I noted in a previous blog post that the self storage industry has witnessed a number of significant changes in recent years. One of the more eyebrow raising consolidations in my industry unfolded over the past month as a private equity fund acquired two of the big actors on the self storage cyber stage.
The acquirer: Cove Hill Partners, a Boston-based private equity firm.
The acquired: Sparefoot, the leading lead aggregator in my industry, and SiteLink, the leading self storage management software provider.
The implications for my industry: Well, that’s what a lot of us are trying to figure out!
I attended a meeting in Atlanta this month with a few dozen of my private middle-market peers. We had the opportunity to hear from the founding partner of Cove Hill, Andrew Balson. And from the founder/presidents of both Sparefoot and Sitelink.
The Cove Hill ownership suggests significant technology capital spend in an effort for this combined entity to become something of a “one stop shop” technology and operating platform for mid-sized and larger operators. And they’ll very likely want layer on access control technology, and perhaps rental kiosks componentry and software layers, in time. Perhaps even elements such as tenant insurance?
The addition of new platform capabilities down the road (i.e., call center, social media, etc.) will make it harder for operators like me to potentially “break-up” with SpareFoot and/or SiteLink down the road. Thankfully (I think) my company doesn’t rely upon Sitelink today.
There are unanswered questions as to will own our customer information — as this combined company will know more about our customers, and it might naturally look to monetize this competitive advantage.
Andrew Balson was engaging reasonably candid. Chuck Gordon of Sparefoot was effective in his pitch to our small audience — most of whom were already his customers. Customers that he naturally is eager to retain.
In the past I have perceived the Sparefoot folks to be little cavalier about the role their platform was going to play in the industry. But in this presentation, I felt their stated goal to make improved products to enhance our industry was sincere. It just makes business sense. And SiteLink will benefit from added developers and enhanced resources, too.
I am concerned with Sparefoot continuing to gain ground as an aggregator, and the challenge of continuing to compete with them for eyeballs. Their largest target audience is likely the independent owners, who will be the least likely group overall to professionally convert leads through sales and quality on-the-ground product and services. People won’t come back if their recommendations and reviews are sub-par.
Cove Hill has assembled (or is beginning to assemble?) a platform that could truly be additive to my industry, especially if they innovate with an eye toward collaboration and shared success. Time will tell. And I suspect this tech roll-up in our industry will quicken over the coming year or two!