Cat’s Yard Club acquisition wasn’t really about equipment sharing

Updated Sep 1, 2017

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When news broke in May that Caterpillar had acquired peer-to-peer (P2P) equipment service Yard Club, it raised a lot of eyebrows in the heavy equipment and construction industries. The deal, terms of which were never disclosed, gave considerable weight to the notion that P2P equipment rental services, which allow contractors to rent machines in their fleets to one another, were changing the heavy equipment landscape.

The acquisition gave Cat a stake in what’s becoming a crowded marketplace for peer-to-peer equipment rental. Competitors include EquipmentShare, Getable and the fast-growing Dozr to name just a few. Prior to the purchase of Yard Club, which was founded in 2013, Cat had invested in the startup and infused rental inventory into the young company’s fleet. Last year, Yard Club facilitated more than $120 million in equipment transaction in North America.

You might assume Cat would be shouting from the rooftops about this deal. However, not only did Cat decline to disclose terms, the heavy equipment giant didn’t really acknowledge the purchase at all. No press release. No replies to our requests for comment. Radio silence.

But after a recent conversation with someone who has been with Yard Club long before the Cat acquisition, the reason for Cat’s silence on the deal has become a bit clearer: the deal had much more to do with technology than P2P rental.

Aaron Kline joined Yard Club two-and-a-half years ago and before the acquisition served as the company’s chief operating officer.

He said while Yard Club continues to facilitate rentals in seven states, “that may change in the next three to six months.”

“Cat’s customer portal allows customers to access rental information, inspections, telematics data, and a variety of other information. The Yard Club rental application is a standalone project but we’re working with Cat to port its functionality over to Caterpillar’s applications,” he said.

Since the Cat takeover, Kline said Yard Club has primarily become “the San Francisco office for Caterpillar,” and added that Cat had been eyeing establishing a presence closer to Silicon Valley “for a while.”

A screen from the Yard Club website.A screen from the Yard Club website.

“Cat’s digital enabled services group is a shared resource for developing applications for common user experience across many different product lines,” he explained. “The motivation for the acquisition was as much about the team’s expertise and development style as it was about the products we’d developed.”

Cat has long been talking up its role as a technology company as it adapts to changing customer demands and the growth in popularity of the Internet of Things (IoT) and connected devices.

In 2015, Caterpillar’s then-CEO Doug Oberhelman said during a talk during Chicago Ideas Week the company had shifted its core focus. While discussing the company’s partnership with industrial analytics firm Uptake, he said Cat could no longer expect to be successful by simply building quality heavy equipment. Thanks to the growth of IoT and telematics, it was now possible to constantly monitor machine health. Oberhelman explained that this type of constant attention to keeping its machines operational would be what the company stakes its future success upon.

“Our business runs on uptime for our customers,” he said. “If we do it at a lower cost than our competitors, we win.”

Though Cat has a new CEO in Jim Umpleby, the company’s focus, according to Kline, has remained on connecting its global network of machines.

So how does the Yard Club purchase aid in that effort? Though Yard Club’s success brought it into direct competition with rental houses, Kline says it has always been a technology company first and foremost. Though Cat may not offer P2P rentals for much longer, a big part of Yard Club’s platform remains highly attractive to Cat’s plan for the future.

Apart from offering equipment rentals at lower prices than the traditional houses, Yard Club also supplied contractors with an impressive fleet utilization dashboard that gave customers the ability to manage the coming and going of machines. Here’s just some of what the dashboard offers to contractors and fleet managers:

  • Dispatch and Scheduling tools for keeping track of owned machines and their attachments
  • Online storage of machine documents like maintenance reports, inspections and contracts
  • A platform for team communication, allowing for a centralized discussion “between the shop, jobsite and office.”
  • Automated inspections and reports
  • Service and maintenance tracking
  • Fleet Visibility for avoiding renting when an idle machine can do the job

It’s easy to see how all of that capability will aid in Cat’s endeavor to provide constant uptime to customers. Kline says the work he’s seen since toward that goal since joining Cat has made him optimistic.

“I think it’s very likely that as connected assets become more prolific you’ll get enough coverage on these machines where you can effectively predict failure and optimize performance,” he says.

Apart from building crucial technology, there’s one more way Yard Club is having an effect on Cat’s future. Kline says it has to do with reshaping the culture of a 92-year-old company.

“Cat is a very customer-focused company.  They want to build great digital experiences for their customers and they know they need to build quickly to do so. Our team knows how to move fast and build great technology, and we’re excited to do that with a company as storied as Caterpillar.”