Episode 172: The SpareBox Storage Tech Revolution in Self-Storage

Jackson Stevens (00:00):

I’ll never forget this lesson. You walk into it, and especially as I did as a tech person, where I was like, oh, how hard could this be? The nuance? And it’s a very human business.

Announcer (00:19):

This is the Self- Storage Podcast where we share the knowledge and skills from the industry’s leading investors, developers, and operators to help you launch and grow your Self- storage business. Your host, Scott Meyers, over the past 18 years has acquired, developed, converted and syndicated nearly 5 million square feet of Self- storage nationwide with the help of his incredible team@Self-storageinvesting.com, who has helped thousands of people achieve greatness in Self- storage.

Scott Meyers (00:56):

Hello everyone, and welcome back to the Self-Storage Podcast. I am your host at Scott Meyers. And on today’s episode we have Jackson Stevens with that spare box at storage where he’s going to be talking about some of the new innovations not only in our industry, but what they have come out with as a result of being owners and operators of a fast growing and scaling organization within our industry. So Jackson, welcome to the show.

Jackson Stevens (01:19):

It’s great to be here, Scott. Yeah, thanks for having me on.

Scott Meyers (01:22):

Well, I’m glad we were able to continue our conversation. We thought it was fitting the last time we talked to have you on the show to talk a little bit more about what you’ve got going on, which is pretty much a tiger by the tail. And as we were discussing before we started recording here, that it was very well received at the inside self-storage trade show, which we were both at in Vegas. And so with that, let’s start, before we jump into your offerings and the tech, give us a little bit of background on yourself and how you got into this incredible industry.

Jackson Stevens (01:53):

So my background is as a technologist, it’s a fun story actually. So the co-founder, my partner Matt Rundel, who’s running Spare Box Technologies with me, we actually entered the space at around the same time. So there’s a company called Red Do Storage, and they had a new COO enter the scene and they were trying to figure out a way to make their operation a lot more efficient and they made the decision ultimately that they wanted to build their own property management system. Now for anybody that’s familiar with property management systems might be laughing right now because it’s an enormous, very large enterprise piece of software. It’s very complicated, but some new leadership at red.storage and the software agency that I was working with at the time said, let’s go for it. We didn’t know the difference at the time. We said, how hard should this be while building your own property management system actually ends up being quite the herculean effort.

(02:52):

It was a year and a half project. We ultimately delivered a successful property management system, but Matt and I were working very closely on the software agency side, Matt, on the red.storage side as the director of it. So I became intimately familiar with self-storage operations. I actually learned how accounting reports out of property management systems like Sitelink work by reverse engineering them, which is not a way I would recommend anybody goes about learning that, but that’s what we did at the time. So my approach to self-storage and my foray into it was really as kind of a modern web technologist trying to find better ways to operate it so we didn’t have the curse of knowledge that some operators might have that have been in the space for a decade or two. And it’s really fascinating how you kind of need both it seems, and we’re obviously going to talk more about that. So that was my entrance into it. I actually ended up joining the red.storage team to oversee that product internally. We continued to enhance it, built some really cool features into it. Ultimately a number of us ended up starting spare box storage. So Matt was employee number one. I was employee number two, and we scaled that platform from zero properties to 108 properties in the course of 18 months.

(04:14):

It was a wild ride, but keep in mind this was happening while Covid was going on. So the industry was a flurry and we were building this portfolio quite rapidly with all of our technology and our operational efficiencies that we’ve developed. And now obviously we’re on the spare box technologies, but I’ve been in and around the industry for about seven years.

Scott Meyers (04:39):

Well, incredible growth and I think you probably made a few folks uncomfortable, not intentionally, but as they look at their portfolio and perhaps how fast or maybe slow they’re growing, that that’s quite an appetite and quite a way to scale up. And I would say as you touched on, there’s a number of software vendors out there in our industry and many of those are built for the larger operators and the ones that are more affordable and on the smaller scale for smaller facilities that they lack the bells and whistles if you will. But really the data points that somebody needs if you’re growing and scaling a portfolio of small facilities. And so it’s kind of the blending of two that the industry didn’t offer and the market didn’t offer at the time. And so as we all are clamoring to get as much data as possible to dial in and get better at our underwriting and creating a history and a database of information that we can lean on anytime we go into a new acquisition, there wasn’t anything in the marketplace until you came along. Is that safe to say?

Jackson Stevens (05:41):

Yeah, and it continues to develop, right? Data continues to be at the fingertips of acquisitions teams and operation teams to really know how to scale portfolios. And to your point, Scott, I mean the spare box storage story is fairly unique. Not many platforms out there that grew that quickly, but we were fortunate enough to have very strong operators and great alignment with the investors behind all of it. So yeah, I hope nobody hears that and gets discouraged that they’re not getting to 108 properties in 18 months because I don’t know when we’ll see that again, just the way the market’s looking these days. But yeah, I mean we will continue to see this golden age of data in supporting folks as they’re looking to invest and grow their portfolios, right?

Scott Meyers (06:34):

Well, as the old adage goes, necessity is the mother of invention. And so that’s why products and companies are founded and born and grown. So as you’re growing and you’re scaling, you’re finding out it is a necessity to be able to, if you can’t find it, then buy it off the shelf that you have to create it on your own. And so on a necessity, you create it. As you said, nobody, I don’t think too many people would take on a massive undertaking like what you’ve done and for one wouldn’t, because I am really not that fond of the operations side of the business. I’d rather go find the deals and let our operations folks handle the rest. But in that, yeah, there’s a need to be able to have that data and to have, if you’re growing and scaling that big, you need to have your operation side dialed in. So let’s talk about the components, perhaps the areas in which you felt deficient or where there wasn’t something in the marketplace that you felt a need for and then how you developed it and really the four food groups within your operating system that you developed as a result of that.

Jackson Stevens (07:34):

So to give a lay of the lands, I’m actually the opposite of you, Scott. I am an operator through and through. That’s what I love doing. I love building great customer experience. I love making things work well, work more efficiently. That’s what gets me out of bed in the morning, which is a lot of fun. So the cool thing about everything we’re doing at Spare Box technology is it’s actually sitting on top of incumbent property management systems. So currently we’re integrated to the big ones, sitelink storage, self-storage manager, also known as SSM. So we built a suite of tools just to help ourselves operate a lot more efficiently. So we have serum, which is one of a kind comprehensive remote management solution that puts control in the hands of the operator. We have RaFA, which is an intuitive field operations app made for in-person and remote managers alike.

(08:25):

So that’s our field remote management play. On the other hand, we have kind of a revenue management customer acquisitions play. So we have Profit, which is an AI driven revenue management system based on current competitor rates and tenant behavior analysis, which is really cool. It actually factors in move out probability if you’re doing rate increases. And then we have Bigfoot, which we’re really excited about, which is a SpareFoot optimization tool for operators using the aggregation platform, SpareFoot for customer acquisitions. So all these things kind of combines, drives what we saw at spare box storage, some really phenomenal NOI growth and NOI margin

Scott Meyers (09:02):

Well listed this if we could with the time that we have Jackson, we can’t do a deep dive into each and every one of those about,

Jackson Stevens (09:08):

Of course not.

Scott Meyers (09:09):

I think you’ve wet everybody’s appetite and there’s a few areas in which people would like to learn a little bit more about. So instead of 30,000 feet or a mile deep, let’s give a cursory review of each one of those areas and then we’ll go from there.

Jackson Stevens (09:23):

You bet. We’ll take it in turn. So actually we’ll do reverse order. How does that sound? That might be a little more interesting for folks. So SpareFoot, for those that aren’t familiar with it is the Kayak or the Expedia for self-storage, right? It’s a means of having another place for a customer acquisition. You just as you might on a kayak or Expedia, someone is searching for self-storage near them, it’s going to give them a search engine results page or a SERP based upon their zip code or their city for great deals and self-storage opportunity rental opportunities around them as an operator, marketing your properties on that platform as you scale, it becomes increasingly difficult to know how to bid and how to bid effectively. So the bid is effectively a finder’s fee, right? The bid is what you’re paying SpareFoot to say, yes, please put my facility on your platform.

(10:21):

Every rental I get, I will pay you a month and a half rents and potentially all the way up to 10, I’ll do a 10 x multiple on the month rent depending upon how bad you want it. So it’s a bit of a pay to play system. There’s roughly 30,000 facilities on the platform. So bids are constantly in this dynamic ecosystem. So we needed a tool to allow us to get really efficient how we are setting our bids. So our data scientist actually created this little Python script that has now become Bigfoot that allows people to set their rates, set a max threshold for their comfort for any one of their facilities, and then the tool actually optimizes the bid within it. So it finds these little deltas to save them money. And then it also ensures that you’re not competing against yourself if you have facilities in a certain proximity to one another. So that one’s pretty exciting.

Scott Meyers (11:14):

And so that’s always been one of the biggest challenges, hasn’t it? As operators we’re looking at filling up maybe that last five to 10% or using SpareFoot maybe on the front end to be able to get some door swings on the front end, but you’re just kind of beholden to them and once you open that Pandora’s box, you have no control. So to finally be able to have some of that control and decide and determine whether you take those clients or not, or whether it’s not worth it and you just wait maybe a day, a week or a month before you fill up with those rates. I mean that’s got to be music to operator’s ears here.

Jackson Stevens (11:45):

Yeah, that’s right. It’s starting to put a little more control in their hands and take the mystery out of it. So in the same canoe, if you will, of customer acquisition, revenue management. So profit we’re really excited about. So this is the revenue management system that we developed internally with some very smart data scientists, one of whom recently just joined us from public storage. So AI machine learning driven, it helps you set your street rates on a daily cadence or weekly or monthly depending upon how frequently you like to do it. And then it also assists you in your ECRI or existing customer rate increase strategy. So it allows you to toggle your revenue goal and then actually at the same time see what the move out probability is for the eligible pool that you’re looking at, which is really neat. So we actually factor in roughly 19 factors from the tenant profile to give you a fairly accurate move out probability in terms of will they tolerate the rate increase or not, which is really exciting.

(12:48):

So what I love about this tool is revenue management is really important for any operator of any size. There’s a couple of incumbent tools out there that do great work. We actually evaluated them for our own platform a couple of years ago, and ultimately we found it challenging to make the numbers pencil in terms of just getting onboard and getting going. So we started building it internally. We love that we’re starting to bring something that’s really sophisticated but is more affordable, more user-friendly for smaller operators because most of these property management systems, your site links and storage do have baked in revenue management modules, but they’re pretty blunt in how they work. You say, okay, my 10 by 10, once it gets below 80%, I want to trigger some cost cutting. So you have to go in and manually configure all of these things. So this system actually brings in much more powerful revenue management analysis at your fingertips and makes the process actually kind of fun. We were happy with the way the interface turned out. Yeah, canoe two. So we were talking about revenue management, customer acquisition over here. Now we’re talking about field management and remote management.

Scott Meyers (14:04):

So let’s pull on the thread a little bit on the revenue management. So you and I were both in Vegas and maybe I was just sensitive to this and I know you certainly are rate management, revenue management, probably one of the hottest topics. And for better or for worse, the discussion is, or the questions are how smart are the models getting and are they just smart enough to cause problems in the marketplace where we have the AI learning and these modules that are going out and competing against each other are almost reminiscent of the days gone by when many of the mom and pops in the unsophisticated markets and operators, there was the race to the bottom. There’s a few folks out there that are saying, well, AI’s getting really good at this, but not so good that they’re not also out there doing the same. And now we have machines racing to the bottom. I know we have the ability to step in and stop that and halt that and set some parameters and we could have a very lengthy discussion and if then scenarios, but what’s your take on that and how is your software solving that? Or at least keeping the facilities that are under your purview from falling to that or succumbing to that and getting your rates and having your rates go a little lower than you would expect before you can grab a hold of it.

Jackson Stevens (15:23):

That’s a great question, Scott. Yeah, I know the commercial real estate sectors, reeling, especially on the multifamily side, there’s some really interesting things going on for algorithmically set pricing, and I know there’s some concerns in the self-storage space right now about that. Fortunately we have guardrails that are built into profit that prevents things from spiraling out of control, target occupancy, and then actually making sure that although competitor rates, while a large factor in how the algorithm works, not the only factor, it’s taking into account your history, it’s taking into account your own move in velocity to ensure that it’s just not going to be a race to the bottom. So that’s something that we are very mindful of when we were constructing this because we know that we don’t want to enter that chapter again. And even though it seems that there’s a little bit of that going on with the REITs at the moment.

Scott Meyers (16:16):

Alright, so let’s move to canoe two.

Jackson Stevens (16:17):

You got it. So we were talking about revenue management, customer acquisitions over here. Now we’re getting into operations. So field management and remote management, remote management, obviously a super hot topic as I’m sure you saw at ISS. There were at least four panels I believe I saw on the topic of remote management. But to begin this with so, and I think a lot of people listening that perhaps do their own rent rolls will really resonate with what I’m about to say. So even in the red.storage days, we discovered that we just needed something that communicated real time with the property management system. It’s really that simple. So most traditionally what you’ll see people do is they will print off the rent roll from the property management system, they’ll put it on their clipboard, they’ll get their pen and they’ll hit the ground, right unit one, okay, customer lock check, unit two, overlock overlock check.

(17:14):

So what happens when you’re done taking all those notes, you then have to go back to the office, log onto the property management system and reenter all those notes. Now for someone who loves operational efficiency as much as he does, that drives me crazy. So we’ve built a tool Rafa that was optimized actually for tablet use and allows the property manager to just fly through their rent roll and their tasks. So we built in a task module, it communicates with your property management system in real time, and there’s some really neat advantages to this. You might see a unit that someone said they moved out of and you say, great, they moved, that looks clean. Let’s go ahead and green tag this, or whatever your nomenclature is and you say it’s available. So the unit right then and there is available once it’s communicated to the property management system and once it’s communicated to the website via the PMS, you’re not waiting four hours perhaps to then get back to the office, back to the computer to indicate to your PMS that hey, that unit is in fact available.

(18:16):

We have seen our property managers at spare box have seen that units will get rented in that time. So someone might be looking around and they might say, oh, well they don’t have a 10 by 10, let me move on. So if you’re able to turn over inventory more quickly, and this is something that’s really, really important in other industries, but I think is quite important in self-storage, sometimes people don’t realize it. I mean once they’re able to do that kind of inventory flip, you’re seeing more revenue right off the bat, which is really exciting. It also has the ability to take photos, send ’em directly to tenants. So we actually have a series of templates that people can create in the system. You can say, Hey, Mr. Jones, please stop leaving your empty coat can behind. So there’s actually a trash template where you can take a photo and with I think two clicks, send that photo to the tenant, to their phone number and email sitting on their property management system with the photo saying this very professional, well-branded message, please refrain from leaving your trash behind.

(19:14):

So it’s allowed our field team to operate on this whole other playing field that we see a lot of other field teams struggling with quite frankly. So yeah, you can see my excitement about it because I’ve been out there and I’ve seen the excitement from the field team members that perhaps were using a different system prior to using this and then having this put in their hands, like it lessens their workload and allows them to cycle through facilities much, much faster, which is really key. So that’s RaFA, that’s the remote field app. RaFA actually plugs into serum, which is the final product offering we’re going to talk about. So serum this one of a kind comprehensive remote management platform. This is when, well, let me put it this way. What we saw from our perch is remote management has a lot of mystery around it.

(20:11):

You’ll go and listen to some of these panels about how certain folks are approaching it and what the right staffing model is and what call center you should use. And to us it seemed like there were really two ways you could approach it. You could go third party management, which not everybody wants to do. Of course, some people do want the control in their hands, they want to own the operations, they want to be a little closer to it, they want to save on that fee. And then there’s the well the do it yourself and then you have to have the know-how and the savvy to plug all these things in duct tape all the services together, which quite frankly is quite hard for owner and operators in the industry. We were unique in that we had a lot of technological competency that was just the impetus for spare box storage coming out of Red Dot. So we said, we’ve figured this out in a way that’s worked beautifully for us. What if we were to create a package where someone could have a turnkey solution to remote management?

(21:18):

There are components that you don’t necessarily have to have, but we’ll help you with the call center integration. We’ll help you with the kiosk, we’ll help you get a kiosk if that’s something you want to do. But from our standpoint, the technology and technology and self-storage, generally speaking, it shouldn’t just benefit new renters. And I think that’s typically what you see when you go to SSA spring share, you go to ISS remote management and the technology competencies really focuses on new renters. How good is your rental center? How good is your kiosk when someone’s trying to rent? But that’s just the tip of the iceberg. Of course you have active tenants you need to take care of. You have a complete operation responsible for stewarding the facility, stewarding the asset, making sure customers are satisfied so that that way when perhaps they do get hit with a rate increase, they’re like, oh, well they’ve actually been quite helpful and my experience has been really, really good, so I’m happy to bear it.

(22:15):

So we’re really excited about serum. As we’re starting to roll that out to our first customers, I think we’re going to see a lot of advantage and a lot of benefit. I know one of the metrics that folks in the industry love to tout is what their FTE per store is, right? Their field, FTE per store. So the REITs are typically between 1.2, 1.4. You’ll hear a lot of people celebrate that they’re at around 0.8 spare box storage today is actually at 0.3 and we do it marvelously. And a lot of that is attributed to just how smart we’ve gotten about process and procedure, how we’ve baked that into intuitive tools to allow our field team to do their best work and to ultimately yield a consistent customer experience.

Scott Meyers (23:10):

So I want to go back and make one comment regarding Rafa, and that is we’ve seen, as you mentioned, you’re rolling all these into one platform, which everybody loves. Anytime you can consolidate, you don’t have to have multiple apps and multiple tools and software. That’s always key. But why are you doing that and does it make sense? Do you get the best of best? What we’ve seen with Rafa, there are a couple of those standalones for field operators to be able to just operate a little more efficiently. But all those from what we’ve seen is mostly it’s almost like project management software that was kind of shoehorned into a self-storage model and it didn’t integrate with anything else. And I’ll tell you, many of our listeners here on Storage Nation have heard me say this, that speed is more key than any other facet in our organization right now, Jackson.

(24:01):

I mean we got KPIs, we’re measuring everything, but right now everything just has to happen. Fast delays are the most, if you want to call that label that as its own KPI going slow and delays are more costly than anything else and it just erodes any other progress if we get delayed for anything. So the fact that, as you just mentioned, a shining example and here’s the ROI ON something, it’s great to have everything all in one place, but what’s the ROI on it? Well, if that field manager it takes four hours before everything’s uploaded and you miss one or two rentals, then was it really a great tool? Well, maybe not. So that is absolutely key. But then that leads me to the question when we’re looking at, you brought up a couple of points as we’re looking at full-time employees that has been the age old.

(24:45):

Here’s where technology, here’s where kiosks come into play is we can reduce payroll because it is one of the highest line item expenses of operating a facility. And the smaller facility, the more difficult it is to get the ratios. You can’t underwrite even in a bank standard of 5% management, if you’ve got a small facility, it doesn’t pencil out and then you are underserved if you try to manufacture to that number and keep somebody within those hours, you’re not operating efficiently either. So one of those questions then within that is, okay, well I’m going to suffer that. Meaning if I don’t have an employee there who’s negotiating with a client when they walk in the door or on the phone, if there’s not an employee or a staff member behind the desk that is upselling to renter’s insurance and locks boxes, moving supplies and anything else that I have, then it’s an either or. I have to be happy with not having payroll that expense, but I am going to have a slower lease up and I’m not going to have the add-ons in terms of an average unit. What we’re seeing with technology, however, is that gap is decreasing and then we’re able to deliver those services and that revenue less, less expensively, but tech. So I guess, am I on the right track? Maybe speak to that a little bit with the data that you’re seeing with your models and just in the industry in general.

Jackson Stevens (26:01):

Oh my gosh, yeah, Scott, that’s a great point. Mean well, you think about it to your example, it’s like, well, we need someone there to upsell. We’re missing out on revenue. I mean most revenue management systems, ours included in websites are now starting to build in upselling capabilities themselves. This is nothing new to self-storage. This is a little more novel, but when’s the last time you went to an e-commerce website and when you were checking out, it’s like, oh, get this one more thing for 50% off. These are tried intrude methods that have worked in many other industries that we’re just now starting to see the application in self-storage, which I think is really exciting.

(26:40):

And then as it relates to, it’s like, well, if nobody’s there, then I’m saving on that payroll expense. There’s not necessarily, and I want to be clear that the goal isn’t to, let’s get payroll down to zero, right? That’s not necessarily the goal because depending upon your unique market, your community unity, the nature of your portfolio and how you want to manage it, it might really behoove you to spend a little more on payroll. It totally depends. We find in scale that efficiency is really key. So the larger you get, the more that you’re going to want to lean on technology. But to your point, it can be a difficult needle to thread, but technology will find ways to continue to bridge this gap. As I was mentioning, e-commerce has been doing it for a long time and there’s all sorts of vendors that are really trying to yield a consistent experience even when someone’s not on site and that’s only going to get better.

Scott Meyers (27:43):

Well, this is a very low labor-intensive area in terms of our industry, and it’s a replicable sales pitch if you want to call it that, or an experience for the customer. And so I would just assume, and we’re already starting to see this in terms of just the website experience alone, chatbots, as they continue to get smarter and as we continue to integrate more AI and they get smarter and better and a more human-like experience, I would have to think that that may be accelerating a little bit faster where we are able to reduce some of those payroll hours because now we’re able to deliver even more services in a more customer friendly, in a more personal manner with ai.

Jackson Stevens (28:22):

And I think the right way to think about it too, Scott, is, I mean, roll up your sleeves and do the homework on why are people calling in? And I think for many operators they’ll find it’s 80% of it is common reoccurring reasons, right? What’s my gate code? When’s my bill due? What’s this charge? So there are some groups out in the industry that are building AI chatbots that are starting to handle those in a very well automated fashion. And I know there’s some good customer success stories coming out of it as well where they’ve been able to either reduce payroll as it relates to a customer service team call center or they’ve just been able to better focus those people towards higher and better uses, which again, also kind of starts this positive flywheel effect. That’s a big philosophy for us. And coming from tech, it was always the automate the boring stuff. Things that are the high frequency, simple use cases that a system could bat out a response to very easily, what’s my gate code? With the right integration, that becomes pretty simple to do. All of a sudden you just reduce call volume by 20%, right? And that’s significant once you’re looking at these numbers on a month over month basis.

Scott Meyers (29:49):

Well, from just one of the stats that you shared earlier, Jackson, of getting your full-time employees down from 1.8 to 0.3, I know there’s a whole lot of owner operators right now that have been doing the math and they may not have heard what we said the last 10 minutes and they’re going to be looking you up to discuss that. And as you said, it is nuanced and it is portfolio specific, and I would say it’s even facility specific as well. But let’s talk about the folks that are looking to get into the business that don’t have their first facility yet, or they do have their first, and so they haven’t scaled yet. They haven’t grown, they don’t know what they don’t know and they haven’t gotten into some habits that may be difficult to then come back and implement a more efficient tech heavy approach to management. So for the new investor that is looking to get into, so storage or may have one or two, how do they get into this mindset and maybe overcome the fear or give them an approach right out of the gate so that they don’t go down the path of having to reverse engineer something when they’ve recognized that they should have implemented something like this, whether it’s all for or even one of the pieces of tech that you mentioned right now before it’s too late.

Jackson Stevens (31:00):

Yeah, that’s the million dollar question, isn’t it? Yeah, I love this one because we actually had, when we were at ISS together, Scott, we had a number of people stop by our booth and it obviously says spare box technologies. So for newcomers to the industry, they’re like, great, I need technology. And it’s like, well, obviously technology means a lot of things. So the first thing I point people to is what property management system are you going to use? To me, that’s table stakes and I think to a lot of other operators in the space, they would call that table stakes. There are people that I believe are being successful with using QuickBooks and kind of managing units in a more traditional accounting system. But it all starts with that. I would say this is very 1 0 1 kind of stuff. I think that’s extremely important. If you’re going to have gate access, automated gate access and having a good vendor I think will be really key.

(31:56):

That’ll allow you to increase the rates of your units. You have greater security. Again, this is something that in most places we’re seeing customers just kind of expect some form of access control right now, access control can get very cutting edge. If we start talking about things like digitized locks, that’s very interesting, and I think that’s probably where the industry is going to go. But I know right now there’s still some technological challenges on that front. But I mean, this is the beauty of this industry. It’s all about doing the basics really well. So if you start there and then you start to say to yourself, okay, well, am I thinking more of a traditional management approach where I do have someone behind the desk that’s assisting both on customer service, leasing, collections, field, they’re kind of doing it all, or do I want to go to more of a hybrid that’s in between this remote management play that we’ve been talking about?

(32:59):

Hub and spoke is another popular thing. I think trying to get very thoughtful on your operating model will serve you really well, because again, there’s no right or wrong answer. I’m not going to sit here and say, you need to do remote management at this point. Maybe you don’t need to, depending upon what your financial goals are and how you’ve underwritten the property and what you’re really trying to accomplish with this first investment that you have, there certainly does need to be a little more of a sophistication in how you approach the operations mindset. But that’s where, quite honestly, the serum platform comes in handy. And that’s really how we’ve thought about it to help people as opposed to interfacing with three or four or five different vendors to try to put all these pieces together such in a way that they like the way it looks on an Excel spreadsheet, they can come and talk to one.

(33:53):

I think that’s a great way to think about it. So not to step into your shoes too much, sure you’re giving this advice all the time, but from my standpoint, as someone who really lives and breathes operations and tech, it’s a matter of what your goals are, both for you personally, obviously the investment, what you’re trying to make, pencil, and then from there, just what you are most comfortable with. Once you’ve kind of checked those boxes in terms of, okay, we’re going to go traditional, we’re going to go hybrid or hub and spoke, we’re going to go remote. There’s a lot of different ways to solve it, but I think to your point, Scott, being very thoughtful upfront about that will set you up for long-term success. Then you can just start to build on the lessons that you’ve learned as opposed to, okay, well now let’s just throw it into reverse and do something totally different because I’m not liking the results I’m getting.

Scott Meyers (34:45):

Well, and I like the way you phrased this, Jackson, and it is true. This is a business where you just master the basics. And fortunately, it’s not a difficult business model in order to do so. Now, there are lots of nuances and there’s many directions that you can go, but that to add on to my own point, then it becomes a math problem or a math equation. So if you’ve determined from the front end and you feel confident, this is the direction we’re going to head with this facility and our business plan and our portfolio moving forward, well then it is a math exercise. And when you go back to the spreadsheet and back to your underwriting and your projections, as you also mentioned, what’s the end goal? What is our exit strategy? What does this need to look like? Then come, that’s where the rubber meets the road, and now you need to begin to put in the numbers with regards to how much is going to cost us in terms of a CapEx to implement this technology upfront.

(35:36):

And then what do we expect in terms of a lease up of percentages and trajectories based upon that versus having people in place or the way that maybe we were thinking before we met Jackson Stevens with a spare box. So it becomes, is again, a simple predictable business model, but I’m finding that those that are going to continue to win in the future are those that are sharpening their pencil, if you will, that are just mastering underwriting. And there’s more demands from our consultants on the feasibility study and to give them good data to our lenders, to our private equity partners that are, they’re going to hold us to these numbers. And so we’re finding ourselves having to dig a little bit deeper and really get skilled in this area yet again, figuring out the plan to begin with, having the data and the history behind it, and then implementing a plan and replicating that throughout our portfolio. Those are the folks who are going to win in this game in the future, in my opinion.

Jackson Stevens (36:32):

A hundred percent. A hundred percent, Scott. Yeah, that’s right. Yeah. I’ll never forget this lesson. You walk into it, and especially as I did as a tech person where I was like, oh, how hard could this be? The nuance? And it’s a very human business. Ultimately, you’re dealing with folks who are leasing space from you, and that is very human and humans behave in unexpected ways. So from an operational standpoint, it might shock you, and I’m sure you’ve had folks on, I’m sure you’ve had conversations about, okay, well now we’re doing auctions. Now what? There can be some surprises in terms of the things you’ll come across in this business, but that also makes it really exciting and there’s a lot of room to get creative, which I think is great.

Scott Meyers (37:25):

Alright, Jackson, I appreciate so much our time together, and as we wind down, I got a question to ask you at the end here, but before we do, so, what is the best way for people to be able to get in contact with you and learn a little bit more about your offerings?

Jackson Stevens (37:37):

Yeah, well, it’s been a pleasure, Scott. People can easily find us at spare box tech TEC h.com. You can book a demo with us up in the upper right hand corner. There’s a big button says book a demo. We would love to show you what we’re working on and if you are someone who’s newer to the space, happy to just give you some consultation as to if you’re thinking about a property management system or more foundational technology. I mean, we’ve been doing this for a while, so we’re happy to help you out on that front. You can find me on LinkedIn, I am, and then our LinkedIn page is also pretty active as well, so we’re constantly posting updates there. This technology will continue to evolve over time as we get more folks using it. We’re really excited to open this new chapter for tech enabled value in the space, bringing things that are easier to integrate with and feeling like you have a real partner. That’s really what we’re trying to do.

Scott Meyers (38:37):

Well, Jackson, what I’d like to do is have you back for round two, if you will, and I would like to focus in on some case studies. So I wanted to ask you about some of those folks that you’ve worked with that have implemented all for our pieces of technology or independently and what that looks like to be able to implement and walk that through, because I think that’s, from what we’ve been talking about today, that may be a little difficult for people to wrap their head around without those case studies. So I’d like to do that. But before we go, if you would, what advice would you have for folks that are looking to grow and scale? Those folks that are already in the business, they maybe have one or a handful of properties, speaking from somebody who grew a portfolio at a very accelerated rate compared to most, what would you say were maybe some of the pitfalls to avoid or the secret to being able to keep a handle on all of that?

Jackson Stevens (39:27):

Yeah, you bet. Well, without getting over my ski tips here a little bit, because I’m not an acquisitions person, but the location of your facilities is going to be key. So that’s actually one of the ways that we were able to drive operational efficiency as we were clustering facilities. So if you have facilities that are many, many miles apart, that becomes less optimal in terms of how you’re managing the operations of ’em. So that’s a big one. But other than that, as we kind of spoke to you earlier, I think having a good thesis around how you want your technology to support your scale and then making sure that you’re having honest conversations, keeping your vendors honest with you as you continue to scale and keeping true to that vision, I think that’ll really service you as you start hopping horses midway through the race. You’ll be introducing, I think, some pain points that otherwise you wouldn’t necessarily need.

Scott Meyers (40:24):

And I would echo that 100% because I’ve seen the challenges that have come from that from so many operators, and I’ve fallen prey to that a couple times and we’ve been going through some hefty growth patterns as well. So 100% agree. Very, very good advice. Well, Jackson, I am going to make sure that we have session two scheduled a very, very soon to go through some of my case studies and look forward to our next chat. Thanks so much for your time again, my friend.

Jackson Stevens (40:49):

Yeah, I’m looking forward to this. Well, Scott, thanks for your time.

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