Business

How the ‘Airbnb of boats’ is trying to rule the waves with rentals

Boatsetter co-founder explains how boat rental company fits in Miami ecosystem

Jaclyn Baumgarten, CEO & Co-Founder of Boatsetter, the Fort Lauderdale-based company that lets you rent a boat or rent out your boat, on board the SOL on Tuesday, February 26, 2019.
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Jaclyn Baumgarten, CEO & Co-Founder of Boatsetter, the Fort Lauderdale-based company that lets you rent a boat or rent out your boat, on board the SOL on Tuesday, February 26, 2019.

Robert Satek knows owning a boat means sinking money—lots—to make money.

He estimates the annual cost of owning his 54-foot Azimut Atlantis yacht, the “Sol,” to be at least $80,000, including his Miami Beach dockage.

Satek had seen ads for Boatsetter. He figured it was another listings site that would take a chunk of change from his pocket.

But in 2018, after a friend recommended it, Satek decided to give it a try. To date, he’s made nearly $100,000 on 55 bookings—more than enough to cover his expenses.

“When I realized the money would just go straight into my bank and that I didn’t have to do much, I knew this was it,” he said.

In an era of disruptive startups, it seems fitting that South Florida is home port for boat-sharing powerhouse Boatsetter. Last year, the six-year-old company moved out of its Aventura office and into downtown Fort Lauderdale. Today, it leases a sleek, high-ceiling space just east of the Broward Center for the Performing Arts overlooking a bend in the Tarpon River.

“It’s perfect for a startup like ours,” CEO Jaclyn Baumgarten said on a recent afternoon in the space’s conference room.

Since its 2013 launch by Andrew Sturner, a lawyer-turned investor and a 25-year South Florida resident, Boatsetter has become one of the region’s most successful startups.

The boat-sharing concept has proven a natural fit for waterfront cities. In 2013, multiple companies were racing to become the “Airbnb of boats.”

One of them was Cruzin, a San Francisco-based firm run by Baumgarten. After years in business development in roles at IBM and Westfield Group, Baumgarten decided she was ready to strike out on her own. With fond memories of growing up boating in Chicago’s suburbs with her family, and sensing there was still an opportunity for a boating marketplace more trusted than existing options, she founded Cruzin in 2012 as a peer-to-peer marketplace. She protected rentals through a first-of-its kind three-way insurance policy covering owner, renter and the platform.

Two years later, it became clear to industry insiders that the space was getting crowded. As Baumgarten tells it, a potential investor suggested Cruzin and Sturner’s Boatsetter should merge to create a more powerful competitor with a nationwide footprint. After spending about 10 days with each other, Baumgarten says, Sturner and she decided the investor was right. Baumgarten moved to South Florida. The investor sailed off elsewhere, but the Boatsetter name remained, creating a player that suddenly had access to 3,000 vessels.

“We were both pulling in the same direction but had complementary strengths,” Sturner told the Miami Herald in 2015.

By the end of the following year, “Boatsetter had raised about $15 million in outside investment, making it the dominant fundraiser among players in the boat rental marketplace worldwide.

Baumgarten was not done yet. In 2017, Boatsetter bought out one of its biggest rivals, Boatbound, for an undisclosed sum. Andrew Hall, the founder of Boatbound, said he still follows Boatsetter’s progress, though he declined to comment further.

The acquisition impressed Laura González-Estéfani, founder of TheVenture.City, the Little Havana-based venture fund and tech advisory. Her firm took on an undisclosed share of Boatsetter at the same time the Boatbound purchase was announced in August of 2017.

González-Estéfani said in an interview that Baumgarten possesses a unique combination of a true passion for the water and a tactical business mindset.

“She is so good at” spotting new opportunities, González-Estéfani said of Baumgarten.

Today, Boatsetter manages about 5,000 vessels and has more than 30 full time employees, swelling to a full 45 during peak season, when it takes on staff at an outpost in Ibiza. To date, the company has raised more than $17 million, a sum still larger than any of its peers have raised. Baumgarten declined to disclose revenues or say whether the company is profitable.

All bookings still take place on Boatsetter’s website, though a mobile app is in the works. Owners are vetted by Boatsetter staffers, and owners have final say over any prospective renter. Boatsetter takes 35 percent of the owner’s rental rate (15 percent for professional boaters), and charges the renter 10 percent.

Baumgarten’s original concept of three-way insurance remains the unique feature for all Boatsetter bookings; many rental marketplaces charge extra for it. The underwriter is BoatUS/Geico Marine.

There are still dozens of boat rental marketplaces—so many that the Passenger Vessels Association, which represents boat owners and emphasizes safety, is sounding the alarm about illegal rentals.

“The Passenger Vessel Association (PVA) is very concerned about this alarming trend because such non-Coast Guard inspected vessel operators pose a danger to the travelling public who are unaware of the potential safety hazards of these illegal charter operators,” the group said in a statement.

Boatsetter says it complies with all Coast Guard regulations and will swiftly kick off any violators.

In the U.S., Boatsetter seems to be the marketplace gaining the most momentum out of all of them, according to Kevin Falvey, editor in chief of Boating Magazine. Falvey said the average boat owner may not—yet—have Boatsetter on the tip of their tongue, but if mentioned, a boater will have heard of it. One reason is search engine optimization: Boatsetter is the first Google result shown in the U.S. for the search term “rent a boat.”

Falvey said trusted boating marketplaces like Boatsetter have three factors working in their favor: The cost of boat ownership is outpacing incomes. People are time-pressed, without the leisure to care for a boat. And with the cost of waterfront property rising, marinas are disappearing — pushing slip fees up.

As a result, boat ownership is less attractive than it once was — meaning more people want to rent.

“I think they’ve carved out a place for themselves,” he said, “and they’ll continue to grow.”

Increasingly, Falvey said, prospective boat owners will turn to a service like Boatsetter to test out a boat before they buy. He gave they example of an empty-nester used to owning a ski boat who now wants to go fishing

That’s exactly the type of customer Boatsetter has in mind, Baumgarten said. It’s especially the case for a younger, upwardly mobile tech savvy generation. Baumgarten says 79 percent of its renters are under age 45, 54 percent are under age 35— and about a third are women.

“That’s unprecedented in the industry,” she said. “We’re creating a gateway for getting people exposed to the boating lifestyle.”

To best its competitors, Boatsetter is casting a wide net, recruiting a wide variety of vessels, like fishing boats, and trying to capture smaller and more family-oriented outings than the traditional booze cruisers that tend to haunt the rental sites.

At the same time, says Julien Geffriaud Boatsetter’s chief growth officer, the company doesn’t let just any boat owner onto the platform.

“We could go into a database and get 15,000 boats tomorrow—but they’re going to be poor quality,” he said.

Last year, The Economist named Boatsetter one of two companies attempting to “rule the waves” of the global boat rental space. The other is Paris-based Click&Boat, which offers U.S. listings and maintains access to a larger fleet of vessels but remains largely focused on the European market.

Baumgarten emphasizes that the quality of Boatsetter’s offerings distinguish it from more quantity-oriented competitors. At the same time, she believes one company will eventually emerge as a trusted, globally dominant player. She has not ruled out further acquisitions.

“Our awareness is nowhere near what it needs to be,” she said. “We are only scratching the surface.”

Rob Wile covers business, tech, and the economy in South Florida. He is a graduate of Northwestern’s Medill School of Journalism. He grew up in Chicago.

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