Episode 630: Free Parking : Planet Money The story of a 24-year-old kid and the idea he thought would reduce congestion, cut greenhouse gasses and make urban life easier for everyone. Instead, it brought him nothing but trouble.
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Episode 630: Free Parking

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Episode 630: Free Parking

Episode 630: Free Parking

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STEVE HENN, HOST:

Just a head's up, there's going to be a little explicit language in the next 35 seconds.

Eric Meyer achieved this kind of horrible fame about a year ago - the kind of fame no one really wants. People across America decided this guy is an a**hole.

ERIC MEYER: Oh, I was called all sorts of things. I was called a jerk. I was called an a**hole. I was called douche bag many times. (Laughter). They brought up my hair - my hair became a common theme. I guess it was slicked - I guess there was a little too much gel in it.

HENN: Why was all this abuse heaped on Eric and his hair? Well, because he had come up with a plan to fix a major headache that plagues all of urban America. He had come up with a plan to fix parking. Eric had built this app for phones that would help people find parking spaces. He called it Haystack.

MEYER: When you would open it up, you'd just see a map around where you are. And you have two options - you can find a spot or you can offer a spot.

HENN: That part people were OK with, it was the next part that people hated, that just felt evil, brilliant but wrong. The way this app worked is if you were circling the block for a spot, you could pay someone who was about to leave a spot. Eric's app had figured out a way to take public free parking spaces and sell them. And he was going to keep a cut.

(SOUNDBITE OF SONG, "SOMETHING ELATED")

HENN: Hello and welcome to PLANET MONEY. I'm Steve Henn. Today on the show, the story of a kid with a dream, Eric Meyer. His dream is to reduce congestion, cut greenhouse gases, make urban life easier and make some money. And boy did he screw it up.

UNIDENTIFIED WOMAN #1: This episode of PLANET MONEY is supported by Igloo, whose goal is to make company intranets you actually like. Igloo has file sharing, calendars, social newsfeeds and task management. It also has a responsive design that works great on any device. The platform is highly malleable, which means you can design it to look and feel like your company. Sign up for a free trial of a demo at igloosoftware.com/planetmoney.

(SOUNDBITE OF SONG, "SOMETHING ELATED")

HENN: Eric Meyer didn't leave college and think to himself, I'm going to build an app that just pisses everybody off. He came up with this idea because he lived in a neighborhood in Baltimore where it was impossible - just impossible - to find parking spaces. It's this old part of Baltimore near the harbor. It's the kind of place where if you drill through your wall, you'll end up in your neighbor's living room. And his place was tiny.

MEYER: When I first saw it, I was a little taken aback by, you know, that it's narrow. But it's beautiful.

HENN: How narrow is narrow?

MEYER: I think it's about 11 feet wide.

HENN: 11 feet wide?

MEYER: Yeah. It might be 12. I think it's 12 - yeah, 12 or 11 feet. Yeah, it's pretty narrow.

HENN: Eric's house is 11 feet wide. His car, this old Jeep, is 15 feet long. And he doesn't have a parking space in the back of his house. So when he parks on the street, his car takes up more space than his house. And a lot of the houses in his neighborhood have two people with cars living inside. Parking problems in Eric's neighborhood were epic.

MEYER: I have many neighbors that literally budget about $200 a month in parking tickets, you know, into their monthly expenses.

HENN: It's just like a recurring thing, $200 every month. Winter is the worst. When there's snow...

MEYER: Even all of the illegal parking spots are all taken, so there is no physical space to put your car.

HENN: So one day in the dead of winter, after he got a massive parking ticket and his car got booted, he's sitting with a friend at a local pizza place - a guy named Cody - and he has an idea. He thinks, what if we created an app where people who were about to leave a parking space, who were about to pull out, they could post it online and sell that space to someone circling the block?

MEYER: So I asked him, I said, you know, Cody, would you pay five bucks for a spot if you're, you know, if you're driving around and need to find a spot coming home late at night with your girlfriend? And, yeah, he said, absolutely. He said, I'd do that - I'd do that every week.

HENN: Then Eric Meyer does something rash. He quits his job and decides he is going to build this app. He goes out. He raises money, first, from his parents, then some friends - an aunt, then real, serious investors. He has enough cash to build this thing, and when he does, it works. Eric still remembers staring at his computer the first night the app went live, sitting there waiting, hoping for the first parking place to sell.

How many spots changed hands that first night, do you remember?

MEYER: That first night I think we had something like 42 - something around 40.

HENN: It was one of the best night of his life.

MEYER: It was an amazing experience. And I think we knew that night that we had something pretty special and something that people cared about and something that worked and that actually helped solve something.

HENN: People wrote, sent him emails, neighbors thanked him. But he did get one email that was different from a neighbor, one he still remembers.

MEYER: And it said, who do you think you are and how do you possibly sleep at night? And it was, you know, somebody who was just very aghast. And they said that poor people will never be able to park again. And, you know, this is going to, you know, make Baltimore an unfair city.

HENN: But most people were not mad. Haystack was taking off. And he figured if this works in Baltimore, it could work anywhere. I mean, parking is a problem almost everywhere - New York, Los Angeles, London. And really it's an economic problem. How do you allocate this scarce resource? There are serious economists who spend a lot of time thinking about it. There is this 800 page book titled "The High Cost Of Free Parking," which kind of shockingly did remarkably well.

DONALD SHOUP: I was surprised that, you know, an 800 page book on parking would be reprinted as a paperback.

HENN: That guy is the author, Donald Shoup, from UCLA. His book actually made him famous. There's a dedicated group on Facebook that call themselves Shoupistas. Shoup says the parking problem boils down to something you may have heard of before. It's an old economic problem called the tragedy of the commons. The classic example is from futile England. You see, in medieval times, a lot of agricultural land was held in common - anyone could graze their animals on it. It was kind of like free parking but for sheep. This sounds nice, but it was a disaster.

SHOUP: Since it was free to put animals on the common, it got overcrowded, and the animals nibbled all the grass and their feet damaged the soil. And I think curb parking is like an asphalt commons. It is free, but a lot of people want to use it. Then you have to hunt for it. And that hunting congests traffic and pollutes the air.

HENN: It causes all sorts of problems. And the costs of this are actually enormous - just in wasted time alone. There is a study in New York by the New York Department of Transportation that found on some residential streets in Brooklyn, 45 percent of the drivers were actually circling the block searching for parking. And because parking is usually free, there's this enormous demand for it, right? We want more and more because we never have to pay for it. The cost of parking is artificially low, so the demand for it is artificially high, which means towns and cities keep building it. It's this huge waste. Shoup says there's a simple solution.

SHOUP: One is charge the right price for on street parking to end the commons problem.

HENN: So basically to create a market.

SHOUP: That's exactly right.

HENN: This was basically what Eric was trying to do with his app. He wanted to put a price on free parking. And it looked like his idea was working in Baltimore. So Eric decides to look for a challenge. He decides he wants to find a city with terrible parking, awful parking, the worst parking imaginable. He decides he is going to take Haystack to Boston. But from the beginning, almost nothing goes right.

MEYER: The fight began the moment that it leaked that we were going to come to Boston.

HENN: And you have to kind of imagine how this looked to the people of Boston, right? This guy from out of town, a guy from Baltimore, is coming up. He wants to start a business where basically, he takes parking places - parking places that belong to the residents of Boston and sells them. The mayor takes one look at this and he's passed. And at this point, Eric makes a serious mistake. He doesn't go hat in hand to the mayor's office and say look, I mean well. There's this thing, it's called the tragedy of the commons - instead, he hires a lawyer and he brings the attitude. He's like, hey, this is legal. We're coming. The mayor puts out a statement saying, alright, fine. It's legal. But you know what? Laws can change. And by the way, this doesn't take very long. Within weeks there's a new docket item.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN #1: Docket 1310. It's an ordinance prohibiting the selling, leasing or reserving of public ways in the city of Boston.

HENN: So Eric tries to fight this bill. He hires a lobbyist, he runs up to Boston. Everything comes to a head at one City Council meeting, and it does not go well.

(SOUNDBITE OF ARCHIVED RECORDING)

MEYER: And neighbors who are mercilessly circling the block burning emissions and clogging up the streets can go ahead and have the convenience of going directly, efficiently to a spot.

UNIDENTIFIED MAN #2: I appreciate the editorializing...

MEYER: Well, it isn't editorializing. It's - this is how Haystack works.

HENN: Eric's arguments are just not landing. For the City Council, this is about him selling something they own.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN #2: This isn't about information chain. This is about cash. It's about dollar signs. So when you talk about, you know, God's work and helping the city and helping its residents and everything else, you know, put that to rest. This is about - this is about cash.

HENN: In less than two weeks, a bill banning Haystack in Boston passes unanimously. And this image of Eric is this kind of jerk who's trying to make money by selling public property - it sticks. Donald Shoup, the guy who's been calling for an end to free parking, the guy who wants a market for parking spaces, even he doesn't back Eric up.

Do you think he was a jerk?

SHOUP: Well, I don't know him. I haven't met him. I've talked to him on the phone. But - well, I wouldn't call him a jerk on the radio.

HENN: Honestly, Eric didn't come off as a jerk to me. You know, he seems kind of sweet in person. I mean, he's ambitious. And sometimes, like really ambitious people, he has tunnel vision. I decided we should try to figure out why his ideas made people so mad. And we did it in the most awkward way possible. I went out into the streets of San Francisco with a bright pink sign saying, honk for my parking, and tried to sell my parking space. I was terrible at this. So Sonari Glinton, a friend and colleague, bailed me out. He went out to Sunset Boulevard in West L.A., found a great spot, and tried to sell it.

SONARI GLINTON, BYLINE: I tell you, this is the kind of thing that I would only do for Steve Henn.

OK, come on Lexus. Oh, oh, come on Hyundai, I know you want to save some money. Oh, no. Now you see my parking space right there right?

UNIDENTIFIED WOMAN #2: That parking space right there with the Volt in it?

GLINTON: Yes. So that's a pretty prime, rock star parking space.

UNIDENTIFIED WOMAN #2: That is a rock star parking space.

GLINTON: Would you be willing to negotiate with me for that parking space?

UNIDENTIFIED WOMAN #2: I mean, hey, listen. I'm not going to knock your hustle. (Laughter). It's very enterprising of you, very entrepreneurial of you.

GLINTON: So would you be willing to negotiate with me so that I could move and you would have this rock star space?

UNIDENTIFIED WOMAN #2: If I would have to pay you for that parking space, no. I would just go find something else. I'd find that rude. I would not pay you for a parking space.

GLINTON: Why not?

UNIDENTIFIED WOMAN #2: I would rather walk ten blocks than pay you for a parking space. Why? What is this about? What is going on here?

GLINTON: It's a...

HENN: Rude. Sonari was selling something that wasn't his to sell. And something else was going on here. Dan Ariely is a behavioral economist at Duke.

DAN ARIELY: The problem is money. There is a very strange, interesting thing about money. And what happens is that money changes the norms that we apply. And the moment money is at stake, we think about life very, very differently.

HENN: So by using money to try and motivate people, Haystack had turned this idea, which was basically neighbors helping each other out by letting each other know when they were leaving a parking space and it was opening up - he turned this friendly thing into a transaction, kind of a hustle. And as that woman said, suddenly it felt rude.

ARIELY: I think what happened is the moment you put money into it, we start imagining all kinds of cases in which we don't help each other as a community, but we work against each other.

HENN: Ariely thinks Haystack could have worked with a little tweak - just take the money out of it. Replace the money with something else.

ARIELY: So imagine he did this app, and instead of people getting paid for it, they would get something like karma points, right, every time you did this. And maybe if it's all people from the neighborhood, we would also put a big sign by your door and say how nice you are to the neighbors.

HENN: I got to say, I was pretty skeptical of this idea. But something like this actually happened to Sonari when he was standing on Sunset Boulevard holding his bright pink sign. He never got anyone to pay him, but someone had another idea.

GLINTON: What are you willing to pay for my spot?

UNIDENTIFIED WOMAN #3: Oh. I don't know. I guess breakfast?

GLINTON: You would buy me breakfast if I gave you my parking spot?

UNIDENTIFIED WOMAN #3: It's kind of fun to - you know, I think Los Angeles is a lonely place...

(LAUGHTER)

UNIDENTIFIED WOMAN #3: ...So you'd have to like have breakfast with us or something.

HENN: This would not have been much use to Eric. I mean, he was trying to build a business. Breakfast and karma points don't really help. Money was kind of important. Soon, San Francisco announced huge fines for people caught using apps like this. And then, Los Angeles passed its own ban. In a couple months, Haystack was dead. Eric went back to Baltimore - back to his little 11 foot wide house. And he had to sit down and write a letter to his investors. He had to let them know they probably were not going to get most of their money back.

MEYER: It was tough. It was very tough. And I remember I actually wrote a long email - sat down, went in my house at night and just kind of just sat there in the dark with this letter. And it was the most difficult letter that I've ever had to write. and I wrote it to all of our investors, which obviously included my mom and my dad and my aunt and, you know, some of my - some great friends that I've had. And I felt like personally I had let them down.

HENN: Eric still lives in that little house. He's now working for another little start-up company, but he is done with parking - well, almost done. Every night when he comes back late from work, he's stuck circling the block, looking for a free spot. A spot that really doesn't exist.

(SOUNDBITE OF SONG, "ROAD TO NOWHERE")

HENN: We always love to hear from you, so email us at planetmoney@npr.org, or tweet at us @planetmoney - I'm @hennseggs. Our episode today was produced by Francis Harlow and Nadia Wilson. And, of course, I'd like to thank Sonari, who was willing to head out into traffic holding a bright pink sign on my behalf. I'm Steve Henn. Thanks for listening.

(SOUNDBITE OF SONG, "ROAD TO NOWHERE")

TALKING HEADS: (Singing) We're on the road to nowhere, come on inside.

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