Two years ago, when UCCS entrepreneurial team Lot Spot Inc. first presented their ideas on how to solve local parking problems — they took last place at Startup Weekend.
Since then, they’ve implemented their technology in a UCCS parking garage, scored a contract with the city of Manitou Springs and won Chapman University’s California Dreamin’ Entrepreneurial Competition last month, which comes with a $75,000 investment deal and $5,000 in cash.
“Almost everyone has been in a moment where they’ve used colorful expletives to describe feelings and emotions during parking,” said Preston Hare, Lot Spot CEO. “You think it’s just parking, but it’s actually an intimate part of people’s lives and parking spaces are incredibly expensive.”
The average cost to build one space in a surface area parking lot is $26,000, he said. The numbers increase to $34,000 in a parking garage and $39,000 in an underground parking lot.
“The fact we’re able to solve parking issues at a cheap cost is what makes the business exciting, because it is such a problem,” said Hunter Berge, Lot Spot’s front-end web and mobile developer. “We’re making a change and creating value.”
In 2014, Connor McCormick, Hare and Berge met during a UCCS innovation class, and the three were tasked with solving campus parking problems.
Intrigued by the challenge, they built their ideas and competed in Startup Weekend, an annual competition where locals pitch ideas for new startups.
They met local software engineer Matt Keith at the 54-hour event. Keith joined the team, helping them develop computer vision technology.
“We thought, ‘We’re going to make Lot Spot happen and going to win’ — and we finished dead last,” Hare said. “The judges told us there is always someone at the competition trying to solve parking, and it’s boring.”
But the loss didn’t put the brakes on the business.
Realizing they needed a better understanding of the problem and market, the team started talking with UCCS Parking and Transportation Services and the office funded their first prototype. Lot Spot received $500 to begin testing a laser system, or simple rangefinder, to count vehicles driving in and out of campus lots.
Although accuracy wasn’t always spot on, the group proved they could track cars with their technology and reached out to The Green Action Fund.
“We found on average our school releases 80,000 pounds of CO2 [carbon dioxide] into the air just on the circling of parking annually,” Hare said.
Lot Spot was granted $7,500, which allowed them to implement their hardware and refine the laser system in a UCCS parking garage near Columbine Hall on three levels. Next month they plan to add the rangefinder to the two remaining levels.
The team connected with the city of Manitou Springs through the Friends of Ruxton Canyon. They presented their solution to fix Manitou’s congested parking and traffic concerns.
“Manitou Springs has terrible traffic during the summer, with roughly 500,000 people driving through,” Hare said. “Manitou was considering building a multi-million-dollar parking garage that would be expensive and an eyesore in town.”
Instead, Lot Spot proposed installing hardware to track all cars entering and exiting Manitou’s five main lots: Barr Trail, Smischny, Wichita, Cañon and Hiawatha Gardens.
“We also plan to put up an electrical sign when drivers first enter Manitou to indicate which lots are open and [which are] full,” Hare said.
The city has allotted them roughly $25,000 in next year’s budget; Lot Spot’s hardware should be deployed in Manitou within the next two months.
“Over the summer we’ll have it installed so we can start to divert traffic circling around Manitou,” Hare said.
According to Hare, the team meets weekly at The Garage at UCCS to keep their business organized and growing. While there, Terry Boult, El Pomar chair of innovation and security, asked the Lot Spot members if they wanted to compete in Chapman’s California Dreamin’ competition.
The national business contest has existed since 2012, and UCCS first competed last year.
“The biggest difference this year was instead of it being a business plan competition, it was a business model competition,” McCormick said. “They wanted to see what the businesses were doing, how they’re implementing their product and determine the most investable company.”
The El Pomar Institute for Innovation and Commercialization sponsored Lot Spot; the team competed against schools, including the University of California Berkeley, the Air Force Academy, Cornell University and Brigham Young University.
“We just wanted to place,” Hare said.
Berge designed the team’s presentation with high-tech images and video from his drone.
“We captured a car circling around a lot six times and zoomed in on an open spot that cars kept missing,” Hare said.
The group learned they were in the top five after noticing they were on the list with Brigham Young, the Air Force Academy, Purdue and The University of Chicago Booth School of Business.
“The team from Purdue had developed a rocket fuel 66 percent more efficient, could take twice the payload and didn’t have hydrochloric acid in it, so it wouldn’t destroy the base where the rocket takes off,” McCormick said.
The group walked into the final round with the mentality that they’d already achieved their goal.
“And I think that mindset played a really big factor on how well we did in the final pitch,” Hare said. “During the last round, judges were asking questions that proved our concept further and we walked out feeling really good.”
Nabbing first place, Lot Spot won an investment from a California venture capital fund, a $7,000 scholarship to an entrepreneur boot camp and $5,000.
“The reason I believe we were able pull off the victory is because we’d already developed the product at UCCS and Manitou, we don’t have to spend millions of dollars creating the technology, and parking is something everybody feels strongly about,” McCormick said.
What lies ahead
Lot Spot bootstrapped the company in the early days with $4,000 and has reached revenue of $25,000. According to the team, the revenue model will be based on monthly fees from monitoring lots.
“We’re currently selling it [for] $2 per spot per month,” McCormick said. “What we still need to figure out is how that will actually check out. By spot, location of the parking lot or cost of the data?
“What we do know is that we’re able to provide valuable data — and get people to empty lots at a much lower cost.”
The group wants to provide an affordable product for parking managers and plans to develop a free mobile app for drivers, according to Berge.
“Currently it’s just a web app,” he said. “We deployed it that way initially to test the market, so we can refine it easier. It’s currently live for UCCS students.”
In the future, the Millennial startup hopes to develop a sales team and get 10 universities to sign up for its product this fiscal year.
“We want to expand at universities first because it’s what we know best,” Hare said.
Running the business seamlessly has been Lot Spot’s biggest challenge, including weather and lighting affecting the accuracy of the team’s video technology.
“We want consistency in our process with the city and in the product we deliver, whether that’s the back end or app,” Berge said. “But we will adapt to the technology and difficulties. That’s just something that comes with business and our group’s collective intelligence is a strength.”
The bottom line: Lot Spot’s solution has tremendous value, Hare said.
“We wanted to start a company, but also just wanted to solve a problem, particularly this one,” he said.
“Our solution allows users to find parking, enables parking managers to optimize their lots and make data-driven decisions using empirical data that confirms whether or not their parking lot is being used at full capacity instead of just eyeballing it and spending millions on another one.”
Year established: 2014
Number of employees: 7