Episode 239: From 20 to 250… Hyper Growth Challenges in Self Storage

Big Announcer (00:03):

This is the Self Storage Podcast with the original Self storage expert, Scott Meyers.

Scott Meyers (00:10):

Peter, welcome back to the show. The last time we chatted, you were sitting at somewhere around 20 clients and facilities and now up to 200. Holy mackerel. What a run. Tell me how that’s been.

Peter Smyth (00:20):

Yeah, it’s been a crazy year. Definitely lost some sleep. We’ve been working hard, the team’s been dealing with the different cycles here and we, God, as recently as last month, we onboarded 44 stores in the same month. And so now I think we’re fast approaching two 50 here, but that’s what’s kept me busy over the last year. The employee count is close to 50. We’ve got everything from side of the road boat and RV 45 units to, we’ve got some thousand unit plus urban stores, and a lot of our year has been spent both building the team to onboard those clients, onboarding the clients themselves, and then thinking about how we’re going to manage those different types of assets. I mean, that’s been a big focus for us is can’t manage ’em all the same way.

Scott Meyers (01:10):

Yeah, well, I mean, growth is exciting. It always is, and it’s always great when it’s your baby because it means that, hey, everybody thinks my baby’s good looking. But that also comes with a lot of challenges. Tell me through all of that, that’s a massive growth. Congratulations, by the way. But in all that, what has scared you as you’re navigating through this on the employee side or performance side, what has kept you up at night during this hyper growth phase?

Peter Smyth (01:38):

Yeah, I mean, one of the challenges we’ve had is when you grow that fast naturally, you have either employee or client churn for whatever reason. You can have client churn for good reasons or bad reasons. It could be because it’s not a fit because your employee, your structure system isn’t working. Or it could be because simply selling an asset to somebody. And similarly, life happens and people need to move on within the company, and it’s not always for performance reasons. So

(02:10):

What keeps me up is how do we design a system that best serves our clients? So there’s not an interruption there. And so we sort of went through a change management process over the last, I’d call it four months, where we’ve tiered out the types of how we serve different types of clients. We’ve broken out functions. And in doing so, I think we’ve made the service more consistent across what is definitely an inconsistent type of asset. So that’s what keeps me up is how do we serve all of our clients in a way that they’re all happy. Now, you do need to make trade-offs and we can’t make everybody happy all the time, and that’s just like a product can’t be for everyone, but a lot of it’s just kind of systems level thinking that we’ve needed to work through while growing this thing pretty

Scott Meyers (03:00):

Quickly. When I look at our vendors, I mean you name it across the board, pick a category. Usually when we start working with them, they’ve been highly recommended. They’re great at what they do, they’ve been referred to us and they’re really great at what they do until they aren’t. And typically what causes that is growth. If they’re doing a really good job, they’re growing. And then I think some companies, they compromise with regards to the people that they bring on to accommodate that growth because they’re growing so fast and they can’t find the candidates or for their systems internally are busting at the seams. How do you continue to stay on top of that so that service doesn’t suffer as you continue to grow at that pace?

Peter Smyth (03:44):

Yeah, some of it is definitely the system itself. And I think as you were talking, I was thinking about what we’ve been focused on, and I think there are the inputs that go into managing a storage facility. And so defining what those are and having SOPs built out is one thing. If you think about all of the functions of a self-storage facility, you go start at top of funnel. So you’ve got answering the phones, marketing the product, then once you’ve answered the phones, you have your clients who are onboarded or tenants and track down payments and deal with escalations there. So that we just needed to design a system that didn’t rely on people from the storage industry who already knew these things. Innately, we need to say, if you take this person out, are we still going to do the job? Then there’s the out looking at things from an outcome standpoint.

(04:40):

So if you’re doing a good job, what is the canary in the coal mine? What are the things that will tell us if we’re doing a bad job? Or it might not even be that we’re doing a bad job. It might just be is the asset not performing for whatever reason? Not everybody has the best asset. Some people, not every facility if managed properly will perform the way that it was underwritten. So defining what those KPIs are and measuring them, reporting on them, and then understanding let’s dive, what’s going to require us to dive a level deeper. And then once you’ve done those things, the third step of that process that we’ve been focused on is the right people. So we’ve wanted to get our business in a place where we didn’t need to hire storage people and we could hire for competency versus experience. I think it’s the way we view it. And by the way, there’s great people in storage, but it does limit your pool. Not everybody’s looking for a job in storage all the time. So we’ve been focused on can we find good people that we can train storage versus find storage people to train to do things our way?

(05:53):

Those are things we’re focused on. I do think one thing that’s a little bit unique, well, maybe not unique, but we don’t have any ulterior motives to growing and not to knock extra space, but their third party management arm, I’m sure it’s great. I know that it’s the tip top. They’re the class A player, but their core business is owning assets. So some people may view their third party management arm as a means to identify new purchase opportunities, and then they don’t. If we do a bad job and we lose our client base, that’s our business, that’s our revenue, and so that we can’t pay for the employees that we did hire, and then we’ll have to scale it back down. So we kind of are very, very aligned with our clients and wanting to do a good job because it’s our business.

Scott Meyers (06:45):

We’ve had that conversation so many times with regards to third party management companies and we’ll self-manage when we can until it doesn’t make sense. And then if we have to, we will utilize the big players, and I say have to, it’s not as if, again, the extra spaces of the world and then the public storage and the larger REITs, third party management, if they’ve got the market cornered, then we shooting ourselves on the foot trying to spend money to beat them, but then to utilize white label and to have the name of our facility gaining traction the momentum so that we don’t have to, if we have to change management companies, well then there we are. We can manage and we can have our name, we can have it basically have it all. And so that’s a path that we take. And just to your point, nobody cares 1% about your facility as much as you do, and so a combination of having white label do this allows us to almost have your cake and eat it too, because we can still kind of control what’s going on.

(07:46):

But all that aside, and we talked about that in the first podcast and so well, we’ll point back to that in the show notes. So Peter, with that growth, I mean you’ve got a lot of exposure. There’s a whole lot of folks that are coming at you and at least at taking a look or jumping on board. So how do you sift through that and are you working with larger players? Are you looking at large portfolios, the individuals? What’s your sweet spot? What’s your avatar if there is such a thing, or do you just adjust and bring these folks on to utilize your services in any way that they can?

Peter Smyth (08:16):

Yeah, when we started out with white label storage, it was an extension of, we had local locker, we were managing our own remote stores, and so the natural fit for us was the smallest, not most or least institutional assets, so think sub 200 units in secondary tertiary markets as many businesses go. We then started to, as we built our own set of tools out and our own team out, we became more competent managing larger opportunities. And so now the latest set of, I think our average contract size in terms of management fee has doubled. And that’s because the facilities have gotten bigger though. So we’re still serving that small side of the road asset, but we’re also serving institutional private equity or high net, ultra high net worth individuals, family offices that own these things. And we have needed to build different services for those different clients.

(09:21):

On the small side, we’ve stayed closer to our original service, which is providing what we call a remote site manager as the main point of contact for those assets. In that case, the owner is in many cases, doing a lot of what a manager would do anyway. Maybe they have their own bookkeepers, maybe they are actually the boots on ground. They go out there and they do the over locks. And in that case, providing another layer there is actually more hurtful than it is helpful. Whereas as we’ve gone a little bigger, you could think of it as an enterprise client for a software business, we’ve provided another layer, what we’d call an operations manager. And in that case, the reporting and client relationship management is done at the operations manager level, and the site manager is doing the blocking and tackling the day-to-day, following up with delinquents, making sure that facilities maintenance is done, and then this more senior person is managing the relationship

Scott Meyers (10:24):

Well. So in the beginning when we first started talking, Peter, it sounds like what you’ve set up from the start has been a page out of Michael Gerber’s book, the E-Myth systems run the business and you manage and tweak the system. And then you talked about making sure that you have the right people, not necessarily in storage, but just finding the right fit and basically Jim Collins method of putting right people right seats on the bus. So all that being said, do you have a system that you follow, that you model out? We follow Traction, Wickman’s, traction protocol and platform around here, and everything that we do is really based upon that with our own little nuances. When you begin to set up and scale and grow, was this all self-taught by trial? Did you bring in consultants? Is there a particular platform that you followed? And I’m talking at your own enterprise level with that kind of growth, you really have to have a system, make sure that everybody’s communicating well. Meetings need to be very succinct. KPIs have to be put in place, and then there has to be levers pulled when those KPIs aren’t met, and all types of things need to happen in that growth. Is there a particular, again, platform system that you’ve found and that you’ve created internally to be able to manage what you’ve been able to manage?

Peter Smyth (11:43):

Yeah. I’ll have to credit Alex, my co-founder a little bit here, but earlier this year, we’ve done different things over the course of our company’s history and that I think different systems work for different size businesses and businesses that are growing at different speeds. So when we started Local Locker, I wouldn’t even say there was a system, if you want to reference like a book, there’s the Jeff Bus gang writes about the jungle of an early stage business. You’re just kind of hacking through it with a machete. That was us figuring out storage. But now I would say what we use, and I kind of hinted at it with the KPIs, is maybe a modified version of what you’d find in high output management, Andy Grove style management, where OK quarterly OKRs and KPIs or KPIs, tracking from the department level down to the individual employee level.

(12:36):

So if a KPI that we care about it is NPS our clients net promoter score, just kind of client satisfaction, the client being the owner of the asset, then what is it that the department needs to do to ensure that that client is happy? So examples could be something as simple as just like a gift or a touch point just to maintain the relationship or all the way to are we delivering accurate reporting? And so tying those objectives and key results to the KPIs that they’re going to impact is how we think about our service. And now the new thing for us is we’ve started developing our own software. So we have AS two guys that don’t have, we’re not software developers, we’ve been layering on how do we incorporate a product roadmap that fits in with the goals that we’re trying to achieve. We would grow this service business either way, but software is an opportunity to do things more effectively and more consistent. And it’s a differentiator that can allow us to ultimately lower our cost structure and provide the same, if not a better service for a lower cost, which is while maintaining the margin that we need to achieve to be a good business.

(14:00):

But ultimately, yeah, it’s like we are constantly thinking about what are the KPIs that we need to hit and what are the inputs, what are the objectives that we need to hit them? And we do that quarterly.

Scott Meyers (14:10):

Well, clearly scalable, and it’s working for you. So what is the balance of 2025 and 2026 look like for you?

Peter Smyth (14:15):

Yeah, so 2025, we’re looking at, we’ve scaled up the team a bit now we’re scaling up the engineering team, and we are trying to lay out a roadmap that we think will really allow us to take most of our workflows. So talk delinquency, management, customer service, and either automate or augment at least the deliverings. And this is not to say that we’re trying to commercialize any of these products. What’s kind of unique about us is when we develop software, nobody sees it. We do. We just use it to do a better job. An example of that would be one of the things that we found ourselves spending a lot of time on was delinquency, man, just first of the month rolls around or anniversary bill date rolls around, whatever it is for you in the industry, people just don’t pay for whatever reason. Sometimes they can’t pay, sometimes they choose not to pay, and sometimes their credit card expires.

(15:14):

We found that most of the FMSs did not have a very good way to track down folks and put them back on auto pay. So we just built our own delinquency management tool that sort of supersedes what’s already in the FMS and does a way better job. And the more people you can get back on autopay, the fewer people will miss the next payment. And that just churns down over time. So that was an effective tool for us that our clients never saw that improved our AR in a client facing capacity and reduced the labor on our side while allowing us to do a better job. So our costs right now as a business are a significant portion of them are tied up in answering phone calls. Our customer service team is a robust one, and there are, I’m not saying that we want to be a fully agentic AI workforce, but there are use cases.

(16:19):

One of the big things with the call center is your occupancy rate. How do you want to keep, the higher your occupancy or utilization of your folks on your call center team, the more effective you’re going to be with your spend. And then another metric you’d care about is how fast can you answer the phones. So if you can take certain types of phone calls and actually do a better job using software than a human, then that will take some percentage of the calls out of your labor force and answer them immediately while allowing you to continue to deliver on the sort of SLAs you have in place service level agreements. So we try to answer 80% of our calls in 20 seconds or less, and we try to answer, have a 95% pickup rate. Those are the two credit guiding metrics for our call center. So a lot of our time is going to be spent on that. There are a lot of different types of calls you get. Let’s start with the low hanging fruit and work our way up.

Scott Meyers (17:18):

Well, if I’m reading between the lines, it sounds like you’re going to be working with and not experimenting in, but maybe perfecting AI chatbots on the front end and see how far you can take it to be able to effectively answer calls better and do everything with the same amount of staff. If not, maybe less.

Peter Smyth (17:35):

Definitely. But I’d like to point out we’re not trying to be an AI native company. We will probably use some horizontal layer to do it. And then on top of that, we don’t want to make service. You could tell when you’re talking to chatbot.

(17:54):

So we want to use it in cases where we think we can absolutely do a better job. And that is, a lot of that is around the knowledge base. One of the things that we spend a lot of time on is we have so many assets and so many different places with so many rules that we have to spend a lot of time maintaining our knowledge base and the playbooks that we have to run these facilities. We have some people whose full-time job is focused on that. So it’s like if you get a certain type of ticket internally, a customer service ticket, whether it’s, Hey, it took us too long to get this person their gate code, what about our knowledge base did not serve us in a way where we could get that done quickly and in a way that the tenant was ultimately happy. So in order to actually build any of these tools, you’re only as good as the knowledge you have about the facility. So that’s a piece of it. And we’ve been really trying to prep ourselves there, spending a lot of time just really saying, what are our blind spots for each facility? We really, really know these things so that we can deliver good information.

Scott Meyers (18:56):

Yeah, well the saying, you’re only as strong as your weakest link. And it just bothers me when I look at our own personal portfolio and I see one facility that’s languishing and I just obsess over that and I hate to see that. And so that keeps me up. And as you mentioned, not every facility can perform to the level of every other, there’s nuances in every facility and market and what have you, but those are the things that keep me up at night.

Peter Smyth (19:22):

Yeah. Speaking of keeping us up at night, one of the things that we also spent a lot of time on this year that I sort of overlooked is just our transitions throughput capacity. Really, that’s a major function of our business because onboarding one facility, you might be able to use, let’s just say you’re an asset manager, an owner, some combination of your acquisitions team and your asset management team that can spend time on this. If you are onboarding 44 facilities in a month, which we did last month, or it’s two months ago, you have people performing functions at a level that needs to be scalable and repeatable. And then at that point you’re thinking about, this person is just an FMS settings person, and there’s a ton of volume that’ll be just tied up in that alone. Or we simply have a client relationship manager. It doesn’t do anything with the onboarding, but just takes the information that the team is working on and conveys it back to our clients or our future clients. So that was a lot of the time was rebuilding that team, because I think if you looked around the industry, it would be hard to find a single operator out there that had built a team like this before because there aren’t that many growing that fast.

Scott Meyers (20:47):

Well, and doing all this while navigating a 2-year-old, a four-year old and a six-year old, tell me how you keep that. Well, they say that there is many folks, and I will agree to that there is no such thing as a work-life balance. It’s just only intentionality in both areas. But tell me what that looks like with a fast growing family and a fast growing company.

Peter Smyth (21:07):

Yeah. Yeah. I mean, really trying to manage costs on both fronts. I’m not sure which ones which expense loan is growing faster. We had a major breakthrough, so I guess I’ll say on the family front, everybody’s healthy, everybody’s happy. At least they tell me they’re happy. Who knows, maybe not always with me, the weekend is a great escape to get out there and spend time with the family on stuff where things are solid, the unknowns are falling off the bike or dealing with some hurt feelings and those things, the stakes are slightly lower there. So spending a lot of time with the family just because it’s a great way to just kind of relax and put things in perspective. We had some major breakthroughs this summer, which is exciting. We came into the summer with my six and 4-year-old saying, we got to get shoes. Everybody needs to be able to tie their shoes, ride a bike and swim by the end of summer.

Scott Meyers (22:07):

That’s fair.

Peter Smyth (22:08):

So we can swim and we can ride a bike. But the shoes, I know we got to need to bring in some outside counsel on that. I don’t know what’s going on. It should be the easiest one to get done, but I think it’s just we put on to get out the door. We just put on Crocs or sandals so frequently that you just never stay on top of it.

Scott Meyers (22:28):

Yeah, whatever it takes. Whatever it takes. Well, it’s managing a family and managing a business. They’re very similar with lots of the same skillsets, but also some nuances to each. But glad to hear it, glad to hear everybody is healthy and happy and that they are also coming alongside of you as you navigate this growth. And don’t forget, yes, you said the weekends are great and keep those weekends sacred because they go by fast. My friend with three of ’em at home, it wasn’t that long ago, even though it was when I was in your stage and once they’re out, you can’t go back. You get 18 summers with each of ’em if that, and so enjoy ’em, my friend.

Peter Smyth (23:05):

That’s a nice way to look at it. See, I was complaining to my dad the other day and he said, don’t worry, it’s only 18 more years. So he looked at it a little.

Scott Meyers (23:14):

Yeah, yeah. I look a little bit differently. I do it all over again. If I could, even in my age, and it’s a blast, I would just enjoy.

Peter Smyth (23:21):

Great. Yeah. I guess that just says more about me as a son than it does about parenthood.

Scott Meyers (23:27):

Before we end, how do people get in touch with you? What is the best way for them to find out a little bit more and learn more about White Label? Aside from which will be in the show notes listening to our initial podcast, what’s the best ways for people to reach out to you?

Peter Smyth (23:39):

Yeah, so white label storage.com and contact@whitelabelstorage.com. Honestly, the industry is not so, so big that, and it wouldn’t be that hard to figure out that my email is peter@whitelabelstorage.com. Many people have figured that out. I truly don’t mind that. I mean, especially if it’s anybody listening to this podcast is probably somebody that is interested in the industry might be worth sharing notes with and potentially could become a client. So I’m happy to put it out there.

Scott Meyers (24:08):

Awesome, awesome Storage Nation you have been hanging out with at Peter SMI of White Label Storage. Peter, thanks so much for your time today. Thanks Scott.

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