Fair, the car subscription start-up that partners with Uber and is backed by SoftBank, is cutting hundreds of jobs as it struggles to find a profitable path forward.
The Santa Monica-based company, whose operations launched just 26 months ago, allows customers to lease used vehicles via an app for an all-inclusive monthly price including insurance and repair.
Fair has so far raised around half a billion dollars in equity and more than $1.5bn in debt, helping it become a leader in the budding market for car subscriptions. But it has struggled with the economics of a business that has required it to spend vast sums purchasing a fleet of around 50,000 vehicles.
The cuts come just as SoftBank’s once-prized asset WeWork plans to reduce 30 per cent of its own workforce amid a frenzied $9.5bn rescue plan. WeWork’s woes have forced SoftBank to address profitability issues across its investment portfolio, which in turn compelled Fair to come up with an aggressive plan centred on sustainable profits, according to people familiar with the matter.
Founder and chief executive Scott Painter informed his staff of the cuts, which account for 40 per cent of the company’s workforce and will take place with immediate effect, in a memo on Thursday.
“I’ve decided to focus the company’s resources on strengthening Fair’s core technology and reducing costs associated with the capital-intensive supply side of our business,” the memo said. “Going forward, Fair will be a smaller team, focused on doing fewer things well.”
The cuts include several co-founders and reach into the C-suite, with chief financial officer Tyler Painter — the chief executive’s brother — being let go, signalling that the cost-cutting plan will include a new business strategy. Kirk Shryoc, a structured finance expert, will be the new CFO.
Mr Painter, the chief executive, told the Financial Times that Fair will still “deliver growth and expansion”, but it is shifting gears from “hypergrowth” to something more manageable.
“Things like this are never fun but I would much rather be announcing that we are getting the religion now — that we need to be really focused on creating long-term value — than telling you that there’s a bad outcome.”
Long-term, he wants Fair to be a public company. “What steps we take now will pay off in big ways later,” he said.
Just a few weeks ago Fair was adding hundreds of cars to its portfolio each day and expanding to one new US city per month. In September it purchased rival Canvas from Ford for an undisclosed sum and then raised $500m of debt from Mizuho Bank and SoftBank, whose Vision Fund also led its $385m Series B funding round last December.
The debt funding was meant to “unlock new levels of growth” by expanding a fleet of cars that would be available to Uber drivers. Fair has partnered with Uber since early 2018, when it acquired the ride-hailing giant’s fledgling leasing business.
Fair has also raised debt from Ally Financial, Silicon Valley Bank, and it has debt facilities from Credit Suisse and Goldman Sachs. Its $50m Series A funding round in March 2018 was led by Next47, the venture arm of German conglomerate Siemens.
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