Imagine a young startup where two of three founders are pushed out the door. Imagine that this same startup parts ways with its COO, its SVP of Finance, its VP of Guest Experience, its VP of Engineering, its VP of Marketing and roughly half its other full-time employees, all within a period of months. Not last, imagine that the remaining cofounder, who is 20, has never before held a full-time job.
Sound like a great company into which to sink a small fortune? Investors in Flightcar, a 3.5-year-old, San Francisco-based startup, apparently think so. In fact, Priceline Group, Tencent Holdings, and earlier backers GGV Capital, General Catalyst Partners, Softbank Capital and First Round Capital came together last month to quietly provide the company with $20.7 million in Series B funding. It has now raised roughly $40 million to date.
Flightcar was formed to address a very real problem: the hassles involved in airport parking. The idea: while you’re away on a trip, someone else arriving into town can use your ride. You leave your car with a valet and skip the process of schlepping back and forth to a far-flung lot. You also avoid parking fees that can add up fast. Your car, meanwhile, gets insured against theft and damage, it’s thoroughly cleaned, and you’re given a little cash for every day your car was rented.
The idea isn’t foolproof for many reasons, including growing competition from Uber. But Flightcar had been ticking along just the same, striking deals with three airports – San Francisco, Boston, and L.A. — by September of last year and raising $13.5 million in the process.
Then, encouraged by investors to start scaling as rapidly as possible, the figurative wheels began to come off.
As Flightcar was striking a deal with its 17th airport, customers began to complain. Recent reviews on Yelp include stories of cars “returned back to me dirty with fast food wrappers in it,” unexpectedly canceled reservations, and “scam-like behavior.” Another customer who says she rented a car through the service but would never rent out her own car via the platform, writes on Yelp: “They are very responsive and helpful when you need to rent a car, but if anything bad happens or issues arise, it’s like the company doesn’t exist anymore.”
The biggest hindrance, say numerous former employees, is co-founder and CEO Rujul Zaparde, who turned down a freshmen spot at Harvard to run Flightcar with friends Kevin Petrovic and Shri Ganeshram — and who later pushed out both men, at different times. Ganeshram left the company within months of its launch; Petrovic was ousted in July over a “difference in priorities,” he says. Interviews with numerous former and current employees, confirmed by various LinkedIn accounts, show that half a dozen high-level employees walked out behind him. (Most of those people declined to comment for this story.)
Zaparde’s obsession with unit economics is one issue, says one former employee. “You still can’t change a reservation with Flightcar online; you have to call to do that,” says this person, adding that rather than hire needed engineers or pay competitively, Zaparde has long been more “far more interested in cutting pay by a dollar” and “giving employees less equity than they should have received.”
Zaparde is also described by several current and former employees as unwilling to engage enough with both employees or customers. “That saying about the customer always being first? Rujul thinks the customer is always wrong.”
“He doesn’t trust people,” says a third long-time employee who left the company and explains that there “weren’t a lot of meetings with management and those that did take place were generally one-on one.” Says this person of Zapardes’s methodology, “There was no broader context. He only wanted people to know as much as they needed to do their jobs.”
Perhaps it’s no surprise that investors see things differently. Hans Tung of GGV Capital – who is now Flightcar’s only board member other than Zaparde — calls Zaparde “thoughtful” and says he has seen “remarkable growth” at the company, though he declines to discuss metrics.
Adds Tung of a major restructuring that took place this week and has left the startup with little more than half its former employees (which, until recently, included 25 people in corporate and another 125 people working around the country in other roles, including as valets): “Young startups will have founders who need to work out their issues. But if we didn’t think highly of Rujul, we wouldn’t have led Flightcar’s Series A or participated in its Series B.”
(Other investors, speaking on background, similarly say they think that now is a good time to take stock of the company and hire fresh talent that can take it to a new level of growth.)
Cofounder Petrovic — reached en route to the airport last night, in an Uber, notably — says he doesn’t think the company is doomed, either, despite the turmoil it has endured this year. Though he thinks Flightcar wasn’t ready for the scale operationally that its investors were encouraging, he seems somewhat sanguine about all the turnover.
“It would be hard to do something too drastic to fix the problems at the company,” he says. “It actually makes me optimistic that [board members Zaparde and Tung] understand the gravity of the issue and [know] that they need to make significant changes in order to have as bright a future as possible.”
Asked about Zaparde’s management style, Petrovic says, “Rujul is 20 and he stands to make a lot of money. I’m sure he’s doing his best. If it were his third company, maybe he’d be doing it differently.”
We asked Zaparde to comment for this story. Instead, he forwarded our request to Julie Sapan, a professional who has worked with a long line of companies that needed help with their positioning and marketing and who was brought in to Flightcar last month to assess the damage.
Supan, who says she’s now the company’s acting CMO, confirmed via email yesterday that, “[Tuesday], we did a strategic restructuring across our business.”
She added that “[W]e are evolving our model to sharpen our focus and double down on the remarkable organic growth we’re seeing at FlightCar. You’ll hear more from us in the coming year.”