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Luxury on the Installment Plan

Millennials may not be able to afford the good life—but they can rent it!

If I wanted to, I could lead a perfectly comfortable life without owning anything ever again. It’s possible that my quality of life might actually improve. A lifestyle devoid of ownership wouldn’t actually save me money—it would probably be costlier than my current one. But it would permit me to experience the dopamine rush of constantly getting something new, even if that something isn’t technically “mine.”

Over the past decade or so, an array of venture-backed companies have emerged from the ooze of Silicon Valley armed with a single goal: to give people like me—relatively young, relatively (but not too) affluent, in possession of some degree of “taste”—temporary access to nice things they wouldn’t otherwise be able to afford. The biggest and most well-known of these companies is Rent the Runway. Founded in 2009 as a formalwear rental company for women, it has since expanded to everyday wear and now offers a monthly designer clothing rental subscription service: starting at $89 a month for the base plan, women can access “hundreds of thousands of options” on a rotating basis.

Clothing rental services ushered in the new rental economy. Where parasitic rent-to-own businesses stepped into the aftermath after the financial crisis to fleece the already vulnerable, several startups now target more well-off consumers to rent pricey mid-century modern furniture; organic, high thread-count sheets; and expensive kitchen appliances like KitchenAids and Vitamixes. Their terms are less predatory than those offered by companies targeting the working class, but the premise remains unchanged. Kept afloat not by the cost of their subscriptions but by hundreds of millions of dollars in VC cash, these startups all use similarly idealistic buzzwords: “flexibility”; “freedom”; “sustainability.” Why spend your hard-earned cash on cheap clothes that will end up in a landfill in a season or two when you could pay slightly more for an endless stream of designer dresses?, their sales pitches ask. Why buy a shitty IKEA couch and a particle board coffee table for an apartment you’ll only live in for a year or two max, when you could spend twice as much for a sofa that’s twice as good—and that you won’t have to take with you once you move?

The rental economy may be a relatively inexpensive way of financing a lifestyle that would otherwise be untenable, but that doesn’t mean it comes cheap.

The usual suspects can be found on these companies’ cap sheets. Bain Capital Ventures, the VC arm of the Mitt Romney-cofounded private equity firm, was an early funder of both Rent the Runway and the furniture rental service Feather. Andreessen Horowitz’s massive portfolio includes Airbnb and the clothing rental company Le Tote, which itself acquired Lord & Taylor—the oldest department store in the U.S. still in existence—in 2019. In a February 2019 post on the Medium blog The Startup, investor Mikal Khoso predicted a rosy future for the burgeoning rental economy. “Many of the most disruptive tech companies of the last twenty years have been successful precisely because they have disrupted asset ownership in a novel way, with dramatic consequences,” wrote Khoso, who currently works for an investment firm that manages more than $350 million in assets. “What’s most exciting about shifts to asset-light approaches is that this is starting to trickle down to ordinary consumers. . . . As a consumer, you can live a great life through renting and all that you have to worry about is cashflow,” he continues. “The consumer gains are unquestionable. Overall, it’s a win-win for everyone involved. Consumers get to live larger with less, and a whole crop of category-defining businesses are being built.”

The rental economy may be a relatively inexpensive way of financing a lifestyle that would otherwise be untenable, but that doesn’t mean it comes cheap—and high-end clothing subscription and furniture rental services aren’t marketed toward people who are struggling to get by. Rental services are predicated on two fundamental lies, both of which have been happily gobbled up and regurgitated by the trade publications and market research firms that breathlessly track these companies’ every move. The first is that “millennials,” that nebulous group of twenty- to thirty-somethings, prefer to spend their money on “experiences” instead of “things.” (Is anyone surprised that the post-Recession slump in homeownership portended the demise of the entire concept of “owning” things at all?) The second, more insidious lie is that not buying things makes you virtuous, that the rental economy serves a more noble purpose than the enabling of wanton consumption: sustainability, mindfulness, minimalism.

Technobabble like Mikal Khoso’s gives the lie to the idea that rental services are in any way ascetic. Living larger with less isn’t about consuming less—it’s about owning less while consuming more. The “freedom” these companies promise isn’t the freedom to opt out of the cycle of endless consumption. What they really offer is mimicry, an aspirational pantomime of the habits of people who can afford to change their wardrobe every season or redesign their living room on a whim. But cultivating a sense of virtuousness remains intrinsic to the rental economy’s branding strategy. Rent the Runway was initially invitation-only, and while it’s now available to the well-heeled masses, the company still refers to its customers as members of a “community” of women who “have joined the movement to get dressed smarter.” The furniture rental company Feather, which is only available in New York, Los Angeles, San Francisco, and Orange County, calls the people who sign up for its annual contracts “members” who are “embracing change & living more sustainably.” Joymode, a Los Angeles-based startup that functions as a rental service for everything from appliances and toolkits to more frivolous things like karaoke machines and inflatable chess sets—also wants its customers to see themselves as part of a community. “Our whole premise is people should own less,” Joymode cofounder Joe Fernandez told TechCrunch in 2018. “We’re trying to help you fight the consumption hangover of debt and clutter and clutter and environmental impact.”

That sales pitch can be tempting, particularly in a world in which marketers and prominent cultural critics have converged on the idea that every consumer choice is laden with meaning. But the simple truth is that the Rent the Runways and Feathers and Joymodes of the world have a vested interest in cycling products through as many customers as possible. You can only sell something once, but you can lease it out countless times—until someone damages it beyond repair, that is, and even then the offending customer will get charged the full retail cost of the product, allowing the cycle to begin anew.

The rental economy doesn’t have a monopoly on these pseudo-luxuries. See: the on-demand delivery companies that seek to eradicate “friction” from the retail experience. Grocery delivery services like InstaCart and FreshDirect eliminate the indignities of waiting in line or lugging groceries home by hiring underpaid gig workers do those things instead. Those who are too busy or indecisive to come up with a shopping list can opt for a curated meal kit service, like Blue Apron or one of its more than half-dozen competitors, or for one of the many startups that delivers weekly packages of pre-selected “ugly” produce. (These companies also have a virtuous bent—they claim to help Americans cut down on food waste . . . while producing more plastic waste and potentially siphoning from food banks’ produce supply.)

And still there are others. One startup offers custom interior design services for a low price; all you have to do is upload pictures of your house to its app, then buy all of the furniture it recommends. Another offers a steady stream of designer perfumes for a flat monthly fee. Yet another lets anyone become an “art collector” by buying “shares” of expensive pieces of art, all conveniently powered by the blockchain—taking rampant art speculation to its satirical endpoint. Most young people can’t afford to invest in art, or an interior designer, or a vanity stocked with fancy creams and colognes, or even the vanity itself. But those who can afford little bits of luxury here and there will often take what they can get.

The “freedom” these companies promise isn’t the freedom to opt out of the cycle of endless consumption.

The mirage of luxury comes at a real human cost, and none of these subscription services would be able to function without the labor of underpaid warehouse workers and customer service reps. Blue Apron workers filed a class-action lawsuit against the company in 2018, claiming they weren’t paid overtime and were ordered to clock out before their lunch breaks actually began. Two years earlier, BuzzFeed News reported that Blue Apron’s warehouse workers regularly put in twelve-hour days in the company’s freezing fulfillment centers where pay started at $12 an hour to assemble boxes or pour tablespoons of soy sauce into little plastic baggies. Blue Apron may be a particularly egregious example of a “mission-driven” startup treating its workers like shit, but warehouse jobs at any of these rental companies are often physically taxing. Employee reviews of Rent the Runway’s fulfillment center in Secaucus, New Jersey, describe a hectic, uncomfortable, occasionally punitive workplace. “One is expected to work at a fast pace. Even when there is an insufficient amount of available work, workers are expected to ‘look busy,’” reads one four-star review.

Despite the relative inaccessibility of the service to its lowest-paid workers, it’s likely that most of Rent the Runway’s subscribers have more in common with the people in the warehouse who steam their garments than with the venture capitalists whose multimillion-dollar investments helped the company grow into the behemoth it is today. Unlike hourly wage workers and young urbanites for whom luxury is only available through a recurring monthly subscription, Silicon Valley investors and their ilk can actually afford to buy and discard expensive things as often as they want. (Whether they actually do this is irrelevant; people who reach a certain level of wealth tend to make a big show of presenting themselves as humble while they hoard their money and delight in watching it multiply.) But the “frictionlessness” prized by these services works to obscure all those fundamental differences—as well as the complex logistics that make unlimited clothing rentals and mail-order meal kits possible, and the often backbreaking physical labor that these companies rely on.

These companies also hide—and often downplay—the actual cost of the goods and services they provide. That aforementioned VC cash lets these companies run huge losses in order to cut costs on the customer end; the logic is that acquiring customers is more important than actually making money, at least for the first few years. The open secret is that this entire economy is a mirage. Hundreds of millions of dollars flow from private equity firms to sleek startups that subsidize their customers’ consumption habits through an endless cycle of debt and investment. Sooner or later, though, the bubble will burst. Whether it will shatter any of our illusions about the ease and accessibility of the good life remains to be seen.