From Commune To Sharing Economy Startup

gthuang88 writes: Willy Schlacks grew up in a conservative commune in Missouri without technology like phones or computers. At age 27, he and his brother left and started a construction business. That led to their founding a Web startup called EquipmentShare that helps contractors rent and share construction machinery. The startup went through the Y Combinator program and just raised $2 million from venture capitalists. The Schlacks worldview, coming from a communal society where they never owned property, fits in an interesting way with the digital sharing economy of Uber and Airbnb that's seeping into other industries. But there's one big difference. "I appreciate capitalism," Schlacks says. "I definitely prefer it."

Comments

Capitalism is great...

[h33t l4x0r]

When you're on top. Let's see how you feel once the patent trolls come after you.

Re:Capitalism is great...

[ultranova]

And since when, do you think, patent trolls represent capitalism?

Ever since someone realized they can make money from patent trolling. "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

You don't get to pick and choose only the positive results of profit motive as representing "real" capitalism. The system works great at finding the local optimum; it's flaw is that it both calls for but can't handle clever pyschopaths. And that flaw turns to a fatal one when people fall in love with capitalism and refuse any attempts to mitigate less desirable effects in the name of economic efficiency - or religious orthodoxy, which is what I suspect it really is for a lot of people.

Ownership and Appreciation

[Okian Warrior]

As nice as communism sounds, there's an inherent problem with rentals.

Anyone who's been a landlord knows that people don't take care stuff they don't own. Rental cars are abused, apartments are damaged and left uncleaned, taxis are smelly, public toilets are filthy and broken down.

I can't think of any rental system off the top that consistently presents clean and well-maintained equipment without enormous amounts of time and effort.

There's a thing in economics called "unequal knowledge" which explains why used cars have little value. The seller knows whether the vehicle is robust, but the buyer has no realistic way to tell. You can't tell whether the transmission needs replacing or the engine oil was ever changed or if other expensive repairs are needed. Because the buyer can't verify whether the vehicle is good, he will only pay "average" price. Because buyers will only pay average price, sellers won't sell vehicles which have above-average value. This in turn drives down the average price and eventually the expectation drops to zero.

Rentals are the same. You can never know whether someone damaged the rental until it's too late, and renters have no incentive to tell.

Construction equipment costs upwards of hundreds of thousands of dollars. I can't see someone renting out a bulldozer and taking a chance that the renter didn't run it without oil for a weekend.

Re:Ownership and Appreciation

[ShanghaiBill]

As nice as communism sounds ...

Never sounded nice to me, and of course it fails every where it is implemented.

It does not always fail. Communism works well as long as you keep it small, so everyone knows one another. It only fails if you go above a few dozen people, and trust breaks down. The happiest people in the world live in Denmark's communal housing.

Re:Ownership and Appreciation

[koan]

Happiness is subjective.
There are multiple forms of communism.
Humans by their very nature are "classed" animals, humans can not stop putting things and other people into groups, categories, classes, etc.

It's what we do down to the very core of our beings, a handful of Danish hippies does not an argument make.

Re: Ownership and Appreciation

[TuballoyThunder]

Construction equipment is rented out all the time. For many construction firms it does not make economic sense to own a full complement of heavy construction equipment.

• https://www.sunbeltrentals.com/equipment/subcat/766/dozers-and-crawler-loaders/
• http://www.hertzequip.com/herc/rental-equipment-industrial-equipment/earthmoving-equipment+dozers
• http://www.unitedrentals.com/en/catalog/dozer-70-hp

Re: Ownership and Appreciation

[FranTaylor]

this is why you don't rent equipment, you pay for the service of getting your hole dug, the contractor provides the gear and the personnel.

Re:Ownership and Appreciation

[FranTaylor]

humans can not stop putting things and other people into groups, categories, classes, etc

There are two kinds of people, those who divide people into groups and those who don't.

Re:Ownership and Appreciation

[penguinoid]

Communism fails when anonymous assholes can take advantage of you. Warning signs is when you feel someone is taking advantage of you, but don't know who.

Capitalism fails when rich assholes can take advantage of you. Warning signs is when you feel someone is taking advantage of you, but you have to cooperate with them anyways.

Re:Ownership and Appreciation

[jblues]

As nice as communism sounds

Never sounded nice to me, and of course it fails every where it is implemented.

I actually like communal roads, schools, police, hospitals, military and so forth. The place that I live now is more towards a completely unregulated market and its not as great as you'd think. Sure, we live well with two maids and a driver, but step outside our gated village and its total mayhem.

Re: Ownership and Appreciation

[Tsu Dho Nimh]

"the problem with renting special equipment is you also have to have the trained personnel to operate it. mostly you are better off contracting the service of having the earth moved instead of renting the equipment to do it yourself"

This business is NOT about renting bulldozers to homeowners digging a basement. It's about renting bulldozers to a contractor who already knows how to operate them and has all the licensing (or has an employee who does), but doesn't have enough jobs that need dozers to justify buying one that will sit unused most of the time. By doing it as a peer-to-peer agreement rather than one company owning all the equipment and taking all the risk, everyone can make money.

BTW, one of the money-makers my HVAC installer mentioned was that they own a crane and have a licensed operator ... anyone who needs crane service can hire his crane and operator if he's not using it for his own jobs. He's be happy to have a third party deal with the bookings.

Re: Ownership and Appreciation

[tmosley]

Then why do used goods sell for more than zero? Economists aren't scientists precisely because they fail to update their theory to account for observation. Nearly all economists fall into this trap. Fortunately, with machine learning, we now have a chance to create a theory of economics that actually matches reality.

We all prefer capitalism

[MrKaos]

However Corporatism has eaten capitalism because in capitalism there is no such thing as "Too Big To Fail".

I think communes are great

[Karmashock]

I wish more people lived in them and not for the reason some might think.

See, people have very unrealistic notions of communism and communal living. You don't appreciate property rights, the free market, etc until it is gone. Look at eastern europe and generally you see populations that are more fanatically anti communist than pretty much any societies on earth including the US. And that is because they lived through it.

And no, I'm not saying that all communist systems must be oppressive autocratic regimes that trample on people's rights. However, I am saying that there are a lot of aspects of that sort of system that are no advertised on the box and you don't really understand what you're buying into until you've lived in it for awhile.

Which is why I think communes are fantastic because they give people a good first hand practical knowledge of how that system works without forcing people that don't want to live in it to join or giving said systems authority over people in a non-consensual way.

I also think the kibbutz system is quite excellent and I really think we should try them out as an alternative to the current urban welfare systems. That is, rather than just give people EBT cards and government housing, you instead plop them in an urban commune. The concept would be that they'd self organize, have some productive businesses that they collectively ran, and generally look after each other in a supportive and helpful environment. Look at the gangs... THAT is the community self organizing to the extent it is able under those conditions. You have young men standing up saying they want to be part of something, that they want respect in their community, that they want some agency in the community... and how can they possibly get that besides going to the gangs? Sure, they could study in school and run for city council or something but that is very much divorced from the culture of those communities. And while you'll point out that the gangs are often seen in a negative light, they are respected, they do generally look after their own members, and they do give their members a sense of purpose in life.

So the kibbutz system or some other commune system should be tried as an alternative. And you could even subsidize them to some extent with government funds. It can't be more expensive than the EBT, welfare, medicaid, etc costs.

I am an arch capitalist radical libertarian. That is where I stand. However, above all I believe in people being able to choose how they want to live. And it seems like a lot of people want to live a more communistic life style and I'm going to practice what I preach by saying that if that is what people want... they should get it. I would say they should be limited to what they can obtain through consent. That is, you shouldn't be able to force people to join, keep people from leaving, or otherwise force people to do things. However, so long as you can get people to consent to your commune, I'm perfectly happy with it.

Something I'd like to try for example would be giving labor unions abandoned factories. The "rust belt" is littered with abandoned industrial infrastructure and dying unemployed factory labor unions that are increasingly on federal welfare. Well, what if we took some of that welfare money and just bought the factories and then gave them to the labor unions? Doubtless they'd need to renovate and buy new equipment etc... but we could raise the money for that rather easily if it were understood that in the process we'd be taking thousands of people off the welfare rolls.

As funny thing about Marxists is that they don't seem to understand what Marx was all about. He was about german, hard working, factory workers owning the "means of production"... the factories. He didn't envision pseudo intellectual never employed hipsters demanding government cheese so they could spend all day posting mean tweats. And he didn't envision generations of welfare families basically raising their children on the government dole to live on the government

Re:I think communes are great

[Karmashock]

First off, I'm not getting rid of markets. The existing market will exist as it does now.

Second, the infrastructure is what we're giving to the union.

Third, central planning is what CEOs currently do and the labor union should be able to handle the administration of a single fucking factory.

As to it being a boondoggle, I expect some of those ventures to fail. I am in fact counting on this to occasionally fail because sometimes things just fail... but more importantly some of the labor unions are run by idiots. And those people need to fail so that they lose prestige in their community.

I do think that labor unions are capable of running a factory. There might be some cultural shifts required because they won't be able to point at the "man" and blame the "man" for everything. They'll have to make sacrifices when times get tight which is what a company does when it lays people off. The union will have that option or possibly reducing wages or increasing hours worked or something. How they make ends meet is up to them.

But the goal of something like this is that it be self sustaining. That is, instead of paying out welfare money indefinitely for structurally unemployed people... we jump start jobs for people in what will ultimately be private ventures.

They must be made small enough that it isn't the end of the universe if the go bankrupt. So don't build mega factories. Do small ones. Try to keep it down to a couple hundred people per factory with independent control. That way when one of them inevidibly fucks up and destroys itself it isn't a huge deal.

Something that a lot of people don't grasp is that failure is a very important part of learning and a very important part of building anything. You need to be able to fail or you can't learn.

So, set a few of these up and let them just run with it. Some will kill themselves and some will succeed. The ones that succeed will be the example of what to do and the ones that fail will be the example of what not to do.

I think we could rehabilitate a good deal of the rust belt with something like this... Try it in Detroit or some other place that has a lot of abandoned industrial space.

Bring in some business experts to help figure out how best to capitalize on the existing infrustructure and labor force. Then take volunteers... ideally starting with unemployed people or underemployed people that have the skill sets required to contribute. And then see if you can make it work with a government grant that ultimately can be billed against the welfare roles because you'll be reducing long term welfare payments. You'll also be bringing new money into the community because most businesses tend to help the business of other businesses in the area. Even if you're just talking about sandwich shops or something. People working need to eat. So the more this works the more associated businesses can profit.

The alternative is just surrendering to indefinite failure and unemployment for fucking millions. And that is an attitude that needs to be taken out back and shot. Defeatism is not constructive.

Re:I think communes are great

[Karmashock]

As to losing political and social control or creating micro cultures, you can't stop that from happening. Currently the areas are controlled by the gangs and they're psychopathic as anything.

I want to stress that a very important issue here is consent. So people can leave the commune if it isn't working out for them at any time. And of course if we get any reports of violence, intimidation, or coercion in the communes then that should be investigated and dealt with.

Are you going to be able to deal with current gangs that live and breath violence, intimidation, and coercion? Of course not because we haven't had any luck up to this point and we have been trying. It is going no where.

The communes will have issues because anything will. But all things being equal it can't be worse than the status quo.

As to Russia, the workers never owned anything. It was always a "political elite" which was just their window dressing on the fact that they replaced one ruling class with another.

I think communism can work... I say this as someone that has no interest in actually living in a communist society. But I think it can work but it has to be structured differently than is typically imagined.

See, things fail. It happens all the time in ANY system. Shit just breaks. And the big flaw I see in communism... aside from moral and ethical issues... just logistically is that it is a massive too big to fail system. I think what you need to do is break it up into lots of semi autonomous entities that can and will fail all the time without endangering the larger society or even especially disrupting it.

Think of little companies in capitalism that die all the time. No one cares. It is totally normal. It only becomes a problem when the company is fucking huge and then that creates problems. And I think that is the first issue that any aspiring communist should look at fixing. My suggestion for that is to have lots of little communist communities that interact with each other according to traditional market forces... aka some kind of consensual exchange of goods and services. So you have communist communities that ultimately still exist in an over arching system that recognizes the inevitability of markets and should any given community be badly mismanaged it can fail without bringing down the whole house.

As to some mill dying because of chinese competition... Again, I'd need to go through that sort of thing on a case by case basis to figure out if there were not some way to save the operation.

In my experience, unions are often not able to deal with sacrifice. This is because they personally have to eat that sacrifice while a more traditional management structure can divorce itself from the consequences. But that doesn't change the fact that sometimes hard choices need to be made.

One thing that I do believe US manufacturing must embrace systematically is automation. As intensively as we can possibly do it. This scares unions because they think we'll replace all of them with machines. The problem with fighting this is that not only do they not save ANY of their jobs but they tend to destroy the business and remove the factory from the community entirely in the process. Let us just go with a worst case scenario and say the automation would cost 80 percent of the jobs at a given factory. That sounds bad. But not implementing the factory at all means you lose 100 percent of the jobs AND the factory leaves which has so many other negative consequences I don't even want to get into them all.

The US has lots of flour mills in it. We are net exporters of flour... big ones. In fact, if anything China is more likely to import flour from us than the other way around. So if some flour mill died... that's on the workers.

If we're talking about a steel mill, Chinese competition there is very stiff. From what I am led to believe one of the bigger problems is energy costs. Melting large amounts of steel and then keeping that steel at very high temperatures while it is mixed with som

what patent trolls woud those be?

[FranTaylor]

This EXACT business model was attempted by dirtpile.com 20 years ago

Any patents on this sort of thing have expired long ago

It's a CRAPPY business model, that's what to be afraid of. People don't want to rent equipment, they want to pay for the service that the equipment provides. Joe the scumbag real estate developer doesn't want to rent a bulldozer to level his lot, he wants to contract with an earth moving company to get the dirt moved. He doesn't want to hire a grunt to drive the bulldozer. He doesn't want to deal with topping off the oil and the hydraulic fluid. He wants a flat piece of land so he can call in the next set of contractors to build houses made out of ticky-tacky.

Re:That doesn't work

[FranTaylor]

the collapse and utter disaster of communist countries proved this.

Yeah okay, cuba has a longer life expectancy than the USA, lower infant mortality rates. Who lost the argument and gave up on the embargo? WE DID.

Meanwhile in much of Baltimore, the average citizen doesn't live long enough to collect social security, and yet they pay into it for the future that they don't have.

"get a good job and work hard," " If everyone's even and shares everything, nobody tries and your country sucks."

People work like HELL in this country, much harder than just about any other country. And guess what? This country SUCKS! Our healthcare SUCKS! Our infant mortality rate SUCKS! Our teenage pregnancy rate SUCKS! Our roads SUCK! Our trains SUCK! Our Internet SUCKS! Our jobs SUCK! Our culture SUCKS! Is this what we get for working harder than any other country?

In the meantime, in the places that value lifestyle and family over business, they have BETTER BUSINESS SUCCESS.

Re:confused

[FranTaylor]

It's a basic human desire/nature to want to control the things you have earned,

"Earned" is not in the human nature, everything else in your post revolves around this fallacy.

"Capitalism, as an economic concept, appeals to human nature because the individual controls the "wealth" and distribution.

In capitalism the individual LOSES control over their wealth, they trade actual stuff with actual value, for monetary tokens whose value is controlled by the group. If the group decides that your tokens are worthless, they are worthless.

Re:boat-loads of horse poop

[codeButcher]

Anecdote here. I keep 8 chickens as pets and for an egg supply. Each morning, I feed them a quantity of mixed-grains fowl feed. This is strewn on the ground, usually in a rough line or a few spots. They then proceed to peck up this feed. I started feeding them enough so that there is some left after they had finished. I then adjusted the quantity down so that there is no wastage - discouraging rodents and other birds from the area. (Chickens are left for the rest of the day to forage free range.)

In the beginning of a feeding session, while there is plentiful, "sharing" gets along nicely. Everyone pecks away in his/her own position. Smaller chicks will be called with a specific sound (mostly be the mother, but others may do it too), shown a piece of grain in the beak of the caller, which is then deposited near the chick for it to eat. The rooster will also use this sound to "call" the hens to come and eat. All nice and commie altruistic, one gets tears.

About halfway through the feeding session, when the food has been diminished by about half, things get interesting. Those higher up in the pecking order (natural fowl social hierarchy) chase away those lower down, to get to their food. No matter that the "higher-up" still had some left where she was pecking. No matter that there should be (just) enough for everyone. No matter that there is a whole day left to forage more. Looks to me quite like the nasty monopolizing side of capitalism from where I stand.

Please people, don't come preach about animal behavior and present that as the absolute and static alpha and omega. Circumstances change, even in a single feeding session.

Let me get this straight...

[cahuenga]

These guys think they invented the equipment rental business in 2010?

Seriously, contractors have been renting and trading equipment since, forever.