Joseph Woodbury

Neighbor started with the idea of unlocking underutilized and underused storage space in people's homes and turning it into a marketplace. I think you should choose companies by how hard they are to start. The biggest companies were the hardest to start because that's what gives them a moat, and moat is what gives you monopoly. The only thing you want to create is a monopoly. That's what you want. >> My worst experiences of mentoring students is when they set up 50/50. >> Across their portfolio, they can earn a million dollars a year. Well, that's not just a million dollars a year. They're putting a cap rate on that. You know, so we're increasing the value of their portfolio by 20, 30, 50 million dollars. >> [music] >> Welcome back to the Startup Ignition podcast. Thank you so much for watching every episode. This is now I think this is episode 53. >> Or 54? >> Maybe I think it's 53. I'm pretty sure it's 53. Hopefully if not, I'll I'll correct it in post-editing here. But welcome back to the Startup Ignition podcast. I'm Tyler, your host. This is John. We're your fathers. >> Hello everyone. >> Father-son duo in startups and everything that has to do with technology, SaaS, software, venture. But today we have a special guest. We have Joseph Woodbury here live in the studio. Thank you so much for coming on the podcast, Joseph. I'm super excited to have you. He is the CEO of Neighbor, which started back I don't know how long it's been now. When was the first inkling of Neighbor's idea? >> Eight eight nine years ago now. >> Yeah, wow. >> Eight nine years ago. Yeah, and he's the founder CEO. So the original founded idea, he He a BYU student. I met him when he was working on it. It was exciting times. >> Yeah, so Joseph is the founder and CEO of Neighbor like John just said, a storage marketplace is how you define your product. Founded in 1617 2017 and you do have co-founders around it. I remember you had like a team of three or four of you that were working on the project. Did it start as a student project specifically at BYU? >> Absolutely. >> Yeah. And so that was the team that helped you do it. Neighbor started with the idea of unlocking underutilized and underused storage space in people's homes and turning it into a marketplace. Basically like the Airbnb but for storage. >> moment here. I call it a sharing economy. It's kind of like Airbnb, Uber, all that where you know, he can become a gargantuan storage company like Uber's a gargantuan taxi company and Airbnb's a gargantuan lodging company without having to own the assets. >> Yeah. >> And it's just leveraging the sharing economy and it's was a brilliant idea. Now, one thing that's funny in the history you might not know since it's at the very beginning, he spelled neighbor differently. We'll maybe go into that and I want to find out how he got the right URL or domain name cuz >> Yeah, cuz it is neighbor.com. >> Yeah, that's a fun story. >> Yeah, we'll we'll hear let's hear that story later. He didn't spell it as neighbor the right way and it was I was >> I'm hoping and crossing my fingers it was neigh like a horse neigh >> [laughter] >> bor. >> Hey, we'll hear that story in a second but let's get to his bio and then we'll go. >> so I know that you've been backed and you're wearing the shirt right now in studio from by Album and Pelion, local firms here and I know I was telling you pre-broadcast I looked it up and I I was like, "Wow, there's been a lot of capital that's put been put in this company." So you I'm I'm sure you have more investors than just Pelion and Album here locally in Utah. Who else has >> But how great are those investors? >> Yeah, of course they're great. [clears throat] We love all of them. >> Phenomenal. though. mean the Utah investor ecosystem. >> Blake was just on the podcast. >> amazing, yeah. Blake's awesome guy. >> Yeah. >> We work with Chad and Ben there, too. >> Yeah. >> Um yeah, so they led our seed round Pelion and and Album, and then Andreessen Horowitz led our Series A round, and then group called Fifth Wall led our Series B round. >> Fifth Wall, a little firm Andreessen Horowitz. >> Yeah, no big deal. >> No, A16Z, not anybody too big. >> And then, what makes you super interesting is that you chose a category most founders don't like to touch. Like, the marketplace industry is a hard nut to crack. >> Yeah. >> And I know we've referred many of founders your way over the years, and it's just cool to see where you've taken Neighbor, the traction you've been able to get, the company you've been able to build, the money you've been able to raise, and the revenue you've been able to achieve on what typically is looked at as like the scary kind of stepchild of entrepreneurship, right? >> Yep. >> Um so, cool to go into that, but everybody, let's welcome Joseph to the podcast. Thank you so much >> is going to be fun. >> Thanks so much for having me. >> No, thank you. Thank you for coming. Um before we go into it, Joseph, I do have an icebreaker for you, and I'm going to spring something on you really quick. I like to play games with either uh John and our guest, or just our guest before we get into the podcast. So, which is it today? >> So, today we're going to play what's in your storage, okay? >> [laughter] >> So, today, what since we have Joseph, the founder and CEO of neighbor.com, which is a marketplace of storage, and utilizing, you know, the sharing economy of storage, we're going to do a couple of rounds of what's in your storage. First round, we're going to do what's in your personal storage. So, we're going to get a little personal. So, I want to hear from both John and Joseph, what is one thing you would keep forever, you're never giving away, one thing your wife or spouse or loved one or family would tell you to get rid of, >> Oh my gosh. >> and this is going to be a good >> And one thing that says way too one thing that is physical that says a lot about you and then one thing that would confuse people if they knew you had it. So, let's start with the first one. So, what's one thing you are keeping forever, never giving away? >> You Who do I start? >> Either one of you. >> Okay, I'll go first and let the guest have time to think about it. >> I'm interested to hear my dad's actually. >> Yeah, cuz this is this there's two legendary items here. >> One thing you don't know about John, he's a massive hoarder. Like a huge hoarder. Like if you go >> him a pack rat. >> Yeah, okay, that's even worse but sure. But he keeps everything. So, I'm interested to hear this. Okay, what's one thing you are keeping forever? >> that my wife You won't believe this. I was a big baseball, football, hockey card, Topps card collector. Box you boxes full from my era. Think how old that is. And she puts no value on them, my wife, and wants to throw them. >> Oh, that has huge value. That's like insanely huge value. >> now. Yeah, there's been times I've go, "Susan, you didn't throw those away, did you?" And then See, I have to go in the deep crevices somewhere and make sure she hasn't thrown them away. So, that one's really important and and you know >> So, your card collection. >> card collection, but I'm going to do in the second one, too. And I got this Harvard athletic jersey from somebody who really went to Harvard in the day. It was Gregory Peck's son. And I know Gregory Peck's a very famous actor starred in To Kill a Mockingbird suit, one of the most famous actors of all time, right? And so, I my aunt was actually a nanny for a very wealthy family in Beverly Hills. And she actually has had dinner with Gregory Peck and his family and I went down and visited her one time. And Gregory Peck's son gave me his athletic jersey from Harvard and I prize that jersey. Now, I wore it a lot as a kid and all that, so it's a little tattered, but I took that into the marriage and she one day threw it away. >> She threw it away? >> Threw it away. >> Oh my gosh. Okay, so that's that's the one your wife begs you to get rid of. >> Yeah. >> Okay. Okay, how about you? Let's go Let's go with Joseph's. One thing you're keeping forever and one thing your family or spouse or loved one is telling you to get rid of. >> Yeah. Um so crazy story, too. I actually have a The one thing I'd never get rid of, I have a second edition Book of Mormon. >> Oh, that's so cool. >> Second edition? >> Yeah, and not first edition. You know, not that >> First editions are worth 100,000 plus. >> So much money, yeah. Um and and I actually got this I did not get this I got this from a non-member. Uh this family we grew up with that bought this old collection of books and in it they found this second edition Book of Mormon. They knew we were members of the church. >> Was it done at the Grant What's the name of the printing press? The one in Palmyra? Was it printed at the same place or a different place? >> different place, yeah. >> Oh, really? Okay. >> Yep. >> That's cool. >> And and gave it to me and and yeah, definitely never thrown that away. Uh >> So our viewers and listeners that don't know about this, so we're here in Utah, prominent religion is the Mormon or LDS Church. >> Yeah. >> And the Book of Mormon first edition is very limited and super valuable, and the second edition probably is pretty valuable, too. >> Yeah. >> Yeah. >> So what's the thing that your wife wants you to get rid of? >> My wife would say, "Why do you have all these like shirts hanging in your closet from high school?" I still have like all my high school clothing, never wear it, you know? It's just Mostly just wear uh uh t-shirts that like my investors give me now. That's most of my wardrobe. >> All right, well, we're going to get you a Startup Ignition t-shirt, for sure. >> Okay. >> [laughter] >> That's funny. Yeah, I definitely got rid of all my high school t-shirts. It's just like, I don't know. There's no reason to rep the high school anymore, but Joseph apparently has them all. That's awesome. >> Okay, one other thing or two other things. What's one thing that is an item that would say a lot about you? >> [sighs] >> What comes to mind? >> to have Joseph go first. I got to think about it. Yeah, that's a tough one. >> I know. Um, item that would say a lot about me, uh, >> [clears throat] >> or what's one thing that would confuse people if they knew that you that you had it. That's the other one. >> Like they would be surprised that you have something like that. >> Yeah, yeah. Anything come to mind on either of those two? >> Well, I don't know. So, I people know me for my hobbies like pickleball and golf, but some people don't know what a avid chess player I am. So, I have a chessboard that's a real physical chessboard where the pieces move by themselves when you play it. So, if you move your piece, it moves the piece physically to its spot, takes your piece, moves it off, and does this. So, maybe they would be surprised I have something like that and wonder, "Man, you must really be into chess." >> Yeah, cuz you only have that if you really like chess. >> [laughter] >> How about you, Joseph? Anything that comes to mind? >> Yeah, um, I mean, it's it's boring, but I I have a lot of books. I I love books. Um, got a whole bookshelf full of pretty much any book I can get my hands on. >> Do you have a like a big book collection? >> Yeah. >> Yeah. >> Like old books, antique books, or like business books? No, no, no. Mostly definitely not business books. I hate business books. >> Yeah, they're I'm like, "Those are kind of boring." >> Yeah, super boring. Mostly like classic literature. Yeah, I love to love to read. >> That's cool. >> It's a hobby of mine. >> What's I'm just going to ask since we're here, what's like your favorite novel of all time? >> Well, um, yeah, I'll give you a couple categories. My favorite biography of all time is a book called With Malice Towards None. It's a Lincoln biography. I love to read Lincoln biographies. I've read a bunch of them. That's my favorite. >> Wow, you're a huge Lincoln fan. >> Huge Lincoln fan. >> That's not a novel. That's a >> That's biography. >> A true biography. You like biographies a lot? I do too. >> I do too, yeah. Uh and then novel probably Les Miserables. >> Oh, really? >> Yeah. Uh love that book. Very profound. I think everyone should read it. Read the unabridged version. It's much better. >> I have a similar very long book, Count of Monte Cristo. >> Yeah. So good. Yeah. Actually it's Dumas. >> I love both those movies. >> They just came >> [laughter] >> They just came out with a TV series for Count of Monte Cristo. Did you see that? >> Oh, did they? >> Yeah. >> Oh, no. I'd love to. >> Pretty good. I'm I'm I'm in >> Well, actually I've watched both of them. There's one made in France. I'm into it. There's one made in France, one in America. The one in France was really heralded, but of course French language and dubbed. But the I watched the US one was really good, too. But my you know, the James uh Caviezel or >> Yeah, that was so good. >> No, not James Caviezel. What's his name? Anyway, Caviezel was the actor that made it in like 2002 that's just a really nice >> So good. >> Yeah. >> for a two-hour movie, right? >> Yes. >> But man, how do you put that book into two hours? >> I don't >> [laughter] >> know. Yeah. Yeah. >> Anyway. >> Okay, I have so many more units, but it takes so long to answer these questions. Maybe I'll skip them. Maybe I'll Maybe I'll do >> more. Do one more. >> Okay, do one more. Okay. So, we'll go to the founder storage unit, okay? So, here's four things Let's go quick. Rapid fire on this one for both of you. So, first thing, one founder habit that is necessary and worth keeping. >> One one founder habit? >> One founder habit that every founder should have that is definitely a focus. You should You would say, "Hey, do this." >> Monthly bookkeeping. >> Monthly bookkeeping? Wow. >> Yeah. >> That's not what I expected. >> Founders and startups often don't do their bookkeeping. And then all of a sudden, they're 10 minutes into a venture and it's going pretty well and they get you know, interested investors or people and they want to see their bookkeeping. They want to see their financial statements. How's the last 10 months gone? And they go, "Uh I haven't done any bookkeeping." That's not good. >> Yeah. >> [laughter] >> What's one thing you would recommend? >> would say uh uh irrationality. Uh just just you don't start a startup unless you're a little bit irrational. >> Like you have to have the risk gene. >> And the smarter you get, um the worse you get. >> Yeah. >> you know, you got to keep that that just absolute willingness to >> Well, I >> try out bad ideas. >> I think there's a reason why you know, like freshmen in universities are much more entrepreneurial than like seniors or MBAs or master students, right? It's because the more educated you get, they kind of beat the entrepreneur out of you, right? >> If if Yeah, I've heard a lot of entrepreneurs say, "If I knew how unlikely and how hard this was going to be, I never would have done it." >> Yeah, exactly. >> I We did this not because uh it was easy, but because we thought it would be easy. >> Yeah, yeah, and and and the reality is as you get more smart or experienced or comfortable with the business world, too, you start assessing risk differently. >> Right. >> And because now also you start having something to lose. >> Right. >> Right now, you've created, you know, I'm just going to say you've probably created a lot of wealth for yourself, right? And maybe it's paper right now, but you create a lot of wealth, and you don't want to lose it. So, you start saying, "Oh my gosh, >> You got to be more careful now. >> But when you're 22-year-old college student, you can go for the gusto, and there's not a lot of consequences. >> You might have lose some top ramen noodles and >> Yeah, your Pell Grant's funding your startup. >> Exactly. >> Okay, so the flip side of that then, what's one founder one founder habit everybody should throw away? Discard right now. >> Hm. >> Like what's what's one of the biggest things, red flag, when you're talking to founders, mentoring news founders, you're just like, "Ooh, don't do that or don't be that way." >> Co-CEOs. >> Co-CEOs. Yeah, that's actually I agree with that. >> Like just just ego in general. Like just get it out. Like you the founder one of the things I loved is when we started Neighbor my me and my two co-founders we sat down and we we had a conversation of like what's founder going to mean at Neighbor? Like what's this title founder going to mean? And we decided it means two things. One, you get to start with a lot of equity, right? Like founders get to divvy up the equity and you get to own a ton of the company. And two, it gets it means you get to say you started the company. >> Yeah. >> And that's it. >> Yeah. >> It doesn't entitle you to be in a meeting, doesn't entitle you to a role. Like the minute I'm not the right CEO, like bring in the right CEO. >> Yeah. >> I hope I'm the CEO 20 years from now. You know, but we all said that in our individual roles is like it's like we just want the best person in our in in each roles and and we have to like strive every year to be that person. And if we're not that person, you know, founder doesn't entitle you to anything, right? >> so good. It's like the book Good to Great. Your main role is getting the right people on your bus sitting in the right seats cuz you can't do it all. You're not scalable. You have 24 hours, right? And you need other good people. And yeah, you can't Yeah, a lot of founders get their egos get hurt if somebody hot comes in the company and starts doing really well. They go, man, I'm not as needed as I once was. Guess what? That's kind of your goal. >> Yeah. Yeah. Yeah. [laughter] And like it's great to be needed, but like you got to deserve it. Get better, right? Like like you know, you can be great. >> So I'm going to build on something real quickly. So I'm going to ask Tyler this. What's the first principle of what not to do I teach in the boot camp, our Startup Ignition Boot Camp. What what is the first operational principle I say never when we we go down the cap table and we say don't ever do what? >> 50/50? >> Yeah, 50/50. So cuz I'm building on top of your two CEO things, you know, a company can't have two masters, right? Two leaders that call the final shot. You need a benevolent dictatorship. And also that's why in 50/50 is a disaster in my history. My worst experiences of mentoring students from BYU or other schools or the thousands I've mentored is when they set up 50/50 and they come and say we're disagreeing or have a problem and they put no mechanism to break the logjam. Those are the absolute worst situations and it's bad. >> And so that's kind of the same principle you said by two CEOs. >> Yeah. >> And or I also just like the whole ego thing. Like because like someone who's not teachable, not humble, that thinks they know everything and they're just like a a bull in a china shop that's just going through everything and it's like no, this is the way and this is what I'm going to do and I'm the one who knows it or I'm the one that's going to be front and center. Those type of founders usually don't make it. >> this session of icebreaker reminds me of how whip smart Joseph is. I was always so impressed at how and you're very pensive and thoughtful about principle. I just really you just really are perceptive. I'm not trying to make your head big but I when I first met you I go, man this guy is whip smart. >> Yeah. >> So it's [laughter] >> It's cuz he likes to read. >> It's cuz he likes to read so much. >> Yeah. >> Yeah. Yeah. >> Yeah. All right, let's go. >> Yeah, well I'm going to cut it. I'm going to cut the icebreaker cuz otherwise we're going to spend the whole episode on this icebreaker even though it's a fun one and you know, I like to see what's in Joseph's storage units per se but we're going to move on because I want to get to you and before we move into your story and like take us back to wherever you want to take us back to Joseph. I kind of want to give the the viewers and listeners a little bit more of an idea of neighbor and like the size and what you're doing right now. I don't know if you could give us any kind of idea of where neighbor's at today. >> Employees and >> And then we can rewind and go back okay, where did it start? So well like just give us any kind of information. >> Brag to us about neighbor. >> Yeah, give give us the awesome bragging. >> Well, I neighbor neighbor has done amazing. Like we've got an awesome team. Um, we've scaled this. We're in pretty much every city in all 50 states um, now we've got users renting out space, uh uh storing their items. We've raised about $75 million like you mentioned at the start from some of the top investors in the world. And you know, I think I think Neighbor um speaking to the vision uh you know, does Utah have an Amazon or an Airbnb or an Uber or one of these companies? Like I think Neighbor has a real shot at being Utah's version of that. A big big public company that that can kind of create the next level of ecosystem that we want. So like that that's our goal with Neighbor. >> Mhm. And and one more thing, let's take us through a user of Neighbor, so a customer. So somebody needs to store something or somebody has extra space. Those are your two type of customers. Can you explain that a little bit more, that two-sided market? >> still the is that still the demographic and that's like the >> That's right, yeah. >> So so so our viewers and listeners can really understand the business model. >> Yeah, so we deal with the same customer that any storage facility does. It's just someone who's either wants to store their vehicle, like their boat or RV or or or trailer. >> Really? Is that like the popular items is like a vehicle? >> Oh, we do a ton of vehicle storage. >> Wow. >> we also have individuals that want to store like boxes or business inventory or or things like that. So so that customer is is not unique. Where we're unique is instead of providing you with a storage facility we have actually four different types of of hosts, we call them hosts, that provide space. One's like our residential host. This is like I rent out my my RV pad, guy stores his trailer on my RV pad. You can rent out your shed or your garage or or just any space you have around your home. That's where we started. We started as like the Airbnb of storage. That's how we grew to all 50 states. That's the core of our business, still like the biggest component of our business today. >> So if I have half of my garage, I could rent it out through you. >> rent it out, yeah. Like I'll use a a couple of Utah examples like we've got um a guy uh actually not far from here in American Fork who, you know, couldn't afford to buy his first home um but like wanted to buy his first home. And so he found a home that had a little extra space behind it and uh bought it and rented out that extra space for some like trailer and and RV storage and it pays 50% of his mortgage. And so like now he can afford this like bigger home, you know, with a bigger lot that he wanted to get uh basically house hacked through Neighbor. >> Yeah. Yeah, I'm I don't want to stop you but I got I you just made me think I there's a lot of young people in order to afford a home right now and I know many of them here in Utah that do this. They get a home and they kind of build an in-law apartment a little bit so they could pay half their mortgage for another people living there. But why not build some space storage and not have to deal with the people and renters and clogged toilets and all that hassle with humans, right? Does that make sense? I think I actually think you could be a good idea for helping people do what they're doing without having to deal with humans. >> We we do say like the gig economy has been awesome and you mentioned some of those companies and it's economically empowered so many people. However, at the end of the day most gig economy solutions are jobs, they're work. You think like you want to earn money on Uber? You got to go drive around. Like you're trading your time for money. >> You got to be a landlord if you're Airbnb. >> Airbnb and and and the person stays for two nights and then they leave and and so you clean up. A lot of most people end up hiring a management company to manage their Airbnb. Neighbor's the first, you know, big nationwide marketplace that's like truly passive income. Like take MySpace for example, I rent out my RV pad. My current renter moved in probably 13, 14 months ago and I spent 20 minutes helping him like showing him the space on the first day. I have done literally nothing for that ever since and I get a direct deposit in my bank account every month, pays my utilities. >> That's awesome. >> And it's just like free money. I wasn't going to use that space. I don't I don't own an RV. So like I didn't need that space. It was just the right house for us and we happened to have a little RV pad next to it. >> fantastic. >> Yeah. I mean let's maybe Yeah, let's >> Okay, well that was the first thing. He was going to go down his You said four things. That was the first. What were the other three? >> Yeah, so so so then um you know, we've got the smaller residential hosts like me, but then we have what we call power hosts. And these are guys you you've heard of maybe people start to invest in Airbnbs. We get people that start to invest in Neighbor. And they'll like buy more property. Um like we've got a guy that that has a large property up in Lehi that's earned 250k on our platform. >> Wow. >> Um you know, and he just bought a large lot uh and and stores a ton of vehicles on it. Or has a small warehouse, you know, we get individuals that have like a small warehouse and they'll rent out like the whole warehouse. >> It's kind of funny you're saying this cuz the number one best use of space is renting out to mobile homes or RVs because right I won't name the family, we know them really well, but they're here in Utah County basically billionaire the king of mobile home parks. >> Wow. >> Cuz you take that land, make it into 200 square foot pads >> Yep. >> and rent it >> Right. >> at very high per square foot space when you think about it and also low maintenance. >> That's just what you're saying. >> No cap back. >> So yeah, that's an interesting idea. I'm starting to think I should go get some and get on Neighbor. >> Yeah, I mean we'll have we'll have real estate investors they own 10 rental properties and they'll start, you know, they'll rent out um their garage or or some space on Neighbor and it's great cuz you know, their net cash on that property mortgage is $2,300 or rent's $2,300 a month, mortgage is $2,000 a month. So they're earning $300 a month in net cash and they come with they layer Neighbor on, we generate them another $300. We just doubled their net cash. And they'll do that for a while, and then they'll start doing the math, and they're like, "Why am I buying more rental properties?" You know, if you had take take Utah. If you had 500K to invest in Utah, that would buy you roughly a townhome, right? It's about a townhome in Utah right now. And you could rent that out for, call it what, 2,000, 2,500 a month. Um so, you're talking like 25 grand a year in rents. If you Airbnb'd it, you could probably push your yield up to like 30 to 40 grand per year in rents. If you took that same 500K, that would get you an acre lot, maybe in the right spot 2 acres, you know, like an acre to 2 acre lot, and you could earn $100,000 a year. And so, instead of $25,000 a year, like $100,000 a year running it through Neighbor. So, all of a sudden >> What is the stuff in it full of vehicles or something? >> vehicle. Yeah, there's so much to put >> What's the going rate for storing a vehicle on Neighbor? >> on your area. I mean, if you're in downtown New York, it's like $600. If you're in Lehi, you know, it's anywhere from, you know, 70 to to $150 a month. >> Yeah. Okay, I'll do it. >> Yeah. >> You get you you you tell your PR guy, "Let's do a little mini um show following you and me figuring this out and have me be a guy, and I'll do it here in Utah County." >> It'll be done. >> Dude, let's go. >> Let's make some money. If you guys want to do it, let's make a fun I'll do that, and we'll we'll have it be kind of a story we could put out on the internet. >> Don't go somewhere that has an HOA, that's for sure. And by the way, like for anyone that is interested, you included, we have a little site called it's just neighbor.com/income. >> Mhm. >> And what it it's this cool tool called blueprint. When you go to that, we will pull up a satellite view of any lot in the country, and you can zoom in on it, and then you can actually blueprint out to the centimeter uh how you're going to design the lot. >> it out, yeah. >> use local pricing data to say and occupancy data to say, here's how much you're going to earn off of this property. And you can know like how much you're going to earn before you even buy the property. >> That's crazy. Let's make a story. I want you to coach me and let's film it and make it fun. >> Oh my gosh. Let's do it. >> So >> I cuz you want to hear about the other ones? >> Yeah, the other ones now, too. >> The second one. That's two, not three, four. >> So so the third is we actually work with large owners of commercial real estate. So big REITs. I don't know if you're familiar with the term REIT in real estate investment trust. Big publicly traded owners, sometimes publicly traded owners of of real estate. And they own office space, they own retail space, they own uh multi-family space. And we'll go to these big portfolios and we'll say you have a lot of space that could be rented out. So let's take we work with a $30 billion apartment REIT. Um and they've got apartment buildings all over the country. And and the first way we work with them is they have excess parking. The city makes them build so many stalls per unit. And so they end up with extra. We take all of that extra, we rent it out for long-term vehicle storage. They like it because it's very stable and it looks like their core rents. And it flows straight to their NOI. So they're taking this money and across their portfolio they can earn a million dollars a year. Well, that's not just a million dollars a year. They're putting a cap rate on that. You know, so we're increasing the value of their portfolio by 20, 30, 50 million dollars. >> an NOI cap rate. >> It's an NOI cap rate. >> So that's really good. Do you have So you know, there's local REITs here right here in Utah County. So do you work with Sundance Bay? >> Uh I don't know if we work with Sundance Bay. Honestly, I don't know. >> name, Stan Ricks. >> Yeah. >> Good friend of ours. >> Yeah, I would love to love to talk to him if we don't work with him. >> birthday party. So if you want to be introduced there, I'd love to see that happen. Help him. >> That would be great. Yeah. >> He turned his uh uh real estate fund into a REIT about 5 years ago. And it's thriving. He's been driving since >> Yeah, I'd love to meet him. >> Okay, let's do that. >> Okay, so another thing, hopefully we follow up on all this business. Yeah. >> Yeah, what's the fourth thing? >> So that's not the only way we work with these apartment REITs. Like most apartment REITs actually have built storage lockers in interior for their tenants as like a tenant amenity. >> Yeah. >> But their tenants never use them. They're like 20% occupied. They're 20% occupied. So we'll take all the rest of them and rent them out to the community for for item storage. You can come store your items in the nice apartment building across the street. You got your storage locker it's much closer. >> Great idea, too. >> So that's the third category. >> I told you Whipsmart. >> I know. >> [laughter] >> Yeah. And and and seriously, these guys are earning six, seven figures a year on Neighbor. >> Wow. >> And then finally, we actually work with the storage facilities themselves. So all the largest storage companies in the country, they post their space on it. >> So you're becoming a channel partner for them? >> A channel partner for them cuz we've got all the information. >> Storage number one? >> They're number one. $50 billion company. >> How do Okay, so this you since you brought this up, so you're actually helping them as a channel partner fill their vacant space. >> Yeah, in fact, Public Storage has every location in the country listed on our platform. >> Let me ask you this, at first when you started though, you were a big disruptor I in my opinion, I think to them, right? How did they first treat you? >> Well, it's funny. You know, do you know what the largest company in the state of Utah is? >> Extra Space Storage. >> That's right. Yeah. >> Yeah. >> Like out of everything that's ever been started, this is how big storage is. Like just a quick aside on the storage industry because marketplaces you know, you maybe a quick aside on marketplaces too. You mentioned marketplaces being hard and they are hard. They're extremely difficult and I could talk about why. But they're also the biggest outcomes. Like all of the biggest companies are are all marketplaces. Like Google's a search marketplace. You know, website creators, searchers come together and and at its core every marketplace is just a search algorithm >> Yes. sorting space. Amazon's a marketplace obviously. >> It's just the first part of the launch is hard to get the chicken and egg of the two-sided marketplace. >> Yeah, if you think about it like we get hosts on our platform or we get renters and there's no hosts, the platform's valueless to them. And then we get a host and there's like no one to book their space, it's valueless. So when everyone shows up to your platform, a marketplace is worthless to everybody. And until more people. So you literally have to have people willing to sit there in a valueless marketplace >> Yeah, critical mass needs to be achieved, yeah. >> And and like stick it out until it's worth a little bit. >> Yes. >> Yeah. And then and then it it's worth a little bit more and then eventually over lots of time and effort and hard work there's enough renters to where like the host get booked really quickly. And there's enough hosts that the renters have lots of choice and price disparity. >> you say the demand side of that that equation is much more important than the supply side? >> Well, that's the age-old debate, supply or demand. And the reality is in the early stages of a marketplace that shifts about every 3 to 6 months. Like you go from demand constrained to supply constrained to demand constrained to supply constrained. >> Yeah. >> And and then you get bigger and usually one one of those two ends up dominating where you become a supply constrained or a demand constrained marketplace. >> Yes. >> We're so hyper local. Most marketplaces have, you know, you use Uber, you live in Utah but you use Uber in Chicago when you don't have a car in Chicago, right? Airbnb you use somewhere else. Neighbor's kind of the first like super hyper local marketplace where I want my storage actually as close to my house as possible. >> Yeah. >> So So we deal with this dynamic in every single market. it's different whether we're supply or demand constrained. It's like on a market basis. >> What a great great PhD primer our audience just got in marketplace. >> For sure. Yeah. >> Concepts. It's very exciting what you're saying. >> Um so so uh you have this marketplace concept. Well, what we want to be is we want to be the best place for a renter to go. Cuz at the end of the day, even though you talk about supply and demand in a marketplace, who gives you money? Your demand. >> Yeah. >> The demand >> is who pays you. >> Yeah. >> And and so like we want to be just the no-brainer solution where you have no reason to start your search anywhere else but on neighbor.com. >> Yeah. >> And so adding these these traditional self-storage facilities it is is the perfect fit for that because now they can come on For years we've been saying like you know, peer-to-peer stuff is is maybe cheaper or closer to your home. >> Right. >> And now they can see that on our website. They can see the traditional self-storage option. They can see the Public Storage unit or the Extra Space Storage storage unit. They can also see the garage in the neighborhood. And then they can compare them all in one place. They don't need to check across eight different websites. So why would you start your search anywhere else? Like if you want a storage facility, we got it. >> Mhm. >> So back to this question though. So at first did they view you as an enemy? >> So so I brought up Extra Space Storage uh um which is now a great partner of ours and and and um just amazing what they've done. Like go go have Ken Woolley on this podcast. Like talk about one of the the the like undersold Utah entrepreneurs. He's had he's had the best outcome of any entrepreneur in Utah. >> Yeah. >> And and yet when you think about like who are the who's the Mount Rushmore >> so dominant. Yeah. Yeah. >> Yeah, who's the Mount Rushmore of like Utah entrepreneurs? I don't think most people would him there, but you should. You know, like who's had a bigger outcome? Nobody. >> Yeah. >> So you should have them on and we love having them as partners. But I'll tell you >> We're going to go through you to get them on. >> Yeah. Yeah. The the the first year we were in business we were neighbor.com n e i y b o r.com. >> Wait, n e y? >> n e i y b o r. So we essentially replaced the g the g and the h with the y. >> Yeah. >> Kind of like Lyft but way more complicated. >> Yeah. >> Um >> A bunch of us old codger investors mentors were saying you got to get fixed that. >> And we were like yeah, you go get the domain for us. >> Yeah, like help us out. >> Um so so Extra Space Storage sued us. We were like 6 months old as a business. Um and we're like what? Uh and we got a lawsuit like actually got served like this guy in a Harley jacket shows up. You know how it is when you get served. >> Joseph Woodberry you've been served. >> J- Neighbor Storage Inc. Yeah, has been served. And what it was we start leafing through the thing and we had done a door flyer um that we cuz cuz you know how we got our first house? We knocked doors. We literally just went out and like asked people. >> I wanted to ask you how you drummed up the first demand. >> very manual like do things don't scale. And so we had this door flyer that we'd given out and it it had it just said on it Do you have extra space in your home you know rent it out on Neighbor? And interesting like we're competitive with Extra Space on the demand side like we acquire the same demanders. But we're not competitive on the supply side. Like they're not trying to get hosts. So this was a host geared flyer. >> used the term extra space. >> They circled the term extra space and said trademark violation. Of course it's not you're you're allowed to use >> Did you defend it? >> So so how N- neighbor.com with what money? >> Yeah. >> You know, like how are you supposed to defend that? We talked to attorneys and they're like, "Yeah, this is a slam dunk win for you. Like, this you don't even have to try on this case, but it's still going to cost you >> 50 to 100 K. >> People So, this is a good teach you moment too. I always tell people this, IP law is the most expensive branch of law. >> Right. >> And they don't trade for equity to startups that have these problems. They want their cash. >> Yeah. >> They want to be paid their fees, and it's super expensive. >> Yeah. >> Yeah. So, what how did you >> Yeah, what did you do? So, so fortunately, um through some contacts, actually through some of our investors at Peloton, who knew um >> Ken. >> Ken, mhm. They reached out to him and said like, "Are you aware of this?" And Ken was awesome and was like, "No, no, no, we shouldn't be doing this." It was just some of their IP attorneys, you know, going crazy at the lower level. >> Justifying their existence. >> E- Exactly. And and so, it all went away. Um but like >> Oh my god. >> that was our first experience. Uh but and now we're like these super close partners and we love we love working with them. >> Wait, wait, wait, there's another lesson you're teaching here, and that is having good investors, good advisors, good mentors can help you through things like this because um over my career of mentoring, there's been many people that have received a cease and desist or trademark violation or like that. And they come so panicked. And if when you're a startup, you probably panicked a little. You go, "What the heck?" Right? Do I mean, a little bit you must have felt You're 6 months into it. And you hadn't had this experience in life. And all of a sudden this lawyer from this massive company is stealing this. And I've had people come over to my house like saying, "Do we just give up and stop this business now?" And I go, "No. First of all, settle down. I promise you, 5 years from now, you'll laugh about this." I go, "It's not very funny right now." >> Right. >> And it's now to you it's kind of comical, right? And he tells a fun story. At the time, were you a little panicked? >> Oh oh, for sure. It was like It's like I got to figure out how to deal with uh a lawsuit, you know. >> But but then you had good mentors and investors that would could calm me down say this is just part of business. This is what lawyers do. This is what big businesses do to slow down competitors sometimes. There's all sorts of reasons they do this even if there's no legal standing that they would ever win on. It they have the money to do it. You don't have the money to defend yourself. Yeah, that's >> Honestly though like you know you asked were you panicked and if I really think back to it I probably should have been. Back to this like rationality I was kind of like We'll be fine. No, no, that's the naive I I just needed I believe that neighbor was going to be it was just going to be successful. Like this was an inevitable idea, right? It's just like inevitably going to be successful. So I was kind of like oh people probably get sued all the time, you know. >> And they do. And and that action is just a slow down tactic most of the time. Yeah, so >> Welcome to America. But let's read those four are fascinating though. Run through the four cuz we just are summarizing something really important. So number one is the core business of >> a person renting out half of their garage to somebody else in their neighborhood. That's why you're called neighbor. >> Yep. >> Second one is what was the second one? >> It's those same people but they go like we call them power hosts. They start investing >> start making a business out of >> They're like one of them 50k or 100k a year on the platform. >> that somebody that says I'm going to have 10 I'm going to actually go buy property just to put on the neighbor system. >> That's right. >> Okay, number three is existing big REITs and apartments. >> Apartment owners, retail owners, office building owners. >> Unused space that they can turn into money that actually increases their net operating income bringing lots of value. And the fourth one is the existing storage industry as partners. >> That's right. >> That's >> And for us it's like we don't care who is a renter. >> Joseph for how you developed this business model. It's really cool. >> Yeah, it's awesome and it's good for the customers, right? Like we don't care you as a customer what space you end up in. We want you to end up in the right space >> Consumers always win when disruptors like you change an industry and bring in new ways. It's incredible. Look at lodging. Airbnb has made lodging better. Uber has made taxis >> Right. >> 1,000 times better. I haven't gone in a taxi since my first Uber, right? Cuz I hate taxis. >> Hey, are are your storage like massive partners happy with what's happening within your marketplace and within you know, their side of the supply and the the you know, the traction that they're getting within your platform? >> Yeah, I think so. I mean, you mentioned Airbnb, they just talked in their latest release about all the work they're doing with hotels right now. >> Yeah. >> Um so, like and and they talked about certain use cases where a hotel is better. >> Yes. >> like if you're if you're just showing up for one day in a city, >> Yeah. >> um and you just want to like be in and out, hotel's actually like a better experience, right? >> If you're going to stay for a week and like really, you know, get into the city, Airbnb's a way better option, you know, like a tradi- >> And you know, there's a hybrid happening now. I just got to tell you cuz this is you're bringing up that these disruptors transform an industry and then become the incumbent. >> Yeah. >> And part of the incumbency, right? So, what's happening now is I just went to California and Arizona and there's actually people buying homes that have like seven bedrooms and they're renting out each bedroom and having a common kitchen >> for >> single travelers that just want to come in for one night and not have cuz a lot of places say >> It's like a hostel on there. >> one night rentals, right? Cuz then you have to clean and it's expensive also with the cleaning fees. >> Right. >> They've made it so now you can have seven bedrooms in a house, >> Yeah. >> rent them out on Airbnb and not have and it just economically and mathematically is working really well. That's kind of what you're saying. >> Yeah. >> And it's it's it's like the word that I would use you know, you used the word incumbent. A marketplace, again, it it sounds really simple. What you do is you create a market. Right? Like, you create choice. Whereas before there wasn't choice, you know, there weren't as many options, marketplaces, they expand the pool of options and they centralize them into one place, so you don't have to comb the internet. Like, I'm sure you could have found you you know, actually like someone's space to store your stuff on. Would have been really hard. You would have had to go like Craigslist or something and leaf through and >> Right. >> and the trust problem's not solved, so marketplaces solve the trust problem. >> Yes. >> It's like, now there's one place you can go to and you can look at all of the options available. That's what Amazon did. >> Right. >> There was lots of stores, even online stores, that you could go to and like find there's pets.com and whatever. Amazon's just like, what if we put that all in one place >> Yeah. >> and made it really easy where you could search and filter through all of the options all at once, pick the top one for you and buy it. We'll send them the money. We'll take care of sending >> it has reviews and feedbacks, too. You're you probably have review feedbacks for years, right? >> Well, comes the trust factor. >> to We need to go into his history real quick, but I'm going to say one last uh teaching thing to you, too, cuz it's so important. So, on marketplaces, like we've said, they're hard, but you're saying how powerful they are, which is completely true. So, I just want our viewers and listeners to have the right perspective here. I'm going to see if you agree with this statement. Marketplaces are extraordinarily hard to get off the ground because of that waiting period of that two-sided market, the buyer and the seller, to get the critical mass, whether it's geographic or nationwide or worldwide, whatever your geography is, if that's important or whatever constraint there is on that's a like geography in the marketplace, you have to have buyers and sellers of at good numbers to get it going. But at first, you'll often have too many on one side and everybody's going to question the value at first. >> Right. >> So, here's my hypothesis to you. I want to see if you agree. If any of our viewers and listeners are thinking about marketplaces, they have to be very careful to do good lean startup validation and make sure their idea is really wanted and desired. >> Yes. >> And it has to be a good marketplace idea. If I think weak marketplace or tangential or halfway marketplace ideas will not make it through that early stage and die. And why I would tell most entrepreneurs not to pursue a marketplace first. Here's why I think you worked and I'm just going to be honest here. You're super smart. You're super I mean, you're really one on the top intelligence of the students I've run into from university and you're super pensive. You're a deep thinker. Everybody what listening this can see that. And you also had a hugely good idea in a probably a sharing economy vertical that's even stronger than Uber and Airbnb. That's what I feel. >> That's right. >> So, that all has to come together to get through that first phase so everybody will wait the time for the marketplace to start being productive. Does that make sense? Do you agree with what I'm saying? >> I I completely agree and an emphasis on market size. Like like marketplaces do not work in small markets. Yeah. Even if they're good ideas, even if people want them. If you were to just start like a a snowboard sharing marketplace, there'd be people that would want to like rent your snowboard. It's not a big enough market. Because let me put the hard you put it one way which was excellent. Let me put it a different way. The business we've had to build, we've had to build a full-blown e-commerce business uh to acquire renters, right? Uh then we've had to build a full-blown SaaS business to acquire all of the hosts and spend double the money to acquire all the hosts and to build like enterprise grade SaaS that works for these $30 companies. >> Yeah. >> And we had to build a whole payments company in in the middle because off-the-shelf billing like stripe billing doesn't work for marketplaces because it the transactions are so much more complex and there's you don't have three price levels you have infinite price levels. You build your own payments company we had to build three companies and what do we get for it? All the revenue that we bring in which everyone calls will will they'll they'll call your revenue GMV instead. We get this tiny little portion. So we have to do all the work you did and instead of keeping 100% of the revenue we get to keep you know a fraction of a fraction of that revenue and we have to build three other businesses also and pay for those businesses. Very hard so it needs to be really big to where you get a tiny fraction of enough payments that it pays for the whole thing. >> question on that marketplace size or that market size from the beginning did you set out to do something with storage like you identified wow storage is a huge market let's do something there because now it seems really obvious right like oh yeah there should be an Airbnb of storage or a marketplace of storage but when you were building it and this didn't exist like was it always going to be within storage? >> And I think that's a great segue into like the history here. This is where my co-founder and I pair really well. >> Okay pause on that cuz there's one important thing. James Courier of NFX okay have you >> Follow his newsletter everyone should. >> So he wrote in 2019 a legendary article called the software for the next 10 years is not marketplaces but market networks. What you just described is what I've been preaching for 20 years to people cuz I figured out when they went to go to marketplaces I said you're going to have to build a SaaS too. >> Yeah. >> Right. >> Okay so James Courier put it in. I just want to know if you were aware it sounds like you are of course. >> Love his stuff. >> Yeah and what it is is that you truly have a marketplace is going to have to the way you become indispensable to one side of that marketplace is by having that SaaS. >> Right. >> Does that make sense? >> And you get And guess what? You don't get to charge for it. >> Yeah. Yeah. >> And you get to give it away for free. >> Yeah. And so So, but this is important to understand. So, there was a great article People should look up James Currier about market networks, and he redefined the term. And that's what you have basically done. Do you agree? >> Yeah. Yeah. >> Well, okay. There you go. >> lot A lot of times we do try to say monetize that SaaS if you can. >> you can. >> Like cuz there There's basic good management tools or business, you know, tools or customer profiling tools that these, you know, provider side people can use and and end up actually implementing within their business. Like if someone wanting to put hair salon marketplace together, if you empower the hair salon with a management tool >> You can monetize the SaaS if the SaaS you're building uh is their core business. >> Yeah. >> If the marketplace you're providing is tangential to their core business, you cannot. For example, these apartment REITs that we have, their core business is apartments. >> Yeah. >> They do They actually don't care about the million dollars a year we bring them. They don't care about it unless it's the easiest thing they've ever done. You know? It's It's like if this costs them time away from their property managers, they like us because we come in and say you get pissed on ancillary income all the time. We're the first people that are not going to make your property managers do anything. It's going to be completely easy. That's how you make tangential work. Or you can charge for it if you're building Like we've built full on CRM. We've built it. We have the world's best storage CRM, and no one pays for it because we're giving it away for free to all these tangential >> I know that was interrupting, but that's what he just said is so important for our listeners. You're so important. Yeah, let's get to his history. >> I I think everybody that is building a marketplace needs to watch this episode. >> Yeah. This is We're going to We're going to tell this story. This is so good. >> If it's core. You can't sell the SaaS if it's if it's tangential cuz I think a lot of entrepreneurs mix that up, too. >> Yeah. It's so good. Okay. Before your co-founder, you were just going to go in there. We want to go back later. Where did you go high school? Where did you grow up? >> I grew up in a little town just outside of Vegas called Boulder City, Nevada. >> Okay, Boulder >> You've ever been to the Hoover Dam? >> Yeah. >> That's us. We built it. >> That's us. There you go. Okay, and so you went to high school and then you came out to BYU here in Utah for >> That's right. >> for college and then finish your college career and when did you meet your co-founder and when did this all start with Neighbor? >> Yeah. So uh >> And were you entrepreneurial beforehand? >> Absolutely not. I I I my co-founders and I I don't think we ever thought we'd start a a company. And different different people are different. Some people are like, "I'm determined to start a company." >> Wow. >> Um I grew up in in Vegas. There aren't a lot of tech startups in Vegas. Like everyone's a lawyer, a a doctor, an accountant. >> Personal injury attorney. >> A personal injury attorney. >> billboards. >> My family, they're all attorneys. >> Okay. >> Um not personal >> dad's brother went to the dark side, too. He's an attorney. >> Yeah. Yeah. >> [laughter] >> And so like I honestly I thought I'd like go to college and be an attorney. >> Yeah. >> And then um my freshman year, someone uh I was looking for like things to get involved in, clubs. And I had this friend who was like, "You should join the investment banking club uh at BYU." And so I was like, "Okay, I'll do that." He's like, "A lot of people are there. It's great." So I joined. I didn't know I didn't even know like what an income statement was. You know, I I knew nothing. >> Yeah. >> But I went and I was like, "This is amazing. Like there's a whole new world here." >> Yeah. >> And I was like, "I'm going to go work for an investment bank this year." And everyone was like, "No, no, no, you you wait till your junior year and then after your junior year." And I was like, "No, no, no, no. I'm doing this this year." So I applied to a bunch of them. I and and fast forward, I got this internship right after my freshman year to go down uh to a bank called Columbia West Capital in Phoenix, Arizona. Small boutique like $100 million deals. >> Mhm. >> Um and and I was I was like, "I I nothing in the interview. I was like, I know nothing about this, but I will work harder than anyone you've ever had. And they were like, we're not going to give you one of our spots, but we're going to talk and see if we can open up an extra spot. And if we can, we'll give it to you. So, I got it. I show up and they're like, build an LBO model. Uh LBO leveraged buyout model. All you have to know is like, think in Excel that's like 500 rows deep, you know, and it's this recursive model. I never used Excel before. Like never. I didn't even know what Excel is. I had this PDF guide. And so, I'd sit there until midnight. Everyone go home at, you know, 5:00. And I'm just like typing in things until I figured out like how an LBO model worked. Um so, then I get back, uh uh took accounting 200 and like aced the class cuz now I knew what EBITDA was, right? Um left on my mission and got back from my mission and I was like, okay, now I'm doing this investment banking thing. And I I did a call with one of my friends that had worked at that investment bank with me, but he was several years ahead of me. He was, you know, closer to graduating. And he had gone on to get a a job with Morgan Stanley in their tech practice, tech investment banking practice. That's like what everyone wants to do. And I was like, hey, I'm back. Let's catch up. And he was like, do you still want to do investment banking? I was like, absolutely. He was like, don't. I was like, what? What do you mean? Like you you did this. He was like, I want you to call everyone who you know that went and did investment banking and ask them how they like their job. >> [laughter] >> And so, I did. I called a couple of friends and they all hated it and were like, don't do this, please. And so, I called him back. I was like, okay, no one likes it. What should I do? He was like, well, you should do consulting. He had left Morgan Stanley. Now he's at Bain & Company. >> Yeah. >> And I was like, "What's consulting?" Never heard of this before. >> [laughter] >> And he was like, "Well, it's it's" He kind of gave me a description. I was like, "Okay, I'll trust your judgment. How do I do that?" He was like, "Well, Bain's coming on campus. They have interviews in in 2 weeks." And he's like, "You're probably not It's probably not going to work out for you, but like you should just do it for the experience. You can apply next year." Cuz I just gotten back from my mission. So, I was like, "Okay, cool." Uh let's do this. Like, will you do a couple practices with me? So, we did a couple of these like case practices. And I I learned afterwards that people do like a hundred of these case practices. >> Yeah. >> I got the interview. And then to my surprise and I think to his surprise, I got the job. >> Wow. >> So, then I went and uh at the summer after >> A job with? >> Bain & >> Bain, wow, okay. >> That's right. So, so uh the summer after my junior year, I interned with Bain & Company. They gave me a full-time offer at the end of that summer. And I was like, "This is the dream, right? Like, this is This is all I ever wanted, you know?" So, I accepted it on the spot. I was like, "I'm going to do this." >> Dallas, yeah. >> Oh, Dallas, okay. >> Out of their Dallas office. Um I loved my experience there. It was It was a ton of fun. So, accepted this Bain & Company offer and then came back to BYU to finish my senior year. Okay. My co-founder, Preston Alder, he, that same summer I was at Bain & Company, uh right before the summer so started, he and his wife had just gotten married. And a week after they got married, they moved to down to South America to work for this humanitarian org. So, you can imagine like you just got married, you haven't even moved into apartment yet together, and you're leaving the country. What do you do with all your stuff? You know, you've got these like now combined stuff. People gave you a bunch of wedding presents, and you don't want to take it to Peru with you. Um so, he needed a storage unit. And he tried to get one and kind of had the same experience that a lot of people have, which is that all the units close by were totally full. Storage is 95% occupied nationwide. So, like over half of all storage facilities are just totally full. So, he couldn't find one. He was going to have to drive half hour to the >> There's a lot of hoarders in this world. >> There are, yeah. Well, and and not just hoarders. Like, I think hoarders get a bad rap. >> But yeah. Yeah. >> But getting a bad rap, Tyler. >> But >> [laughter] >> and some people truly are hoarders. >> Hey. >> But you think of what's driving the storage industry, it's the affordable housing crisis, right? It's like it it used to exist in San Francisco and New York. Now it exists in Austin and Salt Lake City and Milwaukee, like all these flyover cities that didn't have this before. You can't buy a $300,000 starter home. It doesn't exist. >> Yeah. There isn't one. Yeah. >> You know? So, like people are having to buy smaller and smaller spaces. Uh >> For more and more money. >> For more and more money. And if you can't have a home big enough for your family and your belongings, you get a home big enough for your family and you get a storage unit for the belongings, kind of the life things you just need for life. >> Last night, a good friend couple, we're with them and they said one of their child- adult children's having to move back into their home. >> Right. >> And both that couple, the young couple that has to move back in with their parents, they had to clean out some of the house >> Yep. >> and jointly share pri- costs on a storage unit because they have to store it now. No where to put the And it's cheaper for boomerang kids. >> As expensive as storage is, it's a cheaper cost per square foot than living space. >> You know? >> And and and so like that's just the reality that exists in the country. It's why it's why this industry does 10 times more revenue than the entire taxi and limo industry that Uber and Lyft disrupted. >> Yeah. So, Preston basically was like, "I want to do something around this." and looped you in. >> Well, well Preston was like was like, "I'm not going to pay these prices. One, it's going to be like several hundred dollars a month." He's like, "I pay several hundred dollars a month for my rent right now in Provo. And so So, he was kind of stubborn, and he called a bunch of his friends and found a friend that let him store in his garage over the summer. Didn't even think about it. He goes to South America. He gets back three or four months later, goes to pick his items up from his garage, and he's just kind of thinking about it, and he's like, "Okay, one, I felt so much more peace of mind knowing my items were in a nice, clean garage in a neighborhood I trusted. I actually felt safer here than in a storage facility on the >> Yeah, scary going to a storage facility that's not manned by anybody. >> For sure. It And then, two, I saved a ton of money." And he's like, "There has got to be empty space in every neighborhood in the country. I just don't know how to find it. No one knows where it is. Why hasn't someone created like a a directory or a marketplace where you could find the space?" So, he's the genius that had the idea for this, and he's the visionary. He's the one that was like, "You could create a storage marketplace here." Well, we run into each other. So, he His major He was a strategy major at BYU. I was a strategy minor. So, we'd taken a bunch of classes together. His wife ended up going to Bain & Company. Um she was a year ahead of me, so like, we knew each other that way. We were good friends at BYU. We'd met through our our majors. We did all our group projects together, things like that. And so, I ran into him a couple weeks after the semester started, and he was telling me about this idea he had. I remember going home to my wife that night and just saying, "Preston just had the best idea I've ever heard. Like, I thought all of the good marketplace ideas were taken." >> Yeah. >> Um >> This was so early in the marketplace. So brilliant. >> Well, it actually >> I don't know if it was early. >> This was This was >> I This is better than Uber and Airbnb to me. >> It Airbnb and Uber, people don't realize, are 17, 18-year-old companies. >> Mhm. >> Like, they both started in 2008. >> Yeah. >> This was 2017. >> Yeah. >> 2016, 2017. >> So, I guess yeah, you were 10 years behind that movement I guess. >> They were they were big, massive, multi-billion dollar In fact, I did a research project with a professor in school about Uber, which what at the time was a you know, 40 or 50 billion dollar company. Um and the whole sharing economy and how, you know, some rules about how sharing economy companies like I'd had some brief exposure to sharing economies through some research I did with this professor. And when he shared it with me, my first thought went to this is brilliant. Like, what's the market, you know? And so like you asked a you I think you asked, "Did you guys look for something in a big market?" No. Preston solved his pain. Like we weren't looking for something in a big market. >> just so happens it was a huge market. >> We checked the market after, you know, and it turns out and I was like, "Oh my gosh." >> What is the size of the market? >> He I mean, you just said it's bigger than the taxi travel because I Is it bigger than Airbnb? >> Any Any day it's bigger. >> Airbnb's huge, too. >> It It's massive, yeah. But Uber's actually a bigger company than Airbnb. Do you know that? >> But that's >> Uber's a 150 billion dollar company now. Airbnb's >> Uber's pretty slick, though. And there's room for two big leaders, right? Uber and Lyft and there's Airbnb and Vrbo. >> Yep. >> Okay. >> Although those are both winner take all. During free capital, during ZIRP, there was room for two to like spend hot against each other. Do you know how big Lyft is now? It's a 5 billion dollar company. >> Yeah, yeah. >> It was a 40 billion dollar company. Now it's a 5 billion dollar >> Yeah, it's number It's a clear number two. >> Uh Vrbo, I think same same thing. It's kind of like Airbnb kind of took Most marketplaces are winner take all. >> Yeah. >> In the end. Eventually, once the venture capital dries up. >> But I do know the couple out of the Cayman Islands I've studied them and I don't know the person I'm going to have to say them that started Vrbo back in the day and they ran They got to $8 million revenue with like $4 million net profit each year. Just one couple running out of the Cayman Islands. Crazy story. Then HomeAway and all that. >> Yeah. >> Yeah. >> Cayman Islands. >> But yeah, but I agree. Yours I really I'm liking it. I'm liking your vertical better. >> [laughter] >> I I certainly well, we haven't even touched on AI. >> Yeah. >> Uh and and the the power that AI's playing in the space. >> so your history so then he did this then he you guys get him together. How did you two connect and say we're doing this? >> So so um he he came up with the whole name for it and and was like, I'm doing it. He kind of pitched me on it and pitched our other co-founder Colton Gardner who was at the University of Utah. >> Yeah. >> So he's our our our kind of token U representative. >> Yeah. >> Um so that we could truly say like we're we're a Utah startup. Um and and we just started working on it while we were in school. I actually don't think any of us were like had the intention of like this is going to be our full-time jobs. We just thought it was a fun project. You know, like let's get this up off the ground. And so we did all sorts of cool stuff. I mean it just started as a as a survey website where you could go on and fill out a Google Form if you wanted to rent space. And you could go on and fill out a different Google Form if you were willing to like host your space. >> Yeah. >> And we did all the things in between. So if we got a renter, we would call the renter and we'd say, "Okay, what do you want to store?" And we call the host and we say, "Okay, they want to store this. How much do you want to charge?" And the host would give us a price and we'd call back the renter and say, "Okay, they want to charge this much. You good with that? Okay, when do you want to move in?" We'd call back the host. "They want to move in this date. Does that work? Okay, great." We'd send them both a PDF and then the renter would Venmo us and then we would Venmo the host their portion. And that's how we operated the marketplace until eventually it it got to the point where that was too much work. And so we built out a very basic website where they could see each other on a map and they could find they could find the location they wanted and book them. We still didn't have payments. So once they booked on the website, it saved us all the call coordination, but now we still reached out to him for Venmo. They'd pay us and then we pay out the host. Well, then eventually that stopped working cuz Venmo shut us down. My co-founder >> a business and you're you're doing it through personal, yeah? Okay. >> Yeah. I think my co-founder is like still locked out of Venmo to this day. And so then we had to build payments into the product. And it by our second semester of our senior year we're like, man, there's people that are seriously interested. Like this is solving a real pain. This isn't just Preston's pain that he solved, which is I think where most good platforms start is solving your own personal pain. But we got a lot of market validation and like there's a lot of people who want to use this. Um And so two months before we graduated, we all called our full-time jobs and said, "Hey, we're not showing up." So called Bain & Company. Funny story here. I called The business school was very worried about this. The the I had some people at the business school that were like, "You cannot renege on Bain. You're going to ruin our reputation." Yeah. >> Yeah. You know who else had that problem? >> Who? >> That I mentored? Adam Edmons. >> Oh, yeah. >> I was his first mentor. He's been on the podcast. One week before KPMG job, he reneged. >> Yeah. >> And the professors freaked out on him. And I had to go tell them he's an entrepreneur. He's going to do this. >> Right. They want those placement rates. >> So so they did that to you >> Yeah. Yeah. They they were like, "You're the worst for doing this." Well, >> [laughter] >> so I was actually worried like how's Bain going to take this? Um but I called my partner who I'd worked with the prior summer. Awesome awesome guy. And you know what he said to me? He said He said, "I think this is a great decision. And I'll tell you a story." He said, "When I first started at Bain & Company, he's like I thought Bain was the the dream job. My friends had started this little company. It was a little cooler company. Like they sold coolers and they asked me to come be the COO and help help them start the company. And I was like, "Sounds really fun, but like I can't turn down Bain, you know, like I got to go to Bain & Company." He's like, "Do you know what that cooler company is called?" I was like, "No." He's like, "It's called Yeti Coolers." >> Oh my gosh. >> [laughter] >> So he's like he's like, "I wish I'd taken that job." >> Yeah. This is exactly what >> like, "I hope you're successful. Like Bain's always going to be here. Yeah, like go have fun." Um so we did it. Like and and my dad >> Bain should have just backed you, right? It's like I think back to Venmo. Venmo should roll out the red carpet for you instead of >> Slapping you. >> Slapping you down, they should have said, "We got a business thing. We'll make it really worth your while. Let's do it." >> Well, I think a couple years later they did end up rolling out >> business plan. >> Yeah, but they still take 3% for the business. >> They didn't have that at the time. >> Yeah, but 3% is still high cuz you running your own payments company, you're paying a lot less. >> Right. Right. Yeah. So um so yeah, I mean we hadn't raised any funding. Like zero funding. We'd done some of these business competitions where, you know, I think we'd won probably like 20 grand in in business competition stuff. Um and we were all like living off Pell Grants, essentially. >> remember meeting with you in those days for a couple things here and there, yeah. That's fun. >> Yeah, and and so it it was a little bit of blind faith there. Fortunately, later that summer we raised our seed round. Um cuz we just didn't pay ourselves >> anything. >> So and we we had young families. Like we had just I I had two kids while I was in college. >> Yeah. >> Um and >> It's a risk. >> It's it's the risk, but we did it. >> Yeah. But if you don't take those risks, stuff I mean, you if you went the way your father-in-law, I use that term as an analogy, would have wanted you to do, "What are you doing? You got to support this family." You know, that you know, it's if you don't take that risk, >> Right. >> you'll never know and never happen. Just like the Bain guy who lamenting, "Oh, yeah, I've spent 20 years at Bain, but I could have been at Yeti." >> Yeah. >> [laughter] >> And then the reality is you made the right choices. >> Yeah, and I do think you made the right choices. >> a job. You know, like uh people think they're taking a a risk with a startup. Um but but I you look at it, if the startup fails, you got awesome experience that people really want to hire you for. We look for We We love like failed ex-founders. >> Yeah, like >> You learn so much on the way down. Almost more than you would learn on the way up when it's all working. >> Yeah. >> Um we love to hire those people. And it for all the reasons you got job offers before, you're still going to get those job offers. Like the downside is you lose a couple years. >> Mhm. That's the downside. >> A couple years in your early life is not risky at all. I mean, the power compounding principles, you're you've lost hardly anything. But let me just say this, um just I just want to know I I I think there's less risk in being in control of your destiny doing the entrepreneur path than taking a job in some ways because right now, the jobs, you know, the job market is not always And also, half the people that should be entrepreneurs they're not good workers for other people. Sometimes they should like >> Yeah. >> They And they're not going to be happy that way. They need to be a founder. So, not everybody should be a founder. That's 100% true of probably small percentage, but I'm just saying true founder material >> Yeah. >> is not great being number two, number three, number four, number five, or number 24 at a company. >> And it And it depends. Like I think you get a mix. You get those guys that are like they they cannot work for anyone else. >> Yeah. >> But you also get guys like us where I mean, I was headed on the professional services track, so was Preston, so was Colton, you know, we were like totally content to just go be a high performer >> Yeah. >> at a company. >> still had the potential. >> But we were like go the other route. >> Yeah. >> Uh we were like, "This must exist." >> Yeah. >> Like someone's got to do this. >> Yes. was a tipping point for us. >> It's what you Tyler loves of my a saying he picked up for me. What do you say? You ask sometimes when we're interviewing for a potential investment we one of your last questions is What is What is the reason you feel you cannot not do this? You know who I got that from? Adam Edmunds. Adam Edmunds when he turned down KPMG goes John I cannot not do this. >> Right. >> It's a weird double negative sense, right? >> It's so much better than you know and and this can work but sometimes you'll get um folks that are like I want to start a company. I don't care what it is. They're like I just see all the success of like people that start companies and like I must be a part of that. So I've got to start a company and >> Yeah. Yeah. >> Like I just want all the success that comes with that and it's like I think that can work. I've seen that work. There's there's some people that are that that make that work but it's like You know how hard this is going to be? >> Yeah. >> Like >> Yeah, but people >> going to be so hard. Don't It's a non-economic proposition. Marc Andreessen calls it a non-economic proposition. It's the worst way to make money is starting a company. Uh because the failure rate is so high. The best way to make money is to go to Bain and like my salary would be a million dollars a year right >> Blue blooded. >> Blue blooded. >> That is the corporate world. >> If you what you care about is making money on a risk-adjusted basis, do not start a company. >> Yeah. >> You should only do it in my opinion because you really think this needs to exist and you want to be a part of building that. >> Yes. That's 100% great. >> It is it is not for the outcome. And I think we have a very outcome-based state. >> Yeah. >> Like this is a commentary on Utah. You look What are our big massive public companies? Like do you have any big massive public tech companies? We've got Qualtrics. Intrada >> Yeah. >> uh which I'm really >> about. Like I think Intrada could be >> That's Adam Edmunds. >> Like a Yeah, that's Adam Edmunds. That could be a namesake for Utah. >> Yeah. >> Um but so many companies they sell and and and you take some of our biggest successes that have seeded so much and like totally grateful that they came before us, but take like Omniture for example. I don't think people realize that that Omniture is still alive and well and it's a $15 billion company called Adobe Experience Cloud. But guess who gets the credit for that? Not Utah. Adobe does. And it's like now Omniture could Those of us that know Omniture sold at 320 million their first year Adobe owned it went to a billion. Yes. 15 billion. Omniture could be a publicly traded massive stand-alone company today that's like attracting talent and and spitting off entrepreneurs all over the place. And and like who am I to judge? It did do that anyway. Who am I to judge? Like I might have made the same exact decision. You know, it's hard to turn down such an attractive offer like that. But I hope that there are some people out there. I hope I hope I'm one of them, but I don't know. I don't I won't know until I'm in that position. I hope there's some people that are like, "No. I'm going to build a big public company regardless of whether it's the best economic outcome for me. Like I don't care about making money. I just want to build a big company." Right. But if you have a vision of what the world could be and the people you could help with your product or service and that's what matters to you, then learn how to take care of the money side. Right. then you'll make it. We got we got You got to ask your last question. But this is so good, Joseph. This is a great transition into the very end of this podcast and I want to ask you two things as we wrap up because that was a great final note. One, I want to ask you last ending words for all the marketplace entrepreneurs right now because there's been so much gold in this, but like if a marketplace entrepreneur comes up to you and they're like, "You're doing Neighbor Joseph and how have you gotten there? How have you built this? What have you done?" What do you tell me those people and and how can you broadcast this today on the podcast to like final parting words? That's the first one and then the second one is then just overall what's like one thing you want to leave everybody with? So, marketplace specifically and then all entrepreneurs specifically. >> [clears throat] >> So, marketplace specifically, first I'd say it if back to what we said. If If you don't think this absolutely must exist and this is like your your life goal, get out now. [clears throat] Like don't do it. Like seriously, don't do it. Don't do a marketplace. But if you think that that the world must have this, then marketplaces are the best business model out there. In fact, I think you should choose companies by how hard they are to start because the the biggest companies were the hardest to start because that's what gives them a moat, right? And moat is what gives you monopoly. >> Monopoly. Read Zero to One by Peter Thiel. He's he says to The only thing you want to create is a monopoly. That's what you want. You want a monopoly as a business. >> Oh. >> Um uh because everything else is competitive and goes to zero. And marketplaces end up monopolizing spaces because they're so hard and because no If someone wanted to do what we do, they would have to go city by city, every single city and get the supply that we have. It was hard for us. It'd be even harder for them because they have to convince them to leave our platform. >> Mhm. >> We had to convince them to try something. There was no alternative. They have to convince them to leave our platform, which is sending them tons of renters and has all the demand. They don't have any demand. So, marketplaces have these incredible moats and moat is an increasingly important thing in the age of AI. And you're building a digital >> Lyft had its in the ZIRP period, zero interest rate period, had the ability to get capital and buy customers, but then when money became expensive to buy customers, they went down. >> So, if I was an investor in the age of AI, the only companies I would be putting any money in are marketplaces. Because you look at the seven powers framework, like they're the only companies right now that have any hope, you know, like of of being stand-alone. If you're building a digital product, AI can do that better. And these AI companies that are growing 10x year over year, that looks attractive like to join that company. Like I want to join that company that's growing 10x year over year, is exciting. Just like it looked attractive when you had these like D2C companies, there's different phases of startup. They grew super fast, but they were really easy to build. So, as soon as there was profits there, eight competitors came in, sucked up the profits, and they all went bankrupt. The same thing is going to happen with all of these fast-growing AI startups. You're actually at a disadvantage for starting today. The guy that starts in 6 months is an advantage over you cuz he's using better technology. And the guy that starts 6 months after that has an advantage to you in building your digital product. He can build everything that you built for a fraction of the cost. >> on what you're saying comes back to it's got to be the right combination of founder, >> Yes. >> size of market, the vertical, the dynamics within the players in that industry that you're disrupting. All that has to come together just right. >> And you were saying the complexity or the hard difficultness of building the marketplace is actually better. It means you'll make a lot of money if you can make it work. And yes, the moat that will keep >> Okay, last question. For general entrepreneurs out here, we have lots of first-time wannabe entrepreneurs, etc. What's your tip you would leave them? >> Uh one piece of advice. Oh man, one piece of advice. Um it all that matters like you you I I appreciate this. You said I'm I'm very smart. I I actually question whether that's true or not. What [laughter] I will say though but I I I don't think that's the determining factor. I think it's all about work. Like work work work period. There is no other way to do it. Like if if we don't have a $50 billion company in Utah. It's not because people haven't tried. Like it's hard. >> Mhm. >> And and the only way to build a successful startup is just to work at it. You're going to have major down periods, major difficulties. Every single startup I know a lot of the CEOs at Utah companies. Neighbor looks really attractive I'm sure from the outside in like raised $75 million nationwide crushing it from Andreessen Horowitz. I also know the founders of all the most successful companies in in of my cohort. I don't know a lot of the older guys. I know of my cohort those guys. You not believe the difficult things they have to deal with behind the scenes. Like >> It there is not a single hot company in Utah that hasn't gone through or is going through like extraordinarily difficult things. >> such thing as overnight success. >> Yeah. >> And they made it in spite of that because they worked their tails off. >> And you bring up a point so I'll say this four average intelligent hardworking people will always outperform one single genius. >> 100%. >> That's what that's kind of the point you're saying. >> So you're just saying get ready to roll up your sleeves and work. >> Yeah yes. >> So if you so I say this if you just want to be rich >> Right. >> kind of lazy >> [laughter] >> but you that's what people that there's so think of all the entrepreneurs in Utah you've met that kind of fit that description right? They really just want to be rich and successful okay? But they really want to play video games a lot of the day. They're not really wanting to buckle up and work hard. Like when Tyler's doing Dev Mountain, that's all he did. >> Right. >> He had to be at that company the whole time and he had to be there and they had to, you know, office together and they had to figure things out. They went through hard times. There were times when they'd go home at night and think it was all crashing down. >> kind of just saying reality check, this is going to be super hard. >> This is the hardest thing you could do with your life and you're going to have to get rid of like most things in your life. >> Distractions. >> of it. It's kind of like how bad do you really want it? Are you willing to work as hard as you ever worked in your life for years? >> Yeah, for years. And it's all going to be paper forever. And you know, like >> Well, Joseph, [clears throat] this has been incredible. Joseph, we you Thank you for helping me trick Tyler and then [laughter] also thank you for this incredible episode. >> Yeah, thank you. >> Yeah. >> Thanks for having me on. >> I I think this is a must-watch for every single entrepreneur, of course, but I I think specifically for the marketplace entrepreneurs. And I I love what you said. If I was investing today, it's marketplaces, baby. 100%. >> That's with and with the caveat. >> Yeah, with the caveats, right? All these no caveats. >> [laughter] >> But those things got to line up. Stars got to align. Okay, thank you so much for watching this episode of the Startup Ignition podcast. Thank you, Joseph, for coming on again. It has been a pleasure. Tune in, like, subscribe. Reach out to Joseph. The guy is such a nice guy. He's got a big following. Go follow him on LinkedIn. Give him a follow wherever else he is on social media. Go follow his company, Neighbor. They're doing great >> Rent your space. >> Yeah, and rent your space on Neighbor. That's the last shout-out we'll give. So, thank you so much for watching. We are out.