The fact that the best ideas sometimes arise in deep valleys also applied in a certain sense to Daan and Peerby. All the misery came together for him in 2009: his house burned down, his relationship ended and to top it all off, he lost his job at a software company. When he was also rejected as an actor – his idea for a fresh start – he had no idea what to do. Daan was also heavily dependent on his network for a place to sleep and sharing things for the first time. “I noticed that I actually found that a much better life and started to see that the idea of total independence that I had previously pursued mainly leads to loneliness and waste. We are all dependent on each other and that is just beautiful. With that deep insight, I wanted to do something. That became Peerby.”
Circularity as an economy
In a recent podcast Daan meticulously told his story about the experiences with his company. “I started looking much more at circularity as an economy and at the financial incentives that are needed to make it work,” he tells ROM InWest in summary. “The harsh reality is that every revenue model – with whatever social goal and however innovative – must be financially profitable in our Western economy in order to survive and therefore also to be able to make an impact. Only if you can convincingly demonstrate this, you will get investors on board as a circular entrepreneur. And even then, those investors must also have a long breath. Because that is what circular entrepreneurship is often about.”
Longer calculations: unit economics
Daan explains that it is not making a profit, but rather completely different values that are usually central to circular entrepreneurship. Think of reuse, sharing, repair and therefore less new purchases. “The problem is that most people appreciate such things, but are not quickly prepared to pay a lot for them. For example, we share and repair precisely to save money. The result is that as an entrepreneur you spend a lot more 'calculation time' on your unit economics: you first have to set everything up so efficiently that you still have a positive balance for every transaction. Only then can you start thinking about scaling up. From my own experience I know that this is a process of a lot of trial and error.”
Numerous challenges
The challenges Daan encountered with Peerby started with the big question to what extent people were prepared to share at all – immediately followed by the question of how much they were prepared to pay for it. Daan: “The latter soon turned out to be strongly linked to our range, and therefore to the number of affiliated members and the items they shared via our platform. After all, this increases the chance that you will find what you are looking for. We also had to struggle for a long time with insuring shared items. We had to find out: is that a requirement for people? And if so: how much are they prepared to pay for it? Given all the fixed costs for maintaining our platform, scale ultimately turned out to be crucial to being profitable.”
Against the mainstream
Ten years after his first steps with Peerby, Daan sees that sustainability has become much more mainstream. “But if I’m honest, circular entrepreneurship is still quite a challenge,” he immediately qualifies himself. “What you still notice in everything is that our entire economy is set up for that one straight line from new production to sales, use and waste. That process has been streamlined, made cheap and is still widely facilitated by the government, for example with the (bulky) waste collection services. It is extra difficult to break through the status quo as long as everything still works according to old linear models. Imagine a city where a repair service comes to the door every week instead of the garbage truck. What choices do we make then?”
Systemic changes needed
Fortunately, Daan also sees improvements. “Both in society and from the government, there is a growing awareness that the system really needs to change in order to make things more sustainable. This is also increasingly starting to translate into policy. There are more and more subsidies to help circular entrepreneurs with more radical new models, such as the KIA CE – intended for innovative circular products, processes and/or services that will be ready for the Dutch market within ten years. More and more investors are also putting social return first and understand that circular entrepreneurship requires a longer breath. Based on this philosophy, we also received support from ROM InWest. In short: the beginning has been made, but it is still mainly the champions who are currently shaping the circular economy.”
Evolutionary entrepreneurship
What tip does Daan have for these advocates? After a long silence, he makes a comparison with the human body with a smile. “There is not one tip, just as there is not one vital organ. In addition to your heart, you cannot do without your liver, lungs and so on. With circular entrepreneurship, you have to see it this way too: you are creating a living being, of which every part has to be right. That requires a lot of calculation, trying things out, trial and error and therefore also patience. You have to want to get stuck into that complex puzzle. You have to take investors along in this evolutionary form of entrepreneurship and inform them about the bumps you encounter. Staying positive is also extremely important. So realize that your innovation may not yet turn out to be the goose that lays the golden egg, but it is in any case a push in the right direction or can trigger a chain reaction. And hold on to the idea that things like repairing and sharing are universal human needs.”
