SpotHero: Mark Lawrence

After racking up thousands of dollars in fines, Chicago roommates Mark Lawrence and Jeremy Smith figured there had to be an easier way to park. So in 2011, they launched SpotHero as a peer-to-peer service, where people who lived near Wrigley Field might rent out their driveway on a game night. But that strategy wasn’t scalable, so SpotHero soon partnered with garages to sell excess inventory. Over the years, the startup faced intense pressure from investors to expand quickly and copy whatever the competition was doing. But Mark insisted on slow, strategic growth, and today, SpotHero is one of the largest digital parking platforms in North America, servicing about 300 cities. This episode was researched and produced by Katherine Sypher with music by Ramtin Arablouei. It was edited by Neva Grant. Our engineers were Kwesi Lee and Patrick Murray. You can follow HIBT on X https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected]. Sign up for Guy’s free newsletter at guyraz.com http://guyraz.com/ See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

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• 1:32Guy Raz?

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• 2:16Guy Raz?

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• 3:00Guy Raz?

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• 3:45Guy Raz?

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• 4:27Guy Raz?

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• 5:14Guy Raz?

  The problem, I think, in San Francisco is you've got some really hot competitors, right?

• 5:19Speaker 01

  Yeah. I mean, this was quite possibly one of the most stressful periods that we had experienced to date. Not only had we had only raised $7 million, but these companies had raised 40, 50, 60, $77 million.

• 5:36Guy Raz?

  Wow.

• 5:37Speaker 01

  I remember a board meeting where I was told, "Mark, we've been telling you're going slow. You're not expanding fast enough. And now there's this new model, and it looks like you guys are dead." You're being disrupted before you have the chance to disrupt.

• 5:58Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:09Guy Raz?

  I'm Guy Raz, and on the show today, how thousands of dollars in parking tickets drove Mark Lawrence to launch SpotHero, a service that, since launch, has parked 50 million cars across North America.

• 6:28Guy Raz?

  More often than not, it's the seemingly boring businesses that succeed. These are businesses that don't dazzle us with fancy technology or wildly disrupt an established industry. They just do a better job of tackling age-old, run-of-the-mill problems. Some of these stories we've even told on the show. For example, Pods. That company didn't invent storage, it just did it better. Or 1-800-GOT-JUNK. That business simply made it more convenient to haul your stuff away. It's more or less the same playbook Mark Lawrence used, though it took him quite some time to get there. Back in 2011, Mark got into what seems like a pretty boring industry: parking.

• 7:12Guy Raz?

  He named his company SpotHero. Initially, he and his co-founder wanted to create a sort of Airbnb for parking, a peer-to-peer service where people would rent out their driveways in exchange for a fee. Mark launched the idea in Chicago, around Wrigley Field, where parking is notoriously challenging. But as many of these stories go, that model couldn't scale. It turns out, many people who live around Wrigley Field were perfectly happy to stand in front of their driveways on game day with the sign that said, "Parking: 50 bucks." So, like all good startup founders, Mark Lawrence pivoted. He decided to try and partner with parking lot owners to sell their excess inventory.

• 7:55Guy Raz?

  Mark would build the SpotHero app and then get a cut from every parking spot sold. The problem? Well, a lot of other entrepreneurs had a similar idea. And in quick succession, similar businesses started to spring up all over the US. Many of them were far better funded and growing at breakneck speed. And the pressure on Mark to try and copy them was mounting. But instead, he took a slow and steady approach. First, Chicago, then DC, then Boston, and so on. Mark resisted calls to try and get into price wars with his rivals, in large part because he believed that their business models were not sustainable.

• 8:38Guy Raz?

  And ultimately, as you will hear, he was proved correct. Today, SpotHero is one of the largest digital parking platforms in North America, with service in about 300 cities. Before he set out to start his own business, Mark took a job at Bank of America in Chicago right out of college. This was right before the financial crisis of 2008. And just as luck would have it, Mark was assigned to work on mortgage-backed securities, a massive bubble that was about to pop.

• 9:10Speaker 01

  Yeah, the movie The Big Short, for me, is a documentary.

• 9:14Guy Raz?

  Yeah.

• 9:15Speaker 01

  It's funny and it has ridiculous things, but that's exactly how it was. Like, I remember that some of the countrywide financial guys that came, and they were making jokes about writing mortgages to dogs. And so, I mean, like, it was not a very pleasant kind of place. There were pleasant people, you know, and I did make some friends and I worked with some great folks. But, you know, a lot of the, a lot of the talk was like, "Hey, did you hear we're not going to get bonuses this year? Isn't that ridiculous?" And I was like, "What would the bonuses be for?"

• 9:46Guy Raz?

  So you're working there. And, and I guess, I mean, and I'm basing this off of some, some research we did because we, we unearthed a blog that you used to write. And lifestyle ignition, I don't know if this is if this is something you're embarrassed about or not, it's kind of interesting. And and you had a blog, which a lot of people didn't do, and you would you kind of like on this blog chronicled your frustration with working for a big company.

• 10:12Speaker 01

  It's so funny, I haven't thought about that in a really long time. So yes, a bit embarrassing, but yeah, I did chronicle, you know, frustrations with working at a big company. One that I remember was called fake work because it felt like a lot of the work there was just completely fake. And I remember like I had a doctor's appointment and I was told, well, hey, if you're taking a long lunch, which is like an hour and a half for a doctor's appointment, like you you got to be the last one to leave the office. And and I was like, OK, well, and there was really nothing to work on then.

• 10:46Guy Raz?

  Yep.

• 10:46Speaker 01

  And I remember sitting there and there was another guy and he was supposed to be the last to leave because he took a long lunch for some appointment. And so we're both just like waiting for each other to leave and it's 11 o'clock at night and we've like been working on nothing and we're the only ones there. We're finally like, let's just leave right now. So, you know, when your market is down 99.99%, there was periods of time when, you know, they didn't, they ultimately laid off what like 50,000 people between all the various, you know, amalgamations of banks for Bank of America, but there wasn't any work and the work, it was just fake work.

• 11:21Guy Raz?

  You eventually were one of those laid off in 2010.

• 11:24Speaker 01

  Yeah.

• 11:24Guy Raz?

  And was it kind of a relief in a sense?

• 11:27Speaker 01

  You know, it was a relief because I started and it was very stressful because I was a week away from getting laid off the entire time I was there. There was never a moment of like, this is going to be the career. It was more like, OK, we started and it was like crisis, right? I never spent any money. I saved money because I'm like, OK, I'm going to get laid off and I'm probably going to have a very hard time finding a job. And so it was a relief because I'm like, OK, now it has some finality.

• 12:02Speaker 01

  But it also was nice because I literally didn't spend anything. I was like afraid. And so I was able to save money. And what's nice is I was able to use $6,000 of that to start SpotHero.

• 12:15Guy Raz?

  Right, which we'll get to in a moment, but but but basically you were. You're laid off. You you saved a bunch of money. How much money, by the way, did you save?

• 12:24Speaker 01

  Um, I want to say about that time it was like $50,000.

• 12:29Guy Raz?

  That's great. So you had a lot of you had a lot of money saved up and you were just living really lean.

• 12:33Speaker 01

  I mean, we're living so lean. I remember there was a friend of mine, Brandon James, who, you know, went to high school with and we ended up, you know, reconnecting at Bank of America. We we read the book by Ralph Potts called Vagabonding and it was like a contest of like how little we could spend because we're like, we're getting laid off. And him and I, we were roommates and we would eat like just rice and beans. And I remember when I all I bought was like a chicken breast to eat with the rice and beans that I cooked myself. And and I bought a beard trimmer. Okay, like off Amazon for like $30. And he was so disappointed. He's like, I can't believe he's like, you don't need the beard trimmer and you don't need the chicken. I was like,

• 13:13Speaker 01

  I know, but I've been eating rice and beans for months. And so we kind of had that like accountability between us.

• 13:20Guy Raz?

  This book, Vagabonding, is it's called An Uncommon Guide to the Art of Long-Term World Travel. And I guess the idea was you were inspired by this book to save as much as you could with the idea that once you're whatever happened, if you're fired or you lost your job, you just travel. And and I and you write this on your blog blog post Lifestyle Ignition back in 2008, you write, I am gonna go on a bike trip across Africa.

• 13:43Speaker 01

  So that that was the plan. I mean, I researched down to the weight of every single item that I would bring on that bicycle. Because like every, you know, 10 grams, like it all adds up, right? Especially if you're going uphill.

• 13:57Guy Raz?

  Where were you gonna start, by the way? In the south or in the north?

• 14:00Speaker 01

  Um, I was gonna start in Alexandria, Egypt, and then go to Cape Town. But the person I was supposed to go with, Brandon, he biked, he started in Europe and then he biked all across Asia. And we were supposed to meet up in Africa.

• 14:12Guy Raz?

  So you you're laid off. The plan is Let me do a bike trip across Africa and you start to research this. But meantime, you had a friend, a guy named Jeremy Smith, who I guess was, had been a roommate.

• 14:25Speaker 01

  Yeah, so here's what's interesting is the reason Jeremy Smith became my roommate is because Brandon,

• 14:32Guy Raz?

  Goes on the bike trip.

• 14:34Speaker 01

  He went on the bike trip and Brandon, you know, was like, hey, I need someone to take over the lease. So I didn't even know Jeremy. And so Brandon was like, hey, you guys have to live together so I can bike longer.

• 14:47Guy Raz?

  So Jeremy moves in and who is Jeremy? What does he do for, what was he doing for a living at the time?

• 14:52Speaker 01

  So he was at Motorola.

• 14:54Guy Raz?

  Okay.

• 14:54Speaker 01

  And he was in, he was in the finance department at Motorola. And in the beginning, him and I kind of, I don't know the right, like we would butt heads because I was so done with the corporate world.

• 15:08Guy Raz?

  Yeah.

• 15:08Speaker 01

  And Bank of America. And he was like in love, like with Motorola. He's like, corporate America is amazing and Motorola is the best and, you know, going on. And I remember, you know, saying to him, I was like, I'm sorry, I have to say this, but I forgot Motorola existed until you reminded me. But yeah, we definitely butted heads in the beginning.

• 15:30Guy Raz?

  Yeah. So another thing I think that was happening around this time, which would actually lead you to starting SpotHero, is that both you and Jeremy, I guess, were, were having a lot of issues with parking. Like you were getting hit with a ton of tickets. Do you remember how much you accumulated in parking fines, like over the years while you were working in Chicago?

• 15:52Speaker 01

  Yeah, I mean, it was, it was about $5,000 worth of parking tickets. It was pretty embarrassing.

• 15:57Guy Raz?

  Had you, and you paid them presumably, you paid them all?

• 15:59Speaker 01

  Yes, I paid, you know, if you don't pay your parking tickets in Chicago, they're going to boot or, you know, tow your vehicle. And I remember, I remember actually, like call, call it, I don't know if it's like peak demoralization, but I got three tickets for the same thing, like about a minute apart, which was parking more than six inches away from the curb or something like that.

• 16:20Guy Raz?

  Yeah.

• 16:21Speaker 01

  And, and so I remember, I'm like, oh, well, I'll just, you know, I'll, I'll go down and I'll, I'll beat this. I'll pay one, but I'll save on two. And so, you know, they're just like, well, is, is it, is it not true that you were at 3:01, 3:02 and 3:03 PM more than six inches away from the curb? And I was like, okay, well. Technically, but and they're like, okay, so guilty. And I was like, wait, what? Like, I was like, that's bullshit. And they're like, you can't say that in court. Like, do you want to go to jail? And I'm like, well, am I going to go to jail for parking tickets?

• 16:53Guy Raz?

  Yeah, it's amazing how efficient a city like Chicago is in finding people and following up on those fines for parking violations and how inefficient it is in everything else.

• 17:03Speaker 01

  Well, I mean, they're so great at it, right? Like, here's what's crazy. Street cleaning, it's so confusing, right? Like, it's not on a specific date. It's like the second Tuesday.

• 17:13Guy Raz?

  The last month of, yeah, in the bleep year.

• 17:17Speaker 01

  Yeah, and then what they do is they put up these like temporary signs or these almost pieces of paper or plastic around trees. And then.

• 17:24Guy Raz?

  You've already parked your car for the night. You missed the sign.

• 17:26Speaker 01

  Yes, yeah. And then there's the overnight towing ban. Like, if it snows, you know, more than a certain number of inches, then they just tow every car. I mean, there's, there's definitely some efficiency for parking fines in the city of Chicago, so.

• 17:41Guy Raz?

  They're so good. All right, so you're, you're dealing with that. Jeremy moves in and he's Mr. Corporate America. You're looking to kind of transition. You're still thinking about a bike trip across Africa. How do you start to talk about maybe doing a business together?

• 17:56Speaker 01

  We weren't like, hey, let's build a company. We were like, hey, we both have this problem with parking and parking tickets. Let's see what we could do, right? Like, what we looked at is we're like, there's all this parking that you can't have access to. And if we bring all of this parking supply, we're going to start the Airbnb of parking.

• 18:18Guy Raz?

  Wait, so when you say there's all this parking that's available, you're talking about like people's driveways, basically?

• 18:23Speaker 01

  Yeah, people's driveways, but also how about a church? It's busy on Sundays, but it's not busy on other days. How about a Dunkin' Donuts? It's, there's no one parking there at nine o'clock at night.

• 18:35Guy Raz?

  Or the bank that on the weekends says, you do not park here. There's our parking lot. And you're like, the banks are open.

• 18:41Speaker 01

  Exactly, right? So banks close Sunday, right? So, you know, the bank's going to be completely open on Sunday. The church is going to be completely packed, right? So why can't we bring all of this new parking to market and solve all these tickets?

• 18:56Guy Raz?

  Right, okay, so you guys start talking about this. And clearly, you're excited about it. But initially, I mean, he's working in Motorola. By this point, you're already laid off from Bank of America?

• 19:07Speaker 01

  So I'm already laid off. And then he got laid off from Motorola as well.

• 19:13Guy Raz?

  Wow.

• 19:14Speaker 01

  And then he started working at a pizza place.

• 19:16Guy Raz?

  Okay, so you guys, you decide, let's see if we can build something. What does that mean? Did you, what were the first steps you took when you decided to pursue this idea of trying to see if you could use unused, people's unused driveways and Dunkin' Donuts parking lots to turn them into paid parking spots?

• 19:34Speaker 01

  Okay, so the first step was I called my friend Brett because he had a parking spot in Wrigley Field that he didn't use.

• 19:41Guy Raz?

  Not literally on Wrigley Field, but in the neighborhood, Wrigleyville, right?

• 19:45Speaker 01

  In the neighborhood, Wrigleyville, in the alley behind his apartment.

• 19:48Guy Raz?

  Okay.

• 19:48Speaker 01

  So our first spot was called Brett's Spot. It was named Brett's Spot versus the addresses like today. So the first thing I did was ask him, hey, can we sell this online? He said, yeah, I'm not using it, so no problem. And then the next thing we did, we're like, well, how do we get customers? So we would go on Craigslist and tell people they could park there.

• 20:09Guy Raz?

  Right, you didn't build a website yet. First, just starting with one ad, one space, one ad on Craigslist.

• 20:14Speaker 01

  Correct. And what we would do is we'd have two, we had two different ads. One was for self-park and then the other was valet, which I was the valet and I had my car. So they would park and then I could drive them to the, as close as you could get to where pedestrians can walk in. So we had self-park and a valet option for Brett's Spot.

• 20:35Guy Raz?

  And this is all for Wrigley Field?

• 20:37Speaker 01

  Yeah.

• 20:37Guy Raz?

  And there's a phone number or there's like an email address that they can respond to?

• 20:41Speaker 01

  Yeah.

• 20:41Guy Raz?

  Okay, yep.

• 20:42Speaker 01

  Yeah.

• 20:42Guy Raz?

  So what happens?

• 20:43Speaker 01

  I mean, we would sell out his spot every day on Craigslist.

• 20:46Guy Raz?

  During the season?

• 20:47Speaker 01

  During the season, correct.

• 20:48Guy Raz?

  And how much were you charging for the spot?

• 20:51Speaker 01

  Twenty dollars for self-park and forty dollars for valet.

• 20:54Guy Raz?

  All right. But you can't really build a business off twenty dollars a day or forty dollars a day, right?

• 21:00Speaker 01

  No.

• 21:00Guy Raz?

  But this is a start. It's just a start to kind of see, and you're selling the spot out pretty much every day through Craigslist.

• 21:08Speaker 01

  Correct, through Craigslist. We were selling it out every day.

• 21:10Guy Raz?

  And did you need any money to start? I mean, you needed, you didn't need money to advertise on Craigslist, but did you, I mean, you had saved $50,000, a lot of money for a guy who's 24, 25. How much money did you guys put in?

• 21:22Speaker 01

  So, we each put in $6,000. And so then, the next step was, I called my uncle, my mom's brother, and he was an engineer, software engineer by, by background. And I, I said, you know, what do you think I should do? And he said, um, well, you should, um, use Python. And it's funny, because obviously, Python is a critical component of what we do. But I, I said to him, I said, what, what's a Python? What does that mean?

• 21:46Guy Raz?

  The programming language. But did, did you know how to code?

• 21:49Speaker 01

  No, I did not. And so he made an introduction to, um, someone who he knew that was willing to contract for us.

• 21:58Guy Raz?

  And just to be clear, I mean, this was to build a website and platform? This is what the code, this is what you hired this coder to do?

• 22:06Speaker 01

  Correct, yeah.

• 22:07Guy Raz?

  So initially, the idea starts at Wrigley Field, and which is smart, because you're thinking, hey, Wrigley Field, it's, it's in a dense area, built up area. It's not easy to park there. But there's a lot of people who live around there, who could probably make an extra cash. It's like Airbnb. You can, you know, rent out your air mattress and make some extra cash.

• 22:26Speaker 01

  Yeah.

• 22:27Guy Raz?

  How did you find people who were, who you could, you know, who spots you could put on the platform?

• 22:35Speaker 01

  I mean, we would just go door to door.

• 22:37Guy Raz?

  You and Jeremy?

• 22:38Speaker 01

  Yes. And some people were extremely upset, like, no way, I do it myself, I don't need you. I stand on a corner with a sign, and there's a big culture around that. Um, and other people are like, yeah, like, of course. Like, wait, I, I don't have to do anything, right? Like, I'm in.

• 22:53Guy Raz?

  And what was the, what was the, the fee that, what was the split that you, you, you sort of gave them?

• 23:00Speaker 01

  So, so the fee was 15% plus 99 cents.

• 23:03Guy Raz?

  But, I mean, you're talking about, if, like, $3.50 that you guys earn from a spot, that wasn't a lot of money.

• 23:11Speaker 01

  Oh, it was not a lot of money, but it was more exciting to sell one spot. Like at the, at that time, it wasn't like, oh, we're making $3.50 or here's a financial model. It was like, I like, I remember, I'm like, wow, like how good it felt when someone went on our own website and purchased one single spot. It was so cool. And then I remember the first month where we had double digit sales, 11 spots sold. It was like, we hit a milestone. We have double digit sales, 11 spots sold in a month.

• 23:43Guy Raz?

  So going door to door in Wrigleyville, I mean, that's a lot of work. I mean, that's like, like, let's say one out of five or 10 people are going to do it. You gotta go to 10 houses before one person is going to be like, I'm in. And then you've signed them up for, you know, you're, you're basically going to make $3.50 off of them every time they rent the spot. So that's a lot of work. I mean, that is really painstaking work.

• 24:08Speaker 01

  Uh, yeah, and it's not also easy in Chicago in the snow. You know, cause we would try to get ahead of it. So we, in the winter, we went and wanted to get ahead for the season. So we would, you know, tell people like, hey, you know, six months from now, you know, we can make you money on your spot to get contacts. So, you know, we went to, I don't know how many homes, but ultimately even people that said yes, they might've moved or they're like, I need my spot now. And we were able to get about 50 spots after about a year.

• 24:41Guy Raz?

  Took a year to get 50 spots.

• 24:44Speaker 01

  Yeah.

• 24:44Guy Raz?

  That is, I love this because this is what a business is about. It's painful.

• 24:49Speaker 01

  Yeah, it's, it's, you know, like thinking back, it seems ridiculous. Like, gosh, like 50 spots a year. But at, at the time, it was like one foot in front of the other. We've got five spots. We've got 10 spots. Wow, we've got 25. And when you're kind of like crawling around in the dark, you don't know what's next. Like, it could be 100 spots, right? Like, it could be 200.

• 25:16Guy Raz?

  But I mean, even just back of the, back of the envelope math, I mean, 50 spots after a year. If all of them were rented out every day for the game, you'd make 200 bucks a day. I mean, it's, it's small. I mean, it's slow going.

• 25:29Speaker 01

  Right, but I, it, I wasn't thinking about it like that. I was more like,

• 25:32Guy Raz?

  Yeah.

• 25:33Speaker 01

  Okay, we got double-digit sales in a month, right? You know, a, a, a funny milestone was when two people tried to buy the spot at the same time, and the site crashed.

• 25:46Guy Raz?

  All right, so you've got 50 people signed up to sell their spots, right? Through your website, through SpotHero. Let's talk about the name for a moment, because it's a great name. How did you come up with it? And was it just a domain that was available?

• 25:59Speaker 01

  Um, yeah, the domain was available. It's interesting, because we had a brainstorming session and

• 26:04Guy Raz?

  You, you and Jeremy?

• 26:05Speaker 01

  Me and Jeremy and some other friends. And, you know, we came up with a whole bunch of different names. And it's actually kind of funny, because SpotHero was the second name we wanted. The first name, I'm so glad it was, the domain was not available. But the first name was ParkShark.

• 26:22Guy Raz?

  ParkShark.

• 26:23Speaker 01

  But the domain was taken, so we went to the second one, which was SpotHero. And so the first, you know, we got it, bought the domain, SpotHero.com. And then we went on 99designs and paid $99 to get a logo made.

• 26:37Guy Raz?

  Yep, so you really started 99designs, just whatever you, whoever bid the lowest amount. So you have a, just you have a logo, you've got a website. And how did it work in terms of like, I mean, we're talking, this is 2010, 2011. Let's say you click on a spot and you pay for it through the site, right? And then what happens? And you get like a code?

• 26:57Speaker 01

  Yeah, so I mean, there was definitely a lot of friction, because the only way that it would work is you had to print out your confirmation. So you had to print out an email. So you had to have a printer.

• 27:08Guy Raz?

  Okay.

• 27:08Speaker 01

  And so, you know, and if you didn't print it out and put that on your dashboard, you would get towed. So there was definitely enormous friction. No app, just a website and required a printer.

• 27:19Guy Raz?

  Got it. All right. So you, you launch a website. You've got, it's kind of janky, it sounds like, but it's, it's good enough. How do you even get people to be aware of it? Like, how did you even know how to find customers?

• 27:33Speaker 01

  I mean, I Googled, how do you get customers?

• 27:38Guy Raz?

  Nice.

• 27:41Guy Raz?

  When we come back in just a moment, SpotHero expands into parking garages and then hunkers down as competition spreads across the city and the country. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 28:01Guy Raz?

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• 28:43Guy Raz?

  The agents bring speed and scale and people bring taste, judgment and control. Learn how you can get more out of your site from a Framer specialist or get started building for free today at framer.com/built for 30% off a Framer Pro annual plan. That's framer.com/built. Rules and restrictions may apply. AI isn't just opening new business opportunities. It's changing the way businesses get work done. The questions they ask, the decisions they make, the routine tasks they can hand off. That's the idea behind NetSuite Next, the next generation of NetSuite with AI woven into the tools your business already relies on.

• 29:27Guy Raz?

  NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.

• 30:12Guy Raz?

  If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built.

• 30:32Speaker 02

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• 31:17Speaker 03

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• 31:43Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2011, and in order to get customers for his new parking service, Mark Lawrence literally Googles, "How do I get customers for my new parking service?" And one idea he has is to start a blog about parking.

• 32:02Speaker 01

  So I went on the street and I would map every inch that you could park for free with pictures of the signs and where you couldn't park. And we had these maps that I made in Microsoft Paint. So if you thought our website, SpotHero, was janky, you should see my artwork of maps for free parking. And then when it was there, I was like, hey, if you don't want to risk free parking, click on this link to go to SpotHero.

• 32:27Guy Raz?

  That is absolutely brilliant. That's such a smart idea. So you would spend all this time writing blog posts on how to find free parking near a sports arena. People would find it because they might type that in. And it was really designed to get them to become aware of SpotHero.

• 32:46Speaker 01

  Yeah, and so that was where our first customers came from. In addition, we also posted on Craigslist, too. Those would always get flagged and we'd have to go through different hoops. But between the content marketing and SEO and Craigslist, and you know, we just went down the list. When you Google, "How do you get customers?", there were, you know, things came up like pay-per-click or SEM. And our budgets were super low, like, you know, a few hundred dollars a month. But, you know, it added up. We didn't have too many parking spots, but we were able to kind of, you know, grow neighborhood by neighborhood.

• 33:20Guy Raz?

  Got it. But still, I mean, the business basically started by going to people and saying, "Hey, rent us your spot", right? Like, just like Airbnb. But I guess after a year of doing this, you've realized that this is not scalable, right? This is not a great... Model, and I think it was around this time that you started to meet people who actually owned parking garages, right?

• 33:42Speaker 01

  Right. We were using Twitter at the time to tweet about parking and seeing can we attract people or see people who are frustrated with parking in Chicago or for Wrigley and say, hey, have you heard of SpotHero? It caught the eye of someone named Eric Elo, who was at Central Parking, which at the time was the second largest parking company in the country.

• 34:03Guy Raz?

  He saw your Twitter feed?

• 34:04Speaker 01

  Yeah. And so he had reached out and so we met and it was interesting because again, never sold parking in a garage. And to date, we had 50 spots, like 50 spots.

• 34:19Guy Raz?

  It was a peer-to-peer system?

• 34:21Speaker 01

  Yeah. And so, you know, some of the conversations with Eric, like looking back are just, you know, kind of, kind of, you know, funny because, you know, he said, you know what? I'll try this out. Why don't we start something small, like a couple of thousand spots? And I remember like, you know, trying to keep it cool. I'm like, wow, a couple of thousand spots. I remember I said, Eric, so are the, are the spots open every day? And he's like, what do you mean? It's a parking garage. I'm like, yeah, well, like a lot of the people we work with, sometimes they're at work or like they need to move their car or they use it on a certain day. And he's like, yeah, it's a, it's a parking garage. It's open 24/7. Like.

• 35:01Guy Raz?

  So instantly you go, you go from 50 spots to a thousand or more, even more?

• 35:08Speaker 01

  Yeah.

• 35:09Guy Raz?

  Initially, when Eric said, hey, let's try this. I'm curious to see how this will work. Was it cheaper? Would it be cheaper to go through SpotHero rather than just to go directly to the garage and pull a ticket and go park?

• 35:19Speaker 01

  So yes, it was cheaper and they would sell excess inventory. So they knew, for example, I'm going to have 800 empty spaces after 3pm. And I might only have 50 spaces during the day.

• 35:36Guy Raz?

  Right, okay. So you're starting to work with parking garages. And I guess you meet this guy named Harland, Harland Karp, I think. And not only does he have garages, but he's also kind of building or developing scanning equipment, like the machines that we use today where you scan your ticket to go in. And I guess he wants you to start using those as well, right?

• 36:02Speaker 01

  Yeah. And again, in hindsight, it seems obvious. But at the time, I'm like, goal, get spots for Bears games. We have zero. Harland has these spots. And he's like, hey, let me show you this future vision of parking. And he was telling us about a problem that he was solving that we didn't have because we didn't experience it. We never sold parking in a garage. And so ultimately, at that location, the Park Connect from Harland stuff was put there, and you could scan to get out.

• 36:34Guy Raz?

  You would scan your printed out, the printout?

• 36:38Speaker 01

  So you could scan a printout, or you could scan it from a phone.

• 36:41Guy Raz?

  Right.

• 36:42Speaker 01

  And so dependent on the equipment. But that was the first, actually, you know, that was one of the first garages that we got the equipment in.

• 36:49Guy Raz?

  So it was perfect, because, I mean, with Harland's technology, it could become more seamless.

• 36:55Speaker 01

  Right. And we ultimately were able to get, you know, these different garages onboard from three of the largest parking companies in the country.

• 37:05Guy Raz?

  Oh, wow. And I guess in the meantime, like, neither you nor Jeremy were all that technically minded. And so I guess around this time, you brought on somebody who had more like technical skills, because it was a guy named Larry Kiss to be your CTO.

• 37:21Speaker 01

  Correct, yeah.

• 37:22Guy Raz?

  And this, I think, is around 2012. And that was the year you also applied to Y Combinator, which, of course, famously, you know, incubated Airbnb and Coinbase and Instacart and a couple of other major companies and brands. So what, like, what happened with that?

• 37:37Speaker 01

  I mean, the interview was interesting, but it didn't go well off the bat. And the key reason they said no was because we had, they didn't believe that we knew Larry long enough. And they were like, it's a huge risk to have two business founders and a technical co-founder of which was such a new relationship.

• 37:58Guy Raz?

  Yeah. Interesting. No, I mean, it makes sense and their record's very good, but obviously they have to make a decision. Was that disappointing when you didn't get in?

• 38:06Speaker 01

  You know, it was, but I was so like excited at the time to be in San Francisco, to have just been in the room at a Y Combinator, you know, interview. I felt it also clarified a lot of things for the business just by actually filling out the application. You know, because of the experience, I was so excited to apply to other ones and, you know, did all these interviews and, you know, kept getting turned down. And then I remember we got in, they accepted us into Techstar Chicago. And it was interesting because we all weren't sure if we want to do it.

• 38:47Speaker 01

  And, you know, myself, Larry and Jeremy talked and we actually decided no. And, you know, ultimately sat for, you know, a few hours talking to them about, you know, pros and cons and like what we're going through and, you know, conversations like, you said I have to be in all these meetings, meeting all these different people. I'm like, I, I'm like, I don't have time for anything. I'm going door to door. I'm having meetings to get parking spots. I'm, I'm, I'm doing our SEO and our paper click. I'm, I'm like, right now, I'm like, look, I'm missing customer service calls. People are, they need me and I can't answer the phone because I'm here in this meeting with you. And I was told, well, you could, you know, just, you could hire someone. Have you thought about hiring anyone? And I'm like, hiring anyone?

• 39:32Speaker 01

  It's like, never thought, you know, it's like, it's been a year and a half of like, I didn't realize you could do that. It just wasn't a thought.

• 39:40Guy Raz?

  Okay, so you change your mind and you wind up joining Techstars, the incubator. And to get into it, just to clarify, I mean, to get into one of these incubators would work to your advantage, right? Because of course, you get usually an office and the office space and a network of people and mentors and investors who can come by for the pitch day, right? And oftentimes, they get, sometimes not always, these incubators, depending on what they are, get a little bit of equity in the company.

• 40:09Speaker 01

  Yeah, so they got 6% of the business and we got $50,000.

• 40:15Guy Raz?

  Did you need the money at that point?

• 40:17Speaker 01

  I would say yes. I mean, I know how beneficial, you know, joining Techstars Chicago is now. I didn't at the time, but I remember thinking when we raised, like, we're like, we raised $50,000. Like, it just felt so good. And I'm like, we did it. Like, it took a year, almost a year and a half to hit $1,000 of sales in a month. Okay? And which meant, like, we're taking home, what, like, you know, 150 bucks? But I remember in 2012, sales ramped in, you know, January, February, March, April, May, from, you know, 5,000 a month to 80,000 a month in May. But the worry was, is this going to last? And so

• 41:00Speaker 01

  we were, you know, kind of scared to hire someone. And that $50,000 gave us the confidence to make our first hire.

• 41:07Guy Raz?

  But when Techstars brought you in, and they, you know, 50 grand, they get 6% of the business, I mean, essentially, the business is valued at just over a million dollars at that point?

• 41:17Speaker 01

  Uh, I think less. If we gave up 6% for $50,000.

• 41:21Guy Raz?

  Yeah, a little less than a million dollars.

• 41:22Speaker 01

  Yeah.

• 41:23Guy Raz?

  Did anybody say, that's a lot. That's giving up a lot?

• 41:26Speaker 01

  Oh, like, like, everybody.

• 41:28Guy Raz?

  Yeah.

• 41:29Speaker 01

  But I, like, and that was kind of like, why we initially said no. And I thought about it after the conversation. And I remember I was sitting, you know, by myself in the car. Everyone was like, you should negotiate, you should do this and like, no, you should say, no, you guys are already doing 80,000 a month. And I remember just thinking, I'm like, okay, what is the best possible outcome if I say yes to this? And what's the worst possible outcome? And thinking through those like different scenarios, it became clear like, okay, I want to do this.

• 42:03Guy Raz?

  So you guys now have significant revenue coming in 70, 80 grand. But again, your costs were that were super low. I mean, was that so? I mean, were you profitable in that year?

• 42:16Speaker 01

  Yeah, we were profitable. Yeah.

• 42:18Guy Raz?

  And so with that, so essentially, I'm thinking now you've got some traction, you've got real money coming in. I mean, you're going to hit almost a million dollars in revenue in 2012. And so I have to assume that the strategy now is to just expand, get more and more and more, work with more and more parking garages.

• 42:37Speaker 01

  Yes. And the idea was, can we create a model that we can then bring and scale to other cities? And so our expansion, we were the only like, you know, we started out, all these different competitors pop up. And many were in, you know, 10, 20, 50, 150, 200 cities. We were only in one city. And our focus was, can we really get a true playbook for this business in a single market and then go to our next market?

• 43:08Guy Raz?

  And I guess you raised a seed round in December of 2012. It's about two and a half million dollars you guys raised. And your, your idea is, let's do this slowly. Let's really first own Chicago and then we'll expand out, then we'll go to other cities. Essentially, you were able to iron out all the potential friction points by really focusing on Chicago.

• 43:32Speaker 01

  Yeah, the friction points, because if you think about it, we've talked about, okay, there's the parking operators and there's the drivers, right? There's the parking spots, spaces and drivers. But the third leg of the stool is the point of sale systems or parks, which, you know, help enable that consumer experience. And so like, it's not just as simple as getting the spots and the drivers. So working out the different kinks, understanding each detail that's needed by the different partners, right? Like, there were also, you know, folks in the garage that we, we could talk with and understand what, what's happening? How, how does this work?

• 44:11Guy Raz?

  But meantime, all over the United States, clones started to pop up. Companies doing the exact same thing, but expanding faster in New York and Washington DC and LA, et cetera. Give me a sense of how investors reacted to that. Were even your seed round investors, were they saying, hey, what's going on? Why are you just in Chicago?

• 44:35Speaker 01

  Yeah, I would say there was a lot of pressure. Why are you just in Chicago? If you're not in these other markets, you're not relevant. Uber was also launching and Lyft. And there was this whole idea of blitzscaling and moving fast, making sure that the land grab didn't happen by somebody else. And my point of view was the parking industry was more about relationships. At the time, 60, 70% of the dollars spent in parking were cash. It was a very old school group of folks that had set ways of doing things.

• 45:20Speaker 01

  And this idea that you can just throw money at a problem didn't work with an industry that was really about relationships and trust.

• 45:29Guy Raz?

  But I have to imagine with all these other competitors out there, a lot of the money in Silicon Valley was going to those competitors. I mean, probably a lot more money than you guys had raised.

• 45:40Speaker 01

  Oh, an enormous amount of money. And it was very stressful to see all of these pins pop up in different places that, while we were just in Chicago. And we were called a one-hit wonder. Hey, you've got one city. It's really great. Where are you going next?

• 46:01Guy Raz?

  I'm curious, was a part of you scared and worried about expanding out and to the point where you were worried that it could actually tank the whole business?

• 46:11Speaker 01

  I definitely was because I saw that happen to a lot of different companies. They expanded and they got tanked. And I'm like, man, if I'm, you know, in these different cities, I'm not going to be able to have the same level of care and the whole thing could come down. So there was definitely a worry of spreading myself too thin. We also didn't have the same resources as all these other companies.

• 46:36Guy Raz?

  Right, because you raised two and a half million dollars. So you had that runway, but you also, and you had some cash coming in, but you didn't have tens of millions coming in.

• 46:44Speaker 01

  Right.

• 46:45Guy Raz?

  Because this is a, I mean, it's dog eat dog, right? Like, if you're not parking in my spot, you're parking in my competitor's spot.

• 46:51Speaker 01

  Yeah. The number one key thing for why we beat them, all of the folks in Chicago, is we were only in Chicago. Everyone else was distracted with all these other cities. Even the companies based in Chicago, they were focused outside of Chicago.

• 47:05Guy Raz?

  You had competitors who started, who were also based in Chicago.

• 47:09Speaker 01

  Yeah, multiple competitors based in Chicago.

• 47:11Guy Raz?

  That just sounds like a nightmare.

• 47:13Speaker 01

  It was hand-to-hand combat, slog, like you could not imagine. Like, you know, I remember having a conversation with one of the, you know, CEOs at the time of a rival parking online company. And I said, you know, it's interesting, all of my signs disappeared and your signs were put in their place. We had a hundred of them and they all disappeared. But, you know, I was told, Mark, it's just coincidence. And I'm like, coincidence, really? And so, you know, we had our, you know, back and forth, different sign wars.

• 47:53Speaker 01

  So it was a slog, but the real thing is we focused all of our efforts in one city. And because all of our efforts are concentrated there, dollars, focus, operation, relationships, every aspect, we could react quickly, we could make changes quickly, we could iterate, we had much closer attention to the details. Our response time was extremely fast because we don't have, you know, 20, 50, 100 cities, we have one city.

• 48:19Guy Raz?

  But it sounds like even some of your investors are skeptical of your strategy. Even people who are on your side are skeptical of your strategy.

• 48:29Speaker 01

  Absolutely. Investors were very skeptical, you know, feeling like, hey, the trajectory in one city is not interesting. The idea of what SpotHero could be nationwide and then worldwide is exciting, and people are eating your lunch everywhere.

• 48:50Guy Raz?

  And by the way, that's not bad advice. I mean, I, these are experienced investors, VCs, who had probably invested in other platforms and companies that had done very well with the strategy. So who are you, an upstart young guy, to say, I know better?

• 49:09Speaker 01

  Yeah, it's interesting because I wasn't thinking like so much, I know better, as I really fear going to another market.

• 49:20Guy Raz?

  Right.

• 49:20Speaker 01

  Right? Like, you know, so it was like, like, they would try to elicit the fear of losing, but the fear of expanding was greater.

• 49:31Guy Raz?

  Yeah. All right. So finally, after a lot of pressure, the first place you go to expand is Washington DC, which I, February 2013, I was living there at the time. Who sort of owned the DC market when you guys went in? Because you, again, there were competitors everywhere. Who had the best market penetration?

• 49:52Speaker 01

  There was a company called Parking Panda. Parking Panda had the largest concentration in both DC and Baltimore. They had, you know, started around the same time as us.

• 50:03Guy Raz?

  And by the way, could one parking garage, did they have to exclusively work with one brand? Or could they, could they work with Parking Panda and with you guys?

• 50:11Speaker 01

  So they could work with Parking Panda and us. So some were exclusive, some were not, but they could work with both. But the way that we communicated was different. All the other companies were trying to get exclusives, and our strategy was like, we don't want exclusive. We want to prove to you that we can bring more dollars than anybody else. Here are references from Chicago, from, you know, people in your company, some they know, some they don't. And they work with, you know, three, four, five, six, seven, eight players and we bring more than all of them combined and we want to do that here.

• 50:45Guy Raz?

  Yeah.

• 50:45Speaker 01

  In addition, we were the first to have anytime parking on a website and then we were the first that had an app.

• 50:51Guy Raz?

  Hmm.

• 50:52Speaker 01

  We were the first to iOS, we were the first to Android and the focus of being only in two markets allowed us to really leapfrog Parking Panda.

• 51:03Guy Raz?

  And I think very soon after DC you expand to Baltimore.

• 51:06Speaker 01

  Mm hmm.

• 51:06Guy Raz?

  And then Boston.

• 51:08Speaker 01

  Mm hmm.

• 51:08Guy Raz?

  And that year, right, because now the last time you'd raised money was in 2012, it was two and a half million dollars. Now you go back to raise money. This is in, in, and you're looking for series A money.

• 51:20Speaker 01

  Yeah.

• 51:20Guy Raz?

  You know, given the success now, you got success in DC, you're, you're expanding, but still slowly was, were investors lining up to?

• 51:28Speaker 01

  No.

• 51:28Guy Raz?

  To back you at this point? No.

• 51:30Speaker 01

  Investors, no way. They were not lining up. Not only were they not lining up and our traction was good, but not great. And slightly, it was slightly interesting, but not interesting enough.

• 51:44Speaker 01

  I didn't keep in contact with the investors.

• 51:47Guy Raz?

  The ones that had put money in?

• 51:49Speaker 01

  Yeah, I was just focused on building the business.

• 51:51Guy Raz?

  So you weren't sending regular updates or anything?

• 51:54Speaker 01

  Not real, no.

• 51:55Guy Raz?

  Yeah. That was probably not very popular among some of the investors.

• 52:00Speaker 01

  Not very popular. And now, wow, we have a burn, we're running out of money. But, you know, we did have some investors that did step up, you know, co-led the round

• 52:11Guy Raz?

  Yes.

• 52:12Speaker 01

  Chicago Ventures, Bullpen Capital and Mike Gamson, but it was, it was really,

• 52:20Speaker 01

  it was a really hard round. This was May. If we didn't have that first wire, we would have been out of business, right? It got to a point, and I, I never lie, but I lied once. And it was to our accountant, Stephanie. And I remember she came to me and said, hey, I'm looking at the bank account. When is the round going to be done? I said, why? She said, well, because we have money coming due.

• 52:47Speaker 01

  Like, we have to pay payroll, we have, we have to pay operators in like, two days. And I don't see enough money in the account. And I'm like, oh, well, there's other accounts, like, don't worry. And I didn't know when the wires would actually hit. And one of the bigger wires, I was, you know, asked, hey, you know, I've got a delay for a couple of weeks because of some capital calls and VCs, they're going on vacation. You don't mind waiting a couple of weeks, right? And in my head, I'm like, well, if I tell them no, they're going to be like, why are you out of money? Right? So I said, fine. Luckily, we were able to get a wire on the day that we had to pay payroll and operators. And so it was fine.

• 53:32Speaker 01

  But, you know, very hard.

• 53:36Guy Raz?

  All right. So you, but you raised four and a half million. You know, again, you know, you've got well-capitalized competitors. You're still under pressure to expand. And by the end of that year, December 2014, you do go to San Francisco, which is a tough place to go to, simply because, you know, there's tons of competitors, the smart, you know, again, I don't want to say the smartest, but look, just statistically, if you look at the stats, the smartest startups and VCs are here in the Bay Area. They are. I mean, you've got Stanford, you've got Berkeley, a lot of them are coming out of here. The money is here, so on Sand Hill Road and in Silicon Valley. So it's a tough place to come to from Chicago, right? Was it, did it feel intimidating?

• 54:20Speaker 01

  It was extraordinarily intimidating. And I didn't want to expand to San Francisco because of that. And Bullpen Capital, who, you know, co-led our round, you know, their view was, you're not raising a Series B, and you're not going to be taken seriously if you're not in, in San Francisco. But I feared expanding to San Francisco the most.

• 54:49Guy Raz?

  When we come back, SpotHero goes west, where its competition has more visibility and a lot more money. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 55:09Speaker 04

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• 55:34Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's the end of 2014, and after much hesitation, Mark and his partners decide to expand SpotHero to the city they fear most: San Francisco. The problem, I think, in San Francisco is you've got some really hot competitors, companies like Lux and Zirks, raising insane amount of money because they believe that the future is valet parking. Not you park self-parking, but valet parking. And I guess they captured the attention of a lot of VCs who agree. They're saying, this is the future.

• 56:12Speaker 01

  I mean, this was quite possibly one of the most stressful periods, you know, that we had experienced to date. We had worse ones later, but to date, that was enormously stressful because not only had we had only raised $7 million, but these companies had raised 40, 50, 60, $77 million. Lux, Zirks, Butler, Carbon. And they were also extremely visible with the umbrellas and the skateboards. And I remember a board meeting where I was told, hey, Mark, you are going slow. We've been telling you're going slow. You're not expanding fast enough.

• 56:57Speaker 01

  And now there's this new model, and it looks like you guys are dead. You're being disrupted before you have the chance to disrupt. Half a billion dollars went to fund companies that said we were the relic. And meetings in the valley were extremely demoralizing because people would say, hey, like, you know, I've heard great things about you. Clearly, like, this business isn't going to work out, but I wanted to get to know you for your next one. Lux and Zirks were the hot ones. You saw their logos all over the place. Their logos were all over the place. Everybody knew who they were because they were spending, you know, crazy amounts of money. The other thing is our cost of customer acquisition

• 57:40Speaker 01

  were exploding because they were just paying unlimited. And so costs of acquiring customers were going up. They were also prepaying for six months or a year to shut us out completely of, you know, some great, you know, locations. Wow. So they were subsidizing parking for people, basically? Extremely. I mean, totally subsidizing. And we were, you pay fifteen or twenty dollars to park, and you park your car yourself. They also had to pay for labor. So you would pay fifteen or twenty bucks, but they would park it for you? Right. So they were, you know, our average was like twenty dollars to park. So they made it where it's fifteen. But they would valet your car both ways. So the consumer

• 58:25Speaker 01

  experience was quote-unquote remarkable. Like, wow, I can just press a button and my car gets picked up wherever I'm at, and then dropped off and brought back to me. It sounded amazing on paper. And there was actually a vote to pivot the company to be on-demand valet. There was a vote from, from who? The board. Your board? Yes. Voted to pivot your company? It was more of like, hey, all in favor of pivoting the company. Like, it's very clear, like, this is where things are going. And I'm like, all right, well, you know, that's great. But it was very clear, this was definitely not going to work. Didn't make sense. It wasn't sustainable. You'd have to hire...

• 59:07Guy Raz?

  I mean, all your costs would go to paying for valets, humans who are parking the car.

• 59:12Speaker 01

  It made absolutely no sense. You had to pay for humans parking the car. But here's the other thing. There was a thesis that, well, if you park the car farther away, you can get an arbitrage. And especially in New York City, it's could be $100 to park in a specific area. But it's only, you know, $15, you know, a couple of streets over. But the problem is that as you get farther and farther away to get lower costs, lower and lower parking, the amount of time it takes to bring the car there and back increases. So your labor costs go up.

• 59:52Speaker 01

  So for a consumer's standpoint, when it launched in San Francisco, everyone was like, wow, I pressed a button, had a valet come in two minutes.

• 1:00:02Guy Raz?

  Yeah.

• 1:00:03Speaker 01

  And it felt like Uber. Okay, but then fast forward and, you know, there was people screenshotting. It's the valet's coming in 72 days. Because the algorithm was like, well, there's this many valets and there's this many people pressing the button. And so it did some crazy calculations, right? And people like 72 days, I need my car now, right? And so, you know, tested this in New York and Chicago and it just did not work. And I presented to the board the findings.

• 1:00:32Guy Raz?

  And clearly they would, because they had voted to pivot the company.

• 1:00:38Speaker 01

  Yes, but the findings were pretty clear. And the discussion was, okay, well, then why are they able to get such mind share? They're like, if this is going to be the thing, we need to make sure that we are also part of that thing. If it is not the thing, okay, fine. But they have how much more money than us in terms of capital? How long can they be irrational? And what are we going to do to survive this, right? We're shut out of parking spots. Our cost of customer acquisition is going, everything is blowing up. Like, what are we going to do in order to survive this and get to the other side?

• 1:01:19Guy Raz?

  This is such a great like case study in sticking to your core principles. Because it's, it makes sense to me why investors would want you to do this, right? Because at the end of the day, their goal is to make money, right? And there's nothing wrong with that. That's what an investor is there to do. They're not, they're not in the charity business. And so when they see these other hot brands doing these things and all their friends are talking about and everyone's talking about it, you, and you're in the, in San Francisco, you're thinking, well, this is where it's at. This is where it's all headed. And so it makes sense to me that they would say that to you. But on the other hand, it's very reactive, right? And humans are reactive. We're not patient by nature.

• 1:02:02Guy Raz?

  It's very rare to find somebody who's like, no, let's look 10 years down the line. So it's, it is kind of remarkable that you were able to withstand that pressure and, and prove that this really wasn't going to work. This wasn't sustainable.

• 1:02:15Speaker 01

  Yeah, it was definitely extraordinarily stressful for so many reasons. And me questioning myself and thinking, okay, I remember when different parking companies would tell me, nobody is going to buy parking on a telephone. Hey, this internet stuff is a fad. And laughing at how ridiculous the, the, the things were that they were saying. And remembering them saying, listen, I've been in parking for 57 years. I've been in parking for 37 years, 50 years, 40 years, right? What do you know? And I remember thinking, well, I've been in parking for, you know, five years. And then thinking, wait, am I being just like that?

• 1:02:57Guy Raz?

  Yeah. So the, the amazing thing about this story, because I'm gonna, I'm gonna give it away here, is that a year later, 2016, Xerxes.

• 1:03:11Guy Raz?

  Shuts down.

• 1:03:12Speaker 01

  Mm hmm.

• 1:03:12Guy Raz?

  And I think the next year, 2017, Lux ceases operations. They both fade away. They fizzle out.

• 1:03:19Speaker 01

  And the other ones did too.

• 1:03:20Guy Raz?

  Even though in 2015, everyone was like, this is where it's at. These are the hottest companies out there.

• 1:03:25Speaker 01

  Yes, these are the hottest companies. This is where it's at. And this is where half a billion dollars from dozens and dozens of the top Silicon Valley firms are putting their money.

• 1:03:37Guy Raz?

  You know, listen, that's what investing is about. You're gonna win some, lose some. But it is amazing how we are, our perception is so biased, right? Like what we think is right is so skewed. Our reality, and I'm applying this to anything. It's just so flawed. I include myself in this. The way we see the world, we're so certain because it's how we're seeing it. And so often, it's just not the reality that is. Now, I sound like a word seller there, but you know what I'm talking about.

• 1:04:17Speaker 01

  I know exactly what you're talking about. I mean, whether it's recency bias or whatever you want to call it, the idea of what is right in front of me is exactly how it is now and how it always will be is definitely not the case. And it was certainly not the case with On Demand Valet.

• 1:04:35Guy Raz?

  All right. So you withstand that very difficult time.

• 1:04:39Speaker 01

  Mm hmm.

• 1:04:40Guy Raz?

  This is in 2015.

• 1:04:41Speaker 01

  Mm hmm. We were doing our Series B. We're trying to raise $20 million, which at the time, that was a pretty sizable Series B in 2015.

• 1:04:49Guy Raz?

  So you raise the money, and that, of course, enables you to continue to expand. And as you grow, right, I imagine you're not profitable, right, at this point?

• 1:05:02Speaker 01

  We're not profitable, no.

• 1:05:04Guy Raz?

  But 2017, you acquire your previous competitor, Parking Panda,

• 1:05:10Speaker 01

  Yes.

• 1:05:10Guy Raz?

  That was my main competitor when you went to DC.

• 1:05:13Speaker 01

  Yeah.

• 1:05:14Guy Raz?

  And that gave you access to Canadian cities.

• 1:05:17Speaker 01

  Uh huh. What was interesting, though, with Parking Panda is they basically decided they're like, we're selling. And so it was interesting because they were actually the number two at the time. They were the second largest at the time and we were the first. And there was a moment where I wasn't sure if I wanted to buy them. And, you know, you're kind of cagey because you're like, if I give too much to my competitor, then, and they don't buy me, then they know my secrets, so to speak. But if you don't give enough, then it's not interesting. And I was asking them, like, I'm like, I need to see more detailed revenue by city. And they were so cagey.

• 1:06:00Speaker 01

  They showed me a breakout and I was like, why are you like, he's like, I'm going to turn the computer. I'm like, why are you so afraid? Like, remember, if we're going to do this together, like, we need to understand like where, not just your P and L, but like, where are you doing revenue? And he's like, well, our strategy was we went to all these places to hide so that you wouldn't compete with us, to grow our revenue. And I said, where? And I'm looking at, and I'm like, you're doing how much in Sacramento? What?

• 1:06:28Guy Raz?

  Secondary cities were actually arguably proportionally more profitable.

• 1:06:33Speaker 01

  Yes. And that meant that together, the overlap was so low. There's literally going to be 5%, maybe 10% overlap. And that was, that was a really great acquisition. I'm really happy we did that.

• 1:06:47Guy Raz?

  All right. So now you've got Parking Panda and you are really starting to emerge as a big player, if not the big player in the parking space. And You know, we're not going to go through all the additional rounds of funding because you start to raise more money.

• 1:07:07Speaker 01

  Mm hmm.

• 1:07:08Guy Raz?

  And, and by the way, I mean, you know, 50 million round of Series D was that by now 2019, I have to imagine it gets easier at that point to raise 50 million.

• 1:07:19Speaker 01

  Um, I wouldn't call it easy. We've always been in a category that has, has, has always something wrong with it. Right?

• 1:07:30Guy Raz?

  Yeah. What do you mean by that?

• 1:07:32Speaker 01

  Well, obviously it's my fault. I didn't keep in touch with investors or give updates. I'm very good about that now, but yeah, let's take, you know, Series A, right? The, the idea, every day in the media, Uber and Lyft is saying parking is dead. The future is no car ownership, but everybody Ubering and Lyft everywhere. Right? Then it was, okay, parking is not dead. It's the future and everybody is going to, car ownership is great, but valeting those cars is the future and it's not you.

• 1:08:00Guy Raz?

  Yeah.

• 1:08:01Speaker 01

  Then it was actually, sorry about that. It's not labor that's going to scale this industry. The cars are going to drive themselves and they're going to be in perpetual motion. And so they don't ever need to park. And I'm just like, come on, can we get a break?

• 1:08:18Guy Raz?

  Yeah.

• 1:08:19Speaker 01

  We've never been like what I would call on trend, right? Like we've never been this like on theme type company for a raise.

• 1:08:27Guy Raz?

  Because you're not that hot thing. It's like, oh, well, what about this AI company or that tech startup and you're doing, you're selling parking, parking spots.

• 1:08:37Speaker 01

  Right.

• 1:08:38Guy Raz?

  So it's boring, but it's also, the thing is, is I don't mean boring, but, but, but the boring, the quote unquote boring businesses are very often the most successful businesses.

• 1:08:49Speaker 01

  Well, here we are.

• 1:08:51Guy Raz?

  Here we are. All right. Let's go to, let's get to COVID because I, you know, you're plugging, you're growing. Everything's looking great. You've raised at this point, up to this point, I think now you're looking at at least, you know, close to a hundred million dollars by the time COVID comes around. And then.

• 1:09:12Guy Raz?

  That's it. It's like the world shuts down and you're now in the movie theater business. No one's parking all of a sudden.

• 1:09:20Speaker 01

  Yeah. I remember right before COVID, we had a board meeting in February, early February. And, you know, it was a kickoff to the year and I gave a bit of a preamble. Every year in the company, we had an existential threat to parking and spot hero. And I went through everyone for every year, just to remind people of what we had, you know, transcended and come through. And I said, and this is the first time that we sit here today without an existential threat to spot hero and parking.

• 1:09:53Speaker 01

  I am reminded by the board constantly about the words that I should eat because obviously COVID happened and I, and I always.

• 1:10:00Guy Raz?

  And that was like two, three weeks later?

• 1:10:02Speaker 01

  Two, three weeks later. I'm like, oh man. And I, I remind them, I said, well, it wasn't an existential threat to parking. It was an existential threat to everyone. But yeah, it was two or three weeks later and that was by far the hardest time that we as a company had to go through. I mean, brutal, brutal.

• 1:10:22Guy Raz?

  I, you guys put on your blog that you're, you're, you're, you're looking at 90% drop of 90% bookings.

• 1:10:31Speaker 01

  Yes.

• 1:10:32Guy Raz?

  Instantly by, by April of 2020.

• 1:10:35Speaker 01

  April was 98%.

• 1:10:38Guy Raz?

  98%.

• 1:10:40Speaker 01

  Yeah. May was 95.

• 1:10:43Guy Raz?

  Yeah.

• 1:10:44Speaker 01

  It was, it was just a absolute brutal set of decisions to, you know, having to lay off, you know, close to 70% of the company. But it made it easier to be brutal externally, right?

• 1:11:02Guy Raz?

  Yeah. Meaning what?

• 1:11:03Speaker 01

  What I mean, meaning that is like, okay, we signed some SaaS contract

• 1:11:09Speaker 01

  in January.

• 1:11:11Speaker 01

  Don't care not paying it, right? Like.

• 1:11:13Guy Raz?

  You just stop paying it?

• 1:11:14Speaker 01

  Just stop paying literally every bill.

• 1:11:15Guy Raz?

  It's some, some like, some like, I don't know, customer relations management or something?

• 1:11:22Speaker 01

  Voice automation, like, you know, you name it. And I'm like, wait, I have to decide between paying for some software to some stranger that I don't even need to use because of some contract. And then I gotta fire somebody else? Someone is going to lose their livelihood because of this? I'm like, absolutely not.

• 1:11:41Guy Raz?

  Even as people start to emerge from COVID, you guys, I mean, I have to imagine it was slow going because, I mean, even to this day, San Francisco, as you know, 30% of office space is still empty. Have you recovered from the pre-COVID, you know, sort of, I mean, has it, have you fully recovered and more? Or, and if so, how long did it take?

• 1:12:08Speaker 01

  Yeah, so, I mean, we have fully recovered and more. Right now, we are, you know, three and a half times larger now than we were pre-COVID. And there's a number of different factors for that. But there is actually a greater percentage of people driving and parking.

• 1:12:25Guy Raz?

  Because they're not using public transit.

• 1:12:26Speaker 01

  Right. Public transit, you're used to the routine. You go in five days a week, you always take the train. You're coming in two days a week, one day a week.

• 1:12:35Guy Raz?

  You're gonna drive.

• 1:12:36Speaker 01

  You're gonna drive, drive and park, right? And

• 1:12:38Guy Raz?

  Interesting. So the public transit crisis, in a sense, has kind of benefited the parking industry.

• 1:12:43Speaker 01

  It is part of it, but the other part too, there was a time where people were worried about public transit, regardless of the different servicing issues in different cities. You know, people just felt safer in their cars.

• 1:12:56Guy Raz?

  Yes.

• 1:12:57Speaker 01

  And, you know, we ultimately, obviously, had a, had a snapback and we ended up hiring a lot of folks that we unfortunately had to let go and, and, you know, they're, they're, they're still with us, which is great.

• 1:13:09Guy Raz?

  And now, you know, you start in 2011, lots of competitors, there still are competitors out there. Where are you in the competitive landscape? Would you say you guys are the biggest or among the three biggest or, or what?

• 1:13:22Speaker 01

  Yeah, I would say like, we are, we are the largest. Like, we have 1,600 parking companies that we partner with. And when you look at, you know, the sales that we're doing, usually it's, it's greater than all the others combined. I started this

• 1:13:40Speaker 01

  With the idea of how do I stop getting parking tickets? And, you know, love to drive, hate to park. I'm actually like loving to park a lot more now. And I'm, you know, just absolutely jazzed about like what we could accomplish, right? Like, to me, it's focused on executing. How do we change the moments of people's days? Right? How do you make it so people don't even have to think about parking?

• 1:14:07Guy Raz?

  When you think about the journey you've taken, you know, you started out as this little kind of project in 2010 and where you are now. And all that you've been through, how much of where you got to? Because you could have been crushed at many points along the way.

• 1:14:21Speaker 01

  Mm hmm.

• 1:14:21Guy Raz?

  Right? So many variables. How much do you attribute the fact that you guys are here and successful? And now the sort of the 800 pound gorilla on the block, so to speak, is due to how hard you worked in the grind? And how much do you attribute to just getting lucky?

• 1:14:39Speaker 01

  I mean, I think there's a value to consistency. There's something to be said for focus. Our focus, consistent focus. You go through the history of the company, every aspect, all these potential distractions or things to spread ourselves too thin or things that could, you know, have have killed us sooner. Our focus on just one thing and one thing very, very well has contributed. Yes, of course, there's, there's always luck. And I do believe in luck, but I also believe in manifesting it. And I think that consistency and focus has been key across everything.

• 1:15:20Guy Raz?

  That's Mark Lawrence, co-founder and CEO of SpotHero. By the way, remember that bicycle tour Mark was planning to take across Africa before he started the company? Well, he still hasn't done it, but that ride from Cairo to Cape Town, it's actually a pretty popular trip. It's nearly 7,000 miles and the fastest that anyone's ever completed it. Forty-one days, 10 hours and 22 minutes.

• 1:15:47Guy Raz?

  Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyraz.com. This episode was researched and produced by Catherine Seifer with music composed by Ramtin Arablouei. It was edited by Neva Grant, and our engineers were Patrick Murray and Kwesi Lee. Our production staff also includes Alex Chung, Elaine Coats, Casey Herman, J.C. Howard, John Isabella, Iman Maani, Chris Messini, Sam Paulson, and Kerry Thompson. I'm Guy Raz, and you've been listening to How I Built This.