We are a few months away from launching our online peer-to-peer power tool rental company and would appreciate feedback from individuals in the DIY community.

Here is the basic idea: Tool owners will create a profile and list each of their tools as available for rent with a detailed description, picture, and availability. Tool renters will search by location/tool and initiate a rental request. If the owner confirms the request the renter is charged and information is exchanged. Upon return of the tool in good working condition the owner is paid the rental amount (minus fees).

Tool owners will earn extra money on tools which experience minimal use (think of your pressure washer).

Tool renters will pay 1/2 the price of traditional rental stores for twice the time (weekend rentals).

The company (ToolSpinner) will be the online marketplace handing all billings, tool insurance, rating system, dispute resolution, and owner payments.

A few highlights of the company:
- Review system similar to eBay will encourage trust through reviews
- Each tool is covered for repair/replacement program should the renter misuse or abuse the tools resulting in damage
- Secure credit card payments with address verification on renters
- No personally identifiable information of owners is shared until after receipt of payment
- Rental prices are set by tool category according to region

Question to you:
1. Is this a service you would personally use as a DIY tool owner or renter? If not, why?
2. Are there any considerations I should consider while designing the features?
3. Any other thoughts?

Thanks folks. I'm trying to bring something truly helpful to the DIY community. I'm aware of other similar services that exists for peer-to-peer rentals but none focused exclusively on home, lawn, and automotive tools. We are looking at having around 130 categories of tools.

Thanks for your input!
Daniel Cole
Co-founder ToolSpinner ToolSpinner.com

quote:

Upon return of the tool in good working condition the owner is paid the rental amount (minus fees).

I do a lot of renting, so I'm generally familiar with the concept.

90% of the public are honest and want to use such a service the way you envision it. The problem with your business plan is that it doesn't account for the other 10% of people. What happens if someone rents a pressure washer for the weekend that he's moving back to Bolivia. How does the rightful owner get his pressure washer back from Bolivia?

In my business, the HARDEST thing I do is decide how much to charge a tenant for damage. For example, what about a cigarette burn right in the middle of a brand new carpet? If that can't be properly repaired, what's a fair amount to charge? The full amount of the carpet? No, cuz most of the carpet is still in good shape. Half of that? 1/4? You're gonna end up with renters and owners at odds over what's "fair".

And, of course, there's the myriad of issues that fall under the category of "gray matter":
1. Owner supplies too to renter clean, and in good working order. Renter returns tool filthy and in good working order. Now what?
2. Owner supplies saw to renter along with blade. Renter couldn't finish job because blades broke and store was out of stock on those kinds of blades. Now What?
3. Owner supplies saw with blade. Renter claims blade was dull. Renter had to purchase new blade. Renter wants to be reimbursed by owner for the cost of that new blade. Owner refuses. Now what?
4. Owner supplies air compressor to renter. Renter will supply pneumatic nailer. Renter can't do work that weekend because the quick coupler on the air compressor is a different style than the quick coupler on the nail gun. Compressor wasn't used, and renter says he shouldn't have to pay anything. Owner claims renter is simply trying to avoid payment. Now what?
5. Employee of construction company decides he's going to make some cash on the side by renting the company's back hoe as his own. Company owner discovers back hoe is missing. Renter gets charged with possession of stolen property. Now What?

You need to decide how you're going to handle all these contingencies in advance because things don't always go as planned.

Thanks for the response Nestor. As part of our business plan we are trying to dream up various scenarios as you described and ensure we have an answer for each.

We are putting policies in place to address the black and white issues head on such as theft. For the stolen pressure washer example the owner would be charged the full amount of a replacement after not returning the good (this is the reason we only accept major credit cards with a pre-authorized amount for the value of the goods). Also we are only going to handle the "general tools" area (not tackling the industrial or party rentals). This will also lower the impact of these issues since the average purchase price for these goods is much much lower than say a $10,000 trailer mounted tool.

Some of your comments about the grey areas are very helpful. I had not considered something like you describe in #4 about the different size coupler. My initial thought is the owners description w/pictures combined with a pick up inspection by the renter will hopefully avoid some of these incidents. I will consider your input.

Thanks again for the feedback, very helpful while we form policies, procedures, and site features to hopefully serve the 90% of the public mentioned.


Best Regards,
Daniel Cole
ToolSpinner

While I think this is a good concept theoretically, I wouldn't either rent my tools (although not as sophisticated and complicated as the ones you mentioned) or rent someone else's tools, for several reasons.

I should probably qualify my remarks by noting that I've worked in law enforcement and/or civil law for decades and think of issues such as those you ask in terms of liability. So my viewpoint may be slated in that respect.


First, you wrote that:

"Upon return of the tool in good working condition the owner is paid the rental amount (minus fees)."

I would be concerned about the return of the tools, period, let alone in good condition and/or on a timely basis. Some people are just not going to take proper care of the tools, or may not return them (and what guaranty is there that they will?), or may return them damaged.

What mechanisms will be in place to ensure that the tools are in fact returned and the owner can be paid? If someone absconds with tools, the owner has lost his/her tools. Even with credit cards, there is the possibility of fraud unless you have a way of verifying that the renter is in fact the bona fide holder of the card.

In order to file a theft report if tools are not returned, your website would be named and you would be obligated to provide information to law enforcement officials. Are you prepared to put yourself into that position?

Secondly, there's another issue with using tools, especially power ones, and that's liability. Who assumes liability for injury? What kind of liability insurance will you be carrying? Will there be any type of inspection of the equipment/tools prior to rental? What method is there of establishing that the tools are in fact in good working condition and not damaged prior to rental?

You wrote that they will be covered for repair/replacement if misused ... at what percentage of price? Is depreciation a factor? How is this determined prior to the tools being rented?

You may have heard of some of the personal injury scams in which people are injured and sue companies with deep pockets after finding plaintiffs' doctors who aren't particularly scrupulous about creating injury reports for litigation. Using someone else's power tools is an area in which this kind of scam could easily be adapted.

Third, will there by any method of determining whether or not the renter actually knows how to use the tools properly? This is an issue of liability as well as potential damage to the tools.

Fourth, will you be doing background checks and getting credit reports on potential renters? Have you addressed the possibility that some tools may be used improperly, i.e., in the commission of a crime?

Fifth, you mentioned that your company would be carrying insurance. What kind? Umbrella liability? Fraud?

Sixth, there's a recent article in Time about the expansion of hacking into so many sites that contain personal information, especially the social networking sites. Although you're not proposing any networking, you will be collecting personal information on tool owners and renters. Are you prepared to be responsible for protection and/or theft of that information?

You wrote that

"No personally identifiable information of owners is shared until after receipt of payment" Why would any personnaly identifiable information be shared at all?

The profiles would presumably have identifying information. You would need to ensure that you have a high enough level firewall to slow down (I'm not sure prevention is really possible) hacking and identifying sources of tools in certain geographic areas that thieves could steal.

This may sound far fetched, but I would think some of these tools could fetch a decent price if stolen and fenced. In part of my city, thieves have been methodically breaking into foreclosed and vacant houses and stripping plumbing and copper tubing. Different situation, but one which presents an opportunity, as does using possibly fraudulent identification to steal and sell tools.


When my home was burglarized, the thieves didn't take the electronics equipment but took personal items, which I later learned is characteristic of druggies rather than more "committed" and professional thieves. It seems if there's something to be stolen, there is someone who would consider doing it.

I certainly wouldn't want anyone to know what tools I had.

Lastly, do you have adequate financial resouces to counter any contingency which might occur? And have you consulted a small business attorney to determine the best type of entity for your business? E.g., you might have more protection with an LLC than a corporation. Something to think about.

Again, I think the concept is good, but there are lot of potential pitfalls to be considered.

This message has been edited. Last edited by: GardenSprite,

Additional thoughts:

Have an attorney draft the terms and conditions of use of your web site and services, and set up the website so that no one can use the services until agreeing to the T & C. You might also ask your attorney about the effectiveness of these "shrink wrap" terms and conditions, as sometime ago there was some question whether or not they were completely enforceable. This isn't my area of expertise.

The T & C should establish a state of venue for any disputes.

You might consider including binding arbitration in the venue state for settlement of disputes.

Wow, this is great. Thank you for the feedback GardenSprite. I love hearing from a variety of folks and I have not heard from anyone with a law enforcement background. You bring up some very compelling ideas. Allow me better describe some of the mechanisms we will have in place regarding fraud, theft prevention, liability, misuse, data security and corporate structure.

First, as recommended the site terms of use will clearly define major areas such as age requirements, disputes, privacy, disclaimer of warranties, limits on liability, jurisdiction/venue, general conduct, and other standard descriptions of acceptable use. Users (both owners and borrower) will be required to accept these terms of use for continued use of the site.

Liability:
Tool owners when listing a tool are required to accept a statement that the tool being listed includes all original safety equipment as originally manufactured. (This is to prevent someone from listing a tool with a safety guard removed). Tool renters in turn must accept a statement that releases ToolSpinner and the owner from liability resulting in the use of the tool. In addition to the waivers and terms of use, the courts have held that host sites are not liable for user-generated content. ToolSpinner is simply a platform for user-generated content that connects individuals and facilitates payment. At no time will ToolSpinner take any ownership in a tool. An example of this would be an e-harmony meet up that goes wrong resulting in injury based on false information. E-harmony cannot be held liable as the intermediary.

Theft:
Tool prices are set according to average replacement value categorically. For example a 2200-2700 PSI pressure washer has an average replacement value around $325 at your local home improvement warehouse. The rental price is set at $45 for a weekend rental. When a renter requests the the tool they agree to pre-authorize their CC for $325 and accept an immediate charge of $45. The pre-authorization is released at the end of the rental period. Should the tool not be returned the entire $325 will be charged and credited to the owner. The replacement value will be transparent to the owner when listing their tool and to the renter when requesting the tool. If the owner feels the stated replacement value is not reasonable to cover the replacement of their specific make and model they can choose not to list.

Credit Card security:
You comments about CC security is very important in today’s online environment. To ensure user security we will be using a major payment gateway and processor, which will handle the payment security. We will follow the Payment Card Industry (PCI) Data Security Standard to the same level that other national retailers use. Another feature we will be utilizing is Address Verification Service (AVS). This extra payment-processing step ensures that the address listed in the user profile matches the billing address on the credit card. While not perfect this does provides some level of comfort to the owner.

Trust:
One of the primary means of preventing misuse will be our peer review system. Identical to what eBay has successfully implemented both owners and renters will be encouraged to rate each other. This will help to weed out any deviant users. An owner will always have the option of rejecting a request for rental if they feel uncomfortable with the user requesting use (say he is a 1 star borrower and has 3 poor reviews). Conversely; owners that take poor care of their tools or mis-represent the quality will be negatively reviewed resulting in lower search ranking.

Insurance:
Perhaps insurance was not the best word to describe our mechanism in place. We call it our “Owners Assurance Program”. In the event of a damage or theft ToolSpinner will guarantee the repair or replacement value of the tool. This is the case where someone rents your chain saw uses it properly and it just breaks under normal use. In this case, ToolSpinner would cover the repair costs. Of the 132 categories of tools we will list the average replacement cost is only $300 which is not a large exposure.

Inspection:
Great question about the inspection of the equipment. Once a rental request has been approved an e-mail will follow to the renter providing instructions on how to connect with the owner and pick up the tool. Part of these instruction include a step to encourage renters to inspect the tool, document all imperfections, verify the tool is in good working order, and ask the owner any outstanding questions regarding its operation. This is very similar to a standard car rental.

Information/identity Security:
Personally identifiable information would eventually be shared between renter and owner in order to facilitate the actual exchange. Eventually the renter will need to physically meet with the owner. Without a doubt, this is a risk. This step would only happen after both parties have user account and the renter has a verified address and posted payment. Results will be listed as distance from your location and the expectation is to eventually have tools in each of the 3,000 counties across the US.

Organization:
ToolSpinner has already been incorporated under the laws of Maryland. This business structure will provide corporate protection from personal liability and facilitate the inflow of resources to allow for scalable growth in time. I have consulted with an attorney during the formation phase. My personal background includes an undergraduate degree in business with a legal studies concentration and a subsequent MBA. I had the wonderful opportunities to learn about business formation from some experienced businessmen and women.

Peer-to-Peer:
This idea of peer-to-peer commerce is really accelerating recently through the application of technology. An amazing example of this trend is Airbnb.com where individuals list rooms for rent in their private homes. So far the site has over two million bookings with only one major incident of theft/vandalism reported. I see this as testimony to the over arching success of peer-to-peer commerce. That said, I want ToolSpinner to be ready for the day when the service is abused (which is inevitably will be).
Risk and reward always go hand-in-hand. No doubt, a tool owner will assume some risk while using this service; however, they will receive additional income as a result. As an owner you could make $45 per weekend renting out your idle pressure washer. After 7 rentals you would earn $315, enough to purchase a brand new one if desired. My hope is to provide enough security, trust, and functionality to reduce risk to an acceptable level given the reward. My hope is that individuals will start small by listing one item and increase their inventory as their comfort level increases.

I greatly appreciate you taking the time to draft your lengthy response. I think I’ve hit on most of the themes I from your response. I am compiling a list of frequently asked questions for the site and your response will certainly aid in the development.

Thanks again, it is always great to talk with DIY folks.
Daniel Cole
CEO & Co-Founder of ToolSpinner

Daniel:

I think what would be a real benefit to your business is that you break away from the fixed time rental and adopt an "as long as you need it" rental period, so that a renter and owner could negotiate an "as long as you need it" rental period.

Earlier this year I was wanting to rent a bucket truck or cherry picker to do some painting high above the overhang over my back door. I couldn't reach that spot with a ladder (couldn't reach it SAFELY anyhow) and all the tool rental places that had cherry pickers and bucket trucks were renting by the day, week and month.

The problem was, the weather wasn't co-operating. It would rain one day and not the next. And the weather forecast kept predicting 50 percent chance of showers. If I rented that machine for $200 per day, it might rain that day and I just wasted $200. If I opt to rent that machine for a week (7 days) it ends up costing me $1,000, and I'm better off hiring any sign company with a bucket truck to send a guy out to do that painting for me. I didn't know what I should do, but I knew I didn't like the "you pays your money and takes your chances" aspect of it at all. Factors like the weather play a role in so much of what we DIY'er do. And it's not only the weather. All of us DIY'ers know that things crop up that screw up our plans, and we just have to be flexible enough to accomodate those changes. Just because you have a rental agreement to use a tool only for a fixed amount of time doesn't stop those things from cropping up, and so the rental agreement should be flexible enough to accomodate those changes, too.

What I was thinking is having a system whereby for a fixed charge the renter receives the use of the tool for however long they need it (say up to a maximum of 60 days), but returns it to the owner within 24 hours should the owner need to use that tool during that time. The time the tool is returned to the owner isn't deducted from the 60 days. That way, there's a bit of give and take on each side, but at the end of the day, the renter knows that for a fixed price he can get the job done even if he runs into problems, and the owner knows that he always has access to the tool should he need it.

So, maybe you can offer your service in different ways; on a time basis, and on an "as long as you need it" basis where that second option is agreeable to the owner.

Also, dealing with what GardenSprite was saying, instead of giving the renter the owner's name, address and phone number, why not ask the owner to drop off the tool to your place of business and ask the renter to pick it up there. That would minimize the exchange of personal information. I, for one, would prefer that no one out there knows that I have valuable tools and where I keep them. After all, that would make it easy pickins for a renter to then break into the owner's house and steal some tools.

That would be in your best interest too, since once each renter knows where he can rent many of the tools he needs to do the work he wants to do, he won't need your services any more, would he?

Also, since digital information nowadays is cheap, you could use a digital camera to photograph the tools as they come in and come back. Those digital images could be kept on file and provided to both sides in the event of a dispute, and in most cases it wouldn't actually cost you anything to take those pictures and store those images until they are no longer needed.

This message has been edited. Last edited by: Nestor,

Nestor,

Thanks for your response. We've been considering different rental durations. I really like your recommendation for additional flexibility. Aside from weather it often takes me MUCH longer to complete a project than expected. With two children in our home it becomes difficult to commit 10 straight hours to a project. That combined with my lack of DIY skills makes a 4 hour rental of anything a non-starter.

Our current philosophy is default all rentals are at least 2 day (full weekend) rentals, this combined with pricing at 50% of brick and mortar rentals would be substantial benefit to the renters. Twice the duration for half the price should be enough to change renter behavior.

One concern about flexible durations would be the reservations system. We will have a reservation system specific to each tool so a renter can schedule a pressure washer use up to 60 days out. Allowing flexible durations could complicate this.

I'll think over it and see if there is a way to incorporate your recommendation. Our goal is to not only provide suitable tools for rent but also in a way that better fits how the average DIY home improvement person actually accomplished a project.

Thanks again for the recommendation.
Daniel

Below is a scenario to help folks understand the potential value of those tools in your shed. Below is a list of 4 commonly rented tools in your garage with associated ToolSpinner pricing for each:

1. 32' Extension Ladder $14
2. 2300 PSI pressure Washer $45
3. 16" Gas Chainsaw $27
4. 12" Mitre Saw $18

If you rented out each 5 times you would earn $552, 10 rentals next summer and you would be looking at more than $1,000.

What additional tools would you buy with an extra $1K?

I can't wait to be our first customer

I applaud the innovative idea...

However, it looks like a hassle to me. I would not do it.

Best of luck with your venture

Thanks TTFWEB, Hopefully live in a few weeks.

I have no problem loaning my tools to friends or neighbors I figure won't use them to damage anything, and that will probably bring them back.

beyond that, nope. if I don't need it, I'll pass it along or sell it.

there are plenty of rental operations that maintain liability insurance, and keep the tools in shape.

Thanks Swschrad,

Agreed. No shortage of supply as we have some 4,000+ rental operations in the US. Our value will be cost and duration. A traditional rental operation will charge you $80 a day for a pressure washer. Really expensive to the casual DIYer. We plan to target $40 for two days.

Thanks for the feedback.

I will never rent or lend tools again.
Almost everytime I've lent them out they come back (if they ever do) there broken, out of gas, parts missing.
I was just hired by a company and part of the deal was they were going to also pay me to use my tools and pay for anything that got broken.
Two months later I'm missing all of my Pasload guns, the boxes were there but the guns are gone. At last count I found 4 broken tools and 6 missing ones. That does not include all the gas, nails, wiring, misc. stuff they also stole.
Now they come back and say they can not pay me for the tools or to repair them because it's not tax deductable.
They used my dump $5,700.00 trailer every day for 4 months and said they would pay for a new tire that was bald and pay to use the trailer. I never saw a dime.
Brought back my rototiller with a broken recoil starter, all my chains for my chain saw are gone, all the ropes on my ladders are missing, broke one of my ladder standoffs. ECT.
So never agin.

Yikes Joe! That's some serious issues with tool lending.

We should have enough safe-measures in place to ensure a well documented, understood transaction between owner and renter. However, I do understand the service wont be for everyone.

Hope you found a different employer!

Something in writing is only as good as the the person signing the paper, (and yes it was all in writting)
I'm back working for myself again and doing all the jobs I sold for him and he never showed up or even called the people after I sold the job.
Right now I'm in Keysville VA redoing two bathrooms for my lady friend so she can sell the house.
They were the old classic pink plastic tiles, wall mounted sinks that were falling off the wall, rotted flooring under the toilet.

Glad to hear Joe.

I had a pink bathroom in a rented apartment once, they failed to mention that in the demo unit.

I encourage you to check ToolSpinner out in the future. Maybe once it's up and running you'll give it a shot.

ToolSpinner Site

I agree with Joe. I would never rent or lend a tool to anyone, not even my mother if she were alive. I once lent out a concrete hoe to a friend , after several months I finally asked for it back, ( here's the punch line ) He said " that was yours ?" what he did do was return the hoe to someone else, who accepted it and never said squat about it not being his. The friend never offered to replace it, but he and I were friends too long for me to end the friendship over a tool. BUT, when he asked to borrow other tools, I said "NO WAY !"

I painted all my lawn tools with red paint so when the guys clean up they would not be picking up customers tools, first job we went to guess what color his tools were painted, next time I'll use pink.

I am 100% with Joe C on this one too...

The tools I own are only for my personal use, not a living. But to me, their like my tooth-brush...I just don't lend them out and it you do, they never seem right again. Now you are working with a tool that you have less or no confidence in because it spins wrong, cuts crooked, and you just get po'ed everytime it malfunctions.

Tools in a business are business tools with no personal attachment...good luck but keep your iron hot, you have a lot of ironing out of the details yet to do.

This message has been edited. Last edited by: tstex,