It’s no secret: Millennials are saddled with student loan debt, and they’re facing more expensive rent. But they also love experiences. They want to camp, and they want to hold backyard movie nights with big projection screens.
But all the gear required to make those experiences happen doesn’t come cheap. Purchasing it could cost hundreds of dollars.
Enter Joymode, a subscription-based service that rents gear to its members. Think of the company as the “Netflix” of weekend experiences.
“We’re focused on giving people the products they need to go have the experiences that they want,” Cameron Hendrick, head of Marketing at Joymode, told PYMNTS. The company offers its consumers this value proposition: Give us about 10 percent of the cost to purchase the goods, and we’ll lend you the equipment.
Cost advantages aside, Joymode solves another problem: new purchases that are only used a few times. When the weekend is over, the customer drops off the item, or Joymode comes and picks it up.
Subscription Economics
To become a member of Joymode, consumers pay an annual membership fee of $99. Joymode is like Costco in the sense that membership fees bring down rental costs. Initiating a cost for membership helps the company offer more experiences.
“We also take most of the money from the membership fees and invest it into more inventory so our members have more stuff to choose from,” Hendrick said.
Joymode is not alone: There seems to be a subscription service for anything — from menswear to luxury designer jewelry. And while Joymode is more like Netflix and less like, say, Birchbox, the company could conjure up the anticipation and suspense of the latter if consumers wait to try the next big thing in recreation.
Through Joymode’s subscription service, there’s an emotional connection to the “surprise” left on your doorstep, however expected. The success of similar services in recent years has caught the attention of investors, who have funded companies such as Birchbox.
Recently, Joymode closed a nearly $14.5 million round in Series A funding, which was announced on Jan. 31. Before that round, it raised nearly $2.5 million in seed funding in a 2016 round and an undisclosed round in 2015, according to Crunchbase.
The latest round was led by Naspers through its Naspers Ventures division, with participation from previous investors. Along with the investment, Mike Katz of Naspers Ventures joined the company’s board of directors. Katz noted the investment comes as part of a larger consumer macro trend.
“We are seeing a generational shift, particularly in space-starved urban areas around the globe — people are renting not buying,” Katz said in an announcement. “However, no one is effectively enabling that shift across the trillion-dollar recreation space, so the potential for Joymode is almost unlimited.”
Guest Pass
Still, not all customers are crazy about subscriptions. Consumers might like to repeatedly try new experiences, but organizations and corporations may have a different focus.
As a result, Joymode is building a guest pass, which it plans to release in March. It appeals to companies that might not want to commit to the service and want to borrow an item for a specific event instead.
“They just want access … and they don’t necessarily want to be using it on a frequent basis,” Hendrick said.
Even so, Hendrick said individuals are the company’s bread and butter.
“Our core business is consumers and building a lifestyle around them, but we do still get business around companies and nonprofits,” he said.
Future of Joymode
In the future, Joymode could work with brands to promote their products. It’s on the company’s roadmap, Hendrick said, and might happen as early as the end of 2018 or 2019.
The company does have a membership base desirable to brands — hard-to-reach millennials. But, as of now, the company is looking to nail down its service and satisfy existing customers.
To grow its business, Joymode does some paid search marketing in addition to Facebook and Instagram advertisements. But it benefits most from word-of-mouth recommendations. Because Joymode activities are shared with many people, the experiences themselves are a “natural viral channel,” Hendrick said.
While Joymode is currently in Los Angeles, the company hopes to expand to other locations in the future. Hendrick would not mention specific locations, but, with time, the company could come to a backyard near you.
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