On-demand businesses

Rob Kao is a co-founder of ValetAnywhere, a monthly valet parking service in NYC where we’re investors.

ValetAnywhere started off as an on-demand valet parking service and switched to offering only long-term monthly parking after it couldn’t get the unit economics of on-demand parking to work 5 months into its launch. This was back in December 2014, and Rob shares the thinking behind this decision in his Medium post on the economics of on-demand businesses.

Another valet parking startup, Zirx, also decided to shut down its on-demand service in February 2016. And Luxe Valet, the other big player in the market, pulled out of Boston and Philadelphia months after its launch in these cities. Each of these moves is an indication of the challenging economics of offering on-demand valet parking.

Most on-demand services are great for customers. Customers are offered a premium service in very little time, at a cost that rivals or beats the traditional version of the service which existed before the emergence of on-demand enabling smartphones. However, just because a service makes customers happy doesn’t mean that you can build a profitable business around it. You need to be able to make customers happy at a price point where the economics of the business also work out. ValetAnywhere had the foresight to realize this very early on.