A Product Market Fit Show | Startup Podcast for Founders
00:10:14 · Mark, Pablo Srugo
[00:10:14] S1: Yeah, there was preparation there, right? We were already in market, we were already advertising, we were at a startup career expo. All these things sort of culminated to create these subconscious snaps fires that were helpful in the end, I think. Look, the business was supposed to be asset-light. We became very asset-heavy and we now have tens of millions of dollars invested in physical infrastructure. We had this partner that was supposed to be great. On April 28th, our busiest day of the student storage season of our first year, they called us up at 9:37 AM. Our first appointment was to start in 23 minutes, and they said that, "Our guys are refusing to work. You're completely on your own today." This was problematic because Heindrik was already just entering an exam at 9:00 AM and I was supposed to go into my final exam at 11:00 AM. We would not overlap. This was hugely problematic, and again, this was like getting slapped in the face as a founder. The option was, cancel all these orders and tell them to figure something else out, or do the unthinkable and just figure out a way to spin up logistics that 15 trucks were going to do for us with a small team of two. [00:11:23] S0: To be clear, what you have to do at this point is go to a bunch of different places and pick up a bunch of different furniture and store it.
00:11:23 · Pablo Srugo, Mark
[00:11:23] S0: To be clear, what you have to do at this point is go to a bunch of different places and pick up a bunch of different furniture and store it. [00:11:29] S1: Yeah. Aggressive. I think on that day, we had about 84 appointments, and at the time, most trucks were doing 8 to 10 a day themselves. Okay? We now have to do 10 times the normal volume that 10 trucks would've done in one truck, and this is the end of the month. If you've ever tried to move yourself and get a U-Haul at the end of the month, unless you book it two weeks in advance, you're fucked. We had to send Heindrik an hour out of the city to get the only U-Haul left. I remember writing my exam in like 10 or 15 minutes, getting out, starting to move people's stuff down, and then see Heindrik roll up on St. George Street in the tiniest U-Haul you've ever seen. It was the 10-foot box truck. I'm like, "Oh my God," but beggars can't be choosers. In this case, we had to do way more runs back to their warehouse to drop off the product. Then I ended up using my dorm on campus as a staging ground as well, which was filled with these green totes. We worked until 4:00 AM that night and then we did it again. [00:12:32] S0: From when to when? Like noon to 4:00 AM ish? Something like that?
00:12:32 · Pablo Srugo, Mark
[00:12:32] S0: From when to when? Like noon to 4:00 AM ish? Something like that? [00:12:35] S1: Yeah, it was like 11:30 AM until 4:00 AM, and then we did it again the next day and the next day. Then we said, holy shit. If we're going to do this business, we have to do it full-time. We had just started negotiating terms with Michael, and we said, okay, let's close this round, and let's quit our jobs and let's do this full time because I think we have a real business here. [00:12:53] S0: That's an amazing story. It's very prototypical of the founder DNA, right? When you boil it down, I like to think about some of the best founders are insanely focused, and they just have one goal in mind, whatever that goal is. I think here, it's like, make the thing work. <laugh> I say insanely because the thing that happens is actually insane. Two people driving around for, whatever, 16 hours or so, moving boxes. It's just insane, but at the end of the day, it was either that or you return everybody's money, which was unacceptable, so you did it.
00:13:27 · Mark, Pablo Srugo
[00:13:27] S1: Well, the reputational hit, we would never have recovered, ever. We have this mantra that like every single stop, every single customer needs to be successful. It was that maniacal focus, one of our company values right now is sweat the small stuff. Every single customer mattered, but of course, we had to compromise, right? You're constrained and everyone had these time slots and we said, to hell with the time slots, we're going come to you and we tell you we're ready, and we're going to now bundle all these customers together. If you're at 110 St. George, be ready at this time. In fact, if you can bring your stuff down for us, that would also be very much appreciated. We just communicated to all these customers and said, we're going to be here and make it work. We're sorry. Like we're inundated with a crazy amount of work. We're apologetic. And you know, students to their credit are a special breed of consumer where they just wanna get it done and the service might be choppy, but as long as like the outcome is what they wanted, they're gonna be okay. And so we were very fortunate to start in a pretty like, you know, soft , uh, consumer environment and then move into more high demanding kind of , uh, quote unquote adults that are very discerning with what they pay for and what they get in return. [00:14:33] S0: What was the alternative? What were students doing before Second Closet with their stuff?
00:14:37 · Mark, Pablo Srugo
[00:14:37] S1: They were using a very longstanding incumbent called Store Your Dorm that would charge four to five times what we would charge to do the same thing. Taking a step back, that is probably why we were inundated. We did a great job getting our name out there, and of the people that saw us, they booked with us. Then the next year, our student rush was way bigger than we saw in 2017 just because we had plastered the subway with our ads and built more credibility and so on and so forth. The moment we exited consumers, and students, I should say, we went to the typical storage consumer, which was someone that lives in a home or a condo that needs excess space. I remember we graduated from the U-Haul to a Mercedes Sprinter van, and we're like, oh, this is a Mercedes. It's super high-end. In reality, it's just a big minivan. We didn't wrap it because to wrap it would cost $3,000 and fuck that, that's way too expensive. We only raised 500k. Let's be frugal, but as we still did all the pickups ourselves, and I did all the customer support myself, all the sales, and all the inbound management, I could feedback loop what consumers were saying on the ground, what they were complaining about to support, what they wanted to see, and so on. I remember doing a pickup one day and the husband and wife, we were picking up their sofa, the wife was whispering because we were just in Nike athletic gear and shoes and we thought that that was nice but obviously, it wasn't branded and — [00:16:07] S0: You got the Mercedes-Benz, you got the Nike gear, you're good to go.
00:16:07 · Pablo Srugo, Mark
[00:16:07] S0: You got the Mercedes-Benz, you got the Nike gear, you're good to go. [00:16:10] S1: Yeah, big ball. We probably should have thrown on spinners on the truck as well just to really wrap it up, but they were like, "Oh my god, is this a scam? They're going to steal our furniture?" I just remember thinking like, shit, we do not do a great job. We have this little clipboard with this poorly colored printed manifest that looks like shit. I'm like, if we're going to take possession of people's things and be in their home, we need to show up a lot differently. The next week, we had this really cool truck wrap designed, slapped it on the truck, $3,000 later, we went to the cheapest screen printing shop to get Second Closet shirts printed. In the end, we ended up getting a look and feel that when we showed up, that never happened again. It was a micro pivot of how we invest capital because now, those people might go tell other friends like, "Hey, I had a great experience with this branded business and it was super legit. Stored our stuff, they brought it back. Same people, same experience." I just think that we were very receptive to those little things over time that ultimately helped us build a business that was highly recurring revenue and had a high referral base.