Over a seafood buffet at Mastro’s, CEO Alex Israel informed his largest legacy competitor that his parking startup, Metropolis, was going to take their company private. “Cute,” the other CEO replied.

Or as a banker who reviewed the plan early on put it: “Dog catches 747.”

As far as Upstart Moments go, it’s a story that’s hard to top. Founded in a Santa Monica garage in 2017 by Israel and three co-founders, Metropolis was under-the-radar when it pulled off the complex financial transaction earlier this year, valuing the combined business at $5 billion.

And for what Israel considers to still be a startup, it meant absorbing about 20,000 employees overnight – making Metropolis the largest parking operator in all of North America, handling another $5 billion in payments, with 30 million Americans signed up for ticketless app, and another million joining every month.

But Israel doesn’t see Metropolis as just a parking startup. He calls it an applied AI company, one piloting a new “recognition economy” that cuts the wait out of experiences for consumers, from drive-throughs to hotel lobbies, by serving up our identity and preferences without the need to take out a wallet.

What makes this recognition economy different from the surveillance state that many Americans fear is being ushered in by surveillance startups? For one, it’s opt-in only, Israel argues. And in a future where there are cameras everywhere, he claims that Metropolis could provide the digital passport to help you choose which ones you want identifying you or not.

“The question is, do I want that camera to recognize me? And that’s the infrastructure layer that Metropolis is building,” he says. “Control being in the hands of the consumer is the ultimate control.”

On The Upstarts Podcast, Israel talks about why merging “ugly, unsexy” businesses with AI has suddenly gained popularity; why Metropolis is all-in on autonomous vehicles, robotaxis, and drones; and why he argues the startup’s opt-in approach avoids the privacy concerns facing surveillance startups.

Plus, he shares his Upstart Moment: Inviting the CEO of his bigger competitor to a seafood buffet to inform him that he planned to take their company private.

Below, we’ll share my favorite takeaways from the episode – as well as Alex’s answers to our bonus questions for startup builders, exclusive to this newsletter.

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Below, we’ll share my favorite takeaways from the episode – as well as Alex’s answers to our newsletter-exclusive bonus questions for startup builders. Read on.

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Episode highlights

Bad for influencers: Israel’s favorite use case for his “recognition economy” is a drive-through. Instead of waiting to have a garbled conversation, he imagines a future in which the order kiosk recognizes you, applies your loyalty rewards, and asks if you want your usual order. This would be bad for the TikTok prank economy, we both agree.
What Todd Boehly told him: The billionaire part owner of the Los Angeles Dodgers and Lakers proved a crucial backstop when Metropolis was pulling off its take-private. “What are the negotiables?” Boehly asked Israel. And for the founder, it was maintaining control. “It wasn’t about dilution, it wasn’t about earn-outs, it wasn’t about the payday at the end of the rainbow,” he says.
“Not about surveillance”: Flock Safety, the controversial startup that has installed cameras across the country, came up on the episode. Metropolis doesn’t license data to government agencies or anyone, Israel says – and the “fair balance” of convenience and privacy its wallet-free identity solution is intended to offer is opt-out. I press him about this in the show, asking if that’s opt-out in the sense of airport security facial scans that are a pain to avoid; Israel insists that to the contrary, he sees Metropolis as your potential identity passport in a near future where there are cameras everywhere.
Robotaxi parking: A robotaxi and drone future can’t be good for parking businesses, right? Wrong, Israel says – making the case that Metropolis will be an ideal launch site, repair zone, and operations center for the autonomous delivery industry and ride-hailing services in the future: “If we haven’t announced the partnership, we will be announcing the partnership in very short order with, if not all, pretty close to all of these companies.”

Three Builder Questions With Alex Israel

What’s the best advice you’ve ever received as a founder?

“I would say there are two things. One: run towards your fears. I think that’s where you truly differentiate yourself from your peers, right? Most people run away from their fears. Think about special forces that run towards the enemy. You run towards your fears, you run towards the opportunity. You run towards the things that you’re afraid of, and that’s where both the challenges and opportunities lie.
The second one: You need to be terrified of failing in the large things, and completely comfortable in failing in the small things. So you need to be able to relentlessly fail, and I like this idea of failing up. Because the one thing that is resounding with startups is failure. You will fail infinitely more than you will succeed.
If you obsess over those failures, and you allow them to resonate and dominate your consciousness, you’ll live in the past. You need to move forward. You need to learn from your mistakes, and then move forward, run full speed into that wall, time and time again.”

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What’s the worst advice you’ve ever received as a founder?

“I think there’s this construct of work-life balance that people talk about. And I think you need to do what you love. You need to run after your dreams. And I think that founders that optimize for work-life balance are missing it.

The true dynamic is you need to do what you love, and you need to love what you do. And those things are going to become interwoven. You are going to spend more time with your company than you spend with your loved ones. You better love your company. And your loved ones better love what you do as well. You need to have a real understanding, and embrace that that distinction is not going to exist. Your life is your work. Your work is your life. And what it takes to be a founder. And that doesn’t mean it’s right for everyone.

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If you had one do-over, or reload from a previously saved checkpoint, where would you use it?

“I’m not big on regrets. I think that’s back to this idea of obsessing over failures… But I think that one of the things that’s interesting is my mom passed away around a decade ago. And starting a startup is like raising a child. One of the things my mom said is, ‘You don’t need to extrapolate one behavior, or one moment in time, to the rest of the future of your company, the rest of the future of your child’s life.’

And I think it’s similar to a startup. A startup is riddled with these highest highs and lowest lows, and they often happen within the same 24 hour period. And remembering to maintain that even keel, especially as it pertains to your mental health, is critical.”

What about with your first startup, when you were a young founder?

“When you’re a young founder, you often don’t push for what you believe in. You don’t dig your heels in, right, because you’re afraid. And you’re afraid of losing it all. So I think that as you mature, you probably become more willing to put more on the line. You’re more willing to run after what really matters. And I think that’s a big change over who I was when I was in my twenties, versus who I am in my forties.”

The Parking Startup That Swallowed A…