Metropolis CEO Alex Israel: How a 'growth buyout' strategy made them the largest parking operator in North America

you're a founder and you start and you still own 20 30% of a company and you sell it for 80 million, like that's that's a house in PaloAlto and kids and generational wealth in some ways. Um, and yeah, that that has gone by the wayside.

I don't exactly know why because those seem to be easier to get across the finish line from an FTC perspective, but I guess folks just Yeah. At what point does the FTC just say like, "Look, we know we can see what you're doing. " Yeah. I mean, also 15 billion on this company for and and the CEO no longer works there.

Works there. Yeah. I mean, the flip side Yeah. I mean, the flip side is like when was the last time a company was valued at 80 million because every company seems to go straight straight from 5 million to 500 million in two days. And so I I don't know where you're getting 80 million like that.

That's just hard to hard to find. Uh I do I do have a question for you. I don't even know if you can speak to this, but there's a lot of companies that are thinking about plugging into the terminal. We see what Perplexity is doing.

We see uh a bunch of AI agents for financial clear perplexity is trying to disrupt trying to disrupt the terminal. Uh are you looking at that space? Would that be too competitive? Uh is there anything interesting there that you've seen or or or heard rumblings on the other side of the of the fence?

I can't speak to what's competitive with, you know, they're my LP, so speak for their business strategy. What I will say is when you when you run a firm that's got a name of another company on it, my guess is the Google Ventures GV guys have this too.

Every pitch that's like we are going to be the Bloomberg for X lands on my desk. Y and maybe not everyone, but many of them do because they're like, "And how amazing would it be to also have Bloomberg as an investor? " Yeah. Yeah.

Almost all of them seem to misunderstand to me what the value of the Bloomberg terminal is because it packages data. Yep. Community with a messaging system outside in perspective news etc. I mean that's just some of it and it's more than just let's display some data.

So everybody who's trying to disrupt I think is in for a surprise when they realize what an ecosystem it is. Yep. I I think this happens constantly especially in media. People see a media product, they like it, they don't understand why it's successful.

They try to reverse engineer it, but if you don't understand the why, you're never going to be But can I ask you guys though for you on you tried before, what's your hypothesis on your why of why this has been so successful for you?

The main one is that um most people in tech media have done it part-time historically and we decided to just kind of burn all of the ships and make this the full-time thing.

We got some great advice from David Senra, the host of the Founders Podcast, another full-time media creator, and he basically just said, "You guys have something that's that's working. You should go 10 times harder at this. " And what's interesting, and we also enjoyed it a lot.

we liked talking about business together which was kind of the foundation but but yeah the idea that there's a lot of there's a lot of technology podcast there's a lot of business podcasts if you actually drill down and you look at how many people are actually full-time just making media it's very very small it's pretty small and the nature the other thing is the nature of by taking something way more serious than anyone else it can sort of morph and evolve in the way that the show has from us two and a printer My my my viewers uh uh look on this is it's it felt I'm obsessed with Hamilton for a variety of reasons.

One of the reason I'm obsessed with it is nobody would have said one of the great media properties of the last 10 or 20 years would be a musical and so it defied the genre through intensity and seriousness and you feel immersed in a world and like before the show they used to go out on the street and do some little diddy or something like that.

Oops, my camera just froze. Okay, there we go. And uh and you guys have that same kind of immersion. I teach this class at Berkeley on the structure of the media industry. I will be inviting you as guest speakers. Amazing. We'd love that. Let's do it. Not when you're live. You I grew up in Berkeley.

The other thing that you've realized is it's cheap to start a media company.

So, as long as you don't get too big for your britches and figure like a ventureback company, your financial aspiration, maybe this is yours, is to create one of the most financially successful businesses in the history of capitalism, which is in VC as much as an $80 million exit along the way can be magical for everybody involved.

That's the hope is, you know, is that you can produce something wildly valuable and make some money. Yeah. Yeah. Exactly. Yeah. Fantastic. This is great. Well, we'll have to have you back. Congratulations. Congratulations, guys. Appreciate what you're doing. Keep us all immersed in it. We will. We will come back soon.

75 times. Yeah, we'll hit it. We We'll wait till after 73 more to go. 73 heads. Done. I'll come in and bang on that. Have a good one. You're the man. We'll talk to you later. Bye. Cheers, Roy. Bye. Up next, we have the founder of Metropolis, Alex Israel. He's in the studio.

But really quickly, let me tell you about Wander. Find your happy place. Book a wander with inspiring views, hotel, great amenities, dreamy beds, top tier cleaning, and 24/7 concier service. It's a vacation home, but better. Welcome to the stream, Alex. How are you doing today? Good. How are you guys doing?

We're doing great. We've been having an awesome show. What's it like to land on the the CNBC list? You guys are on there, right? You guys are on there. Congrats. I mean, that's got to be your guys' biggest accomplishment ever. There's nothing there's nothing that there's nothing that tops that. No. No. No. I'm kidding.

It's a I mean, anytime, you know, I know the CEOs that land on these lists, they're like, "Cool. " You know, they'll post about they'll post about it, but it's like, "You get back to work. " Yeah, of course. Yeah. It's uh Look, it's flattering. I just like being in the company of, you know, Open AI and Yeah.

You just got to get back to work. Yeah. The first the first CEO to be like, you know, normally CEO say job's not finished. In this case, job's finished. No, we're done. We're done. We're just done. We're done. This was the whole goal the whole time. And now we can retire. It's kind of like an exit, but better.

Yeah, it's definitely better. Definitely. Yeah, I can pay my college. It doesn't pay the bills, but you know, you can send it to a family member and maybe they'll be impressed, you know. Yeah. Yeah. You'll get some text messages.

Uh anyway, uh c can you kick us off with an introduction on on on the structure of the company and what you guys are building because it's super interesting and I I know we can go a bunch of different directions, but I'd love to get your kind of uh ground setting first. Yeah, of course.

Um, so you know, traditional in a lot of ways startup story. Founded the company in 2017 and now are one of the fastest growing payments companies in the United States. We talk about ourselves externally as an AI company for the real world.

But it's all about how you leverage computer vision and artificial intelligence to create next generation payments and commerce everywhere you go. Whether it's a retail environment, a car wash, or a gas station, how do you just walk in or walk out or in this case drive in and drive out? That is fascinating.

Um, talk to me about the strategy of actual uh building the business and uh acquiring assets and and and actually getting like the go to market motion is different here, right? Yeah, it was very different. I mean, look, we started very, you know, I don't know, stereotypical.

We raised the, you know, I guess large, but $20 million seed financing, $40 million series A. We hit the wait $20 million seed in 2017 that that that that's more than bigger than a mango seed which which started to become popular a bit later. Uh I don't know was that a water watermelon seed round?

Um what what what what was the catalyst there? You just you had a bunch of experience in the space and and so people had a lot of confidence in you or why why did you need 20 million at the time? Yeah, it's a good question. I don't know. I guess serial tech entrepreneur u I don't know.

My last series A in my last company was 3.

5 million and I you know I thought I was rich you know and then you know $20 million seed financing but look we knew we were tackling you know the first vertical that we entered was mobility and we wanted to go after the parking industry and we wanted to deploy technology in the parking industry and we knew that there were a number of companies whether it was standard cognition or Amazon go that were leveraging computer vision to create these next generation experiences and we knew it would take a lot of capital and we kn it would take while a while to penetrate the market.

So, we wanted to make sure that we had the capital in place to to really go after the market. Talk about your position in in parking uh today. It sounds like you're you're thinking about other categories already.

At what point did you decide that you could be thinking about other other applications of the the tech and infrastructure? Yeah, it's a good question. You know, I'd say so after our series A, I would say we hit product market fit and unit economic fit really quickly.

I'd say the problem was we hit a wall with our go to market and that was you know at the time we were scaling our technology to a number of the largest asset owners across the United States and we'd effectively knock on their door asked to take the keys for the parking experience to their $200 million development and they were like cute startup come back in 50 years so we realized we needed a different go to market motion so we shifted strategies and we invented what we qualified internally as a GBL which was this idea of a growth buyout could we raise venture capital dollars and could we acquire old world businesses?

So, we started rolling up oldw world parking operators that are, you know, the cost plus staffing agencies that were evido positive that run parking across the United States. And we kept rolling them up to a point where now we're the largest parking operator in the United States. It's amazing. What uh Yeah. Yeah.

What is the structure of the of the parking market generally? I feel like uh I I live in Pasadena. When I drive around, some of them are cityowned, some of them validate, some of them don't. It feels very fragmented.

It I I couldn't name one unified brand, but is the is the structure of the parking owner market as fragmented as I perceive it to be? Yeah, completely. It's I mean, it's as fragmented as the real estate owner market, right?

People that own real estate own parking and there are, you know, hundreds of thousands of real estate owners from a class A perspective all the way through an airport across the United States.

And we deploy our technology to facilitate that type of seamless experience where a consumer can just drive in, get a text message when they arrive, and get charged when they leave. Yeah.

Is that historically just because there's no economy of scale like there is in in real estate, or is that just because the asset class is so big that you can't possibly own it all? It's just so sexy. You know, everyone drives and they're like, park it. Yes. Yes.

You know, it's like No, it's like the last bastion of non-institutionalized real estate in the United States. Yeah. Yeah. You're right. And it's everywhere. It's 15% of the surface area of our cities. And for us, it was the first touch point.

And to your comment earlier, we realized that if we can roll out parking and we can deploy a seam seamless payment product across parking, then we can move into gas stations and car wash and quick serve retail and then we can move past the car and into the store. Yeah.

Can you talk about the uh the kind of longer term vision for city parking? I feel like there with autonomous cars, people are excited about maybe reclaiming some green space.

Whenever I see a big city and there there's just like one flat parking lot, I'm like that would be way more efficient if it was like three stories of underground parking and then a massive building on top with some mixed retail and some on the autonomous cars.

People like to say, "Oh, when we have autonomous cars, we'll need less parking in cities. " And and and I can see that in some way, but but at the same time, I'm not excited to spend every day in Whimos, effectively taxis. I am excited to have my own autonomous car.

And the idea that I would drive into the city and then my car would just be driving around all day, like it's got to go somewhere while I'm while I'm podcasting, right? Like it can't, you know? So, so it's going to be parked somewhere.

And so I think this sense that autonomous driving is going to eliminate the need for for parking is is um or or certain, you know, some some of the parking in in cities is maybe off base. No, look, I think it's an interesting question.

I mean, when we founded the company, we spent a lot of time thinking about the future of autonomous vehicles. And to your point, like cars are not going to circle the block endlessly looking for their next