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Business Observer Thursday, Jun. 4, 2020 3 months ago

Storage industry pioneer rides high into another high-stakes venture

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Self-storage might not be sexy — but for Peter Warhurst it has sizzle. And now, two decades after a major industry victory, he’s back for more.
by: Mark Gordon Managing Editor

Peter Warhurst helped reinvent the national self-storage industry with PODS, portable on-demand storage. Despite that Clearwater-based company’s success — a private equity firm bought it in 2007, nine years after Warhurst founded it, for $430 million — Warhurst often lamented a missed opportunity.

That’s because although PODS pioneered on-demand self-storage, it lost out when customers moved the stuff that filled the containers. Years after he left PODS, which was sold again in 2015, Warhurst would chat up the executives. “I would ask them, ‘Are you making any money on the [moving] system?’ I always felt like there was more we could’ve done there.”

Warhurst had an idea: Set up a system of facilities that could store the pods, a place where customers can access it on-demand. It would be like PODS but the twist be to take it off the customer’s driveway while creating another revenue stream in the transfer of goods. He called it fetchable storage. 

Warhurst pitched the idea to PODS executives and offered to create and sell them the technology to run it. They turned him down. He tried to buy a container storage business and implement the idea there. That acquisition fell apart. “I finally decided I was just going to do it myself,” Warhurst says. “It was just too good of an idea to pass up on.”

That idea is now Red Rover. Incorporated two years ago and launched in February, Tampa-based Red Rover is Warhurst’s vision coming to fruition.

Here’s how it works: A customer picks up a free Red Rover truck — a new model that includes a backup camera — and drives it to the location with the stuff. The customer loads up the Red Rover container then drives the truck back to the main hub or a satellite location. (The truck is free, gas and tolls included, for up to 60 miles.)

Red Rover’s first market is Tampa, with a main location near the Tampa Fairgrounds and satellite locations in Largo and near the Tampa International Airport. When customers want to get or move the stuff, they can go online, schedule an appointment and pick it up.

Courtesy. Peter Warhurst incorporated Tampa-based Red Rover two years ago and launched the business officially in February.

Rates start at $159 a month for an 8-foot container and $199 a month for a 16-foot container. Millennials and Gen Z are a target market. The pitch? The affordability of renting a truck and self-storage unit, with the convenience of portable storage, at a mid-level price. “We are creating an entirely new industry. We will be very disruptive to the mini-storage and U-Haul segments,” Warhurst says. “We will be disruptive to PODS, too.”

Red Rover’s timing could be spot on. Self-storage has been on a roll, at least before COVID-19, in multimillion-dollar, multiproperty acquisitions and new, niche-based developments, from wine vaults to high-end car condos.

Make a mark

Warhurst’s success with PODS also bodes well for Red Rover. “We overcame a big hurdle,” Warhurst says. “We built a market in mobile storage when nobody knew what that was.”  

Warhurst’s idea, and track record, convinced several former PODS people to join him at Red Rover. That includes George Spowart, who had an 11-year tenure at PODS, including five as chief marketing officer. “I think this will be a better solution than U-Haul or PODS,” says Spowart, who, up until Warhurst came calling on Red Rover, was the chief marketing officer for The Perfect Workout, a strength training chain with more than 60 locations. “I totally believe in the model. I wouldn’t have quit my job and joined Pete if I didn’t.”

‘We are creating an entirely new industry. We will be very disruptive to the mini-storage and U-Haul segments. We will be disruptive to PODS, too.’ Peter Warhurst, Red Rover

For it to work long-term, Red Rover depends on scale, requiring multiple markets and then within those markets a main facility and several, smaller, satellite facilities. Warhurst and his team are targeting 40 markets nationwide within three to four years, starting on the east coast and working west. In bigger markets, which Warhurst estimates will run some $4 million in startup costs per market, the company plans to finance the expansion with private equity. Warhurst is one of about 24 investors in the company so far, and the largest shareholder.

After big cities, the plan is to tackle smaller markets, using joint venture agreements with other entrepreneurs. An average joint venture opportunity, Warhurst says, will cost about $2 million, varying on the population of the market. A joint venture, he adds, allows Red Rover to have more control over the processes and day-to-day operations of other locations than a franchise model.

“People often ask me about my biggest regret at PODS,” Warhurst says, “and one of them was franchising. I never found a way to get franchises all aligned with the corporate division.”

Warhurst plans to incorporate other PODS lessons learned into Red Rover. For example, he’s already trademarked the term fetchable storage, so when competitors begin to crop up, like what happened with PODS, there’s a clear market leader. (PODS won a $41.4 million trademark infringement lawsuit against U-Haul in 2014 after the competitor introduced U-Box pods storage boxes.) “We were too slow at the time to trademark the portable storage name,” Warhurst says. “We were smarter this time.”

Big opportunity

Another lesson? Keep the payroll lean. Warhurst says he’s launched Red Rover with 10% to 15% fewer people than PODS, and employees are doing more multitasking. “We will use a lot of things from PODS that were successful,” he says, “and modify some of things that weren’t.”

Courtesy. Red Rover offers what the company calls "fetchable storage."

Warhurst, 67, has more than the success of PODS to lean on, having started and sold at least three businesses. “Pete is one of those people,” Spowart says, “who, when he has an idea, he can’t sleep until he goes out and does it.”  

One element Warhurst couldn’t foresee is the COVID-19 crisis. While he believes some of Red Rover’s features, such as private storage and limited customer touch points, is an advantage in a germ-conscious world, in the early going, the pandemic has dented the firms’ progress. “We were going for guns right before this happened, so it’s slowed us down a bit,” he says. “But it’s also allowed us to optimize our systems and work out some software kinks.”

In addition to finding the silver lining, Warhurst thinks about the original vision for Red Rover and the need it meets. “I believe this is such a great opportunity,” he says. “I believe this will be another homerun. I think it’s going to be another PODS.”

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