Fair, a two-year-old auto subscription startup, announced it is cutting 40% of its staff, including chief financial officer Tyler Painter, the brother of CEO and co-founder Scott Painter. Painter will be replaced by Kirk Shryoc, managing partner and co-founder of Hard Right Solutions LLC, a software and consultancy firm, reports Auto Finance News. TechCrunch estimates that Fair will lose about 215 of its 539 employees, as reported on LinkedIn. Scott Painter notified employees on October 24 via email.
Here is an excerpt, published by TechCrunch:
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While we are proud of our growth, we are here for the long term. This means that weve decided to take proactive steps now to ensure we are a profitable public company later.
With the help and guidance of our leadership team, Ive decided to focus the companys resources on strengthening Fairs core technology and reducing costs associated with the capital-intensive supply side of our business. Going forward, Fair will be a smaller team, focused on doing fewer things well. As part of the process of achieving profitability, were reducing our headcount across the business.
While these are the decisions that every entrepreneur dreads making, these are important for us to be able to safeguard the future of the business weve all worked so hard to build.
I remain grateful for this teams hard work and optimistic for the future. We have created an entirely new category that consumers love. Weve served tens of thousands of customers. Weve powered Uber drivers livelihoods. Weve helped everyone get access to the car they want, when they want, for how long they want – all on their phone and without taking on debt. We all did this together. We should all be proud of these achievements and I am personally grateful to all those who have given their time and expertise to deliver the future we set out to build.
Now, we will set out to transform the supply side of our business over the coming months, focus on building a profitable model, and operating with the rigor of a publicly traded company, wrote Scott Painter.
This news comes about five weeks after Fair acquired Canvas, Fords car subscription service. At that time, Fair reported 45,000 subscribers in 30 markets. Canvas brought about 3,800 subscribers in three markets to the table. Except for Ford taking an equity stake in Canvas, terms of the deal were not disclosed.
Fair.com, who secured a $100 million debt facility and an equity investment with Ally Financial in August, is valued about $1.2 billion. Its lead investors include SoftBank, Ally Financial, Mizuho Corporate Bank and Silicon Valley Bank.
Earlier this year, Fair partnered with Uber to make its pre-owned vehicles available to Uber driver-partners. Uber drivers can choose a car, starting at $130 a week with a $500 start payment. Each vehicle includes unlimited miles, vehicle warranty, routine maintenance and 24/7 roadside assistance. There is no credit approval necessary. Last fall, Fair partnered with AutoNation to expand its inventory.
Fair has transformed the pre-owned vehicle market and made cars accessible to those who have trouble getting financing but also to those who dont want a commitment. The latter does not want to own or lease a car. With Fair, they can get instant approval, a price range from which to shop and complete the deal all through the Fair app. Essentially, drivers subscribe to a specific vehicle for whatever length of time they want. Once they pay the initial payment, they can drive the car for as long as they want.
So why is a young, privately-owned company laying off a significant part of its staff? For now, we can only take Painter at face value. It is a proactive move toward profitability and sustainability. While he said in an interview that his investors did not ask for the cuts, Painter wants to keep them happy and investors want to see ROI, particularly if Fair has any hopes of going public in the near future. We dont think the layoffs necessarily signify trouble, but perhaps an infusion of financial expertise is needed to keep Fair on the path to profitability.