Why AirGarage Pivoted To Being A Managed Marketplace

Of course, Air Garage looks much more different today. And as far as the direction that you took being full stack and more managed, so what were some of those initial challenges maybe as you started off being an Airbnb for parking and insights that led to then pivoting?

Yeah. So we started out with the Airbnb for parking, the driveway rental platform that was Air Garage 1.0, right? And so we started that, like I said, first version was December 2016, built out the real platform in 2017. And I spent all of summer 2017 going door to door, getting driveway owners signed up. And we actually did get a lot of people signed up. And we then found that students were wanting the service so badly that before we, we basically got our lesson in launch before you think you should, because in July of 2017, we were still working on the site. It was very buggy. And some student named Martin just found our website somehow. I have no idea how and rented a space through our website. And it was funny because Scott was at the time interning at CERN in Switzerland. So it's like, middle of the night there and I was on a camping trip with my parents. And so I'm in the middle of the forest calling Scott frantically being like, hey, you know, somebody tried to book a spot on our website and it broke all these different things. But then that was what enabled us to like fix all of the bugs that that person discovered because they booked that first spot. And so we wound up selling out all of the spots in summer of 2017 going into the school year. And then we quickly realized this is a very supply constrained marketplace and the marketplace is driven by the supply. There's so much demand, we cannot fulfill it. So how do we get more supply? And I think that was our first lesson. And whenever you're running a marketplace, you always have to identify which side of the marketplace is the constraining factor and focus almost all of your energy on driving that part of the marketplace. And even still to this day, the vast majority of our effort at Air Garage, even though the business is very different, is focused on how do we get more supply because the supply drives the demand, not the other way around. And I think that that's where actually a lot of people that have tried to start parking businesses in the past have gone wrong as they've focused on the wrong side of that marketplace. And really, you know, the lesson that sort of led us to where we are today was that, you know, when you're running a marketplace, you have the 2 types of marketplaces, right? You have the Uber marketplace where you have a very high frequency transaction, but it's a low dollar value. And you have the Airbnb transaction where it's high value of dollars spent, but only, you know, infrequent use. And we were sort of stuck in this death trap middle ground where it was not a very frequent transaction because we were selling only monthly parking at the time. And it was relatively low dollar value because parking near campus wasn't that expensive. And so it was like, you can't really make a business out of that. And so we started figuring out, hey, we're supply constrained. We can't possibly get enough spaces and there's not a lot of value to be squeezed out here. So we need to figure out like, where is the supply that we can actually derive value from? And that was probably in spring of 2018 where we started working with these churches near the campus and they actually had, you know, 50 spaces. And so it's like, okay, if we can onboard a supplier onto the marketplace that has 50 spaces, instead of just one space in your driveway, obviously those economics work a lot better for sort of onboarding supply and things like that. And then we evolved that from just doing monthly parking with a few churches to actually running the full parking lot and the full transient sort of day-to-day, you know, hourly parking for this other church. And really, I think the, you know, the interesting thing there was just how much volume we started seeing going through the platform as soon as we onboarded those churches. And in onboarding those was kind of our first lesson in, hey, we have to be more than just a listing service in order to provide value in this specific marketplace. And I think that's where our sort of belief around the way marketplaces has evolved from the last 15 years or so. It's like the original marketplaces that came out in the world were all really these like 2005 to 2010 era marketplaces. And they all, if you think about them, were really just like listing services or arbitrage services. So if you think about something, you know, like an Expedia where originally really their business model was just that hotels are not online and you need to book a hotel. And we're really good at being the intermediary between those 2 things and running a lot of Google ads. That was a marketplace that you could build in 2005 to 2010 and make a lot of money because there was a lot of arbitrage there. But then as more and more businesses have come online and had those basic presences exist, you have to provide a lot more value deeper in the stack of the marketplace in order to, you know, have something that you are building into a sustainable business. And so That's where in summer of 2018, we basically shifted our whole focus to this sort of full-stack approach where we manage entirely the supply of the marketplace. So we partner with a property owner, a landlord. We basically take over their property as if we were a property management company. We do everything involved in running it day to day. So we do the payment collection, the advertising, the enforcement, picking up trash, cleaning snow, all these things. And then we are able to open that supply onto the marketplace for consumers. as a result of that. But in order to get that supply and get 100% of it, we have to do all of that management. And really what we are at the end of the day is like a parking management company, but we think about it as much more of a marketplace for consumers in the long term where consumers sign up for Air Garage, they have their license plate and credit card on file, they have this seamless experience parking in all of our facilities, things like that. And the sort of corollary to that would be, I mentioned Expedia before, there's been other apps that have tried to be this sort of consumer marketplace for parking. But they really haven't changed the parking industry fundamentally because they're just this layer that sits on top of all this old school machinery that works in the background. And so there's, you know, terrible integrations which lead to bad consumer experiences and really only like 5 or so percent of total parking volume goes through those apps at this point. And so our philosophy is just if you want to actually change the industry, you need to be able to capture 100% of that parking volume. So you have to be able to do all of this sort of full stack management that goes into managing the supply of the marketplace.