This post is two years old and I’m two years wiser (I hope). I’ve shared some new insight in a more recent post: The HelloParking postmortem Part Two: a look back, and a new perspective
Well, folks – it’s time to close our doors here at Hello Parking.
It’s been an amazing ride trying to get our business off the ground, and the Boston startup community has been incredibly supportive and helpful these past months through our endeavors. Who knew we had Silicon Valley 2.0 in our own backyard?
With all the support and friends we’ve made through the process, we thought it would be fitting to tell the story of Hello Parking from start to finish and explain what we learned and why we weren’t a smashing success. From the very beginning, we wanted to be in the business of monetizing vacant parking spaces, and it went a little something like this:
This part could needlessly be dragged out, so I’ll paraphrase. Though at the time we’d never even heard of AirBnb, the analogy will help keep things brief.
“Look at all these empty parking spots in all these alleys in Boston. Wait, doesn’t Boston have some of the most expensive parking in the country?Let’s make an AirBnb for private parking spaces”
Great idea, right? Frankly, I still love it. The problem is that, while plenty of folks would love to rent your parking space for a day, almost nobody would agree to rent their own out to a stranger. In cities where parking is a big enough issue, those who have parking spaces guard them with their lives, whether or not they go empty for a night, weekend, or a month.
Okay, that didn’t work. Clearly, we have to own and control our own inventory!
When we couldn’t crowdsource an inventory of vacant parking, it became apparent that we had to control our inventory. Translation:
“Let’s become the ZipCar of parking spaces instead!”
Perfect! Brilliant! Now we’d be in control. Thanks to some free press from a Kairos Society summit where we pitched our concept (Inc Magazine, Portfolio.com, Northeastern University, BostInnovation and Bnet) we already had plenty of potential users of the service. The idea was to rent these parking spaces that are currently on the market out in bulk from property managers and real estate brokers at a discount and pass them on to Bostonians for $15 per day. Turnover on private parking spots in Boston is high enough that there are always about 500 on the market at any given time. The business plan was even good enough to grab the attention of Techstars. Of the 700 businesses that applied, we made it to the top 30 and were just a few slots away from spending the summer in Boulder, CO to work on the business.
We approached property managers and real estate brokers all over Boston, cash in hand, ready to strike a deal and lock down a few spots for a month as a beta test. Without fail, the conversations would go a little something like this:
Property manager: “Not interested.”
Us: “But aren’t these parking spaces just sitting there empty?”
Property manager: “yes..”
Us: “Ok. So we’ll give you cash right now for them. Don’t even take them off the market. As soon as you find someone to sign the lease, we’ll move on to the next one”
Property manager: “Sorry guys, it’s really not worth it to me. We make so much money on apartments, parking spaces are just an afterthought for us. If someone rents them from us, fine. If they go empty, that’s fine too. We’re only worried about filling the apartments.”
Ouch. So the people who control everything just don’t care, and it seemed there was nothing we could do. With the advice from some of the folks we talked with at Techstars (Thanks Nicole!), though, we didn’t give up. We turned the business plan around and headed to where the real money in the parking industry was. Parking garages.
HelloParking – now it’s Priceline for parking!
After some magic with LinkedIn and some pure luck, we ended up getting in touch with one of the kings of the parking industry. It seemed as though he had a hand in everything that went on in the parking word, and he had all the contacts we’d ever need. Best yet, he wanted to help us innovate and he wanted to come along for the ride. Our new friend, to whom we will always be grateful, took us under his wing and taught us anything we wanted to know about the industry. What we learned is that very rarely do parking garages ever fill up. There are always vacancies. We then decided it would be our mission to turn these vacancies into cash by entering the deals game. We would do to the parking industry what Orbits and Priceline had done to the travel industry.
Our value proposition to the parking garage managers was simple. We’ll fill your parking garage with paying customers by offering unpublished rates. It was a simple “Name-your-price” model on daily, weekly, or monthly parking. Each reasonable offer would be submitted to a set of nearby garages, and the managers would have the option to accept, reject, or submit a counteroffer. And after even more press the offers started rolling in. Before long we had hundreds of folks naming their price on parking in Boston. The problem? *chirp chirp chirp*… not a single nibble from the garages.
We tried working with the huge parking management companies (LAZ Parking, Central Parking, Standard Parking) and we tried working with the individual owners. The common theme, once the offers were actually handed to them, was that they didn’t want to dilute their price. Translation? It seems that most of these folks are making plenty of money, and have been for ages, sitting there watching the money drive in each day. Why fix what isn’t broken? As it turns out, the garage managers are comfortable with their vacancies and would rather see them there than a discounted price on parking.
The final Hail Mary – group deals on parking
Well there seems to be a lot of buzz out there about group deals sites. Why not hitch a ride on the wave, we thought? One email came in about a woman who wanted to get a deal on parking for her husband’s retirement party downtown. Hm… great idea! We figured that if we could convince enough people to park together, we’d have the leverage to negotiate lower rates with the power of groups.
We spent weeks reaching out to conventions, conferences, and meetups around Boston offering to be their go-to parking price negotiators. Simply put, we’d work to find their group the lowest possible rate and take a piece off the top as profit. The few times we were able to get a deal, the magnitude of which was so small the business model proved unprofitable.
But we’re okay…
Listen, we’re doing just fine. We’re just two young entrepreneurs who learned more about business in the past 7 months than we did in a lifetime at school. We’ve made some wonderful friends and connections in the entrepreneurial scene here in Cambridge. We had our fun and now we’re ready to move on to the next big thing. For me, that means joining up with a couple startups in the area doing sales, marketing and business development consulting, with which I’m already having a blast! And for Neil that means figuring out how to meet up with his lady in Denmark.
What’s important is that we’ve put ourselves in a better position for the next business concept that comes our way to exploit.
Some key takeaways from this experience:
- Start young. You’re [relatively] debt free, with no dependents, and investors love students. Angel investors, especially, know that their money will go farther with a student who can live off cheap rent and Ramen noodles. The support for young entrepreneurs is incredible as well. There are so many different organizations and institutions with the soul purpose of helping student entrepreneurs succeed.
- Do the research and evaluate your market, but don’t let these things stop you from getting things done! Sometimes you just need to go with your gut and fail fast until you’ve found something that works. “
- Don’t just think about how to execute a great idea. Consider how that concept fits into the ecosystem of that industry, and where the money is. We found plenty of ways that would help bring value to vacant parking spaces. What we never considered was the extent to which property managers or parking garage owners would care. These things are important.
- Where possible, avoid creating a two-sided market unless there is asubstantial want or need on both ends. Plenty of folks in Boston wanted cheaper and more convenient parking options. With the original plan, though, we discovered that the promise of small rental revenue on a homeowner’s parking space was not enough to get them to list their parking space. We would never organically accumulate the amount of inventory needed to sustain our business. Figuring out how to combat the chicken-or-the-egg problem is one of the most difficult challenges!
- If you’re in the Boston area, check out the Cambridge Innovation Center. Tim Rowe fittingly calls it a “frat house for startups”. No matter what stage you’re in, there’s a home for your business there. I should also express my gratitude to Bain Capital who sponsored our stay at the CIC through the Critical Mass program. Thanks for taking a chance on us Bain! The CIC was and still is the perfect environment to get the juices flowing with like-minded people all around you.