As the market continues to turn against the wave of highly valued venture-backed startups operating with little end in sight to their huge losses — Uber and WeWork being two prime examples — another startup is taking a proactive step to get ahead of the story, by cutting costs and restructuring before public opinion forces the issue on them.
Fair .com, a startup building a flexible car ownership business that is valued at $1.2 billion — backed by some $500 million in equity from SoftBank and others, plus billions more dollars in debt funding — said today that it will be laying off 40% of its staff.
Painter (the CEO) said in an interview earlier today that the reason for the move was to proactively come out to make changes to help the company become more profitable at a time when the “capital markets” are focused on profitability — perhaps more than the over-focus on growth that has fueled a lot of the biggest investments in recent years.
In 2018, ahead of its funding from SoftBank, the company picked up the unprofitable leasing business of Uber; and earlier this year it picked up Canvas, a car leasing business previously owned by Ford.
At the time of the Canvas deal, Fair said it had about 45,000 subscribers currently in the U.S., with 3.2 million downloads across 30 markets, adding some 3,800 subscribers coming on from Canvas.
It’s notable that Fair is backed by the same investor that helped propel both WeWork and Uber to giant valuations ahead of the companies seeing their fortunes change: Uber’s in the public markets where it’s been pounded for its losses and WeWork before it ever got to its IPO (the company had to withdraw its filing and just this week saw SoftBank scoop up 80% of its business at a cut price in order to keep the whole thing from going under).