diff --git a/upgrade/0.4.0/README b/upgrade/0.4.0/README
new file mode 100644
index 0000000..f0302f5
--- /dev/null
+++ b/upgrade/0.4.0/README
@@ -0,0 +1,3 @@
+This version has a change to store directories split out over subdirectories, to make sure we stay navigatable when the number of pod grows.
+
+The upgrade script moves the existing directories from the 32 character directories in 1 directory, to multiple subdirectories.
diff --git a/upgrade/0.4.0/upgrade.php b/upgrade/0.4.0/upgrade.php
new file mode 100644
index 0000000..33260f4
--- /dev/null
+++ b/upgrade/0.4.0/upgrade.php
@@ -0,0 +1,42 @@
+<?php
+
+require_once(__DIR__ . "/../../config.php");
+
+foreach (scandir(STORAGEBASE) as $dir) {
+	if ($dir === '.' || $dir === '..') {
+		continue;
+	}
+
+	$source = STORAGEBASE . DIRECTORY_SEPARATOR . $dir;
+
+	// Only process directories with a 32-character hexadecimal name
+	if (!is_dir($source) || !preg_match('/^[a-f0-9]{32}$/i', $dir)) {
+		continue;
+	}
+
+	// Split into 8 chunks of 4 characters
+	$parts = str_split($dir, 4);
+
+	// Build destination path
+	$destination = STORAGEBASE;
+	foreach ($parts as $part) {
+		$destination .= DIRECTORY_SEPARATOR . $part;
+	}
+
+	// Create parent directories
+	$parent = dirname($destination);
+	if (!is_dir($parent)) {
+		mkdir($parent, 0755, true);
+	}
+
+	$source = str_replace("//", "/", $source);
+	$destination = str_replace("//", "/", $destination);
+	// Move the directory
+	if (rename($source, $destination)) {
+		echo "Moved:\n";
+		echo "  $source\n";
+		echo "  -> $destination\n\n";
+	} else {
+		echo "Failed: $dir\n";
+	}
+}