I have a soft spot for businesses that are free for end users, valuable to the partners who distribute them, and still manage to generate excellent unit economics for themselves. The world is full of things that claim to be two of those three, but companies that thread all three simultaneously are rare, and when they do exist, they tend to compound for a long time before anyone notices.
The business we’ll discuss today is one of those businesses. It’s, to put it plainly, as unglamorous as it gets. There’s no AI angle, no network of software engineers, no moonshot. Just a physical product that people need occasionally, a platform that makes borrowing it frictionless, and a business model that somehow works beautifully for everyone involved. I know because I’ve used the product many times, with enthusiasm, without paying a dime.
The CEO stepped down in February, on the same day the company posted the best results in its 20-year history. The stock fell 24% before the market closed. Which, for a business this good, struck me as worth writing about.
Let’s dig in.