Elan Mosbacher is SVP of Strategy & Operations at SpotHero, the largest digital parking company in North America. A start-up veteran, Elan has held roles across marketing, business development and general management at tech and venture capital companies, including Sandbox Industries and DialogTech. You can find him on Twitter at @mosbacher and on LinkedIn here.
The parking industry holds tremendous potential; in the US alone, it’s valued at $30 billion. But it’s been slower to adopt modern technology than other travel verticals, like airlines or hotels. Surprisingly, 30 percent of all parking transactions are still in cash.
In 2011, SpotHero set out to digitize the parking experience for drivers and parking operators. How? With an API platform that allowed operators to share inventory and drivers to reserve parking spots online based on their end destination. But the industry has remained largely untouched by AI.
Most garage operators determine prices manually based on competitor pricing and many maintain static rates despite frequently fluctuating demand. Parking pricing systems should be dynamic, like the market—but until now, that hasn’t been possible.
With 10 years of data on where, when and how people want to park in relation to garage occupancy, traffic and weather, SpotHero has developed an AI platform, called SpotHero IQ, that can determine optimal pricing for a parking garage at any given time. Now, in contrast to the static pricing of the past, AI is enabling dynamic pricing models that improve inventory management and set the fairest prices.
While some industries have been resistant to tech transformation, parking managers have been fairly open to AI adoption because there’s evident business value in creating a more streamlined, dynamic parking process. Already with SpotHero IQ, a parking operator in Austin saw a 89 percent lift in revenue, while one in Chicago saw a 76 percent lift in revenue.
Most importantly, SpotHero IQ will provide greater visibility into rates and occupancy for any given garage. With data-driven insights, parking operators can now guarantee they are pricing appropriately to maximize profits for their spots. At the same time, drivers always know exactly where they’re going to park, how much they will pay and why.
EPISODE 12: ELAN MOSBACHER
SpotHero Brings AI to Parking
Jim Freeze Hi! And welcome. This is The ConversAItion, a podcast airing viewpoints on the impact of artificial intelligence on business and society.
The ConversAItion is presented by Interactions, a conversational AI company that builds intelligent virtual assistants capable of human-level communication and understanding. I’m your host Jim Freeze, Chief Marketing Officer at Interactions and a long-time tech enthusiast.
Today, I’m thrilled to be here with an executive from a company that’s applying AI in an industry that may surprise you: parking. His name is Elan Mosbacher, and he’s the Senior Vice President of Strategy and Operations at SpotHero, the largest digital parking company in North America.
Elan, welcome to The ConvesAItion.
Elan Mosbacher Thanks so much. Great to be here and excited to chat.
Jim Freeze Great. We are too—very much looking forward to this. To start, can you tell us a little bit about your background in technology and more specifically your history with SpotHero?
Elan Mosbacher Yeah, absolutely. So I have spent my entire career in technology startups, I have a background in finance, and I’ve been marketing business development, general management type leader, in a handful of technology companies based in Chicago. Joined SpotHero after the seed round of funding, when we had a website and we’re selling discounted parking in Chicago and have had the pleasure of helping the company grow over almost seven years now into a national brand that helps tens of millions of drivers around the country find a place to park, pay for that parking and get in and out of the garage with ease.
Jim Freeze Well, I live in Boston, so it sounds like I need to use your product because finding parking in Boston, if you’ve ever been here, can be a real challenge.
Elan Mosbacher Yeah, absolutely. We were once at an industry conference and there was a startup pitch competition judged by “Mr. Wonderful” Kevin O’Leary from Shark Tank and he also described parking in Boston as hell. He was like, “Yeah, parking in Boston is hell. It’s terrible.” And so we try to make it a little easier.
Jim Freeze Yeah. Well, I think he lives in Boston, I think that’s his home.
So let’s dive a little more into the role technology has played in parking today. I understand that SpotHero has played a significant role in bringing parking garages online. Can you tell us a little bit more about how you’ve seen parking technology evolve over time?
Elan Mosbacher Sure. So I’ll talk a little bit about SpotHero, where we fit in the parking ecosystem and how it’s evolving. SpotHero is the largest marketplace to buy and sell parking in North America.
And so we’ve played a really critical role in helping digitize the parking industry. Parking has been a bit slower to adopt modern technology. If you think about the way airlines or hotels or rental cars or ground transportation companies have used technology, they’ve adopted it earlier. And so up until recently, it was very much a cash and paper type of business. The parking industry as a whole globally is about a hundred billion dollar industry in the United States.
Where we sit now, it’s 30 billion, so it’s a pretty sizable industry, but still, in our space today, 30% of all transactions are cash or cash transactions. What SpotHero has really done is we’ve built the digital layer to sit on top of those garages on not only the apps that you see as a consumer, but integration into the hardware at the garage, the software at the garage, and all the backend technologies required to digitize the experience both for you as a driver and for the parking asset owner and operator.
Now, one of the biggest challenges is—there’s actually enough parking for all the cars—but the challenge is how to find the parking because it’s often hidden below buildings and harder to find. So if you live on the outskirts of Boston and you drive in the city, you might have anxiety about, “Where am I going to park?” or “How much am I going to pay?” And there usually is parking. It’s just because it’s not digitized, it’s harder to find than a lot of things that we’re used to finding and buying on the internet.
Jim Freeze Interesting. So let’s talk a little bit more about how it’s digitized. So your most recent innovation, I think your AI platform is branded SpotHero IQ. I’d love to dig into that a little bit more. Can you talk a little bit about the introduction of AI and your platform in general into the parking industry and talk a little bit about how it actually works.
Elan Mosbacher Yeah, absolutely. So to do that, I’m going to talk a little bit about how our business worked prior to SpotHeroIQ and then we can talk about what the future looks like.
Historically, a parking operator would give us inventory. They would say, “Here are all the spots in my garage or a subset of those spots.” And we make it available for sale on our platform. Drivers could go to our website or mobile app or buy parking through one of our partners who use our API and very simply say, “Here’s where I’m going to go.” We would show the pricing, they would buy and upon arrival at the garage, you could get in and out of the garage via a variety of mechanisms, such as scanning your phone. One of the things that’s still pretty manual in the business is actually determining what the price of the parking should be.
So you can imagine, if you’re an operator of a garage, you have to figure out what price you want to charge. And oftentimes that’s done by simply walking around the block and looking at what your competitors charge and putting it up on a board and it doesn’t change very often, but the reality is that the supply and demand dynamics for parking change quite frequently, a time like COVID is certainly a good example of that, where demand’s way down.
And so nobody’s really built sophisticated tools to enable parking operators to determine what the market rates should be. And that’s really where the idea of SpotHeroIQ came to be.
What SpotHeroIQ does specifically is it takes all SpotHero’s proprietary demands data, 10 years of historical data on where and when and how people want to park. And it merges that with other data that we have available such as occupancy of the garage, the drive up the price of the garage, and eventually, things like traffic and weather type data, and it helps figure out what the pricing should be based on the level of demand and the level of inventory at the garage at any given time.
Jim Freeze This is really interesting because working for an AI company, we know the importance of data and data models, the models get better over time with more data, obviously. And I’m wondering if you take into account in your AI model, not just that garage, but other garages in the vicinity to kind of maximize that real time supply and demand?
Elan Mosbacher Yeah. So we’re in the process of rolling SpotHeroIQ out. So when we started, we literally started at one garage, and we would look at the demand for that rate, the radius around that garage, the occupancy of the garage, the pricing of that garage. So it started with just needing to optimize that. That was phase one.
In phase two, we actually had to look at what we call the microclimate, which is that garage and the various garages around it. Because as a driver you could choose from a handful of garage on a single block. And so now it’s gotten to the point where we’re able to use that data to optimize the microclimate and to tell any given garage what the pricing should be based on demand in that area and based on pricing at other garages as well. So it is getting more sophisticated. We are taking in more data points and as it goes from pilot in a handful of cities to more scale, you’re going to be able to see that in the city level as well.
Jim Freeze Yeah and as you get more and more data the models will get better. How often do you update that pricing? Is it based on a daily basis? What’s the frequency of optimizing that supply and demand?
Elan Mosbacher Sure. So to give some context there, many parking garages almost very rarely changed their pricing. Now, maybe once a season, once a month, once a week, some do on a daily basis, but that’s more rare and now we can update every 15 minutes or so. And in theory, it could be even more frequent. It’s just not necessary, but if you think about the number of rate changes that can be made, if it’s happening every 15 minutes, as opposed to every month, it creates two opportunities for the parking operator or asset owner, creates opportunities to optimize revenue, and then do a better job of yield management and for the driver, make sure you’re paying a fair market price because the last thing you want is to be running late to a meeting and get to a garage and find out it’s sold out because the pricing was too low.
And on the other hand, it feels really frustrating if you pay a lot of money for a parking garage that’s empty. And so we’re trying to make sure that people are paying market rate. And what we found interestingly enough is that we’re seeing parking operators to make more money and we’re also seeing customers buy what we call a higher conversion rate, higher frequency, because we’re pricing the parking appropriately for what consumers want.
Jim Freeze I’m just reflecting on some of my own experience where, I live in Boston, I’m heading somewhere to meet some friends for dinner, and I often will look just online to see what the pricing is at parking garage’s close to the place I’m going perhaps for dinner. And I’ll compare that with the cost of real time, I’ll go onto Uber and compare that with the cost of an Uber ride over and back and whichever one, based on that, my analysis ends up being cheaper, I’ll do. And this really is pointing towards the value of a product like this where in many cases, won’t go for the parking because for two hours, it’s 30 bucks in an empty garage where an Uber ride back and forth might be 16 bucks. So what you’re talking about just makes massive economic sense for me as a consumer and for the operator as well. It’s a brilliant idea.
Elan Mosbacher Thank you. I think that [inaudible] when I started in this business, the parking operators would tell me that they really thought of their competition as the garage across the street. And before all these new trends in mobility, like rideshare became more prevalent that was the case. But now consumers have so many options, whether it’s using an app to figure out how to use public transportation or rideshare, or bikes or scooters, really there are many substitutes and attractive substitutes to parking.
So for the parking industry, these types of tools are critical. And on the consumer side, what we’re seeing is journeys into the city are becoming more multimodal. So we’re seeing people drive to the train and then take a train and then rideshare from the end of the train or drive to the outskirts of the city, and then walk the rest of the way. And so having this data and having more transparency around pricing is really critical in the way that people want to live their life and get around the city in the years to come.
Jim Freeze Absolutely. I’m curious as to, when you approach parking garages, do they understand the value proposition, do they get what you’re trying to do? Are there challenges associated with getting them on board and then getting them implemented?
Elan Mosbacher So far, again we’re earlier in our rollout of this technology across the portfolio, but everybody we approach is really excited about it. And we don’t talk to parking operators about AI, right? We talk to parking operators about how we’re leveraging new cutting edge technologies to grow their business. And so we don’t talk about the features and the technology. We talk about the benefits and the big business impact. And that seems to resonate well, obviously different operators are at different stages of the adoption curve. There are some who are more forward thinking, and then some are more cautious depending on the type of their business and who they are. But generally speaking the thought of leveraging cutting edge technology to automate, to make more money, to save time is a really attractive value proposition.
Jim Freeze Yeah. That value proposition resonates very much with me. That’s very similar to what we do at Interactions. We really try to focus on talking about the benefits of applying our technology, which is based on conversational AI, but what matters is the solution that’s enabled by the technology, not necessarily the bits and bytes and functions and features. It’s really what you can deliver in terms of concrete benefits. So I totally relate to that concept.
So, you have a lot of pilots running across the country right now. What have the results been so far?
Elan Mosbacher Sure. So we started this at a couple of garages, expanded to certain microclimates and portfolios, but the results have been really impressive. So we actually started our first pilot with a parking operator in Austin, Texas, who saw an 89% lift in revenue. There’s really a lot of opportunity to improve the utilization of the garage when pricing appropriately based on again, supply demand dynamics, and then the other data that we’re able to include in our algorithms.
Jim Freeze Yeah. That’s a terrific benefit, right? To be able to talk about that level of increased in revenue or lift in revenue, that’s really compelling.
One last question for you. If you kind of take a step back, what do you think the big picture is, longterm effect of artificial intelligence on the parking industry?
Elan Mosbacher So I think that where we’re going is pretty simple. As a consumer, if I want to drive into the city or go to the city, I want to know what all my options are. I want to know how long it’s going to take, I want to know what the pricing is and the more accurate that is the better it’s going to be for me. As a parking operator, I want to make money and I want to use the latest, greatest technology to get there.
And so we believe that SpotHeroIQ is going to be the technology that helps make that happen. And what that will look like is eventually fast forward, that we will have visibility into all the rates and all the occupancy and a whole bunch of other data for any given garage. And it will be able to price it appropriately, automatically such that again, operators will have the highest possible yield for the asset that they control. And drivers will always know exactly where they’re going to park and how much they’re going to pay. So they don’t have to worry about those two things. When they head into the city with their car.
Jim Freeze It sounds like a pretty good future to me, for somebody who lives in a big city. So thank you very much for what you’re doing. It’s been great chatting with you. I really appreciate the time Elan.
On the next episode of The ConversAItion, we’ll discuss how AI is—and should be—taught in schools, with Professor Dave Touretzky, a Research Professor in the Computer Science Department at Carnegie Mellon University.
This episode of The ConversAItion was recorded remotely, and produced by Interactions, a Boston-based conversational AI company.
Well, that’s the end of today’s ConversAItion. This is Jim Freeze, signing off, we’ll see you next time.