irainonyourparade

random ramblings

How Django is pronounced

http://news.ycombinator.com/item?id=4976551

Who the fuck cares?

I love Django the web framework and I thought Django Unchained was an entertaining movie, but the description of how we pronounce it, and whether linguists would describe the common voicing of it as “sillent D” or not doesn’t matter in the slightest.

Stop being pedantic.

SpotHero

I Like Spothero, But They Aren’t Going To Make It

Congratulations to Spothero on raising money, from two great programs. Too bad the investors are going to lose their money.

This will come off as a negative post knocking the business. It’s not. I’m happy that the founders raised, AND I’m a happy customer of Spothero. I want them to succeed. I just don’t think they will.

I don’t have any privileged information, have any idea what their pitch deck looked like, know what their future plans are, or how much they make.

As a consumer, I love it. As an ignorant, backseat driver, wannabe investor speaking out of turn with incomplete information — I think it’s a dog.

Why They Won’t Make It

Unsubstantiated (but I think generous) assumptions:

  1. They make 50% of the revenue of every parking spot sold.
  2. 100k/year/employee
  3. No other costs like rent, servers, accountants, attorneys, marketing, etc.

They have 11 employees.

They need to clear $1.1 million a year to just cover employee costs.

Let’s say they just need to *gross* 1.1 million a year.

How many spots would that be in Chicago?

Chicago

In hourly spots, lets give them $22 per parking spot. Why $22? Because that’s higher than the average listed spot and makes math easy for me. At 50%, their cut is $11. To make cost, they need to move 100k spots in Chicago this year. 274 spots a day.

$1.1 million target / $11 per spot / 365 days =~274 spots sold

Another unsubstantiated claim, but I am just going to say they can’t sell 274 spots a day in Chicago.

But there are millions of drivers!

It’s a mistake to think that the market size is “people with cars”. It’s people with cars who:

  1. can’t find street parking or need more than 2 hours
  2. don’t have a regular spot (so excluding regular drivers or familiar destinations)
  3. exclusively in areas where parking is scarce (in the suburbs you can park anywhere for free).

So I can’t prove it, but I’m betting against 274.

But Wait, They’re Going To Expand Across The Country!

Awesome. Let’s first just grant them zero employee or cost growth for expanding nationwide.

What’s the US total market? Chicago metro is population ~10mm and the US is ~315mm, so did the market opportunity get 30x bigger? Doubtful.

Paid for, on-demand parking from a mobile app only matters in places that have the right intersection of (a) lots of people driving, (b) scarcity of free parking.

San Antonio, Texas — top 10 city in the US by population — Texas is big. They have plenty of free parking.
Manhattan, NY — scarcity of parking — most people don’t drive. people who drive in Manhattan are mostly rich or professional drivers who have an arrangement.
San Francisco, CA — SF proper is a good market. Sunnyvale or mountainview? mostly not so.
Columbus, OH — plenty of cheap or free parking

Of course, there are areas in most cities where spot hero would make sense. Minneapolis, MN, for example — big city, lots of work commuters, but outside of downtown, there’s little/no need for parking apps. And even if they were to explore it, the meters are only $.25 an hour and all day parking is less than 5 bucks. New Orleans, LA — outside the French Quarter, most places have parking lots.

Unless its a pervasive problem in the city as a whole, it won’t be WORTH it for Spothero to explore the market. Trying to edge in to a place with 25 cent street parking will be a negative ROI proposition for Spothero (printing up signs and getting a street presence and advertising isn’t ACTUALLY free). Trying to move into a city just because a 9 block square of downtown has scarce parking is also a bad move.

Ultimately, the majority of the revenue will come from people like salespeople who go on calls to various unfamiliar areas of their city but don’t know the parking spots. These will be regular users who install the app. There will also be the occasional users like me, but that’ll be a long tail of infrequent users who contribute a minority of revenue.

So they need to sell 274 spots per day nationwide priced at the Chicago rate, with no expansion of expenses.  However, almost everywhere else has cheaper parking, so they actually need to sell a lot more spots than the stated 274.

Distribution is Tough

If you haven’t heard of spot hero, the next time you’re looking for a parking spot you don’t think “Hey let me google it” or “Maybe i should search the app store”. You drive around. That’s what people do. I’m not saying it’s optimal, I’m just saying it’s established driver behavior. So unless the user has heard of Spothero previously, it won’t even be an option. So Spothero has the fun task of educating all drivers in their market. That’s generally difficult and not cheap.

An Incomplete Analysis

As I’ve stated above, this is just raw, back of the envelope number crunching that uses no privileged information.

To get closer:

  1. Include the fact that Spothero sells monthly parking (I excluded this revenue model), which has a higher ticket price (though I suspect a smaller cut and unlikely recurring revenue). (Good for Spothero)
  2. Find out what the real split is. I suspect the 50% split I assumed above is more than they actually get. (Bad for Spothero)
  3. There are actually costs other than employee costs. (Bad for Spothero)
  4. Nationwide expansion will probably increase costs (Bad for Spothero)
  5. I used an average sale of $22.00, which is almost certainly too high (Bad for Spothero)
  6. There are a handful of competitors in this space (Bad for Spothero)

If you have more complete information for this, access (and permission to share) any of these parking companies’s investor decks, I’d love to see it. If you want me to do this for your company or someone else’s, email me.

Thanks For Nothing

http://news.ycombinator.com/item?id=4759141

http://blog.gaborcselle.com/2012/11/getting-people-to-use-your-app.html

Seriously? Your strategic advice to startup founders on “getting people to use your app” is:

1. Create a high quality app

2. Make it viral

Please, somebody tell me who is creating apps saying “you know, I’d like to create a low quality, non-viral app”.

Most Startup People Don’t Know Shit About Financial Markets

http://mathbabe.org/2012/10/06/dissolve-the-sec/

http://news.ycombinator.com/item?id=4624719

Please shut up.

“Someone isn’t doing a good job in some dimension, so let’s dissolve that entity” is an idiotic response. *

A persistent problem among smart people is the belief that their general intelligence qualifies them to comment on matters they have no domain expertise in (and consequently offer supposedly common sense solutions as if they have some sort of special insight into the problem). That nobody else had. Including all the other backseat drivers on the internet. And you know, the people who think about that problem for a living.  PLEASE FUCKING STOP.

This is not just a “startup people” problem. It’s a smart people problem. And a  “think they’re smart” people problem. It’s math professors leveraging titles like “tenured Ivy league professor” to comment on moral issues in the popular press, or the ridiculous idea that the opinions of the general public should bear on US foreign policy

“Fox News: 68% of Americans believe we should withdraw from Iraq.”  Oh really? Who the fuck cares? Sure, maybe you don’t think Iraq is a good idea. Maybe I don’t even think so. But I know for damn sure that I know less than the policy makers about the implications of pulling out, that there is a lot of non-public information that goes into those decisions, that the general public doesn’t educate themselves about foreign policy, and I for damn sure don’t want a phone poll of Main Street Joe The Plumber’s to be dictating legislation.

But I’m in startups and I used to be in finance (so… basically, not unique at all… also, the next time I read a “I quit my ibanking job to start a startup” blog post I will rant about that). So one of the really common themes that rubs me the wrong way is “startup people think they know shit about finance”.

The problem is that there’s a lot of literature about finance.  You could read for days. And startup people are smart people, and they feel like they know something once they’ve read some of the “authoritative” literature on the subject.

You don’t. So please stop. It makes me want to punch myself. Or you.

* Note: I’m not defending the SEC. “Dissolve them” is a childish response. Hey mathbabe, do you think the SEC does anything else that might have value? Do you think we’d really be better off with no SEC tomorrow? It’s really easy to nitpick and find SOMETHING wrong in any organization.

Startup = Growth

Paul Graham’s recent post, Startup = Growth, raises interesting questions about what makes a startup a startup.  The HN thread is interesting, as usual, but I feel like (also, as usual), they’re nitpicking about the wrong things.

The most prominent discussion thread debates whether or not PG’s definition of “startup” is too narrow.

The actual fun things in the article are:

1. PG gives us a NUMBER to shoot for. 7%/week growth. Love that he put out a number.  Also makes an interesting point about constant _rate_ growth rather than constant _user_ growth — Incidentally this probably makes MOST HN people firmly in the camp of “not a startup”

2. Claim that VC’s invest in startups because its too easy for small business owners to craft situations that don’t align investor and founder incentives, but its virtually impossible for  VC’s to invest in high _growth_ startups and lose. This is a stupid argument.

Who cares if PG’s definition of startup makes your company not a startup or if you think “startup” should mean something else.  It’s just a word and it doesn’t matter if you’re working on a startup or a small business, as long as it motivates *you*.

 

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