SoftBank-backed Fair struggled after explosive growth, say insiders - Business Insider

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SoftBank-backed startup Fair burned through nearly $400 million in 10 months. Insiders reveal how Softbank stepped in and cleaned house in the wake of WeWork.

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In February, programmers spent a week in a swanky Santa Monica rental home they dubbed the "Fairbnb," sprinting to create a functionality that would help the company better partner with Uber. Today, those millions are gone. Eight months after the swanky "Fairbnb" retreat, Fair found itself needing an emergency cash injection.

"We've built the hardest part; we have to figure out how to finance all of it," he told Business Insider from a conference in Portugal. "We're at a point now where we have to get it right, given our scale." As SoftBank-backed, money-losing Uber geared up to go public, Fair entered another market by acquiring the ridesharing company's money-losing leasing program this January. Lyft has had a similar tie-up with three rental car providers including Hertz since March 2016, a Lyft spokeswoman said.

Employees said that the ridesharing part of the business was more profitable for Fair than the general consumer business because it had less user acquisition cost and more dependable demand. While the company's server infrastructure was spectacular – one programmer compared it to Netflix, the gold standard – Fair's employees were frustrated by a poor backend. Operations relied on cumbersome Google spreadsheets and manual inputs, and the whole process was prone to user error, even when Fair added systems like fleet maintenance software Fleetio.

"One guy would go out and spend $10 million on cars, then the finance team would say, 'What the f---?'" Executives also had side projects that vacuumed talent and spend. For example, Fair leased an old Walmart across from the Oakland Airport to build a facility to refurbish cars, with rent starting at about $225,000 per month, two sources said. Painter said that number was incorrect, but he declined to give specific figures.

"We'd have to assist Scott's [16-year-old] son with getting a car," one employee said. "His profile had a SpongeBob SquarePants license - the license picture was SpongeBob." "I didn't really understand how serious it was the first day," said one employee. "The second day was like, cancel any orders you have in process. No money's going in or out at all. The next day I realized it was bigger than I thought."

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