The technology industry has done quite a lot in the name of "disruption."
That buzzword and guiding philosophy of startup culture underpins the pledge to change the world by ousting industry incumbents through sheer will and the glory of efficiency -- a process best illustrated by the car-hailing app Uber, now a real-time textbook for techies looking to shake things up. But one area that's seemingly off limits to tech's golden touch: restaurant reservations.
Brian Mayer learned that the hard way earlier this month when his brand-new service, ReservationHop.com, instantly became a lightning rod for heated discussion over how far startups will venture to make a buck under the guise of problem-solving. Mayer's service, born from an unpleasant wait for a popular food-truck burrito, was created to snatch up popular restaurants' prime-time reservations in San Francisco under fake names and sell them a few days in advance without the establishment's knowledge. If no one bought the reservation, Mayer would call up and cancel the reservation a few hours before. The service was live for a long weekend, from July 3 until July 8, before Mayer stopped taking orders.
This is irresponsible and sleazy and exactly what people hate about startups sucking the life out of San Francisco https://t.co/pqz572FWA9
-- mat honan (@mat) July 3, 2014
The torrent of online disapproval, brewing first on Twitter, coalesced on July 3 with TechCrunch's Josh Constine christening the service "JerkTech." ReservationHop was, he wrote, "emblematic of a compassionless new wave of self-serving startups that exploit small businesses and public infrastructure to make a buck and aid the wealthy." Alongside MonkeyParking -- the smartphone app that tried to auction off public parking spaces before being -- ReservationHop was in the eyes of its critics contributing to the very problem it was claiming to solve.
Mayer initially responded to the backlash with a head more level than most tech founders who earn themselves a Twitter and online media bullseye. In a July 3 post on his personal blog titled, "How I became the most hated person in San Francisco, for a day," the Bay Area product manager owned up to having treated this only as an early experiment. While Mayer "never expected a maelstrom of internet hate," he understood that ReservationHop could illustrate him like, "as one Tweeter put it, 'a caricature of SF tech bro sh*thead.'"
"It seems that everywhere you look cherished public resources are being claimed by startups, whether it's Google laying claim to bus stops or parking apps laying claim to, well parking spaces. I'd half expect someone to come along one day and put picnic blankets down in Dolores park and sell them at $25 apiece," Mayer wrote.
Pledging to talk to restaurants to loop them in, Mayer closed ReservationHop on Tuesday of last week to reorient the service after talking with dozens of professionals in the restaurant industry and gauging the prospects of working together. That same strategy has already cemented a number of New York City startups, led by Eater.com co-founder Ben Leventhal and his mobile app Resy, that are making reservation-selling a reality.
Now, it appears ReservationHop will see itself truly tried by the market. And selling reservations is something the masses may soon come to accept, like paying more to hail a car that comes at the tap of a smartphone screen. In a chat with CNET News, Mayer delved into his motivations behind ReservationHop, the ethics of so-called "JerkTech," and why he thinks that tech is not the enemy here.
This interview has been lightly edited for clarity.
Q: You spoke in your blog post about how you felt that you understood in part some of initially online backlash that turned you into "the most hated person in San Francisco," but seemed skeptical about the amount and direction of the anger. Now that the dust has settled, have your thoughts on that experience changed at all?
Mayer: I understand why ReservationHop represents what many people hate about the consumer tech industry, even if we are far from the first startup to try to sell restaurant reservations. At the same time I am glad that the controversy has brought mainstream attention to this exciting potential new market, and the ongoing disruption of the restaurant industry. I think one of the major factors behind the particular intensity of the response to us was the timing: shortly after the MonkeyParking controversy and during a slow July 3 news day. It played very well into the "JerkTech" theme.
What kind of feedback have you received from within Bay Area startup culture?
Mayer: One of the best parts...for me has been to experience how nurturing and supportive the tech community in San Francisco really is. I've gotten amazing feedback from some of the preeminent names in tech. Not everyone agrees with the model, of course, but people in tech understand that startups need to experiment with product-market fit, so I'm receiving a lot of encouragement from other entrepreneurs who have been where we are now. I've also gotten quite a lot of positive feedback from the restaurant industry.
People think that restaurants are automatically against the idea on its face, but the fact is that I've had a few owners and chefs reach out to me personally and offer their support. There is an acknowledgement that the industry is changing. It may not be toward this particular model, but restaurants are becoming more sophisticated and eager to explore how new technologies can help them deliver better service, or help their bottom line.
Do you think this idea of selling what we either rightly or wrongly feel are free and public resources is something that can't be stopped unless it brushes up against municipal law? Should we really start worrying about monetized blanket space at Dolores Park?
Mayer: First off, you don't need to worry about Dolores Park! But the observation is apt. The main driver is not about monetizing "free" resources but about smoothing inefficiencies in marketplaces. Entrepreneurs are like economists: they look for where the demand side of a market and the supply side don't line up and then they try to create solutions that bridge the gap by making things cheaper, stronger, or more efficient. Think of Uber as an example. The taxi industry worldwide has been inefficient for a long time because of artificially restricted supply and poor communication. Uber solved both problems.
Restaurant reservations are not a public resource, but there's a clear gap between the number of reservations available and the demand. There's also a deadweight loss in the form of no-shows. Our hypothesis is that we can eliminate this inefficiency by introducing a marketplace for reservations. We may be wrong.
It seems pretty clear that while the jury is still out on the nature of restaurant reservations as a sellable commodity, the biggest problem seems to be in you doing so without permission of the restaurants by way of fake names. Do you think that was the wrong way to go, and are you now firmly of the belief that restaurants need to be looped in on this?
Mayer: Yes and yes. We definitely made a mistake assuming from the beginning that restaurants wouldn't mind how we booked reservations as long as the tables were being filled. But after personally speaking to over 20 owners, managers and chefs in the restaurant industry...I realize there are other considerations restaurants deal with such as brand, avoiding short-sats [when diners who don't spend a lot of time -- or money -- at a restaurant] and no-shows, reserving a percentage of tables for walk-ins, and social convention that go into how they structure their reservation system. I'm glad that we've had the opportunity to further understand that perspective as we "pivot," so to speak, to find the right product-market fit. That is another thing that I've come to appreciate -- that the angriest guy in the crowd can teach you a great deal if you're willing to hear him out. I've always been a foodie, but my respect for this industry has only grown [this month].
A poignant comment I read online about selling reservations stated "we are a transactional society on steroids" where "everything boils down to figuring out the maximum amount of money you can extract from my pocket at any given moment." What do you think of this sentiment, and what kind of role do you you technology -- and more importantly, monetization-fueled startup culture -- plays into that notion?
Mayer: Well we are a transactional society! Not that there's anything wrong with that. No one is "extracting" money from anyone's pocket (except, maybe, for taxes). Nobody is forcing people to pay for what others are willing to sell. In our society, people make decisions of what they want to buy based on the value they derive from the purchase. No one has to buy a restaurant reservation. But if you're in town for the weekend and need to find a cool restaurant, it may be worth it. If you forgot to grab a table for Valentine's Day, you may pay extra for it.
Why shouldn't startups be fueled by monetization? Without income, you don't have a business. By the same token, if there's no demand and no customers, there's no monetization. Technology is just a scapegoat. There will always be resistance to new attempts to make inefficient markets more efficient, because in the case of the big disrupters like Airbnb and Uber, there are entrenched industries that benefit from the inefficiencies. But that doesn't mean that technology or startup culture is itself the problem.
Some argue that selling restaurant prime-time reservations levels the playing field, while others argue that it further disintegrates hospitality. Then there's the owner's argument: restaurants can sell reservations to ensure diners show up, a kind of insurance against a problem that has plagued the industry so they say. How have your thoughts on those different perspectives changed?
Mayer: All valid if conflicting viewpoints. Customers in the back of the line don't like waiting an hour for a table, especially when celebrities and friends of the restaurant can get in immediately, and would be glad for a system that gave them a leg up on the game. At the same time, restaurant owners have told me that they like having a system where they reserve special tables for friends and it is a standard perk of being in the industry that you get the same treatment at other restaurants, which I totally get, having come out of the conference business where we used to exchange free booths and tickets. There's a lot of perspectives out there, and the question for us in the coming weeks is, what can we do that benefits both patrons and restaurants?
The founders of MonkeyParking defend themselves by saying they're in the business of selling information -- when and where a parking spot is about to be vacated, for instance. Is this how you view a restaurant reservation, as a piece of information (name, time, location), and restaurants shouldn't care about the details if it creates a valid transaction?
Mayer: It's a philosophical question: who owns the restaurant reservation? Is it the individual who takes the time to claim a table at a certain time, or is it the restaurant who provides the asset free of charge? Ironically, by keeping reservations free, restaurants may be contributing to the ambiguity on the subject. If restaurants charged for reservations, the transaction could come with terms that forbade resale or transference, and it would be clear that the reservation belongs to the restaurant. But if they are free, a lot of people wonder: why can't I sell it?
That's a question a lot of people have been asking, especially as we're starting to see a promulgation of new markets that previously weren't thought about. I see this as very similar to whether it's acceptable to pay someone to wait in line for you at the Apple Store, or holding a seat for a friend at the movie theater. Where it gets murky is when such common practices become commercialized--that's where you see controversy over whether it's "ethical" to engage in such activity.
There's a obviously a line here, but many are willing to cross it with extreme examples -- paying to jump ahead in an emergency-room waiting list, or creating a service for privatized, for-profit organ donations, for instance. Putting aside those extremes, do you believe it's ethical to sell something simply on the grounds that someone is willing to pay for it?
Mayer: My perspective is, and this is the thing I was most widely misquoted on last week, both parties need to consent to a transaction for it to be ethical, and such a transaction cannot create negative externalities for a third party. To use your example, I don't understand why it's considered acceptable to give an organ away for free but not to sell it -- after all, an organ market would certainly solve the massive organ shortage we have in this country.
Society changes its views over time in regard to what's considered taboo to engage in commerce over. It used to be commonplace for priests to sell indulgences to the public, which is now taboo. It used to be taboo to charge interest for a loan, which is now commonplace. We shouldn't let our attitudes about what is or isn't considered taboo to decide what markets we create, as long as the markets involve mutually consensual transactions. We should create the markets and let the people decide. If there's no market for restaurant reservations, then people won't buy them!
In your view, what allows you the right to take demand for something and monetize it independently and without incurring any risk yourself?
Mayer: I've heard both perspectives: that the reservation is owned by the restaurant and that it belongs to the person who made it. Any secondary market for reservations relies on the latter interpretation. That doesn't mean that the restaurants don't or shouldn't be involved in the transaction. They should, which is why we're working with restaurants now to form the partnerships to make it happen. Restaurants should share in the value of the reservations we offer, if only because we want them to see ReservationHop as a helpful tool, but also because we believe restaurants can benefit from a paid reservation system.
While it may be argued as ethical if someone is willing to pay for it (and it's not affecting health or being enacted in a time of civil emergency like price gouging gasoline), do you think there's a problem in offering a paid service that solves a problem you actively contribute to?
Mayer: We haven't created the problem of limited supply and high demand, but we are trying to solve it.
By turning reservations into a commodity with a price tag with no idea of whether or not people would be willing to pay for it, were you not offloading all the risk onto restaurants? Did you feel that the volume you were doing this in was insignificant enough to justify experimenting without such knowledge?
Mayer: When we first launched the service, we anticipated that restaurants would be neutral one way or another, as long as we canceled unclaimed reservations to prevent no-shows, which we did. Keep in mind that the only reservations people are willing to pay for are those for restaurants that have no problem filling their book and have 1-hour waits out the door for a table. So either way, the restaurant is filling their tables. We also were operating at such a volume such that we didn't think it would matter -- one table per restaurant per night. However, there were other considerations restaurants were making that we didn't think of. Thus, the backlash, which has taught us a lot about this market and given us a lot to work on!
Working with restaurants, how startups like Resy and Table8 operate, seems to allow restaurants more control, over how many reservations they're willing to sell, at what times. How do you view those methods with regards to the future of ReservationHop?
Mayer: We are exploring any and all alternatives and we have tentative partnerships with several restaurants to experiment. If we cannot find a way to make both consumers and restaurants happy it's not worth doing.