How Neighbor is changing the self-storage industry

Joseph Woodbury, Neighbor.com co-founder & CEO, joined The Final Round to discuss how Neighbor is becoming the Airbnb of storage, how COVID-19 has impacted business and the company's plans for the rest of 2020.

Video Transcript

SEANA SMITH: Welcome back to The Final Round. One startup, Neighbor.com, is looking to transform the massive self-storage industry with renters paying a fraction of the cost of traditional storage units. So for more on that, we want to bring in Joseph Woodbury. He's the Co-Founder and CEO of Neighbor.com.

And Joseph, you're essentially the Airbnb of storage. I think that's the best way to describe it. You're giving people an opportunity to make money by renting out their extra space. And I like the idea. It makes a lot of sense. So just talk to us about how this exactly works and also how you're competing with-- in a space where there's so many big players that are dominating right now.

JOSEPH WOODBURY: Yeah, I mean, you hit it on the head. It really just takes the marketplace model where we let homeowners with an extra basement, or garage space, or even a parking spot next to their home, rent that out on our platform. And instead of a storage renter going to one of these big billion-dollar storage companies and paying them, they pay you instead.

We like to talk about it like we're-- we're not just disrupting the storage industry. We're kind of disrupting the sharing economy, in a way, too. This is really the first sharing economy solution that doesn't require any work. Up until this point, Uber, Instacart, DoorDash, you have to go drive around. You have to really put in the elbow grease to earn money. But our homeowners are making passive income right from their home.

SEANA SMITH: Well, and that's interesting, just in terms of how exactly this works. Because from my understanding, it's not only residential that you're working with. You also have the commercial space as well. So how much interest have you gotten from that? And also, has it been from most of these retailers that have been struggling over the last couple of months?

JOSEPH WOODBURY: Yeah, we noticed an opportunity here as part of the COVID pandemic. We were seeing, as the pandemic wore on, our storage revenue was climbing. We've five X'ed business since this pandemic began. And yet we had these landlord commercial office space owners coming to us and saying, we don't know what we're going to do. Everyone's canceling their lease.

You saw the news, Pinterest just paid a $90 million fee to get out of their lease. Everyone's moving to remote work forever. And we said to them, we can make you cut your losses. We can come into your building. We can take some of those floors that you may no-- no longer be able to lease, and we can rent them out to the public.

We've done this already in downtown San Francisco. We've begun converting some of the office space there into storage space, and it's renting like crazy. People need storage right now, because they're cleaning out their home office for-- for more space. Everyone is moving. The buy-sell markets are up in the housing market, and so we see an opportunity to pare unused supply with demand.

INES FERRE: And Joseph, just on that point of COVID-19 and what you're seeing during the pandemic, are you seeing in certain areas an uptick as people are leaving cities? Do they need more storage as homeowners are perhaps looking for extra income? Are there certain areas where you're seeing more movement?

JOSEPH WOODBURY: Yeah, that's exactly right. It really is the perfect storm, where you have so many individuals who are needing income now more than ever. For a while, they could rely on the extra unemployment benefits.

Now, those have even started to go away, and they really need income, but they need to make that income from their home. You can't travel to-- to do that income. Travel's really shut down right now. And that's what Neighbor is. It's a way to make income from your home.

And then, as I mentioned, on the demand side, everyone is taking this-- this COVID opportunity to find their new place. You're seeing a lot of-- you're seeing an exodus out of markets like California into markets across the Midwest like Utah, and Texas, and Nevada. And all those people buying and selling homes, they need a place to store their items while they're in transition. San Francisco, in particular, basically all of the supply that we've been able to onboard in the city is-- is occupied.

MYLES UDLAND: And then, I guess, I'm not exactly sure how you-- how you would kind of frame this idea, but would you consider your core customer, like, the people who have the space? Or is it the people who are giving the stuff to the people with the space?

JOSEPH WOODBURY: That's the fun part about building a marketplace is you really do have two core customers. We have these individuals that they're looking for storage. They don't want to pay the exorbitant prices of the industry. And they need storage that's closer, and safer, and cheaper, and we provide that to them.

And then we have a completely different customer that is looking for ways to subsidize their mortgage, or save for a vacation, or help with their car payment. And they want to make money with excess space in their home. And so the way we target those customers is actually very different and kind of fun in how we build the marketplace.

SEANA SMITH: Joseph Woodbury, a very interesting business idea. We wish you all the best. Thanks so much for taking the time to join us. Co-Founder and CEO of Neighbor.com.

JOSEPH WOODBURY: Thanks so much.