From beginning to end, the story of a failed parking startup
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 a substantial 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.
Announcing a parking partnership with Mass Challenge!
In an exciting breakthrough for the Hello Parking family, we’re happy to report that we’re teaming up with the folks at Mass Challenge! After announcing the 120 finalists for their startup competition, the administration was looking for a friendly and convenient way for their new tenants to park.
We were able to leverage the power of groups and offer any Mass Challenge finalist $40 off regular the regular monthly parking rate at a nearby garage. That’s right… we’ve hopped on the group deals bandwagon… sort of. Either way you look at it, though, it just makes sense. We’re now able to offer the Mass Challenge finalists a cheaper way to drive to work, while at the same time make the lives of the parking garage managers easier by finding them around 50 new customers.
Thanks again to the fine people over at Mass Challenge for taking a chance on a local startup, and we hope you enjoy your discounted parking!
Do you know of a group of people looking for parking in your area? We can facilitate the group deal for you. Contact us for help finding discounted rates for weddings, trade shows, networking events, and more.
Thanks again for tuning in, and we’re looking forward to hearing from you.
Founder, Hello Parking
What we are and what we’re not (for the time being, anyway…)
Whether in startup-mode or a full fledged enterprise, businesses often spend a great deal of time discussing what they are, and what they can offer. Obviously this makes quite a bit of sense. What is less prevalent, though, is the discussion about what a company isn’t. An influx of extraordinarily low offers on parking in extraordinarily expensive parking areas makes it seem appropriate for us to have the discussion.
What are we? Think of us as your roadmap to your city parking garage deals. We take your price and proximity willingness to nearby garage managers to find out if they have empty spaces they’d like to see filled at a discount. There’s always a bit of vacancy in their garages, which puts you at an advantage working with us.
What are we not? Magicians. We can help with unadvertised lower rates. We can try our best to find you a great deal where appropriate. We can’t find you $30/month parking in a parking garage in Downtown Boston (yup, that request came through a couple times). At this time, we do not deal with private parking spaces or driveways either.
As always, thanks for tuning in and keep in touch! Let us know how we can help you with your parking needs, and we’ll be thrilled to accommodate.
Validation, Validation, Validation oh my!
It’s been quite an exciting ride so far. After our “soft launch” we had a lovely article written about us in BostInnovation.com, and were surprised by a feature in Thrillist.com as well! And boy, have the offers been rolling in. So much so, as a matter of fact, that we’ve already almost hit our pilot test quota and may have to consider closing the doors to our public beta early! (So get your offers in soon…)
Most exciting for the business, and for the Hello Parking team, though, is where we get to call home this summer. With a little bit of help from friends, some lucky connections, and some serious pitching, we managed to win a spot in the Critical Mass venture accelerator program in the Cambridge Innovation Center. We’ll be moving in to the new office in a few weeks and we’ll be surrounded by other inspiring entrepreneurs and mentors. It’ll be an incredible launching pad for us and an excellent opportunity to get off the ground and start finding you the best parking deals around!
Thanks again to Bain Capital Ventures for having faith in us and sponsoring Hello Parking’s stay at the CIC. We’re excited for the opportunity to prove your instincts about us right.
Tumbling into Hello Parking!
Well folks, after months of hard work, a half dozen new directions and quite a bit of luck, Hello Parking is finally ready for launch!
We’re opening our doors for business with the basic idea in mind that when searching for a home for your car for weeks, months, or years, parking garages should find you.
It’s very simple. Give us some information about where you want to park, for how long, and name the price your willing to spend. From there, we work our magic and find a parking garage that is a perfect fit for you!
How does it work? Again- pretty simple. No garage is ever full. We give these garage managers the opportunity to try to fill their vacant spots with paying customers without having to advertise their lower rates. It works for airlines, it works for hotels, and now it works for parking.
What do you think? Keep in touch and we’ll do the same.
(Hello Parking, Co-founder)