Wild issues occur within the self-storage enterprise.
In 2023, Matt Engfer was at back-to-back lien auctions in Texas. At auctions like this, bidders purchase deserted models with no concept what’s inside, playing on mysteries.
So, the opening of a unit can get dramatic. The lock comes off, the door curls up, and everybody inhales. And on this specific Texas day, that first unit was an out-of-left discipline treasure trove, crammed with paintings value tens of 1000’s of {dollars}. The second unit was much more memorable.
“They opened it up,” Engfer laughs. “And what did they find there? A mouse-breeding apparatus to feed snakes with. You’re definitely not supposed to keep live animals in a storage unit. But this thing was filled with mice that were being sold to snake owners.”
Is that this the most effective story I’m going to listen to this week? Virtually undoubtedly. But it surely’s additionally a view into how shocking the self-storage enterprise can actually get. Self-storage is a type of basic invisible however ubiquitous industries—the overflow of life must go someplace, and there are lots of people on the planet. And since that is 2026, it tracks that it could have its personal legacy software program, which Engfer believes might be improved upon.
That’s why Engfer and Adam Fleming in 2022 based self-storage software program firm Cubby. The corporate now counts greater than 400 operators with north of two,000 amenities amongst its clients, a bunch that features Atomic Storage Group and American Self-Storage. It’s additionally reached a key monetary milestone: Cubby simply raised a $63 million Sequence A, led by Progress Fairness at Goldman Sachs Options, Fortune has completely discovered. The corporate’s present buyers embody Third Prime and Bienville.
Cubby, in some sense, is trying to resolve the basic enterprise software program downside: That present legacy software program is taken into account by many to be outdated. Even earlier than beginning Cubby, Engfer was met with skepticism.
“In 2018, even renting a unit online was barely a thing,” he mentioned. “Meanwhile, you could rent any hotel room in the world online. So, from a customer perspective, clearly the tech wasn’t good enough. But industry folks were sober-minded, and not overly enthusiastic. It was clear it would be hard, but there was a lot of opportunity.”
That’s as a result of self-storage is fairly darn large. The business’s value about $50 billion and there are at present greater than 52,000 self-storage places throughout the U.S.—greater than the mixed U.S. places of Burger King, Chick-fil-A, Starbucks, and McDonald’s, Engfer tells me. It’s a enterprise that tends to have 30 to 40% revenue margins, with stable to nice demand constantly.
“Depending on the research you look at, between 15% and 25% of the population is a storage renter of some sort,” he mentioned. “And that’s growing by generation. Gen Z rents more than Millennials, Millennials rent more than Gen Xers, and Gen Xers rent more than Boomers. Then, you have Boomers aging out of their homes. So, there’s a lot of demand for storage.”
These various types of demand additionally make self-storage considerably “recession-resistant,” he added. It accordingly follows that Cubby wouldn’t be the one participant trying to run software program by way of this huge area. Cubby’s prime competitor is SiteLink, the dominant self-storage software program supplier within the nation whose backers embody personal fairness corporations EQT and Cove Hill Companions. Engfer desires to be clear: Goldman’s funding isn’t a PE deal. As soon as inbound curiosity surged, he mentioned, Engfer was searching for a progress fairness accomplice who wouldn’t seize “two hands on the steering wheel.”
“We want the healthy pressure of an investor who thinks big,” he mentioned. “That’s good for our company… At this point, we wanted a helpful minority investment partner with an understanding of commercial real estate and who’s going to work hard for us—but we want to run the company because we know how to do it.”
I requested Engfer why a enterprise like self-storage finally issues. And as a lot as anything, his reply is concerning the socio-economic state of the nation. Self-storage has upward mobility that you just solely see hardly ever nowadays, he mentioned.
“As far as I can see, [self-storage is] the last place where you can get a job working for $18 an hour as a site manager without graduating from college,” he mentioned. “You can get promoted a couple times, become a district manager, raise a fund, buy or build a facility, then build a very valuable real estate portfolio. And I know this is true, because half our customers are those people.”
