Fluid Truck, a startup that was founded to disrupt the commercial vehicle rental industry, has removed its sibling co-founders – CEO James Eberhard and chief legal counsel Jenifer Snyder – as reported by sources familiar with the situation. The shakeup, described as a hostile takeover by employees, was orchestrated by two minority investors on the board. Eberhard and Snyder still hold their board seats.
The leadership restructuring, previously unreported, comes after Fluid Truck, backed by venture capital, suffered significant financial losses by June 31, leaving vendors and fleet owners unpaid, according to documents seen by TechCrunch and sources with direct knowledge.
Despite several rounds of layoffs and cost-cutting measures in 2023, the company, often compared to a commercial truck version of Zipcar, couldn’t overcome these financial challenges.
The decision to remove Eberhard and Snyder was driven by two minority shareholders – Bison Capital and Ingka Investments, Ikea’s venture arm. Sources claim the investors accused Eberhard of mismanaging company finances, resulting in significant operating losses.
Employees, both current and former, acknowledge Eberhard’s good intentions and amicable nature but agree that he played a significant role in the company’s financial struggles.
Now, concerns have arisen among employees that these investors may not have the company’s best interests at heart. A term sheet for debt financing presented by Bison and Ingka in 2023 has been cited as evidence of their lack of confidence in Eberhard and Snyder’s ability to turn the company around.
Scott Avila from Paladin Management has stepped in as the interim CEO, replacing Eberhard. This change has led to a tense work environment at Fluid Truck, with the workplace transitioning from a casual setting to a more formal one.
Adding to the company’s challenges, the interim CEO has taken over during the busiest season for the startup.
Eberhard directed inquiries to Fluid Truck’s press contact when asked for comment. Snyder was unreachable. Fluid Truck confirmed Avila’s appointment but declined to provide further details on the situation.
Following the leadership change, the company stated in an email that they are actively addressing current challenges and working towards restoring financial health.
Both Bison and Ingka refrained from commenting on specific questions presented by TechCrunch, instead issuing statements that disputed the accuracy of the information provided.
All good plans go to waste
Despite garnering initial attention and investments in 2016, Fluid Truck faced financial difficulties due to critical missteps in its business model.
The introduction of the Fluid Vehicle Investor Program (FVIP) aimed to make the business more asset-light but led to issues such as mismanaged insurance claims and delayed payments to fleet owners.
The company’s financial struggles worsened when funds from vehicle sales were redirected to pay off debts, resulting in outstanding insurance claims and debts to vendors.
Members of the FVIP program revealed that they are owed significant amounts by Fluid Truck, with some claims reaching hundreds of thousands of dollars.
Legal disputes have arisen from these financial issues, with some asset owners suing Fluid Truck for breach of contract and non-performance.
Hostile takeover
Financial struggles and management conflicts led to a hostile takeover initiated by minority shareholders Bison Capital and Ingka Investments.
Despite achieving EBITDA profitability for the first time in 2023, Fluid Truck faced pressure from investors due to ongoing liquidity issues. Attempts to secure additional funding led to disagreements between the founders and investors.
A term sheet proposed by Bison and Ingka, perceived as aggressive, called for Eberhard and Snyder’s resignation, cost reduction plans, and substantial debt repayment within a tight timeframe.
Eberhard rejected the offer, leading to his removal as CEO. Fluid Truck’s future remains uncertain as the company grapples with financial challenges without new investment.
