FOUNDER: Daniel Hughes
LOCATION: New York City
LAUNCHED: September 2009
2010 REVENUE: $100,000
2011 PROJECTED REVENUE: $2 million
PRICE: From $29 a month for five boxes to $249 a month for 100 boxes
STORAGE FACILITY: StorageByMail leases space in a 600,000-square-foot warehouse.
RECENT BUZZ: In October, the company won $50,000 in a start-up competition held by MassChallenge, an incubator in Boston.
FUNDING SOUGHT: $1.3 million
The Pitch: "People who need self-storage facilities usually live in cities, and many of them don't own cars. StorageByMail lets people put their belongings in storage simply by mailing them to us. After signing up to pay a monthly fee, customers describe the contents of each box for reference, print out prepaid shipping labels, stick them on boxes of any size, and mail the boxes to our facility in Jersey City. To retrieve a box, users just log on and request a return to any address. We pay the shipping fees—up to $25 per shipment. We're raising money for a marketing campaign aimed at people in the military. We also want to market to urban customers, traveling salespeople, and businesses with corporate relocation programs."
Focus on the Military
With this business model, Hughes can use cheaper storage locations and reach a national customer base. That's all very good. The problem is, there are no barriers to entry—there are three or four companies that are doing the same thing. Because there's nothing unique about the company right now, it's not the kind of company an investor is likely to fund. For now, Hughes should continue to bootstrap and work on gaining serious traction in the military segment. Once he has real numbers to show that he's the go-to person for the military, the company will be more attractive to investors.
David S. Rose
Chairman, New York Angels
New York City
Alter the Business Model
It's a clever idea, but there are no barriers to entry. Because Hughes doesn't have his own storage facility, I think this business might work better as a service for other self-storage companies. Hughes could contact facilities around the country and offer to fill their extra space by bringing in new customers who live in other parts of the country. Hughes would have to see if self-storage owners would be willing to pay for this type of service. Until then, he should raise money from individuals, because it's unlikely any large professional investors will get involved.
General partner, Canaan Partners
Menlo Park, California
Get Customers to Commit
The problem StorageByMail is solving is quite specific, and it's expensive to find consumers with that problem. Because the customer acquisition costs are so high, Hughes should test ways of getting customers to keep their things in storage for a while. Instead of having customers pay month to month, perhaps Hughes could offer a discount to customers who commit for a longer period. If it costs $100 to find a customer who pays $500 to $1,000, that's lucrative. Spending $100 to find a customer who uses the service for only a month is not.
Partner, Dace Ventures