During interviews, I often ask entrepreneurs, venture capitalists, and tech execs if there’s anything other than what they’re working on that they’re excited about. Last year, I heard a lot about on-demand valet apps Luxe and Zirx. Typically, the sentiment went something like this: “It’s amazing, I love it, but I have no idea how they’re going to make money on this.”
To nobody’s surprise, the answer to that mystery is: No, most likely this iteration of valet parking will not make money. When I talked with Zirx CEO Sean Behr last week, he put one of several problems with the on-demand valet business like this: “In the consumer business, when we launched a new city, we would go in and buy lots of parking spaces. And then we hoped that we would have enough consumers to fill those parking spaces. That’s a very expensive proposition.”
As of Monday, Zirx is closing its consumer-facing business and will focus instead on enterprise clients like car dealerships, car rental agencies, and other companies that need to move cars from one location to another. Behr describes the new direction as “a sustainable business that can grow without raising huge amounts of venture capital.” Weird.