If fair Scott Painter, who fired 40% of his employees in October, promised not to cut leasing services for on-demand fleets. But just a week later, Painter was removed as CEO and has since been replaced by Adam Hieber, a CFA of the fair investor SoftBank. According to two sources, Fair announced at an all-hand meeting today that it would end the Fair Go program that Uber drivers could use to lease cars. The program will end in April. About Now confirms the TechCrunch news.
Fair used to be worth $ 1.2 billion after raising over $ 2 billion in equity and debt from SoftBank and Lightspeed. In October, she fired 40% of her employees. The company bought Uber's XChange leasing program in early 2018. With the contract, drivers can lease an Uber eligible car with breakdown service and maintenance subscriptions for just $ 130 a week and a starting fee of $ 500.
But Uber had sold the leasing program because it was unprofitable and added to the passenger's losses in a difficult time. With additional fees incurred, Fair was unable to significantly improve operations.
A source tells us that Fair Go was profitable. It was an important focus for the company when it upgraded its subscription services for traditional drivers. Another source says that at one point Fair Go added about 250 to 300 car rentals a day and had thousands of active rentals.
However, Fair Go was faced with higher insurance rates from carriers, which makes sense since Uber drivers can travel much longer than conventional car owners.
Instead of trying to pass these fees on to drivers – many of whom are already financially strapped – Fair told employees that they would no longer rent to Uber drivers. This is a respectable decision as it could have put the Uber drivers in debt if they hadn't understood exactly what their total cost would be.
Attempts to achieve Fair for Comment were made more difficult by the fact that many of the internal PR staff were affected by the October layoffs. A representative of the agency was asked to comment on the closure, but did not comment before going to press.
However, an Uber spokesman confirmed the closure of Fair Go and their partnership, notifying TechCrunch that “Unlocking vehicle access options so drivers can make money with Uber remains a top priority. We are grateful for the cooperation with Fair and their contributions to our rental car program. We continue to invest in rental partnerships and build more flexibility than we can today with hourly, weekly and monthly options. "
Uber tells me that it is still about offering drivers leasing options through partnerships with Hertz, Avis, ZipCar and Getaround, and that they may be able to work with Uber drivers who were previously leased by Fair.
Painter continued to chair Fair.com when he stepped down from CEO position in late October – a change that we are still affirming is in effect today. At the time of the layoffs in October, he said the measure was proactive and not in response to SoftBank Print.
"SoftBank is a big shareholder and supports my focus and that is now a reality," Painter said at the time. "Leaning on us isn't the term," he added in response to our questions as to whether SoftBank was putting pressure on them to make these changes. "They support us – there is a big difference," he emphasized.
The change of CEO a week later and today's news about Fair Go indicate a different development of events that reflects the pressure that SoftBank itself is under.
The news is the recent low for the SoftBank portfolio after the WeWork implosion. This has caused potential repeat LPs for SoftBank's massive Vision Fund to tighten their wallets, and prompted other late-stage investors to focus on sustainable profitability. Late-stage startups have repeatedly tried to lower their burn rates, often through layoffs.
SoftBank's portfolio, which according to the Megafund's assessment of many inflated valuations, could have problems advancing on good terms, was the hardest hit. TechCrunch this week brought the news that Flexport fired 3% of its employees or 50 employees.
Other layoffs financed by SoftBank include Zume Pizza (80% of the layoffs), Wag (80%), Getaround (25%), Rappi (6%) and Oyo (5%). More could come: Activist investor Elliott Management, who now owns more than $ 2.5 billion in SoftBank shares, has reportedly spoken to the company on a number of issues, including better governance and transparency and Investment management.