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People in Austin are replacing Uber and Lyft with ... a parking app?

Luxe’s little-known valet service has found unexpected success among the drunkerati.

When Austin residents voted to require fingerprint background checks for all ride-hail drivers in May, Uber and Lyft did just as they warned people they would do: They left.

It was an outcome few actually wanted and even fewer believed would actually happen, one that stranded approximately 10,000 drivers as well as riders who had come to rely on either the income or the easy access to transportation the services provided.

Luxe app
Source: Luxe

In the wake of Uber and Lyft's departure, some people have turned to things like a rogue Facebook group where potential riders post their pickup and dropoff locations in search of drivers. Others in search of a more reliable replacement in a city known to be the "hardest drinking" city in Texas turned to a service few could predict would be a solution: On-demand parking app Luxe.

Now that Uber and Lyft are gone, it turns out more people are driving into Austin and using Luxe's valets to park their cars. But after a night of drinking — when Uber and Lyft would make the most sense — many of these Luxe users have begun to use a little-known service provided by company: Drive Home.

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Filling the Uber gap

Drive Home is exactly what it sounds like: A Luxe valet will drive your car back to you when you're ready to leave. But instead of turning the car over to you for you to drive, the valet will drop you and your car back at your home.

In the time since Uber and Lyft have left Austin, there has been a 140 percent increase in Drive Home rides, according to Luxe co-founder and CEO Curtis Lee. The company has also seen a 32 percent increase in their overall business in the city and a 30 percent increase in their monthly subscriptions. The company wouldn't provide whole numbers to Recode.

While it's likely that Luxe might see Drive Home utilization drop off if Uber and Lyft ever return to Austin, the service does exemplify what the company can do beyond parking without subjecting itself to what Lyft and Uber often characterize as onerous regulations.

"How do we help the person who has their car, had some drinks, and can't decide if they want to take an Uber home, which would especially be an issue the next day for the commute?" -Curtis Lee, Luxe co-founder and CEO

Luxe launched Drive Home six months ago, when Lee realized few of their users were using the service for anything other than commuter parking. That's why Lee decided to replicate a similar service he encountered in Korea and created what is essentially a designated driver service.

"We looked at our consumer base and saw that our average customer was using us anywhere from ... two times per week to multiple times a day, every single day," Lee told Recode. "So we really saw an opportunity to extend beyond parking for commuting purposes. How do we help the person who has their car, had some drinks, and can't decide if they want to take an Uber home, which would especially be an issue the next day for the commute?"

So Luxe quietly launched Drive Home in markets like San Francisco, Los Angeles and Austin. Unlike Uber and Lyft, Luxe drivers aren't subject to the same commercial transportation regulations that can often require things like a commercial license or fingerprint background checks.

According to the company, that's because of a distinction that seems trivial by all other measures: These drivers aren't driving their own cars for money.

Internally, Lee said, valets-turned-drivers have to receive extra training and a special company certification in addition to passing "extensive background checks" which the company puts all their valets through.

The background checks are so extensive, the company said, that Luxe only hires fewer than five percent of applicants. (Lyft and Uber made similar claims about their background checks when pushing back against requiring fingerprints.)

Renaissance Valets

For Luxe, Drive Home is a part of the larger goal to be the "relationship point" between customers and their cars. Eventually, the company hopes to provide everything from mechanic services to smog checks: "Basically, anything that you'd spend money on for your car," he said. Already, Luxe offers things like car washes, gas refills and even electric vehicle charging and hopes to continue to automate this in the future.

It's exactly this attempt to diversify their consumer base, Lee said, that has kept them in business even as many competitors have fallen or pivoted away. So far, Luxe has raised a total of $75.5 million in funding from a variety of investors including car rental company Hertz.

"There were some worthy competitors with a fair amount of resources who pursued a different strategy than us," he said. "They focused solely on the commuter market instead of diversifying their customer base. Others didn't have the resources to automate their services — a lot of them were doing things in an Excel spreadsheet."

It's not exactly an easy space to operate in, either. On-demand parking companies including Luxe are a part of a small but growing cohort of companies hitching their wagons to today's car ownership model. They're largely betting that personal car ownership won't take a hit at a time when many other companies have predicted it will and when some, like Uber and Lyft, are pouring money into replacing it.

An in-app secret

For now, the company has done little to promote its Drive Home service beyond including it on their website and making it available to users, and it is still hoping to smooth out the way it works.

"It required a little bit more training on our end," Lee said. "We get our highest qualified drivers to provide the services. As of right now, we match our valets with rides that are going toward the location they go to at the end of the night."

As for what valets do after they drop the customer off, Lee said: "Sometimes they take public transportation, sometimes they take Uber where it's available or sometimes they just walk home."

Finessing the the way Drive Home operates is a major focus for the company, which has tasked its entire engineering staff to prioritize developing and bettering their machine learning algorithms.

"We have a staff of Ph.D. data scientists working on matching algorithms, our own ETA machine-learning algorithm," Lee said. "We do the dispatch system — everything's built in house. But logistics is something that will never be fixed, even at Uber's scale and with its resources. You're always trying to run after this thing that you can't ever get. But it's about getting better."

By Johana Bhuiyan, Recode.net.

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