What on-demand valets can teach us about the American city.

This On-Demand Valet Startup Is Booming. Something’s Wrong with the American City.

This On-Demand Valet Startup Is Booming. Something’s Wrong with the American City.

Moneybox
A blog about business and economics.
June 1 2017 2:22 PM

This On-Demand Valet Startup Is Booming. That’s a Sign That Something’s Wrong With the American City.

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Julio Vargas waits for a DropCar customer to pick up his ride.

Henry Grabar

In Ferris Bueller’s Day Off, there’s a scene in which our teenage heroes drop Cam’s dad’s precious red Ferrari at a downtown parking garage. “You fellas have nothing to worry about,” the attendant says from the driver’s seat. “I’m a professional.”  Moments later, he’s burning rubber on the streets of Chicago.

Henry Grabar Henry Grabar

Henry Grabar is a staff writer for Slate’s Moneybox.

Yesterday’s misbehaving garage attendant, minus a few miles per hour, could be today’s employee at DropCar, a startup that pairs New Yorkers with people to drive their cars around, and which has lately begun pitching itself as a tonic to the agonies of New York mass transit. “We’re bringing a private chauffeur to a larger group of people,” CEO Spencer Richardson explained as we stood by his blue BMW i8 (license plate “DROPCAR”) in a South Bronx garage recently. Around us a crew of DropCar valets was getting its first assignments of the day, preparing to pilot Teslas and Range Rovers to their owners in Manhattan.

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DropCar offers two services: The first is called “Will,” a $15-per-hour valet who will drive or supervise your car for hours at a time. In a city where parking routinely costs $20 an hour and a 60-minute cab ride would eat your daily paycheck, that’s an astounding bargain. (The price, as it so often is with startups, does not appear to be sustainable.)

The second service is named “Steve.” For $349 a month, DropCar valets will pick up and drop off your car 10 times at your doorstep—and park it while you’re not using it. “As long as people have their car when they want, and we have it when they don’t, they don’t really care where it is,” Richardson says. (Sorry, Cam.)

DropCar has a few thousand customers, including a number of businesses, and just fewer than 200 employees (actual employees, with benefits) who move hundreds of cars a day. It’s a niche concept, and one that at first glance appears redolent of this American moment of yawning wage gaps and on-demand personal attendants. But DropCar is also the sign of a problem in the American city, and its success helps us understand what ails a place like New York—and the other major cities in which Richardson thinks DropCar could thrive.

On the day I visited, I got into a Jeep Grand Cherokee with Julio Vargas, a DropCar employee who mostly works in the company’s Times Square office, where the company is hiring about 30 new drivers a week. But on this day Vargas had been summoned to drive down memory lane (also known as the West Side Highway) with me. “I know you think I’m driving like a grandma,” he said as we curled up the on-ramp to the bridge into Manhattan. Like all DropCar drivers, Vargas’ habits are monitored through his GPS, which keeps him from going all Ferris Bueller down the West Side.

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Still, it’s a good job, he said. An eight-hour shift might include five driving assignments. Your job is driving around fancy cars and hanging out in Manhattan, waiting to pick up the next fancy car. (Or taking the subway to meet it.)

Two things make this service viable, to the extent it is. (More on the travails of its competitors in a moment.) The first is the astronomically high cost of land. Common to any megacity, this phenomenon is particularly pronounced in New York, where annual land values have grown 24 percent a year between 1993 and 2007. This makes renting parking space at the heart of the metropolis as expensive as renting a house in other cities: $562 and $533 were the median monthly parking price in midtown and downtown Manhattan, respectively, according to a 2012 Colliers International survey. No doubt it is more now. New York is extreme in this sense, but not alone: Boston clocked in at $405, San Francisco at $375, Philadelphia at $313. That’s the market at work.

The second factor in DropCar’s success is a market not at work: Driving, in New York and every other American city, is vastly underpriced for its effects on congestion, infrastructure, and air quality. Parking may be expensive, but driving is free.

Put the two together and you have a system where the cheapest way to own a car in New York is to store it miles from home and pay someone to bring it to you when you need it. The cheapest way to use a car is not to park it when you get out, which costs money, but to hire someone to sit in it and drive it around the block, which is free.

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Still, it hasn’t been easy for entrepreneurs innovating valet parking. Silicon Valley is littered with the bones of on-demand valet apps. Caarbon and Vatler went bust. Zirx and Valet Anywhere have pivoted. What makes DropCar different, Richardson thinks, is its focus on business-to-business operations, which make up about a third of its trips.

“We’re not trying to be the Uber of parking. We’re trying to be the Disney of vehicle support,” Richardson said.

Riding downtown, I wondered if I was witnessing a preview of the autonomous vehicle era. This is how car storage and use might work in a world where driving costs are low, labor costs nonexistent, and parking costs very high. When cheap driving is a substitute for expensive parking, cars won’t park at all. They’ll drive, even when the owner isn’t in the driver’s seat.

Autonomous vehicle enthusiasts often think that won’t be a problem, because each AV will be part of a shared fleet that can pick up a new customer shortly after dropping one off. But DropCar is more proof that people are very attached to their own vehicles, even if they only use them a few times a month. Vargas recalled driving a doctor around to house calls for an entire day. That morning’s client, an engineer, liked having his car seat, in addition to having his car easily available at either his home or office.

Vargas uses it himself. He’ll leave his car parked in the South Bronx and take the subway back to Hamilton Heights, where he lives, because parking in Manhattan is so difficult. Then, when he wants to visit his daughter in Queens, he’ll have his car delivered and drive over. “If our clients can use it, why can’t I?”