Technology Archives

Fall 2014 Fundraising Field Notes

Each August, as the Fall approaches, I try to quickly jot down my “field notes” and tips for folks who enter the marathon fundraising season from Labor Day to Thanksgiving. This Fall is a bit different. More companies, even more money, and new capital sources like the crowd and private equities. For Fall 2014, no long preamble or disclaimers, I’ll just launch right into it, in no particular order:

The Jump From Seed To Series A Is Big: I hear many people in their seed round already talking about their A Round in the next year. Optimism is great, but if that’s the goal, everyone needs to be clear about how to put the seeded company on the right path. If the institutionalized seed folks are looking for six months of trailing data, imagine what the billion dollar funds want.

Don’t Get Tripped By Outdated “Round Name” Terminology: What are seed rounds? What are Series A’s? Who on earth knows anymore. Yet, I see so many folks getting hung up on what to call it that it clouds their vision and judgment. I’ll paraphrase a line from PG: “Series A is when the pros do it and call it that.”

Optimal Ratios Between Branded And Unbranded Money: Every founder is different here, no rights or wrongs. The trap is to get stuck. Some founders want some level of branded money, and some just want money. Know where you stand on this spectrum and execute accordingly. Those who want a mix of branded and unbranded can likely close quicker (as opposed to rolling closes) and save time, as fundraising is quite a distraction to product and company development.

The Trick With Introductions: I’ve seen 100s of founders do the rounds for random intros to investors they want to meet. Those rarely work, in my experience. Rather than play a numbers game, 4-5 targeted introduction requests from people who BOTH you and the investor know will be much better received. It’s really about the strength of the connection between the nodes, that’s what sets up an introduction to be timely, awesome, and potentially game-changing.

Own Your Process: Dorky as it sounds, running a fundraising process is a way for investors to see how a CEO runs process. Investors like to see someone in control, this gives them confidence. Give them something to believe in — like running the process.

The Uber Effect: Uber is the hottest company on the planet now. It’s first round was pegged at $5m, and I believe it was on AngelList. People even questioned the $30m B round from Menlo. Now everyone realizes it was under their noses, so they’re looking for not only breakout ideas, but breakout people — Travis already had a startup he slogged through for six years and was determined to the bone. Motivation reveals itself.

Conversations, Not Pitching: Speaking of conversations, the best advice I received from a mentor in graduate school in preparing for interviews was to turn any Q&A into a conversation. If you can do that, it breaks up the unnatural interrogation and allows an investor to see the range of your thinking, as well as personal characteristics. Also, I just fundamentally believe that people want to have conversations rather than pitches or business meetings — they want to be heard, they want to listen, and they want to feel as if they met someone new that they can work with. That is what creates excitement.

Start The Conversation With Traction: Here’s a bold idea — After your cover slide in the deck, have the first real slide be about traction, usage, metrics. If you don’t have traction, say that upfront and explain where you are. People will still fund things pre-traction (and even pre-product), but just be upfront about that.

Speaking Of Slides, They’re Meant To Attract Others: Slide decks are a way for investors to determine if they want a meeting. Some don’t like slide decks and want to just try the product. Either way, if you have an app — send the investor the app. If you have a deck, make it simple and attract others to want to meet you. The deck or app is just a means to a meeting where you can have a conversation in real life.

Part Of The Pattern, Or Part Of The Portfolio: When a space gets hot, investors want to meet everyone in the space. This helps them develop a thesis, meet the players, and build a pattern. When you’re talking to an investor, try to determine if you’re becoming part of their pattern or can be part of their portfolio. If things don’t move in a manner that has momentum, take it as a “no” and move on…believe me, the investor will rush to get back in touch if they come to a decision later or change their mind. I have done this too — waiting by the phone — and it’s just a bad place to be. Don’t do it! (Tangent: Read this post on “Turf Signaling” – the location of where you meet reflects power dynamics often overlooked.)

Hard Problems or Timing Inflection? A fun criticism of investors is that they (and some founders) don’t “solve hard problems.” It’s a misguided critique. These kind of investment dollars are to be applied to hard problems, yes, but what really drives this is traction, market timing, and potential for inflection. Some do it by chasing after it’s obvious, and others are able to predict when something is on the precipice of inflection. Again, there are plenty of patient investors and capital, but with companies staying private longer, secondaries available but not predictable, and so many investment opportunities around them, investors are going to naturally pick up on things that are already working — where the question isn’t “How big will it grow?” but rather “How big will it grow and how fast?”

Sophistication With Stats: A bad place to be in an investor meeting is when the CEO does not own the metrics. The metrics should be like oxygen to a CEO. Also, the way in which stats are presented (month by month rather than cumulative, properly labeled graphs, etc.) show a level of business sophistication that will be noticed.

Alternative And New Capital Sources: VC firms have used social media and content to convince you that you need it. In some cases, you do; in many, you don’t. There are now tons of alternative funding sources (you know the ones). Additionally, for companies who are growing, there is even more new money coming into late-stage private financings. This is an increase even from last year as companies stay private longer and mutual funds, hedge funds, corporates, and even SWFs are getting into the game with direct investing. There lots of money out there (some may say too much), so make your plans accordingly.

Getting Fireballed, And Some Clarifications

Yesterday, a funny thing happened — I wrote a post earlier about mobile startups and the timing of their decision to build on Android, and it took off — and into the hands of John Gruber, famed Apple blogger and creator of Daring Fireball. Boy, can Daring Fireball drive traffic! Here’s what I learned from this experience, and I also must include some clarifications from my initial post, as I did make a mistake and want to clarify that:

  1. In my original post, I wanted to make a nuanced point — that it’s fine for mobile startups to build for Android, but that I believe it is a decision that can wait until a product has found product-market fit and has a strong, engaged foundational base under it. So, I do not think apps should avoid Android altogether — but, I do believe Instagram’s path from iOS to Android is the right one to follow for most apps.
  2. One mistake I made in the post was to not caveat specific countries where Android is the dominant platform right now. As someone on Twitter pointed out, a country like South Africa, where Android is dominating (right now), would likely need an Android solution. While I do believe it’s better to use iOS to find product-market fit, I should’ve pointed out Android-first considerations are real in markets like South Africa.
  3. I would caution, however, that these rates will remain as such. I rarely see people leave iOS for Android, but I see people leave Android for iOS all the time. As the cost of devices come down, and if those populations want to use new apps built in the west (which is a presumption, yes), then it makes sense for this to shift over time. I would bet Apple is thinking about ways to go down market, too, and Amazon buys enough old iPhones to recycle them to the corners of the earth.
  4. Gruber’s influence in driving traffic is insane. In one day, he accounted for as much traffic as I receive over 2-3 months of time combined. I learned yesterday that this is called getting “Fireballed,” and the traffic continued today and is expected to last some time. I can understand how Gruber does his sponsorships, why he’s so sought after. I can also now better understand the motives of other Apple bloggers to write about the company and ecosystem — it drives traffic in a big way. If you now think of some of the best tech bloggers out there, it’s no wonder Apple is featured so much. Apple fandom runs deep, and those who can capture the edge of what is the most secretive company in tech will be rewarded with eyeballs. (Thank you, John, for the mention and link.)
  5. The comments between Android and iOS fanatics are the worst. I gave up trying to keep up and let people go to town. You folks argue and I’ll enjoy all my new cutting edge apps only available on iOS.

Finally, personally, I have tried Android 2x and I hated it. I like to have new apps. In my graph of friends I interact with, maybe 1 out of 10 has an Android. And, as I’ll write soon, the arrival of iPhone 6 and iOS 8 will begin a non-trivial separation between each platform’s capabilities.

Hard vs Soft Power In Technology Nation-States

Earlier this week, Bloomberg BETA’s Roy Bahat wrote a post about his views on using the “language of war” in startups. It’s worth a quick read. I wrote back to him and said while it can be crass to use belligerent language, there are probably nationalistic reasons (thinking of companies as nation-states) for why this happens. However, why not speak the language of colonization — yes, another unsavory nationalistic tactic — as a means to discuss strategy, growth, and hopefully winning one’s market? In this light, the language of war connotes a “hard power” of coercion and/or the use of force. Could there be room for the “soft power” of persuasion, public relations, and appealing to hearts and minds instead?

When I wrote back to Roy, he replied, “You should write that.” So, it when on my list, until I just got back to my desk and read the bombshell dropped by The Verge’s Casey Newton, detailing how Uber systematically tried to sabotage Lyft. First, a few things out of the way. This is bad, bad PR. I’m also a fan of Uber, and while I don’t expect any company to always “play by the rules,” this kind of stuff could hurt the arc of the company or, worse, engender an image that they can’t shake. In wanting Uber to succeed, I am hoping they learn from this. (By the way, Verge’s Newton did an amazing job scooping the story; this is the type of investigative work tech blogs should be doing to balance out the optimism of funding announcements and product launches.)

So, we are back to “Hard Power” vs “Soft Power.” The terms were coined and popularized by Harvard’s Joe Nye, a hybrid academic and state department official for many years. Nye’s argument was that as society transforms from materials to information and becomes globalized, a nation’s soft power (favorable policies, culture, attitudes, acceptance, values, etc.) can spread to give those nations a competitive advantage via persuasion instead using the coercive hard power (military/industrial complex, offense, arms trading, etc.). Nye’s world is one in which America should win with its soft power, it’s mindshare, positive PR at scale.

As Roy and I were emailing about this, it become apparent that the leading technology giants — Apple, Google, Amazon, Facebook, etc. — all use a mix of hard and soft power in concert. To pick on one, Amazon messes with publishers and authors at times, but then buys Goodreads and Twitch and fans love them. Uber right now is winning, no doubt — and they’re using a mix of hard power (against Lyft) and soft power (reducing traffic, drunk driving, etc.) that make them a complex beast. Whereas Google scaled on the back of the Internet with minimal friction, Uber is a network built on top of real world APIs. Uber is coming into contact with our transportation, food delivery systems, messenger routes, ridesharing, and more. Uber can repulse with its hard power, and win hearts and minds with its soft power. It may be easy to criticize from afar (and many of those critiques are likely to be valid), and while we all may want to see soft power at work, the truth of the matter today is that competition is fierce, resources are scarce, people need to get to Point A to Point B, and hard power still has its place in the real world. Drive accordingly.

Unpacking The Amazon-Twitch Acquisition

A few brief nuggets of interest re: today’s outlier outcome, which is Amazon’s nearly $1bn all cash acquisition of Twitch:

  • Seven Years Post-YC: Justin.tv (the original) company went through Y Combinator in 2007 and then made a hard pivot. You know, a 7-year over night success. (This is also the largest acquisition of a YC company to date.)
  • Concentrated, Risky Bets @ Series A: Alsop Louie invested close to $8m to help Justin and his team handle video server and storage costs, and because there was electricity in the house that they were building it. He had to visit the company’s office to find that out, he told me over lunch last year. It was a concentrated, highly risky bet — exactly what a proper Series A should look like.
  • Gaming = Media = Attention: The act of playing games, and the act of watching games, are media. Building Minecraft servers are the new legos. This is just the beginning of this wave.
  • Low-Key Founders: I’ve come in contact with various Twitch founders here and there, and they were all very quiet in their own way. Limited social media presence, quite reserved in the settings I saw them. Maybe their minds were on something else ;-)
  • Amazon’s Motives: Amazon paid an all cash sum amounting to a seriously non-trivial percentage of their total cash on hand (especially relative to what Google may have wanted to pay). In this light, we could view Twitch as a gaming portal, a streaming base for other media, and/or even a social network. They probably also had all sorts of inside data on how Twitch was scaling their cloud services. Let the theories fly around! Either way, we have to believe there is something deep in this for Amazon, perhaps across all three areas, which made this deal vital.

iOS First. Android Much, Much Later

I have been involved in many situations in all sorts of capacities in and around companies with mobile products where the topic of “When should we go Android?” comes up. My own thinking has evolved on this, and will likely continue to as the world changes. But, for right now, for 2014, this is what I believe: For early-stage startups focused on mobile, there is usually is no need to worry about Android until the product in question attains product-market fit and gets large enough to begin lock-in.

The most common trap here is the early iOS app which gets some buzz. All of a sudden, the founders hear “When are you building for Android?” The natural, enthusiastic response to sincere requests of the Android chorus is to go ahead and build for Android and seek more downloads, more growth, more revenue. I have a different view though. The proper response is: “No. Buy an iPhone.”

Let’s revisit why this is the case. Let me state up front that I have no problem with Android and see its own benefits. But in this context, startups should follow the lead of Instagram and only start dabbling with Android if and when there’s a solid base of millions on iOS and/or if it becomes a strategic chip for the startup. Ok, so why is this so?

  1. Early-stage startup teams cannot afford to handle the hardware fragmentation that plagues Android.
  2. Study after study demonstrates iOS users are not only growing in key geographies, but are more valuable customers.
  3. iPhone 5c and future low cost models will likely steal share from Android relative to yesterday.

Product-market fit is elusive in general, and acutely so on mobile, where distribution pipes are either constrained or flooded. I’m seeing too many teams building for Android too early. Unless there is a huge foundation under the iOS apps, building for Android is likely only to result in a few spikes in user growth and then a lifetime of hair pulling — too much for a small startup to handle. The common wisdom used to be iOS first, Android second — but I think it needs to be amended right now to the following: “With the caveat there may be a small handful of apps which need to be on Android early, mobile startups should be iOS first (of course) and resist the urge to make Android second too soon.” For a product early in its life cycle, the return on investment often can’t be justified.

The Inefficient Frontier

I was in a meeting the other week where someone started talking about “The Efficient Frontier.” I had heard of the phrase, but wasn’t able to immediately recall the exact definition, though it was made clearer as this person charted out the different portfolio mixes the following groups take: founders, private investment funds, and incubators. The optimal place to be on the curve, he argued, was right above the point where the return on investment would be inefficient.

As I read more about the term, I realized it can be different things to different people. Here’s the Wikipedia definition:

The efficient frontier is a concept in modern portfolio theory introduced by Harry Markowitz and others. A combination of assets, i.e. a portfolio, is referred to as “efficient” if it has the best possible expected level of return for its level of risk (usually proxied by the standard deviation of the portfolio’s return). Here, every possible combination of risky assets, without including any holdings of the risk-free asset, can be plotted in risk-expected return space, and the collection of all such possible portfolios defines a region in this space. The upward-sloped (positively-sloped) part of the left boundary of this region, a hyperbola, is then called the “efficient frontier”. The efficient frontier is then the portion of the opportunity set that offers the highest expected return for a given level of risk, and lies at the top of the opportunity set (the feasible set). For further detail see modern portfolio theory.

So, it makes sense that angels, VC firms, and the like want to be on the efficient side of this frontier. But, what then of the folks who are beneath it? It is cliche to say founders take on extremely concentrated risk, but taken within this particular framework, the majority of founders are on “The Inefficient Frontier.” The word “inefficient” isn’t a good word. It implies friction, sub-optimality, and rewards that may not be properly tied to performance. Seen in this slightly different yet powerful perspective, it is a good reminder for me (having been through one of these myself) that a founder’s frontier is often inefficient to begin with, and getting to that point of efficiency requires significant energy to overcome the brutal laws of gravity.

The Bitcoin Crunch

Remember “The Series A Crunch”? Well, I think an offshoot of this will manifest itself across what feels like almost 500 Bitcoin related companies. I, myself – I am a Bitcoin believer and Bitcoin junkie. Yet, despite that optimism, I am continuously floored by just how many Bitcoin startups are out there. I don’t know who is funding them or how they’re making money to survive the typical cycles needed to make Series A investing, which I’ve recently heard defined as “when pros invest and set the terms.” (As a disclaimer, please note I’ve invested in 7-8 early-stage Bitcoin-related startups. I am a long-term believer.)

So, based on that, I’ll try to briefly summarize my thinking: A year ago, some of the world’s best investors placed their bets on a small handful of Bitcoin startups. Many of these companies centered their offering around payment and exchange of Bitcoin. A few months ago in 2014, there was more talk of storage of Bitcoin. And most recently, in the summer of 2014, there’s more talk about companies offering more robust access to the block chain itself, or building out chain-powered apps around ideas such as derivatives and other types of smart contracts.

Reflecting over the last 20 months, I am shocked by the number of Bitcoin startups I’ve seen. It may be more than photo-sharing apps now. Most of them, of course, sadly have no traction whatsoever. Many of them are tended to by people who haven’t been toiling away with the protocol for years. They are solutions chasing a problem. Given the landscape, here’s my view on what will happen to Bitcoin startups moving forward.:

  1. There was an arms race to acquire early Bitcoin accounts and wallets, and a small handful of companies dominate that space. It’s unlikely someone can just enter the space now (though there is a caveat) and do anything meaningful.
  2. The successful Bitcoin teams I’ve found had at least one founder who grew up hacking around with crytocurrency and the Bitcoin protocol. There are many folks entering the Bitcoin space in a “fast friendly” way and those people are likely to lack the proper context of what the technology can really do in order to build something innovative.
  3. Companies which get good seed funding generally consist of stellar teams, are working on consumer adoption issues (like building a mobile app), are building more merchant tools to get suppliers interested in Bitcoin, and are leveraging the Bitcoin platform to bring developers and larger companies into the mix.

The risks associated with these developments (or predictions!) are three-fold:

First, there are some great investors who do not conceive of Bitcoin as anything beyond a currency, or ones that do not believe the environment will be welcoming to these companies (for legal or regulatory concerns). This has constricted the number of larger venture capital firms that can invest in the category (for now), which means Bitcoin startups who graduate to the level of institutional investor may either find a smaller market for their equity and/or some of them may be conflicted out of participating given the eventual consolidation of talent and product ideas that will undoubtedly occur as the ecosystem matures.

Second, all of this means many of the startups which purport to be Bitcoin-related won’t meant the thresholds required to graduate to the level of real institutional venture capital. This is what I refer to as “The Bitcoin Crunch.”

Third, I think this is all healthy and natural, and starts to separate the winning solutions from the mediocre. I’m a believer in Bitcoin both as a unit of exchange as well as a platform for people to build all sorts of new applications, including ones that never use bitcoins themselves. It will take time, though. I do believe something will tip all of this over at some point — it could be an entrepreneur who cracks the code on tying Bitcoin to consumers’ mobile phones, or the group of developers that partner with a company like Amazon or Google to build the next generation of distributed computing architecture on top of the protocol. I have no idea what it will be and when it will happen, but I do believe it will.

Mobile Apps And Call Avoidance

No phone, no phone…I just want to be alone today.” –Cake, “No Phone”

Years ago, I was talking with Davy Kastens, CEO of Sparkcentral, about his product. His company builds products for large consumer-facing businesses to handle, triage, and address consumer complaints about products and service. In our chats, he mentioned a term to me — “Call Avoidance.” I didn’t think much of it at the time, but Devy build his product around the costs companies would incur as a result of fielding customer inquiries via phone.

Only recently did this term pop back into my head. You may remember the “Push For Pizza” mobile app and viral video. (If you haven’t watched the video — it’s hilarious, well worth the time.) As soon as I saw it, Davy’s line came back to me. The entire app is built around the concept Call Avoidance. On mobile, all of the apps that have cropped up where you “tap stuff to get things,” many of them replace our need for having to make a phone call and talk to another person altogether. My immediate reaction to the pizza app was: “Ha! But, I would use that.”

And, then it dawned on me…on mobile phones, so many popular apps have essentially replaced our previous reliance on telephone calls with app-initiated API calls. For instance, we now can now call a taxi, order food for delivery, schedule services, or just send a “Yo” by simply tapping our phones with mobile software which replaces API calls with telephone calls. It’s charming yet odd that rapid growth mobile phones enabled us to not to have call other people at all.

There’s a deeper lesson here for people who aspire to build consumer mobile apps. I’d say, observe the world around you and see where people are still laboring to make phone calls on a somewhat frequent basis. You’ll find issues like medical billing and insurance claims (or any kind of customer service) and phone calls made to local businesses, where consumers often spend the most money within a certain radius of their home (and perhaps why Path acquired and integrated TalkTo earlier). Today’s consumers expect powerful yet elegant applications which will make their lives easier, and not having to call anyone to discuss logistics makes life that much easier.

The Summer Of Uber: Aggressive Expansion

Now, our operation is small, but…there’s a lot of potential for….aggressive expansion.” -The Joker, The Dark Knight [video clip]

Every once in a while, a truly world-class technology company emerges. There’s the scale of Apple, building integrated devices and changing the game each time; there’s Amazon, selling books online as a wedge to selling everything we can imagine; there’s Google, leveraging big data to build the world’s premier information company; and, most recently, Facebook, which is on a long march to bring every human on the Internet and connect them to the people, places, and things that matter to them. Each of these companies operate at massive scale, touch all four corners of the earth.

In a place like Silicon Valley, the only natural question to ask is: What’s the next startup most likely to join the pantheon above? After the past few weeks, the answer is easy: Uber.

After all the chatter around Uber’s most recent fundraising, which valued the company at over $18 billion, the company has demonstrated tremendous dexterity and range in launching a number of high-profile initiatives and moves. Specifically, consider the following timeline:

  • June 2014: Uber raises over $1 billion, valuing the company at over $18 billion.
  • August 5, 2014: Uber announces UberPool, empowering riders to share rides based on proximity and destination similarity. (Worth noting many observers feel Uber scooped Lyft’s plans to launch Lyft Line, but now it’s moot as both are up and running.)
  • August 19, 2014: Uber announces the appointment of David Plouffe to run the company’s public policy and strategy. You may have heard of Plouffe, who in the past simply engineered one of the most famous and successful political campaigns of all time with Barack Obama in 2008.
  • August 20, 2014: Uber announces a “test” for Corner Store in Washington, DC, a service within the Uber app which allows consumers to order basic sundry items, putting the company on a path to be squarely in competition with initiatives from the likes of Amazon and Google, and many startups like Postmates, Instacart, DoorDash, and others.
  • August 20, 2014: Uber, on the same day as Corner Store, opens its API and announces 11 partner integrations with companies like United Airlines and OpenTable, among others. These moves take advantage of Uber’s scale (as my friend Rohittweeted, in mobile, Uber offers Google-like scale).

Consider, for a moment, the complexity of executing on all of these initiatives within a short period of time. Sure, many of these may have been in the works for months and now ready to showcase in a storm of activity, but the bottom line is Uber is not messing around: It is launching new products quickly and taking an experimental approach to continue to iterate and find product-market fit; it is not going to go into regulatory battles unarmed anymore; and they have a killer BD story to sell to hundreds of consumer mobile apps at scale. Launching with 11 API integrations was likely “taking it easy for Uber,” where 11 partnerships for most well-funded startups may be around that total after years of grinding it out.

A final thought. If hiring is a leading indicator of private company momentum, click here and take a gander at the breadth of jobs Uber is hiring for across the world. I’ll repeat that: Across the world! This is where we start talking about real physical scale. Over the summer holidays, a family member on the east coast earnestly asked me if I thought factors X, Y, or Z could hurt Uber. I thought about them, but ultimately answered with the following: “What will stop it?” Right now, I can’t think of anything.

Parkageddon

Over the past few years, various startups have attacked the “transportation” space by offering different modes of transport — private black cars, fist bumps with mustaches, sidecars with community donations, car rentals at home, car sharing near work, personal drivers for the day, private buses to replace popular public bus lines, and more.

All of this activity drives home the point that transportation’s value to us is directly related to our own needs of sustaining income and relationships. And, it helps that public transit infrastructure lags woefully beyond what the public requires today: We don’t want to pay for new infrastructure, but we wanted to be driven to tonight’s event yesterday.

So, if entrepreneurs have figured out how to get a good deal of us from Point A to Point B without our own personal vehicles, and what happens to those folks who still drive their own cars into the parking abyss that is San Francisco? Have you seen parking rates on the nights of Giants games in SOMA creep up yearly? Is the city adding more office and residential space but fewer garage slots?

These questions are, of course, rhetorical, and the only answer I have for you is: Get ready for what I like to call #Parkageddon! That’s right. This Fall 2014, in San Francisco, you will see a level of car congestion that will beat last year’s levels. More and more startups (and investors) are now permanently in the city. The Giants are doing well, and the A’s even better. People who have been forced out of San Francisco as residents yet hold jobs in the city are likely to commute in by either car or rail.

#Parkageddon. Just watch, you will see people traveling into the city spend 33% of their commute time cruising to the city perimeter, 33% of the total trip time getting through the bottlenecks to permeate the perimeter, and then 33% of their commute time securing parking. And, those people will frustrated or even angry. They will tweet their rage. They will experience #Parkageddon.

[When I started writing this, I thought I’d list out some of the startups I’ve heard of like Caarbon, Vatler, Curbstand, Flightcar, SpotHero, ValetAnywhere, Zirx, Luxe, MonkeyParking, and others. But, then I was curious -- “How Many Are There?” Well, according to AngelList, there are 83 parking startups. Eighty Three. So, no...I won’t detail them here. As a disclosure, I am a consultant to Bullpen Capital which recently invested in SpotHero.]

It’s a natural reaction to snicker, but when I sit back and think about it, parking is a real, nationwide, mass consumer problem, or at least an annoyance. And, we have already seen scores of businesses launched that tap into labor markets and match demand (here, to park my car) with supply (here, to pay people to valet). All sorts of risks abound with this space, and we can also expect to see some unsavory stories hit the press. Some of the solutions are based around networks of individuals workers (mobile-empowered valets) while some try to give you access to parking garage inventory; some startups tried to let people trade public parking spots (which was met with City Hall fury), while others try to provide crowdsourced intelligence about where someone should park, like Waze but for parking.

Just as we’ve seen with transportation, and with food delivery, and with home cleaning, there’s no good reason to not think parking can be on that list. Will we let drivers take our cars? We already do at hotels, or at restaurants. We let people sleep in our extra rooms or squat in our subletted apartments. The common risks associated with handing over your car keys to a stranger can be managed with networks like Facebook, GPS tracking and motion sensing from a valet’s phone, background checks powered by companies like Checkr, and so forth. It sounds kind of crazy and even twisted, but parking eats up a lot of peoples’ time, and those who have money are willing to spend it for more time. Put that in the meter.

** Post-script: I’ve been thinking about parking much more now. Too much. Today in the car, something dawned on me — if this takes off in SF, the city (and other vested interests) are going to fight this big time. Now, you might say “Well, they fought the cabs and looked what happened?” But, that isn’t the right analog. If this P2P distributed parking thing works, it will likely (1) reduce parking violations and therefore one of the city’s biggest revenue machines and (2) potentially take money away from garages which prey on people who only realize too late that they’re paying $6 per every 15 minutes (and are run by “vested” interests). The city and the garages can be more effective at squeezing these startups because the companies have to rest the cars somewhere when they’re not in use. This isn’t (yet) carsharing. While Uber and other transport networks cut out the middleman, there aren’t middlemen in parking. If they succeed, the startups will become the middlemen.

Haywire is written by Semil Shah, and is published under a Creative Commons BY-NC-SA license. Copyright © 2014 Semil Shah.

“I write this not for the many, but for you; each of us is enough of an audience for the other.”— Epicurus