A Glen Allen-based technology startup that provides on-demand warehousing and fulfillment generated its first dollar of revenue last month.
After emerging from private beta testing since September 2018, Warehowz launched in February 2019 with about 70 warehouses using the platform nationally, including Richmond- and Fredericksburg-area clients like Stafford-based moving and storage company Hilldrup.
Coincident with the launch, co-founders Darrell Jervey, CEO, and Nick Bawa, CTO, raised at least $200,000 last month out of a total $1 million seed round harvested from local investors. They expect to close out the round in March.
Warehowz is one of the first companies to offer the sharing economy model for the $200 billion warehousing, storage and fulfillment industries.
“Warehousing is a very old industry,” said Jervey. “Everything you see has gone through a warehouse in the United States.”
But Warehowz’s value proposition didn’t catch on at first with established business owners.
“A year ago when we knocked on people’s doors, they were hesitant,” said Jervey. But after owners learned how Warehowz works: “We’ve been running into that a lot less in the last three to six months.”
Warehowz matches warehouse owners with available space to clients who need fractional or temporary storage space.
Whereas traditional warehouse businesses require some sort of commitment to at least a year and payment for a set number of square feet, Warehowz removes the need for rigid contracts and enables flexible warehousing.
“Clients can flex up 20,000 square feet one month and flex down 10,000 square feet the next depending on their needs,” said Jervey.
But it's not just a matching service — it also provides warehouses and clients with data including inbound orders, packing lists, SKUs and arrival time.
“This data moves through our platform and we can use an API to automatically import it to our clients’ warehouse management software,” he said.
These components — automation, visibility and flexibility — are hallmark qualities in other companies offering services on-demand, such as Lyft, Netflix and Spotify. Similar to these business models, Warehowz takes a piece of the transactions it facilitates.
"In the startup phase you’re doubling and tripling rapidly and really moving the needle."
For Jervey, Warehowz is company No. 8.
A 25-year serial entrepreneur in technology and consumer products, he left an executive position at a $400 million public corporation, Cotelligent, to start his first product business in 2004, Worth Home Products.
Worth Home surged quickly to success starting with a $1 million contract from Lowe’s, Jervey said, which came from Worth Home’s first product.
One night at his wife’s Christmas work party Jervey noticed recessed lights could be converted into dropped lighting. He built prototypes in his basement and filed for a design and utility patent, then traveled to the Lowe’s headquarters in North Carolina and “knocked on their door.” With contract in hand, he bought a company in Houston with a website, staff, phones and a warehouse, and got to work.
Today, Worth Products Group and his portfolio of startup brands, including an online sports apparel store called Baby Fanatic, are all operational and thriving.
“After Cotelligent, I realized I like the startup phase of business,” he said. “When Cotelligent passed the $200 million mark, I was always in the boardroom working on lawsuits with lawyers to fight for one percent on the company scorecard and six sigma – and people make big money doing that. But in the startup phase you’re doubling and tripling rapidly and really moving the needle.”
Jervey and his team of six full-time employees at Warehowz are hoping to do exactly that in 2019. While its technical talent needs will continue to be supplied by software development firm Covintus led by Bawa in the same office, Jervey plans to hire 20 employees by yearend and raise additional funding.
“I’ve been [in Richmond] for 15 years. I’ve seen the city make huge progress in putting support in place for a thriving startup ecosystem. Are we there yet? No. But Richmond is capable. The opportunities, deal flow, capital and people have all come along way.”
