Founder's Statement: Three Major "Lessons Learned" from the Closure of the NFT Rental Agreement Rentable
A product or solution is best validated before being fully launched in the market, rather than rushing into action; haste makes waste.Original author: 0xrose, Deep Tide TechFlow
On September 13, the NFT rental protocol Rentable announced its closure, with all services ceasing on October 14. Co-founder Emiliano Bonassi stated, "We did not find a product suitable for the market, and our runway has ended. After careful consideration and discussions, we prefer to move towards closure rather than seek further funding."
Once upon a time, NFTFI was a hot track, especially after the NFT rental protocol standard ERC-4907 was passed in June, many were optimistic about this track. However, in just a few months, the situation changed dramatically. Regarding the reasons for the "failure," the founder reflected and summarized three points:
1. Narrow Track
The definition of a track is to set the specific problem you want to solve fundamentally and focus on it. First, you need to evaluate and apply your solution to a broader range of similar problems, targeting a larger market, but you must choose carefully.
From my experience in DeFi, I am biased in thinking that if you solve a general ERC20 problem, you can solve all problems. Therefore, I believe that if you solve a general NFT problem, you can solve all problems.
The mistake is that this approach may work in DeFi because ultimately all tokens are the same, but it may not work in the context of rentals.
Every NFT has its uniqueness; renting may be similar to lending, but "renting x NFT" has different meanings depending on what "x" represents. Note that this is specific to rentals; for trading, a generalized statement works well.
We could do better by conducting more in-depth research on various NFTs and selecting a specific market to better understand and build a vertical customized solution rather than an agnostic general solution.
2. Resource Allocation
Time is the most scarce resource for everyone, from partners to investors, and of course, users.
After the first call or a few feedbacks, if no commitment is given, it is hard for them to engage unless they are doing it for free for some reason.
Since we did not need external capital to build the MVP, I completely underestimated this.
We actually need capital to align interests; each investor and partner brings their specific value, and it is important to master how to leverage it.
Therefore, it is necessary to plan what they can bring, from capital to recruitment or just reputation, which must be done.
3. Better Validation
Validation is a big topic but can be summarized into goal setting, hypothesis framing, experimentation, and data collection.
We made a mistake: once we found a good technical solution to implement rentals, we immediately executed it.
Moreover, our assumption was that users did not have any rental mechanisms; if there was a solution (i.e., "there"), we would see new dynamics.
We need to conduct more validation "on paper," shorten iteration cycles, and reallocate engineering efforts to focus more on the rental motivations and goals of partners/users.
Conclusion
The author believes the founder's summary is very sincere and hits the nail on the head.
First, whether there is real demand and whether the demand/track is large enough. NFT rentals seem appealing, but imagine a specific scenario: a blue-chip NFT is a social display, and the holders are usually industry leaders/wealthy individuals. Are they willing to rent it out? And are there too many people willing to rent? This is somewhat similar to renting second-hand luxury clothing; it seems there is demand, but it is quite niche, far less than the vertical market of game NFT rentals.
Secondly, the team felt they could create a product and bring it to market without external funding because there was no financing. However, in the crypto market, financing is not just about money; endorsements, BD resources, establishing connections with important partners, assisting in recruitment… various external resources can be built through the Cap table.
Finally, a product or solution is best validated before being fully brought to market, rather than acting immediately; haste makes waste.
