Serial entrepreneur Scott Painter's plan to build an all-electric car subscription company called Autonomy didn't pan out, so he's pivoting once again to what he calls “the hardest build” of his career.
While Autonomy will continue to operate the small fleet of 1,000 vehicles it has assembled over the past few years (still well short of its goal of 23,000), Painter told TechCrunch in an exclusive interview that the company plans to spin off a new company called Autonomy Data Services, or ADS.
The new company will provide its software platform and data to automakers that want to run their own subscription services for electricity, gas, new or used cars. Painter says it is also in talks with auto dealers, fleet operators, and even companies that sell construction and farm equipment but want to offer subscriptions. He says the early version of the service is already generating revenue.
Painter said ADS is in talks with several automakers, including three that previously operated their own subscription services. The company is working with Deloitte to run the service. ADS shares the revenue as a software or service provider, and Deloitte charges automakers (or other customers) to customize the platform.
Painter has had another twist. He’s had a rough few years. After stepping down as CEO of auto retailer TrueCar (a company he founded in 2005) in 2015, he founded car leasing startup Fair, which raised more than $300 million from SoftBank. That led to early investors accusing SoftBank of ruining the company, and Painter eventually stepped down as chairman in 2021.
His recent transition hasn't been easy either.
To make all this happen, Painter initially had to convince Autonomy's investors, some of whom were already underwater when the subscription service never took off as promised.
“Our lenders had a senior lien position. They could have killed the company and liquidated the fleet” to get some of the money back. But he worked with them to convert $32 million of Autonomy's debt into equity in the ADS.
He also said he had to “dig deep personally,” selling a $6 million beach home on Pacific Coast Highway, foreclosure on another property and “selling a lot of assets I didn't want to sell.”
“It was the hardest thing I’ve ever done as an entrepreneur,” he said, likening the whole process to “hugging a cactus.”
6-digit data argument
Autonomous driving was already struggling last year, when Elon Musk’s aggressive price cuts destroyed the value of a small fleet of mostly Tesla cars. (Painter, who knows Musk personally, says he tried to “emphasize to Elon how important it was to be more predictable about discounts,” but to no avail.)
The problem this time around is that most major automakers have already tried subscription services, and almost all of them have walked away from the idea.
Painter says this happened because automakers “still didn’t understand how loyalty or how subscriptions worked.” He says all automaker subscription services were brand new and they didn’t understand how customers would behave. Will they subscribe for a few months? Or for a few years?
Painter argues that without this information, it's really hard to set a price, and that the reason automakers charge so much for subscription services is because they want to scare away buyers.
That kind of information is one he plans to provide via ADS. And it’s not just coming from Autonomy customers. Painter quietly bought the assets of Shift Technologies, a used-car marketplace that went bankrupt earlier this year, for less than $1 million. In the years before it collapsed, Shift bought Painter’s former car-rental startup Fair, which had previously acquired Ford’s subscription service Canvas, bringing the remnants of his previous businesses back under his control, as well as Uber’s rental service Xchange.
Any company’s data can be used to predict “how long people will stay in their cars based on their customer base, FICO scores, income, etc,” Painter says. This is important not only because it provides certainty, but also because the flexibility of a subscription service can be attractive to customers with lower credit scores.
Painter said that in addition to the customer data, he has obtained all the source code, patents, trademarks and regulatory and legal “working product” from the closed entity, which he said will make it much easier for ADS to acquire and operate customers in new markets.
He said he got more than a terabyte in total, jokingly calling it an “amazing avalanche of poop.”
“My IT people were like, ‘What are we going to do with all this? It just keeps coming up,’” he says. But he points out that the companies that generated all this data “spent a total of $1 billion on software development,” which he now owns and uses at ADS.
“If (SoftBank CEO) Masayoshi Son found out that I bought all of Fair's IP and assets for less than a million dollars, I think he'd go crazy,” he joked.
And while he’s raised $2.5 million for the effort, he’s not done yet. “We’ve done everything we need to do to make (ADS) an investable business. Right now, we’re just looking for an equity partner who’s willing to put in between $5 million and $8 million,” he says. “That will give the company two years of runway and then we can continue to scale with Deloitte.”
