How storing your stuff got easier, the story of portable on-demand storage.

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Dave Young:
Welcome to the Empire Builders Podcast. Dave young here with Steven Semple. And as usual, Steven whispers the topic into my ear just before we start recording. And you got me. I’m stumped this time because you just said the word “pods” and nothing comes to mind other than, are we talking about coffee pods? Are we talking about… Did you say, “pogs,” like that game that kids used to play with the little cardboard circles. Remember those?

Stephen Semple:
Yeah. I forgot about those.

Dave Young:
I have no idea where we’re going here. I think of 2001: The Space Odyssey. “Open the pod bay door, HAL.”

Stephen Semple:
Well, you got the spelling, right? P-O-D-S. Pods.

Dave Young:
Okay.

Stephen Semple:
But it stands for Portable On Demand Storage.

Dave Young:
Oh, yeah. The U-Haul things and the… Yeah, yeah, yeah.

Stephen Semple:
PODS is a really specific one. It’s the one where they bring that box to you, you load it up, and then they take it away to storage. Yeah.

Dave Young:
Yeah.

Stephen Semple:
Yeah. So, this idea was launched in 1998 by Peter Warhurst. And 10 years later, he sold that company for $450 million.

Dave Young:
Nice. Got to love a good exit.

Stephen Semple:
Yeah. And when I heard that, I was like, “There is an empire, and this is worth paying attention to.” And the storage industry is a huge industry. It’s estimated the storage industry’s a $67 billion industry. And the average house in America has 300,000 items. And most people have a storage facility all full of stuff not worth keeping.

Dave Young:
Yeah. No I’ve been there, done that. And we’ve all got stories that we’d be ashamed to tell about storing things that-

Stephen Semple:
I can’t believe I spent money to keep this. So, Peter was an owner in a technology company, and he got bought out. So, at the age of 40, he has this bunch of money. And so, what he decides to do is buy a piece of land and build a storage facility. And he locates one in an affluent community in Florida that’s walking distance from where he lives. And he thinks, “This is great. It’s walking distance from where I live. I don’t need a lot of staff. This be a great way for me to do something and makes some money.” And Florida’s a great market for storage because there’s no basements. There’s no basements in Florida because of the really low water table. So, when he’s buying the land, the guy selling it is this dude, Roy Courtney. And Roy ends up becoming a partner in the storage facility.

So, when Roy, who is selling him the land, learns what he’s doing, he says, “Hey, I’d love to do this with you.” So, it took about 2 million bucks to build this facility. And before it was even finished, Peter was so convinced it was going to work great, he started to look for a second site. And Clearwater, Florida, is pretty dense population. So, it’s hard to find a two to three acre lot in a visible location away from the competition with the right zoning.

Dave Young:
Okay.

Stephen Semple:
So, Peter’s driving around with Roy, and they cannot find another property. And Roy’s talking about this other business that he has that does pick up of medical waste.

Dave Young:
Okay.

Stephen Semple:
And it hits Peter. Why don’t we do that for storage? What if we went-?

Dave Young:
Pick your stuff up? Yeah.

Stephen Semple:
What if we went to the home and picked it up? It would be bringing the storage to the home. How’s this different than hauling stuff away to the dump? You’re just hauling it to a storage facility. So, the question that started going through his head is, “How can we do that?” And he started researching it, and he found no one else was doing it. And so, this concept was instead of hauling to the dump, let’s take it to storage. Simple in concept, but kind of complicated in execution.

Dave Young:
Sure.

Stephen Semple:
So, first of all, he’d need to make a good looking container. And the most popular mini storage is 10 by 10. So, he started with a 12 by eight container.

Dave Young:
Okay.

Stephen Semple:
Because 10 feet wide won’t fit on a truck.

Dave Young:
Yeah.

Stephen Semple:
So, he developed this weird looking truck that comes along and can drop it off and pick it up. And there’s several patents on the loading mechanism. And there’s several patents on the building of the box because that was the things that were really unique. And it’s a big investment, but you can stack the boxes. So, this is the other thing that clicked with him. So, when you buy warehouse space, you pay for the square footage. And there’s all this air. So, the sky is free. So, you can stack these boxes. So, he also made it so you can stack the boxes. And from a capital standpoint, the warehouses are rented, the trucks are leased, the containers had to be bought.

Dave Young:
Okay.

Stephen Semple:
So, he, then first of all, decided, “Okay. I’m going to go to my friends. I’m going to put some money in, and I’ll go to my friends and do a round of financing.” And he raised about $7 million. And at first, he thought this would be small. He thought he’d need about a hundred boxes. And he promoted this using cable television. One of the things he loved about cable television, as we know, you can target specific neighborhoods. You can take a city and cut it down into small things with cable television. And there was also a new channel coming out at the time, this 24 hour news channel. And they came to him and also gave him a great deal on the advertising. And he was also doing radio on the morning and afternoon commute.

Dave Young:
Okay.

Stephen Semple:
And here’s what he never expected. He got calls off the very first ad. Very first ad he got calls. Now, the other thing that surprised him, he also got calls from people who wanted to invest.

Dave Young:
Oh wow. Okay.

Stephen Semple:
Yeah, who heard this idea and wanted to, like, “Is there a franchise available? I want to buy this.” So, a year out he immediately started doing franchises. First franchise was in Sarasota. But the funny thing is he ran into some challenges. And in Florida, particularly, bumped against these municipal regulations complaining about the boxes. So, if you park a truck in front of somebody’s home-

Dave Young:
Oh yeah.

Stephen Semple:
You can do that. It’s a truck. You put a box on somebody’s driveway, it’s a billboard. So, he had to deal with a whole bunch of municipalities to permit this. Because one of the most successful things happened is he would drop this box on somebody’s driveway, and everybody would see this thing and go, “What the heck is this?”

Dave Young:
And then, they’d check it out.

Stephen Semple:
And they would check it out.

Dave Young:
They don’t know the neighbor. Yeah.

Stephen Semple:
Bingo. Bingo. And so, within six years, he had 295 locations. He was in 7,000 cities, 40 states. And again, he never expected this to take off this way. But there was three reasons why he thought it worked. First of all was, it was a new service that landed in the middle. He had these full service movers that would move the stuff for you. And then, you had truck rentals where you load the stuff up, took it somewhere, and unloaded it. And he felt like this landed in the middle for people. Plus, it was very disruptive. Because the moving industry has a terrible reputation for how to handle this stuff and all those other things. So, he felt this was also very disruptive. But a big part was, look, you drop this thing on the driveway and there’s this huge billboard in a residential community. So much so, municipalities initially complained about it.

Dave Young:
Yeah, it’s so true. I mean, the reason I went straight to U-Haul when you mentioned this is that there was one in my neighborhood a couple weeks ago. Steven, they had 10 of these things in their driveway.

Stephen Semple:
Right.

Dave Young:
The U-Haul version of it.

Stephen Semple:
Yeah.

Dave Young:
I’m like, “Man, that’s a lot of these storage things.” I think the other thing is what he stumbled across was the headache of moving your stuff into a storage unit. Nobody’s got a vehicle. You have to go to a U-Haul place or someplace to rent a truck or a van or something like that. And then load it, load it quickly.

Stephen Semple:
That’s the other part is loading it quickly.

Dave Young:
And then, unload it quickly-

Stephen Semple:
Quickly.

Dave Young:
…so that you can get the rental truck back. These things, you put it in my driveway. Now, I’ve got till, I don’t know, how long do I have to load it up?

Stephen Semple:
Yeah.

Dave Young:
I can schedule that, right?

Stephen Semple:
Yeah, because the other part is, when you look at their model, is everything stays in this pod for the length you have the pod. They don’t care whether the pod’s in your driveway or in the storage facility. Move it when you want it moved. And this visibility in the neighborhood, how many times we’ve seen this with home services companies that, when they’re in an area with their nicely wrapped truck servicing the air conditioner, that they get more sales in that area. Right?

Dave Young:
Absolutely.

Stephen Semple:
It really does feed on itself. But the other reason why the business was successful is he allowed consumers to drag them in other unplanned directions. So, for example, they had a customer that asked if they could just store it in the driveway because they were doing your remodeling. Can you just drop it on the driveway? We’re going to put stuff in it. When the remodeling’s done, we’re going to unload it. Then, can you take it? They’re like, “Geez, we never thought about that application. But sure.”

But how many businesses would be like, “Well that’s not… We can’t there.” And they were like, “Sure.” Another said, “Hey, we’re moving to St. Petersburg. Can you just drop it off on the driveway in our new location?” And they were like, “We never thought about that, but sure.”

Dave Young:
We’ll charge you this. And people are like, “Yeah.”

Stephen Semple:
Yeah. All they figured out is, “Okay, well if we’re going to do that…” And again, how many business would be like, “Well, that’s a bit of a pain in neck. I’ve got to send a truck to St. Petersburg.” I’m amazed at the number of times I say to customers, like clients of ours, “Oh, gee. The customer’s asking for this.” I said, “Just give them a price.”

Dave Young:
Yeah.

Stephen Semple:
Just give them a price. And if it’s a real pain in the neck, give them a high price. You never know. They might write the check for it. But give them a price. Don’t say no. Give them a price. So, there was all sorts of other opportunities that opened up for them because they listened to their customer, and they were prepared to do it the customer’s way. In 2006, they expanded Canada and Australia. They’re doing 300 million in revenue. Here’s one of the other things that Peter learned. There’s this real allure to franchising, right? It’s easy. It removes the problem of managing people on locations. Here’s what he discovered. Franchising’s actually hard because now you answer to franchisees.

Dave Young:
Yeah.

Stephen Semple:
They’re constantly telling you, “You need to do this. You need to do that.” You’re constantly under pressure from franchisees who always want more or always want to do things different or all of those other things. And he was, quite frankly, finding it a headache. And in 2008, 10 years after starting the business, Arcapita comes along and makes him an offer for $450 million to buy the company 10 years after starting. And he looked and he said, “The early investors have been in this for 10 years and have had no return. And these franchisees are a pain.” So, Peter decided to sell. And time to retire. Now, the funny thing is he doesn’t retire. He starts another company called Red Rover, and we’re going to do an episode on Red Rover.

It’s also interesting to note, when you read the book, Pour Your Heart Into It by Howard Schultz, one of the early people in Starbucks, he also talks about some of the downsizing, the franchising, and why Starbucks didn’t go that direction. But really neat business because I love how they discovered the idea we’re constantly talking about in this podcast. Look to other spaces for ideas. And they’re driving around looking for property. And his buddy is talking about this medical waste business. And he goes, “Wait a minute. Wait a minute. Hold on a second. Why can’t we do that?

And looking at the power of those boxes looking good and those being billboards in the neighborhood, and how he creatively used radio and cable television to promote this. I think there’s a lot of really cool things to learn there. I looked at this and I went, “Man, this was right down our alley.”

Dave Young:
Yeah. And some of that unintentional. It doesn’t sound like he pre-planned the idea of… I mean, sure, you’d want your name on these boxes so that they’re identifiable. But it doesn’t sound like that was part of the original strategy. It was just, “Oh, we’ll bring a box, and you put your stuff in it.” And man, yeah, if your neighbors can see what’s going on, perfect. Perfect.

Stephen Semple:
Yeah, he thought he was going to be doing a hundred of these things, and it would make great sense. And he wasn’t thinking about franchising, and he’s like immediately getting people calling saying, “Hey, can we do a franchise?” And some of this other ideas actually using it as a moving service.

Dave Young:
Sure.

Stephen Semple:
But what I’m saying is what we’re learning from him. He was not only open to this idea. He was open to things.

Dave Young:
Yeah. Yeah. I love it. I love it. I remember as a kid you’d ride around neighborhoods and garage doors would be open. And they had cars in them or they were empty. And now, you walk around my neighborhood here, and if there’s a garage door open, it’s like, “Holy crap. They got a lot of stuff.” And I think, “Well, hey, guess what? Guess what’s not in my garage? Cars.”

Stephen Semple:
See, I’m one of those people who I have a car in my garage because I just hate parking the car in the driveway. But man, if it wasn’t for that? But I have to fight. I have to constantly fight to keep stuff out of the garage so I can park my car in the garage. It’s an ongoing struggle.

Dave Young:
We’ve still got stuff in there for moving that’s like, “Ah, do we get rid of it? Do we sell it? Do we…? Ah, I’d love to have my car in there.

Stephen Semple:
Don’t permanently park a pod on the driveway. That’s not the answer.

Dave Young:
No. No. And the service is pricey, too. I mean, I don’t know that we looked at the brand PODS, but we looked at some of the competitors. And it’s because of the convenience of it, right? So, you pay a premium for something that’s easier.

Stephen Semple:
Yeah.

Dave Young:
Renting a big 36 foot truck and filling it yourself doesn’t cost near as much as renting the equivalent number of those pods and having somebody pick them up and haul them to your new location.

Stephen Semple:
Right.

Dave Young:
That’s super expensive, but less stressful. You can fill them up at your own pace.

Stephen Semple:
Yep.

Dave Young:
You’re not under this big pressure that, oh, the day you rent the truck, and you’ve got three days to get it filled to your new location and emptied.

Stephen Semple:
Yeah.

Dave Young:
Oh, yeah.

Stephen Semple:
Exactly. And what we know is consumers will pay for something like that. And the other part was it was very innovative for the time. And look, hat’s off. He saw a different industry, brought that idea over here, and then was also open to where consumers wanted to take him. And you know what? He ended up building a business in 10 years that was worth almost a half a billion dollars.

Dave Young:
Nice. Yeah. I love stories like this, Steven, where you come into an old tired industry that’s been exactly the same for, gosh, how long? The only innovation that happened before PODS was U-Haul saying, “Hey, why don’t you just drive your own truck and load it yourself?” Before that it was you hired a moving company or you better know some guys with trucks. That’s it.

Stephen Semple:
Exactly right. Exactly right.

Dave Young:
Cool story. Thanks, Steven.

Stephen Semple:
Awesome. Thanks David.

Dave Young:
Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app, and leave us a big fat juicy five star rating and review. And if you have any questions about this or any other podcast episode, email to questions@theempirebuilderspodcast.com.

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