Another chapter is opening up for Fair.com, the car subscription startup backed by hundreds of millions of dollars from SoftBank and others: Today the company announced that Bradley Stewart, who had been CEO of aviation startup XOJet from 2013 to 2018 (when it was acquired by Vista Global), is joining as CEO. At the same time, Stewart confirmed in an interview that Fair is working on raising another round of funding -- size as yet unknown, but including both equity and debt -- to push ahead on its business now focused squarely on car subscriptions for consumers.
"As we pivot and scale, more capital will be needed to pursue that, to grow the market and for customer acquisition, and to allow us to buy more cars. That process is under way," Stewart said, adding that despite everything going on in the market, there is still funding to be had. "I was shocked by how it is going right now," Stewart said.
Stewart's appointment comes in the wake of a dramatic six months for Fair, which was once valued as high as $1.2 billion and has already raised hundreds of millions in debt and equity for a business built around the concept of subscription-style car usage, longer than typical rentals and shorter and with more flexible terms than your average lease.
Aimed both at consumers and those -- like Uber drivers -- using cars for work, Fair's original idea was ambitious, but ultimately fell afoul of tightening governance from its lead investor, smarting from the debacles of WeWork and Uber.
Fair's fall included a large round of layoffs and the sacking of its CFO; the abrupt departure of its co-founder, serial car-startup entrepreneur Scott Painter, as CEO (he remains as chairman); and a pivot away from what was billed as a lucrative business leasing cars to Uber drivers. Stewart replaces Adam Hieber, a CFA from SoftBank who had been interim CEO after Painter stepped down. Hieber will go back to being an operating partner at SoftBank and will also stay on Fair's board.
Fair's problems were not due only to tighter policies from SoftBank: they also underscore the bigger challenges faced by car startups around balancing user demand, cash burn and a heavy asset load in the form of car inventory.
But even so, those demands don't always end in pivots and restructuring. Just today, it was reported that a startup focused on car sales, Vroom, has confidentially filed for an IPO provisionally (optimistically?) scheduled for June.
That's one reason why investors and Fair itself continue to tinker with its own model to get the business on the right footing. There's clearly opportunity, and at a time when people need more financial flexibility in their lives, and have moved away from ridesharing and public transport -- both results of the COVID-19 pandemic -- that opportunity could come in the form of changing ownership habits for cars and more demand for the likes of Fair's vehicles.
As for what Stewart has in store, he comes from the world of private equity -- he's ex-TPG -- and sees the Fair opportunity both through that lens and that of his previous role in an aviation startup.
"The tailwinds are long term and enduring," he said of Fair and the car market. "You can see the shift from ownership to rental, and the push within the consumer market to be more savvy about depreciation and value orientation." He also noted that the fragmentation in the current car market will give a company like Fair to get more economy of scale through a more national approach.
Stewart's only getting started now -- the announcement was made to the company just this morning -- so there is not a lot to draw out yet on how he plans to steer the company in the coming months, in particular at a time when consumer spending has taken a big hit, and many automakers are feeling the pinch.
But he did say that so far he feels Fair's biggest "gaps" have been in the area of pacing and refining the company's go-to-market proposition. "Those will be the big focus for me," he said, "making sure that the pitch is right and that we’re meeting the needs of our customers. You’ve got to learn and the data has to be looked at critically."
Stewart added that he'd like Painter to be involved "as close as he wants to work with me" in the newly pivoted startup. Painter was not available for an interview but in a statement endorsed his replacement.
“Fair is transforming the car from an owned asset that loses much of its value over time into a service that can be turned on or off like the countless other subscriptions people access on their phones,” he said. “Brad’s passion for Fair’s unique offering is evident and exciting, and his experience innovating a mobility model that eliminates unwanted elements of ownership makes him the perfect choice to lead Fair into the future.”