News & Analysis

Startup Parkhound jumps on the bitcoin bandwagon

- January 7, 2014 4 MIN READ

The internet has recently been abuzz with bitcoin tell-tales; and more and more startups are recognising the need to keep up with this technology trend. The latest startup to incorporate cryptocurrency into their payment system is Parkhound – an Australian-based online marketplace that connects drivers seeking parking spaces with local property owners who have spaces to spare.

Launched in September 2013, Parkhound allows local residents to earn extra income from leasing spare parking spaces – whether it’s a garage or a driveway – while motorists can enjoy the benefits of a cost-effective, hassle-free parking experience.

Through the site and mobile app, motorists simply find a space, book a time and go directly to their pre-booked parking space.

“With a chronic shortage of parking across the country, parking is now a confirmed commodity.  The problem is so bad that in some parts of Australia it is cheaper to get a fine than pay for parking.  Parking is hard to find and when you do find it, very expensive,” says Michael Nuciforo, Co-Founder of Parkhound.

“In most Australian cities, casual all-day parking can cost up to $80.  At Parkhound we can offer a parking space in the same area for less than $80 a week. It’s a classic win – win.

It’s cheaper for drivers and local residents get to make money for nothing. Parkhound has seen strong demand since launching last year – demand that continues to consistently outstrip supply. Some of our drivers have said that before using our site, that they would have to hand out pamphlets, do letter drops and even door knock houses in the pursuit of a suitable parking space.”

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Michael Nuciforo, Co-Founder of Parkhound

Interestingly, the inspiration for Parkhound came at an Aussie Rules game, Hawthorn versus Collingwood, in August last year.

Nuciforo says he and a group of friends were driving to the hallowed turf of the Melbourne Cricket Ground, and there were three unappealing parking options available to them.

They would have to either find an expensive parking lot in the city and take a long walk; park at the ground, pay a premium and spend hours trying to get out, or chance it with on-street parking.

“So we decided to take a chance and started circling around East Melbourne on the hunt for parking.  As we circled the streets we noticed something.  As we drove past parked car after parked car, after finding only empty space that required a parking permit, there was dozens of empty garages and driveways right near the ground,” says Nuciforo.

“It then hit us.  Wouldn’t it be great if we could just knock on someone’s door and ask to park at their place for a small fee?  The idea stuck.  The more we thought about it, the more it made sense.  There are unused parking spaces all around us.”

Parkhound now have their minds set on disrupting the $1 billion car parking market in Australia.

“We dream of a different parking model – ordinary people coming together to offer a better solution. We are passionate about collaborative consumption and believe that there is enough parking for everyone if we come together and share,” says Nuciforo.

“The solution to Australia’s parking problem isn’t more parking spaces or better public transport.  It’s the better utilisation and distribution of the parking spaces we already have.”

Parkhound’s business model is similar to GoGet and Airbnb where its free to list and book a parking space on their marketplace; and when bookings are made, Parkhound takes a 10 percent commission from the listed price.

“We only make money when our sellers do.  This provides the right incentive to our customers and us.  The commission charge covers the cost of maintaining the platform, legal agreements between buyers and sellers and promoting the parking space to our customers.

Crocitti says most owners can expect to earn up to $3,000 to $4,000 a year from a single parking space.

“It’s an excellent asset class as there are no maintenance costs, no repairs, no paint and most of all no bills to deal with … When you compare leasing a parking space or sharing a flat with someone, parking wins hands down. A parking space can generate similar money to a roommate but there are no dirty clothes on the floor, unwashed dishes to deal with or empty rolls of toilet paper” he says.

Parkhound yesterday announced a deal to lease out an Exhibition Street parking space in Melbourne for 1.25 Bitcoins, the equivalent of AU$900. Robert Crocitti, Co-Founder of Parkhound, says they’re keen to embrace cryptocurrency before it becomes mainstream.

“As a digital company we are really keen to embrace new technologies that enable our customers to pre-book a parking space quicker and easier. We expect Bitcoin to grow steadily over the next 12 months and we forecast that 5 percent of our transactions will be via Bitcoin by the end of 2014,” he says.

Despite public scepticism, Parkhound believes that consumers are keen to embrace new payment services like Bitcoin as concerns about consumer privacy increase.

“Duck Duck Go was the fastest growing Search Engine last year and we think this trend will follow into payments. Consumers want anonymity. As more businesses accept Bitcoins in Australia the more consumers will use it” says Nuciforo.

Parkhound acts as an intermediary in the payment, receiving the Bitcoin payments from the buyer and then transferring Australian currency directly into the sellers account.

But because the currency is not prevalent yet, Parkhound don’t expect to be able to enable direct Bitcoin transactions between buyers and sellers; and given the value of Bitcoin is fluctuating, exchange rates will affect the price of parking drastically.

Only four months into the business, Parkhound already has hundreds of parking spaces Australia-wide listed on their marketplace. They’re currently growing their customer base by 50 a day; and as the company scales, Nuciforo believes “the collaborative consumption model will really pay dividends”.

“The more parking spaces there are, they more drivers that can find a parking space they need at the price they want.  The more drivers there are the more sellers that will want to join the marketplace.  Over time, Parkhound will scale its technology to partner with other providers and their appears to be natural synergies with companies like GoGet in the Australian market,” he says.

At the moment, Parkhound is undergoing a final round of beta on its updated mobile app with a select group of customers.  They’re also developing an API that can be integrated with third-party mapping and GPS providers.

Nuciforo says, “We think current mapping technology is broken.  It tells you how to get somewhere but the most difficult part is finding a parking space at the end of the journey.  In the future you will get directions from Google and a parking space courtesy of Parkhound.”

Parkhound also wants to contribute to the growth of green technology. Nuciforo says, “We are in discussions with electric charge point partners at the moment, we want to power the Australian electric vehicle network.  We want to offer our sellers the opportunity to install a charge point and lease that out to green drivers.”

For more information on Parkhound, visit www.parkhound.com.au.