Parking Apps Have This Basic Problem: Selling An Asset Someone Else Owns

There are so many of them it is hard to keep track. In fact, there are so many different kinds of parking apps that they begin to defy categorization.

Some are employed by mall owners, some provide valet parking services wherever you are - and some simply attempt to make a market in a valuable commodity they don't happen to own - on-street parking spaces.

The good news is that they have identified a global market need. The challenge is that they have to either share their revenues with those who actually own the spaces or attempt to sell rights to something they don't own and face lawsuits from those who do. It almost makes creating an online grocery shopping app look easy. JL

David Streitfeld reports in the New York Times:

Apps balance minimal supply and heavy demand for curb slots. The apps allow drivers to bid for parking spaces that others users were vacating. Those drivers moved on, they could build credit by selling their space.The problem was the apps were selling something they did not own.

As soon as Uber and Lyft reinvented driving, entrepreneurs cast about for the next unloved slice of the economy to upend. They found it in parking.

Everyone agrees that urban congestion is bad almost everywhere and that the search for street parking is a significant part of it. Drivers hope against hope, looking for something cheaper and more convenient than a garage. In the meantime, they get in the way of those heading somewhere else. In one study of a 15-block stretch of New York’s Upper West Side, motorists were estimated to “cruise” a total of 366,000 miles a year searching for street parking — farther, the study noted, than a one-way trip to the moon.

Entrepreneurs have been trying to solve such problems with clever fixes. Yet one of their first big solutions was met with a resounding “no,” a rare rejection in a culture where almost anything tech has at least some defenders. In this case, regulators rattled their legal fists, politicians declared that this must not stand, and columnists dispensed ridicule.

The source of all the ire? Apps that tried to balance minimal supply and heavy demand for curb slots. The apps would allow drivers to bid for parking spaces that others users were vacating. When those drivers in turn moved on, they could build credit by selling their space.

The problem, of course, was the apps were selling something they did not own. The two that briefly achieved the most momentum, or perhaps notoriety, were MonkeyParking and Haystack.

“Haystack was dubbed ‘jerk tech,’ ” said Eric Meyer, the 25-year-old Baltimore entrepreneur who developed the app. “It took us a bit by surprise.”

Hoping to use the Uber model of operating first and asking permission later, Haystack got a second surprise when Boston made it illegal last summer before the app could gather a crucial momentum with users.

San Francisco banned MonkeyParking as well as two similar apps, Sweetch and ParkModo. The latter, which was on the verge of starting its service, planned to pay agents in the city’s crowded Mission District $13 an hour to squat in spaces until they were needed, the city attorney’s office said. In a working-class neighborhood that is rapidly filling with well-heeled tech workers, that business plan would have drawn widespread attention.

Mr. Meyer is still a little bitter. “Cutting innovation off at the knees does not do any good for anyone,” he said.

In this case, however, it actually might. Silicon Valley entrepreneurs are now tackling the parking problem with renewed vigor and have come up with another solution, one that has fewer regulatory or public relations hurdles: valet parking on demand.

Like all the best innovations, it is simple. A driver presses an app and rolls up to his destination. An agent arrives to take his car away for however long he wants. Ready to go home? Press the app again.

Sean Behr, chief executive of the valet company Zirx, notes that Uber strikes most initial users as “a magical experience. But sometimes you have to drive, so you go to a garage. The number of steps is amazing. I give them my car, they give me a little piece of paper, I walk four blocks to my meeting, now I’m late, and then I come back, hand them the piece of paper, wait 10 minutes for my car. This is not magic.”

Zirx, which received $30 million in financing at the end of April, is now in portions of Los Angeles, San Francisco, San Diego, Seattle, Washington and, as of this month, Brooklyn. It has around 300 “agents,” as it calls the valets, who the company says can make up to $30 an hour and can get free food.

The price for a valet service, which can indeed seem magical to customers, averages $15 for an entire day. But there are questions about whether valets are this boom’s equivalent of Kozmo.com, the dot-com wunderkind that delivered pints of ice cream in an hour for no fee. Kozmo closed in 2001 after blowing through $250 million in venture capital.

Mr. Behr said the business model involved more than valets. “Once I have your keys for an extended period of time, there are interesting things I can do,” he said. “We view parking as an entry point to providing a suite of services — gas, car wash, oil changes.”

Some analysts are skeptical. “Right now we’re talking about solving a problem for affluent people in the Bay Area and a handful of other cities,” said Julie A. Ask, a mobile analyst for Forrester. “I can’t see valet as something that is too big.”

The start-ups are now competing in earnest. Another service based in San Francisco, Luxe Valet, received $20 million in venture funding in February. A well-publicized third app in San Francisco, Caarbon, is starting out by invitation only.

No true entrepreneur is fazed by competition, and Mr. Behr is not. “This is an easy business to start, but a very difficult business to scale,” he said. “If I add 40 percent more cars tomorrow, I have to physically put them somewhere.”

Other entrepreneurs are pushing parking from a different direction. ParkMe.com, based in Santa Monica, has a database of 81,000 parking locations in 57 countries, about 5,000 of which a user can reserve.

“We’re in a weird period with parking,” said Mark Braibanti, director of marketing and business development for ParkMe. “We don’t have the ability yet to automate everything and turn it all over to self-driving cars, but we do have the technology to help drivers get all the information they need and match them with other parties.”

The irony of the parking apps, of course, is that the more of them there are and the better they work, the more they will influence drivers to think that driving yourself isn’t so bad. That will in turn contribute to the problem parking apps are trying to solve.

Donald Shoup, a professor at the University of California, Los Angeles who wrote “The High Cost of Free Parking,” says he believes, “We’re just at the cusp of a big change in parking,” but it will be led by cities, not Silicon Valley entrepreneurs. Valet and parking apps show the problem, he said, but only nibble away at the edges. A better idea: Smart meters that adjust prices for demand, which have been successful in San Francisco and are being adopted elsewhere.

Dr. Shoup pointed to the Southern California city of Ventura, which installed metered parking in a part of the downtown that did not have it before. There were some early grumbles from worried merchants, but the move opened up space previously used by store employees to park all day. The money that the meters earned paid for free Wi-Fi and increased security.

“Why should an app developer get all the money from underpriced curb parking when the city could be getting it?” Dr. Shoup asked. “This could be a new source of revenue and greatly reduce congestion as well.”