
Ford Acquires Chariot (YC W15) - aluminussoma
https://techcrunch.com/2016/09/09/ford-mobility-solutions-acquires-chariot/
======
badstrategy
Former Chariot corporate (non-driver) employee here.

This is a rescue acquisition, pure and simple.

I could probably write a book about how not to run a company based on my
experience there. Coordination failures at all levels and constant managerial
abuse. In the words of an Uber employee familiar with the situation, "That
company has employees solely so they can be a clueless, abusive megalomaniac's
captive audience". Just read the Glassdoor reviews- the ones that aren't the
fake 5 star reviews the CEO paid someone to submit.

Another employee has set up a Former Chariot Employee Alumni support group,
FYI. Message
[https://www.suggestionox.com/r/Q5EWLs](https://www.suggestionox.com/r/Q5EWLs)
with your LinkedIn details if you are one and you need help.

~~~
habosa
Glassdoor is blocking me out. Can you explain some of what went wrong inside
Chariot?

From the outside it is very well run and I was amazed at how quickly it went
from creepy white vans to a whole fleet of branded vehicles with a mobile app.

------
alivahab
From Chariot CEO & Co-founder:

Hi All, Thanks to those who have wished us well on this thread. Keeping
everyone happy is tough, if not impossible, and it's even harder for them to
swallow when they depart ahead of a very successful exit. Nevertheless, we
wish everyone who spent time with us only the best since they contributed to
our success.

We're really proud to be Ford Smart Mobility's first acquisition and become a
building block in their strategy. Our mandate is to scale the effort with the
considerable resources we can leverage from Ford.

If you're interested in learning more, check out opportunities to join us at
chariot.com/careers. Hope to hear from you!

Ali Vahabzadeh

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mox1
I find it very interesting and frankly quite stupid that Ford is attempting to
become an Uber / Silicon Valley / Technology type company[1]. They practically
made the auto industry and have been a leading manufacturer for ~100 years.
But lets drop and forget all that, technology is cool!

I predict that in 5-10 years this will really come back to haunt them. I was
planning to buy some Ford stock for a while, but after seeing this shift, not
touching it with a 10ft pole.

1\. [http://www.bloomberg.com/news/videos/2016-09-09/ford-ceo-
on-...](http://www.bloomberg.com/news/videos/2016-09-09/ford-ceo-on-a-move-to-
mobility-services-ride-sharing)

~~~
pb
In ten years, all auto makers will either be tech companies, or they will be
out of business. I'm impressed that GM and Ford have the foresight to
understand this.

~~~
treehau5
Detroit will rise again in the next decade. They have pretty enticing offers
for software engineers to move in. Right now you can get a stellar house for
around ~150k which I am sure will triple in value in 20 years. Trying to
convince my wife to move there from warmer climate, however... If anyone wants
to help me there I am all ears, haha.

~~~
pests
I live about 10 minutes from Downtown Detroit.

It's nice. Feel free to hit me up if you have any questions I could answer.

~~~
treehau5
Hi, I am hitting you up. (Am I doing this right?)

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cmottau
Darn, I was eagerly awaiting them to go out of business so I could pick up one
of their vans (all Fords btw) at auction for pennies on the dollar. Their
drivers in SF are absolutely clueless and honestly should not be alowed on the
road.

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mkagenius
No discussion of terms.

~~~
minimaxir
Per Recode: _Ford declined to tell us how much they paid for the San
Francisco-based startup but said it was an all-cash transaction._

Per CrunchBase, Chariot only raised a $3M seed round a year ago
([https://www.crunchbase.com/organization/chariot-3#/entity](https://www.crunchbase.com/organization/chariot-3#/entity)).
Given the low-margin nature of the business (many other startups along these
lines died out), I'm curious what dollar amount would make sense.

~~~
JonFish85
Almost certainly an amount that wipes out common stock holders. People they
want to keep will get a retention offer, but with the acknowledgment that
their stock in Chariot is now worth $0.

~~~
birken
First of all, the story doesn't mention anything about the size of the deal.

Second of all, the company is selling after ~2 years. The average employee has
probably been there for less than 1 year. Excluding the common stock of the
founders (since they are the ones who made the decision to sell), employee
common stock grants and common stock options are all about ensuring employees
get a share of blockbuster company results, like IPOs or 8/9 figure
acquisitions.

In the case of smaller acquisitions (of which this might have been or might
not have been), stock options are probably not worth very much because the
company hasn't grown that much. Nobody is at fault, nobody got screwed, its
just how stock works. That is why employees are paid salaries. This is why
employees often get generous retention offers from the acquiring company.
Nobody is being "wiped out" because that assumes there was inherent value to
begin with, which there isn't.

~~~
JonFish85
I'm not saying anyone got screwed, I'm saying that common stock probably is
worth $0 (for similar reasons: quick exit, not much time to really build
value, etc). "Generous retention" can vary drastically.

The reason I mention it is because it's easy to get sucked into the trap of
"hey they exited for $30m, and the person who gave up $40k/year salary for 2%
ownership just got a check for $600k!" when that simply isn't realistic.
Unless everything goes exactly right, common stock isn't really worth the
risk. I think it's an important distinction to make.

Again, not saying anyone got "screwed", just that even in this case, an
8-figure exit could very well mean no common stock holders got a dime. I'm
very curious about the terms of the Cruise deal as well -- a 10 figure exit
(!), but I'm interested to find out how much the common stock there was
actually worth.

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brianbreslin
What was the other vanpool/private bus company that was recently selling off
their vehicles on ebay? They had really pretty buses and were in SF only.

~~~
squishypirate
I believe it was Leap: [http://rideleap.com/](http://rideleap.com/)

~~~
brianbreslin
They blamed their shut down on regulatory issues, but how did chariot get
around them?

~~~
jonathankoren
Because Chariot didn't pull a Sillicon Valley and and flagrantly break the
laws. Chariot followed them.[0]

Funny how the sucker following the law survived the longest. Someone could
easily draw the conclusion that it's just an excuse for a bad business plan.

[0] [https://techcrunch.com/2015/11/29/the-last-bus-startup-
stand...](https://techcrunch.com/2015/11/29/the-last-bus-startup-standing-
chariot/)

------
EdJiang
For some reason, this reminds me of when GM & co bought all the streetcar
companies, only to kill off streetcars in favor of busses.

[https://en.wikipedia.org/wiki/General_Motors_streetcar_consp...](https://en.wikipedia.org/wiki/General_Motors_streetcar_conspiracy)

------
dlitwak
Congrats to Ali. Been very impressed with Chariot's mastery of nitty gritty
business & logistics fundamentals. That sounds like it should be obvious, but
Leap and other competitors couldn't so much as file the right permits, let
alone start what amounted to their own public transit network and get regular
ridership. This is a hard, low margin, business to get right in a crowded
space, and Ali managed to scale it to 40k+ riders per month and that's
awesome. Well deserved!

~~~
erispoe
40k+ riders per month? I've been trying to get ridership data for Chariot and
couldn't get anything. So it's around 2,000 riders per business day? For 30
lines?

It's really low ridership by any standard. Not even a dent in SF Muni
ridership of 650,000+ daily rides. It's the equivalent of a local, infrequent
Muni line you probably never heard of like the 36-Teresita or the 37-Corbett,
both of which are moving around 2,000 riders a day. On a single, modest line.

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frakkingcylons
Yeah the next market is obviously Austin, they've been hiring for ops and
marketing for months now. I know because I've been watching and waiting
forever for Chariot to come here and show Capital Metro how modern, efficient
transit is done.

~~~
erispoe
Chariot does not provide "modern, efficient transit" by any metric. They are
commuter shuttles, operating only during commute hours. They're miles away
from a transit system you can rely on for most of your activities.

Commuter shuttles have trouble attracting significant ridership, because
riders are using them just for that: one commute.

We know that for transit to be successful, it's gotta be a way of life. For
many car riders, their way of life heavily depends on getting everywhere with
a car. It's hard to replace that with mass transit. Cities have done it, but
commuter shuttles do not achieve that.

------
baccredited
OUCH. I invested in YC W15 companies (thirteen of them) through FundersClub
but they missed this one.

Dear YC - please allow me to invest in the whole class, like you did for
Michael Bloomberg!

~~~
wtvanhest
1st, I am not sure if this is even a good acquisition.

2nd, That isn't how it works. Deal flow is the most rare, and precious, and
valuable thing to investors. FoundersClub is trying to get deal flow and they
will win some deals, but ultimately, the investors with the absolute best
reputation will get to invest in the best deals.

In any event, Founders Club likely passed on Chariot, which I would have to
agree with based on how the economics of that business works, regardless of
whether they had a great outcome here or not.

~~~
baccredited
Ford paid more than $65 million for shuttle-van startup Chariot

[http://www.businessinsider.com/ford-buys-
chariot-65-million2...](http://www.businessinsider.com/ford-buys-
chariot-65-million2016-9)

