When Pete Warhurst decided with his partners to start a storage business that would allow customers to keep their storage unit on their own property, he only planned to have 50 to 100 containers built.
But soon after a radio ad aired for Portable On Demand Storage, he got the sense that the idea may have far more potential than originally anticipated.
“As soon as (it) finished, the phone started ringing, and we had two or three people say, ‘Tell me more about this PODS thing, I might want to rent one,’” says Warhurst, president and CEO of PODS. “Then we had three, four, five more people call and say, ‘I want to buy stock in your company, or I want to buy a franchise,’ “
Not a single container had even been rented yet, but it was obvious there was a lot of growth potential for the concept of a container that can be stored at a customer’s house or picked up and stored in a PODS warehouse.
Warhurst has parlayed that initial interest into 100,000 units for rent across 150 markets in 45 states.
PODS had 2005 systemwide revenue of about $200 million, including franchisee revenue, and has grown by 100 percent a year during the past seven years. This year, it is targeting $300 million in systemwide revenue.
“I wish I could tell you we were that smart, and we knew all along were going to be this multistate and location industry,” Warhurst says. “Really, creating a new industry is what we are doing.”
Despite being surprised by the success of his concept, the former fire chief and paramedic has carefully managed his company’s growth to keep it on the path to success. Here’s how Warhurst has conquered the challenges he’s met along the way.
Growth at a steady pace
Early on in the PODS venture, Warhurst was determined that the company’s success would not be its demise. He had already once experienced the drawbacks of growing too fast after creating 911-emergency routing and records management software with partners.
The software was such a hit that they eventually had no choice but to sell to Bell Atlantic.
“We were so successful and contracted for so many jobs and installations, we couldn’t get it done and didn’t have resources to get it done,” he says. “Unless you have the infrastructure around you, I would tell anybody to do what you can do comfortably.
“Don’t stagnate your growth, but build an infrastructure that allows you to grow at whatever pace you want it to be. Getting the systems and procedures in place makes it so much easier down the road. It does slow you down in the beginning, but ultimately, it will make you a much healthier company.”
Learning from the software experience, Warhurst was sensitive about not allowing PODS to grow by leaps and bounds in a short period.
“I wouldn’t let my franchise team sell a franchise west of the Mississippi,” he says. “I felt we weren’t ready to go that far. It exceeded our span of control. We made some good decisions to control our growth early on.”
With that mindset from the beginning, Warhurst was able to grow the company at a good pace, which benefited him in the long run and has made PODS an international company.
“Now, we have such a great infrastructure under us, we can open countries,” he says. “All of Canada is under contract or is going under contract. We just did our first cross-international delivery. We made the business decision to do Australia at the first of the year, and we’ll deliver PODS in October.
“By taking the time to build the infrastructure under us, our ability to grow and expand is a piece of cake.”
While growing may also involve change, Warhurst said he prefers the word “enhance” because PODS was the first of its kind. Trying to change and compete in other industries is not something he finds appealing.
“A couple of my franchisees and some people ask me, ‘Why don’t you go to an office POD and compete with GE?’ GE could crush us,” he says. “They’ve been doing modular offices for decades and that is not our core competency. This is our industry to own and continue to own and dominate.
“While I don’t want to deviate and change, I certainly want to continue to enhance and improve how we provide the service. All we have to do is stay focused on what we do best, continue to try and improve our services and continue to grow and don’t get stale.”
Warhurst was already in the storage business when the PODS idea was born. While looking around for more property to build another storage unit in densely populated Pinellas County, the light bulb came on about the possibility of having a portable storage unit at a home.
However, that meant developing a lift system known as Podzilla and a container to hold the storage, which turned out to be quite pricey. Banks weren’t necessarily seeing Warhurst’s vision, a problem with such a capital-intensive business.
“We were building a box that the bank said, ‘Hey, if you go under, who am I going to sell this thing to?’ he says. “There was no secondary market for this collateral we were trying to finance.”
Through different fundraising techniques, bank debt and partner contributions, the company took its first step to the fast track. However, with rapid success came the need for faster decision-making, rendering every decision more of a risk.
“We don’t have the luxury, in a lot of cases, to go out and do case studies and hire consultants to come back and tell us what we already know,” he says. “We do make decisions after some diligence, but my instructions are always, ‘Let’s monitor what we’ve decided. Let’s monitor how it’s progressing. If it’s wrong, then let’s not be ashamed to say it is wrong. If we can tweak it and fix it, then great, let’s tweak it, fix it and hopefully fine-tune the solution and resolve the problem. If it’s completely wrong, let’s not be too proud to say we made a mistake. We made 10 decisions in the last month and one went sideways on us, so let’s fix it.’
“The key is to monitor it. Since we aren’t spending a lot of time on the front end analyzing and doing case studies, the key is to monitor our decisions and to make sure they are going the direction we want them to.”
Warhurst says that for the last five years, his COO ran the day-to-day operations, but Warhurst still kept his eye on what everybody was doing.
“I made sure we were all aimed at the same bulls-eye,” he says. “We met and chatted and everybody knew what the other was doing. It’s important not to micromanage. I’ve driven a truck, I have built a pod and answered the phone and booked an order. I’ve done it all, but I’m not good at any of it.”
To add to the risk, Warhurst and his partners had no prior example to research the direction a company like PODS took for success. The idea was so original that there wasn’t even a mention of such a business on the Internet.
“Our competitors that are coming up now can look at what we did and how we did it and can pick and choose what they like of what we did,” Warhurst says. “We didn’t have anyone to follow. Building the first pod was a risk. Investing the hundreds of thousands of dollars to get off the ground and get the first pod rented was obviously a huge risk in an industry that we didn’t know if t
here was an industry there to have or a market there to penetrate.”
Being forced to make quick decisions might actually be a benefit for Warhurst because he says overanalyzing a situation carries its own risks.
“Don’t get analysis paralysis,” he says. “Don’t get too bogged down in trying to overanalyze it. You’ve come up with an idea, and your gut and instincts tell you it’s a good idea, be willing to take the risk. But monitor the decisions you make and be willing to admit when you made a bad one and change it and fix it.
“You can’t be afraid of risk and you can’t be a control freak. You have to trust your instincts and believe in your own vision. If you don’t believe your own story, who else will believe it?”
Build a good team
Part of the decision-making process for Warhurst is realizing he may not always have the correct solution for a problem. Using a leadership style he describes as fairly liberal, he says he tries to point everyone in the same direction but spreads out the power.
“Early on, I was the management team,” Warhurst says. “Obviously, as we continued to grow, my span of control narrowed and wasn’t broad enough to be able to do all the divisions proper service. By bringing on quality talent and getting them to learn how I think and empowering them, I think it’s enabled us to grow much faster than if I micromanaged and did it all myself.
“Clearly, the only way we could grow at the pace we are growing is empowerment.”
Warhurst surrounds himself with talented people he trusts, and when he hires senior staff members, he interviews them with his COO over a two- to three-hour period to try to find the best fit.
“I look at education and historic background and what they’ve done,” he says. “Are they a good fit for the rest of the management team? I get great pride walking down our hall seeing two or three of my managers in a room at a whiteboard solving a problem or kicking a situation around and coming up with solutions.
“There is nobody that has all the answers, and there is nobody that has an ego that isn’t receptive to a peer’s idea or suggestions. It’s an extremely cooperative and friendly environment.”
And if he has a bias toward a solution, he tries to hold it to himself and let everybody else pitch their ideas first.
“Then I’ll throw my opinion in and see if it alters anything,” he says. “Nine out of 10 times, we can come to a resolution that we all get buy-in on, and we all agree this is the most logical of the solutions. On the rare occasion that doesn’t happen, then that is what they pay me the big bucks for. I make the final decision.”
Although it’s important to realize you don’t have all the answers, Warhurst says a leader needs to have confidence that the final goal can be reached.
“Believe in yourself, believe in your idea, and be sure you can afford your goal and objective and that you’re funded,” he says. “Most businesses struggle to raise capital to meet their full objectives, and they have great ideas, but they can’t fund it. It’s important that you have plenty of funding, and you know you can fund what you are getting into.”
How to reach: PODS, www.pods.com or 1-888-776-PODS