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How to End Your Parking Nightmares Once and For All

3 Mar

I love cities, but a settled family and the location of our offices relegate me to life in the suburbs at present. I drive up to San Francisco several days most weeks and though I love the energy, creativity, food, culture and walkability, I truly hate parking. My parking frustrations start with the high cost, expand to the inconvenience of finding a lot and a spot (usually at the point I am already running late due to traffic), and culminate in the unpredictable risk that all nearby lots might actually be full due to a Giant’s game, a convention in town, or just the fact that it’s 8:58am on a weekday and the San Francisco economy is booming.

As a technology venture investor and former product manager I am further frustrated that parking need not be the daily battle it is in most dense cities. There are in fact enough parking spots in most cities most of the time. Reports suggest that US cities average between four and eight parking spaces per vehicle and in some cities parking lots cover more than one-third of the metropolitan footprint. The issue is the information gap of knowing where to find an available spot at a specific time, at a price you are willing to pay, as close as possible to your destination. This sort of linear optimization along three dimensions (location, time and price) would be simple for software to solve if only we had the right real-time data. Unfortunately we don’t.

I am well aware of and have indeed tried many of the parking apps that list garages and their prices, and some that even attempt to indicate (or predict) availability, and yet others that enable you to pay with your smartphone. The problem is that even in their flagship cities no app yet has particularly good coverage of all parking options and the real-time availability data is woefully inaccurate. Even if the perfect app did exist, it is hardly ideal for me to be fumbling with my smartphone at the most chaotic and stressful last mile of my drive–and the app still may dump me many long blocks away from my actual destination. A “full stack” solution is necessary.

I first heard about Luxe while chitchatting with a friend who frequently drives from Palo Alto to various meetings around San Francisco. She emphatically heralded Luxe as an app that has made her life better. I tried the service the very next day and saw exactly what she meant. The experience starts by entering your destination on the home screen of the app. Then start driving. No need to indicate your arrival time as Luxe can track your inbound progress and predict your arrival time based on distance, speed and real-time traffic. As you near your destination the app pops a picture of your specific valet with their name and a brief blurb about their personal interests, setting the tone for a very warm and human experience. The app zooms in a map to show the exact location of your valet, who is actually quite easy to spot on the sidewalk in their bright blue track jacket. You jump out, they jump in, and you are walking to your destination feeling like we live in an age of magic. Luxe will even fill your tank or get your car washed for a small service fee. When you need your car back just confirm your pickup location and click the “return my car” button in the app and watch the icon of your valet retrieving your car and then driving your car towards you. I find Luxe especially awesome when I have a series of meetings in the city such that my last appointment is far away from my first appointment–Luxe brings my car to me so I don’t have to trek my way back across town to where my day started. And the best part is that the cost of parking via Luxe is almost always 25% to 50% less than what I would pay at the nearby commercial garages. Luxe can price attractively due to the volume discounts they get from garages and the fact that their valets can run or kickscooter further from the busiest parts of town than you or I care to when we are rushing to our appointment.

To be fair, this is a very hard business to build due to bursty demand and the unpredictability of traffic, road construction, weather and other variables. Maintaining rapid response times at peak rush hours is a challenge. Algorithms which predict demand, routing and dispatch optimization, personalized CRM, and high standards in hiring, training, and live customer service are key’s to Luxe’s current and future success. Attention to detail and a customer centric culture are essential. While this is not an easy business to manage, I believe it is one of those rare business where generating demand will be far easier than fulfillment. Do not let the name confuse you, Luxe is not a service meant solely for the pampered ultra-wealthy who only fly private and gets massages in their home twice a week. Luxe is an extremely cost effective solution to everything that sucks about parking in busy cities and the service will only get better over time as they grow and expand their coverage universe.

Venrock led the Series A for Luxe because we believe in the team, the concept, and the market opportunity. Finally we can enjoy our cities, parking included.

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Will There Really Be an Uber for Everything?

9 Feb

 

The Next Uber

This post originally appeared on TechCrunch here.

Though the press has turned on them as of late, seizing on every allegation and misstep, I love using Uber. From the very first time (September 28, 2010 to be exact) I saw the little town car icon crawling across the map coming towards my little green dot I knew taxi cabs, airport car services, and parking lot attendants in downtown SF were going to see a whole lot less of me.   Tens of millions of riders around the globe love this service so much it has become its own verb. And at a $40 billion valuation, it is no wonder that it has become cliché to describe other on demand mobile services (ODMS) as the “Uber for X”. Any offline service that can be reserved, or delivered to you physically, or transmitted to you virtually through your smartphone seems to have a startup or several trying to become the Uber for that particular vertical. A few of these will turn into very large and successful global internet brands, grabbing major market share and even greater market capitalization from the offline rivals they out innovate. Most, however, will succeed on a much more limited scale, making only a small dent in their industry and servicing limited geographic markets.

My own framework for trying to determine which markets and which companies will be truly transformational is basic in concept. Start with a service where the greatest percentage of customers are most painfully unhappy with the existing providers. Fortunately for entrepreneurs and investors (but unfortunate for our daily lives as consumers), many service sectors suffer major challenges around availability, quality, transparency, and pricing. Not all problems are equally painful, however. Most people don’t consider the logistics around getting a massage or attending a yoga class nearly the same level of pain and frustration as home renovation or trying to sell their old car privately. There is also the question of how often one needs such a service, with frequently used services having the advantage of being more likely to become sticky habits versus one-off trials that may be forgotten over time. We are much more motivated to find solutions for frequently encountered pain than occasional pain. Next, ask yourself how can an on demand mobile service leverage smartphone technology, network effects, economies of scale, rich data, crowdsourcing, and the other tools found in a tech entrepreneur’s arsenal to build a service that truly delights customers and “bends the curve” in terms of customer experience. This is obviously the really hard part. Great service is hard to consistently deliver in general, but there are those services that are innately more challenging, such as home or auto repair, where the nature of the service is to diagnose and fix idiosyncratic physical problems that catch consumers by surprise leading to an initial state of frustration and financial worry. While aspirational to think that an ODMS can fix even the most broken service sector, often the symptoms of pain in the hardest industries may need to be treated progressively over time. Thus, it is the total distance travelled between the typical incumbent service level and the redefined ODMS service level, rather than the start or end point on an absolute scale, which creates the opportunity to create a truly great business.

How can on demand mobile services create delight versus their offline incumbents?

Immediacy and Reliability—the main point of most ODMS is to use the smartphone to be your remote control for life so that when you push the button for your ODMS stuff needs to happen, as fast and consistently as possible. Uber leverages local network effects between drivers and riders, and invests heavily in data science and AI simulations to insure that rider wait times are as short as possible and drivers are as busy as possible so they can earn the most money. Without short wait times Uber would not be nearly the magical experience we all love. Another example of instant fulfillment is Doctor on Demand*, a service providing immediate smartphone video visits with a board-certified physician so that you don’t have to wait for days or weeks to get an appointment to see your doctor or head to an after-hours clinic or emergency room for routine medical needs. Clearly you wouldn’t use Doctor on Demand if you have severe chest pain or are bleeding profusely, but there are a huge variety of use cases for which you don’t need to be in the same room as your doctor and the convenience of an immediate appointment, at one third the cost (on average) compared to an in-office visit, is so compelling that employers are offering DoD as a benefit to their employees.

For the majority of services that can’t be delivered virtually like Doctor on Demand, the act of rolling out city by city is expensive and time consuming, often requiring an investment in “boots on the ground” to recruit and train workers, market to new users, and assure quality in new cities. If you are truly bending the curve with a revolutionary service breakthrough you can attain a superior growth rate which attracts the capital to enable a nationwide and even global expansion strategy like in the case of Uber or Airbnb. For many ODMS that are only incrementally improving upon the traditional service model, geographic expansion will likely have to come more slowly and may ultimately max out at the major US cities or even just a region or two. This is not necessarily a bad thing as many enduring businesses can be built as the most technologically advanced player in a region. Personally we still enjoy PurpleTie’s drycleaning home delivery services, which started as a 1999 VC backed effort to go big with an online nationwide dry cleaning service but failed and got acquired by bootstrapped CleanSleeves (who apparently liked the PurpleTie name better.) Fifteen years later PurpleTie.com operates only in the Bay Area between San Mateo and San Jose and seems to have a healthy business. Perhaps the new generation of ODMS startups providing dry cleaning and laundry deliver services will go substantially further than did CleanSleeves, and if so it will be because they figured out how to create more customer delight than just mobile app order placement and efficient delivery. My wife is quite eager to give Wash.io a try, but whether or not she would stay loyal to them versus the next cheaper version will depend on how well they turn a relatively commoditized service category into a truly differentiated experience.

Quality—Service businesses are so hard to build because they rely on people to deliver service and interact with customers as much or more than they rely on computer code. Managing people, especially a workforce of independent contractors rather than full time employees, is a lot more variable than executing software routines and so recruiting, selecting, training, and managing workers is a core element of any ODMS. Background checks, license verification, detailed applications and face to face interviews are all part of the selection process. Most services rely on their customers to rate service providers and tend to ruthlessly cull those drivers/doctors/plumbers/etc that fall below a rating threshold, often a fairly high bar. Doctor on Demand checks the lighting, sound, and appearance of every doctor before every virtual shift. Some services even provide a satisfaction guarantee on the completed job, such as Red Beacon’s* $500 offer. Service quality can often be a matter of individual taste. For example, in the home cleaning category services like Homejoy may delight 9 out of 10 customers but it will be an endless uphill battle to please the pickiest consumers when it comes to something as subjective as a clean home.   Quality is not just the absence of problems, but also those unexpected touches which delight. Good Eggs, for example, would unexpectedly throw in a free gourmet treat or two when we first started the service. The freebies stopped once they hooked us as repeat customers but the amazing quality, friendly service, and personal touches like handwritten notes have made us loyal. There are simply no shortcuts when it comes to delivering consistently great services levels and ultimately quality can make or break a business regardless of whether they have the best looking mobile app.

Price—Tech enabled services are often far more efficient than traditional businesses at acquiring customers and aggregating demand through digital channels, viral marketing, and highly visible brands. This often enables cutting out layers of middlemen in the value chain. Additionally ODMS can rely on large regional facilities on cheaper real estate for physical goods processing versus sub-scale storefronts and expensive Main Street locations of their offline peers. Passing a good portion of these savings on to consumers is perhaps the smartest way to generate trial, grow quickly and hook customers on your service. BloomThat is a flower and gift delivery service that does a wonderful job of curating their selection and providing same day delivery, but their pricing advantage vs 1-800-FLOWERS is so significant that they have dramatically grown the frequency of gift giving among their customers far beyond the traditional Mother’s Day and Valentines Day holiday spikes. Some of the smartest pricing plans still include premium and ultra-premium levels, such as Uber Black or Uber Lux, for the truly price insensitive segment, but the mass market almost always appreciates a good value, especially when being asked to try a brand new service through a new medium. In the long run, however, one hopes that there is enough technology leverage, economy of scale, and disintermediation in your ODMS to be the good margin, low cost provider in your industry, not just the company most willing to subsidize losses indefinitely.

Payments—Rolling out of your UberX curbside without having to fumble through your wallet for cash nor waiting for your credit card to be run through a mobile POS is simply addictive. Getting food delivered by services like DoorDash or Seamless without the awkward eye to eye tipping procedure with the pizza guy is very easy to get used to.   Customers simply expect that effortless payment is part of the magic in a service that has been newly redefined as on demand and mobile. The nice part is that this also solves many business model problems around your workers handling cash or credit card numbers, deadbeat customers, and leakage from your workers attempting to cut you out of a side deal they offered your customer after you so nicely made the match between them.   The downside for the ODMS is that for low priced transactions the interchange fees on these credit card payments can be a significant hit to your margin, and on the other end of the spectrum certain high ticket services that require onsite estimates like home renovation may not easily lend themselves to being in the payment flow. Over time, however, we will see the vast majority of ODMS handle payments in the background as part of the consumer experience.

So, will there be an Uber for every service industry? There will be some for sure, but not many in terms of a global, dominant, hugely valuable iconic brands.   Some industries are just not important and/or frequent enough to our daily lives, or unpleasant enough as they exist today, whereas other industries face service challenges so fundamentally hard to solve that it will be a long while before we see an ODMS truly solve them. Just like with the B2B Marketplace craze of the late 1990s we will see massive experimentation across an enormous swath of the consumer services sector. We will also see traditional offline service businesses forced to up their game and become more technologically sophisticated. So while there may only be a handful or so of Uber-sized winners, there will be many smaller ODMS who find some degree of success, and the biggest winners of all will be consumers themselves.

*Current or past Venrock investment.