On the heels of Clutter announcing a large growth round of $200 million earlier this year, the storage startup is cleaning up the competitive field. TechCrunch has learned and confirmed that Clutter has purchased the storage business of erstwhile rival Omni.
Omni will remain an independent company, which will now instead focus on rentals of personal items. That business was originally built around renting out items that you had stored with Omni itself. In recent months, however, the company had been transitioning that model to one where you used local businesses as the hub for handing over or picking up rented items. (It’s also been dabbling in cryptocurrency, offering to pay users in XRP instead of cash for renting out items.)
The companies had been working on the acquisition for the past two months, and Ari Mir, CEO and co-founder of Clutter, told TechCrunch it closed today.
While we were writing this story, Omni also posted a short note announcing the deal. “This deal allows us to double down on our rentals business and focus 100 percent of our efforts on empowering everyone to access the items they need when they need them,” it notes.
Mir said the two are not discussing the financial terms of the acquisition, which will give Omni customers 90 days under their current plans before being offered alternatives from Clutter, or a free delivery of their items elsewhere.
That free delivery might be to a company that rents out those possessions — such as bikes or furniture — that owners are not currently using but still want to keep. That’s because unlike Omni, Clutter will not be offering those customers the option to rent out items through Clutter itself. It’s an area that Mir said the company does want to move into one day, but it’s focussing on expanding the storage business first.
Clutter was last valued at around $600 million in its most recent deal, with backers including Softbank, Sequoia, Atomico and GV. Omni has raised around $33 million.
The acquisition and spinning out of the service underscores a wider shaking out of startups that had emerged over the last several years to disrupt the incumbent storage market.
Tapping into a changing tide of how we live today — smaller dwellings, and more movement especially for younger working people — many startups saw an opportunity to provide more flexible solutions to modern consumers built on the on-demand model.
For Clutter, Omni and a number of competitors, their target users are consumers based in urban areas who live in smaller spaces with less storage options; have the disposable income not only to buy stuff but to pay to keep it somewhere else; and likely already use of other app-based on-demand services for food, transport, work-space and so on, making them familiar and ready to work with startups offering the same services to manage their material possessions.
But as we have noted before, the business of storage on demand is nothing short of, well, cluttered.
The wide array of rivals include incumbents like Public Storage, U-Haul and other older businesses that offer services to clear away your possessions and/or store them in lockers. Newer startups still active in storage include MakeSpace, Livible, and Closetbox.
But there is now also a growing list of companies that have tried to build storage businesses, and have thrown in the towel. They include Trove (which was acquired by Nextdoor and has transferred its storage business to “trusted partners”), Handy (which was acquired by ANGI Home Services), and now Omni.
One of the reasons it’s been difficult to build startups in this space is because storage is a little bit like logistics: it requires scale for the economic and operational models to be more viable, and so if the business isn’t growing fast enough, it can be too hard to sustain it.
If some businesses haven’t been scaling fast enough, it seems that Clutter is emerging as a consolidator that has: in addition to buying Omni’s storage business, it had also acquired Handy’s storage business. (Mir described the two acquisitions as “very similar” in how they were structured.) Clutter had been offered Trove’s business as well, he added, but declined to take it.
“Our business has the capital and operational intensity of an Amazon,” Mir said. “We’re consumer-facing, but we also are building a big backend, complete with trucks and warehouses. It requires lots of capital and being good at operations. Not a lot of teams have the appetite for it. It’s incredibly challenging.”
The parallel with logistics is not one to be ignored. Like logistics, storage involves three key elements: the building of smart platforms to optimise the routing of goods, pricing of services and other features; the use of warehouses as start, middle and endpoints in the movement of goods, spaces where items can be both kept and moved; and a network of reliable people to operate the delivery and distribution aspects of the business.
From what we understand, the second of those — the physical storage spaces — is an area that Clutter will be looking to develop more in the coming months, with its next funding round likely to be structured to help it start to take on more property of its own to build out its operations.
Additional reporting Josh Constine