By Justin Biel, trends editor at Grow Wire
⏰ 6-minute read
A lack of parking near their college campus led three students to start a business that matched college kids with neighbors and businesses that had available parking.
Increased demand for their service encouraged the students to drop out of college and found AirGarage, a full-stack parking operator with lots in 22 U.S. states and Canada.
The 23-year-old founders have learned a lot about building a tech startup, as evidenced by their advice to other entrepreneurs.
Scott Fitsimones, Chelsea Border and Jonathan Barkl were students attending Arizona State University when they noticed a problem: There was not enough parking on campus.
"Parking passes [for access to a spot on or near campus] for the largely commuter school ran upwards of $1,200 a semester," Fitsimones said. "The school kept expanding, but there was no new supply of parking."
At first, Fitsimones did what the school advised and bought a parking pass.
"I got duped," he said. "I paid $1,800 for a permit to a garage that was so far away I barely even used my car."
But Fitsimones discovered a workaround to this problem -- renting parking spaces from homeowners who lived close to campus. His second year at ASU, he forwent the parking permit and knocked on the doors of local neighbors to inquire about renting a space.
In the end, "I paid a neighbor $80 for the entire school year," he said. "It felt like the ultimate hack."
Inspired, Fitsimones, Border and Barkl worked to bring this solution to more students. In 2017, during their sophomore year, they started connecting students in need of parking with neighbors who wanted to make extra cash for renting out their driveways.
"We were running this side hustle matching students who wanted parking to neighbors with available students," Fitsimones said.
AirGarage allows local businesses to rent their unused parking spaces to individuals.
From a college side hustle to a legitimate business
After working with individual homeowners for a time, it became clear to the founders that the overhead and infrastructure required to sell individual parking spaces was not efficient, so they went in search of partners that offered a more significant opportunity. Local businesses with a plethora of open parking spaces were a logical next step.
"We signed up one church by the Arizona State campus and got 65 parking spaces," Fitsimones said. "It was clear this was the smarter play."
Pursuing this new model, the team offered its service to more partners such as hotels and small businesses. The team approached businesses one-by-one and secured them as partners with no sign-up fee and a 70/30 revenue share, favoring the lot owners.
"We opened up hundreds of new parking spaces in the downtown area," Fitsimones said. "It became clear that we really had something people wanted."
That was the aha moment.
By 2018, the business had 250 parking spaces available for students to rent, and the founders had a tough decision -- pay attention to school or keep growing their business.
"We had to decide if we were going to work on computer science homework or respond to 20 customers who wanted to pay us money," Fitsimones said.
"We had to decide if we were going to work on computer science homework or respond to 20 customers who wanted to pay us money."
The students ultimately dropped out of college after their junior year and officially launched their business as AirGarage. They then expanded, bringing more local businesses onto the platform and making the University of Arizona their second collegiate partner.
At that point, friends and mentors urged the founders to consider fundraising to develop the business. So, the trio left Arizona and relocated to San Francisco at the end of 2018.
Learn more about why San Francisco is THE hub for venture capital funding.
Today, AirGarage and its three 23-year-old founders are backed by $2 million in funding from both angel investors and venture capitalists and manage parking lots across 22 U.S. states and Canada.
Drivers can use AirGarage's app to find easy-to-pay-for parking in 22 states.
How AirGarage works for parking lot owners and customers
From these humble beginnings, AirGarage has evolved into a comprehensive parking system.
For property owners, its full-stack platform allows them to monetize and manage their underutilized parking lots. In other words, parking lot owners can make money by renting out their spaces when they don't need them. They can set space availability by the day or week and take payments from customers without the need for a gate or parking attendant. AirGarage has a network of parking enforcement agents who scan lots for unpaid cars and take action against repeat offenders.
Meanwhile, customers looking for parking will pull into a lot and see a sign with a number to text to pay for parking. The system returns a link that allows the guest to create an account, add a credit card and license plate and pay for parking. The system automatically recognizes returning users, making the process simple when parking at other AirGarage lots.
Advice for other founders
Supported by a team of 10 employees, Silicon Valley investors and business mentors, the founders of AirGarage are now focused on deepening their knowledge of the parking landscape in each city where they currently do business, as well as onboarding partners in new cities.
In the two years since launch, Fitsimones has learned about what it takes to survive in the competitive startup landscape. Here’s his advice for entrepreneurs looking to follow in his team’s footsteps:
Take a phased approach to product development.
AirGarage started using Google Forms that matched students interested in parking spaces with neighbors offering places to park.
Next, the team began developing a website and app for AirGarage, relying solely on their own coding skills. It wasn't a perfect product by any means, Fitsimones explained, but it allowed them to test assumptions, learn and make changes.
"Whatever you build first is not going to be what ends up being successful or what people end up using in the market," he said.
"Whatever you build first is not going to be what ends up being successful or what people end up using in the market."
The goal for founders is to create a quick feedback loop that involves learning from customers and then iterating, he added.
Understand your customers’ pain points.
In the beginning, the AirGarage founders relied on their firsthand knowledge about the troubles of student parking to create their product.
As the platform developed, they worked closely with local businesses to understand the needs of non-student customers. Now, with partners across 22 states, AirGarage is conducting more location-specific research that includes studying local laws around parking.
"It's important to build out a local presence to understand regulatory issues in each city, to understand local problems and generate local knowledge," Fitsimones said. For example, "It's important for us to know about how weather affects towns in certain seasons and what part of town has the highest parking needs."
To tee up its next phase of growth, AirGarage has a handful of "city-launchers" working on the ground in critical markets. These city-launchers explain the business proposition to prospective partners and open new accounts.
Because the founders of Airgarage are only 23 years old, finding mentors was an important step. When the team has questions about negotiating partnerships or building new products, they "turn to angel investor partners or venture capitalists that have built similar businesses," Fitsimones explained.
He also recommended that new founders be bold, rather than hesitant, about connecting with mentors.
"Cultivate mentors by asking questions and reaching out shamelessly," Fitsimones said. "We met several of our investors and mentors through cold emails and Twitter."
Hire senior talent.
Hiring a capable team and turning over responsibilities to them was a critical part of company growth, Fitsimones explained. He warned against founders’ typical hesitance to delegate tasks once the company starts demanding their attention in areas that don’t have to do with everyday operations.
"You can't be afraid to let go of your baby," he said. "You can gain a lot of leverage by bringing other people into the fold … and giving them responsibility."
"You can't be afraid to let go of your baby. You can gain a lot of leverage by bringing other people into the fold."
To go along with that, he also recommends hiring the best talent possible.
"Some young founders are insecure about hiring senior talent," Fitsimones said. "You should actually aspire to build a team where you are the least qualified engineer or salesperson -- after all, your role should be to remove roadblocks and help your team succeed."