It's about as low-tech as a company can get. But the Pinellas County maker of portable storage units is racing to keep up with its plans to grow PODS Inc. nationally.
By KRIS HUNDLEY
Published March 15, 2004
[Times photo: Cherie Diez]
Hector LaPorte puts a tracking number on a new PODS unit in the holding area at the St. Petersburg factory. In six years, the company has expanded to 3,200 cities nationwide, with more than 22,000 units.
CLEARWATER - Peter Warhurst started PODS Inc. six years ago with the idea of storing people's stuff: He would deliver his company's distinctive white storage unit to a home, they'd fill it and leave it on their property or have him haul it to a PODS warehouse.
But it didn't take long before customers wanted a PODS unit they could fill at one home, then have delivered to their new residence. Warhurst's focus quickly shifted from the temporary storage market to the $8.5-billion moving industry. And since then, his company, which is now in more than 3,200 cities nationwide with more than 22,000 PODS, has been racing to keep up.
"It just keeps growing, like gremlins," said Warhurst, who is president and chief executive of the company whose name is short for Portable on Demand Storage. "Our biggest challenge is not letting our success be our demise."
PODS is the second entrepreneurial brainstorm for Warhurst, 52, who was once a firefighter and paramedic in Largo. Drawing on that experience, Warhurst and two partners built a company that developed and designed computerized emergency dispatch systems. After they sold it to Bell Atlantic in 1992 for an undisclosed amount, Warhurst took up golfing.
By the mid 1990s, Warhurst was looking for a part-time enterprise that would generate income but demand little attention and few employees. He ended up building a 346-unit storage center in Clearwater, not far from his million-dollar condo in Belleair, and immediately began searching for a site for a second facility. Stymied by a shortage of possible locations while driving Pinellas County, Warhurst struck on the idea of bringing the storage unit to the home.
"I checked the Internet and nobody was doing it," he said. "I couldn't even find somebody to copy."
So Warhurst and his old buddies from the Largo Fire Department began tinkering with ways to build a weather-proof storage unit and a hydraulic lift system. The unit, steel-framed with aluminum exterior and plywood interior, had to be tough enough to withstand the elements and nice enough inside to meet his wife's approval.
"She was my litmus test," Warhurst said of his discriminating spouse.
The lift had to be strong enough to pick up whatever customers stored inside their units - items have included cars and steamrollers.
"There were a lot of sleepless nights," Warhurst said of the work that led to a patented lift system dubbed "Podzilla."
"The lift is now in its sixth generation and has been used for about 450,000 deliveries. And we've never dropped a unit or had a unit's bottom fall out," he said.
Nor did the torturous task of inventing PODS equipment ruin longtime friendships. Several of Warhurst's former firefighting pals are still with PODS, including Roy Hensler, who is lift production manager; Dave Ravella, senior vice president of manufacturing; and Ed Sajdak, in charge of special projects.
In early 1998, the company delivered its first POD to a small business in Clearwater. Warhurst said the unit generated calls from customers by just sitting in the parking lot.
"It's a very intuitive product," said Warhurst, who originally had figured the business would max out at 80 PODS. "We quickly realized we had something more than an 80-box business."
The units come in two sizes, 8x8x12 and 8x8x16, with the larger unit capable of holding the contents of an 1,800-square-foot home. Rental rates vary by size, location and use, but average $150 a month. In Pinellas County, a larger unit costs about $255 for delivery and the first month's use, then about $180 a month for storage at a PODS warehouse. Cost is about $50 less initially and per month if the unit remains on site.
Warhurst said when PODS are used for moving, the expense is half that of traditional movers if homeowners pack the unit themselves and 20 to 30 percent less if they pay packers.
About 80 percent of the company's business is residential, while 20 percent is commercial. Among commercial uses are document storage, temporary fireworks sales and holiday package storage.
Along with customer inquiries, Warhurst said he was immediately flooded with calls from potential franchisees and investors. In late 1998, he sold his first franchise in Sarasota. Today, about 75 percent of PODS locations are franchised, although contracts for larger markets were written with an option for corporate buyback.
PODS' original franchise agreements were for markets of 400,000 people, which Warhurst said requires an investment of up to $1.5-million. PODS receives a fee of $75,000 plus 10 percent of revenues for marketing, billing and call center support from the corporate headquarters in Clearwater. PODS now is selling smaller franchises, for market populations of 200,000 or fewer, so it can break into smaller towns across America.
"We want to get the nation populated with PODS," said Warhurst, who said the company sells an average of four or five franchises a month. "We think we'll be a brand, so people will say, "Go get a POD,' like they now say, "Go get a Kleenex.' "
PODS was profitable last year for the first time, Warhurst said, with systemwide sales of more than $50-million, about half of that from corporate locations. Total revenue is expected to more than double in 2004, he said.
Far from retired, Warhurst now works a 60-hour week overseeing a staff of more than 300. Eighty percent of PODS' residential customers are using the units to move from one location to another. But if people want to relocate to a city without a PODS location, they're out of luck.
"We did 300 inter-franchise or long-distance moves a month last season," Warhurst said of the March-to-October period when the majority of home moves take place. "But we turned down 3,000 orders a month because we didn't have a PODS in one of the cities. That's why we need a national footprint."
PODS had raised $13-million from private investors in its first four years as it built factories, software systems and bought trucks. Early in 2003, the company started to search for serious money. By December, the company has signed a deal for $15-million in equity from a Texas venture group funded in large part by the Hunt family's oil fortune.
"The Hunts got preferred stock, some veto power and two of five board seats," said Warhurst, who controls the largest block of PODS common stock. In addition to the Hunts and Warhurst, the PODS board includes David Berg, vice president and associate general counsel for Best Buy, and Phil Doganiero, a retired executive and local investor.
Warhurst said he chose the Hunts over four other potential investors. "I liked the people and their business philosophy," he said. "They believe in management and they see the vision of where PODS could be in two to five years."
With the Hunt investment, plus another $3-million from previous investors and a $25-million credit line, Warhurst is on the fast-track to open PODS this year in major locations from Long Island to Los Angeles to Seattle. A sixth PODS factory, where the units can be cranked out at the rate of one every 20 minutes, just opened in Medford, Ore. A national television ad campaign is about to be launched using golfer Kirk Triplett as the company's spokesman.
As PODS spread across the country like kudzu, there's one sure sign the company has made its mark. Not long after opening in any new market, a call will come in to PODS headquarters from local municipal officials, suggesting they need to regulate the newcomer.
"We've become a gnat in their ear," said Warhurst, who said his company never has been forced by regulations to move out of a community. "It's just an educational process."
Typically, he said, municipalities will limit a PODS unit to no more than five days on a site and no more than two or three times a year at the same location. For more extensive building or remodeling projects, PODS often are allowed on site for the duration of the building permit.
"They're better-looking than Dumpsters," Warhurst said. "But it's not our ambition to be shed manufacturers."
Instead, he wants to keep the PODS moving, capturing a bigger and bigger share of the stuff packed by the 26-million households that relocate each year.
"Everybody has a moving horror story," he said. "It's not often a business can create a new industry, but I think that's what we're doing."
