My chat with Ritwik Pavan, Cofounder of Vade
Not everything can be scoped as a software problem
Ritwik is the Cofounder and COO of Vade, a startup that helps cities manage their curbs with real-time data. Here’s their funding announcement. This is the first in the series of chats with founders of startups working with the government to improve our lives.
Sar: When I first discovered you, I went to the website and immediately thought of AirGarage and Flock Safety. It turned out that the CEOs of both companies had invested in you. And then I saw Upfront being the lead investor. I think they invested in a commercial space management company earlier.
Ritwik: Density, right?
Sar: Yeah. There are common themes amongst you and all these other companies around creating efficiency in asset utilization, selling to local government officials, and building a hardware-based network. Ultimately, all these companies conceptually boil down to this idea of "let's be smarter about things that were fundamentally dumb," so to speak. Can you tell us how you started with Vade and the preceding ventures you worked on?
Ritwik: Absolutely. Vade is my second venture. When I was in high school, I built a game just for fun, and it ended up hitting the top 20 in the app store — top 3 in games — ultimately becoming a viral trend. I took this initial success as a segue from just building a silly game to building apps for startups and bringing their ideas to life.
With this in mind, I started a software design & development firm, Linker Logic, to help founders design & develop their ideas into market-ready applications. Eventually, I bootstrapped and scaled it up to bring on a team of developers from India to help keep up with the projects we were working on. I began this company as a high schooler and was able to continue the business as a college student at UNC-Chapel Hill.
Following this first venture, I started my 2nd venture, Vade, sophomore year of college. I found myself running late to a meeting I had in downtown Chapel Hill one day, all because I'd have to spend at least 15 minutes trying to find a parking spot.
That got me thinking: Why is there no real-time data on parking spot availability? So I started Vade to make parking easier for citizens in cities. We were initially citizen-focused but quickly realized we needed cities to buy in. We would have to provide value to these cities for them to adopt what we were working on.
Cities are just as frustrated about the parking environment and curbs as their citizens. They're trying to manage the curb, but they have no data or measurement around it. At Vade, we've always said, "you can't manage what you can't measure." To manage and understand the curb, cities need to measure real-time curb data. Many metropolitan areas spend hundreds of thousands of dollars — if not millions — on parking consultants to conduct studies to collect curb data. The parking studies didn't translate when it came to making curbside decisions - it just went towards people standing along the curb, going through checkboxes on a list, and jotting down the occupancy they saw on paper. Obviously, with a process of this nature, there are inaccuracies and inconsistencies. Cities' parking consultants could conduct a week-long study with nothing of actual consequence to show for it because they're not going to have the same person standing there 24 hours a day, seven days a week. This set a costly and unreliable standard of getting real-time data on the curb. So, we took a deep dive into revolutionizing curb data. We initially started with sensors that go in-ground but quickly learned that cities hate sensors.
Sar: And why is that?
Ritwik: Well, what happens when it snows? What happens when there's vandalism? Cities and their parking managers don't like investing in vulnerable sensors on the road since they're unreliable and inefficient. One sensor can only cover one spot; beyond physical restraints, they've also been found to have calibration issues. Sensors have an understandably bad reputation in the industry, which we didn't know until we delved deeper into our research in the first six months.
So when we initially went and pitched them to cities, they said, "please don't be another sensor company." The City of Raleigh's parking manager Matthew Currier was the first to propose that the best solutions would be cameras. A single camera could cover 15, maybe even 20 spots depending on the location.
That's when we decided to pivot to using cameras but found a new challenge: wired cameras didn't work because it would end up costing millions of dollars in infrastructure costs to run wires up the poles for cities. So, we spent the next year and a half doing R&D and building our solar-powered, wireless, LTE cameras. We built them completely proprietary and in-house. Our CTO has an electrical engineering background, so he did some 5G antenna research. We put these cameras together, went back to cities, and said, "alright, we've got what you are looking for now."
So, as I said, our cameras are fully wireless and solar-powered, using LTE to send images once a minute. We then developed a custom computer vision model to be able to detect occupancy. While all this was in the works, COVID struck. Commercial activity, mainly related to the driver-based gig economy, completely shot up. Uber, Amazon, DoorDash, and FedEx started taking over the curb on top of regular citizen activity. Cities had no idea what to do. I'm sure you've seen all those stickers and papers saying "temporary curbside parking." It was unprecedented. The whole system as we knew it was going downhill. It was unfortunate, but it was great timing to prove Vade's usefulness; COVID accelerated our business because nearly every city now would benefit from our solution. Cities knew we were the first player in the industry to innovate curb management solutions the way we did. We had the data to detect what type of vehicle was parking there, when the start session was when the end session was, and what the utilization was like. We also want to help with urban planning decisions and integrate our API into wayfinding apps and other parking vendors, such as pay-by-mail, automated enforcement, etc.
Sar: So, taking a step back and going back to the early days, you started from the simple question of "where can I find a good curbside spot in, let's say, Manhattan?" And you were focused on selling to regular people?
Ritwik: Yes, that's how it got started. In the beginning, we were focused on building an app where we would show which parking spots are available in real-time, but we quickly realized that there are already so many different parking apps out there. We didn't want to be just another parking app. We found that the true problem was rooted in a lack of relevant and usable data. So that's when we took the route of selling to cities. We figured, let's provide value to cities, help them understand how we can mitigate this congestion, and then build an API that can integrate into the likes of Google Maps and all these pre-existing parking apps.
Sar: The thinking shifted from, let me help people find a spot in a busy city to let me help city officials plan the space better. And that shift happened before you went down the R&D path of spending almost two years on hardware because that's a massive undertaking with no feedback loop.
Ritwik: Yes, exactly, and the best thing we did during our R&D period was re-evaluating who the customer was. Not doing so would have resulted in us squandering the next two years working on appealing to citizens; we would have built a sensor-based solution only to realize that cities hate sensors.
Sar: Right, so who do you talk to within local governments?
Ritwik: The stakeholders could be transportation planners, a parking director, a parking manager, a smart city planner, or anyone involved with the general parking department. We also work with parking consultants and vendors that bring us into their cities to help them cover larger scopes of curb management or produce better real-time curb data. However, our primary customer is the city. The city is the one that's funding the deployment.
Sar: You specifically mention curb management and not parking lots. Is that intentional?
Ritwik: Yes, our focus is on the street and on-street parking because that piece of real estate (the curb) is where the actual problem lies. There are a million different solutions for parking garages. The problem is in urban areas with on-street parking because that's where DoorDash and Ubers go, where the citizens want to park. Some people like to park in parking garages for convenience, but the real demand and the real issue are on the street.
Sar: How do you sell to the officials at the local government? They aren't exactly your software people, right? What does the pitch look like? They have to see what you see as a problem and care enough. I just had a conversation with the CEO of Propel, and we talked about how governments often don't recognize user experience as a problem. They decided to build a consumer brand around a government program. In your case, data capture is the core issue, and I'm wondering if they do see it as enough of a necessity for them to put money towards it.
Ritwik: They all realize the base problem, but you're right that they will not necessarily envision the technical side of the dashboard analytics. We're building the platform so we can easily give them decision-making tools. One of the big things with parking operators right now is automated enforcement. I just got back from, believe it or not, a parking conference called the International Parking Mobility Institute Conference. Every parking manager is there, and all of them are looking at a future of automated enforcement. There are huge staffing problems now; managers cannot manage their bike and bus lanes.
So, outside the analytics around utilization levels, we're also providing municipalities with tools like automated enforcement through alerts. For example, cities have seen a huge problem with cars illegally parking in bike lanes. Bicyclists are complaining about it, and pedestrians are complaining. Not only does that cause traffic congestion, but it's also a huge safety concern. With our system, an enforcement officer can be alerted and immediately deployed when cars are parked illegally in a bike lane.
Another application is dynamic pricing. Until now, even in big cities like New York City, all these different fleet companies paid a lump sum to the city to exempt themselves from parking enforcement violations because the cities know they would otherwise flood the courts with parking violations. That comes with a huge loss for the city, and one way to look at it is that the citizens are subsidizing the cost for these companies since they have never paid their fair share for their use of the curb. Cities want to be able to bill the companies for exactly how long they park, but it's just not feasible. If an Uber vehicle was parked for three minutes, cities want to be able to charge that company for its three minutes of utilization. These companies are taking advantage of the curbs right now, and citizens of these cities are getting affected the most, with growing issues such as traffic congestion, increased parking rates, and overall revenue losses for the city.
Sar: You're critiquing all these companies that effectively do drop-offs or pickups, whether people, food, or parcels? And you're saying the time spent doing that activity is going under-monetized, right? So the city's not making enough revenue. Wouldn't the second order effect of what you are talking about just mean an increase in consumer prices? The money Uber gets charged for dropping off people is coming from somewhere.
Ritwik: That's a decent argument to consider. We look at it from the opposite perspective, where, because of our technology, companies will now actually have safer areas to do legal drop-offs. So much time in their "last mile" logistics is spent just finding somewhere to park in the middle of the street to deliver orders. Imagine if the city says there are specific pickup and drop-off zones where a driver can park and get real-time data. Even if we can reduce the time spent finding parking spots by half, the contrary argument can be made that companies can now deliver more orders quickly, generate more revenue, save on costs, reduce congestion, and, very importantly, reduce emissions.
Sar: Yeah. So this is where the urban planning piece comes in. It isn't just the story of, oh, evil companies abusing real estate; it's that we will have to reorganize urban spaces around dedicated zones for commercial activity.
Ritwik: Absolutely. It ultimately goes back to urban planning. Micro-mobility is a hot-button topic right now with the infrastructure bill. The grants and funding are primarily for cities to be able to handle issues like the curbs. The curbs, collectively, are responsible for billions of dollars in revenue and commercial exchanges.
Sar: Do you expect to start seeing a shift in how the cities make money from consumer to commercial activity? Would that be an effect of you guys becoming big and successful? Right now, when you park on the streets, the cities mostly depend on citizens' honesty to use those unmanned meter machines to pay for the time they use the public space. You are charging yourself.
Ritwik: You bring up two good points. And our thesis is that citizens shouldn't even be paying for parking. As I mentioned earlier, citizens pay for parking because it's subsidized. After all, the commercial operators aren't paying their fair share. And then the other thing to look at is parking itself. When someone pays for parking, you can see it as insurance. It's insurance from getting an expensive parking ticket, and many citizens are willing to risk not paying for the spot. It's often smarter to take the risk; there's no real incentive to follow the rule and pay for the spot. And so we can have automated enforcement, but we're also pitching automated billing to cities down the road. Our cameras can detect license plates and how long the vehicles are parked. We can now start to track how long the car has been there and bill the vehicle for exactly how long it stayed. So, now you can see real-time availability and real-time payments where you can just pay for exactly how long you park and never have to worry about the inconveniences of going to the parking meter or overpaying for a short stay.
Sar: There's this underlying theme of not burdening regular people. I want to talk about how you sell. What was your entry point into your early customers?
Ritwik: It took us three years to get our first customer. We had to show the potential of real-time curb data for the first few pilots we got. Everyone understood the problem; they had no data to measure solutions for it.
We were building basic analytics dashboards, where we were showing cities their utilization levels. For example, in Lexington, Kentucky, there was a bike lane where they tried to figure out why so many vehicles were parking. And it was because a nearby restaurant was telling customers to park on this street to pick up their DoorDash order.
The initial project showed cities basic analytics: here's the occupancy, here's the turnover rate. We could also tie our data to data for payments and show cities how many vehicles they had parked at a curb versus how many were paying for it.
Sar: How did you get the payment data? Were there any other use-cases you guys discovered early on?
Ritwik: The city shared the payment data. All the parking operators feed into the city and show how many parking transactions are being made. And so we could see that there were twice as many vehicles parked there as there were completed transactions.
Our first paying customer was the Florida Department of Transportation, where we had a completely different use case. We could show truck drivers how many spots were available before they got to a truck stop. Initially, we were just showing the real-time availability when truck drivers primarily use the rest stops. What they wanted us to do is to be able to integrate our API into what they call "Sunguide Systems," the big black screens that you see on the highway. That way, a mile before truck drivers get to the rest stop, they can decide if they should pull into that stop to park. Truck drivers have a limit on how many hours they can drive during a day for safety reasons, so spending time looking for parking leads to a lot of inefficiency in how our goods are transported on land. Now, they can just know, "okay, this truck stop has spots available, so let me park here instead of taking the risk and driving further down to the next stop where there might not be spots available."
Sar: How does the business model work?
Ritwik: We make annual contracts with cities. We charge cities a pre-annual subscription for the cameras, and the camera costs include installation, maintenance, our dashboard, etc. Our full technology stack is all packaged into just the SaaS model. It takes a while for the government to set up infrastructure-related things, so we wanted to make it as easy as possible for them to integrate with us. We do a pre-annual subscription, so they pay us one year in advance. It's one price: they know what it is, and it's predictable.
Sar: Did you guys experiment with pricing? What were the early learnings?
Ritwik: In the beginning, we were deciding how to create pricing that works to incorporate the hardware and software aspects combined. We debated HaaS (Hardware as a Service), DaaS (Data as a Service), or charging per covered space. We never wanted our solution to be expensive or unattainable for the cities to adopt, and we wanted the sales cycle to be as efficient as possible. Early findings showed that we were a fraction of the cost that consultants were charging cities, and we were providing real-time curb data that was accurate and not previously accessible.
To prove product-market fit, we had initially done a handful of free pilots in early adopters cities, such as Austin, Raleigh, Lexington, etc. Now that we've covered several use-cases, we've been able to begin generating revenue and charging a pre-annual subscription fee per camera.
Sar: What city-level budget does this come out of?
Ritwik: Cities have a parking department. Depending on the city, believe it or not, cities have some pretty big parking budgets. Sometimes, it comes out of the Department of Transportation budget directly.
Sar: In terms of rolling this out, is it like, “let us show you the value in one or two areas that we have identified and then do a city-wide rollout?”.
Ritwik: It's primarily in downtown areas first. Cities already know which streets are having the biggest congestion problems. Generally, they come to us with far more streets than we're initially willing to do for a pilot.
Sar: Do you know how they think about the feedback loop here? What do the officials need to see in the short term from the pilots to justify the spending to their higher-ups and engage in the expansion discussion?
Ritwik: The primary insights they're looking for are the uptime of the cameras, the accuracy of the computer vision, and the raw data. Then they go to the city council or the transportation department, show them the data, and walk them through the congestion, double-parking, bike lane issues, and historical analytics. These data points and findings are then used to move into the next phase, which includes automated enforcement, dynamic pricing, real-time availability, last-mile routing for TNCs, or wayfinding for citizens via API integrations.
Sar: Have you seen that phase kick in for any of your initial customers?
Ritwik: Yeah. We're actively discussing the next phase of automated enforcement in commercial loading zones with a handful of cities. They've expressed a high interest in this solution, and we're actively pushing the second phase, which turns those analytics into actionable metrics because, again, that's where the real benefit lies for cities and citizens.
Sar: And does that mean more technical integrations with the systems on the enforcement side?
Ritwik: There's a lot of backend work that goes into this. So much goes into the curb that the regular citizen is not thinking about when they park. There are many rules, rates, and regulations and many different types of violations. We've spent three years talking to cities to understand how we can solve their curb-related problems.
Sar: Do cities run an RFP? Or is it like you aggressively trying to sell hard and then making them see the problem?
Ritwik: An RFP is going out at least once every few weeks, focusing on precisely what we are working on.
Sar: Operationally speaking, there's a lot of onsite work. Do you have people on the ground in all these cities?
Ritwik: Right now, we've got a deployment team in-house. We also work with local contractors. Every city has a preferred local contractor. They generally are very open to partnering up with us and allowing us to use their contractors to service any of our suspended hardware.
Sar: What's been the most surprisingly challenging part so far?
Ritwik: We knew the hardware was challenging but did not realize how challenging it would be, especially with the ongoing supply chain issues. I would also say that one of the things that pleasantly surprised me was how receptive cities and parking managers have been.
Sar: What does your product roadmap look like?
Ritwik: Right now, we're focused on the Measure Platform, where we focus on three things: the analytics of what's going on at the curbs, the zones that cities are most interested in, and the safety around bike lanes and parking violations. The next phase of the product is about turning all this data into meaningful actions for cities around dynamic pricing, digital signage, wayfinding, and automated enforcement.
Sar: Do you guys have any ambition of building a consumer brand, or are you content with staying behind the scenes? What is the long-term vision?
Ritwik: We always want to be behind the scenes and maintain our focus on cities. We want to allow cities to manage rules and regulations dynamically and effectively. When they set up a new rule, it should be automatically enforced across the city. We want to transform the physical curb right into a digital curb. That's our end goal.
Sar: Doesn't not having a direct relationship with consumers hurt you? How would they interact with you?
Ritwik: We have relationships with parking vendors and an API that we integrate into parking apps and websites. Cities are working with several other vendors. They have a vendor for enforcement; they have a vendor for parking apps. So, they can tell those vendors to integrate with us.
Sar: And those parking apps care about the curbs?
Ritwik: Every parking app asks for our real-time curb data, and the way for us to get that data is through the cities. It's a win-win situation. Sometimes would-be competitors are compliments. The parking apps want real-time availability data to be able to show their users. None have real-time curb data or a direct way of getting it.
Sar: Have they tried to get this data somehow?
Ritwik: They tried to get real-time data through transaction data, which was completely flawed because if someone doesn't pay for the parking spot, it says it's available on the app, but in reality, it's taken by somebody illegally parking there. Then there's the opposite problem of someone paying for two hours but only staying for 30 minutes, so now the parking app is marking parking spots as taken when they're not.
Sar: Ah, interesting. All of them have wrongly scoped it as a software problem. They haven't scoped it as an original data source problem, which you guys have, which means creating a network of hardware to capture new data.
Ritwik: Yes, exactly. You're nailing it. We decided to take on the hard problem and move from there.
Sar: Now it makes even more sense why Flock Safety and AirGarage founders invested in you!
Ritwik: Yep, one of our biggest goals, once the hardware is installed, is to continue building our use-cases and bring in even more value from the curb data generated through our cameras.
Sar: Right, it's very sticky, and there's a lot of inertia for the next company to come in and go through this all over again.
Sar: Let's end our chat with a forward-looking question. What do you want Vade's legacy to be?
Ritwik: I want our legacy and future to be focused on the positive impact we will make on revitalizing cities' infrastructure, improving traffic congestion, and prioritizing the public safety of citizens.
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