RE MINISERIES PART 1: NICK HUBER – OPERATING A MOVING COMPANY AND A SELF-STORAGE PORTFOLIO – EP. 68
Today’s episode is the first in a three-part miniseries on real estate. Even though Think Like an Owner is a small company focused podcast, many small company owners also own real estate and I thought a short miniseries would be an interesting way to bring that conversation onto the podcast.
This first episode features Nick Huber, who owns self storage facilities through his company Bolt Storage across the East Coast in New York, Pennsylvania, and Ohio. What makes Nick so interesting is he started out owning and operating a small moving company he started in college called Storage Squad. Over the course of this episode, we talk about life running Storage Squad, why he decided to branch into real estate, using Reddit and Twitter to grow your business, and where he’s taking his own podcast next.
Think Like an Owner Sponsors
Live Oak Bank – Live Oak Bank is a seasoned SBA lender focused on search funds, independent sponsors, private equity firms, and individuals looking to acquire small companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.
Hood & Strong, LLP – Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [redacted]
Oberle Risk Strategies – Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and Employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.
If you are under LOI, please reach out to August to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to August directly at [redacted] in sponsoring? Send me an email at [redacted] Transcript:
Well thanks for coming on the podcast, Nick, it’s exciting to have you. I’ve enjoyed following your account over the last year or so, and I’m really curious to dive into real estate a little bit more. I focus mainly on businesses and small companies that folks run, but a lot of them own real estate on the side, so it seems like a worthy discussion to bring into an SMB-focused podcast. So excited to hear a little bit about yours, but you started with an SMB, I’d love to hear a little bit about your background and how you got through your moving company and now into self storage.
Yeah Alex, first thanks for having me, man. I’m a big fan of your work and I’m happy to be here. So 2011, I was an undergrad at Cornell in Ithaca, New York, started a small business doing pickup and delivery students storage when students went home over the summer. My partner, Dan and I, filled our apartment basically full of stuff over the summer while the kids were gone. We drove around in our cars, picked up their stuff, stored it, and then we decided to go all in and start that business and forego the job market. Launched that a couple of schools the next year, bought a couple of cargo vans doing pickup and delivery of student storage. The company was called Storage Squad.
Grew that business, learned about logistics, moved to Boston for a couple of years until about[redacted]That’s when I left the business and we built our first self storage facility. And in January of 2021, we sold that small business and now we focus fully on real estate, self storage.
You said you stored stuff at your apartment. How filled was your apartment? Like if you had more stuff to store, where would you put it?
I ran around and started advertising like a maniac. I went to the sorority events and the fraternity meetings and the sports teams, and sending emails to every Listserv that I could and basically drove around in my Cadillac DeVille, picked up all the boxes, put them in my apartment. Filled up my apartment room so full that I could not sleep in there that night, locked the door for the summer and people kept calling. That’s when I called my partner, went over to his house because he had a full five bedroom house with a big basement.
I went in and said, “Hey, can I lease your basement from you?” And he goes, “What do you mean? I want to help. Let’s do this.” And he got even more excited than I was, so we partnered up and drove around, and picked up about 40 students’ stuff and filled up not only his room, but we subleased some other rooms from some people who were renting and about to head out for the summer. Filled up the whole basement with stuff and five days later we had seven or eight grand sitting on the bed in cash and we were pretty pumped.
What was your first investment after that? Beyond just leasing people’s houses and friends, what was that first big investment you made in that business?
We bought three cargo vans, one for Indiana University, one for Iowa, and one for Cornell, all with student loan money / some money that we had saved, but we bought really crappy vans for about $1,500 a pop. Built the website for free, did all the branding design work for free. That’s all, that’s the only dollar we spent between then and the next year when we got serious about it.
What did serious look like?
Well, we knew our friends were getting $100,000 a year jobs in New York City. They were Ivy League grads, and when I called my dad and said, “Hey, I’m going to start a moving company,” he tried to talk me off a cliff. He’s like, “What the heck, Nick? I didn’t send you to the Ivy League to start a moving company. You just told me about your buddy getting a job in New York City for $120,000 a year. What are you doing?” We knew we had to get serious, so we didn’t just do Cornell and Ithaca College, we did the two other schools that we launched at and our goal was 250 customers. If we weren’t going to hit 250 customers, we both were going to pack it in and go get jobs. So we built the website, did a bunch of marketing, convinced a couple of buddies in those towns to launch the businesses. We got, I think 256 customers, so we hit our goal by six.
Did a whole ‘nother year living for free at his apartment in Chicago. That’s when we launched in Boston, Syracuse, Penn State, a couple of other schools. That next year we did, maybe… It was our first big year, 300,000 or so, actually more like a half million in revenue. We were able to reinvest about 100,000 of it because we did a lot of the work ourselves. The next year after that is when we really ramped up and Boston started to take off[redacted]was our big year, that’s when I think we went up to probably 1.5 million in sales. Then 2015, ’16, ’17, couple more schools, couple more schools. Got some contracts with schools. About that time we were doing about two to three million a year with six full-time employees. And a lot of part-time employees, 150 or so.
How’d this business make money then? Was your money made primarily on the moving of the storage and then the actual storage was pretty low margin? Or was the storage in the margin and the labor of moving things wasn’t that profitable?
All of our expenses were in the move, almost. We leased our warehouse space and some supplies. All of our expenses were in the moving of renting the trucks, paying the employees, getting the supplies, but we just charged a flat rate per item. The average order was about 250 bucks or so, we’d charge 40 bucks for a box and the average order was 5.5 items, three boxes and a mini fridge, and a bed or something like that.
Who is the first hire you made that you didn’t know personally?
Oh well, all kinds of them. I mean, I was thinking about this last night, how wild entrepreneurship is, that you’ll have a five minute call with somebody. I interview quickly and fire quickly as well, but you have a five minute conversation with somebody you barely know, maybe a half an hour interview. Next thing you know, you’re both trying to make a big life decision and you’re signing on to pay somebody X amount of money per year for them to come work for you. It’s pretty wild how that works. But yeah, we hired a lot of virtual strangers to come make $15 an hour, driving trucks and moving boxes.
What kinds of people did you look for?
We hired a lot of students, a lot of athletes, a lot of people who just wanted beer money for the weekends and that made it difficult because they didn’t really care. We didn’t have the time, or energy, or money, or resources to train them a lot. We got a half an hour with each of them to try to train them on how to do the job, so it really tested us logistically on, hey, if you’re going to have somebody come in and they need to be able to offer a reliable service to your customers, but you only get to have them for two weeks and then they’re gone forever, that’s a challenge.
That is a challenge. What are some failures you had in learning to manage people?
I would say when I said 2014 was our first big year, 2013 was a mess[redacted]was the most stressful three week period of my life. We were understaffed and frankly, we got a lot more customers than we thought we were going to get. The job that we were hiring for was complex, and me and Danny were trying to hire these Ivy League students to come work for us and they were just failing. They didn’t do a good job. They were late for appointments. They didn’t label stuff correctly. The warehouses were unorganized, it was a mess. And we stayed up basically 23 hours a day, 22 hours a day for three weeks straight because we were the ones answering the customer service calls. We didn’t even have a customer service rep. We were idiots, we did not know how to run a business.
The next year is when we got serious about, okay, we have to simplify this job. We have to standardize the job. It’s not the employee’s fault, it’s your fault for not giving them the tools to succeed. So we got serious about standardizing it, simplifying it and that’s when we were finally able to scale and hire the full-time customer service reps and take the billing off the responsibility of the drivers, and things like that.
When you say simplifying and giving them standardized processes for doing things, is that creating checklists or is there some software you implemented?
I’ll give you an example. Yeah, 2013 was the cluster, that was the terrible year. Profitable year, but terrible from a organizational standpoint. We had a tablet that they were using with LTE, it had a 45 point checklist on the back of things they needed to do. From drive the truck to answer the customer service calls, to call the new customers, to making the schedules, to labeling the boxes, to taking the pictures of the boxes, to creating the invoice, to unloading the truck at the warehouse, to organizing the warehouse, all of it. These one employees needed to do all of it. The next year we’re like, “Okay, this is too much. Unless we simplify this down, they are never going to be able to do all these things, ever, and it’s going to be failure forever.” So we said, “Okay, what can we take off this?” And we said, “All right, the billing.” Instead of having them actually create an invoice and be the judge of what something costs, they were messing up, our invoices costing us all kinds of money.
They were billing giant boxes as small boxes, like 50 bucks here, 50 bucks here lost off of the revenue. We say, “Okay, let’s take that off of their plate and have them just take a photo. And have one person on a computer in one area, do all the billing. They look at all the photos and they do all the billing for everybody. Then it’s making the schedule. Okay, instead of having our employees make the schedule where they’re going to drive, why don’t we have one person on a computer in one area, make all the schedules for every truck across our entire company?” It was just systematically doing that to every area of the business until these drivers had five things to do. They had five things. And yeah, you can train somebody to do five things well in 20 minutes, 30 minutes.
That’s when they started being on time, we stopped hemorrhaging money on our billing. Our scheduling was better. Another one was customer service. Instead of answering customer service questions, pull out this card and give it to them. That card has a phone number of somebody who answers customer service questions all day. So it was about taking things off their plate and simplifying it.
Did the business become easier or harder to manage as it grew and you started implementing these systems? It sounds like it improved and got better, but I’m curious, did every function in the business get better or did some get worse and more difficult?
I’d say that year in 2013, we made 100 grand in profit and it was the most stressful year of my life. The next year it got less stressful and we made more money. The next year it got less stressful and we made more money. I think part of that’s just scaling. If you don’t have scale, you can’t hire out individual people to do individual jobs. But I would say there were still some stressful years as we grew, 2016, 2017, but it definitely got easier.
Then how did you get into self storage?
We realized that, hey, the service business that we’re building, A, it has put some cash in our pockets. We’re still living frugally. At this point, we’re making 500 grand a year, what do we do with our cash? And the second thing is like, hey I don’t like this life. I don’t like every May spending four weeks on the road, away from my family, sleeping in grody warehouses, being stressed out as hell. Having to deal with 150, 200 part-time employees, having to staff up, preparing for that is just not a lifestyle that’s good.
And B, there’s no intrinsic long-term value in the business. We’re not going to be able to scale this thing. The business was not super scalable. I mean, yes, it was scalable to the point to make a little bit of money, but there’s only so many good colleges in the country that you can go to with the business model, we learned. A lot of them were failing. SEC schools were not doing well. Private schools that are hard to get into were the bread and butter, we were already at most of them. So that’s when we decided, okay, what’s next? I kind of semi left the business at first in 2016 to build a self storage facility in Upstate New York and self storage was just a natural business that we looked at and said, “Okay, it’s real estate. We like real estate. We don’t know a ton about it. We know it’s tax efficient. Who do we want to compete with?”
So my partner and I were like, “Okay, let’s figure out the path of least resistance. What can we do? The people that are already doing it and making really good money are not very good at what they do.” So we chose self storage because there were a lot of mom and pop operators who were in their sixties that didn’t answer the phone, had no websites, were keeping handwritten ledgers, doing no marketing, and all of them were filthy rich. So we’re like, “Let’s try to get some of that.”
Talk about the first storage facility that you were operating. How did that process work? How did you develop the playbook for systematizing it and all these other things?
Well, I think with real estate, the actual operations of the business are fairly simple, but the logistics behind putting a deal together is the hard part. We had 500 grand of our own cash in the deal, we had to raise 500,000 from friends and family. Then we had a bank finance and other 1.5 million to go all in on a $2.5 million build that we then had to build. Once we got it up and operational, it was about just blocking and tackling and doing what we did best, which is answering the phone, doing marketing, getting customers in the door. It started to fill up pretty fast and the operations went really well.
You fast forward to mid 2019, that’s when went back to our bank. We finished it in 2017, got it built in 2017, bought out a neighboring facility across the street in[redacted], we went back to our bank and said, “Hey, we think this thing’s worth significantly more than the 2.5 million we have in it, let’s look at a refi,” and so we got more debt on it and pulled out about $2 million of cash to go build and buy more storage.
How much better do you think you operated the self storage business as a result of owning the moving company?
Yeah, I think a lot about how small business correlates to real estate. I think the mistake, the misconception around real estate is that it’s a passive business and that it’s just something people do who play golf and ride around in their Porsches. “Oh, I’m in real estate so I don’t really do much. I just own it and people pay me checks all day.” That’s not the case. I think we had a competitive advantage in the self storage business because we treated it like a sweaty startup, like a small business that, “Hey, where can we carve out some alpha here? Where can we out-operate everybody else? The sweatier, the better.” We looked at a business that had an average of 400 tenants in one storage facility. You got to collect the rent from them. You got to get them in and out. You got to rent units. There’s a lot of turnover.
A lot of logistically challenging parts of this real estate business. It’s not just a triple net lease where you do nothing except cash checks all day. So learning how to deal with the customers, how to run the business, how to manage it remotely. And we manage this thing remotely. I lived in Boston while the thing was in New York for the first two years. Now I live in Athens, Georgia, and we have a portfolio of 20 properties and almost 5,000 units up around New York and Pennsylvania, but I live in Georgia. So I think the logistics and learning how to do it, it was key. We wouldn’t have been able to get into real estate if we didn’t know the ins and outs of small business.
Were there any downsides to not being in the physical location? I can imagine if something went wrong or a car drove into the side of one of your units, that being on-site would feel nice. It would be good to check in on how things are going. Were there any downsides to being remote?
I’ll flip it around and say that it was an advantage because if I was on-site, I would have been sweeping units. I know myself, I would’ve been driving by it. I would’ve been tinkering. I would’ve been inside the business. But when I was in Boston, six hours away, I mean, yeah I was there every other month on-site, walking around, making sure everything was good. But the fact that I wasn’t there, it forced me to run a tight ship. It forced me to zoom out and look at the big picture. It forced me to delegate the contractors that were going to show up.
I had to find them. I had to vet them. I had to make sure that they were reliable. It helped that I could see the facility with motion detection cameras on my phone all the time, that helped. But I think it was an advantage not being there, honestly, because I was able to focus on growth. I was able to focus on new deals. I was able to focus on expansion, and I didn’t have the option to go spend a whole day weed eating, or spraying weeds, or cleaning units, or sweeping hallways.
So you built the first one and have since bought others. What are some pros and cons to building one verse buying one?
I think looking back, I wouldn’t do it the way I did it. I would buy something existing, just knowing what I know now about the business. But I think it was a tremendous blessing because we got bailed out by a hot market. The storage facility filled up and it was worth a lot more than what we paid to build it. So it was a huge financial windfall when we were 29 years old to have $2 million wired into an account saying, “Hey, you can use this to go buy and build more self storage.” That was a life-changing event. I don’t regret it by any means, but knowing what I know now, that you can buy storage facilities that are already built in full for $50 a square foot, it’s easy now.
How did your self storage business interact with Storage Squad? Just in terms of operations?
Operations, there was nothing similar. We didn’t lease space to the other company, the only thing that was the same was the website and the brand name. We had a Storage Squad sign on the building, but the intrinsic value of having that back office staff that can answer some phones for you, having the cash coming in every month from that other business to pay our bills so that we could invest in the real estate. We never would have been able to take the financial risk to build the facility without our small business, and just the operational chops that we learned over the years, was insanely valuable.
How did they interact on a personal portfolio level where you have income and real estate on one side, with a business on the other?
The small business income was active income because me and Dan were involved in the small business. And when you’re in real estate, the loss is the depreciation loss, the real tax advantages with real estate are a different type of loss. They’re passive, so we weren’t even able to use the losses from our real estate depreciation to offset the profit from our small business. But that said, I mean, it all works together, the personal financial statement depends on how valuable each of those things are. The small business paid the bills and created cash, the real estate was the longer-term appreciation play that was really tax advantaged.
What are the drivers of something like self storage, which is more asset intensive, versus your moving company, which is a lot more employee-based?
That’s a good question. I think the advantage of self storage is in that it’s not employee-based. I think the way real estate is valued is more clear. The value on the open market is more clear. It’s really hard to sell a small business and if you sell it, which we did, we sold it for one time EBITDA when we sold it, one time profit. Our self storage business net operating income is 500,000 on that facility, and 12 times that is what it’s worth. We knew that long-term value, long-term equity. Banks will also loan against real estate assets, it’s more sure thing income in their eyes, coming in every month. So the long-term value and appreciation, we just knew that building wealth over the next 20 years, real estate had to be a part of that.
I’m curious, I’m sure you’ve gotten to know other self storage owners and investors. Do a lot of the other owners and investors own small companies as well that funds the real estate? Or do a lot of them just own real estate and they don’t have another business or cash flowing entity on the side to help support it?
Yeah, I think another misconception is that you can get involved in commercial real estate without any cash. It’s just not the path that most people take. I mean, if you’re not from a high net worth family that can bankroll you, the only way to get into real estate is to get some cash built up, and that’s what small business does. You look at famous real estate investors who built half of New York City, almost all of them, either them or their family members started a business to generate a bunch of cash. Same with many of the real estate investors that I know. Very few of them, Chris Powers being one, he started in real estate in the (inaudible). After 2008, he found some great deals, got a ton of appreciation early on. He entered real estate without starting a business first, everybody else that I know was an entrepreneur before they got into real estate.
And you think that’s just because they’re the ones who have the assets to get into real estate on a more scalable way, versus someone trying to buy a small storage facility and then work their way up from there?
Yeah, I think a normal person with a W2 job, it’s really hard to get ahold of 200 grand, 500 grand. We had 500 grand in the bank when we did our first development, or the bank would not have approved it. We had to put 30% of the cash down and we had to have another 100 grand in reserves. The amount of cash needed to buy commercial real estate is significant, so without that cash… And it’s just really hard to generate that cash without entrepreneurship, I mean, true wealth. To generate massive amounts of wealth, it’s almost always through small business
I’d be curious to dive into the operating playbook a little bit more. So if you’re competing with mom and pops with everything’s on paper, what approach did you take?
This is right around 2016, and this is when software as a service got big. There were several companies that were building software as a service for self storage, so we bought $150 a month out of the box software that could rent units. It could send automatic notifications. Customers could log in and pay. You could send text message notifications at different points during the rental process. It just made it super easy for us to run the business. So while our competitors, they didn’t answer the phones because they like to be a hundred percent full, we know that self storage should never be a hundred percent full. If you don’t have any units available, you’re not charging enough money, you’re under market rent. So we just implemented the big players’ revenue management strategies. And the big players, I mean Public Storage, Extra Space Storage, CubeSmart, the REITs, drive rents like they do, but operate like a lean bootstrap startup without that full-time manager on site.
So Public Storage, CubeSmart, Extra Space Storage, the big players, they all have full-time managers in an office at their storage facility. We don’t have a full-time manager at any of our facilities, we have five customer service reps that manage 20 facilities. It’s about cutting costs and driving revenue. We found that these mom and pop operators, A, they weren’t very efficient. They didn’t use software. They were keeping handwritten ledgers, not answering their phones, running at a hundred percent occupancy. And B, they weren’t driving revenue. They weren’t driving rents. They had tenants in their units for 10 years without raising the rent on them one time, so when you can cut expenses and drive revenue, you can have an operational advantage.
Yeah, absolutely. I know that a lot of small business owners are nervous to raise prices. How did you view raising prices? And then what were you afraid of happening if you raise prices and then those things happen or not?
I mean, it’s uncomfortable, I get it. Especially if it’s your one asset. If you have one property in one town and you live in that town, and your kids go to school with your customers’ kids. And you know them, and they walk in your office and they send you Christmas cards, that’s a little different, it’s hard. But when you know that the data says that, okay, Public Storage, every nine months they raise people’s rent 6%, no matter what. Every time somebody moves in, five months after they move in, they get a 10% rate hike. It’s just their playbook. It’s what they all do. It’s what they found that, okay, there’s going to be a nominal amount of turnover if we do this stuff. You look at mom and pops who have charged the same $52 for a 10 by 10, for 10 years, it’s sad to think about how much money they leave on the table when they could’ve been optimizing those things.
An example is we bought a property in Shippenville, Pennsylvania, and the guy was charging $52 for a 10 by 10. Everybody around him was charging $90 for a 10 by 10. I don’t talk about raising rents a lot because I know that it’s a piece of bad press waiting to happen in any small town that we operate in, but I mean, all we did was raise rents to what the competitors were charging. Nobody moved out and we went from doing $13,000 a month to $19,000 a month in two months. It’s just the blocking and tackling of running a self storage business.
Yeah, certainly. I find pricing really interesting so I’m always curious about that.
Yeah, I think so many small business owners don’t raise rents enough, or don’t raise prices enough. The way it impacts your bottom line is insane. You can raise rents 10% and your margin can double.
Did you raise prices in your moving business?
We did, yeah. Not enough, looking back. We wish we would’ve done it a little more because we were always the low cost option. We didn’t know much better.
Did you raise them at all or…
Over time, yeah. We were charging, I think $24.99 for one of our signature boxes at the beginning, and by the time we sold the company, we were charging $39.99 for it. So over the course of seven, eight years of operating the company, yeah, we’d do a $2 or $3 rate hike every year.
Is there something you do besides just looking at competitor rents in town to figure out what’s the optimum price point for raising a price, either in your moving business or in self storage?
You look at cost to move. To move out of a storage unit, somebody has to rent a truck and go there and sweat all day and move it into another storage unit, so for $8 or $10 a month, the advantage that we have in self storage is that our ticket price is low. Like a multifamily tenant, getting a 10% rent increase can be hundreds of dollars a month. For us, our average tenant pays 70 bucks, so a 10% rent hike is $7, it’s a very small piece of the pie. And another part of its occupancy, if everybody in town is almost full, then you know that everybody in town is charging too little.
That makes a lot of sense. Throughout all of this, you started a subreddit called Sweaty Startup and have since built up a nice Twitter following. I’d be curious, what was your experience using Reddit to grow your audience? And then what made you decide to try out Twitter?
I launched the Sweaty Startup podcast in December of 2018 and it was about small business entrepreneurship, just trying to spread the message that folks should focus on small business. It’s a really great way to generate wealth, and you don’t have to have a new idea, and you don’t have to get venture capital funding, and you don’t need to call yourself a startup. I had no way to promote that. I didn’t know any entrepreneurs, had no way to connect to them, so I said, “Okay, where do entrepreneurs hang out?” And it was in the subreddit called Entrepreneur on Reddit. I went on there and started writing copy and trying to get people to listen to my podcast and it was a brutal place. I mean, some people resonated with my message, but I had a lot of people who would just say the meanest things every time I posted, all over the place.
So I got good at writing copy. I got thick skin and I built up a following of about a thousand downloads a month per episode of the podcast. Moses Kagan, who’s one of the real estate, Twitter, original guys, and he runs a great real estate private equity company out in LA. He reached out to me and said, “Hey, Nick, I want to come on your podcast because while I’m in real estate, we do a lot of property management. And I’m just seeing a huge shortage of trades people and a lot of opportunity in so many different, small businesses that are home service related and property management related.” He came on my podcast and talked about that stuff. And afterwards he said, “Nick, you’re in real estate, you don’t talk about that much on your podcast. Why aren’t you on Twitter?”
I said, “Moses, social media is just a waste of my time. There’s no money to be made there. I just don’t think it’ll open any opportunities, an social media, it doesn’t make sense for me.” He’s like, “Well, Nick, you’re wrong. I think you’re going to meet a lot of really smart people. Your network’s going to explode and you might just find some people to invest in your real estate deals. It’s like, just do me a favor and like go on there and write some of the same stuff you write on Reddit, write it on Twitter.” I think two months later, I had ignored him and he sent me a text, said, “Nick, I just released a real estate deal and I funded it, and most of the people who invested with me are people that I met on Twitter. My network’s growing. You don’t understand, do it.”
That was what tipped me over the edge, I’m like, “Okay, I’ll do it.” Got on there, started tweeting. And luckily Moses had, I think maybe 3,000 or 4,000 followers at the time and he did a quote retweet with me and said, “Hey, this is Nick, he’s in self storage. You should follow him.” I got maybe 500 followers from that and that really helped me because I had one or two before that. But yeah, just started tweeting about my deals. I had a really open book and real estate is notoriously like a tight knit, close to the chest, secretive, people who do real estate deals don’t really talk about it. So people started gravitating towards reading some of the things that I was writing because I was sharing everything about my real estate and my deals, even posting profit and loss statements on Twitter. So that’s how the following began.
How would you compare the cultures of Reddit and Twitter?
Oh, that’s what also surprised me, is that people were actually nice on Twitter. I mean, it’s different now that I have 120,000 followers, there’s a lot of jerks too. It’s just a lot of cancerous people who have nothing good to add to anybody, but with the anonymous nature of Reddit, it was on another level. So I was pleasantly surprised by the welcome that I got on Twitter from the real estate community of just, “Hey Nick. I know…” I didn’t know what I was talking about. I was learning as I went and these people were patient with me, they helped me learn. It was a great experience on Twitter.
Have you continued to use Reddit or have you mostly entirely shifted over to Twitter?
I have moved almost all my focus over to Twitter, still do the podcast and the blog and stuff like that. But yeah, Reddit, I gave up on that as soon as I realized how much better Twitter was.
In what ways was Moses right in that building your following on Twitter would be really helpful for your business?
It changed my life. I think it fast forwarded my career 20 years. I mean just the monetary side of things, we’ve raised $7 million from LPs, almost 100% through the people that I met on Twitter. We’ve bought $20 million worth of real estate, that’s been financed by obviously us and the people that I’ve met on Twitter. A lot of self storage consulting, a lot of online course sales. It’s amplified the podcast and my message. It’s helping me meet amazing people like you and Moses and Chris. It’s incredibly rewarding. I mean, obviously there’s some negatives, the phone addiction and the dopamine hits is tough to manage, but I would say that it’s awesome. It’s phenomenal.
Is there a next step for you in terms of, podcast Twitter courses, that sort of thing?
Yeah, I’m going to do more of it. I think when I released the real estate master class, that was a hit, I’m surprised how many people bought it and I’m really surprised how many people read it and got good stuff from it, so I’m going to do more courses. I know online course sales is wishy-washy for me because it’s got such a negative connotation. You think of Tai Lopez and Grant Cardone and that stuff, but I don’t know, I’ll continue to create them because I learn a ton when I build a course on something.
I learn a lot and the communities are going to be cool. Over the next six months I’d love to launch a real estate community and a small business community for people to interact and share in an even more intimate location, and continue to grow. I’m launching a real estate podcast here in the next couple of weeks as well so can just continue to grow the media company. I have so much fun creating content that it’s when I’m in my flow, and I want to spend a lot of time doing that over the next 10 or 20 years.
So a real estate specific podcast that isn’t Sweaty Startup related?
I just feel like my audience is split between people who are into small business and entrepreneurship and people who are into real estate. Some people are into both, but a lot of people are into either/or. I polled my audience in my newsletter and sent them a little fill out this… basically a survey, and I was really surprised that it was about[redacted]Half the people were there for the real estate content, half the people were there for the entrepreneurship and they do have a lot in common, but not a ton.
That’s funny. Moving into some closing questions. What class would you teach in college if you could teach about any subject you wanted?
I think that’s an easy one for me. It would be the Sweaty Startup class. I think too many college entrepreneurs go in and try to raise a bunch of capital and start a brand new, change the world, new idea business, and it’s such a waste because there’s no worse time. There’s no point in your life where you have worse odds of success than when you start a new idea of business, right out of school. With no network, no operational chops, nothing. You’re competing against seasoned operators who know how to raise money and know how to get traction and know how to build communities.
So when you talk about all the folks in college who were in the entrepreneurship classes, pitching their new ideas, it’s just such a waste to me. I saw it in college firsthand, of 20 brilliant kids who were in my entrepreneurship classes, who all of them now have jobs because they went and tried to change the world with a new idea right off the bat. So many of them would be better served by just starting a sweaty startup, a small business, bootstrapping it or buying one and learning all there is to learn about business and life, and operations that way, that I think that many of them would be on a path to wealth by now, if they would’ve given that a shot.
What’d your class look like? Would you help each student start a sweaty business of some sort?
Honestly, I think it would look a lot like my podcast. I would probably just rant at them all day about why it’s stupid to go get venture capital money, and how to run a small business. I don’t know. I think it would be encouraging kids to go out and make a thousand bucks. Go out and make a thousand dollars. Forget about an MVP, forget about a new idea, forget about software for a while. Look up from your computer screen because there’s opportunities everywhere in our physical world. I think there’s an obsession with software and yeah, software’s an unbelievable tool. And the software stack that we’re building out inside of our small business is unbelievable. And the operational advantage we can get over our competitors is huge, but we’re not building any of the software. It’s all already there. The software is there to win. We don’t need more software right now, we need more people to start home service businesses, small businesses, washing, cleaning, maintaining, building, all the little things in our physical world that are huge opportunities.
What’s a belief you used to hold strongly, that you changed your mind on?
That’s a really tough question. I think I’m softening my position a little bit on this change the world stuff, because I’m seeing people who are in the position to actually get it done. I’m starting to meet them, I’m starting to see that, okay, maybe you can change the world. But you still shouldn’t try to do it as a 21 year old, you should try to do it after you’ve had some success. Unfortunately it takes money to change the world. Anybody who disagrees with that, is a liar. So in my opinion, go out and make some money. If you want to change the world, be a capitalist, start a business, make some money and then you can do amazing things when you have that money. But I think there is a ton of opportunity in the tech space and I’m starting to see it now that I’m more well connected to a lot of people who are in that area.
Is there any angel investing you might do?
I don’t know about angel investing. I think investing in series rounds for real companies with real… I feel like angel investing is donating money, I do. I just think that it’s a pipe dream and nobody makes good returns, angel investing. I would like to invest in companies that are on track, that are selling and doing some things that pretty cool. So maybe that’s called angel investing, I’m so new in it. But yeah, I’m about to invest in a company, small check, 20 grand that I think has a chance to go public someday.
Excellent. What’s the best business you’ve ever seen?
I’m biased, but I think the self storage business is one of the best businesses in the world. I think that you can retain customers, you can drive revenue, you can operate it in a pretty low maintenance way. To put it in perspective, I’m going to pull up my portfolio actually because we have 536,000 square feet of self storage, 4,154 units. Seven of those units are not storage units, there’s three apartments and four mobile homes. Those three apartments and four mobile homes cause about 30% of our headache out of 4,154 units. We rent steel boxes. There’s a door with a handle that are made to last 20 years, that’s the only moving part of anything that we do. In the multi-family space, you have toilets, appliances, carpet, flooring, boilers, heaters, air conditioners, plumbing, a lot of emergencies and I would not want to be in that business just from what I know about that.
But yeah, so I feel like I’m in a unique position and the vision, for the first time in my career, over the past six months has come together that I have a clear path, a clear vision to build a real estate private equity company that can buy 50 or 100 million dollars a year of self storage without me working 90 hours a week. I can work 30 hours a week and I can play golf and I can do podcasts and I can run my media company. That sounds like a pretty damn good business to me. I’m biased though.
Yeah, if you couldn’t pick self storage, what would you say instead?
I think it depends on the stage of life. Are you talking about if I was 21, knew nobody and had no cash, what business would I start? Or do you mean like, hey all right, maybe I’m in my situation now with some resources, some network, some cash, what business would I start?
Not necessarily something you would start, but just something you read in an article or heard on a podcast or from a friend that you thought, “Wow, that’s an amazing business model that they’ve got going over there.”
Honestly, I’m a fan of the more logistically challenging a business is, the better. People say recurring revenue is what you’ve got to have. Low skilled is what you’ve got to have. So if you do those two things, pest control is the best business in the world because you show up, you spray a couple of chemicals, you don’t mess anything up and you leave. And it’s recurring revenue, you get people on monthly checks and they pay. I don’t necessarily love the pest control business because, for those reasons you have a lot of people very interested in getting involved in pest control, so the competition is tough in that area. The more logistically challenging a business is, the more sweaty, nuts and bolts, and things that make it tough, the more I love the business because I think smart people ignore it. The really good operators ignore roofing companies and HVAC companies, and plumbing companies, because it’s hard.
And then also, I like business to consumer. I don’t like B2B contracts where you’re getting recurring revenue all the time. People talk about how great it is, but if you can go out and get cold business off the street, that’s not repeatable business, you can charge tons of money because everybody ignores it. People ignore those things because they’re not as easy, as sexy, as reliable. They all want the contracts. They all want to get company contracts. They all want to do X, Y, and Z, but if you can bring in new business, repeatable business off the street from customers, you can name your price in many industries.
I love it. Thank you Nick for coming on the podcast, this has been a lot of fun.
Alex, I appreciate you having me on, and I’m a big fan of your work. I love catching up with your episodes and I’m excited that you wanted to have me on. So thanks again.