Putting a New Economy Spin on an Old Economy
Founders: Chuck Gordan, Mario Feghali
Year founded: 2009
Before Chuck Gordan left UCLA for a junior semester in Singapore, he was faced with a relatively mundane but annoying problem: Where would he store his belongings while he was gone? There was no inexpensive, elegant solution, so he ended up putting half of his stuff in the attic of his roommate Mario Feghali’s house in Bakersfield, and the other half in his girlfriend’s garage in San Diego. But while he was gone, he kept thinking that there should have been a better option.
“I was an art major, but I took some entrepreneurship classes, and I learned about the startup world, which I knew nothing about,” Gordan recalls. He came up with an idea for a website that would link people who needed storage space with individuals who had space to rent. “You could compare it to Airbnb for storage,” he says.
When he returned to UCLA in the summer of 2008, he convinced some family members and a few friends to bankroll his idea, which he decided to peruse with Feghali. “The whole world was crashing and burning, but we got some good press,” he says. The partners signed up a few thousand users on their site, but their fledgling company couldn’t seem to make money. “People would get close to making a transaction and then get scared,” says Gordan. But he noticed something curious about who was using the site, which was designed to attract private homeowners. “All these mom and pop storage companies saw us and were signing up and we thought ‘wow, they must be desperate.’” That was the "aha" moment that inspired Gordan and Feghali to make a critically important pivot: Rather than modeling the company after Airbnb, they would embrace the Hotels.com model. That meant giving small storage companies, which are typically not very tech savvy, the opportunity to list their companies online at SpareFoot. Potential customers could then find, compare and review the companies according to their needs.
To further develop their plan, Gordon and Feghali applied to several incubator programs and were accepted at Capital Factory in Austin. So the newly minted graduates headed to Texas in May 2009. There, they received $20,000 in seed money from Capital Factory and advice from twenty mentors on everything from business development to marketing and sales, to company culture. The relationship with Capital Factory ultimately led to another $4.5 million in venture capital funding and a decision to remain in Austin.
SpareFoot now works with more than 6,000 storage companies nationwide and has purchased or licensed other domains such as selfstorage.com, selfstoragedeals.com and selfstoragefinders.com. “Our pitch to self-storage companies is if you have vacant units, we’ll send you tenants, and we only charge you if they move in,” says Gordon. SpareFoot charges companies a one-time fee, according to the size of the unit that is for rent.
Getting mom and pop storage companies onboard is no easy task. “It’s a challenge for our sales team every day,” says Gordon. “We need to communicate that today’s consumers are online and they need to be able to find you online. Our role is to help the mom and pops compete online with bigger companies.” To that end, the company also provides storage companies with templates for basic websites, helps them set up Google Places pages, and coaches them on how to brand themselves online with compelling content, including video.
With 40 employees and 760 percent sales growth last year, Gordon is confident that the company is on a roll. And a sluggish economy is no deterrent, he says. “What drives storage is people moving, and people move in good times and bad.”
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