Barrett O’Neill Builds OnDemand Storage – A Tech-Enabled Storage Service Business
For Barrett O’Neil, building OnDemand Storage was a no-brainer. As an entrepreneur at heart, Barrett knew all along that he wanted to build something that gave him more control over his own time and finances. When Barrett graduated from Babson College, an entrepreneurial focused school and landed his first internship at a bank for $14/hr, he soon realized that the pay was not going to cut it for him. So together with his friend, they came up with an innovative business idea.
They decided to use up the extra space in the basement of his parent’s house, as a storage facility where international students at his college could store their things. He coded the website himself, his friend put fliers under every door on campus and they did all the heavy lifting themselves. Soon enough the business grew to 22K approx. in revenue.
A lot of the lessons that I learned in getting to a top university for my sport baseball, have carried over into business really well, and it feels like they’re pretty similar in terms of the competition and just having to show up when you don’t feel good and perform. So I think sports are a great lead into business for sure.
Barrett O’Neil’s OnDemand Storage takes things a step further from your average self-storage solutions as it offers pickup and delivery options for its customers. As a tech-enabled storage solution, it offers a safer, more efficient storage facility for customers to put away their items, whether they’re downsizing their homes or require temporary storage for their business goods.
Listen to the full podcast to learn all about Barrett O’Neil’s OnDemand Storage building journey and be inspired to set forth on your own entrepreneurial goals.
Barrett’s Book Recommendations:
Where to Find Barrett:
Follow him on Twitter: @barrettjoneill
Find him on LinkedIn: barrettoneill
Where to Find OnDemand Storage:
LinkedIn: OnDemand Storage
In today’s episode, we have Barrett, the man behind OnDemand Storage.Barrett, welcome to the show.
Thank you. Thanks for having me. I’m excited to be here.
Hey, man, maybe a quick question would be for those who don’t know you, a quick intro, maybe the very first thing is probably you know him as the founder of OnDemand Storage. On top of that, I just found out yesterday that you are an ex Bain Capital associate. Is that correct?
Yes. I worked at Bain Capital for a year out of college, and I quickly found out that working nine to five or should I say like seven to ten maybe wasn’t for me, but it was a great experience and I can explain a little more detail about where that fits into my story, but it was a fun year but also let me know that I think I’m a lifelong entrepreneur hopefully.
And he’s quite popular on Twitter as well. Maybe to get started, could you tell us where did you get started, especially with OnDemand Storage? What’s the backstory behind it?
Yeah, for sure. So I graduated from a school right outside of Boston, Massachusetts, where I’m from called Babson College. And Babson is an entrepreneurial focused school. But there’s a really large international population. So over the summer, I landed an internship at UBS, the bank. And I think it was like $14 an hour. And so I was doing the math, extrapolating it out over the summer. And I think it was like five grand or something I was going to make after taxes.
And I was like, oh, man, this is not enough. So we came up with this idea to store the student stuff, the international student stuff. And so I coded a little website. My friend put Flyers under every door and car on campus. And what ended up happening was we got 67 students, I believe, and we stored them all in my parent’s basement. I lived like 20 minutes from the school, and I think we did roughly like 22K in revenue.
I always say it was the best business ever. It was like 97% profit. It was awesome. Yeah.
We literally rented a truck and we did everything else ourselves. We got free storage at home. And so what happened was then I went to work for a year after school, and this industry was happening really on the West Coast.
And it was like this tech-enabled storage service alternative to self-storage, where you can request pickups and deliveries of your items a little more full service. So just with the on-demand economy and everything, I noticed that a couple of these companies, particularly Clutter, which now they’ve raised hundreds of millions of dollars.
But at the time, they had raised like nine or ten. But they were calling themselves an on-demand Storage company. So I was like, oh, that’s a pretty cool term. So I just went on, GoDaddy, and it was for sale. And I just bought it on the spot, the domain. And I was like, in a minimum, I could probably flip this to them and make a couple of Bucks.
But then we just built the company around that. Really.
So you bought the domain first and then you start the company. Usually, that’s not the case.
No, it’s a little funky, but we were interested in the space. And so we actually really liked the name Make Space. But there was a company out in New York who ended up being really successful, and they got acquired by that company, Clutter, but they had already had that name.
So we were just researching. So we did, like the business model, and we knew a little bit about it from doing it. But it was really like when I saw that, I was like, oh, wow, I could see that. That feels like I could see it on a Billboard or as a national brand. It reminds me of 1800 Got Junk, Brian Scootermore’s junk removal company. And so I felt like it had those kinds of vibes.
So I just was like, okay, at a minimum, on purchasing this, I think I could probably sell it back to one of these companies for a little bit of money, but then we just decided to build around it instead. So that was kind of the final push us over the cliff into taking the entrepreneurial leap full time.
Got it. So was this before Bain or after Bain? How does that bank come into this?
Yes, my junior and senior year of college, we did just the student storage at Babson, and a couple of other local schools around there. But then we went to work for a year. My other partner was working at Dell EMC in Sales, and so we were just texting. He didn’t like going to work every day. I didn’t like going to work every day.
And so I’d say, like, in March of 2016, we started talking about doing it, and by July, we were doing it full time. So I think I worked literally one year at Bain almost to the day, like pretty close to exactly one year.
Got it. Self-Storage, the whole industry is quite old. I don’t think they’re using much technology to run it as it was. So I think you’re using a lot of software to make an efficient how are you doing that? What are the new tools you’re using to make it more efficient?
Yes. The main difference between self-storage and our service is we have a pickup and delivery aspect for certain customers. So over time, we’ve morphed into almost like an I call it soft logistics. So we’ll provide logistics for companies, storage, warehouse space, and then soft logistics, meaning like one to two deliveries, a week for our B2B customers. And those have become our bread and butter customers.
But we do store a lot of what we call residential customers, which might just be somebody who’s downsized their home or lives in the city and doesn’t have a ton of space and they need to put their stuff somewhere. So we saw a lot of those people as well.
And the main difference is that they don’t have to go to their unit and do anything themselves. We just handle everything for them. So from a technology standpoint, we have some custom tools that we’ve built out to enable this, and then we also will use other tools and stitch them together like WordPress plugins, custom plugins and custom software systems. So it’s a little bit of premade stuff and a little bit of custom stuff that we’ve built just based on what we’ve learned about the business over time.
Cool. At least in the UK we are seeing peer to peer self-storage is coming up. How do you see that? Is that a threat to your business? Is that something is going to stay or it’s just a fact that’s going to go away? How do you look at peer-to-peer self-storage?
Yeah, it’s a really good question. That is in the US also a growing market as well. I think the biggest one if I’m not mistaken, is called Neighbor in the US. And they have actually gotten into a lot of other stuff outside of just peer to peer now, which is interesting, like almost listing warehouse space for rent.
And my hunch is I think it’s a different type of customer that we’re going after. So I don’t really view it as competitive. I view it more as a tangential service where I think it just shows, especially in the United States, the storage industry is so massive. And it’s really funny because a lot of the stuff that gets put in there really never gets used again. We do a lot of storage to junk.
Well, if customers call and be like, hey, I don’t want my stuff anymore, throw it out. And we’re like, sure, it cost XYZ to throw it out, which is just a really interesting case study in psychology, I guess. But I think as far as the peer to peer, I think that probably will get more popular. But I also think it’s smaller storage, probably.
I can’t see people renting out their entire garage for like what amount of money makes it worth it to not have your garage as opposed to how can they access it? Like if someone going into your home, I think there’s like a lot of liability questions around that that become interesting. And what are the restrictions around getting your stuff? What if somebody’s on vacation and you need something in there? How do you get that?
With that said, I do believe that it will probably stick around. I think it almost reminds me of it’s like in the cryptocurrency kind of logic of everything is peer to peer. It’s like removing the companies and the powers that be.
So if we can just do a deal direct, I think there’s a market for it. I don’t think it’s going to be anywhere near the size of the self-storage market. If I had to guess
Right, it’s a much smaller market. Yeah. And you mentioned that lots of stuff in storage goes to junk. Could you tell us a bit more about that? What kind of percentage are you talking about here? Is it like 20, 30%? Is it a lot more than that?
And also, what is that you do when somebody says, you know, I don’t want my stuff? What would you do after that?
Yeah. So it’s definitely not 20% or 30%. I’d say, like maybe 2% to 5% of customers will call in a given time and say that. And usually what we’ve noticed is it’s after someone’s been in storage for maybe two years where they’ve realized like, okay, I haven’t touched this.
My credit cards are getting charged every month for two years. Like, maybe it’s time to give this stuff up. So the way that it works is junk is a very regulated industry because there are certain things that you can’t throw out from, like an environmental hazard standpoint.
Even something like a mattress is actually pretty hard to dispose of. So our cost is purely just driven on what they want to throw out. So if somebody has 50 boxes of clothes with us, we have partners set up, so we’ll just donate that stuff.
So we’re not going to junk anything that can be reused again. So furniture that’s in good shape, we’ll donate that, and then some stuff is a little funky and nobody would want or isn’t in great condition. And that stuff will just take to a dump that we have a license at and you have to pay. And so we just charge accordingly for that.
Cool. Self-storage as it is right now, I think it’s quite distributed. The thing is, different companies are running it at different places, different price points. Do you think there ever will be a service like Hotel.com, which aggregates all those storage companies so you can go to one site, pick your location, pick your budget, find a service for you, or is it already there or that’s something that’s going to happen, or you think that’s not possible, especially in the space?
Yes. If you go to Storage.com, they will do that. And so they’ve been a little slow to add the companies like mine, which are like tech-enabled, we call it full-service storage.
They’ve been slower to adopt that. Another one is it used to be called SpareFoot.
They’ve now changed the name. It’s escaping me, but that’s a great one. And so they’re like slowly adopting this type of storage that we do. I’m not sure if they have the peer to peer on there yet. My guess is they’ll be a little slow to add that.
But as far as self-storage, there are aggregators that exist that allow you to find the unit you’re looking for closest to you by a certain price or something like that. But it’s interesting as to how these new types of storage might influence that as time passes. And yeah, I mean, there probably will be a market for maybe a more niche aggregator for full-service companies or something like that. I think there’s a market there. Maybe I’ll build it.
Good. Excellent. All right. In terms of markups, you early mentioned that 90% was your markup, when you’re doing it by yourself, especially at home. So as you scale, how does the markup change in this industry? Still is it a high markup business to do, or as you scale, the markups go down substantially low?
Yeah. So it’s a good business to scale, but I would almost equate it to a staircase. So where with technology, your costs are going to be kind of fixed and you might benefit from scale without your costs really moving in tandem at all, or like a very marginal increase in cost to achieve scale, we’re limited by space.
So within a space, you can get to a certain margin, so maybe 35% to 40% margin, but at a
certain point, to continue to scale, you’re going to have to incur new cost, whether it’s like a new location. So I think if you think of it in a staircase where it’s like you can continue to scale, but your cost will rise, maybe not in a prorated sense, because if you get larger space, it might be cheaper per square foot, get some economies of scale there, things like that.
But yeah, I think it scales nicely. I think the challenge we’re facing right now is the industrial real estate market is probably hotter than it’s ever been, especially in the markets we operate in. So that presents an issue just in terms of getting space at a good price.
So for us to go and triple the amount of real estate that we have, we have to invest a lot of money. So it’s like there’s going to be a period where we’re in the red on that, wherein our current space, it’s like, does it make more sense to just raise prices 10% and just maximize the space that we’re in for the time being until the market maybe softens or something? So that’s like the biggest issue that we’re looking into at the moment.
And in terms of geography, you’re still covering Boston only, or your plan to expand elsewhere or you already have expand elsewhere.
Yes. So we’ve tested a few models for expansion, and it’s not our intention to expand outside of the New England area in a physical presence. We want to use our brand and our back end system and our customer acquisition strategies we’ve developed to do so. And so we’ve tested that model successfully in like nine different cities.
And what we’re doing now is we’re just vetting those partners and finding the right people to work with. But typically what we’ll do is find the traditional moving company in an area. So we’ll have like trucks and warehouse of the assets that we need, and then we put the better consumer-facing brand on it and we’re able to attract customers with new marketing, a better brand, a more focus on B2B and logistics, and we can bring them good customers, and then we can command a higher price because we’re not lumped in with the ubiquitous moving companies.
Therefore, we can scale that way with our brand. And so that’s our plan. In order to scale physically, you need tremendous amounts of capital, and it’s not our intention to go and raise capital at this time. At least.
Got it. And let’s say LP wants to come in. Right. A hypothetical question with X amount of capital, what kind of ROIs should they be expecting in an industry like yours. Let’s say I have two options.
The most common option for any investor will be real estate right now. And compared to investing in conventional real estate, residential real estate, rather than doing that, investing on yours, what kind of ROIs can they expect if they invest in a company like yours?
Yes, it’s a really good point. So we only raised one very small seed round for our company, and then we just really focused on being profitable. So I’m not sure the ROI someone would get. I think the way that they would view it is like from a cash flow perspective, as opposed to real estate, there’s really two ways you can invest with our company.
One would be like to go in on real estate with our company and purchase industrial real estate, which I think we can provide better returns than most tenants because here’s an interesting thing about our business is a true logistics company like XPL Logistics or something, who would occupy similar space, but we don’t compete with them.
Their business model is to get the lowest possible price for their customer, meaning or else they don’t stay competitive. If people are shipping volume, they need the lowest price so they’ll find someone else.
So that’s difficult for them to continue to raise higher, to pay higher rent in a warehouse base
because their customers want to pay them less. With us, we are really a longer-term storage solution, providing convenience and almost like rentable space that would be hard to find outside of a service like ours. From the size customers that we store, there’s not a ton of those options available.
So our customers continue to pay more over time. So we’re occupying the same building.
But our customer economics are actually completely opposite, as opposed to someone who’s operating on volume compared to operating on recurring revenue and getting storage customers in there who are benefiting from the convenience and free up space.
So I think on the real estate side could provide great ROI to an investor. And then on the business side, our business is very profitable in cash flow. So I think that’s been our apprehension of bringing somebody in is like we don’t really want the oversight if we don’t need it.
But I think if we ever did go down that route, somebody would be able to benefit in a great way from the profits that we’d be able to scale.
Cool. In terms of cost efficiency, I think that you mentioned you initially sold students. How has that changed? What were you doing to get students on board when you started? And right now you’re serving mostly B2B clients. How has that changed? What is it you’re doing now?
Yes, so we do still have a student storage business arm. It’s just not our full-time focus. And so with students, there’s really two ways to get them there’s direct to the student, which like if you didn’t have a relationship with the institution, you have to go direct.
So that’s a lot of guerrilla marketing like flyers on campus, get student reps to wrap the brand student centres, set up tables and things like that, answer questions. And then the second way is get a contract directly with the College or University, which that’s the best way because then you can give them the messaging and they obviously control the distribution to their own student body.
So our best deals are the ones where we have an institutional level connection. Now, with that said, they’re kind of hard to get because educational institutions move very slowly and there’s a ton of red tape in terms of getting a deal done.
So we’ve had success in getting those and they’re really good. They just move slow and it can be hard. It’s not necessarily reliable that you could say, oh, we’re going to close X amount of deals this year because a lot of the stuff is outside of your control.
So the goal is to have a bunch of those going on at once and then maybe one or two fall and it’s great. And on the BTB customers, we’ve really done well with SEO. We don’t spend a lot on paid ads really at all.
And we get inbound inquiries, we probably get anywhere from five to ten increases per day and some of them and we’re pretty picky about the customers. A lot of our space is filled up, so now we’re pretty picky. So unless we get new space, which is again tough, then that’s pretty much been our acquisition strategy for the time being.
Cool. What’s your future plans for OnDemand Storage? You said you’re not planning to raise capital anytime soon. So how do you plan to do that?
Yeah. So our plans are maybe to add some tangential service like junk removal and maybe buy some companies and then buy other companies in a similar space. So we do want to expand and we may raise capital to realize that plan, but I think we’d be able to do the first couple of acquisitions on our own.
So we’re actually in the process of negotiating a few deals to do that, which would be awesome. But I think building a new location from scratch can take a while. So I think an acquisition led strategy is really the way to grow quickly.
Right. I think just going to a new city and trying to start with zero customers. I think I’ve already done that once and I don’t want to do that again. It takes a long time.
I mean, what kind of prices are these going at? Is it like three exhibitor, four exhibitor what kind of price you’re looking at, especially in the industry?
Yeah, I think that’s a fair range. I think depending on the market and maybe how they’re getting customers could fluctuate that by maybe half or if it’s three and a half to four and a half or something.
But yeah, I think that’s the price range, like on the higher end of service business valuations. And then there’s the potential for real estate too, which is kind of a different angle and probably like a separate business that works alongside this, but from the service end I think yeah that’s a fair valuation.
I just realized that. I think it was just yesterday I was listening to your other podcast and you mentioned that you played baseball. Can you tell us a bit about that? Yeah.
So originally I went to the University of Virginia and then I was a baseball player there, I was a pitcher, and then I had elbow surgery, and so I couldn’t really throw at that level anymore. And that’s how I got to Babson College.
But yeah, I was a relatively high-level athlete back in the day, many moons ago. That’s what I say now. But yeah, it was a big part of my life.
I think a lot of the lessons that I learned in getting to a top University for my sport, baseball have carried over into business really well, and it feels like they’re pretty similar in terms of the competition and just having to show up when you don’t feel good and perform. So I think sports are a great lead into business for sure.
Got it. So if you have to go back, let’s say give advice to your younger self. What would that be? Let’s say you can give advice to your 13-year old, 20-year-old self. What would you tell him?
Yeah, it’s a great question, something I think about a lot. I would encourage myself to push my comfort zone more earlier. This might surprise you, but things like publishing online, that doesn’t necessarily come natural to me.
It took a lot of discipline to do it and a lot of pushing my comfort zone. When I think back to like my mid-teen years into my early 20s, if I could go back, I wish I had been more outgoing and used my youth to my advantage. I think people want to help young people, especially when you’re willing to speak up or hey, can I come shadow you for a day at work?
You could probably get some C-level executive at some big company to let you do that if you’re 19 years old and you just have the guts to call them and ask. So I think that’s what I would do is just push myself outside of my comfort zone a little more. So it’s something that I proactively do now, but I wish I had done earlier.
Got it. Do you guys do any cold calling at all when you started or no?
Yes. I cold-called the University of Florida, which is one of the biggest universities in the United States, and I actually closed the deal with them. It was very early. I think I was exaggerating our capabilities a little bit maybe, but yeah, I cold-called them and we got a deal.
So, yeah, we used to do a lot of cold calling, especially early before we had built any online reputation or anything like that. It just works. I think it’s very uncomfortable. But talk about pushing your comforts zone.
Right. And this is a question we ask everybody. Can you name three books that inspired you or changed the way you think?
Yes. So I tweeted about one today, which is influenced by Dr. Robert Cudini, and it’s like the underlying psychology of sales and persuasion. And that book has really taught me how to frame my products and services and who I’m going after and how to speak to them and endear them.
The second one is a book by Doctor Ian Robertson, who is an Irish psychologist. And it’s called The Winter Effect. And it’s like this scientifically proven process that if you, like small wins, it gives you the confidence to take on bigger challenges. So I think a lot of the time it applies to business and people say, oh, I want to build a unicorn or something, but that’s a huge goal that is incredibly daunting if you haven’t even got one customer doing something.
So if you can frame success in these small wins, then your confidence grows and it grows at an increasing rate over time, allowing you to take on bigger and bigger challenges.
Let’s see, the last book that I would recommend is Sam Walton’s Made in America its an awesome book about the creation of Walmart, which is I think they do like $500 billion a year in sales or something. And he was like a small-town guy from Arkansas, and he built this behemoth and he just kind of tells exactly how he did it with some really great lessons. So that’s one I really enjoy.
Superb. You have quite a presence on Twitter and your followers increased really quickly. So could you tell us a bit about that? How did you get into Twitter and what is that you do to be successful in Twitter? Yeah.
So I was a Twitter lurker for a while, which I think there’s a lot of people that could probably grow really big accounts and, like, add a ton of value that are. So if you’re listening, I encourage you to get tweeting.
But for me, I have a rule that when I see smart people doing something and putting time and energy into it, that’s worth paying attention to. So I saw some really smart people putting a lot of time, energy and effort into Twitter. So I said I should really focus on this.
So that was kind of the gateway, to it. And I have learned a lot from Twitter and apply it to my businesses and had a lot of success. So that was great. But as far as the success on Twitter, I think there’s a formula and there’s a few different formulas, but the one that I can speak to is kind of this idea of earned wisdom and earned knowledge.
So I think the basis for anything interesting on Twitter is like you doing something that is interesting. You know that as an entrepreneur, in order to come up with these things and these ideas, you have to actually do something to kind of realize why they’re important.
And then on top of that, I think the people who are out there doing stuff can feel the authenticity and know that it comes from a learned experience. And then the other piece of it is I’m always trying to learn new stuff and make myself better.
So when you write about these connection points of your thoughts and experiences and things you’ve learned, combine it with something new. I think you create, like, this unique content that is really you, but also maybe have some wide appeal. And so that’s been my focus is to do that, and it’s worked pretty well for me so far, and I’m enjoying it.
And the biggest benefit of Twitter, I think, is my thinking is much more clear.
I think tweeted about this yesterday.
Yeah, I did tweet about that, and I was driving to work and I was thinking about it. I’m like, I feel a lot my mind. Some people meditate and they feel like their thoughts are really clear, at least for me writing what I’ve noticed is my thoughts are structured in my head much more clearly, which allows me to articulate them in a much more, like calm, concise and way that relates to the person or the audience I’m trying to get that point across to.
So there’s literally no downside because if for some reason it doesn’t work out for you, nobody’s going to see it anyway. Right. I would tweet to add value, not tweet to grow followers are similar to making money. Like it’s a byproduct of a process that adds value to somebody else.
So the more value you add, in theory, the more followers you’ll get and so that’s been my experience. But it’s a great app. I mean, I’m meeting incredible people like you and a bunch of other people I’ve gotten lucky enough to form a relationship with.
Thanks, Barrett, Thanks for coming on the show and sharing your experience.
Yeah, thanks for having me. This was great. It’s nice to finally get to meet you.