Andrew: Hey, they’re freedom fighters. My name is Andrew Warner and I interview entrepreneurs who build phenomenally successful companies for an audience of entrepreneurs who are building phenomenally successful companies. And unlike other podcasts that are more about let’s just hang out. Let’s just be around this topic.
I know that the people who are listening are actually building because often they come back here and do interviews about what they built and. One of the things that I’ve heard for years. And maybe I would’ve said it, if you would’ve asked me, is that you can’t just build the Airbnb of whatever or the Uber of whatever.
You’ve gotta be more creative than that, which is why I’m so excited to have today’s guest on Joseph Woodbury is the co-founder of neighbor. What a great domain neighbor.com they’ve got, it’s the Airbnb of extra space in your house of storage space. And the thing is doing well. And it makes a ton of sense.
And I wonder. How he came up with the idea and then why that version of Airbnb for something worked. And I know it can’t just be as easy as let’s just take two ideas and mash ’em together. So I invited him here to talk about how he came up with the idea why it worked and so on, and we could do it.
Thanks to two phenomenal sponsors. The first, if you’re hiring a developers to, to build your idea, you need to know about lemon.io/mixergy. Great developers. At a lower price than you’d than you’d expect. And number two, if you’re doing email marketing and you should be, I wanna introduce you to send in blue check ’em out at, send in blue.com/mixer G, but I’ll talk about those later first, Joseph.
Good. Have you here?
Joseph: Hey, thanks for having me on
Andrew: What’s the revenue right now at Nabor.
Joseph: CA can’t talk about revenue. Um, but we’re, we’re in every city and every single state in the country.
Andrew: Are we talking? Can you gimme a ballpark, like in the single digit millions more than that, less than that?
Joseph: Can’t give you a ballpark.
Andrew: even that. All right. How much, how much money have you raised?
Joseph: We’ve raised 65 million. Uh, now our, our most recent round, our series B round was a 53 million round.
Andrew: All right. Um, I think you’ve raised money from Andreson Horowitz, right? Who else? Really? Top notch people. Okay.
Joseph: Yeah. So we’re, we’re based outta salt lake city, Utah. So we raised our seed round from the largest venture firm in Utah, a group called peon ventures and album ventures. We then raised our a from Andreesen Horowitz. We really wanted to bring on. Um, as a property marketplace, we wanted to bring on the best marketplace investor in the world.
And so we brought on a guy named Jeff Jordan from Andreesen, who he built eBay. He built open table. He built he’s on the board of Airbnb and Instacart and Pinterest and, and, uh, offer up and kind of a lot of the big marketplaces. So we brought him on to join our board. Um, and then since again, we’re a property marketplace.
Now that we had the, the top kind of marketplace investors on board, we wanted to bring on the top prop prop tech investors. So for our B round, we had a group called fifth wall lead that round. They’re kind of known as the top prop tech investors in the country.
Andrew: And the way it works. I’m now recording from my new place in Austin. I’ve been like wandering from Airbnb to Airbnb. I think the audience was tired of hearing me say, I’m searching for a place here, but we finally found, look at all this space back here, acres and acres, close to downtown. Anyway, turns out there’s a giant shed.
I don’t need a fricking shed here. Thank you. I don’t need a fricking shed. Can I just list it on neighbor and then have people store their
Joseph: Yeah. So we work with any type of unused space. We’re a lot more flexible than a lot of marketplaces. So we’ll have people rent out, sheds we’ll have people rent out, uh, garages, basements bedroom. Um, even even empty lots, we’ll just have them park, you know, a boat on their empty lot and, and store someone else’s boat.
Um, we also work with big commercial partners. So some of the largest office building owners in the country have listed space on our platform. Some of the largest retail, uh, owners in the country have listed space on our platform. We, we take any space. That’s sitting there unused and we will monetize it for our customers.
Andrew: Wait. So I, I heard you say that, but I didn’t understand how that worked on neighbor. So if there’s someone who has retail space, that’s going unused, they might list it on neighbor. And then if I have an idea for say selling Mixergy t-shirts and other swag, I could go and use that space to sell my stuff.
That’s how it would work.
Joseph: So all of our spaces for self storage. uh, say you owned a retail strip. Yeah. And you had a, a suite or two that just were not renting out, um, for retail space, we’ll take that space and we’ll rent it out for self storage and we’ll have people store items in that retail space that way, you know, these big res that are operating right now at, at 80% occupancy or, or less, uh, many times, and they’re really struggling to get to high occupancy
Joseph: now, we keep the lights on for them.
We keep the cash flow coming.
Andrew: Meanwhile people are using more and more storage. Storage is pretty expensive. And I remember we were paying until now until we got our place a hun no $280 a month for tiny bit of space and we’d have to drive an hour up 50, 50 minutes north of, uh, central Austin to get to it. It was so frustrating. And that’s what you’re eliminating.
Andrew: Does, does a dude just come into my house whenever he wants to get his stuff?
Joseph: So you, as the host get full control over your space, when you’re listing your space, we’ll ask you a bunch of questions about access, different hosts, set, different access levels. According to their preference, you could, you can say, Hey, business hours only after hours only, um, we’ll have some hosts even, even set it to where it’s by appointment only.
So you have to set up an appointment in order to come, come by. Anything’s kind of on the table.
Andrew: Oh, that’s phenomenal. All right. Let’s talk about how you came up with the idea. To be honest with you. I was kind of skeptical about the story that I’ve heard you tell, which is your co-founder was going to, to south. Uh, was it south America? He was going to.
Joseph: That’s right. He, well, he’d just gotten married. I mean, he was, he got married and a week later, him and his new wife headed down to south America. Hadn’t even had a chance to like put their items together yet in an apartment or something. So they needed to desperately to find a storage unit. Um, in the couple days before they were leaving and they ended up kind of having the same experience everyone has when they go to get a storage unit, sounds like the same experience you had.
He, he looked and all the facilities close by were completely full. That’s kind of a nationwide phenomenon right now. I think the average occupancy rate across the country is 96% right now. So over 50% of facilities are completely full. They have no more room. And so he was gonna have to drive a half hour to the next city over, um, uh, just to find one with any vacancy.
And he was like, not willing to do that. Sounds like you were willing to drive 50. Um, which is even longer. And, and then of course you’re paying these extremely high prices. It’s the largest subscription payment that most Americans make. You know, you pay 10 bucks a month for your Netflix and 30 bucks a month for your, your internet.
There’s really nothing. You’re paying, you know, several hundred dollars a month for, um, except for your mortgage. Right. And so. Uh, frustrated with this whole situation. He found a friend that was willing to let him store in his garage. Um, he stored there for the four months. They were in south America. He went to pick his items up after he got back from south America.
And, and he, he just had the thought like, why doesn’t everyone do this? I felt so much more peace of mind knowing my items were in a nice clean garage in a neighborhood I trusted much better than one of those dirty storage. Facilities and I saved a bunch of money too. Why isn’t there? Why has someone not built a marketplace, um, where you could find empty space in your neighborhood?
Andrew: it, wasn’t just sitting around saying, look, Airbnb is doing well, what else can we turn into Airbnb? There’s a dude now who has. Company that does Airbnb for pools. You get to rent your neighbors pool and go swim in it, or have a party in it. It’s just, how do we apply this model towards all these other things that people do?
That’s not your approach. That wasn’t how you got, got to it.
Joseph: you know, you, you kind of raised this question at the, at the start and my thoughts on. Our, I actually agree with a lot of the naysayers that, that it, you can’t just do Uber of this or Airbnb of, of that, um, marketplace at the marketplace model only works when applied to a very massive industry because it needs scale to operate.
You know, if you were to go start a company to say, um, do, uh, Uber for. I don’t know, snowboard sharing or, or ski sharing. That’s great, but there’s, there’s not a, a high enough frequency volume there, um, of people sharing snowboards. Uh, I’m sure you could find people to use that in a niche situation, but marketplaces work in these extremely large, old, archaic industries that are very unsexy until they’re disrupted think like taxi.
You know, no one was like, oh wow, taxis or hotels. Um, no, no one was getting excited about hotels, but they’re both massive multi-billion dollar industries that are just a terrible user experience. And self-storage is, is no different. It’s this, it’s this extremely huge. It’s like eight times the size of the taxi industry, the storage industry is, and it’s this extremely huge industry that no one enjoys using.
And that prevent presents a great opportunity to provide a better. Peer to peer solution.
Andrew: had no idea was that big. I had
Joseph: We’ve we’ve uh, P you know, you don’t notice ’em cuz they don’t have the, the big signs. They’re all zoned industrial. But uh, we like to tell people, um, it’s people notice restaurants. They’re easy to see. They’re easy to, to compare. And um, we like to tell people there’s we’ve now built more storage facilities in the.
Then we have McDonald’s Starbucks, Dunkin donuts, Wendy’s dominoes, uh, Walmart’s home depots and Costcos combined. Um, so like there’s roughly 14,000, McDonald’s in the United States. Uh, and there’s around 19,000 cities in the United States. So if it feels like there’s a McDonald’s in every city, that’s because there basically is a McDonald’s in every city.
Um, but storage is much more common. There’s there’s around 60,000 storage facilities. So if you go to a town that doesn’t even have a post office, it’s so small, there’s gonna be multiple self storage facilities in that town.
Andrew: So how much of this analysis were you doing before? Were you sitting and saying, let’s see how big this market is. Let’s understand if it makes sense to do a marketplace here, or did you say something else?
Joseph: Yeah. So like none of this drove my co-founder’s idea, you know, he, he had the idea, um, in, in the way that I think most ideas come and it’s, it’s not by sitting and thinking what’s the perfect market to go into it’s it’s having a personal pain point. Solving that personal pain point and then thinking, oh, this solution that I created for myself to solve my own pain point could, uh, be useful for a lot of people.
Why, why don’t we do this? So, so he told me about it. I just, I just thought it was brilliant. Um, I, I definitely came at it from, from a little market perspective. So started looking into a lot of the market stuff and started seeing, you know, what, this isn’t just a good idea. This isn’t just a good solution.
This is a, this is a, uh, good solution. That’s also a, you know, 50, 60 billion opportunity. Right. So, um, it, they, they, it, it certainly, uh, encouraged us to, to kind of read up on the industry, but it, it, it didn’t start
Andrew: Student, I think at the time, right.
Joseph: it. Yeah. I, all of us, um, very non-traditional well, I don’t know, you know, sometimes. I think this is, is the traditional background these days, but none of us were planning on doing a startup. Um, we were all kind of headed off to professional services, jobs. We’d all accepted full-time jobs. Uh, I, I had worked for an investment bank and, and a private equity firm and the Senate majority leader.
And then I, I landed at Banon company consulting firm, um, was actually headed out you’re living in Austin. I was headed out to live in. Uh, Dallas and worked for, worked for ban and company came back after interning with them for my senior year, um, and, and press. And my co-founder told me about this idea and we all called our jobs.
We started working on it, getting customers, we all called our jobs our last semester and told ’em we weren’t gonna show up. Um, so, so that was kind of fun. Avoided, you know, I, I had, I had worked in all of the boring industries that there are, and, and ended up in tech.
Andrew: So one of the problems with marketplace, especially one that is as nationwide as yours is, it’s really hard to go everywhere. I heard that you decided you wouldn’t do any blitzscaling early on. What did that mean then? How would you start? Did you start in one city? Did you pick one industry?
Joseph: Yeah. So our growth strategy has, has evolved significantly over time. Um, when you’re, you’re absolutely right when we first started. We, we just focused on our home market, salt lake city, Utah, and, and we did everything ourselves. It very much, Paul Graham like do things that don’t scale. We were knocking doors to get supply, uh, doing all sorts of hacky stuff.
Like, um, we, we figured out this hack that we could print these labels that described our app on a water bottle, a nice, like smart water bottle. And we could drop off cases of water bottles at all the office buildings all over.
Joseph: all over the WASA front and the receptionist, unlike the rest of the junk mail that they would get, they couldn’t throw it away.
Um, so they’d go, the receptionist, like has to go put it in the fridge and then people at the company are using our water bottles for the next six months.
Joseph: tables. It, it worked extremely well. It was like our best like early growth hack.
Andrew: for, for getting people who are willing to pay for storage offices said we will
for getting supply for getting hosts
Andrew: hosts. And then did they end up doing this in their homes or in the
Joseph: in their homes. So we, we, we figured out that like the group that was most likely to early adopt us was, um, like young, young professionals in kind of technology centric jobs. Um, were highly willing to, to list some space. And, uh, we were doing these lunch and learns, uh, where, where we’d like buy the whole company lunch and we’d go talk to them.
But those were expensive. They took forever to schedule and they, they weren’t a high conversion tool. And we were like, Hey, we could get in a lot more offices a lot quick. With no coordination and no scheduling. If we just show up and like land these on the reception, these water bottles on the reception desk.
So we, we probably handed out, uh, across, across Utah and then California, which is our first, first market outside of Utah. We probably gave out over half a million water bottles. Um, uh, so it, it was, it was a fun time.
Andrew: What does it cost to create and
Yeah. It’s, it’s like sense. Um, if you go straight to the water manufacturers, which we did. so, so that was the other thing. It was just an incredibly, a case is 30 water bottles. It costs us like a dollar, you know, or less to drop that off. And it’s free marketing. Um, So, so that was kind of that stage of the business.
Very hacky. We, we spent no dollars on like marketing. We had my co-founder was our only marketer in the business and we really just let the users come to us. We listened to their concerns. We waited until we had product market fit before expanding outside of our original market.
Andrew: Let I’m sorry. Let me pause here for a second. So it was picking one or was it two markets to go into, was it two
Joseph: Just one at
Andrew: one at first?
Joseph: just one market.
Andrew: Giving out water bottles, and that makes a ton of sense. You don’t even have to pay the, what is it? The 5 cent, uh, deposit, right. That you have to pay when you from the grocery store.
Clever idea that got you supply. How do you get demand then?
Joseph: So, so demand. Um, we, we, there, there was kind of a few different ways. We, we got demand in the early days. Um, one, of course, when people are searching for storage, it’s all about finding what channels. Are people using to, to get that demand. People were already looking for storage, we didn’t invent storage.
And so, so we just had to go where they were. And in the, in the early days it was really simple. Um, it was, we’d either pay for like a Google ad, as people were searching in our local market of Utah. Um, Or we’d like throw up a billboard in a high density area and, and let people know that we were available like as a, as a cheaper, closer, safer option for storage.
Um, when, when we decided to expand outside of Utah, we very much followed an Uber playbook, um, where we had, you know, a GM for the market, a market launcher kind of located in the market. Uh, so very much like Uber Lyft style launch playbook, um, we, and that was very successful for us. We, we, we spent the time to get it right in Utah.
So when we launched in LA, which was our first market outside of Utah, I, we got as many hosts in the first seven weeks in LA, as we’d gotten in the, in the first year and a half in Utah. So we were able to really accelerate it, speed it up, um, do more scalable, kind of systematic.
Andrew: How’s this coming across, by the way we are, as you might see from the trees behind me getting a lot of wind here. I love this part of Austin just because it’s so windy. Are you picking it up on Mike?
Joseph: I’m not picking it up. Nope.
Andrew: this is amazing. This is great. Um,
Joseph: I, I love Austin. My, my, uh, I have a lot of family in, in Austin and around there. Beautiful, beautiful place to.
Andrew: It is, it does get super hot. And I was worried about not being able to be outside this time of year because it’s over a hundred, but we kinda lucked out this area right here so far has been breezy, but I’ve never spent a summer in Austin. So who knows, we’ll probably end up leaving every summer. Like your friends do.
Joseph: Well, I’m I’m from Vegas. So nothing’s hot.
Andrew: Yeah. What do you do when you were in Vegas? Growing up? Did you take off? No. Your family would just stay there, right?
Joseph: Yeah, I’m from a little tiny town outside of Vegas called Boulder city. It’s right by the Hoover dam. It’s about five minutes from lake Mead. So, so just grew up doing a lot of boating and, and, and fun stuff around.
Andrew: What kind of a kid were you? Um, I feel like you were kind of driven the fact that you would get to go and work for Harry Reed and then Bain and company tells me that you’re you are right. And I’m actually even watching your eyes. I. What was it like?
Joseph: Yeah. Yeah. I mean, I was, I was, uh, you know, if I had to describe my, my high school, it was like very into sports, very into. You know, a as are we all right? You know, it seems like what everyone’s
Andrew: wasn’t when I was in school, but now it was, I used to be into rush Limbaugh and then the conservative Chronicle, which was. This newspaper, essentially, that would then go and license all the columns of every conservative person. I only got that cuz rush Limbaugh recommended it and I would drive everyone crazy talking politics to the point where now I don’t talk politics at all.
Cause I know that people couldn’t stand me cuz I would talk politics so much. Was that you?
Andrew: It was.
Joseph: Yeah. Uh, I, you know, I, I didn’t, I didn’t, I don’t know that I had the self-awareness you did. So I don’t know if it drove people crazy or.
have the self till later.
Joseph: in my junior year of high school, I, I took a bill through the legislature. So I was, I was very into it.
Andrew: Wow. What was the bill and what did you think you were gonna be when you grew up?
Joseph: it, it was so Nevada, um, heavily reliant on gaming income, right? Just the, it pays for everything, the taxes on gaming pay for the schooling, pay for the infrastructure kind of everything. But, but when I was in high school, this was kind of when other states were starting to open up gaming. Right. So you, you had gaming opening up.
In, in a lot of states being legalized and the thought was, Hey, we need another industry. We need another like core industry to power state revenue. Um, and what do we have? You know, what are our natural resources? Well, Southern Nevada has the highest solar, you know, potential of any area in the world. Um, this was before they’d built a lot of solar plants down there now, Southern Nevada’s home to like the largest solar plants, the.
Um, uh, same in the desert desert winds, highest wind potential. Um, up north, you have extremely high by Tahoe. You have extremely high geothermal potential. So it’s like Nevada should be the renewable capital of the world. Um, so actually it was kind of a marketplace bill. Uh, I I’ve never really thought of it that way, but, but kind of thinking of it from neighbors standpoint, the bill was to allow anyone to put solar on their roof.
Or anything and tap straight into the grid and get essentially paid for whatever energy they’re producing to the grid. Uh, have the, the utility company pay them for that energy, um, and kind of crowd source energy to really spur investment. So,
Andrew: Wow. And so that worked and it’s still on the books now, I think, right.
Joseph: No, it was, it was like my first like reality check on, on the political system. I got, I got all the votes I needed in the house and I got a joint sponsor in the Senate, all set to pass. Um, and then the, the main utility company in Nevada. Um, didn’t love it. They made some donations to the chair of the commerce committee where my bill was and the commerce committee chairman tabled the bill and wouldn’t let it get to a floor vote where I had all the votes to pass.
Andrew: Oh, wow. That’s one things that sucks politics versus entrepreneurship. Got what?
Joseph: yeah. Yeah. Got, got derailed by the political system.
Andrew: Hmm. Yeah. You know what, that’s why that’s another reason why I gave up politics. It just feels like so many people arguing and not getting anything done and almost through arguing, making their case worse versus entrepreneurship. You could just build the thing you wanna see in the world. And there’s less resistance, more support.
And I wanted to create Mixergy as a way of championing it, but now I don’t even think it needs championing. The world recognizes entrepreneurship is the future. All right, let me take a moment. I wanna talk about my. I wanna talk about my sponsor it’s lemon.io. I’ve been saying up until recently that if Joseph, if anyone wants to hire a developer, lemon has phenomenal developers at incredibly good prices.
What I should also emphasize is that it’s more than that. They will help you find your startups, what they call chosen. One the. Person who’s supposed to be the perfect fit for your company in less than 24 hours. And you don’t have to do the whole scrambling posting ads looking through results and all that, because that’s what they do at lemon.
They will do it for you. And they also have a zero risk. Replacement guarantee. You’re not happy. They’ll take care of you and they do it all with their custom assisted matching. You tell them what you’re looking for. What’s the project you’re working on. They will find the right person for you. So if you’re looking to hire developers, go to lemon.
Yes, you’ll get a great price, but you’ll also get quick match and zero risk replacement guarantee. If you use my you’ll even get a lower price than everyone else there gets everyone else gets it is lemon.io/mixergy. If you’ve got a project. That needs a developer. If you’re looking to hire developers, you need to do it fast.
Or if you’re looking to hire developers and don’t want the risk of a full-time person on your books, go to lemon.io/mixergy, and they’ll take great care of you. I’m hearing them advertising everywhere they must be doing well. All right. So once you figure that out, how much of a playbook did you put together and, and what did that playbook look like?
Joseph: Yeah. So, so we kind of really honed in on this Uber playbook. Uh, we launched several more markets across the country, California, Texas, Florida, New York, a lot of the largest markets in the country, um, that was working for us. Um, very boots on the ground, people on the ground, going to all the local events, getting involved in the community.
But as we did that, um, we started to notice. That we were getting users in markets we hadn’t launched yet. Uh, our, our website was of course available everywhere. Like we don’t restrict the website and we were starting to get users signing up and listing space in markets that we’d never spent a dime of marketing dollars in, or we’d never made any sort of efforts.
And then those users, uh, albeit at a slightly slower rate would actually get rented all without us doing anything. And it was kind of this feeling of like, man users are gonna use this product, whether we like it or not, you know, kind of, uh, so, so as that organic activity started to happen, it started to force us to think, you know, should this be more of a national solution?
Is should, should we be promoting this more on a national level instead of doing this market by market Uber style approach. And that was a hard decision to make because. uh, we had this playbook that worked really well. Um, and it’s always scary to abandon something that, you know, that works. And also going to a national scale, we just felt like we could spend a lot of money waste it, and no one would notice, right.
We, we would just be a drop in the bucket. And so, um, we, we made the decision to kind of take the plunge. We went fully national. Um, which required like 10 Xing our budgets. And, uh, fortunately it worked, it just, it worked even better than the, the regional kind of launch playbook. Um, it, it was the best thing we ever did in the business and, you know, a year and a half after pulling the trigger on that, like I said, we now have active users in, in pretty much every city and every state in the country.
And that’s, that’s something that’s kind of unique about our business. um, we, we have users in more cities probably than Uber or Airbnb in the United States. Um, and, and that’s not to say that we’re larger marketplaces. We’re a larger marketplace. We’re just a more distributed
there are more people who are using neighbor to store their products than taking Ubers.
Joseph: No, not more people, but people in more cities and that’s just because the models are different in Uber. You can’t take an Uber in, you know, Clinton, Utah, because there’s no taxis like the concept of a taxi doesn’t exist there. It only exists in like big destination cities and. Uh, Airbnb similar, it’s a destination website.
You you’re gonna find Airbnbs in large cities. You’re also gonna find Airbnbs in very small cities, but only cities that people visit. So you’ll find Airbnbs in salt lake city, San Francisco. You’ll also find Airbnbs in, uh, Sedona, Arizona and Moab, Utah, but you’re not gonna find Airbnbs in Clinton, Utah, cuz like no one travels.
Um, but with storage, like I mentioned, at the start of the, the show, you go to a town that doesn’t even have a post office, they’re gonna have multiple self storage facilities. So we can have, we can have hosts in every city in the country, you know, even a got
Andrew: I guess I, I was wondering about that because now that I left the big city, I’m, we’re still in Austin. Right. But I’m a little bit in a smaller city than I’ve been in. Uh, just about any other time in my life. I notice that people have space. They have big garages, they have extra, uh, closet space.
They have extra bedrooms.
Joseph: Yeah. When we started this business, um, we were, we were positive. We were sure that this was only gonna work in large cities and suburban markets.
Joseph: So the fact that rural worked so well, um, was a complete surprise to us. Like we just, it totally blindsided us. It was a, it was a learning kind of, one of those learnings of like, oh, wow.
We didn’t understand. These use cases and people use storage in the tiniest towns. They, they may have a large lot, um, but their home is only so big and they need to store a bunch of furniture or, or they may have, you know, a boat or, or toys or something that they wanna store in a storage unit. And they don’t wanna build a big
Andrew: kind of warehouse
Joseph: for them. And, and so there’s all these like use cases.
Andrew: Yeah, I think I think of it as just, I can’t fit things in my apartment. What do I do with them? I moved out of one apartment into another. Got it. It’s more like you have stuff that needs to be stored that you’re not using you’re tr I guess for me, it would be we’re traveling to another, uh, another country.
I just need to put my car somewhere. Where do I put it and know that it’s gonna be safe and not very expensive. The the original playbook though. What was it like? Can you take me through the, the process of like, I guess, how do you create a process doc that allows a stranger to run basically their own independent country in a different city.
Do it as well as you would do it and allow you to grow.
Joseph: Yeah, I, I definitely don’t. I definitely don’t have all the answers to that, but, um, you know, I think, I think the masters at this, you know, are the, are the delivery marketplaces like DoorDash? I look at them and they just run such an efficient market by market launch playbook. Um, but things we did. Is is we mapped out exactly.
Like you’re saying it it’s all about the communication. So we had my co-founder who ran marketing at the time. He had a, a like first 100 days checklist and, and it, it stated everything from like, find these events, go to these events. You know, find these groups, go to these groups, drop off these water bottles, uh, flyer, these boat shops and these, and these, uh, these different kind of local businesses.
And it, it just walked through it step by step. So it was so easy to just wake up and say, I’m gonna do these like 10 tasks today. We sent them materials. We sent them everything they needed so that like, they didn’t have to worry about going and getting all that. That was all. I just kind of Shipp. Uh, to the market.
And I think making it as easy as possible that said, we don’t do any of that anymore. Right. We, we don’t have a single employee outside of the state of Utah. We’ve moved to a fully headquarter centric model. Um, we brought all of those market launchers back to, to headquarters and we, we run everything now from here, whereas before it was all distributed.
Andrew: I just emailed your team. You’ve one of the best teams that I’ve ever worked with. They’re so freaking on it. I actually thought that they were professionals like professional marketers or something for you. And then this morning I looked and I realized, no, they email@example.com in their domain. I’m sending them an email asking if they’ve got photos of those water bottles, I’ve gotta see what they.
Bottles look like, um, what did you do when to go to marketplace? I feel like you had to get an advisor or somebody who’s been in it. You’ve gotten really good over the years of getting the right people around you. Who did you get, who was helping you put this together?
Joseph: Yeah. I mean, we’ve had, we’ve had awesome people invest in the business that, that have been helpful along the years. We had, you know, here, here in Utah, the largest marketplace is overstock.com. Um, so we had the CEO of overstock invest. Uh, then then more recently we’ve had the, the first CEO of Uber. Uh, we had, uh, CEO of DoorDash, Tony zoo invest stock X CEO,
Andrew: This is Ryan who invested Ryan
Yeah. Yeah. He’s
Andrew: so are you good about going to them for advice? How did you get more out of them than someone else might.
Joseph: he’s got, I think, I think you have to, to understand, um, like what, and when, so there have been different times in the business where we’ve gone more to. than another and advisors, I think are happy to help as, but, but you have to drive it, right? Like, and, and, and someone who is, is, is gonna be helpful.
They’re never gonna drive the relationship. You have to drive it. And you, you have to realize that you don’t need to keep up with all of them all the time. You can keep up with them during the times where. There’s the most leverage to do that. And that’s what they want to do too, because they have busy lives.
They have very complicated things they’re running. And then I think the last thing is. Well, you have to realize there is no one size fits all playbook. Like there are no, you know, Ben Horowitz in his book. Uh, hard thing about hard things talks about how there’s no silver bullets, there’s only lead bullets.
Um, and, and there’s no silver bullets. Like our marketplace is totally different than every other marketplace that’s been built. And we have to figure out the right way to build that. And there’s of course, learnings we can take. Um, but there’s also things we’ve made mistakes before by looking at other marketplaces and trying.
You know, imitate things they were doing, and those ended up being mistakes for our business because we’re just a different business.
Andrew: What’s one of the hardest things that you had to do. It seems like this kind of worked pretty.
Joseph: I I’m, I, our, our PR team must be doing a good job if that’s what it seems like. Um, so the, the different stages have had different, hard things. I think, um, in the seed stage, the hard thing was, you know, doing everything and just being so, so, so scrappy, like we were, we were so cost conscious when we get pizza, every Wednesdays we would.
Take the little receipt that had the, like you get 10 cents off your next pizza and like go cash it at the pizza hut. and, and I’m glad we did, because with that limited amount of capital, it’s really difficult to build a marketplace. Like we’d be bankrupt today. If we hadn’t been so capital conscious to get ourselves to the place where we could raise the next round effect effectively and efficiently.
So like that came with a zone set of hard things. Just, just very tight. Everything’s tight. No one’s making any money at the startup. You know, everyone’s taking these, these massive, massive pay cut. Uh, to come work for us in exchange for equity and, and just being super cost cost conscious. And everyone’s wearing 10 hats.
Whereas, um, you know, after raising the B a lot of the, the, uh, the challenges were scaling people, right. And scaling culture and scaling processes. And how do we, how do we preserve this super neighborly, tight knit culture that we’ve always had, where we all know each other, we all know each other’s family.
How we preserve that as we, as we, you know, 10 X, the amount of employees we have in the business.
Andrew: Yeah, I would even go a little further back. I wanna understand where did the money go when you were so cost conscious that you had to watch each 10 send coupon? What was it that you were spending money on?
Joseph: At that stage, I think you’re trying to, so like, we would not use like any software at all, almost to a fault, like, I’m sure there’s, there’s some things that we would’ve accelerated the business that we should’ve just purchased the dang software, but like, We would not use basically any SAS software. We didn’t have slack, we didn’t have, you know, anything.
So all of the money was, was going to people to build the business. Specifically, we focused more on building the product team out the engineering team than on building the marketing team. And then the rest was going towards, you know, experimental ad campaigns. And it’s basically, you just had two costs and that’s it in the whole business people and, and some ads to get the word out and.
You don’t spend money on anything else? We, we, freeloaded off of our, our seed investors. We officed with our first seed investor for like the first eight months of the business. Then we office, they kicked us out. And so we went and office with our other seed investor for like the next eight or 10 months.
And then they kicked us out. And so we went and bought this. We, we leased this. House that we found. Um, and, and it looks identical to the, the house in the Mr. Rogers TV show. It’s, it’s like a carbon copy and someone had taken the inside and converted it into office space and we paid $1,200 a month for, for 2,700 square feet.
And, um, you had engineers on the bottom floor and customer support on the top floor. And, and that, that was where
Andrew: You know, part of what you might be seeing as my eyes are dif drifting away is I’m looking at neighbor as we’re talking. And it’s hard not to start to think. Well, this makes a ton of sense. Why am I not putting extra storage in here? Look at what these people are offering. They’re just offering space for a car they’re people who are offering just driveway space for like 80 bucks in Austin. which makes sense.
Joseph: Yeah. And, and some people get really entre. What I love is, is marketplaces create almost shadow markets. Um, and, and there’s, there’s some really entrepreneurial people out there. So there’s a lot of people there, your average user. You know, they’re, they’re just renting out a spot. They make 200, 300 bucks a month.
Right. But, uh, then, then there’s these power users that are like, you know what, I, I could make a lot of money off of this and they’ll, they’ll go and, and take a property and they’ll make $60,000 a year. Off of that property. And we, you know, we have some of these, these res that make a lot more than that, you know, they’re listing millions of square feet and, and so they’re making inordinate amounts of money on the platform, but I’m just talking, not even like, not even the res I’m just talking individual, like people, homeowners that get creative, get entrepreneurial, have a big lot or something, or, or a big custom garage they’ve built and, and make $60,000 a year on the platform.
Andrew: So they might just build a customer garage and list all the space in it, a neighbor for anyone to come in. And they’re essentially one of these like Manhattan mini storage facilities that I used to use. But in a neighborhood and they’re making a little bit extra money. Do you have places where you have those stories?
I see. I don’t know what it is, but I’m kind of a sucker for these stories of people who are doing well on Airbnb or hip camp or something.
Joseph: we just, we just had a story run yesterday, I think in business insider. Uh, about a woman who’s, uh, I can’t remember what the amount of, I wanna say it’s $26,000 a year and they do a profile and they show photos of her space and, and, you know, business insider does a good job of kind of laying out how she got started.
Uh, we we’ve got, um, I, I just heard this story. Uh, our, our PR team was telling me this story about a user in New York. Who’s kind of taken it upon himself. He wants to become like the storage czar of New York. Uh, he’s a he’s he got his start as a host on our platform and he’s like purchasing properties and expanding his empire and like wants to use our platform to be basically like dominate this, this sector.
Andrew: type of property is he getting?
Joseph: He’s, he’s buying like, you know, little parking lots, uh, around New York and, and, um, I, I think he’s got some interior spaces as well. Just kind of little odd, little odd nooks and crannies around the city. He’s like, Hey, these have a use case. They’re not being used effectively or efficiently. I can make more money off of ’em.
So let’s, let’s kind of gobble these up,
Andrew: Are people,
Andrew: people also creating like new locks for each? Like, are they taking a house maybe, and then turning each bedroom into a storage facility and then adding special? To it, they’re doing the whole thing. right. I should
Joseph: Yep. Yeah. So you see everything in between. You see some people, they make zero improvements to the space, they just list the bedroom and you have to ping them. If you wanna get let in, right. They’ll they’ll let you in. Um, and then we have other people that put a whole smart lock on their side door and you can have access to the smart lock it’s, it’s kind of everything in between.
have. Yeah, we’ll, we’ll have these big, these, these office owners. If someone will have an office space, they’re no longer using. Some of them will build out full units, storage units in the office space. Others will literally just put tape down on the floor and start renting it out and they’ll control the access.
Um, so, so you can work with zero capital improvements. You can work with full capital improvements. It just depends on, on what you wanna leverage.
Andrew: What’s the, uh, what’s the insurance situation. If somebody steals from somebody else’s, um, storage.
Joseph: Yeah. So we’re the we’re hands down the safest storage platform in the country. I think the average break in rate right now in the storage industry is like one in 10 storage facilities gets broken into every single year. And that’s because again, they’re all zone industrial. They’re all in these. The the, the, the biggest expense for storage facilities land.
So they purchase like the cheapest land they can get, uh, over 50% of storage facilities have no security cameras or anything like that. And stuff gets stolen. Cuz people know that there’s items there, uh, on our platform. You’re storing, uh, in a, you know, with a neighbor, right? We’re called neighbor for a reason.
Residential areas, according to the FBI stats are like 10 X safer. If you look at our internal platform stats, we’re like a thousand times safer, uh, than a, than a storage facility. On top of that on top of the fact that it’s already just safer, we offer the best insurance in the country. Uh, for the host, we provide a million dollar G.
um, just like Airbnb million dollar liability
Andrew: if somebody damages their house or steals from them, you’ve got a million dollar insurance on them.
Joseph: Well, you, you’re a, if you think about it as a host, you’re a business owner, you know, you’re, you’re, you’re technically renting out your space as, as a business. And so there’s liability involved there. Like what if someone slips and falls on your. Right. And, and, uh, there’s ice on the driveway and they slip and fall.
You could, they could Sue you and we’ll cover you even in that, that sort of scenario. And then on the flip side, um, we offer to our renters property protection plans that they can purchase, right. At the point of checkout, it’s the easiest of any storage, most storage facilities. People don’t know this, but they don’t ensure your items.
Andrew: know, I, I had no idea this happened to my mother-in-law. She had stuff in storage in San Francisco, in the city, cuz she didn’t wanna drive out far and somebody broke in and stole some things from her, thankfully, nothing too badly, but they stole and she was shocked. They didn’t have cameras. Which, why wouldn’t you have cameras?
It’s so easy and second, no insurance on it at all.
Joseph: I, I had an investor call me like month after they, we closed the round and he was like, Hey, I remember you talking about the safety stuff. My son just called me. His whole facility was broken into. Uh, he went down there and he said, you guys are gonna replace this. Right. And the storage facility was like, no, we did.
We, all we do is rent you a place to store your items. We do not cover anything. And he was like, well, I’m never gonna use you guys again. And they were like, Okay. We don’t care. We have a waiting list of like 20 people that want that unit we’re so full. And so we are, you know, you can purchase a plan up to $50,000, um, on, on our, on our site for whatever you’re gonna be storing.
We have custom plans for whatever you’re gonna be storing, and then we will replace anything if there’s any sort of damage, but there almost never is. So, um, you don’t have to worry about it.
Andrew: You know, I’ve seen this happen with other interviews that you’ve done where the guest, I mean, the host starts asking you questions about how does it work because it’s such a fascinating model instead of how did you build a business, which is what we started out here talking about. So let’s let me say this interview is fine.
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Send in blue.com/mixergy gets you a low price for great service. Let’s come back into business. I’m wondering how do, how does somebody else find this? Like you’ve said, look, you can’t have a small market, which made me think, you know, people have pitched me on why don’t we just create studio space for podcasters, podcasters need it.
First of all, podcasters are pretty fricking cheap. They could record anywhere. They don’t need to pay. And they’re not that many of them that you need this. How would you think about this? Do you see a space that could, that could have the neighbor approach? What’s another market that could have that kind of marketplace.
Joseph: Well one, um, that I, that there’s actually a few companies in this space that I’ve been fascinated to see. And I think it’s a, it’s a great disruption. And this actually goes against the trend. Normally, what I, what I would say is that. You shouldn’t, you should not disrupt an industry where there is no existing industry, cuz it’s hard enough to change behavior.
That’s what we’re doing. There’s already an existing storage industry and we’re changing behavior, but it’s 10 times harder to create new behavior. and so I’m fascinated to see this working so well. There’s, there’s a few startups that have started disrupting the laundry space, where it’s a marketplace.
They will come pick up your laundry. They will take it to someone who, you know, lives in the area. That person will do your laundry. for you. And that’s not an existing rental market, by the way. There’s not some like big laundry, right? If people just do their laundry at their home. So what you’re disrupting is the cost of purchasing a, a, you know, washing machine and the time it takes the, the, the labor it takes to do your laundry, but it turns out people have a, this is a big pain point for people.
And because. Even though the cost isn’t super high on the laundry side, the time it takes to do your laundry is so burdensome to people that they’re willing to pay hundreds of dollars a month to have their laundry done by someone else.
Andrew: sense. There that laundry service. I forget what it was called. Washio that started out and then closed. Why do you think this approach is working and Washio didn’t.
Joseph: Well marketplaces, there’s usually a big graveyard. Um, you know, you see this in. In, uh, you never know who’s gonna win. You see this in like the delivery wars, right. It was Uber eats had just dominated the space and GrubHub. Right. And then GrubHub started sliding. Uber started taking off and, and Postmates and DoorDash, like hardly had any market share.
And then who won that space? DoorDash won that space, even though they were like the furthest behind all the rest of them. Um, if you look at the, the, you know, kind of marketplace for self storage, we, we didn’t realize this when we started the business, but we got six months, eight months into the business, we started doing more market research and we realized there had been hundreds of companies that had started this exact same concept.
There was a, there was a massive graveyard. It had been like every single year. Five people started this idea. It lasted for six months and then it failed. Um, so, so, you know, I, there, there’s a couple I’ve I’ve heard of here in Utah, one’s called, uh, um, Suha another, one’s called Dre, uh, laundry that I think are both doing a really good job.
And I think they’ve learned from some of the failures of, of Washio and, you know, it’s, that’s kind of how marketplaces go.
Andrew: saying it’s just natural for them for, to have a lot of people. And what makes one work where another wouldn’t it’s there’s not a checklist that there that you need. It just sometimes works sometimes. Doesn’t what about Omni? I kind of liked Omni’s idea. I was one of their early users because a friend, um, asked me to give it a shot when he was working there, they came and they picked up my stuff with this guy who literally had white gloves, I think put, put it in.
I didn’t even need anything stored. I just wanted to check it out. And I loved how they took photos of my product. And then the next step was you could rent it out. It seemed to make so much sense. All the stuff that you’re not using anyway, makes some money on it. Why didn’t that work?
Joseph: Well, the, uh, uh, I think any in any business, if you ever try to crack a logistics problem, That is like the hardest problem you can crack that is, that is, there is a reason ups and FedEx have cemented their places. And that is because you can’t just stand up another FedEx. Like why doesn’t someone go disrupt, you know, ups or FedEx is because they, they have this insane ability to coordinate.
People all over the world in a way that’s efficient and doesn’t waste time. If, if you are having to pay for trucks and having to pay for labor, and those trucks in labor are just sitting there going unused, um, and, and are not efficiently being used a hundred percent of the time, always stopping at a house which hard to do in storage.
It’s not a high, high frequency. Purchase to like always have a, a truck driver stopping at all the places, unless you like own that local storage market. So, so you could maybe make it work. If you had full ownership of the market, you’d have enough players, but at any given time, only, only like 10% of the market is turning over.
And so there’s just not enough people. And, and it, those, those labor and, and, and capital expenditures become prohibitive. Plus it wa you know, it wasn’t a marketplace. It was a marketplace, but they also had to buy the space. And that’s the big unlock for our marketplace is we, we can take 20 million in venture money.
and turn that into the exact same square footage that it a, that would cost a traditional self storage facility, like four or 5 billion to build. And so we have huge leverage on the supply, cuz we’re not building it. We’re just crowdsourcing it. We’re just saying, Hey people come take this unused space that, that you already have, and we will, we’ll help you earn money off of it.
So. Yeah, it, it wasn’t, it wasn’t a true marketplace in, in that, uh, regard cuz of the capital
marketplace at all. You’re saying also they had to spend a lot of money on. They probably had to spend a lot of money on facilities. You, you don’t know the business? I don’t think, um, from the inside.
Andrew: they also had all the logistics, headaches of how do I get this product back to you if you’ve rented it and how do I get it to the person?
I’m sorry, if you, if you stored it with us and how do I get it back to the renter who needs it that night and pick it up from them the next day and do that all where I forget, like I would
Joseph: do that all
Andrew: Right? Right. And if it’s a $5 rental, they can’t charge me more than $5 for pickup and drop off.
Joseph: Exactly. And, and people are super cost conscious in the storage industry. They, they want what’s cheapest. And so if you’re gonna be a premium product with a premium service, that’s difficult. I, I kind of actually think there’s some care comparisons to be made with WeWork in a way. Right. We, WeWork was kind of built as a tech company, but.
They were taking a lot of venture money and putting it into physical assets. And you don’t, you don’t get leverage on pH physical assets. You get leverage on software.
Andrew: Do you think Joseph, that the idea of, I mean, it’s still a lot to be unlocked and having the things that people don’t use around their house. Turned into rental, uh, money. Do you think that if it was more of a marketplace where people just took photos of the stuff in their house that they weren’t using, like maybe they had a bike that they hadn’t used in a while, take photos of it, list it for rent and then have the person who wants to rent it, come to their house to rent it and pay a fee that way.
Would that work?
Joseph: I absolutely think there’s a, there’s a massive opportunity for a hyperlocal. Uh, marketplace, that’s actually part of our long term vision. As a company, we, we didn’t call this company. You know, we called it neighbor for a reason. didn’t call it, store this or stash that or something to do with storage.
And that’s because our vision for this, we think our, our most valuable asset on the platform is that we have neighbors in every single city, in every state, in the country already opening their space to each
Joseph: And as, we continue to grow that hyperlocal network, that’s never been created before.
We wanna allow users on our platform to do all sorts of things for each other, not just open their space for storage for each other, but you know, you know, come U come use my basketball court. Come, come. You know, I have a $2,000 table saw you don’t wanna buy a $2,000 table saw, come use my, we wanna bring back this, this, this nuclear community that used to kind of exist, but is fallen away as people don’t talk to their neighbors anymore.
That’s our mission as a company to bring that back.
Andrew: It was by the way, called store with neighbor.com I think, was the domain or, or was it still called neighbor back?
Joseph: What we always called the company neighbor. Um, we, we actually, before store with neighbor, the domain was neighbor spelled of the Y. Um, so N NEI, Y B O R. Um, when we first started it, then we shifted to store with neighbor.com and then we finally got our hands on neighbor.com.
Andrew: great freaking domain. What did that cost?
Joseph: so the, you know, it was kind of one of those classic situations where the, the guy that the, the dude had owned it since 1997 just sat on it. Right. And we pinged him, uh, when we first started the business and we said, Hey, can we buy this? And, and, you know, he said, no. And then we pinged him again and, and he said, all right, here’s the price?
And it was some, some exorbitant price. And we were like, okay, we’re not gonna pay that. So we walked. Uh, and, and we just kept pinging him and walking away every six months for a couple of years. And finally the price came down. Uh, and what we did remember, we were so cost conscious is a seed seed stage company.
The price like fell in half. So we, we purchased it, but we turned around and we reversed financed it. Um, so we actually just made a monthly payment on it. Uh, we, we owned it, but we made a monthly payment on
then when we raised
Joseph: the, a round. To, to somebody Yep. got like a little local investor to like, give us basically the money we’d paid for it.
paid like, you know, a, a thousand bucks a month or something. And then when we raised the, a round, we just paid it off. So
Andrew: How much was it?
Joseph: how much was
Andrew: Yeah, that seems like a great domain.
Andrew: wow, great price.
Joseph: I know.
Andrew: And I could see also how it wouldn’t be useful for anyone else. It’s not like people are typing a neighbor and then signing up for insurance or something. There’s not affiliate commission. That’s a natural from it. It just makes sense for your model.
Wow. Joseph, what a great freaking business and. I think, I, I think I might want to try having somebody come and use the shed. I don’t even care so much about the a hundred or $150. I just wanna see how this whole thing works from the inside. It’s it’s a fascinating model and it kind of makes sense the way that there’s some people who are like buying properties to list on Airbnb.
I think they’re gonna be more and more people buying just empty lots to list on hip camp for camping. I could understand that there’d be people who just say. I’m gonna buy the cheapest property in my neighborhood. Cause I think like, especially you look at Austin, you see, there are these really beaten down things that eventually will get destroyed and replaced say, you know what?
It’s still in a decent location takes maybe five extra minutes to get to, I’m gonna buy that. I’m gonna turn that into a neighbor storage facility. Maybe put some locks on the thing, make it easy for people come in and out stuff like that makes total sense. And of course for parking. All right, thanks so much for being on.
Joseph: Thanks so much for having me.
Andrew: All right. Thank you all for listening. And I especially appreciate it. We tried this before. I had a mistake in setting up. I love that. Now I’ve been able to set up recording outside my next problem. First of all, I want to hear from people. Can you hear clearly, is this working out? And my next problem is.
Austin’s gonna keep getting sunnier and sunnier. I need more sun protection, but I do not want to go inside. All right. We’ll work on that. And Joseph you’ll work on, on changing the neighborhood, uh, experience. Thank you. And thank you all for listening by everyone.