Lego rental startup success is $6.75M lesson in sharing


(Photo Courtesy of Pley)

Sharing may be a tough lesson for kids, but for adults it’s a booming business.

Since the mail-order movie rental company Netflix launched in 1997, the sharing economy has grown to include everything from designer dresses (Rent the Runway) to vacation rentals (Airbnb) to cars (Zipcar). Forbes just named Airbnb cofounders, Nathan Blecharczyk, Joe Gebbia and Brian Chesky the first “sharing economy billionaires.”

Now you can add Legos to that list.

Pley (formerly Pleygo), a startup that rents the Danish block toys through monthly subscriptions, just got a $6.75 million infusion of venture capital from Allegro Venture Partners, Floodgate, Correlation Ventures, Maven Ventures, and Western Technology Investments.

Launched in 2013 by Ranan Lachman, a former investment banker, and Elina Furman, founder of the parenting website A-List Moms, the 23 person startup has sent more than 75,000 Lego sets to 15,000 families, turning over each set in about 2.5 minutes in its San Jose warehouse.

Former Netflix Chief Operating Officer Tom Dillon is on Pley’s board of directors.

“Ownership is old school,” Lachman told Fortune. “The really smart consumers only own something … for the exact amount of time they need it.”

Ownership can also be really expensive. Parents have to shell out $239 if their kid wants to build Lego’s London’s Tower Bridge, and $399 for the Star Wars Super Star Destroyer, for example. Pley rents Legos for between $15 and $39 a month, depending on how large the set is.

Lachman credits his business idea to the desire to challenge his two kids with new toys while avoiding the cost and clutter, the Wall Street Journal said.

To make sure there are no missing pieces, Pley weighs each set within one hundredth of a gram. If pieces are missing, they use an algorithm to figure out which ones, replace them with extra stock and ship the set to the next customer, the Journal said.

So how does Lego feel about this?

“We proved through a comparative study conducted among our members that our service actually benefits the Lego group, as we increased brand awareness by 40 percent and sales by 26 percent,” Lachmann told VentureBeat.

The company will use the money to build out an East Coast warehouse, expand its business into Europe, and double its staff. It will also start renting other toys, mostly pricier, educational ones.

Gail Sullivan covers business for the Morning Mix blog.
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