For the first time since uTenant secured the backing of global real estate services business JLL, MHD talks with uTenant’s top brass – together with JLL’s Head of Industrial & Logistics Brokerage in Australia – to explore the warehouse disruptor’s early success, and why JLL realised that backing them was the right bet.
While the partnership between warehousing disruptor uTenant and global property services firm JLL is relatively recent – formalised earlier this year, with JLL taking a minority shareholder stake that bolstered uTenant’s growth potential while maintaining the latter’s unshakeable commitment to complete independence – the seeds of its inception were planted many years ago, says Greg Pike, Head of Industrial & Logistics Brokerage in Australia for JLL.
“My relationship with Matt Sampson [Founder & Managing Director of uTenant] goes back many years to when we were colleagues at another agency,” says Greg. “I went to JLL, and Matt struck out on a new path to create uTenant.”
Nevertheless, the conversation between the two never stopped, with Greg half-jokingly admitting that in the early days, “Matt would be bouncing ideas off me over beers and I’d be telling him all the reasons they wouldn’t work. It would be fair to say I’ve modified some of my positions since then.”
Kyle Rogers, Co-founder at uTenant, corrects Greg’s somewhat self-deprecating take on events. He says the current partnership wouldn’t have been possible but for Greg’s willingness to keep on listening and probing and. Greg and JLL soon realised this was a perfect partnership and could see the potential benefits to clients.
Both sides agree that JLL and uTenant’s partnership was the result of transparent dialogue, a relationship built on trust, and a mutual interest in best-serving the tenant-side customer.
Matt Sampson’s original innovation in starting uTenant was to create a platform that connected landlords and tenants on a fixed fee model, whereby potential tenants could tap into uTenant’s vast ecosystem of landlords with ease and transparency – something that previously could not be done – and know they were getting the best deal because uTenant didn’t take commissions from and wasn’t beholden to any commercial real estate agent.
Kyle – whom Matt brought on and whose role in expanding uTenant merited him his title “Co-founder”– added to uTenant’s original business proposition the idea of “pallet matching”, whereby those with excess warehouse capacity could be matched with product owners in need of extra storage capacity.
Kyle recalls sitting with Matt in uTenant’s original office – just the two of them – with a whiteboard up and ideas flowing, when the “lightbulb moment” hit. At the time, uTenant was already offering its on-demand warehouse matching service but looking to charge a margin during those initial stages. “We had a major lightbulb moment when we started to truly listen to our customers – finding out exactly what they needed and how we could add more value,” Kyle says. “This was when we decided to change the business model to provide the on-demand service without a margin – to really put the service at the forefront of uTenant’s offering.
“We suddenly recognised that product owners didn’t have the time to call up numerous 3PLs to find which was the cheapest, which had the best location, and which was the optimal cultural fit to store their excess product. So, we decided to find the best 3PLs at the best cost at the right time and right place – create a platform that allowed product owners to access them – and charge nothing for it.”
It was an extension of Matt’s original insight – that simplicity and transparency built into a pathbreaking technological platform would engender trust with the tenant. And as Kyle, Matt, and Greg all agree – trust is perhaps the most important asset a firm can have long-term in the commercial real estate market.
For Matt, this was another winning opportunity for fresh disruption.
“Offering a pallet-matching platform as a value-added service was something no one else globally was doing,” he says. “Previously, there were always margins involved which ended up costing product owners more money to store their goods because they had to add in the margin the broker would take. With our goal being to service the tenant, this was a no-brainer. Not only could a tenant or product owner avail themselves of more options with greater transparency – but we fundamentally disintermediated the market. So, for the pallet-matching service, we took out the broker and the brokerage fee, and we didn’t charge anything extra.”
When Greg Pike recalls this new pivot and pitch by uTenant, he uses similar language to Kyle. “It was a penny drop moment for me – and for us – at JLL,” he says. “Because we realised that uTenant’s new platform would work to the benefit of our own landlord customers, too. We realised that this was a value-add for all parties involved.”
Greg elaborates. “Let’s say I’ve just facilitated a 15,000 square metre property deal with a 3PL provider, but for the moment that 3PL is only filling 10,000 square metres of its new property. We can now team up with uTenant by introducing the 3PL provider to the uTenant ecosystem – and a product owner using this value add service might end up matching perfectly with our 3PL customer, backfilling the tenants’ space until such time they need it, or better yet, helping that 3PL party continue on their mission to grow.
“I’ve just helped put revenue back into a 3PL customer’s bottom line. So, our customer the landlord is happy to have filled a vacancy; the 3PL – or the tenant – is happy because their excess capacity is now generating revenue; and the product owner – the 3PL’s new customer – is happy to have quickly and transparently been able to outsource overflow pallet work to a reputable provider. Neither JLL or uTenant charge for this service and any fees generated from the leasing of the property are transparent. So, what we have gained is trust, and bolstered our reputation for solving problems, which pays off in the long run for all parties concerned.”
That’s why JLL partnered with uTenant, because the value of – in Kyle’s words – “a transparent and connected warehousing ecosystem made possible by digital technology” was valuable to JLL in and of itself.
THE ROAD AHEAD
While uTenant has added many new staff this year, the company doesn’t add more personnel for the sake of it, nor aspire to become a traditional “end-to-end” supply chain service, says Matt. “For me it’s always been about iteration after iteration – persistent experimentation and verifying the value of new disruptive ideas.”
Greg sees great potential for uTenant to expand into APAC, but such expansion will occur at its own pace. “From my perspective, uTenant’s primary focus is innovation, and ensuring the innovation adds value to the customer before focusing on other markets.”
And to continue to innovate, you need to hire innovators. The notion of “transparency” applies as much to uTenant’s own hiring process as it does to its platform. “We need to be transparent with ourselves – knowing that there are skills we don’t have and that we must find the people who have them,” Kyle says.
To that end, uTenant recently brought on board Marie Varrasso to be uTenant’s Chief Operating Officer.
With more than 25 years of supply chain experience – including senior roles at Oxford University Press, Nike, and Officeworks – Marie brings extensive knowledge and experience across all facets of the supply chain industry.
Coupled with her deep knowledge of wholesale and retail – as well as managing her own warehouses, and those run by a 3PL – Marie also brings detailed customer insight to help uTenant continue to develop its roadmap for the future.
“uTenant’s philosophy gels with my own – to innovate and simplify,” Marie says. “I’m a ‘one page’ sort of person – if an idea or a solution can’t be conveyed effectively in one page, it’s probably overly complicated. To me, uTenant’s values completely resonate with my own – transparency, simplicity and authenticity across their ever-expanding supply chain ecosystem.
“I want to help them create simple solutions for complex problems. uTenant’s ambitions dovetail with my own – to provide simple but highly effective solutions to our customers.”
For more information on uTenant, click here.