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What we are seeing today in the city of Chicago, especially on around is the neighborhoods are growing really fast, so you look at Westlaw, which now has google and Mcdonald’s to look at Bucktown and wicker park all the way to edgewater. All these neighborhoods are really blowing up. What that means is these neighborhoods now have a bigger problem than downtown Chicago or at least a very high a growing problem and they don’t have a solution. Unlike the city of Chicago, the loop area is what I mean because the loop area at least has those traditional farm installations.
Jay Clouse: 00:00:35
The startup investment landscape is changing and world class companies are being built outside of Silicon Valley. We find them talk with them and discuss the upside of investing in them. Welcome to upside.
Eric Hornung: 00:01:03
Hello. Hello, hello and welcome to the upside podcasts. We are finding upside outside of Silicon Valley. I’m Eric Hornung and I’m accompanied by my cohost, Mr. flat tire himself, Jay Clouse. Man, that is a bad nickname, Jay.
Jay Clouse: 00:01:20
Not to be confused with fat tire. The beer or my beer gut.
Eric Hornung: 00:01:25
Yes. Neither of those things. You had a flat tire a little bit ago and I thought that that paired nicely with what we’re gonna be talking about today.
Jay Clouse: 00:01:35
It’s hard to be a vehicle owner. Do you own a vehicle? You’re in New York. You don’t own a few personal vehicle, do you?
Eric Hornung: 00:01:41
I. I don’t. So little insight here guys. We’re going to be talking about parking today and I do not own a vehicle. I have not owned a vehicle since 2014, so I am the foremost expert on parking this. This,
Jay Clouse: 00:01:56
this opportunity just means nothing to you, but I am an avid parker and we’ll get to that shortly.
Eric Hornung: 00:02:03
Yes, we will. Jay, why are we here? What are we doing here at upside here at upside.
Jay Clouse: 00:02:07
We’re talking to founders outside of Silicon Valley. We’ve spoken to founders and Columbus and Cincinnati and Minneapolis, Kansas City, Chicago, all over the country. We are. We’re talking to these guys because we know that they are building impactful businesses, investible businesses with high upside and they are doing it outside of San Francisco or the valley in general, and so we wanted to shine a light on these founders and what they’re doing because we fundamentally think it’s a great time to be building companies outside of Silicon Valley.
Eric Hornung: 00:02:38
We’re talking to guys and girls. We are excited to bring on more female founders so if you know any female founders, please recommend them. To us. It’s a pervasive issue in the venture capital space and we wanted to be some of the people helping to solve it.
Jay Clouse: 00:02:54
That’s right. Eric, can you tell the listeners what the format of our show looks like?
Eric Hornung: 00:02:59
So we have three sections, our show and upfront and interview in a debrief. The upfront is what you’re about to hear. Jay and I are going to walk through some research we did on the industry, the market, the competitors, and a couple of questions we have about the company in the interview. We’re going to take all that research, learn about the founder, the company, and the market opportunity and in the debrief. Well, we’ll get to that in a minute. Jay, who are we talking to you today?
Jay Clouse: 00:03:26
Today we’re talking to Vivek Mehra Probably saying his last name incorrectly. We’ll find out when we speak to him. The vic is the founder and CEO of ParqEx ParqEx is a platform that helps to unlock the value of privately owned parking spots and it allows basically owners of private spots to list their spot as available and then earn an income for people who are looking for parking in that area. It’s like uber for private parking spots. ParqEx was founded in April of Twenty 15. It’s based in Chicago, Illinois. It’s raised almost a million and a half and funding at this point through organizations like generator and some other angel groups. See Looking for other basic statistics. That’s what I have on ParqEx. Did you find anything? It’s kind of base level knowledge that folks should have.
Eric Hornung: 00:04:16
I think when we think about the market size, that’s kind of base level knowledge that you want going into understanding and opportunity and it’s something I’m having a difficult time finding in my research. I found that the market size for smart parking, which is what I believe this fall under, is somewhere around a billion dollars. I found that the global size of all parking public parking, I believe is about $100,000,000,000 and I found that in the United States if we kind of limited back to that, there’s about $250 million cars, so each of them needs a parking spot. I don’t know how that gets us to a total addressable market in this space because I believe, and I want to hear your thought on this, that this space is not about the current total addressable market, but the potential for a total addressable market.
Jay Clouse: 00:05:07
I think you’re absolutely right. I think he’s looking at this saying there is an oversupply of parking. If you incorporate the privately held spots that are unable to be made publicly available because there’s a mechanism lacking for connecting the supply to the demand. Now, Eric, I’m going to be honest here, having done startup weekend here and just in Columbus, Ohio over the last six years, I’ve heard this pitch close to a half dozen times. I’ve seen this idea pitched, worked on a half dozen times and the takeaway from that is one, it’s a problem people feel and are constantly aware of and are looking for a solution to. two It’s really hard to solve and I think that’s because you’re looking at a two h, two sided marketplace. You’ve got to grow both sides equally and in such a way that it’s actually helpful if you have parking spot holders who are on the platform and readily giving up their parking spot. If it’s not geographically convenient to what I’m actually looking for. That’s not a good experience. It’s just difficult. So I’m interested to hear from Vivek what his approach is because even this crain’s article from Chicago in December of 2017 had the headline, do you really need another parking app? The startup is betting that you do. I had the same thought when I and I, when we said we’re going to talk to this parking app. It was another one of these, but they have some traction there in multiple markets. They’ve raised some funding, they’ve gone through generator. I’m excited to hear what his approach is and what he sees as the opportunity.
Eric Hornung: 00:06:44
I really think that you need some sort of unique, deep competitive advantage in this space because although I don’t drive often when I lived in Chicago, I used a couple of their competitors to park. I use spot hero, I believe, and I use. I use park mobile when I’m in Cleveland. A lot of places in Cleveland use that when you search parking just on the itunes store Those are two of the top three that come up along with a company called best parking. So you’re right, it is a large space with a large potential that I think everyone sees and no one can quite fully understand. And it’s an easy initial idea, right? I want to solve parking because parking sucks. Everyone hates parking. There’s never been like a a great. I mean George Costanza maybe right when he got that great spot out front. He was excited about that, but he drove around the building five times to get it like that.
Jay Clouse: 00:06:44
We love Seinfeld on the pod.
Eric Hornung: 00:07:51
Yeah, it’s, it’s such an easy what sucks. Right. You and I love that question and parking sucks. You and I drove back from Kroger after you picked up your groceries on a random Saturday night.
Jay Clouse: 00:08:05
Always Grocery shopping on Saturday evenings.
Eric Hornung: 00:08:07
Thanks. Yeah, big time. Partier. And it took us how long to find a parking spot on the street, right? If there was a way to say, this is my spot, I’m coming back right now, I’ll be there in five minutes. I think that that’s adjusted time parking solution is very interesting. Spot hero.
Jay Clouse: 00:08:23
And the other parking app you mentioned, those are both for public available spots, right?
Eric Hornung: 00:08:30
I believe park mobile is, I believe spot hero and I could be wrong. It might have been another parking app to be honest with you. Whoa. Let me park in a parking garage that I don’t know. That was public. I believe it was private. That being said, I am really interested to hear about kind of what the secret sauce is for ParqEx because it’s. It’s hard for me to understand it from the third party research I’ve done.
Jay Clouse: 00:08:52
Yeah, I think it’s. I think it’s just going to be a b to c play where they have to build it up as fast as possible in their. Their advantages going to have to be supply. I love talking about supply in two sided marketplaces and I think this is a prime example of where it’s super, super necessary. But what what I found from the research is Vivek claims that it is not that parking spots are unavailable, it’s that they are not accessible. He says parking spots are only 60 percent occupied when at their peak utilization. So he, he very firmly believes that there is not a supply and demand mismatch so much as just the mechanism to help match those things effectively. I do have some other data here that I found from Vivek in speaking about ParqEx, this point, an article I saw from I believe November of 2017 or maybe it’s December of 2017. They had 500 parking spots on the APP and 32,000 users from January through November of 2017. ParqEx’s user growth was 150 percent in transactions, grew by 121 percent with revenue increasing 172 percent. Also found that their revenue model revenue comes from parking and monthly subscription fees charged to buildings that use the access plus.
Eric Hornung: 00:10:12
Well, I’m excited to hear about it because facebook wasn’t the first social network, but social networking was a huge opportunity that no one really knew what it was gonna look like. And if Vivek and ParqEx can be the facebook of parking, I would love to have them off side.
Jay Clouse: 00:10:29
He would probably cringe at the description of the facebook of parking
Eric Hornung: 00:10:32
from a evolution of a space model. The facebook model is not the ParqEx model that are more of a eight airbnb or uber. Just so everyone’s clear on that.
Jay Clouse: 00:10:44
Okay. Uh, so eric, I’m going to be performing this interview Solo.
Eric Hornung: 00:10:49
Yeah. We have had some scheduling mishaps on my end. One hundred percent my fault. I take full blame, but I believe that I leave the podcast and trustworthy and very capable hands and I know that you’re gonna do a great job and I look forward to jumping back in for the debrief.
Jay Clouse: 00:11:07
All right, I’ll go talk to Vivek and we’ll talk soon. Vivek. Welcome to the show.
Vivek Mehra: 00:11:15
Thank you Jay for the opportunity. Appreciate it.
Jay Clouse: 00:11:18
So are you from Chicago?
Vivek Mehra: 00:11:19
Well, I’ve spent more than half my life in Chicago. I do consider it my home, so by 21 years. But then I was born in India and came here for my masters when I was 22 years old.
Jay Clouse: 00:11:32
Tell me a little bit about that. Tell me about college age for they can and why you came to Chicago?
Vivek Mehra: 00:11:37
Yes, so after my Undergrad in India, I came for my masters initially for my first masters I went to University of South Carolina in Columbia and then in 97, once I finished the program I moved to Chicago and took my first job and then landed up doing my second masters from University of Illinois in Chicago and while I was studying I was also working. Those were the kind of the end of.com boom days. And so I was able to hustle education and work at the same time and the industry picked up my early on skills in programming. So I’m a hardcore developer, very passionate about technology. And that was the start of my journey here in Chicago.
Jay Clouse: 00:12:23
How did you discover development engineering?
Vivek Mehra: 00:12:27
Well, I think it was, um, I was drawn to it, you know, it was always just in there kind of a desire to solve problems. And I felt technology provided that. And even early on in my earlier days, even much younger days, I always found myself drawn to technology, whether it was trying to fix a remote control car and my year really young days to try to fix a remote control to, you know, finding a piece of a computer sitting around that wasn’t working and I was like, okay, let’s try to fix, it’s a hard drive or video card, so just have always been a little bit hands on on the technology front and that just drew me to it and that’s what kind of led me to do my master’s. And even after that was people were trying to get away from programming and getting into management. I was finding myself drawn more to no, I want to build something, build a product that people would use to solve a business problem or just a real life problem.
Jay Clouse: 00:13:37
So can you tell me a little bit about some of the things that you built either in college or early after college?
Vivek Mehra: 00:13:46
Yeah. So of the things. I still remember even in my, when I was in my early twenties when I was 21 years old, I found myself writing a research paper for my masters in data mining and data warehousing topics, which today is more well known as ai, but one of the things that I wrote, which was completely candidly was something I did last minute. I just winged it and I didn’t have anything better. I was running against a deadline and I called it data mining on the Internet. And the idea was, uh, basically data mining always you do on historical data and you look for patterns like, Hey, this kind of events or behaviors would result in this outcome. Right? So usually like credit card companies would use that data to determine your credit score and whether you should get a credit card or a loan. One of the things I came up with a coin that time and I titled it as data mining or the Internet. So at the time in 97, the Internet was still at its infancy and people were looking at as static data and you can read and that’s about it. So what are the things which I’m really, as I said, it was very far fetched for the time was me saying, well in the future we will be doing real time analysis on data while it’s happening and people would be able to make changes and do stuff with it. My professor was blown away with it and made me present that and I was like, oh my God, don’t make me do that because I don’t know what I’m talking about. So that was one of the cool things. But along the journey along my journey in in this space, I have been very fortunate to work in manufacturing at Navistar where I built a piece of software software that was used for used trucks appraisal. After that I worked at in healthcare for building a patient tracking system for patients who are suffering from hemophilia. And we would send them a first aid kit every month to even when gps was a new technology, we built a piece of hardware that would track a assets when you call nine, one, one to even one of the first, a handheld mobile devices if you remember the HP palm pilot. And we use that for some patient tracking systems. So it’s been a very interesting journey and use technology for several different industries.
Jay Clouse: 00:16:17
That’s wild so all those different industries where they tied to one company you were working for or did you just bounce around to all those industries in different independent directions?
Vivek Mehra: 00:16:27
Yeah, no, it was a all different companies. Some of them are very well known fortune 500 companies. So the first one I mentioned in manufacturing was navistar. From there I moved onto in the human resources space at Hewitt associates. And then from there I was lucky enough at the age of 26 to actually find myself with some baxter executives and we built the healthcare system. And then after that I went to northern trust, which is one of the largest banks in the country. And build their financial system. And after that I met John Gad from Cleveland, Ohio and we built a print platform. And after that I just built ParqEx.
Jay Clouse: 00:17:10
Super interesting. So tell me about your introduction into entrepreneurship as a direction.
Vivek Mehra: 00:17:16
You know, in my early years of my career it was more about finding a job and at the age of 26 that just got lucky, met some baxter executives who were looking for an engineer who would build their system. They had the domain knowledge, they had the customer base, they had the investment and they just really needed somebody to go build it. And I was young and ambitious and I basically said, give me a chance. And they laughed initially saying, Hey, you know, you have no idea about what healthcare is, you don’t even know what Hipaa is, how are you going to build a system for us? And I said, well, I’m cheap. I’m extremely hardworking and uh, you know, give me a chance. And they did. And that led to me getting my first exposure at a startup. And I built a team of 12 and we built a system which then God implemented at a hospital and we had a lucky exit. I didn’t get rich on it, but I got really rich on my experience and that helped me actually gained some confidence. And then after that I joined northern trust, which is obviously a large corporation after which then I met John and I was again, you know, the entrepreneur bug had already bit me and I was like, yeah, I want to, you know, build something again. And uh, we started ground up and build a print platform after that. So, you know, I think once you kind of embark on that entrepreneurial journey, it’s just a matter of time. It sucks you in your, you, you’re driven by your passion to create something and it’s never going back. I guess for me, at least
Jay Clouse: 00:18:49
for the listeners, can you explain what Baxter as a company is or was?
Vivek Mehra: 00:18:55
so I didn’t work for Baxter, but Baxter is a large pharmaceutical company in the healthcare space. And I didn’t work for Baxter, but these were individuals who had worked at Baxter, left Baxter, had a ton of experience in the healthcare space, had a ton of domain knowledge and just life experience. So it was when they came up with their idea of building a healthcare platform to track patients history, patients who are suffering from hemophilia, they brought in the domain expertise and I was brought in to build the technology.
Jay Clouse: 00:19:30
Got It. Okay. So that was kind of your first startup experience and when you say you built a team of 12 did you find a team of engineers to help you build this thing.
Vivek Mehra: 00:19:38
Yes, you’re absolutely right. I was young but I had gained a ton of knowledge and experience. So I was a software architect that I was brought in to build this platform. So yes, I interviewed individuals, brought them in and build the team and architected the solution. And then I had developers, 12 developers who worked on this platform and took it to fruition.
Jay Clouse: 00:20:02
Was that one of your first leadership experiences to then?
Vivek Mehra: 00:20:06
I would say, you know, I had worked as a team lead before, but that’s very different than really being the key person who is building the entire product and software for a company. So yes, that was the true first I almost, you know, there were no titles that time as such. I was happy to be called a software architect, but really I was the head of technology in some ways without any large titles. Yes.
Jay Clouse: 00:20:34
And what did you learn from that experience?
Vivek Mehra: 00:20:37
Well, so a lot obviously it was a humbling experience because not having been in that role before and obviously being very ambitious enough to say that yes, I can do it. Put myself in that position where I was responsible for delivering a product a lot, uh, sat on my shoulders, a lot of responsibilities. And it was not just the technology aspect of it because that almost started becoming easier and easier over time because, you know, I was like, yeah, that I can figure out. But it was truly assembling a team, mentoring them and leading them, making them obviously, first of all, believe in you so that they can build a product that is in line with the vision that I had, but also the vision that our founders and the management team had and that responsibility was huge and there were obviously a lot of good learning experiences from that, but it taught me a lot, not just the technology challenges of healthcare, which I’d never built before and the domain expertise that I have, the domain knowledge that I gained from working in healthcare, which I had never worked in before, but also just the overall leadership challenges that I had never faced before.
Jay Clouse: 00:21:52
You’ve been coding since some of the earlier days of the Internet?
Vivek Mehra: 00:21:52
Jay Clouse: 00:21:58
How has the technology of development changed over the course of your career?
Vivek Mehra: 00:22:04
Jay Clouse: 00:23:17
I’ve always wondered this, I spent some time in product and so I’ve always been near engineering, at least in my short career to this point. And with all of the evolution of tooling for developers at this point, I always wondered if people who started a long time ago and got really comfortable with some of the older language are at an advantage or a disadvantage now as things change so quickly.
Vivek Mehra: 00:23:42
Yeah, it’s a good good, uh, point for debate because if someone is passionate about technology and building technology and they are extremely hands on for those individuals, it’s easier. But most that I know they actually have moved on away from technology and gone more into management for them. Obviously there’s, it’s, it’s harder for them to understand like how things have changed, you know, in my particular case, I have kept myself extremely hands on, so as new technologies and languages or platforms or frameworks have come to be I, I actually, if I had any free time, I’m actually playing around with it and I’m trying to figure it out. So for me actually it’s easier because it’s more about pattern recognition and those patterns still exists and they have evolved and become better. If your fundamentals are strong, it’s easier to kind of apply those fundamentals to the newer technologies and tool kits.
Jay Clouse: 00:24:44
So after you build and then exit this company with these former baxter executives, walk me to the point where you had this moment of thinking about ParqEx
Vivek Mehra: 00:24:56
really after that, which was in my. I was 26 and after that I, you know, once we have that exit, I went back to working in actually a large corporation, which is northern trust. I was brought in to build a financial platform, so I built what is called a portfolio management cash, which is really a portfolio management tool for portfolio managers to manage portfolios off stocks and think of it as index funds. So built that and again lead the team over there. After that I met John Gad who’s was the CEO of a company we built ground up. We exited that in 2013 and after that is when I started ParqEx in April of 2014 and the idea came to me having lived in Chicago for over 20 years, ran into all kinds of parking issues, whether it was not able to find parking or finding parking, but it was very expensive and then I live in a condo building and I always find it really interesting that there are ample parking spaces just sitting idle, but when my friends and family come, they are not able to park there because there’s no easy way to make those parking spaces available to them. That is really where the idea stemmed from and I was like, okay, what is the reason? Why is this so crazy? Why can’t we make those parking spaces available to visitors in the building or to even outsiders who are in the area looking for that parking space, went onto do some research and found that really supply is not the problem. So there is a ton of parking always available whether in the city or in the neighborhoods. It’s about really making it available and accessible and that’s kinda where I got really interested because I felt that couldn’t be a technology solution we could build to solve their problem and that’s where ParqEx came from.
Jay Clouse: 00:26:59
Can you talk about that research you did and how you came to that conclusion? That supply is not the problem.
Vivek Mehra: 00:27:05
Yeah, so one would think that, well, if I’m driving around the city of Chicago and clearly if I’m being charged $65 for a day, that must be a supply issue, right? Or Hey, I’m going to this building and there’s no parking in this building, and you usually you would think, oh, they must be like no parking in this building. That’s why I’m not getting it. What our research has shown is actually for every car in the United States, there are about eight parking spots. Chicago neighborhood technology did a research that we came across and they found that if you look at utilization of parking peak utilization, so p being the time when most amount of cars are parked in the building where you live, for example, that peak utilization is about 63, 64 percent. That means about 40 percent of the parking is empty and that’s peak. That’s when you are driving your car to work or doing some other commute during those hours, which is usually during the daytime. The utilization is only about 40 some percent, which means 60 percent of their parking is sitting idle in that building. So think about it. That means at any given time you have the 100 spots in the building. There’s about anywhere from 40 to 60 spots sitting idle. So if supply was not the issue than What was was the question that I wanted answered and then what I did was I spoke to several developers and realize I’m going after or we’re going after non commercial parking. Right. We’re saying if you’re coming to my condo building, if there is there is parking available Then why is it not accessible or why is that not being made available to me or to my friends and family. Right.
Jay Clouse: 00:28:55
So that study that showed the peak utilization, was that taking into account noncommercial parking or was that looking purely at commercial parking?
Vivek Mehra: 00:29:04
That was a looking at both commercial and noncommercial parking, but that is a breakdown off that as well in that study and that study was also done a predominately for city planning, so urban planning and transportation because when developers are looking to build new buildings, how much parking is really required was also the question and try to address
Jay Clouse: 00:29:30
that other statistic. You mentioned that for every car in the United States there are about eight parking spots. Was that research controlled by geography? Because I can imagine, you know, you have hugely dense population with cars in Chicago, but then you have a whole 20 acres of parking spots in Iowa or something.
Vivek Mehra: 00:29:48
Yeah, you’re right. So the study was done more for urban cities or urban areas basically. And in areas where parking is considered to be a problem. And again, I would, you know, if you asked me the study done by Chicago neighborhood technology was more kind of precise than, you know, paraphrasing or the agenda statistics for every car that are eight parking spots.
Jay Clouse: 00:30:15
So what made this a problem that you were particularly interested in? You said I’m going to spend the next however many years of my life starting a company to address this.
Vivek Mehra: 00:30:24
Yeah. So I mean, as I said being passionate about technology and seeing a problem right in front of my eyes. It just drew me to this company ParqEx where we felt very passionate about a problem and we feel that we can build the technology, not just today but also for tomorrow that can solve this problem for owners, renters managers and also the communities. And that’s what drew me to it and said, hey, you know, we can, we can build it. This is a big market. This is a real problem a lot. Everyone faces it. We, we spoke to, we did surveys, we did surveys in neighborhoods. We did like literally door to door surveys. We talked to developers, we’ve talked to communites. We talk to property managers and came to a realization, yes, we can actually build a technology that can solve this problem.
Jay Clouse: 00:31:12
Can you give sort of your. We’re dancing around it and I think a listeners can kind of read between the lines, but can you give your prepared sort of pitch for what ParqEx is and what problem it solves?
Vivek Mehra: 00:31:25
Absolutely. So podcasts is a private blogging platform dedicated to solving urban parking challenges for owners, renters, managers and communities. How we do it, if you’d like me to get into that, we basically have four service offerings at the highest level. One is the marketplace solution which allows owners to rent out their parking spaces hourly, daily, weekly or monthly. So they set the price, they set the duration, and they list their parking space on our platform and the renters find it and rent it out, almost like an airbnb for parking model. The second is access plus, which is our proprietary iot technology that opens gates and garage doors right from our APP. The beauty of this is it makes all these private parking spaces available on a platform and you don’t have to run around handing off your gate or garage door opener to your renter. The beauty of this is also for property managers, it helps them reduce their operating costs because they don’t need to issue and track these gates and garage door openers and the third offering we have is the guest park, which is think about all these condominium buildings where maybe parking to a random parking to outsiders is not feasible, but providing guest parking is a great solution that everyone is seeking. And then the fourth is enforcement were realizing that we’re not dealing with parking lot operators and parking businesses. We are working with individuals or we’re working with residential or noncommercial. Parking enforcement becomes very important. So like for example, the doormat needs to know which car, which visitor’s car is supposed to be parked here. The tow truck company, if there were monitoring a private parking lot, needs to know real time what vehicle and or license plate belongs in a particular spot to, you know, just a better and more transparent way to manage that parking space. So these are the four offerings that make our ParqEx private parking platform complete.
Jay Clouse: 00:33:36
Okay. So you’re really working a lot with some of these owners of the spaces as opposed to just like the renters. If I lived in a condominium, it’s not just you’re dealing with me, you’re dealing with the governing body of the condominium because they have some systems in place that monitor the lots and monitor the gates. So who is your customer? Who do you describe as your customer?
Vivek Mehra: 00:33:59
Yeah, so we do a lot of B, two b sales. So our customers are developers, property managers read those are may fall in b to b category. So we work with large developers and you know, even nonprofits like schools and colleges, but that’s our B, Two b side. We also, as you know, do have the peer to peer side. So yes, there are individuals who come on our platform through marketing, uh, who may list, but that’s fewer than the supply that we get from our B, Two b side, and then the renters, they simply find us through our marketing channels.
Jay Clouse: 00:34:35
Are you familiar with startup weekend as an event?
Vivek Mehra: 00:34:38
Yes, a little bit.
Jay Clouse: 00:34:39
We’ve done startup weekends here in Columbus and something I mentioned to Eric and our preinterview was, I’ve heard a parking app pitched at a startup weekend so many times over the years. So it’s such a well known painful problem for people that just seems to be very, very difficult to solve and take hold because we’re still talking about it. You know, you have, you have spot hero which is looking mostly at public spaces. Right, right. So what makes this such a difficult problem to solve?
Vivek Mehra: 00:35:13
Yeah. A good question. And as you can imagine that get that a lot.
Jay Clouse: 00:35:17
Well I saw the article that said, do you really need another parking app? This guy thinks that you Do
Vivek Mehra: 00:35:23
So for setting, it’s important for the audience to know the difference between what we’re doing and what other apps are doing. Right. So spa hero parkways and parking panda and several others are aggregators of parking, right? Which is basically parking businesses that are operating these parking lots and garages, valet companies and things like that. So it’s almost like a hotels.com model or orbitz or travelocity, but aggregates all this commercial parking. But there’s only a finite number of that commercial parking. Right. And actually that number is reducing by studies that we have seen. They’re being converted into these parking lots, at least the city of Chicago for example. You’ll see a lot of them, even if you drive around, I’m being converted into condos and apartment buildings. Right? So all the parking’s going away. On the other hand, as we are, as I’ve already mentioned, and I’ll throw some numbers at you, might help kind of see the magnitude of this. So today in Chicago, there are 36 thousdand street parking spaces. So meter parking, there are about 450,000 commercial parking spaces. So in parking lots and garages. And you compare that to private parking only in the proper city of Chicago where parking is a problem. There are about close to 8 million, 8 million private parking spaces and if what whether you look at it as population to parking ratio or if you look at car to parking ratio, as I was saying, one is to aid or by utilization either which way you’re looking at at least three to 4 million private parking spaces could be made available to solve this problem. So we know supply is not the issue. So that’s kind of what first of all differentiates us where we’re going after that private parking supply now coming. So that’s the big difference between us and some of these commercial parking apps which you already mentioned as well. But then when you bring up that yes, you have heard of several, even apps that are trying to do very similar things to us. Very true all the way from California to Boston. We have several parking apps that get pitched and the big difference you’ll find and if we have obviously done a competitive study and we keep track of any new competition that comes up as soon as we find out about it, we put it on that list. And what you find is a lot of people have tried doing the airbnb for parking model. You know, they, they try to build an APP and nowadays we know apps can be built very quickly and they put it out there in the marketplace saying, Okay, download our APP and list your parking spot and you can run it up. Well, if you look at several other similar marketplace apps, including for example, and I say this jokingly is match.com and if you hear their ceo talk is, uh, you know, I’ve built an APP and I expected men and women to come and start dating on the platform and I was going to get rich on it. It didn’t work that way. So it’s not as simple as just building an APP and then hoping that people are just going to come. You almost have to be able to create that market in some ways. The big difference we have versus anybody else out there being a technology company. We actually built our technology ground up thinking of who we are trying to solve the problems for and what are their problems rather than thinking about, oh, we are solving a party, bro. We actually went and solved a problem for the real estate community and what we’re finding is we sell our technology to the real estate community and they love us. They’re using us today as an amenity in some of their newer buildings. So guests park is an amenity. They pay us who our sas fees rather than the marketplace side and through, uh, you know, over a period of time the parking comes on the marketplace as well, but that’s almost an after effect. Also then property managers are using us. So what you would think as an APP that is simply a marketplace where people are coming and listening and renting out is really become a real estate technology which is solving a parking problem as well.
Jay Clouse: 00:39:32
That was really well explained. So how do you guys go about acquiring these customers, whether it’s the property managers or the real estate community? What’s your customer acquisition plan?
Vivek Mehra: 00:39:45
What we do is we have a sales and business development team here in Chicago and other locations as well, like in Milwaukee and Madison, and they basically primarily target listed communities or entities. So we go after property managers, large property manager groups, a large developers reads also nonprofits like schools, colleges, churches, and we bring their inventory on our platform for access management enforcement or guest parking. We also, while we are selling those, if there are parking spaces that can be put into the marketplace, of course we do that as well. So that’s our B, Two b side and then we had the marketing engines that also fired the same time for making sure people know of our brand and reach and that’s how we get our supply on the demand side, which is the renter side. It’s actually way easier because we know and we see a ton of demand for very little marketing span on some of the popular marketing channels like Google ads, facebook and even linkedin. And others were able to get a ton of demand which are, which is basically people looking for parking and that’s how we get a transaction or a platform.
Jay Clouse: 00:41:05
What does that growth look like on both sides of the platform? How? How quickly have you guys grown? What cities are you in
Vivek Mehra: 00:41:14
today We are well established in three cities, milwaukee, Madison and Chicago, Chicago being our headquarter and we are seeing organic growth in six additional cities from Washington DC. Austin’s and mark was San Francisco, La and even Hawaii. Yeah. It’s funny. Hawaii has a parking problem? So that’s kind of our geographic growth wise, userbase wise, you know when we really launched this, I mean we started in April of 2014. We launched in fall of Twenty 15 and in 2015 we had close to a thousand customers. Today we have close to 40,000 customers on our platform today we get about 80,000 users who come to our platform every month searching for a parking solution, whether it is for their building for simply renting our parking or access class or enforcement.
Jay Clouse: 00:42:07
You have a little bit of a geographical challenge. I would assume if I am in Chicago and you have parking inventory in certain regions of Chicago and I’m also in Chicago, but in different regions, how do you control that geographical balance as you or even just growing one city?
Vivek Mehra: 00:42:26
Yeah, great question and that actually goes into our go to market strategy some a little bit. I’ll explain that. So when we launched the product in Chicago, the first thing we did was we did a good amount of research and put together some decision metrics as to how we determine what neighborhood to go in first. So we broke up the city by neighborhood and we launched in just two neighborhoods of Chicago, West Lou and Wrigley, a those test markets for us and we were able to learn a lot as to what works and what doesn’t. Right. And then we expanded that out neighborhood by neighborhood across Chicago. So our playbooks are very neighborhood based and then we actually then we built a playbook that can be applied from city to city in the same manner. So your, your point is very valid and 100 percent agree that, you know, the challenge with parking is you’re looking for parking in, you know, like a two block radius at the most from where you stand. Now, for us to be truly a viable solution for this $4,000,000,000 market in Chicago, we would need ubiquitous parking. Uh, that means parking around every neighborhood of Chicago. We have that today. No, but are we on our way? Yes. Are we a more viable solution than anything else out there? Yes. Because think about it. Parking lots and garages today exists were mostly in the downtown area, correct. So what we are seeing today in the city of Chicago, especially and around, is the neighborhoods are growing really fast. So you look at Westlaw, which now has google and McDonald’s to Bucktown and wicker park all the way to Edgewater. All these neighborhoods are really blowing up. What that means is these neighborhoods now have a bigger problem than downtown Chicago, or at least a very highly growing problem. And they don’t have a solution. Unlike the city of Chicago, the loop area is what I mean because the loop area at least has those traditional farming solutions, so in a way our solution which provides ubiquitous parking, more parking around the neighborhoods is a more viable solution for the future, but are we there yet? No, we have only about 6,000 parking spots today on our platform and we do provide a really good solution in certain areas, but not all areas yet. Another way to look at it would be, for example, in the West loop area of Chicago, there are about only six parking lots and garages only six and think about it, so to further enforce your point, if you are in a two block radius of those six parking spot parking lots of garages, you have a solution, otherwise you don’t. Whereas we have been able to create ubiquitous parking in west loop. I think we have close to a few hundred parking spaces spread out and that’s providing a better solution in those neighborhoods than anything else out there and that’s kind of the future for us.
Jay Clouse: 00:45:27
You mentioned that Chicago is a $4,000,000,000 market. How big do you see as the total addressable market that you guys were trying to attack?
Vivek Mehra: 00:45:36
Yes, and again, these are big numbers so you know, don’t hold me accountable for like a few billion here and I’m taking, I’m taking these numbers from the media that has been published out there, but what numbers have been floated around are like across the United States at about $35,000,000,000 being spent in parking revenue, which is comprising off street parking, parking lots, garages and other miscellaneous. Now what we feel is if we are looking at bringing all the parking supply that wecan in and even a fraction of it, we can actually disrupt that big parking industry. Right. As I mentioned earlier, some of the numbers that we see in just Chicago, there are less than $500,000 commercial parking spaces and 8 million noncommercial parking spaces today. If he brought even a fraction of those, we could be disrupting that market and really so we can. I wouldn’t say we are going after the 35 billion yet, but even if we got a small sliver of that for ParqEx, it can be a very big market.
Jay Clouse: 00:46:45
You mentioned earlier these four different services that you have and you also mentioned that the property managers pay a sas fee for offering this as an amenity. Can you walk me through the different revenue streams and what that actually looks like for ParqEx?
Vivek Mehra: 00:46:58
Absolutely. So the easy one is the marketplace where anyone can list their parking spot and we get supply from property managers, developers, streets, nonprofits and individuals for those parking spaces that are rented on our platform. The owner keeps 80 percent of the revenue and we keep 20 percent. We also charge a $1 additional service fee to the renter, but that’s on the marketplace side.
Jay Clouse: 00:47:26
And is that, do they name their own price?
Vivek Mehra: 00:47:29
Oh yes, absolutely. So we helped the owner by providing some suggestive pricing, meaning, Hey, if you’re in this neighborhood, this is approximately what your parking spot should go for. So we make recommendations whether it’s hourly, daily, weekly or monthly, but the owner gets to decide on the price. So some owners may underpriced some may overprice with regards to the service revenue, if that’s what you were looking to also get out of us. What we do is, uh, as I said, we have different service offerings, access plus enforcement guests park to name a few. And what we do is depending on the complexity of the property we can, we range from $50 to $2,000 for a setup fee and then we charge a monthly service fee of anywhere from $50 to $500.
Jay Clouse: 00:48:21
Super Helpful. Yeah. This is a different approach than I’ve ever heard to this problem. And you know, like any marketplace, it strikes me that you’ll want to grow super quickly. Right. How big is your team right now?
Vivek Mehra: 00:48:35
So we have 11 people on our team right now here in Chicago and Milwaukee and Madison and then six additional contractors who are working offsite.
Jay Clouse: 00:48:47
What does team growth or business growth look like in a year, two years, five years. You know what, what’s your, what’s your growth strategy?
Vivek Mehra: 00:48:56
As I mentioned, we require, we have a, we have a playbook for launching new markets and one of the key success factors for us to grow in those markets is to have at least one to two individuals as city gms to grow those markets. For us, we have obviously proven this model in Milwaukee, Madison and tested it out in San Francisco as well. Overall, if you asked me, uh, over the next two to four years what our team size looks like, we primarily will hire more individuals in sales and Biz Dev side of things just to kind of grow more with the real estate community a little more faster. Operations would also, we would need to add a few more people, their marketing maybe a couple more. And then on the product side, all in all, if you’re looking at numbers, we would be today it’s approximately 18. We looked at doubling that number over the next four years, if not more.
Jay Clouse: 00:49:55
Yeah. It seems like you guys could hire and just focus on marketing if you wanted to. You could just pour into into marketing, so what is your plan or goal as far as number of markets that you want to enter in the next two to five years?
Vivek Mehra: 00:50:10
Yeah, so we actually have modeled this out as to our growth strategy plan, so to speak, and it is a little bit of function of our capital raise as well. So if you look at our trajectory, we’re looking to add six more cities. The next, let’s say 2019, and that is a function of our next capital raise of course, over a period of five years we have identified 26 markets that we can grow in. Again, it being a function of how much money we can put into our sales and marketing engines.
Jay Clouse: 00:50:46
ParqEx is the first company from Chicago that we’ve had on this show. We’ve talked to a lot of folks in Ohio and some folks in Minneapolis. Can you talk about what the startup ecosystem is like in Chicago and what it’s like trying to raise funds in Chicago?
Vivek Mehra: 00:51:00
Yeah, sure. First of all, thank you for having a Chicago company on their show and being the first. That first sounds good. Always. I’ve been in Chicago for over 20 years now and this is my third startup, so have been through the process of raising capital and haven’t gone through an exit as well. So, you know, Chicago ecosystem is very conducive for startups in so many ways. Uh, there are obviously accelerators that help out. We went through two accelerators, one from Chicago, one from Milwaukee where it comes to raising capital. So there are, of course, high net worth individuals, angels who invest. There are angel groups that we have taken investment from to which, uh, they, they not only provide capital but also help and I’m very thankful to some of them. We wouldn’t be where we are today without their help and support and as where it comes to vcs as well. We have some really good organizations here in Chicago that fund now, if you compare it to the bay area, obviously it’s not the same. We all know that, but there is still enough capital to get your company off the ground. So these are the good, the good things and obviously nothing is as easy and rosy as it seems. Obviously everyone have not done this before. You know, it’s a grind and the Chicago market, especially being the being in the Midwest, it’s very midwestern, meaning they look for very strong growth kpis. It’s not about ideas anymore. It’s not about even an mvp anymore. Very few get lucky with funding in the MVP stage, let alone the idea. For us it has. It was, at least in this company, it was all about metrics, kpis, it was all about or bond, how much is your revenue and how much have you been growing. And that is what really led us to get to the funding level that we have gotten this far.
Jay Clouse: 00:53:09
And I’m not sure I have that, that statistic. What? Where did you guys raise from to this point and what have you raised?
Vivek Mehra: 00:53:16
We raised over $2,000,000 thus far. The journey has been where I started out in April of 2014. I self funded it for the first two years of bootstrapping for the first two years and then in 2016 went through two accelerators and spring out of 1871 and generator out of Milwaukee and by the end of the program we had all the KPIS and necessity to prove that really we have a fundamental business model that works. We have the playbooks, we have the team, we have everything else, all the other check boxes checked and all we needed was growth capital, which then led to me going out to raise our first round of seed funding. Went out to ask for $500,000. We had four point 3 million in comments. We closed one point five, a one point three and then another 300. So it led to for that particular round it was one point five and then that gave us growth capital for 2017. In 2017. Our kpis were strong as well. We, you know, our revenue group, 400 acts or user base grew 300 percent and I’m sorry, 300 percent, 400 percent man, not x. and that led us this year and you know, we are in conversation with some institutional investors and while those conversations can take time, I went out to raise another small bridge round of $500,000. That was also always subscribed. So we are about 250 percent over subscribed for that as well. That’s been our journey in the capital raising side of things.
Jay Clouse: 00:54:50
You said something I hadn’t heard directly before, which was you said four point 3 million and commits and closed one and a half million. What happens in the process that commits don’t turn into in the bank?
Vivek Mehra: 00:55:02
Well, there’s two sides to that actually because one is do you really need that much capital and how much capital should you take and meet a need? As I mentioned to you, we were out looking for 500,000 so we did not need more than a certain amount. So taking four point three would have led to a huge dilution, which I don’t think anybody would have agreed to a or rather we didn’t agree to it. So therefore we took the most amount of capital that we possibly could and that made sense and gave us enough runway to kind of get the company to a point where it would go on the right trajectory for the next round of funding or just growth where we wanted it to be. So yes, we had interests, uh, of a four point 3 million where people had committed some of it did not close. You’re also right about that. So some of it was we didn’t need so we took the most of our we needed, but also there were a lot of simultaneous commits happening and some people committed, you know, let’s say a million dollars, but then they wrote a $100,000 check, which is in my experience quite common actually. And it happens for so many different reasons.
Jay Clouse: 00:56:20
It’s interesting and they just like someone comes in at the end. So it’s actually, it’s going to be one 10th of this, right?
Vivek Mehra: 00:56:25
Yeah. It’s happened to me at least quite a bit. And I know a lot of other co founders or founders and ceos that have shared that story with me, so I don’t think it was me or my face.
Jay Clouse: 00:56:37
No, that wasn’t what I was suggesting. I’m sure. I’m sure it’s fairly common. So what are the types of things that keep Vivek up at night? What worries you about this business? What is, what is a challenge you’re chewing on right now?
Vivek Mehra: 00:56:49
Yeah. So you know, it’s all about hitting those kpis and growth numbers and whether so pulling the right levers, hiding at the right time, not overstretching yourself on the expenses. Those are the common themes that we, uh, you know, keeps us awake on a day to day basis. But other than that, you know, we, we are very confident that our team is very optimistic and strong about our growth. Not only in this year but the years to come. So, you know, we know it’s a little bit of a land grab situation. We know there are other companies that make catch on to what makes successful and may try to do the things we’re doing, which no one else has done, so therefore it is little bit of a race. We do have a headstart. We are working with some of the most prominent real estate companies, not only in Chicago but also nationally, so we do have a bit of a lead. We do have some proprietary technology that no one else has done or has, so we feel confident about those, but yeah, it does keep me awake because it’s a little bit of a race.
Jay Clouse: 00:57:51
A couple of kpis you mentioned that I took note of, you mentioned revenue growth. You mentioned user base, user base growth. What are the major KPI’s that I’m missing here that you guys pay attention to?
Vivek Mehra: 00:58:02
Yeah, we. We pay attention to obviously properties we bring on to our platform and parking spaces we bring onto the platform whether it’s to manage or monetize, right? So manage meaning for access plus or guest parking or enforcement. So that’s the managed side of it, this sas side of it, and then the monetization aspect or the marketplace side is basically how many spots are being rented on our platform users to which I already mentioned the always track users and activities because it tells us the potential of the market. You know, we see as I mentioned, we have seen anywhere from 60 to 80,000 users coming to our platform each month at this point. Obviously all of them are not finding a parking solution because of our limited inventory today, but it shows the potential of the market. So we track that. We also track activities. So activities meaning how many users are looking for parking in a particular area, how many people are listing, how many people are doing transactions on the platform so those are the primary ones
Jay Clouse: 00:59:05
super helpful. So it’s five years from now as the year 2023, what is the reality for ParqEx? What’s going on with ParqEx?
Vivek Mehra: 00:59:16
Yeah. So exciting actually because I feel we’re well positioned for that future. And here’s why. You know, we know that there’s a ton of disruption happening in the transportation side, whether it is ride sharing, for example, we work with ride sharing companies today, whether it’s really rides or even Zipcar or some others, uh, there’s Uber’s and lifts that are becoming more and more predominant in the mode of transportation and we work with them as well and there are many different use cases for that. So we know transportation and we also know there’s connected cars and driverless cars. We’re talking to transportation companies as well. And here, you know, on a, on a very lighthearted side. Here’s this, here’s the thing, he’s very close, obviously will not be able to park in a parking lot or a garage with a garage door opener because they don’t have pumps to click on that clicker, right? So they are going to need some technology. They are going to need some technology that will give them access to this parking. We also know there is a trend towards electric vehicles, tesla and others. So. Well they are going to need charging stations. You know, when we had the last transportation change or you know, we’ve had gas cars forever, but that’s why we have so many gas stations, but now with these electric vehicles, you’re going to need charging stations and charging stations everywhere, not just in the heart of the city. So you can put charging stations and parking lots and garages and say, Yep, you got to come to the city every time you need a charge, right? If you’re driving from a neighboring state, you need parking along the way. And what we’re finding is we’re working with these kinds of entities to kind of make that ubiquitous parking available where you could park your car and even these connected and driverless cars could simply park there and charge. So we feel we’re well positioned for that even better position than some of the other traditional models. Same with real estate. You know, as I mentioned earlier, the numbers are crazy. Or if there are eight parking spots for every car today, and let’s say there’s 20 percent of that is not true. But even so there is a lot of parking. We know that well, that number is going to get worse. That ratio is going to get worse because if we’re saying they’re going to be fewer cars, then guess what, there’s going to be more real estate and if there’s more real estate and what are we going to do with it and that’s where we feel we are a better position because we are working with real estate entities today and they see the value we provide, whether it is as simple as, you know, making that parking available to help solve a communities parking problem, reduce congestion or make that parking available for charging for these electric vehicles. Or when Uber and Lyft is going into fleet management, guess what? They’re going to need places to park so that people who want to be Uber and lyft drivers, but they don’t own cars can pick up that car. Well guess what? They’re not driving to the city without a car or taking public transport to pick up that car. So these are all the changes that are happening in the ecosystem that someone needs to think about and ParqEx is thinking about it.
Jay Clouse: 01:02:36
That’s awesome. I love future casting like that. Vivek This has been a lot of fun. Where can listeners learn more about you or ParqEx after the show?
Vivek Mehra: 01:02:46
So our website would be the best place. ParqEx.com there. Also available on facebook, twitter, linkedin.
Jay Clouse: 01:02:53
Great. Thanks for joining us.
Vivek Mehra: 01:02:53
Jay Clouse: 01:02:58
All right eric. So I just spoke to Vivek, what is your feedback for me on an interview? How did I do? Did I. Did I miss anything glaring?
Eric Hornung: 01:03:07
See, this is nice. I get to kind of give you a little bit of feedback here. This is kind of like a deal memo on Jay’s interview style, which is fun.
Jay Clouse: 01:03:15
Help me help you.
Eric Hornung: 01:03:18
I will say that I thought you did a fantastic job interviewing the Vivek. I thought you asked a lot of pertinent questions. You asked a lot of questions that I wasn’t thinking of to ask next because as I was sitting there listening to the episode, I was thinking like an interviewer where I wasn’t just taking in the content. I was thinking, okay, if I was sitting there, what question would I ask next? And I would say about 60 percent of the time your question was as good or better than the question that I think I would have asked. So you did a great job. I think the one area for improvement, and this comes from a Patrick O’shaughnessy line when asked how he does his interviews, it’s the idea that sometimes a guest will say something that they kind of leave hanging out there. And as an interviewer it’s a very tough skill and it might be easier when we have the both of us to kind of catch on to that one little thing that they left out there that might open up a whole Pandora’s box and ask that one question. So I think that that’s something that every interviewer struggles with, especially when you’re doing one on one live real time and you’re used to having me and you relying on each other.
Jay Clouse: 01:04:30
Was there a piece in particular that gives you that feedback? Was there something that he said that you wish I would have dug into?
Eric Hornung: 01:04:36
Um, I believe this gets into the deal memo, so we’ll talk about it. But the idea of costs, I felt like that didn’t really come through at all in the interview. Uh, there’s a lot of talk about revenues and growth, but there was this need for funding. They had to raise a bridge round and I didn’t really understand how their cost structure worked and I think that’s something I came away from the interview still missing,
Jay Clouse: 01:04:56
man. I’ll tell you. It was, I don’t prefer doing interviews alone. It was hard. I was juggling trying to ask the right questions while also trying to take notes and doing it in real time because you and I have synced up really well I feel after doing, you know, a dozen of these and it’s really nice to be able to lean on you to come in and ask them questions so I can collect my thoughts and make sure I’m adding the questions. So
Eric Hornung: 01:05:18
likewise, because if I had to do one of these are when I have to do one of these alone, I’m going to feel the exact same way I already know it.
Jay Clouse: 01:05:27
Cool. All right, well let’s get into our third segment here. Can you share with our listeners a reminder of what we do here in the third part of our show?
Eric Hornung: 01:05:35
So the third part of our show is a hypothetical deal memo. A deal memo is a way for Jay and I if we were angel investors with Lps or venture capitalists with Lps to do two things, one, crystallize our own thinking on whether or not we’re going to put money into this opportunity and to explain to our investors why we’re going to put money into this opportunity. What is the upside here? What’s the potential downside? What are some things that you know, maybe we have questions about Jay, am I missing anything.
Jay Clouse: 01:06:06
Nope, that’s right on. And what we’re ultimately trying to come to here is in this hypothetical world, if we were to make an investment, we’re doing that because we have a positive indication on these four questions that we’re speaking to implicitly or explicitly. And those four questions are, one, how committed is this founder to what are the founders chances of success in this business and in life. Three, what does winning look like in terms of revenue and my return and for why has this founder chosen this business? So Eric, I’m going to turn it back to you and give you free reign to start with. What really stood out to you as a first time listener to Vivek and what, what stood out to you about the ParqEx opportunity or Vivek as a founder?
Eric Hornung: 01:06:49
Yeah. So let’s talk about Vegas of founder. He has some deep experience and some really unique experience across industries. He’s obviously very technical. I believe that he said he came in around the.com boom into the industry. So that’s almost 20 years of experience working across, I think it was something like healthcare and Navistar, which is a trucking company. He said manufacturing, uh, a wide range of opportunities that let me know that he has the technical chops to get done whatever needs to be done, which is really important when we get to his business model. What, what did you think about Vivek?
Jay Clouse: 01:07:26
I agree with you in terms of technical chops and pedigree. He’s been a part of two exits in the past. The conflict or the question is having technical shops doesn’t necessarily make you a leader or a CEO now saying the vegas not but saying for him to grow, Park acts and get this to where it needs to go. He needs to get off of the keys. Probably. That’s. That’s generally the path. It’s great to have a technical founder because that changes the way you think about building a business in a really positive way I think, but if you don’t leave behind, I mean, imagine if Mark Zuckerberg was still coding at facebook. You gotTa, you gotta leave some of that behind so you can really build the team, execute the vision, go out and fundraise. There’s just no time for that for a scale. You can really find. Pull someone into be serviceable and I’m not. This isn’t feedback directly on the Vivek. I don’t think that he’s not doing that. It’s just something to think about when it comes to a technical founder
Eric Hornung: 01:08:28
of course, and I think he even indirectly said that when he said that their business model and what their next steps are are all on the business development and marketing and sales side. He understand that that’s a, that’s a need in the company. And when you asked them about future casting, the team’s growth, well what did he say? It’s all going to be marketing sales and business development, so we understand that that’s the need in the company. That’s the need of the business model. Yeah.
Jay Clouse: 01:08:58
He said he wanted to double the team size in the next four years if not sooner, and I think that’s actually a little conservative to me, and he said this, this is, this is an opportunity that’s a race to market and a race to capture market. They are in nine markets right now, three of which are established. Six, which were organic growth markets as he put it. This is something that you’ve got a land and expand and grab quickly. I wanted to hear some more urgency and he spoke about when he says this is the thing that keeps them up at night, but I wanted to hear that in the, in the growth plan and say we’re going to hit this many cities this year. You know, we talked to Tilr, episode one. They just opened up 12 new cities a couple months ago like announcement Tilrs and 12 new cities. That’s the type of aggression that I want to see. What are your thoughts?
Eric Hornung: 01:09:49
So I’m a little bit torn on that because. Well let’s get into the business model and then
Jay Clouse: 01:09:54
this is the cost you were talking about.
Eric Hornung: 01:09:56
Well it says a little bit to do with costs, but also just a little bit to do with how their business model is maybe different from a Tilr or lawn guru, which I believe are the two business models that are closest to ParqEx in terms of what we’ve talked to on this podcast. So when we think about the traditional B to c play in silicon valley, you are creating a moat by spending a lot of capital to get a lot of users. You are moat becomes the network effect. That is what you’re banking on. I think what we’ve seen over the Tilr lawn guru and now ParqEx episodes are that network effect maybe isn’t the best moat or isn’t the moat that they are choosing to pursue. Instead, it’s finding businesses and creating outsized value for those businesses.
Jay Clouse: 01:10:52
You’re right, and he spoke to this, right? He said a lot of the companies that come into the parking space and fail are because they’re going the pure airbnb of parking.
Eric Hornung: 01:11:00
Correct. And I think that that’s a really unique approach to dig a moat and maybe it means that you don’t have to do six new cities all at once, right? If you can link up with a real estate company that has a presence in Chicago but also has a presence in Atlanta and Denver and Seattle, the one you want to expand to those markets, you already have a contact there. You already have a relationship built there and you’re going to have your kind of base layer of supply in whatever city you go to, so I don’t know that you need to be as concerned about rapidly growing and of course it is a race, right? It is a race, but I think that the business model lends itself to building depth of relationships as opposed to breadth of demand because there’s already demand in parking.
Jay Clouse: 01:11:53
Yeah. I will say this, the scale of this opportunity and the scale of the challenge to do this right and effectively is it’s big. You know, we, we came into this and like I said in the upfront, I’ve heard a version of this pitch a ton of times at startup weekends and I’ve seen the AIRBNB for parking fail and he’s saying, I know that fails and that’s not what I’m doing. We’re a real estate technology solving a parking problem, but the pure scale of saying, and we’re going to do it this way, by working through developers and through real estate communities, I love that approach. It’s so hard to build the geographical density of parking when the people looking for that spot or looking at a two block radius and they’re also consumers who are expecting to download an APP, have a wonderful first experience from the interface to the actual experience of utilizing the product or when I’m getting rid of it and never trying it again. There’s a lot of points of failure in this system.
Eric Hornung: 01:12:51
There are a lot of points of failure, but there is also kind of one key entry point, right? You, you establish this relationship. Let’s just look at one specific example, right? You established this relationship with a real estate investment trust. They have a building in the west loop in Chicago. That west loop already brings with it a captive audience of guests for access management. Once that captive audience comes in, because the only way to park in that building is by using this APP, right? So it’s essentially like a back and outsourcing of the parking, what did he say an amenity? buildings can market. Then those people now have the APP on their phone, so that takes away the barrier to entry of downloading something new because they’re captive in that building and when a guest comes to that building and needs to download the APP to use it, they do that and now that you say that I guess goes somewhere else and they say, okay, well I have this extra parking spot that I want to lease out. Now it’s not, you’re not going out and trying to convince people to use this. They’ve used it, it worked, and if that first experience works really, really, really well, the chances that they use it again I’m guessing are high. So that would be a question maybe for Vivek in the future is what’s kind of your recurrence rate? Are People using this one and done or are those 60 to 80,000 people a month doing more than that?
Jay Clouse: 01:14:15
That is a good question. I do like, I mean from an opportunity size, the total addressable market, it’s hard to put a figure on that for a market that’s not effectively being monetized right now, so it’s hard to get data on that, but if he’s spit balling in Chicago alone, the parking services market is $4,000,000,000 and he’s estimating something like $35,000,000,000 nationally check the box. Big enough market, right? They have multiple revenue streams here. I’m. I’m convinced that if you win this market, big return for me it’s getting. There is a lot of steps.
Eric Hornung: 01:14:51
I agree. I think that the recent probably 10 year push in real estate towards everyone kind of living in apartments in new apartment complexes being built. I mean I know if you look down your street in Columbus, Ohio, how many new apartment complexes are going up just in the short north?
Jay Clouse: 01:15:07
Yeah, there’s like three massive complexes in the two block radius from my apartment right now.
Eric Hornung: 01:15:13
Right. So the idea of building going out into urban sprawl hasn’t really been the most recent 10 year trend. There’s a lot more parking downtown, there’s a lot more parking in buildings, there’s a lot more parking management that’s becoming a problem for real estate companies or has become a problem with real estate company, so I think it’s definitely solving a need in a very unique way. I think that they picked a very smart area to kind of focus
Jay Clouse: 01:15:41
the number that he threw out. That blows my mind. You said today in Chicago there are 36,000 street parking spaces like metered spots, 450,000 commercial parking spaces, parking lots and garages in 8 million private parking spots. That’s crazy. And then he went and detailed neighborhoods and the problems with neighborhoods and the population growth there and they’re parking solutions, their need for parking solutions, which is not being served. You know, every, all the things. I went into this interview, dubious about. I came out saying I had no idea what I was thinking and he spoke to it very eloquently and knowledgeably.
Eric Hornung: 01:16:15
So going in, I think I was definitely a little skeptical as well. I mean, I go into all the interviews, a little skeptical, but having heard this pitch so many times, oh, parking is at peak, 60 percent utilized. I’ve heard that number before on off p gets 30 percent utilized. It’s like, okay, that’s fine. So what you want to do is fill in that utilization gap. This doesn’t seem like that kind of play. This is a different type of parking play. I mean it’s more of A. I mean they are taking a sas fee, but it’s more of a SAS model, which gets to the first thing I said here, which is Vivek’s technical competency matters a lot because when in a sas model, eventually you’re going to bring on a customer that is huge and they aren’t going to want the off the rack model. There’s going to be some level of customization, so having a technical founder there makes that much more manageable. When you do have someone like a, like one of the largest reads in the country who says, we want to establish this across every single property that we have that’s over 200 units across 25 states. Then having a technical founder I think is a massive advantage.
Jay Clouse: 01:17:26
Yeah. Would you. Would you classify this as a B to B to c company?
Eric Hornung: 01:17:30
I feel like it doesn’t fall in the traditional B to b to c. I think it’s close. I feel like there’s two kind of competing business models here and not know. Not competing. Maybe they’re more chronological, right? It’s B to b to c to start and then it becomes a peer to peer marketplace over time is the way I see it is when you think about those numbers, that 500,000 commercial lots in Chicago and 8 million private. The first step is capturing as much of those 500,000 as you can because it’s a harder market to get into and then utilizing your access to those 500,000 to get to a portion of the 8 million down the road. That’s how I understand the business model as playing out and I think it’s brilliant.
Jay Clouse: 01:18:13
All right, well we’ve answered most of our questions here. The thing we haven’t directly spoken to is why did Vivek choose this business? How committed is he to parking and you know, he, he, he said he’s passionate about parking, which I think is a founder thing to say about anything. To me, the read that I got was he’s passionate about solving problems with technology and this was a hairy problem that he could solve with technology as putting your investor hat on and to totally put you on the spot. Is that enough for you to say somebody is passionate about an idea to say they’re passionate about how they’re solving it and less about the problem itself and I’m kind of projecting here. This is a little bit unfair of me because I’m. I’m making assumptions.
Eric Hornung: 01:18:52
Yeah. I think that. I mean you can only go off of the interview we just had, but I would say that my biggest concern on this opportunity, there’s two concerns. The first one is the idea that it’s in the parking space and the capital raise is going to be tough because everyone comes into this. Well, I want to understand costs a little bit more too, but every investor is gonna come into this saying, oh, another one, right?
Jay Clouse: 01:19:15
Unless I think the thing is though, we get that because we hear parking startup or parking idea and we make the assumption that it’s an airbnb for parking model, whereas if the messaging was more clear from the outset somehow, and maybe it’s just my own preconceived notions that are clouding this and actually his messaging is very, very good. If it was, this is a real estate technology that solves a parking problem, I think that becomes more of a conversation starter and I think it gets more quickly to the opportunity at hand here.
Eric Hornung: 01:19:46
I 100 percent agree, but as it stands right now, you and I both did our independent research upfront and I believe that our takeaway was that this is a parking company, so maybe it’s a branding and messaging issue that you know, the, the typical Wazniak and jobs and he needs a. He needs a job to sell the right to the right people. I’m not sure if that’s the case. The second thing that would be the biggest concern that would be a big concern for me is the cerial-ness of his involvements across space and time. It’s a very big benefit for launching a company. He has a wide range of experience, depth and breadth, but there doesn’t seem to be a storyline for I found this thing and I really love it. It’s I found a puzzle that I wanted to solve with technology and I solve that puzzle and then I moved on to the next puzzle.
Jay Clouse: 01:20:48
But the good thing about that is the cerial-ness is not. I started in this problem. I got excited by another problem. I started there. It’s always been I had this opportunity and we saw it through to completion and then I went to this next opportunity and I saw it through to completion and now I’m here. So I. I totally agree with you. I think the positive of that is he’s not context switching just out of, you know, Shiny Object Syndrome
Eric Hornung: 01:21:12
of course, of course, but I think this might be one of the larger problems that he’s going to be solving and not like when he was working for the Baxter executives where he had to create this thing and then they kind of took it over and he had his exit or whatever. Here, it’s okay. Your creating it. It’s a huge problem. I mean you don’t tackle a $35,000,000,000 industry in three years, you know, this is a 10 year plus problem and if you do well and exit early as an investor, that’s something you want to think about. Right? Is, is he, is there going to be a potential that, okay, I solved the problem and now it’s just a scaling issue, so let’s just exit for 100 million dollars and pass it to someone else. Or is this something that, okay, we got to $100,000,000 and now it’s refining. It’s not building, it’s not solving anything new. You have the model down. It’s just we want to iterate on that model until it’s perfect and it’s worth $10,000,000,000. That’s the question that I think I have the most gray area about,
Jay Clouse: 01:22:18
so I think you kind of just spoke to this, but let’s say looking back six to 12 months from now, what are you looking for from ParqEx? What are things that you’re watching for and we’ll give you a positive indication. Twelve months down the line.
Eric Hornung: 01:22:31
I want to understand their real estate base, the real estate companies that they’re working with. If I had unlimited access to any kind of information about the company, I would love to talk to maybe their tier two customers, so not they’re big ones that they’re dedicating a ton of resources too, but the tier two, tier three customers to see what the experience is like because like I said earlier, the business model is predicated on that first experience going really well for both both the real estate customers and the users. That to me, I think is going to tell me the most because the model’s expandable once you get someone in who is really focused on expansion, but that first product has to be so good.
Jay Clouse: 01:23:15
Yeah, I agree with that. I’m interested in the user experience for sure. I’m also interested in learning more about and seeing what they’ve learned about how quickly they can move into and get meaningful geographical density for parking spaces into new markets and how that playbook is evolving and how quickly they can rinse and repeat and what that trajectory looks like for them. I think they’re gonna learn a lot about that in the next and the next year, 18 months. I’m also really interested in where the trend is going, this is Something you touched on with electric and autonomous vehicles and what parking looks like in a future scenario there. What he said in my brief experience, the smart city team here is aligned in that these electric vehicle companies will need places to store the fleets. They’ll need places to charge the fleets and as an apartment complex you are going to start marketing with the amenity of charging stations that are available to the tenants when they need them. If you’re in a parking complex, an apartment complex with for charging stations and 200 tenants, it’s not useful. Right? So they’re going to have to adapt and I don’t think they know exactly how they’re going to adapt yet because this is the problem we’re trying to solve actively here in Columbus and the more ParqEx can be a part of that conversation in a meaningful contributor to that I think bodes well for them in the future. Or if they can’t be then I think it bodes poorly. So what they learned about that and how they can help, no pun intended drive that conversation would be a useful and interesting to me to look back on here and in a year.
Eric Hornung: 01:24:49
Yeah. Well I’m really excited to follow along with ParqEx now that you’ve had this conversation and see how they continue to grow, continue to differentiate themselves and maybe they’ll do some rebranding.
Jay Clouse: 01:25:01
Yep. Alright guys, thanks for listening. We’d love to hear your thoughts. This is a big complex one. Want to hear what we missed, what I missed as an interviewer tweeted us @upsidefm or shoot us an email Hello@upside.FM, something Eric and I are very conscious of right now is we’re looking for more female founders. We would love to speak to more female founders who are pre series a. If you or someone you know fits that category, please shoot us a note on twitter or via email. Love to hear about it, and if you liked this episode, please leave a review or rating on itunes. It helps a lot. Eric, I’ll talk to you next time. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest, so shoot us an email at hello@upside.FM, or find us on twitter @upsideFM will be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on twitter and let us know and if you love our show, please leave us a review on itunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there were a couple things we wanted to share with you at the end of the podcast, and so here we go. Eric Hornung and Jay Clouse are the founding partners of the episode podcast. At the time of this recording, we do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinions of Duff and Phelps Llc and its affiliates on your collective llc and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening and we’ll talk to you next week.
ParqEx is a platform that helps to “unlock” the value of privately owned parking spots, which are often underutilized and/or difficult to manage. The ParqEx marketplace helps owners to efficiently rent their parking to drivers on an hourly, daily, weekly or monthly basis. ParqEx is an alum of 1871 Chicago and the Gener8tor Accelerator, based in Chicago, IL.
Vivek Mehra is the founder and CEO of ParqEx.
Learn more about ParqEx: https://www.parqex.com/