Fernandez’s new company has nothing to do with social media.
It’s likely that Joe Fernandez, the former co-founder and CEO of Klout, owns more cotton candy machines than almost anyone else in the greater Los Angeles area. The same thing goes for bubble machines, giant Connect Four boards and outdoor movie screens.
Fernandez is not running a local carnival, though he could given the contents of his downtown LA warehouse. Instead, Fernandez and co-founders Waynn Lue and Keith Walker are growing their new startup: A one-year-old company called Joymode that rents out the kinds of physical products you might need to use once or twice a year, but that don’t make financial sense to buy or store at your house or apartment.
That means tents and lanterns for a camping weekend. Or cotton candy machines and canopy tents for your child’s backyard birthday party.
“When I started Klout in New York, our apartment was so small that anything we bought we had to get rid of something just to physically maintain the space,” Fernandez said in an interview. “Living that way I really started to change my perspective on ownership. It really felt good to not to be weighed down by the stuff you accumulate.”
So Joymode rents gear people need for the weekend, and delivers it directly to the consumer’s home. (Fernandez says he even makes deliveries himself in his own car.) Consumers pay a $99 membership fee to join Joymode, then pay additional money for the gear they rent, typically 5 percent to 8 percent of the item’s retail cost.
It’s a brick-and-mortar logistics business that’s about as far as you can get from Fernandez’s first endeavor, Klout, which he sold for $200 million to Lithium Technologies in 2014. At Klout, Fernandez built a software program to determine a user’s social media influence — their “Klout score” — based on things like how often they tweeted or how many followers they had. It was completely abstract.
“We were measuring an emotion,” Fernandez said with a chuckle. “We [now] have a warehouse full of stuff.”
A little more than a year after joining Lithium, Fernandez left and headed to LA. He doesn’t have any experience running logistics or operating a warehouse. But he was set on the idea of simplifying the reality of owning “stuff.”
One year in, the company is plugging along. Fernandez employs nine people and says they get 50 to 60 orders per weekend despite being in an invite-only beta. The challenge, of course, will be scaling the business outside of Los Angeles. Unlike growing a mobile app or software service, Joymode requires a warehouse full of goods and the manpower to deliver those goods in every new market.
That’s not impossible. Everything in Joymode’s warehouse cost around $100,000, Fernandez says, and the company has taken $3 million in funding from investors like Homebrew and Lowercase Capital. And unlike the freemium model often deployed by software startups, Joymode makes some money each time it rents out an item.
“I was really worried about [the cost],” Fernandez said of starting the company. “It’s not that it’s expensive necessarily, it’s that you just don’t want to own [this stuff].”
So Fernandez owns it for you and hopes you’ll pay him to use it.
“We hope to [eventually] be everywhere,” Fernandez said. “You don’t raise investment money without world domination plans.”