Part
01
of one
Part
01
Research company portfolio - "makespace.com"
Hi! Thanks for asking Wonder to conduct a deep dive of the company Make Space.
The short answer is MakeSpace is a virtual storage company, founded in 2013 and recently grown to four cities and a $30 million round in venture capital funding. Below you will find a deep dive into my findings.
OVERVIEW
MakeSpace is a 'virtual' storage company, marketing to people who do not want the hassle of having to transport their things back and forth from a storage unit. Users manage their storage needs entirely through an app, allowing them to request same-day pickup and even able to 'call back' specific items at any time. At the moment, MakeSpace operates in large metropolitan areas, currently in New York City, Chicago, DC and LA.
By keeping to these areas, MakeSpace is targeting city dwellers who may not have or only limited access to a vehicle to transport their items. Alternatively, people in cities also tend to drive smaller cars, so transport of larger pieces of furniture would also be difficult. MakeSpace offers free pick-up, keeping its pricing competitive. They also offer free packing bins, reducing waste and cost on traditional boxes and tape.
BACKGROUND & HISTORY
* Funding
MakeSpace was founded in 2013, launching initially in New York City. They began with $2.1 million of seed funding, quickly gaining an investment of $8 million from Upfront Ventures. In early 2016, MakeSpace held another round of funding, led by Harmony Partners and Upfront Ventures, worth $17.5 million. Its latest round was in April 2017, led by several previous investors (Harmony, Upfront) and 8VC, Carmelo Anthony, Summit Action, and Nasir Jones.
In its latest round, MakeSpace stated it was using the money to expand its operations to the West Coast, now active in Los Angeles and looking towards San Francisco.
* History
MakeSpace, as stated earlier, was founded in New York City. The founders wanted to take the idea and test it worked in a robust market. In its first year of operations, MakeSpace captured an incredible 2% of all new customers for the storage industry in NYC. After this success, MakeSpace expanded, one element at a time. They branched out geographically before upping their product lines (MakeSpace only stored bins at first, no furniture).
Once MakeSpace expanded to offer furniture storage, they found their business "exploding". Their ARPU grew 3x, and CAC dropped 50%. Homepage conversion rates rocketed 350%. With these, they were able to build out their sales and marketing team and keep growing.
MakeSpace has also been a pioneer in that they have built their warehouse management processes and software from scratch. As MakeSpace aspire to become the "Amazon of storage", they knew they couldn't do that using third-party software. Early investor Mark Suster writes: "We built logistics tracking, hub-and-spoke routing, least-cost route optimization, photo processing software and mobile apps. 80% of our software was 'below the surface' and not apparent to the market or competition." MakeSpace looked at Amazon and knew they only became so big due to superior CAPEX management and "world-class logistics".
* Future
MakeSpace want to drive legacy competitors out through their modernisation and superior logistics. They aim to make companies like Public Storage become the "Blockbuster of their industry". They have already started building software for new products offerings yet-to-be-announced. They want to ramp up their customer service, tracking, scheduling and pick-up and delivery options.
Despite thorough research, I was unable to find any confirm revenues or estimates for MakeSpace. As a private company, they have so far not released any data. Early investor Mark Suster has stated publicly that he expects MakeSpace to close out 2017 with "10s of millions of recurring revenue".
BUSINESS MODEL
As MakeSpace can operate 'virtually', they save significantly on overheads and can pass those savings onto consumers. Due to automation and being able to hold items in a more compact, denser space, MakeSpace claim its costs are around 50% of other self storage facilities, dropping to as low as 20% as they are able to grow in volume. MakeSpace's physical facilities are usually located in the suburbs, far cheaper than inner-city industrial real estate.
Additionally, as volume increases, the efficiency of MakeSpace's transport routes does as well. As they grow, routes will have enough drop-offs and pick-ups to operate at profit.
TEAM MEMBERS
Mr. Rosen came up with the idea for MakeSpace when he came to New York to help his girlfriend pack her apartment after Hurricane Sandy. He had previously founded the failed Speakergram, but when Rosen met his mentor Mark Suster, the idea was immediately a hit. Rosen was adopted by Suster's VC firm, Upfront Ventures, and began gathering his founding team.
Mr. Gandhi had three years at High Peaks Venture Partners before being approached by Rosen to join MakeSpace. The two had been acquaintances for a few years, but Gandhi had yet to find a startup which sparked his interest. Once he was introduced to MakeSpace, he was immediately interested. Both Gandhi and Rosen reportedly believe in the importance of team compatibility, favored over any level of qualifications.
Mr. Grasset has extensive experience being the CTO for other startups like Tripl and Lifesum. He is in charge of expanding the team to keep up with MakeSpace's growth. Grasset took over when co-founder Adam LeVasseur left MakeSpace in January 2015. Despite thorough searching, there is no public information on why LeVasseur left MakeSpace.
Mr. Paik joined MakeSpace only this year, coming from another startup, BeenVerified.com. He previously worked for Goldman Sachs. There was no press around Mr. Paik's hiring to lend any data to a backstory or facts as to why he was selected to join MakeSpace.
OVERALL MARKET SPACE
MakeSpace claim the storage industry is worth $27 billion and ready for modernisation. The industry is highly fragmented, with the biggest market leader holding a less than 10% market share. Due to the nature of self storage, a substantial number of companies are local or regional entities, with very few national players in the mix. As a stagnant market and business model, the industry is ripe for disruption. MarketSpace say, "Public Storage is the Blockbuster Video of their industry and we set out to build Netflix."
CONCLUSION
To wrap up, I have detailed MakeSpace's story, outlook, business model and team members, as well as their perspective on the whole storage industry.
I hope this has been helpful. Please feel free to ask Wonder if you have any more questions!