In the early 2000s, a young California operator made waves when he announced at his first meeting of the SSA’s Large Owners Council that he was pulling all his Yellow Pages ads. It was industry common knowledge at the time that the Yellow Pages were the dominant way to acquire new renters. The young entrepreneur assessed the data and chose a different course.
For nearly three decades, Lance Watkins, CEO of Newport Beach, Calif.-based Tenant Inc., has been both a herald and an initiator of changes in the industry. Watkins led the charge in taking self-storage into the digital age. Founder of Storage Outlet, Storage Treasures, Charity Storage and StoreLocal, Watkins’ business ventures often sprang from the unanswered needs of his own self-storage business as the industry lagged in technological solutions.
Watkins entered self-storage in 1997 with a South Gate, California facility, unconventionally utilizing shipping containers as storage space. Since then, his entrepreneurial nature, energy, and foresight have consistently led not only to his own success, but numerous benefits for the industry as a whole. Improving the industry is the driving force behind all of Watkins’ efforts.
Watkins understood the entrepreneurial mindset at a young age. As a child, he recalls riding with his father who was selling Encyclopedia Britannica door to door and would become the world’s top salesman for the company. His father and mother later built a successful business of their own, and Watkins saw what could be accomplished through vision and grit.
He attributes much of what he has achieved to the people who became his mentors. While in his 20s, Watkins sought out and gained knowledge from three mentors who helped guide his success. “Two of them were billionaires and the other was also extremely successful,” he says. “They had massively different business interests, but all three of them suggested self-storage, and after looking into the industry, I understood why.”
In the 1990s, one of his mentors was developing gorgeous Shurguard facilities in California, yet steered Watkins toward storage space in shipping containers on leased ground. “It was down and dirty, but he said this approach would make money.”
Watkins started attending industry shows and asking questions. He undertook six months of due diligence on how to build containerized storage facilities. This included a trip to China to figure out how to have the containers built and shipped to the U.S. Prospecting for facility sites, he discovered that Southern California Edison was one of the largest landowners in the state. Most of the land was encumbered by power lines, so buildings were prohibited on those sites.
Thus began Storage Outlet. Watkins was able to negotiate a 65-year ground lease with Edison. He opened the first project, roughly 85,000 rentable square feet in South Gate, around 1997. “I leased it to 90 percent in 90 days while also developing two additional sites.”
Watkins’ partners were happy with his success, but developing the facilities was complex. “The cities didn’t want those containerized storage facilities,” Watkins says, “and there were a lot of technical problems to solve with getting the containers delivered and set up.”
He brought his partners opportunities for ground-built facilities, but they wanted to keep doing the container deals because they created tax and cash flow benefits. It took Watkins three years to convince his partners to let him do an in-ground project. “It was three times easier,” he says. “It was a huge success, so they turned me loose.”
A few years later Watkins had a portfolio of stores, visiting each site at least once per month. “On the operating side, my heart was in sales and marketing,” he says. “I would ask the managers, ‘How’s occupancy? How’s marketing doing?’ Everything was analog then. There was no digital. No smart phones.”
Around that time, Google had launched, and consumers were beginning to use it to search for businesses, but Watkins didn’t know how to build a website. “You knew somebody who knew somebody,” he says. “Someone’s kid in a garage. That’s how I did it.”
When visiting his stores, Watkins always asked where the leads were coming from. “Door hangers? Penny Saver? The blimp?” he would ask. “They started telling me it was the website, and I was saying, ‘What website?’ I forgot I had built it.” After getting the same report from many managers, Watkins began to pay attention. In the early 2000s, he began building more robust websites.
As a young entrepreneur, Watkins had the opportunity to meet many large storage operators. “When I passed 1 million square feet, there was a thing called the Large Owners Council (LOC) under the SSA,” he says. By his first meeting with the council, Watkins had already had websites for two or three years and was tracking his marketing efforts. He used tracking numbers for each Yellow Pages ad and did a six-month study on the cost of gaining customers through those listings.
“In my first meeting of the Large Owners Council, I put my hand up and asked if anyone had done a similar study,” Watkins says. He shared his findings that his highest cost to gain a customer was $2,700 for Yellow Pages yet just a few dollars via digital leads. “With my little portfolio,” he says, “I was spending about $500,000 per year on Yellow Pages.” Watkins says he was the first large owner to pull all advertising from the Yellow Pages. “Everyone thought I was crazy,” he says.
Around 2008, Watkins noticed another trend that was gaining influence. Social media was rapidly taking off. He says he was the first large operator to seriously embrace the new digital trend. “I had 4,500 organic followers when Public Storage had 25,” he says. He hired an agency to help with digital marketing—the only agency focusing on self-storage at the time. Soon, Watkins saw that social media was becoming a critical aspect to how search engines saw his business.
“Social media grew up from hot or not to the five stars we all seek from our customers, the sites we use to acquire talent to run our businesses, and now AI,” says Watkins. “It was never going to be cat videos.”
In 2010, Watkins experienced another phenomenon that sounded alarm bells in the storage industry. “One day, I got a call from one of my LA facilities,” he says. “They said, ‘Hey boss, the camera crews are here today.’ In our industry back then, cameras and reporters were never good.”
He asked why a news crew was filming at the facility and learned that they were following Dan and Laura Dotson of American Auctioneers, who were ultimately the impetuous for the hit television show “Storage Wars,” and filming an auction. “I flipped,” Watkins says. “I said, ‘Get them off our property,’ but they had already finished filming. The biggest news agency in LA had discovered that there were storage auctions and decided to film a segment on it.” The management team hadn’t informed Watkins.
“Next day, I’m hiding under my desk thinking, ‘When this airs, my partners are going to crucify me. My business friends in self-storage are going to crucify me.’” At the time, auctions were something the industry did not broadcast. However, once the segment aired to about 4 million viewers, Watkins says his investors and even some renters were calling to ask if they could come to auctions. “Producers in LA were also watching the same show,” Watkins says, “and within a couple weeks, 35 producers were chasing the reality TV concept.”
Since increasing his ranking online was always on his mind, he saw a potential opportunity. Watkins was considering leaving the digital marketing agency at that time. “I understood that the value of your online real estate was going to be more valuable than the physical location of your real estate. With an agency I was just renting my online space, I wanted to own it.”
Watkins saw an opportunity to turn the sudden interest in auctions into a positive. Original Productions had partnered with A&E to film a storage auction show and reached out to Watkins to film at his facilities. “I told them they were idiots and that no one was going to watch a show about storage auctions,” he recalls. “They laughed at me and said, ‘We want to do it. Will you help us?’ I said, ‘Absolutely.’ This stupid show that would fail within the first year would expose my Storage Outlet brand to millions of people.”
The social media content would drive relevancy and lead searchers back to his new website. This would reinvigorate his search engine rankings after their inevitable slump as he transitioned from a third-party marketing agency to hosting and managing his own websites. Watkins couldn’t believe the opportunity served up to him while the rest of the industry dreaded public awareness that delinquent units were ultimately auctioned if they remained unpaid.
The crew showed up at the Gardena facility with three minivans and a producer who knew nothing about self-storage. “That’s how ‘Storage Wars’ started,” Watkins says. Once it aired, the number of people showing up for auctions quickly grew from a few bidders to hundreds.
Watkins says that for five years straight, “Storage Wars” was the top syndicated reality show. “I was so wrong about whether the show would succeed,” he says, “but what I did recognize was the business opportunity. We were going to have to take our auctions online.” Watkins created Storage Treasures, an online storage auction website, with his former partner Leslie Watkins. To promote the brand-new website, he leveraged his involvement with “Storage Wars.” He created magnetic signage with the auction sites URL, and they would literally run between the storage unit during filming to throw his magnetic branding into the shot just before the cameras started to roll. “We were signing up 1,500 bidders a day and had the highest traffic of any storage related site in the world,” he recalls with a grin.
Watkins understood that the digital revolution had changed the way people search for storage space, but he also knew an effective digital presence was becoming increasingly challenging and expensive. “I had concerns about what that was going to mean to me as a private operator,” he says. “The REITs eventually were going to crush smaller operators. It was crystal clear to me back in 2010 and 2011 that all of us smaller operators were screwed.”
Watkins saw that the public companies owned maybe 10 percent of the physical real estate but owned a disproportionately high percentage of online real estate—roughly 25 or 30 percent. He says that alarms should have gone off for everyone when they looked at the inequity between physical real estate ownership and online ownership. “It was the precursor to consolidation,” he says. “It wasn’t about them buying up more than 10 percent of the real estate; it was about them buying up more and more of a digital footprint. They owned page one.”
By 2012 Watkins had a plan. “I partnered with StorageMart, the largest private operator at that time,” he says. He met with Chris Burnham in Newport Beach. “He had 180 stores at that point, and he knew he was in trouble with the publics,” Watkins says. The question the two operators contemplated was how they could get thousands of stores to band together to acquire tools to compete with the largest companies. They created a co-op called StoreLocal, with a target bigger than any public company collectively working together on their business.
One problem with building a co-op was that many operators were successful enough that they didn’t really understand the necessity of banding together to compete with the REITs. “The fact is, there was more demand than supply for our product,” Watkins says. “You didn’t have to be good to find success. The operators in StoreLocal participated, and they philosophically agreed, but they didn’t realize the importance.”
Things changed when Storable, a top industry software company, began buying the supply chain such as operating systems, insurance companies, payment processing, etc. StoreLocal participants rolled their sleeves up when Storable began dictating business practices to these independent minded entrepreneurs. They were ready to shape and control their own technological futures. “We showed them Tenant Inc., which we positioned as a tech company, not a co-op” Watkins says. His team had been building the technology for many years. “We were building VSaaS—vertical software as a service,” he says, “a ground-up solution that runs deep within an industry and a tech stack, which vertically integrates as well. You cannot lead the vertical with a private equity rollup of legacy systems.”
Tenant Inc. launched five years ago to provide tailored solutions designed for specific self-storage industry needs. The VSaaS seamlessly integrates the fintech, CRM, data, web, communication and many more products operators value and use. Watkins says you can think of Tenant Inc. like Microsoft. “You don’t use Microsoft,” he says, “you use Word, Excel, PowerPoint, etc. Tenant Inc. owns and integrates Storage Front, StoreLocal, Hummingbird, Nectar, Tenant Payments, and Tenant Protection Services.”
For the self-storage industry, he sees further consolidation and holds to the theory that there will be only 10 strong brands owning consumer traffic in a relatively short timeframe. Watkins also sees a revolution in product offerings. “This has been a status quo industry for 50 years in every way,” he says. “The facilities we build today don’t look much different than the ones we built 50 years ago. Are they more beautiful? Are they vertical? Yes, but they’re built on a bell curve of a unit mix from 5-by-5s maybe up to 10-by-40. The same roll-up doors, and the same product offering.”
For Watkins, one problem with the status quo is the number of services the industry has left on the table. He sees last-mile delivery, logistics, concierge services, and small business needs as just some of the areas operators may venture into. Watkins believes the acquisition and development party has seen closing time considering the current financial markets and economy. As operators wait for easy money, which we may not see again, they may seek new opportunities within the businesses they already own. “You’re going to have to work,” he says. “On top of that, you’re going to have to work in areas you never wanted to work in.”
This simple business of storage has become more complicated. “The most powerful location on Earth is 3.5 inches in somebody’s pocket,” Watkins says. “We’re going to realize that being good on 3.5 inches takes more than hiring some agency. It takes all of your data and information, and it has to be verticalized in a VSaaS, because ultimately, you need to make decisions quickly and efficiently.”
Storage customers are also changing. “Our biggest users now are millennials, and Gen Z is coming up,” Watkins says. “They’re using storage differently. If you can’t respond to how they use storage, you’re going to be behind.”
Watkins believes that the newer operators will adapt to today’s climate and do well. “These new people coming into the industry—most of them from technology and finance backgrounds—are not following the status quo at all,” he says. “They’re looking at how the business has been marketed and run, and they’re doing it differently.” There will be many failures, but new markets and methods will be proven by the pioneers.
Watkins always followed his own drummer as well, taking risks that not only panned out for his own business but also benefited the industry. Today, Watkins is focused on stabilizing Tenant Inc. and, as always, staying two steps ahead of where self-storage is going next.
“I’m fearless of execution and bored by status quo. I have many years ahead with Tenant Inc. Think of us as the disrupter of disruption and opening new doors to your income imagination.”
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Tammy LeRoy is a freelance writer based in Indianapolis and is a longtime contributor to MSM.
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