{"id":6556,"date":"2018-02-01T17:46:55","date_gmt":"2018-02-01T22:46:55","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/spothero-kicks-parking-frustrations-to-the-curb\/"},"modified":"2018-02-01T17:52:45","modified_gmt":"2018-02-01T22:52:45","slug":"spothero-kicks-parking-frustrations-to-the-curb","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/spothero-kicks-parking-frustrations-to-the-curb\/","title":{"rendered":"SpotHero Kicks Parking Frustrations to the Curb"},"content":{"rendered":"

 <\/p>\n

Finding parking in a city has historically been an infuriating experience.\u00a0 Prices can vary widely from one parking garage to the next.\u00a0 And to make matters worse, you often have no visibility to a garage\u2019s price until you\u2019ve driven inside and have no feasible way to backtrack.\u00a0 Thus, you park and leave the garage feeling that you got ripped off.<\/p>\n

SpotHero has emerged as a winner of the digital age by creating a platform that eliminates this information asymmetry and benefits both sides of the platform: parkers and parking garages.\u00a0 First and foremost, parkers benefit from an equalized playing field of information.\u00a0 A parker can input their desired location and time period into the SpotHero app which will yield a map of parking facilities and their prices.\u00a0 The parker can compare the facilities and reserve a spot through the app.\u00a0 On top of the price transparency benefit, the rates offered in the app are often discounted from the rates that non-app users would receive.\u00a0 This discount is the direct result of the benefit that SpotHero is providing to the parking garages.\u00a0 A parking garage\u2019s costs are almost entirely fixed.\u00a0 Thus, wasted utilization of parking spaces can be a significant drain on profits.\u00a0 Being part of the SpotHero network drives incremental parkers and their dollars into these garages, and thus the garages are willing to give SpotHero ~15% of the parking fees.\u00a0 What\u2019s more, the parking garages can continue to charge higher prices to the less savvy parkers who come to their garage without using the app.\u00a0 That two-tiered pricing option minimizes the risk that garages take on by offering discounts to SpotHero users.\u00a0 Thus, all parties end up better off: the garage has increased its utilization and revenue, the parker feels better knowing that they\u2019ve made an informed purchase, and SpotHero has pocketed ~15% of the transaction.\u00a0 Knowing that ease of use is also critical to customer adoption, SpotHero has encouraged garages to install scanners so that parkers are able to seamlessly enter and exit the facility.<\/p>\n

\"\"<\/a><\/p>\n

Since SpotHero is a private company, it\u2019s a tough to get a fully comprehensive sense of their success to date.\u00a0 However, the information that we do have is positive.\u00a0 As of July 2017, SpotHero had integrated with over 6,000 parking operators in 50 cities and saw revenue double from 2015 to 2016.\u00a0 They also raised $30 million of funding in 2017, bringing their total to $57.5 million.\u00a0 Counterintuitively, SpotHero seems to have succeeded because they didn\u2019t attempt to fully \u201cuberize\u201d parking to the same extent as some of their competitors.\u00a0 For example, in 2016 competitor Zirx admitted defeat in their attempt to create an on-demand valet parking platform because it proved too difficult to manage to the appropriate number of valet contractors to keep both wait times and costs sufficiently low. \u00a0I would argue that SpotHero\u2019s success is in large part due to its parking solution being far less ambitious.\u00a0 SpotHero\u2019s service requires relatively minor behavior changes from either side of their platform and doesn\u2019t rely on an ability to predict user demand.\u00a0 Sometimes the simpler solution is the better one.<\/p>\n

SpotHero will surely look to follow-up on its initial success with additional ways to generate revenue.\u00a0 In 2017 they acquired Parking Panda which had become a leader in event-related parking.\u00a0 They\u2019ve also partnered with Wageworks to devise a program that gives commuters more flexibility to use pre-tax dollars to pay for parking at work.\u00a0 Finally, with an eye towards the future SpotHero is thinking about how autonomous cars might one day interact directly with the parking facilities to make reservations.\u00a0 The biggest challenge there will be getting the parking garages to configure their data in such a way that they can easily interact with those cars.\u00a0 But as long as parking garages have excess capacity, they will have incentive to work with SpotHero.\u00a0 And that\u2019s good news for anyone who has ever walked out of parking garage feeling bamboozled.<\/p>\n

 <\/p>\n

Sources:<\/p>\n

http:\/\/www.chicagobusiness.com\/article\/20170718\/BLOGS11\/170719870\/spothero-tops-off-with-another-30-million<\/a><\/p>\n

https:\/\/blog.spothero.com\/sell-parking-spothero\/<\/a><\/p>\n

https:\/\/www.forbes.com\/sites\/briansolomon\/2016\/04\/14\/a-tale-of-two-on-demand-parking-apps\/#58fc03960ea9<\/a><\/p>\n

https:\/\/techcrunch.com\/2017\/04\/13\/spothero-acquires-parking-panda\/<\/a><\/p>\n

https:\/\/spothero.com\/wageworks\/<\/a><\/p>\n

https:\/\/techcrunch.com\/2016\/09\/08\/spothero-is-ready-for-the-future-of-autonomous-parking\/<\/a><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

SpotHero's platform has alleviated information asymmetry issues for parkers while also helping garages fill their unused capacity.<\/p>\n","protected":false},"author":2340,"featured_media":6557,"comment_status":"open","ping_status":"closed","template":"","categories":[611],"class_list":["post-6556","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-spothero","hck-taxonomy-organization-spothero","hck-taxonomy-industry-auto","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/digital-winners-losers-2018\/","yoast_head":"\nSpotHero Kicks Parking Frustrations to the Curb - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/spothero-kicks-parking-frustrations-to-the-curb\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SpotHero Kicks Parking Frustrations to the Curb - 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