Why is Scott Painter selling his beach house to start a new vehicle software company?

Serial entrepreneur Scott Painter’s plan to build an all-electric vehicle subscription company called Autonomy hasn’t come to fruition. So he’s once again focusing on what he calls the “hardest job” of his career.

While Autonomy will continue to operate the small fleet of 1,000 cars it has amassed over the past few years — a far cry from its stated goal of 23,000 — Painter is forming a new company called Autonomy Data Services, or ADS, he told TechCrunch in an exclusive interview.

This new company will provide a software platform and data to automakers who want to operate their own subscription services for electric, gas, new or even used cars. Painter also said he is in talks with car dealers, fleet operators and even companies that sell construction and agricultural equipment, but they may want to offer subscriptions. He says the initial version of the service is already generating revenue.

Painter says ADS is in talks with several automakers, including three that already run their own subscription service. The company is partnering with Deloitte to run the service; ADS will get a revenue share as the software-as-a-service provider, while Deloitte will charge automakers (or other customers) a fee to customize the platform.

It’s another change for Painter, who has had a tumultuous past few years. After stepping down as CEO of auto retailer TrueCar (a company he founded in 2005) in 2015, he created car leasing startup Fair, which received more than $300 million from SoftBank. That ended poorly, with early investors accusing SoftBank of ruining the company and Painter ultimately resigning as chairman in 2021.

His latest transformation wasn’t easy either.

To make all of this possible, Painter first had to convince Autonomy’s investors, some of whom were taking a loss because the subscription service didn’t launch as promised.

“Our lenders had a senior secured position; they could have liquidated the company and tried to liquidate the fleet to get some of their money back,” he says. But he worked with them to convert $32 million worth of debt into equity in Autonomy in the ADS.

He also said he “had to put in a lot of effort personally”, including selling a $6 million beach house on Pacific Coast Highway, taking out a mortgage on another property, and “selling a number of properties I didn’t want to sell.”

“This has been the hardest thing I’ve ever done as an entrepreneur,” he says, describing the whole process as akin to “hugging a cactus.”

Six-figure acquisitions for data

Autonomy was already struggling last year when Elon Musk’s aggressive price-cutting destroyed the value of a small fleet made up mostly of Teslas. (Painter, who knows Musk personally, says he “tried to explain to Elon how important it is to be more predictable about discounts” but to no avail.)

The problem this time is that almost all major automakers have already tried subscription services. And almost all of them have ditched the idea.

Painter says this was because automakers “didn’t have the loyalty yet, or the understanding of how subscriptions would work.” He says that because all of the automakers’ subscription services were brand new, they didn’t understand how customers would behave. Would they just subscribe for a few months? Or a few years?

Painter argues that without this information, it’s really hard to figure out pricing, and so automakers end up charging too much for their subscription services — scaring away buyers.

That’s the kind of information he plans to deliver with ADS. And it’s not just coming from Autonomy customers. Painter quietly bought the assets of bankrupt used-car marketplace Shift Technologies earlier this year for less than a million dollars. In the years before its collapse, Shift had bought Painter’s former car-leasing startup Fair, which had previously acquired Ford’s subscription service Canvas — bringing the remnants of his former business back under its ownership — and Uber’s leasing service Exchange.

Painter says data from all of these companies can be used to predict “how long people stay in their cars based on their customer group, what their FICO score is, what their income is, etc.” This is important not just because it provides certainty, but also because the flexibility of subscription services is attractive to customers with lower credit scores.

In addition to customer data, Painter said they also got all the source code, patents, trademarks, and compliance and legal “work product” from those shuttered businesses, which he says will make it much easier for ADS to connect and work with customers in new markets.

In total, he says he found more than a terabyte of information, jokingly calling it “a mind-blowing avalanche of s—.”

“My IT guys just thought, what are you going to do with all this stuff? It just keeps coming,” he says. But, he points out, the companies that generated all this data “collectively spent about a billion dollars developing software” that they now own and are using in ADS.

“I mean, when [SoftBank CEO] He joked, “If Masayoshi Son finds out that I was able to buy the Fyter IP and properties for less than a million dollars, it would just, I mean, kill him.”

And while they have raised $2.5 million for the effort, the work is not done yet. “We have done everything we have to do to make sure we are successful [ADS] An investable business. Right now we’re just looking for an equity partner who can invest from $5 to $100. [million] and $8 million,” he says. “That will give the company two years to move forward with Deloitte.”