24 Mar The Uber Model, It Turns Out, Doesn’t Translate
In San Francisco, as in most cities, parking is an expensive daily grind that saps the soul. So a year and a half ago, when I discovered the valet-parking app Luxe, the heavens parted, choirs began singing and double rainbows colored the sky. This, I was convinced, could be the next big thing.
Luxe solved parking with an army of smartphone-guided attendants who parked and retrieved your car at the push of a button. That sounds like a bourgeois luxury, but the real magic of Luxe was its underlying economics. By ferrying cars from popular areas to underused parking lots, Luxe’s founders argued that they had discovered a loose thread in the city’s parking knot. It wasn’t simply more convenient — at $5 an hour, with a maximum of $15 for the day — Luxe was also significantly cheaper than just about any other way to park.
Things have since changed, and not for the better. Luxe is less reliable, and prices have gone way up. Where I park in San Francisco, Luxe now often charges close to $30 a day, a rate that exceeds those of local lots, especially when you include the app’s suggested tips for valets.
Luxe disputes that there has been a shift in its business model or its target audience. The company says business is booming. But the uneven service and increased prices raise larger questions about on-demand apps, the battalion of companies founded in the last few years to get stuff done for customers in the real world, like food delivery, grocery shopping and parking.
Other than Uber, the hypersuccessful granddaddy of on-demand apps, many of these companies have come under stress. Across a variety of on-demand apps, prices are rising, service is declining, business models are shifting, and in some cases, companies are closing down.
Here is what we are witnessing: the end of the on-demand dream.