[00:00:07] Barry O'Kane: Welcome to HappyPorch Radio, the Circular Economy Technology Podcast, where together with leading experts, thinkers, and doers, we explore the intersection of technology and the circular economy. 

I'm Barry, the founder of HappyPorch, where we provide software engineering expertise for a more circular economy.

[00:00:26] Jo Weston: And my name is Jo. I help purpose-driven and circular businesses turn their vision into a strategy and story that moves people to act.

In this episode, we are joined by Valentin Lheureux, founder of HomeCycle, a French startup renting household white goods like washing machines and dryers, bundled with repair and more.

[00:00:49] Barry O'Kane: One of the things that stood out for me in our conversation is this recurring theme of how technology for these business models is still a challenge. There's more and more great platforms and people working to solve this part of the challenge, yet HomeCycle still couldn't quite find - and he describes in the conversation how he couldn't quite find the ideal tool for some aspects of the operational that he needs to do.

I'm always observing that technology is an enabler and maybe isn't the most critical challenge within the business, yet it should be helping to solve those challenges and it shouldn't be yet another hurdle in the way. So for those of us working on the technology aspect of circularity, there's still a lot more to do.

What did you think, Jo?

[00:01:32] Jo Weston: Yeah, it was a really interesting conversation. One of the things, I think, that stood out for me was this concept of having to go beyond rental, in terms of what you are offering the customer. Really transitioning from not just offering a product but also offering a service or should we say an experience. So alongside offering, for example, the washing machine itself, also offering cleaning services, maintenance services to make it not just a product solution, but also a practical solution to some of life's challenges.

[00:02:14] Barry O'Kane: Yeah, I completely agree. I think he describes that really, really well in this conversation. And so without any further ado, let's meet Valentin.

[00:02:21] Valentin Lheureux: Hello, my name is Valentin. I'm the COO of a company called HomeCycle. We are a French company and we offer rental in B2C and B2B for big household alliances, washing machine, dryers, refrigerators. Also we are starting to investigate for all the wine cellar that is also in this category, but we are speaking about heavy and big products.

[00:02:47] Jo Weston: Things that are difficult to get up the staircase.

[00:02:49] Valentin Lheureux: Exactly. And also really indispensable products. If we take for example the corona virus situation, these products were really labeled as really important products. And so you could still buy them if you needed during this period. 

Just to give an idea, but today in France, I don't know exactly in the other countries, but I guess it's almost the same, but this product are in 99% of all families. So, really we are on really important product for the daily life.

[00:03:18] Jo Weston: Perhaps you could tell us a little bit more about how you came to set up the business. When did that happen? Why did that happen? What was it that you saw that needed to change? Tell us a little bit about your backstory.

[00:03:31] Valentin Lheureux: So, in order maybe to understand why we decided with my co-founder to found HomeCycle, I will go a little bit back in the history.

So I started to work, just after my studies, in like, a big player in France, a big retailer which is called Boulanger. And they're really like a leader in France. And I started there as a product engineer. So I was developing product for the private label. And it was really fun and I learned a lot of things, but then I changed and I was a Buyer for them, so I was really witnessing the situation where I had my customer in store that was asking me to have less and less expensive products, but more and more qualitative. And then as a Buyer, I had to go to see the manufacturers and I was there like Okay, I need to have the best price as possible, but the best product as possible. And so I was witnessing like this really equation. Really, this linear economy where at one point I was telling myself it cannot be sustained in the long run to start to put some pressure on the manufacturer to do better products, and also to have, if possible the cheapest products at the same time in order to really, as the situation is difficult for French people to have, let's say, the best bargain and offer a qualitative for the best price. 

So at this point, it started to grow in my mind, Okay, how we could do it differently. And so I started to dig a little bit about the circular economy, about the, I don't know exactly how we say in English, but the economy of functionality and cooperation. I started to dig these fields and I still was working for Boulanger and I had the opportunity to move to another city called La Rochelle in France because my wife had a really big opportunity over there. And when I went in La Rochelle, I met my co-founder Valerian who is the founder of a startup studio called Jumanji 2030. 

They were thinking about that, they were thinking about rental, they were thinking about the economy, the circular economy of use. And we decided to ,after many iteration, we decided to start HomeCycle to offer the rental. Because we really thought well, we still think that, okay, we need to change the way this market is functioning, is working. Because it cannot be sustained in the long run to have pressure on one side, on the manufacturer and on the other side, the pressure from the customer. I really believe that Okay, maybe we still have some years ahead of us to work like that, but it cannot be sustained in the long run.

[00:05:54] Jo Weston: Interesting. And how do people respond to it in France in particular, because I know Barry's in Scotland, I'm in the Netherlands. Every country's different and it's interesting to understand more about how it is in France. What's the attitude to renting also, perhaps what's your typical customer? Who are those people?

[00:06:14] Valentin Lheureux: Yeah. The question is interesting because from my point of view, from what I can see in France is that there are different speeds depending on the category and depending on the generation in terms of adoption of the rental. The rental in France is working quite well for all the mobility, let's say scooters, cars, but also about the multimedia products, like smartphones, TVs.

I would say that for this kind of category all the different actors are quite well structured. That's mean that you have people for every step of the value chain. People are more and more eager to rent smartphones, to rent the car, to rent scooters, to rent bikes. So I would say that in this category, it's growing quite well and there are more and more people. Especially because we see young generation being a little bit less in need to possess products. So we see a real trend. 

For white goods, where we are, it's a bit different. There is still quite good tractions but the approach for the rental is a bit different because we are less on a statutory, there is less status linked to this kind of product. You don't renew your washing machine every two years or every three years to get the last model. So the approach is a bit different. It's maybe a little bit more about the services that we can offer around the rental. And the different actors around the value chain. I don't know, maybe the manufacturer, maybe the financial  institution, if you have one. They still really don't know how to approach it because you don't have residual value linked to the product. There is not like a real secondary market that is structured for the white goods. And so you cannot have the same, let's say, mechanism as what you have in the multimedia. 

So we see a good trend. There is traction. We see that the manufacturers, the financial institution, the retailers all of them, Okay, how could we do it for the white goods? Because we see that there is something that we can do, but it's not still well defined on how to do it. So that's really interesting because we are at the beginning of, I think, a big trend that is coming, a big revolution.

[00:08:18] Jo Weston: It's interesting, isn't it, because I think this also ties in with what we were talking about yesterday, Barry, which is the transition towards not just buying a product, but also having an experience. 

So here in the Netherlands, Coolblue, one of the appliance retailers, they're an online platform selling all sorts of things. They've also just introduced renting of washing machines, but also that they provide free energy for two hours of the day which is an interesting concept because this then goes way beyond just the product and really into the kind of experience space. 

I think, is that what you've also seen in France, that there's a transition with the younger generation towards wanting more of an experience, not just a product?

[00:09:03] Valentin Lheureux: Yeah completely. Actually today, from what I can see, and especially for the white good, we need to go beyond just “we rent a product”. It's because if you do it like this, you could be like labeled as a, like, I don't know, but you just finance the product for the people that cannot afford it. And to be honest with you, at HomeCycle, this is something that we are trying to avoid because this is not what we want to do. We do not want to be an option to finance your product. 

And so that's why the experience is really important. And that's why also all the services that you can bring around the rental are also super important for us because it needs to be a complete package. And it needs to be worth it for a customer. Because the rental can sometimes be at the end, a little bit more expensive than if you buy the product on the shelf, let's say, and that's why we need to bring more services. 

We need to bring, for example, in our case for all the length of the rental, the product is warranted for repair. You have someone coming to your house in two to three days to repair the product. If the product's not repairable, we replace it. And we have many ideas of other services that we can bring to the table in order to really worth it and to not just Okay, you cannot afford this product, rent it like this, you can afford it. This is not what we want to do.

[00:10:18] Jo Weston: And this ties into your mission to simplify people's lives. And maybe we could just touch briefly on who is the typical customer then. 

Because I think one of the big questions that people will ask in this space, who is your typical customer who wants this?

[00:10:33] Valentin Lheureux: Completely. It's interesting because when we started HomeCycle we had some like personas in mind. Like maybe the students, maybe, the people that come to a country for only two to three years and need to rent the product.

And in the end, to be honest with you, of course we touch them, but these are not our main customer, main clients. The main one today for HomeCycle is first someone that do not want to face the burden to handle a repair, to handle the delivery and the installation. To handle “What should I do if my product is not working anymore?” Because once you add it in your life you don't want to handle it anymore because you don't know what you have to do. 

So first is that, and the second one, that is also, the same person, but the first, let's say motivation is this one and the second one is, Okay, a product when it breaks down most of the time it's not when you planned it. And so you have to buy a new product. And when you look at the market, okay, 600 euros, 500 euros, 800 euros, and you're like, Okay, I would prefer to go on holiday with my children with this money than just like putting all the money in the washing machine. 

And so we have people that decide, Okay, I want to have still a good product, a quality product that is beautiful in my kitchen or in another room. And so I will use the rental because I see the services and I see that they can have access to a better product than what I would've bought in the traditional market. These are the two main reasons.

And unfortunately, I don't know if it's unfortunately, but today we mainly have women that buy a product in HomeCycle.

[00:12:02] Barry O'Kane: You also mentioned that you're looking at B2B as well. So how different is that and how relevant is that for you at this stage?

[00:12:09] Valentin Lheureux: Yeah, that's true. So when we started HomeCycle, we focused on the B2C because we were really there to try to change consumption habits, to change this, like markets and bring really like a different solution. We have a big challenge in the B2Cs where maybe we'll discuss a little bit deeper after, but it's how do we finance the product, and the fact that we go in B2B, it's much more easier to finance product when we go in B2B relation. So that's one of the element that pushed us to try to have a look at the B2B market.

Secondly, that was interesting when we started the interviews with I don't know, maybe co-working space, co-living spaces we started to see that actually they were facing quite similar issues as a normal, let's say, client in B2C. They needed to have a quick repair, they needed to have a quality product. And we saw that the service that we were offering could really like work for B2B partners. And actually it went quite fast because as soon as we started, we managed to have some partnership with co-living spaces, co-working spaces, and that decided that they would prefer to rent the product because they were benefiting of all the services that we could provide.

And also sometimes for some of them, let's say the smallest one, when they need to buy for a house that they just built, they need to buy three washing machine, two fridges, two dryers. Having this product, not needing to amortize them, but having them directly in the operational cost. 

So some of them, it was making a difference.

[00:13:34] Jo Weston: So the type of customers would be like universities, old people's homes, student accommodation. How could we see that, those kind of places, right? 

[00:13:45] Valentin Lheureux: Yeah. Those kind of places, because today, to be honest with you, in B2B there are B2B partners, B2B companies that need products that are not professional products. They use domestic products and you have some companies like, for example, restaurant, hotel that use professional products.

And today we are not able to address professional products. So we decided to focus for our B2B growth on the companies that use domestic products because this is the one that we are able, but maybe in the future, I mean, for all the student accommodation and all of that, there are really, like interesting things to do. Also with the rental because at the end for some companies it can bring a lot of costs just to buy the product and a lot of costs to maintain the product.

[00:14:30] Jo Weston: Is this something that is more relevant to people living in cities or high density populated areas?  Or, if we look at the landscape of France, for example, where are your customers?

[00:14:42] Valentin Lheureux: Our customers are mainly in cities, but we see that we have customers also quite far from cities. And that's interesting because when we discuss with them they also need to have the services that we could provide to the cities. And sometimes they are even more, I can say, left behind from the traditional companies. So that's super interesting and that's why we decided to address all the territory, all France, in terms of delivery, that means that we don't have any exclusion. Because we wanted to give also the opportunity to people that maybe are a little bit more remote to still have access to quality products and to still have access to the services of repair. And not just like offering the service to people that live in city. I don't know why, but it's more people living in cities that today are renting our products.

[00:15:31] Jo Weston: And what would you say is your biggest challenge? You are in a startup in terms of developing the technology or in terms of any challenge actually, 'cause maybe the challenge isn't developing the technology. Maybe it's actually developing that traction with people.

[00:15:46]  Valentin Lheureux: Yeah for us, in rental startup, the biggest challenge is how do we finance the product or how do we manage to purchase the product? And technology, of course, is one, but I will go on this topic maybe just after because it's really interesting. But the main challenge is, Okay, how do I manage to have products?

Because to be honest with you, the traction is there. And in our situation, it's more that how are we able to have enough products to answer the demand.

Why is that? Because today , if we go deeper on that, I see four ways to finance product, let's say, purchase product.

The first one is, okay, you have a big amount of cash. You are able to raise money every six months. And you manage to purchase the product as you would purchase in the B2B relation, and then we rent it and you have enough money to wait for the 12, 16 months, to find your money back.

Second way is you could have private investor, that invest in SPVs, Special Purpose Vehicle. And you give them back some cash from the rental of the product that they purchased. 

Third way that is quite common is okay, you have a financial institution that jump into your economic model. And so when you have a rental, actually you sell them the product and they own the asset and they collect the subscription, the subject amount.

And the last one, which is the one that we really fight for in HomeCycle and this is the one that we think it's the royal way, let's say the best way is to partnership directly with the manufacturer to work in share revenue. And this one for us is the best way to do rental because you really have an alignment of all the value chain. 

Because as you incentivize the manufacturer to the revenue that you do he's starting to think, Okay, how can I give you a better product that lasts longer, that is more repairable? Because with you, if we are able to rent it two to three times, I will win more money. 

But this one is the biggest challenge because when you go see a manufacturer and you talk about that, they look at you with big height. I don't know how to do it. I just sell the product to the retailer. So that's super interesting. 

[00:17:45]  Barry O'Kane: That's interesting as well 'cause it links to you saying your motivation I guess for starting the business as well. Tying it all together.

[00:17:51] Valentin Lheureux: Yeah exactly. And this is super interesting when we start to have discussions with manufacturers where they say, Okay, if it starts to grow, maybe we could start to think about building a product that is made for rental. The product that is really repairable, really durable with maybe some pieces that are easy to replace from the customer himself so for me it brings all the motivation that we have to do this kind of business because in this kind of discussion, you are really changing all the value chain and all the perception of the different actors.

[00:18:18] Jo Weston: And it's massively connected to repair, right? If we think about circular economy and the circular ladder, I think in this case this is really good because it does connect to building a product that can be repaired as well as, the rental side of things as well. How do you manage the repair side of things?

[00:18:37]  Valentin Lheureux: So well in our ambition as we have like the circularity in our DNA, every product that arrives at the end of this rental period, we get back the product and we refurbish it. And we want to re-rent it. This is in the case where the product can be re-rent. Sometimes we get product back and they are really like, in a really bad shape. And so we are only getting, like the spare parts or even sometimes we cannot do anything with it. And so we put it like in the right, let's say flow to go to be destroyed, unfortunately. This is for, like the refurbishment. That's interesting because in France the refurbishment is really starting to grow. There are more and more startups that are working around that. So we have alternatives, to, partner with some people, some companies to refurbish the product.

So during the rental we actually, we also partner with companies that are already quite well installed in France that have an average between 50 to 100 repair guys. I don't know exactly how we could call them, but repair guys that are all around France. And so as soon as we have like a customer that is telling us, Okay, something strange is happening with my washing machine. First of all, we do a phone call to directly diagnose if there is something to do, could it be just like something that we could change directly on the phone or, Okay, we have someone that needs to go to the house with a spare part. This is also a challenge for the spare part.

And that goes there and then that repairs the product. And so we are able with these partners to have the phone call, we do it directly like the same day we have the request.  But the repair happens approximately after the phone call in two to three days, we have someone that is able to go to the house or to the apartment.

[00:20:10] Barry O'Kane: That's the really valuable part there as well is often when something breaks and I don't know what's wrong, can I fix it? Is it gonna be expensive? Do I have to replace it? So the simplification of that, that's the service part. That's what it's worth paying for a little bit, what you're describing.

[00:20:21] Valentin Lheureux: Exactly. This is something that we really insist in our website, in our ads, when we want to acquire new customer. We really, like offer you have an amount that you pay every month, but in this amount, everything is warranted.

You do not have to worry about the repair, you do not have to worry if the product is not working anymore. We are going do it for you. We go back to, Okay, we want to really simplify people's life. I think life is already quite stressful. We have many things to handle. You have to handle the children, you have to handle well, all of that. And so, we don't want to be additional things to handle. We really want to be smooth, really easy and okay, you rent the product and you know that you have one phone number, you have an issue. You call someone is answering, and we provide you already a first answer. Okay, Someone needs to come. He will come in two days. You have the appointment, that is done. And okay, you already know that this is handled and you could go on in your life.

[00:21:16] Jo Weston: I was just thinking about one of the things that would be nice is that someone would come and clean my washing machine. The inside of the glass gets dirty and the drawers where you put all of the soap and everything gets dirty. I would like someone to clean it for me once in a while. 

[00:21:32] Valentin Lheureux: To be transparent with you, this is something that we provide only for B2B at this point. We are working on it for our bit, for our classical combustion for the B2C. It's quite expensive to be honest today. So that's why today we have more room in a B2B partnership to offer it than a B2C.

But why we do that, because I think this point that is interesting, is we have a lot of studies that shows that 60% of the breakdowns that you have on your products in the first five years are linked to a lack of cleaning or maintenance of your product. 

So, that's why we are working here to whether we are working to try to have the customer to do it on its own, but sometimes he don't know how to do it. To do it, you have to do that and all of that. And we are trying to find a way, we are not the solution today, but to gamify it a little bit, to make it fun. Maybe to incentivize a little bit the customer on, Okay, you wash your washing machine. Okay, maybe we can give you that and we can give you that. And there if we manage to either have the customer to do it or maybe at one point if we have the right volumes to have someone that goes in the home to maybe just change some parts that could be more fragile.

We know that they are fragile and we know that at the end of the rental we will get back product that will be in better shape. And we really augment the probability to rent it again.

And also we have a better product. Not a better product, but we have a clean product for the customer. So we know that it's going to be happy to continue, to be happy using this product.

This is one of the challenge also, that we have is this one. It's really important for us. 

[00:23:09] Barry O'Kane: That’s really interesting. I just wanted to segue a little bit and talk a little bit about how they organize all of that. and this is me thinking about the technology 'cause that's obviously one of the angles that we're really interested in is how you operate and how you manage all of that.

You mentioned the data and gathering things like, we know that 60% of machine is because of lack of maintenance and cleaning. So I guess across the whole business, how are you looking at how you deliver the operations, what tech stack you need, how you gather that data, how does all that look for you?

[00:23:36] Valentin Lheureux: Yeah. To be honest, it's difficult. Why? So as we are a small company, small startup, we don't have unlimited resources. And so we have to use tools that already are existing on the market. ERPs, CRM, all of that. But what it's super interesting is that as we are trying to bring to scale a new way of a new model with the tools that we use are made for the classical e-commerce.

So that they are really good for a purchase, classical purchase. And then you never hear about the customer anymore. Here in our position, in the rental, it's not the customer that it's important, of course it's important, but what's really important is the asset, is the product to be able to track, okay? This product was. in this house during six months, then you get it back, you refurbished at this place, and then you put it in another house, and then you add a repair. And to be able to have all the life of the product, and even if you push it further, is to have the return on investment for this product.

And there is, to my knowledge, to be honest with you, no real tool existing today that brings you this view. And that's super interesting because we see that even some software that say that they are for the rental, actually the most of them, they built their software on the model of rental where you were sending boxes every month.

[00:24:58] Barry O'Kane: Subscription types, yeah.

[00:25:00] Valentin Lheureux: Yeah. So it's not the same again, because when we send the product to the house, then we don't send anything else. And we need to be able to keep contact with the customer to understand. Okay, how's the products going? Everything is going well for you. Yes, Okay. Do we need to do some maintenance? And all this follow up, all this tracking the product and following the product on all is life, today the tools are not really addressing it.

We see that it's starting to emerge. We see some software are starting to okay, build some features and all of that. But to my knowledge, again, I have not seen any software that have been built with this in his DNA. 

This is a challenge for us because we use many tools, too much tools. To try to take best of each tools and to make our own sauce, let's say.

And it's not perfect. And maybe sometimes it's also retaining us a little bit back because we cannot, like really execute the operation.

[00:25:52] Jo Weston: That's really interesting and we talked yesterday about AI. And I think because everybody's talking about AI, it would also be good to hear from you how you are using AI to develop and also some of these bottlenecks and problems that you're having, which is holding you back. Is there an AI solution that could actually facilitate that process for you and speed things up?

[00:26:17] Valentin Lheureux: Yes. To be honest with you, today we use AI mainly for like specific problem that we could face. And let's say for example we want to build an automation, to really like, ease a flow of purchase of all of that. And we are going to use the AI to help us to code a few small automation. This is let's say, the first part. 

Then we have some reflection, some thoughts about how AI could help us to prevent breakdowns. How AI could help us to say, Okay this product, you need to go to do maintenance because this and this happened.

But we are really at the beginning to be honest, and we see that something is coming for the future for the AI and the use of AI in our let's say, market of the rental. But we are really at the beginning and we are just starting to have some thoughts in some discussion.

[00:27:08] Barry O'Kane: That's a nice segue. I'd love to keep the conversation going, but I'm aware of time as well.

Just thinking about for you, what is the future like? You're at this early stage, you're building traction, you're very clear on your mission. You're a B Corp, we didn't get a chance to talk about that, but tell us a little bit about what are your plans, what are your ambitions for the next period of time?

[00:27:26] Valentin Lheureux: Yeah. The ambition is for us is really to be known in France as like the specialist of house, big household appliances rental. What it's super interesting is that we see that people that launch themselves into the rental. When they start with smartphones, they start with multimedia products. They start with small household appliances, and then they see big household appliances and they see many challenges. The product is big, transportation is hard. The renewal, as we said, is not well quite often, not well, really frequent. And to be honest with you, we decided to go for the hard path, telling ourself, okay, we think that we could crack it with time, but if we crack it, we are really going to be like the specialist of the rental of big household appliances. 

So really the ambition is this one. And to achieve this ambition, we have to be able to build partnerships with the most famous brands of household appliances in the share revenue model. Really to change the industry, to be honest with you. We want to see it really, like further and really with high ambition, we want to change the way the manufacturer sees the market and we really want to be a strong option for them to say, Okay, I could sell it to a retailer. I will still sell it to a retailer because the retailer is a big actor and they're really doing their job well, if I can say. But Okay, I have another option, which is working with HomeCycle, or maybe it would be another company, but where it brings more sense to my team, it bring more sense to my CSR policy. And we are really doing something good for people and we are changing our industry in the right way.

[00:29:01] Barry O'Kane: Outstanding. I love that. And the fact that you've chosen the hard route and that mission, I think that's wonderful. 

I would love to have a further conversation to dig into some of the specifics and deeper things there. You mentioned the financing and the different vehicles for financing and the technology challenges and the scaling challenges. So maybe we can have you back on in the future to update on the progress and the successes you've had.

[00:29:19] Valentin Lheureux: With pleasure. Yeah. With pleasure.

[00:29:20] Barry O'Kane: And then just finally, for those listening who want to find out more about what you do or get in touch, where do they go?

[00:29:25] Valentin Lheureux: If they want to get in touch with me, of course they could go on LinkedIn and just connect with me. Usually I answer quite quickly and if they want to have a chat, I'm always eager to have a chat and to learn from people. And because sometimes this is at this moment that you have some ideas. But if they want to learn more about HomeCycle, of course they can go on our website. It's homecycle.fr in France.

I hope in some years we will be able to distribute also in, maybe in the other countries.

[00:29:49] Barry O'Kane: Wonderful. Thank you. As usual, we'll share those links and all the show notes and transcript on happyporchradio.com. 

Thank you so much for joining us. Really enjoyed the story and good luck with the future of HomeCycle.

[00:30:00] Valentin Lheureux: Yeah. Thank you very much. It was a pleasure.

[00:30:02] Barry O’Kane:  Thanks for listening. If you enjoy and benefit from these conversations, please help us share with others. Just take a moment to rate and review on your favorite podcast app.

Thank you.

[00:30:21] Outro: This podcast is brought to you by happyporch.com. Whether you need bespoke software development, fractional CTO support, or just expert advice, HappyPorch is here to support your circular economy initiatives. If you're driving innovation and circularity, we'd love to chat. 

Your hosts were Barry O’Kane and Jo Weston. 

Barry is a software engineer, leader, and entrepreneur with over 20 years experience. He founded HappyPorch to help you create web and software solutions that support the shift to regenerative circular economy. 

 Jo helps purpose driven and circular businesses turn their vision into a brand and story that moves people to act. She works with teams at tipping points ready to scale or reposition for greater impact.