Identifying Your Market As An Entrepreneur

Heather Armel | August 15, 2019 at 9:42 AM

...Or 'Markets' In A Sharing Economy!

Remember back in the day when Uber first launched, and everyone was skeptical about riding with a stranger or using their car as a taxi? For most of us, those days are far in the past, and the sharing economy has now evolved to reach further than our vehicles. Entrepreneurs within this space face the unique challenge of marketing to two types of customers, each with different needs, and you need both of them to be successful.

Recently, our CEO had a wide spanning conversation with a marketing professional who has had success navigating the often challenging space of sharing economies. In this blog, Hollywood Branded has a conversation about identifying your market as an entrepreneur with Neighbor.com Co-Founder and CMO, Preston Alder.

Podcast EP141-158 (5)

A Little More About Preston

Preston started his first company while he was in college at Brigham Young University, a videography business to build his creative side and helped him get through college. His idea for Neighbor was born from a personal pain point before he even graduated. Now, Neighbor.com is a marketplace that's disrupting the 400 billion dollar self-storage industry.

As CMO, Preston has played a huge role in enabling Neighbor.com to expand to 48 states, building trust with their customers along the way for what many would see as an invasive process (renting your space to others). We're excited to learn about his pivotal role in building this company!

Interview Transcript Highlights

Question: I'm super happy to have you here today. You have a really interesting background, the fact that you started your business based on your experiences in college. I'd love to have you just fill us in on how you got started and what got you to where you're at now.

Answer: I'd love to share. The concept and idea of Neighbor came about while I was in college. My wife and I, we were recently married and we needed storage. I was a junior going into my senior year in college and I was leaving for a summer internship. I was going to be in South America helping a younger company and we needed to put our stuff somewhere.

We started calling storage facilities and I realized every storage facility in the surrounding area was completely booked out. This shocked me. I didn't realize storage facilities booked out. I had never purchased storage before. I started calling surrounding cities and it turns out that even those facilities, the ones that weren't completely full were just very expensive. It was more than I wanted to pay as a college student.

So, I went to the drawing board and started calling around. I called friends. I even called local apartment complexes associated with the university and said, "Hey, is there any way I could store my stuff in this apartment that's not completely full?" I just got a lot of blank stares and a lot of no's, frankly. They said, no, that's not a thing, even though those rooms were going to be empty for the summer.

Eventually, I found an old friend who was actually an old neighbor of ours back when I was very young who lives about an hour and a half away. Called him up and he said, "Hey, we've got an empty garage. Come use our space." I packed up all of our stuff and drove it there. It was the middle of the night. It was finals week, just a very stressful time in my life.

I ended up driving, I think it was an hour and a half there, hour and a half back. On my way back, it's like two or 3:00 AM and I remember thinking, I know there are empty garages and empty bedrooms even close to where I live in my apartment. Why did I have to drive three hours? Why did I have to rent the truck? It would have been so much more efficient if I had been able to use a neighbor here. For me, it was a neighbor that helped me when the storage facility couldn't, and it was much cheaper and I felt good about the option all around. It wasn't in that moment itself that I decided, oh, I need to start a company but that was the seed of wow, everyone should be doing this.

Then from that time on, it was probably about six months later actually. I reached out to one of my co-founders, wasn't a co-founder at the time, but I reached out. We had worked together at three different companies. We knew each other very well and trusted each other. His name is Colton Gardner, and said, "Hey Colton, I've got this idea that's been the itch in the back of my mind that I want to pursue." We started making pitch stacks. He was up at the University of Utah.

I was at Brigham Young University. We pitched at both these winning competition money and that's how we got our first seed of an idea going or first initial small funding. Then from there we actually launched, pulled on my third co-founder, Joseph Woodbury. We raise a seed round and from there it's exploded. Our team has grown. We're in more than 45 states at this point where you can reserve space like rent space out, but we're based out of here in Salt Lake City.

So, the initial idea was end of 2016 but really launched like we didn't start advertising Neighbor to the users until spring of 2017 so just over two years ago, coming up on two and a half.

Question: What have been some of the hurdles? There's been challenges I'm sure with marketing and getting people onboard, what have you faced? How have you conquered and sold in and been very successful in raising money to support the business and grow it? How have you approached this?

Answer: Anyone that's tried to start a company or has started a company will know that there's going to be thousands of problems or obstacles that do come up. I would say two major ones stuck out.

Marketplaces are very difficult, it means that we have two types of customers that have very different needs. It's a very rare case where someone who has space actually needs storage and someone that has like who needs storage has space. For that reason, we have two different people, two different types of customers with different needs, different demographics but we need to market to both those customers before we can even start making money. We need to have hosts and renters or what we call them. It's the chicken and egg syndrome. I can speak to that and how we've overcome and how we've identified ways and then I have a second point as well.

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To this first one, I think the first and foremost, one of the biggest lessons I've learned is we really need to identify who your customer is and where they're at. How are those trends and finding them going to be different? Just to give you a high level view for us, we quickly identified that renters, if someone needs storage, it's almost like buying gas. When you need it, you need it, you're going to look for it, find it. Typically, the cheapest option and then you're going to move forward. There's a small window, it's probably a couple of days where someone says, "I need storage. I'm moving next week or I'm moving in two weeks, let me find an option." They'll go through this search period where they're trying to find, and they're proactively looking on channels. They might be performing a Google search or Google Maps and they might be calling around or word of mouth. They're looking for facilities on side of the road. We quickly learned that by focusing on channels that did that lead capture.

Something like Google ads, if we're bidding on the right keywords. If someone says storage near me, are we in the right place at the right time with the cheapest option and the closest option? That meant we needed to only be marketing in the areas that made sense where we knew we had the right supply for them. Long story short, for renters, we quickly identified that that is the best way for us to quickly service their needs is identifying the channels where they're performing searches.

Now for the other side of the market, when we talk about our supply, there are very few people out there that are going to get online and type in, "I have an empty garage I'm not using, what can I do with it?" They're not necessarily proactively looking for it. We need to find other channels. Two things, without going into too much detail, but two things that really worked for us were having very broad campaigns that help generate awareness.

In the markets where we have launched, we've done big awareness campaigns such as billboards or other advertisements where we not only establishes trust like, oh, this is a local trustworthy brand that I can recognize and see but it also is just that repetition of people seeing it spreading word of mouth. The second way that we've really focused on our host has been to leverage channels that don't necessarily scale. We do lots of grassroots efforts where we'll host local community events. We have had giant barbecues where we'll have all the neighbors and anyone, you don't have to be on the neighbor platform, you can just come and hang out at a park with all of us. We love it. That brand has been really important to us.

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Question: For entrepreneurs out there, since you are certainly one, what advice do you have for them?

Answer: Probably two things come to mind. First, I'm actually not a huge advocate of how you should be an entrepreneur. For me, I very much found me and I'm glad I'm here. I absolutely love it, wouldn't trade it for the world. I'm so excited that I'm doing what I'm doing because I'm so passionate, and this goes for everyone on my team. Not because I contrive to something like I was so obsessed with becoming an entrepreneur that I made something work.

My biggest piece of advice is go deep and learn some very relevant skill sets. Pick up some engineering or coding resources so that you can be a huge asset when you do start a company or go start working at a company, and as ideas come, take those leaps of faith and join them. I'm not the biggest advocate of saying everyone should be an entrepreneur and you should go start something even if you don't know what it is.

My second piece of advice is just like really creating value for the customers that you're working towards, for us, that is the biggest, like the single most driving factor. The fact that I know we have people making 20 grand a year on Neighbor, they're making tons of money and this is significant. We have people paying for their mortgage or their phone bills, paying for Christmas because they've got a part of the garage they're not using. It's a huge motivation for us to know we're helping users.

Check Out The Podcast!

Isn't Preston great?! He shared so much information during the podcast, including a biggie for businesses that wasn't touched on in the blog- how he built trust with his customers. Obviously, for Preston's business model trust was crucial, but every business needs to have trust! Check out the full episode below to hear their whole conversation.

We have a huge collection of blogs that have even more information that can be helpful for your business. If you're interested in learning more about building trust and customers, check out the blogs below!

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