How Zirx Is Turning Its On-Demand Parking Business Around
After nixing its consumer on-demand parking service to focus on enterprise customers, the startup expects to break even in some parts of the business within 60 days.
An image of the new on-demand car delivery platform from Zirx.
The news sounded like a coded message that the company was failing, and some took it that way. One tech publication ran a headline proclaiming Zirx, the company, was shutting down. VentureBeat didn't characterize the change as Zirx falling completely off the map, but nonetheless used apocalyptic language: "So there you have it: Yet another (consumer-focused) on-demand service bites the dust."
Not quite. CEO Sean Behr now says the startup is poised for profitability with the launch of a B2B vehicle delivery service targeting car dealerships, repair shops and car-sharing services. The company offers these businesses a platform to arrange the logistics of delivery, with 1099 workers at the ready to carry out the task on-demand. Zirx continues to offer valet services to businesses.
"I have plenty of cash in the bank, tens of millions of dollars in the bank currently, and I have a business that's growing month on month," Behr says. His company has raised $36.4 million, not including an undisclosed amount from BMW last year.
Behr said that while consumer on-demand valet didn't work out for Zirx, it could still potentially work out for other companies. Luxe, which still offers on-demand valet, recently raised $50 million from rental car company Hertz, bringing the startup's total funding to $75 million.
What makes the vehicle delivery service so much more promising than parking cars for regular consumers is that the overhead is dramatically lower, says Behr, citing by way of example that that there's no need to purchase parking spaces upfront. The company reports operational costs have declined 60 percent month-over-month since the company shifted to an enterprise model.
The startup expects to break even in the cities where it operates within 60 days. Zirx requires no on-site staff in cities where it operates, just 1099 employees. The company offers services in San Francisco, Seattle, Los Angeles, San Diego, New York, Boston, Washington, D.C. and Chicago.
Costs of operations at the company's headquarters in San Francisco -- where engineering, marketing, business development, financial services and customer operations are located -- prevent the company from breaking even as a whole just yet, though Behr says he expects to reach overall profitability in the year.
Behr thinks Zirx is hitting a sweet spot in a growing market. Older companies in the autoworld can benefit from offering convenient services like delivery of cars to customers' homes, and Zirx can offer that benefit without the companies themselves having to hire staff or create new services.
He specifically pointed out a trend of carmakers including GM, Mercedes and BMW offering carsharing services as demand for new cars, he says, declines. "The days of you and me going and buying a car every three years are slowing down," he says.