Mark Ang was 17 years old when he and his older brother, David, moved out of their parents' home. The brothers piled into a small, 500-square-foot apartment, with David working full-time to cover their rent and claiming the only bedroom. Mark, a student at the University of Toronto, was deputed to sleep on the couch.
"That was my desk, that was my office, that was everything for the next little while," said Mark, who is now 22 years old. His old bedroom furniture had to go somewhere, but he was faced with steep prices to put it into storage, leading the brothers to muse that there had to be a better solution.
A few years later, the brothers started tinkering with business concepts, and as Mark finished university last spring, they formally launched their storage company, Second Closet. The company's tech-driven storage solution operates on a model where users pay only for the space that their belongings take up, rather than paying a fixed price for a storage locker that may not wind up full.
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The company arrives to pick everything up, and delivers it back when the customer has space for it again. Everything is arranged with a few clicks on a smartphone or a laptop; the costs range from $3 a month to store a small box to $36 a month for a three-seat couch.
The customers' items are taken to two leased storage sites – one in Toronto at Allen Road and Sheppard Avenue, the other in Mississauga near Pearson International Airport.
Second Closet's Toronto-based team has grown over its 15 months in existence, from the two brothers with an idea to 35 full-time employees. The staff include drivers and movers as well as engineers, salespeople and customer experience representatives.
According to Michael Hyatt – founder of the software company BlueCat Networks Inc., Second Closet's first investor and the young brothers' business mentor – Second Closet has effectively “Uber-ized” storage.
"They’re walking into [the storage industry] and saying, 'Hey, I’m going to take technology, make it way more efficient and better,' " Mr. Hyatt said. "And I love that idea, because the demand for their business is huge.” Space is a premium commodity, he added – particularly in the dense urban environment of Toronto where the company has started out.
Mr. Hyatt first learned about the brothers' project through a chance encounter with them in the tech hub MaRS Discovery District in April last year, the same month that Second Closet launched.
By May, however, Mark was craving stability and had resolved to take a job with a consulting firm. The day before he was slated to begin, Mr. Hyatt posed a question over coffee. What would the brothers need to make a real go of this Second Closet idea, and for Mark to abandon the consulting job? They’d need half a million dollars, Mark answered.
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So Mr. Hyatt made some calls. By the end of that day, all $500,000 was locked down from investors including Mr. Hyatt, his brother Richard, Generation Capital’s Geoff Beattie and Colliers’ Mike Cowie. The Angs reminded Mr. Hyatt of Richard and himself, Mr. Hyatt said, “when we were young and super keen and overly anxious to build something."
In June, Second Closet raised an additional $2-million, led by the family-run investment company MIG Group.
Mark estimates Second Closet has worked with about 3,000 customers in the Greater Toronto Area so far, accruing monthly revenue in the lower hundreds of thousands. The company is set to expand to Vancouver at the beginning of 2019, and long-term, they’ve set their sights on New York, Boston, Miami, Los Angeles and San Francisco.
Ty Shattuck, chief executive of McMaster University's Innovation Park, sees potential in Second Closet's business concept. "They've definitely hit a vein in terms of a need," he said, adding that scaling will be their next hurdle to surpass. "My one concern is, there's lots of people in the storage or the temporary storage area. How easy would it be for someone with a big brand and deep pockets to simply replicate what they're doing?"
While Mark doesn't see similar competition popping up yet in Canada besides traditional self-storage outfits, a U.S.-based company called Clutter does have a business model akin to Second Closet's. But with success comes competition, Mr. Shattuck said. If bigger companies can design and implement similar technology, the true test of Second Closet’s business chops will be whether they can stand out.
"Their viability, frankly, is about how fast they can move to create a brand," Mr. Shattuck said. "The trick is to move fast enough before a big boy decides to come eat your lunch – or, frankly, eat you."