An “entrenched industry that is failing
to recognize and adapt to changing consumer demands,” Jillian Manus said as she
explained why $400 million in venture capital is being invested to disrupt our
self-service storage business model.
Ms. Manus was the keynote speaker
at the California Self Storage Owners & Technology Conference in Napa this
past May. Based upon Jillian’s credentials, we should be listening!
Ms. Manus previously invested in several successful self-storage properties.
She is managing partner of Structure Capital, a venture capital firm that
provided early seed investments in disruptive technology titans Uber,
AirBnB, Netflix, and Lending Club.
Ms. Manus sees the storage
industry evolving from a problem-solving
business to a lifestyleservice
(hobbies or lack of closet space). The digital ecosystem, she believes, will
disrupt self-storage use and demand as today’s consumers buy “experiences” and
not things. They expect everything to be on demand, as in it comes to you not
you go to it; and it is all controlled through the magic wand of a smart phone.
Structure Capital invested in Omni,
an on-demand storage startup. Their “concierge” business model picks up your
belongings, then stores and catalogs them with photos and descriptions. Storage
fees are based upon the items
stored—not a unit size. Omni’s mobile app allows customers to
conveniently select which items to retrieve from storage to be delivered to their
The storage industry, Manus opines, is too fragmented,
lacks technology infrastructure, and suffers from an industry-wide complacency
toward disruptive changes. Publicly
traded storage companies, she points out, have yet to innovate, leaving a huge
opportunity for new companies to fill in the gaps.
She believes that too many leaders are risk
averse and content with incremental outcomes at the expense of disruption. Challenges
in transporting items to and from a storage unit creates what she calls the
“Black Hole Effect” where stored items get sucked in, held hostage, forgotten
about, and overtime breeds customer contempt toward the self-storage business
model. This should be a reality check
for all self-storage operators to wake up and work together in developing the technology
to address unmet consumer-driven issues from opening the door for disruptive
business models to compete and take market share.
The storage software industry possesses
too many “silos” or fiefdoms that are blocking innovation, Manus claimed. These
“silos” are the owners’ inability to grant technology companies complete, unfettered
access to their store’s data via a common API feed. API access is the digital
bridge connecting your business software to software applications used by
consumers. She believes common API access from all software companies is necessary
for outside technology companies to invest in technology solutions demanded by a
changing customer base. Without universal API access and protocols, our
industry cannot provide the business services, easy apps, platforms, and other
technology needed to remain competitive and relevant to today’s “on demand”
consumers. Our self-imposed inefficiencies are why so many venture capital
firms seek to disrupt our industry!
John Chambers, chairman of Cisco Systems, famously warned that business leaders
who don’t reinvent, change their organizational structure, and fail to appreciate
the speed of innovation will get disrupted. “And it’ll be a brutal disruption,
where the majority of companies will not exist in a meaningful way 10 to 15
years from now,” he says.
Our industry possesses a
staggering 2.35 billion square feet of storage capacity, but minimal technology.
On-demand competitors are technology
rich and view storage capacity as an incremental expense based upon demand. Our
profit is driven by the demand for convenient space whereas on-demand competitors
will profit from their convenient technology which efficiently utilizes under-utilized
It is time for all of us to work
together in making the transformational changes necessary to remain a relevant long-term
business model. Otherwise, we may very well look back upon today’s prosperity
as the storage industry’s antebellum period.