navigate selling to a range of customers of different sizes?

For any startup operating in the circular transition space, it’s crucial to understand that the market is still in its nascent stage. This presents both an opportunity and a challenge. On the positive side, everyone agrees that the circular economy is going to explode and grow faster than we might intuitively think. This is something that is widely accepted, from Gartner and the Big Four to entrepreneur-led side hustles that are built around business ideas that focus on servicing goods rather than selling ownership.

The more contentious point, however, is market timing and progression; when is the crucial tipping point? This is currently the line drawn in the sand across different stakeholders. I personally believe that the winners of the new paradigm are the actors who are now pressing the gas pedal, and they will be rewarded quite handsomely. Laggards never win big. Another thing to remember is that in this market, buyers are still often looking to go from zero to one, rather than transferring 20% of their existing business. Therefore, it’s better to think of the circular economy as a complementary revenue stream or expansion. When going from zero to one, the needs are still quite similar and overlapping between small businesses and enterprises. Of course, navigating this paradigm can be challenging on a day-to-day basis, but we are pros at it.

Lastly, it’s important to note that all merchants, whether they are big or small, hate bad user experiences. Bad UX means cognitive load, friction in repeating tasks, and a negative impact on the product moving from inventory to the end-user and back. That’s why it’s crucial to prioritize simple UX and really get to know the retailer employee using the software. Sometimes, I feel that enterprise-only focused software companies use their enterprise focus as an excuse for bad UX. We are the opposite, believing that UX needs to be even better for large retail customers since their employees are the heaviest day-to-day users.

We can see that Rentle is currently focused on offering a suite of solutions to help merchants get into the rental market. You are looking to expand into other offerings such as insurance and financing. How are you thinking about expanding your offering?

We are enabling a lot more than just rental. Merchants can already now sell subscriptions via the Rentle platform, and we also support traditional sales options. Quite soon merchants will also build their buyback programs on top of our platforms. All of this tapping into a single source of inventory where you can track your inventory on the level of an individual unit. Rentle offers a single inventory connected to a product catalogue, supporting any circular productisation model. These can be hosted on your existing storefronts or the ones provided by Rentle.

We do also provide out-of-the-box payment processing with native support for the needs of circular business models, such as deposits and recurring charges, and are looking to launch more similar services that significantly reduce friction and risk for merchants to operate circular models. These include a wide range of services from fintech, capital and shipping.

What advice would you give to founders starting a sustainability startup?

Sustainability is a critical value that should guide prioritisation, formulate your vision, and serve as a guiding light to help you say “no” to ideas. As a founder, it’s essential to remember that sustainability is also a business case. Many sustainability startups fail to communicate their real, hardcore business opportunity to customers, opting instead for soft language that doesn’t always drive change at the necessary speed.

Thankfully, there has been a lot of great educational work and regulatory push across industries that has made sustainability a profitable investment for many. However, purpose-driven founders sometimes forget this and risk not getting the traction they deserve. To avoid this, it’s crucial to remember to highlight the real business impact you can have for your customers and showcase the value of sustainability in driving change and creating tangible business benefits.

Let’s talk about the circular economy and the future. What do the future of circular commerce and circular economy look like?

The future looks bright, profitable, and exciting. I believe that the most significant future-defining initiatives are created out of scarcity and tough times. There has never been a stronger economic incentive, support, and demand to drive sustainable consumption of goods and services in history. I believe we have already passed the tipping point, and now the question is not “will we,” but rather “how fast.” Capitalism and sustainability haven’t always seen eye-to-eye, but they’ve now shaken hands and started working together, creating a powerful engine.

For consumers, this means that we’re on track to significantly increase sustainable consumption through the servitisation of shared assets, which will, in turn, improve convenience – something we value highly. All in all, the future looks very exciting.

What is the progress on the transition to a circular economy in the Nordics and Europe versus the rest of the World?

I’d like to give a shout-out to great think tanks such as Circle Economy, which does a lot of excellent work in this area. Depending on the context of the transition, estimates on sustainable consumption vary widely, with the consensus being around 8% of total consumption. At Rentle, we focus on accelerating the speed of the transition, whatever the current adoption rate may be.

When it comes to awareness, the Nordics and Europe are probably the forerunners in many respects. In Europe, it’s rare to find a retailer that doesn’t have initiatives to expand their offering from linear to circular. Heads of Sustainability & Innovation are now in similar demand that Heads of Digitalization were a few years ago. They’re tasked with facilitating this expansion into more profitable and future-proof complementary revenue streams.

That being said, I’m super optimistic about markets like the United States. We’re seeing a significant portion of our growth coming from those markets, and the nature of the US market allows them to make big bets when they believe there is real business value to be achieved. As I mentioned earlier, sustainability is one of the biggest business opportunities out there. It may only be a matter of time before the US overtakes Europe on this front. However, maybe this is one of those races where, from a sustainability point of view, we don’t care about the winner. We’re just thrilled that the speed of the transition is increasing, and the world is moving towards more sustainable consumption of goods and materials.

What further actions should be taken to advance the adoption of the circular economy? 

To provide clarity, I’ll focus on one key point, even though there are many things to consider. In my opinion, the most important step is helping the supply side – the merchants, retailers, and brands we know and love – take one of the largest infrastructure jumps they’ve ever faced. During the dawn of e-commerce, they had to figure out cloud technology, e-commerce, shipping, and everything that came with it. Those processes have been honed to the maximum over the past 20 years and serve as the foundation of modern commerce.

Now, merchants face the reality that the commerce infrastructure they’ve adopted and built their operations on top of needs to be rebuilt. This is something many influencers in the market fail to understand. The circular economy isn’t just about the atom level of innovating on material processing or supply chains. It’s primarily about enabling merchants to launch new consumer offerings on their commerce infrastructure. For the consumer, tapping into circular offerings needs to be more convenient than buying cheap mass-produced goods. That convenience is largely enabled and facilitated by the software layer of commerce. This is one of the largest digital infrastructure projects of our time and needs to be approached as such.

COVID supercharged the rapid transition from retail to online, and we saw a lot of efforts and policies helping SMEs and enterprises make the jump to ecommerce if they hadn’t done so already. The ones who were already prepared reaped a lot of commercial benefits.

There are many similarities to the circular economy. Consumers already want it, governments understand that it needs to and will happen. Now, we need to shift our focus from the phenomenon to the question of where investments will have the most leverage in terms of consumption footprint. My bet is that it relies on the commerce software layer.

What’s next for growing Rentle? 

Our goal is to accelerate the expansion from a linear to a circular economy by building a commerce platform that makes it more profitable and effortless for merchants to do so. We keep investing in hiring top talent to continuously provide merchants with features and capabilities that enable more sustainable sales and growth. We have several new features rolling out this year and are excited to launch them, along with globally recognized forerunner brands building offerings on top of Rentle. Our original vision statement of “accelerating sustainable consumption of goods – globally” was always never-ending by definition, and we are committed to continuing our efforts towards that goal. There’s a lot of hard work ahead, but we’re focused on delivering the platform capabilities that merchants need to succeed. The vision is brighter than ever.

Amanda Pun
Amanda Pun
Amanda is passionate about startups, particularly in the FinTech and B2C spaces. She was one of the first employees of fintech startup, Homeppl, and has expertise in Product Management and Operations. She is based in London and originally from Canada.

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