Spotlight on Small Biz: Float could be the Airbnb for boats

Few things are more quintessentially Minnesotan than spending time on one of the state’s 10,000-plus lakes. With Memorial Day and summer approaching, the desire to be on the water is reaching a fever pitch for many.

Nearly 820,000 watercraft are registered in the state, according to the Department of Natural Resources, and Minnesota perennially has among the country’s highest rates of per capita boat ownership.

Still, countless boats idle in docks while their owners are busy, leaving would-be boaters high and dry. Seeking to bridge that gap is Float, an online peer-to-peer boat rental marketplace that aims to be the Airbnb of boating.

Co-founders Jake McHenry, Float’s CEO, and Ross Larson, chief operating officer, are preparing for their first full season this year after testing the waters from mid-July through August 2018. They hope to have 50 boats in Float’s inventory by Memorial Day weekend, up from two boats and 25 rentals during last year’s soft launch.

Friends since first grade, McHenry and Larson, both 27, grew up in Mendota Heights determined to start a business together. With Float, they hope to make boating accessible to everyone who wants to navigate a lake or river but may not own a boat — a problem they’ve experienced.

“Growing up we had a buddy who had a cabin on Prior Lake,” Larson said. “We would always go out on his boat. When he wasn’t available we didn’t have an easy way to get out on the lake. But then you see all the boats that are just sitting there.”

Larson’s dad eventually bought a boat. The boat got a fair amount of use that first season but less in subsequent years as payments for storage, insurance and other expenses continued.

Larson and McHenry discussed business ideas as they set out on professional careers. McHenry worked as an analyst for four years at Target, started in the grocery division before moving to the new store and small format team. Larson, an engineer, was doing sales of commercial heating, ventilation and air conditioning systems for Trane in Chicago.

They quit those jobs in January (Larson) and February (McHenry) of 2018, to pursue Float full time.

“Airbnb has done this for homes. Turo (peer-to-peer car sharing) has done this for cars,” McHenry said. “Let’s do this for boats.”

The biggest hurdle to clear was insurance, McHenry said. They went to hundreds of underwriters before getting a policy written for Float.

Float’s policy covers the boat during the rental; neither the owner nor the renter needs additional insurance, McHenry said. The policy covers the boat up to its actual cash value during the rental. Float requires a security deposit from renters, making them liable for up to $1,000 in damage.

Float offers education in boating use and safety through its platform, its principles and boat owners, who are responsible for getting their boats in and out of the water, Larson said. Boat owners can share their knowledge about boat operations and safety during a pre-rental test drive with the renter.

Boaters need to operate courteously and be aware of what their wake is doing, said Harland Hiemstra, DNR public information officer. Drinking while boating is legal but a boating-while-intoxicated violation will go on the boater’s driving record. Safety regulations, such as having children 10 and under wear life jackets, also must be followed.

Float donates a percentage of each rental to groups working to preserve the quality of the lakes where those rentals occur.

Float’s boat renters include families and groups of friends, McHenry said. A number have been in their mid-20s to early 30s while some older renters rent a boat to see lake houses from the water. Others own boats up north and rent to get out on metro lakes.

McHenry described Float’s boat owners, who set the rental rate for their watercraft, as opportunistic and open to the sharing economy. Some own Airbnb properties.

“Our platform allows everybody who has a boat to essentially be their own entrepreneur and start their own business,” McHenry said. “They can generate supplemental, passive income; primary income even.”

Some view their boat like a rental property. “You buy a $20,000-$25,000 boat and rent it out multiple times a week through the summer and the return on investment can make the numbers work,” McHenry said.

That made sense to Aaron Naft, who bought a Malibu lake boat after meeting Larson.

“It made me more excited to purchase a boat because I knew it wasn’t going to be as much of a financial burden if I could start seeing some money come in from it when I’m not using it,” said Naft, a frequent Airbnb and Turo user who works for an e-commerce apparel company in Minneapolis.

Ernest Grumbles, an attorney whose St. Paul law firm works with start-ups, said he and his family enjoyed their experience renting from Float for a day of St. Croix River boating last September.

“Jake met us at the dock, gave us a walk-through of the boat, explained the safety features and how to operate it and also gave us some tips on the navigability of the river,” said Grumbles, who now is weighing the possibility of buying a boat. “For the time being we’ll take advantage of the peer-to-peer economy. If we enjoy it and keep doing it, it could lead to that.”

Float

Business: Online peer-to-peer boat rental marketplace. Boat owners can list and rent their boats to generate income. Renters get access to a variety of boats on a growing number of lakes without the expense of boat ownership.

Headquarters: Minneapolis

CEO: Jake McHenry

Employees: 2

Founded: 2018

Website: letsfloat.com