Mobile Payment in Parking Industry – An Interview with Chris Hoogewerff

We're a mobile payment company for the parking industry. Pretty simply, as an end-user, you can use our app, send a text message, or call the IVR (Interactive Voice Response) system to pay for parking.

What we have is a lot more valuable than that, because you can start to do things that you could never do before in the parking industry, like validation programs and special discounts and coupons and offers. It's a nicer user experience to use your phone to park, whether it's at a meter or at a garage. There's a lot of value there for the parking operators and for the municipalities too. It's access to real-time data. It's the ability to change your prices based on demand. It's the ability to go in and look into a customer and see how often they’ve been here. What can I know about this customer that I never knew before?

Like I said, it's a mobile payment startup. It's a mobile payment company for the parking industry. We're really passionate and excited about a lot of other things we'll be able to do there, too.

Yes. That's correct. We started in this industry from an off-street standpoint. Our founder was in the Bay Area. He saw the iPhone come out and he said, "Man, this is really going to change how people park their cars. I can feel it."

So he started this company. He approached some parking operators in the Bay Area that were largely based on cash. They have unattended, cash-only locations where really their customers had to fold up a few dollar bills, and put it in the slot that corresponded to the stall number where they parked. If they didn't have cash, they’d be out of luck. It was a very easy problem to identify. It was a pretty straightforward problem to solve. The app development, that's tough. We're all new at it. He was new at it at the time, but it was a pretty clear route where he wanted to be.

We moved from there to other off-street scenarios. We built a gate kit, where you can actually control a gate arm and make the gate go up and down from the app. All focused on off-street, at that point.

We've started to grow; we've started to bring in new people. Carl, the founder, met Barney Pell, who is a long-time technologist, angel investor, and serial entrepreneur. They met at a parking lot. Of all places, right? Carl was out there trying to get new customers, trying to make deals happen. They started talking. Barney had always thought there was an opportunity in parking. He always hates having to pay with cash, anyway. They started talking, and they had a few meetings, and I think it was less than two months later Barney became the first, he became the chairman.

He was an angel investor. He kind of brought his whole passion for entrepreneurship and for technology to the table, brought that to QuickPay. From there, we've just been growing ever since. He's been bringing his expertise, and we brought a bunch of folks on who have been in the parking industry for a long time. That's where this whole thing came from. For years, it was off-street only. Then the opportunity came up to do what we're doing, but do it in on-street. We took a lot of work on the development side, but it ended up being a new future for us. We moved from traditionally all we were doing was off-street, to going to Salt Lake City and outfitting their whole downtown with QuickPay ready stalls.

Now, if you're in Salt Lake City, you can either use the pay-on-foot machines or where you kind of have to walk down the block, find a blue meter, and swipe your credit card, put in your stall number. Or you can just use your phone. We have QR codes and NFC chips on every stall. Like I said, that was a future for us. This is actually what some of the other folks in the industry have been doing from the start.

For us, it's interesting because Salt Lake City was such a big, big move for us. Off-street is by far, I think, a bigger market in the U.S. and worldwide. It's where a lot more money is, I think.

There are a few things there. One, if we're talking about cash-only facilities, like traditional parking meters on the street, or these facilities like I talked about where they used to only accept crash if you rolled it up and folded it and slid it into a slot, the benefit is now you don't have to carry around cash.

I think a lot of people are going that way, where they don't always visit the ATM every couple of days, and there's not a very big need to. The fact is, parking is, I think, the second-highest cash industry in the country, only behind alcohol in bars.

You have all these industries where they're just handling less and less cash. Why not parking? That's the initial benefit. Now, you don't have to carry around cash. You can use a credit card by virtue of your phone. In facilities that already accepted credit cards, there's still the benefit of not having to take your credit card out of your wallet, not having to pull a ticket at a garage, not worrying about losing the tickets. These are more convenience-type benefits.

There's a whole other side of the equation, too. It really is about value. We're adding convenience by avoiding the cash transaction. We're reducing shrinkage for our partners by reducing the amount of cash they handle. For the end-user, that's a convenience thing.

Where we can really add value is using the customer data for loyalty programs for validation programs. Parking has always been a very anonymous industry. Except for monthly parkers, you really would have no idea who is driving in and out of your facility. Now, compare that to the airline industry. Compare that to hotels, where you have frequent flier miles, and in hotels, where you have points. This is all based on the idea of customer identity. You know exactly how often they use your service. You know where they go, when they go, often times you know why, because of that data. The real value is being able to offer up that information to our partners. Now, somebody who parks isn't just a vehicle, it's a person. You can start to say this person's come here and parked every weekend for the past month. We should really do something. Maybe it's a virtual punch card, so they'll come back.

Yes, it's absolutely true, you know. The nice thing is that we're not some evil company collecting customer data. The beauty of it is that the benefits are for everyone involved. If I'm driving to a garage, and I go there every day, it's nice to get an offer that means something to me that I would actually value. That's the whole point. I'm getting an offer. I'm getting a validation; I'm getting some kind of a promotion that actually gives me value. We're just the engine that can provide a greater standard of value, I think, for the industry.

Yes, I think a lot of it goes back to what we already talked about: the root of the company, and how that defines their vision. If it's a company that started with on-street, they're going to have that mentality, and they're going to have that focus for working with the municipalities. It's a different vision.

We all offer a lot of similar things, and the core benefit is you use your phone to pay for parking, right? I think the difference is how you go about doing it. Some companies have different user experiences.

Some mobile-payment providers, as you know, have QR codes that you scan. Some of them are using NFC. For some of them you're keying in meter numbers. There's a few different ways to experience the service.

From an operator side, for the operator, for the municipality, they're getting different standards of data. They're getting a different experience on their end, right? How much information do we get? What kind of information is it? Is it real time? There is a variety on that side as well.

I understand where you're going. No one wants to have four different apps on their phone to park. But I don't want to say all the competition is hurting the end-user, because it's actually what's driving a lot of innovation. I think that's what a lot of people are getting excited about in the industry. For a while, there were one or two companies, and now there's a bunch springing up. Now there's really a pressure to innovate, to come up with the best product you can have, and to really add value to the industry.

That's a good thing. But, there's going to be consolidation in the industry. I'd love there to be a standard where I don't need four different apps to pay for parking. I just need my favorite. Whoever gets to be the favorite, they'll be the winner, but there shouldn't be a requirement to have all these different accounts and all these different apps.

Think about credit cards. I don't have an AMEX or a Visa or a MasterCard or a Discover. I have a couple of credit cards, but they are good pretty much anywhere. That's a good experience. We're kind of in a stage now where I think it's just working itself out. It's new, and you have a number of people playing, and you have a number of different companies working at it. In this stage, yes, it's true that you can use QuickPay in some places where you can't use ParkMobile. You can use ParkMobile in some places where you can't use QuickPay. You have PayByPhone in other places. It’s not an ideal scenario. But, give it a few years. I think it's really going to work itself out.

You mentioned award programs, and possibly parking garages and operators getting new data and being able to change parking that way. Can you sort of predict what you think the next big thing is?

Yes. I think you mentioned that I said consolidation. I think that will happen, but I wouldn't call that the big thing that's coming. I have a suspicion that yield management is going to be something that's really going to make some big waves in this industry.

When you buy an airline ticket, you're not buying the same price any day of the week. It's fluctuating, and it's based on demand, and it's based on occupancy. It's based on supply, right? You've had a limited access in the parking industry to engines that can actually drive that. I really think in the next few years, it's going to be whoever brings yield management, whoever goes to a parking operator or a municipality and says, "Listen, I know based on your customer data, your occupancy levels, based on your facilities, based on the traffic, I know exactly how you should price your parking. I know when you should price it that way, and I know what your optimum levels are." These are math calculations, right? These are algorithms that somebody smarter than I am is going to come up with. If you can package that into a company, into a product, that makes it easy and automates it, that'd be enormous. It'll change the industry. It'll turn into something very similar to the airline industry, the hotel industry.

Right. If prices are increasing and you're making more per space, you have less people driving. That's a good thing, too. A lot of folks in this industry, I'm pretty sure, are worried about that. I think these things work themselves out. It's just a factor of economics.

Sure. It's actually a pretty interesting story. Back in college — I went to Northeastern — a friend and I got together. We met in the entrepreneurship program, actually, and we were just exploring options. We both agreed that parking was annoying and a hassle, and, you know, no one argued with us there.

We thought, "Let's go try to find a way to fix it." Maybe we can't fix the whole parking experience, but maybe there's one thing we can do, maybe there's an opportunity we can find. We started looking.

We were actually leaving my apartment; we went to my back alley. I lived in the heart of Boston, right near Fenway Park. Parking is super expensive. We walk through our alley, and there are driveways that are completely empty. There's room for dozens of cars in this alley that just… they were vacant. That was kind of a moment where we both identified an opportunity. If a stone's throw away you can pay $30.00 to park, why are these all empty? We got into the driveway sharing business. This was at a time when I don't think the driveway sharing concept was as ubiquitous. It was like an Airbnb for parking spots and driveways.

We wanted to go to property owners and renters of the apartments, and landlords and property managers. We wanted to go to them and say, "Hey, you could actually make some money from those spots. Rent them out for the day, for the hour, for the week, whatever, and we'll help you do it." We had a lot of people that were excited about using the service. A lot of people wanted cheaper parking. They wanted a place where they could park and not pay the rates that are at the garages. What we had trouble with, actually, was getting the inventory. This is something I've heard from a lot with people who've gone through the driveway-sharing experience. It's funny, because there are a number of companies that have tried it. The inventory is just really hard to get. Renters, the people who are actually living there in cities, tend not to own those spaces, so they don't really have the rights to go out and rent them. If you try to find the landlords, they are more concerned about renting out their apartments that make a lot more money than the parking spaces. The same thing is true with the property managers.

We tried for a while, but we just didn't have success in getting the volume. And the driveways that we could get a hold of, we'd have access to them for one or two days a month. It wasn't a regular thing. Then we started thinking, "I still like this parking space. I think there's still an opportunity." Let's try a different angle. Let's go to garages, where the real inventory is, where the real money is. Let's go find something there. So we started walking around garages. Sure enough, parking's expensive, but they were never full. Parking, people complain about it all the time. People are always saying there's nowhere to park. But parking garages very often have plenty of vacancy. Sometimes it's just the top two floors. But it's never like they're always full. We started approaching the owners of these garages and then saying, "Hey, let's try to get these filled up. Let's do some unadvertised pricing. Let's let people reserve parking in advance for a lower rate." It's not going to hurt your revenue stream, because we're not going to publish these rates on your garage. We're not going to put up a big sign. Your customers that you are getting today are going to get the same amount they would and you'll get the same number of them.

We were just going to try to find people who are outside of their existing customer base. The ideas that we had, the marketing concepts, the business plan: it was all nice, it was all sound, and we had some people in people who owned garages who were interested, who wanted to go ahead and do it. Then the struggle became that we actually didn't have the technology to get people in the door. We couldn't get somebody through a gate. We tried working with some of the equipment manufacturers and some of the parks systems. It's a big hassle. They've got a big backlog of products, enhancements that they have already. It would have taken a year and a half and maybe $70,000 in development work on their side to get an integration in place where somebody could show a QR code on their screen and it would get them in the gates.

So, you know, we worked at this for maybe a year, a year and a half or so. Finally, one summer came, I said, "All right, Neil" --Neil is my business partner-- "We're going to work on this full-time. We're going to give it everything we've got for the rest of the summer. If we've lost traction, if haven't gotten anywhere, then let's throw in the towels. Go do something else and go back to class.” We had plenty in our favor. It's not like cards just didn't line up for us. We made a go at it. We went through some incubator program in Boston. Summer was over and we hadn't made much progress, so, you know, we just decided 'let's call it quits for now.'

We both went back to class. I actually wrote an article about the experience I had been through, some of our successes and failures. It was like a post-mortem of the whole process.

The story got shared around a little bit. It was still pretty unique to see a story about somebody who had failed at a startup, instead of just hype about some of the great things that are going on. The story got picked up a little bit, shared around the Boston startup community, and around the parking community as well. That's actually how I got to be where I am today.

My boss, Barney Pell, read the article. He wanted to get in touch. He said, "You know, Chris, we've got a trade show coming up. I want you to fly over here. We'd like to meet you. I read your story, and you know, I really like a lot of the ideas that you've had. We actually have the technology to make it work." That really intrigued me. So, I said, "OK, I'll take a week of from class." We'll go see what those folks have to say. I met them. I loved the team. I loved the passion. I've been full-time ever since. I dropped a few classes and took some extra time to graduate, meanwhile. I've never looked back. It's been really, really fun.

You know, it's funny, because one of the reasons that people probably find it dull is one of the reasons I find it so exciting. That's because it's an industry that for a long time hasn't progressed a great deal. All of the sudden, you have all these people innovating and trying to make it better. So, it's an industry that's just so ripe for innovation, and you see it springing up every day. Someone's coming out with something new. It's nice to be a part of that shift. Some really great things are happening to this really big industry. I get to be a part of it. We get to have a say in where it's going to go.

That's really exciting to me. The fact that there's an opportunity that so many people feel. An opportunity that so many people are pained by right now. We started off this conversation: parking, for a lot of people, is a pretty big hassle. We can be the people that make it better, and that's nice.

I have a puppy. We got a golden doodle. He's six months old now. We like going on hikes. We do a lot of hiking, my girlfriend, and I, and the dog.