SpotHero: Mark Lawrence

Summary

How I Built This with Guy Raz: SpotHero’s Journey with Mark Lawrence

Podcast Information:

• Title: How I Built This with Guy Raz
• Host: Guy Raz | Wondery
• Episode: SpotHero: Mark Lawrence
• Release Date: March 10, 2025

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Introduction to SpotHero's Origins

Mark Lawrence, the co-founder and CEO of SpotHero, shares the intriguing story of how thousands of dollars in parking tickets led him to create one of North America's largest digital parking platforms. Launched in 2011, SpotHero has successfully parked over 50 million cars, addressing a seemingly mundane yet pervasive problem—finding convenient and affordable parking.

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Early Challenges and the Financial Crisis

Mark’s entrepreneurial journey began after a stint at Bank of America during the tumultuous financial crisis of 2008. Assigned to work on mortgage-backed securities, Mark recounts the chaotic environment reminiscent of the movie "The Big Short" ([06:26]). The experience was fraught with uncertainty, leading to his eventual layoff in 2010—a moment that paradoxically became a turning point for SpotHero.

Mark Lawrence [09:45]: “I was able to use $6,000 of that to start SpotHero.”

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Identifying the Parking Problem

The initial idea was inspired by Mark’s frustration with accumulating parking tickets totaling around $5,000 while working in Chicago ([13:08]). Together with his roommate Jeremy Smith, Mark envisioned SpotHero as an "Airbnb for parking," allowing individuals to rent out their driveways or underutilized parking spaces. Their first test involved selling parking spots around Wrigley Field via Craigslist, achieving daily sales despite the limited initial revenue.

Mark Lawrence [18:10]: “But it was more exciting to sell one spot. It was like, wow, how good it felt when someone went on our own website and purchased one single spot.”

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Building the Platform and Expanding Slowly

With $12,000 of their personal savings, Mark and Jeremy developed Spothero.com, initially facing significant operational friction due to the lack of a seamless digital experience. Their methodical approach focused on one city at a time, starting with Chicago. This strategy allowed them to fine-tune their business model amidst rising competition from better-funded rivals.

Mark Lawrence [22:00]: “But, 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.”

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Facing Intense Competition and Investor Pressure

As SpotHero gained traction, numerous competitors emerged, sparking a highly competitive landscape. Investors urged Mark to scale rapidly, fearing that slower expansion would render SpotHero irrelevant against well-funded adversaries like Lux and Zerx. Despite mounting pressure to blitzscale, Mark remained steadfast, believing that deep relationships within the parking industry were crucial for sustainable success.

Mark Lawrence [41:02]: “The parking industry was more about relationships. ... you can just throw money at a problem didn't work with an industry that was, you know, really about relationships and trust.”

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Strategic Expansion and Acquisitions

In 2017, SpotHero acquired its main competitor, Parking Panda, significantly enhancing its market presence and operational capabilities. This strategic move not only consolidated their leadership in the parking space but also expanded SpotHero’s reach into Canadian markets. Despite the acquisition challenges, including due diligence and integration, the decision proved pivotal in solidifying SpotHero’s dominance.

Mark Lawrence [62:43]: “What was interesting, though, with Parking Panda is they basically decided they're like, we're selling. ... I was looking at how much in Sacramento? Secondary cities were actually arguably proportionally more profitable.”

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Navigating Through COVID-19

The onset of the COVID-19 pandemic in early 2020 posed an unprecedented existential threat to SpotHero, leading to a drastic 98% drop in bookings by April 2020. Mark describes this period as the most brutal yet, necessitating tough decisions like laying off 70% of the workforce and halting payments on various contracts to sustain the company.

Mark Lawrence [67:48]: “It was by far the hardest time that we as a company had to go through. I mean, brutal. Brutal.”

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Recovery and Growth Post-Pandemic

Despite the severe setbacks during the pandemic, SpotHero rebounded strongly, growing to three and a half times its pre-COVID size. Factors contributing to this recovery included increased reliance on personal vehicles over public transit and a strategic focus on scalable operations. Today, SpotHero partners with over 1,600 parking companies, making it the largest player in the digital parking industry in North America.

Mark Lawrence [70:48]: “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 greater than all the others combined.”

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Key Insights and Conclusion

Mark attributes SpotHero’s success to unwavering focus, consistency, and the ability to adapt strategically while resisting the allure of rapid, unfocused expansion. He emphasizes the importance of building strong industry relationships and maintaining operational excellence within a concentrated market before scaling.

Mark Lawrence [72:05]: “There’s a value to consistency. There’s something to be said for focus. ... Our focus on just one thing and one thing very, very well has contributed.”

SpotHero’s journey underscores the significance of perseverance, strategic decision-making, and the resilience required to navigate competitive and unforeseen market challenges. Mark Lawrence’s story is a testament to how addressing everyday problems with dedication and strategic insight can lead to monumental success.

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Notable Quotes:

• Mark Lawrence [09:45]: “I was able to use $6,000 of that to start SpotHero.”
• Mark Lawrence [22:00]: “But, 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.”
• Mark Lawrence [41:02]: “The parking industry was more about relationships. ... you can just throw money at a problem didn't work with an industry that was, you know, really about relationships and trust.”
• Mark Lawrence [67:48]: “It was by far the hardest time that we as a company had to go through. I mean, brutal. Brutal.”
• Mark Lawrence [72:05]: “There’s a value to consistency. There’s something to be said for focus. ... Our focus on just one thing and one thing very, very well has contributed.”

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Mark Lawrence’s SpotHero exemplifies how tackling everyday challenges with strategic focus and resilience can transform a simple idea into a dominant market leader. This episode provides invaluable lessons on entrepreneurship, emphasizing the importance of perseverance, strategic decision-making, and maintaining core principles amidst intense competition and unforeseen crises.

Transcript

[Guy Raz]

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[Mark Lawrence]

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.

[Guy Raz]

Wow.

[Mark Lawrence]

I remember a board meeting where I was we've been telling you 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.

[Guy Raz]

Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. 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. 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. 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. Mark would build the SpotHero app and then get a cut from every parking spot. Soldier 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. 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.

[Mark Lawrence]

Yeah, the movie, the Big Short for me is a documentary. Yeah, it's funny and it has ridiculous things, but that's like exactly how it was. Like, I remember 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 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?

[Guy Raz]

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

[Mark Lawrence]

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 gotta be the last one to leave the office. And I was like, okay, well. And there was really nothing to work on then.

[Guy Raz]

Yep.

[Mark Lawrence]

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 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 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. And the work, it was just fake work.

[Guy Raz]

You eventually were one of those. Laid off in 2010.

[Mark Lawrence]

Yeah.

[Guy Raz]

And was it kind of a relief, in a sense?

[Mark Lawrence]

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, okay, we started, and it was like, crisis, right? I never spent any money. I saved money because I'm like, okay, 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, okay, now it has some finality. 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 Spot Hero.

[Guy Raz]

Right. Which we'll get to in a moment. But.

[Mark Lawrence]

But.

[Guy Raz]

But basically you were. You're laid off. You. You saved a bunch of money. How much money, by the way, did you save?

[Mark Lawrence]

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

[Guy 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.

[Mark Lawrence]

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 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 I bought a beard trimmer, okay, like, off Amazon for, like, $30. And he was so disappointed. He's like, I can't. He's like, you don't need the beard trimmer and you don't need the chicken. I was like, I know, but I've been eating rice and beans for months. And so we kind of had that, like, accountability between us.

[Guy 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 Were whatever happened, if you were fired or you lost your job, you would just travel. And you write this on your blog. Blog post, Lifestyle ignition. Back in 2008. You write, I am going to go on a bike trip across Africa.

[Mark Lawrence]

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? Like, especially if you're going uphill.

[Guy Raz]

Where are you going to start, by the way? In the south or in the north?

[Mark Lawrence]

I was going to 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.

[Guy Raz]

So 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 had been a roommate.

[Mark Lawrence]

Yeah. So here's what's interesting, is the reason Jeremy Smith became my roommate is because Brandon, the roommate, he was on the bike trip. He went on the bike trip, and Brandon 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.

[Guy Raz]

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

[Mark Lawrence]

So he was at Motorola, and 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 and bank of America. And he was, like, in love, like, with Motorola. He's like, corporate America's amazing, and Motorola's 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.

[Guy Raz]

Yeah. So another thing I think that was happening around this time, which would actually lead you to starting spot hero, is that both you and Jeremy, I guess, 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?

[Mark Lawrence]

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

[Guy Raz]

And you paid them, presumably? You paid them all.

[Mark Lawrence]

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 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.

[Guy Raz]

Yeah.

[Mark Lawrence]

And. And so I remember, I'm like, oh, well, I 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 301, 302, and 303pm More than 6 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. 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 gonna go to jail for parking tickets?

[Guy Raz]

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

[Mark Lawrence]

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, the last month of.

[Guy Raz]

Yeah. In the bleep year.

[Mark Lawrence]

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

[Guy Raz]

And then you've already parked your car for the night. You missed the sign. Yes.

[Mark Lawrence]

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

[Guy Raz]

They're so good. All right, so 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?

[Mark Lawrence]

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.

[Guy Raz]

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

[Mark Lawrence]

Basically, 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 9:00 at night.

[Guy 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.

[Mark Lawrence]

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?

[Guy Raz]

Right. Okay, so you guys start talking about this and clearly you're excited. You get excited about it. But initially he's working at Motorola. By this point, you're already laid off from bank of America.

[Mark Lawrence]

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

[Guy Raz]

Wow.

[Mark Lawrence]

And then he started working at a pizza place.

[Guy 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?

[Mark Lawrence]

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.

[Guy Raz]

Not literally on Wrigley Field, but in the neighborhood. Wrigleyville.

[Mark Lawrence]

Right, in the neighborhood. Wrigleyville. In the alley behind his apartment. So our first spot was called Brett's Spot. That 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.

[Guy Raz]

Right. You see them build a website yet? First, just starting with one space, one ad on Craigslist.

[Mark Lawrence]

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.

[Guy Raz]

And this is all for. For Wrigley Field?

[Mark Lawrence]

Yeah.

[Guy Raz]

And there's a phone number or there's like an email address that they can respond to. Okay, Yep. So. So what happens?

[Mark Lawrence]

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

[Guy Raz]

During the season.

[Mark Lawrence]

During the season, correct.

[Guy Raz]

And how much were you charging for the spot?

[Mark Lawrence]

$20 for South park and $40 for valet.

[Guy Raz]

All right. You can't really build a business off $20 a day or $40 a day. Right. But this is a start. It's just a start to kind of see. And you're selling this spot out pretty much every day through Craigslist, Correct, Through Craigslist.

[Mark Lawrence]

We were selling it out every day.

[Guy 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?

[Mark Lawrence]

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 background. And I said, you know, what do you think I should do? And he said, well, you should use Python. And it's funny because obviously Python is a critical component of what we do. But I said to him, I said, what's a Python? What does that mean?

[Guy Raz]

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

[Mark Lawrence]

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

[Guy Raz]

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

[Mark Lawrence]

Yeah.

[Guy 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.

[Mark Lawrence]

Yeah.

[Guy Raz]

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

[Mark Lawrence]

I mean, we would just go door to door.

[Guy Raz]

You and Jeremy?

[Mark Lawrence]

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. And other people are like, yeah, like, of course. Like, wait, I don't have to do anything. Right? Like, I'm in.

[Guy Raz]

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

[Mark Lawrence]

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

[Guy Raz]

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

[Mark Lawrence]

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 remember, I'm like, wow, 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.

[Guy Raz]

So going door to door in Wrigleyville, I mean, that's a lot of work. I mean, that's like, let's say one out of five or 10 people are gonna do it. You gotta go to 10 houses before one person is gonna be like, I'm in. And then you've signed them up for, you know, you're basically gonna 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.

[Mark Lawrence]

Yeah. And it's not also easy in Chicago in the snow, you know, because 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 tell people, like, hey, six months from now, we can make you money on your spot to get contacts. So we went to I don't know how many homes, but ultimately even people that said yes, they might have moved or they're like, I need my spot now. And we were able to get about 50 spots after about a year.

[Guy Raz]

Took a year to get 50 spots.

[Mark Lawrence]

Yeah.

[Guy Raz]

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

[Mark Lawrence]

Yeah, it's, you know, like thinking back, it seems ridiculous. Like, gosh, like 50 spots a year. But 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. It could be 100 spots, right? Like it could be 200.

[Guy Raz]

But I mean, even just back of, back at 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.

[Mark Lawrence]

Right. But I, I wasn't thinking about it like that. I was more like, yeah, okay, we got double digit sales in a month. Right. You know, a funny milestone was when two people tried to buy the spot at the same time and the site crashed.

[Guy 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?

[Mark Lawrence]

Yeah, the domain was available. It's interesting because we had a brainstorming session and you and Jeremy. 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 Spot Hero 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 Park Shark.

[Guy Raz]

Park Shark.

[Mark Lawrence]

But the domain was taken. So we went to the second one, which was Spothero. And so we bought the domain spothero.com and then we went on 99designs and paid $99 to get a logo made.

[Guy Raz]

Yep. So you really started 99designs. Just whatever you bid, whoever bid the lowest amount. So you have it just, you have a logo, you 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.

[Mark Lawrence]

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.

[Guy Raz]

Okay.

[Mark Lawrence]

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.

[Guy Raz]

Got it. All right, so you launch a website, you've got. It's kind of janky. It sounds like but 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?

[Mark Lawrence]

I mean, I googled how do you get customers?

[Guy Raz]

Nice. 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. I almost always stay in Airbnbs when I travel because it lets me experience a town or a city just like the people who live there do. Maybe you're planning a trip for a long holiday weekend while you're away. You could Airbnb your home and make some extra cash toward the trip. Or maybe there's a big game or event coming to your city and lots of fans are going to be visiting. You could Airbnb your home or an extra room and make some extra money while people are in town. Whether you could use a little extra money to cover some bills or for something a little more fun, your home or spare room might be worth more than you think. Find out how [e-mail] host are you tired of paying for overpriced razors and grooming products? Dollar Shave Club has everything you need to not only get a quality shave, but an affordable one too. From Raz and electric trimmers to pre and post shave care, including their cult favorite Shave butter, they have a full lineup of personal care products for any man anywhere with any type of hair. But don't take my word for it. Try for yourself. Dollar Shave Club products are now available everywhere, so you can order from their website, Amazon, or get them at your favorite retailer near you. Alternatively, you can visit their site right now for 20% off orders of $20 or more and get your products delivered your door. Visit dollarshaveclub.com howibuiltthis and use promo code built for 20% off orders of $20 or more. And remember, whatever you shave, welcome to the club. One of the hardest parts about B2B marketing is reaching the right audience. I constantly get aggressive emails from people offering me marketing services I just couldn't possibly need. So when you want to reach the right professionals, use LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals, and that's where it stands. Apart from other ad buys you can target by job title, industry, company role, seniority, skills, company revenue, whatever you're looking for. Which means you can find all the professionals you need to reach in one place. Stop wasting budget on the wrong audience and start targeting the right professionals only on LinkedIn ads. LinkedIn will even give you a $100 credit on your next campaign, so you can try it yourself. Just go to LinkedIn.com BuiltThis. That's LinkedIn.com BuiltThis. Terms and conditions apply only on LinkedIn AD. 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.

[Mark Lawrence]

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 Spot Hero 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.

[Guy Raz]

That is absolutely brilliant. It'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 Spot Hero.

[Mark Lawrence]

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. It added up. We didn't have too many parking spots, but we were able to kind of, you know, grow neighborhood by neighborhood.

[Guy Raz]

Got it. But still, I mean, the business basically started by. By going to people and saying, hey, rent is your spot. Right. Like, just like Airbnb. But I guess after a year of doing this, you realize 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, Right.

[Mark Lawrence]

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 Spot Hero? 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.

[Guy Raz]

He saw your Twitter feedback.

[Mark Lawrence]

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.

[Guy Raz]

It was a peer to peer system.

[Mark Lawrence]

Yeah. And so, you know, some of the conversations with Eric, looking back, are just kind of funny because 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, try to keep it cool. I'm like, wow, a couple thousand spots. I remember I said, eric, so are the spots open every day? He's like, what do you mean it's a parking garage? I'm like, yeah, well, a lot of the people we work with, sometimes they're at work or they need to move their car. They use it on a certain day. And he's like, yeah, it's a parking garage. It's open 24 7.

[Guy Raz]

So instantly you go from 50 spots to a thousand or more. Even more.

[Mark Lawrence]

Yeah.

[Guy 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 Spot Hero rather than just to go directly to the garage and pull a ticket and go park?

[Mark Lawrence]

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

[Guy Raz]

Right. Okay. So you're starting to work with parking garages. And then I guess you meet this guy named Harlan. Harlan Karp, I think. And not only does he have garages, but he's also kind of building or developing scanning equipment. Like the. Those machines that you. 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?

[Mark Lawrence]

Yeah. And again, in hindsight, it seems obvious, but at the time, I'm like, goal. Get spots for Bears games. We have zero. Harlan has these spots. And he's like, hey, let me show you this future vision of. 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 Harlan stuff was put there, and you could scan to get out.

[Guy Raz]

You would scan your. Printed out the printout so you could.

[Mark Lawrence]

Scan a printout or you could scan it from a phone.

[Guy Raz]

Right.

[Mark Lawrence]

And so it depended on the equipment. But that was the first. Actually, you know, that was one of the first garages that we got the equipment in.

[Guy Raz]

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

[Mark Lawrence]

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

[Guy 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 technical skills. This is a guy named Larry Kiss to be your CTO, correct?

[Mark Lawrence]

Yeah.

[Guy Raz]

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

[Mark Lawrence]

I mean, the interview was interesting, but it didn't go well off the bat. And the key reason they said no was because 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.

[Guy 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?

[Mark Lawrence]

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 wanted to do it. And myself, Larry and Jeremy talked and we actually decided no and ultimately sat for a few hours talking to them about pros and cons and what we're going through and 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 doing our SEO and our pay per 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? 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.

[Guy Raz]

Okay, so you change your mind. You. 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 it. 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.

[Mark Lawrence]

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

[Guy Raz]

Did you need the money at that point?

[Mark Lawrence]

I would say yes. I mean, I know how beneficial, you know, joining techstar 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 2020 12, sales ramped in January, February, March, April, May, from 5,000amonth to 80,000amonth in May. But the worry was, is this going to last? And so we were kind of scared to hire someone. And that $50,000 gave us the confidence to make our first hire.

[Guy Raz]

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

[Mark Lawrence]

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

[Guy Raz]

Yeah. A little less than a million dollars.

[Mark Lawrence]

Yeah.

[Guy Raz]

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

[Mark Lawrence]

Oh, like, like everybody. Yeah, 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 80,000amonth. 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.

[Guy 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 that year?

[Mark Lawrence]

Yeah, we were profitable. Yeah.

[Guy 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.

[Mark Lawrence]

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, because, you know, we started 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?

[Guy Raz]

And I guess you raise a seed round in December of 2012. It's about two and a half million dollars you guys raised. And 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.

[Mark Lawrence]

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 folks in the garage that we could talk with and understand what's happening, how does this work?

[Guy 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, D.C. and LA, et cetera. Give me a sense of how investors reacted to that. Were your, even your seed round investors were there saying, hey, what's going on? Why are you just in Chicago?

[Mark Lawrence]

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, you know, set ways of doing things. And this idea that you can just throw money at a problem didn't work with an industry that was, you know, really about relationships and trust.

[Guy 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.

[Mark Lawrence]

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

[Guy 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?

[Mark Lawrence]

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 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.

[Guy Raz]

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

[Mark Lawrence]

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.

[Guy Raz]

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

[Mark Lawrence]

Yeah, multiple competitors based in Chicago.

[Guy Raz]

Just sounds like a nightmare.

[Mark Lawrence]

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, 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 I was told, mark, it's just coincidence. And I'm like, coincidence, really? And so we had our back and forth different sign wars. 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.

[Guy 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.

[Mark Lawrence]

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

[Guy 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?

[Mark Lawrence]

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

[Guy Raz]

Yeah. All right. So finally, after a lot of pressure, the first place you go to expand is Washington, D.C. which I February 2020 13. I was living there at the time, who sort of owned the DC market when you guys went in because you, you again, there were competitors everywhere who, who had the best market penetration.

[Mark Lawrence]

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

[Guy Raz]

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

[Mark Lawrence]

So they could work with Parking Panda and us. So some were exclusives, 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 People in your company, some they know, some they don't. And they work with 3, 4, 5, 6, 7, 8 players. And we bring more than all of them combined, and we want to do that here. In addition, we were the first to have anytime parking on a website. And then we were the first that had an app. 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.

[Guy Raz]

And I think very soon after dc, you expand to Baltimore and then Boston. And that year. Right, because now the last time you'd raised money was in 2012 was two and a half million dollars. Now you go back to raise money. This is in. In. You're looking for Series A money, you know, given the success. Now you got success in dc, you're expanding, but still slowly. Was. Were investors lining up to back you at this point?

[Mark Lawrence]

No investors. No way. They were not lining up. Not only were they not lining up, and our traction was good, but not great. And it was slightly interesting, but not interesting enough. I didn't keep in contact with the.

[Guy Raz]

Investors, the ones that had put money in.

[Mark Lawrence]

Yeah, I was just focused on building the business.

[Guy Raz]

So you weren't sending regular updates or anything?

[Mark Lawrence]

Not real, no.

[Guy Raz]

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

[Mark Lawrence]

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, Cole led the round with Chicago Ventures, Bullpen Capital and Mike Gamson. But it was. It was really. 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 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. Like, we have to pay payroll, 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 weeks because of some capital calls and VCs, they're going on vacation. You don't mind waiting a couple of weeks, right? 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, but, you know, very hard.

[Guy Raz]

All right, so you, but you raised $4.5 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, just statistically, if you look at the stats, the smartest startups and VCs are here in the Bay Area. They are. I mean, you got Stanford, you've got Berkeley. A lot of them are coming out of here. The money is here on Sandhill Road and in Silicon Valley. So it's a tough place to come to from Chicago. Right? Was it, did it feel intimidating?

[Mark Lawrence]

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 San Francisco. But I feared expanding to San Francisco the most.

[Guy 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. At Schwab, how you invest is your choice, not theirs. That's why when it comes to managing your wealth, Schwab gives you more choices. You can invest and trade on your own. Plus get advice and more comprehensive wealth solutions to help meet your unique needs. With award winning service, low costs and transparent advice, you can manage your wealth your way. At Schwab. Visit schwab.com to learn more. We've all got our own professional goals. Maybe to impress an investor or show off your next big creative idea. Well, Canva can help achieve your goals with the power of visual communication. We spend a lot of our lives at work, so it's time to find ways to enjoy it. Canva lets you jazz up your documents with images and charts from their massive media library or add animations to make your presentations pop. And I just love how easy it is to make designs. So whether you work at a small or a big Company in a team of two or two thousand, Canva empowers workplaces everywhere to design compelling content, save time, and be more productive together. Love your [e-mail] 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 Zerx, 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 capture the attention of a lot of VCs who agree. They're saying this is the future.

[Mark Lawrence]

I mean, this was quite possibly one of the most stressful periods 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, Zerx, Battler, 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 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. 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.

[Guy Raz]

Lux and Zerx were the hot ones. You saw their logos all over the place.

[Mark Lawrence]

Their logos were all over the place. Everybody knew who they were because they were spending crazy amounts of money. The other thing is our cost of customer acquisition 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.

[Guy Raz]

Wow. So they were subsidizing parking for people.

[Mark Lawrence]

Basically, extremely, I mean, totally subsidizing. And we were. You pay 15 or $20 to park and you park your car yourself. They also had to pay for labor.

[Guy Raz]

So you would pay 15 or 20 bucks, but they would park it for you.

[Mark Lawrence]

Right. So they were, you know, our average was like $20 to park so they made it where it's 15, but they would valet your car both ways. So the consumer 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.

[Guy Raz]

Yep.

[Mark Lawrence]

And there was actually a vote to pivot the company to be On Demand Valet.

[Guy Raz]

There was a vote from who?

[Mark Lawrence]

The board.

[Guy Raz]

Your board?

[Mark Lawrence]

Yes.

[Guy Raz]

Voted to pivot your company.

[Mark Lawrence]

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.

[Guy Raz]

Didn't make sense. It wasn't sustainable. You'd have to hire. I mean, all your costs would go to paying for valets, humans who are parking the car.

[Mark Lawrence]

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

[Guy Raz]

Findings, and clearly they. What? Because they had voted to pivot the company.

[Mark Lawrence]

Yes, but the findings were pretty clear, and the discussion was, okay, well then why are they able to get such mindshare? 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, everything is blowing up. What are we going to do in order to survive this and get to the other side?

[Guy Raz]

This is such a great case study. And in sticking to your core principles, because it makes sense to me why investors would want you to do this. Because at the end of the day, their goal is to make money. There's nothing wrong with that. That's what an investor is there to do. They're not in the charity business. When they see these other hot brands doing these things and all their friends are talking about it, and everyone's talking about it, and you're 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. It's very rare to find somebody who's like, no, let's look 10 years down the line. So it is kind of remarkable that you were able to withstand that pressure and prove that this really wasn't going to work, this wasn't sustainable.

[Mark Lawrence]

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 gonna buy parking on a telephone. Hey, this Internet stuff is a fad. And laughing at how ridiculous 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?

[Guy 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, Zerks shuts down. And I think the next year, 2017, Lux ceases operations. They both fade away. They fizzle up.

[Mark Lawrence]

And the other ones did, too.

[Guy Raz]

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

[Mark Lawrence]

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.

[Guy Raz]

You know, listen, that's what investing's about. You're gonna win some, lose some, but it is Amazing how we are. Our perception is so biased. Right. What we think is right is so skewed our reality. And you can apply 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.

[Mark Lawrence]

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. Is definitely not the case, and it was certainly not the case with On Demand Valet.

[Guy Raz]

All right, so you withstand that very difficult time. This is in 2015.

[Mark Lawrence]

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.

[Guy Raz]

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

[Mark Lawrence]

We're not profitable, no.

[Guy Raz]

But 2017, you acquire your previous competitor, Parking Panda, from that main. Main competitor when you went to D.C. yeah. And that gave you access to. To Canadian cities.

[Mark Lawrence]

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're kind of cagey because you're like, if I give too much to my competitor 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. Interesting. And I was asking them, like, I'm like, I need to see more detailed revenue by city. And they were so cagey. They showed me a breakout, and I was like, why are you like. He's like, I'm gonna turn the computer. I'm like, why are you so afraid? Like, remember, if we're gonna do this together, like, we need to understand, like, where. Not just your P. 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?

[Guy Raz]

What? Secondary cities were actually arguably proportionally more profitable.

[Mark Lawrence]

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

[Guy 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 we're not going to go through all the additional rounds of funding because you start to raise more money. And by the way, I mean, 50 million round series D was that by 2019. I have to imagine it gets easier at that point to raise 50 million.

[Mark Lawrence]

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

[Guy Raz]

Yeah. What do you mean by that?

[Mark Lawrence]

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 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. Car ownership is great, but valeting those cars is the future. And it's not you. 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?

[Guy Raz]

Yeah.

[Mark Lawrence]

We've never been, like, what I would call on trend, right? We've never been this on theme type.

[Guy Raz]

Company for a raise because you're not the hot thing. It's like, oh, well, what about this AI company or that tech startup? And you're doing. You're selling parking lot parking spots, right? So it's boring. But it's also. The thing is, I don't mean boring, but, but, but the boring, the quote unquote boring businesses are very often the most successful businesses here.

[Mark Lawrence]

Well, here we are.

[Guy 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 $100 million by the time Covid comes around. And then 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.

[Mark Lawrence]

Yeah, I remember right before COVID we had a board meeting in February, early February, and 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 every one for every year just to remind people of what we had transcended and come through. And I said, and this is the first time that we sit here today without an existential threat to Spotty Hero and parking. I am reminded by the board constantly about the words that I should eat, because obviously Covid happened. And I always.

[Guy Raz]

And that was what, two, three weeks later?

[Mark Lawrence]

Two, three weeks later, I'm like, oh, man. And 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.

[Guy Raz]

You guys put on your blog that you're, you're, you're, you're looking at 90% drop of 90% bookings. Yes, instantly by April of 2020.

[Mark Lawrence]

April was 98%.

[Guy Raz]

98%, yeah.

[Mark Lawrence]

May was 95.

[Guy Raz]

Yeah.

[Mark Lawrence]

It was just an absolute brutal set of decisions to having to lay off close to 70% of the company. But it made it easier to be brutal externally. Right?

[Guy Raz]

Yeah. Meaning what?

[Mark Lawrence]

What I mean, meaning that is like, okay, we signed some SaaS contract in January. Don't care. Not paying it. Right.

[Guy Raz]

Like, you just stop paying it.

[Mark Lawrence]

Just stop paying literally every bill.

[Guy Raz]

It's some, some like, some like, I don't know, customer relationship or something.

[Mark Lawrence]

Voice, automation. So, 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 find somebody else. Someone is going to lose their livelihood because of this. I'm like, absolutely not.

[Guy 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?

[Mark Lawrence]

Yeah, so I Mean, we have fully recovered it 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.

[Guy Raz]

Because they're not using public transit.

[Mark Lawrence]

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, you're going to drive. You're going to drive. Drive and park. Right. And interesting.

[Guy Raz]

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

[Mark Lawrence]

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.

[Guy Raz]

Yes.

[Mark Lawrence]

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 you know, they're still with us, which is great.

[Guy 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?

[Mark Lawrence]

Yeah, I would say like we are. We are the largest. Like we have 1600 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 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 focus 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?

[Guy 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. Right. So many variables. How much do you 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?

[Mark Lawrence]

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 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.

[Guy 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. 41 days, 10 hours and 22 minutes. 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 [e-mail] this episode was researched and produced by Kathryn Seifer, with music composed by Ramtin Arablouei. It was edited by Neva Grant, and our engineers were Patrick Murray and Khwesi Lee. Our production staff also includes Alex Chung, Elaine Coates, Casey Herman, J.C. howard, John Isabella, Iman Ma'ani, Chris Messini, Sam Paulson, and Kerry Thompson. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short [e-mail] surve survey it takes a lot to grow your business. You've got to attract audiences, score leads, manage all the channels. It's a lot of long days and late nights, but with Breez HubSpot's new AI tools, it's never been easier to be a marketer and crush your goals fast. Which means pretty soon your company will have a lot to celebrate, like 110% more leads in just 12 months. Visit HubSpot.com marketers to learn more.