As per latest reports by ET, Ola, the Bangalore-based cab hailing startup has shut down TaxiForSure, which it had acquired in March last year for $200 million. Consequently, the company has laid off over 700 employees.
TaxiForSure seems to be the latest victim of the Ola-Uber rivalry, which has now gained two times the ground that it had before Uber gave in on the Chinese market.
One of the Ola investors revealed that thus laying off would reduce the cost for Ola of around 30 crores ($4.5mn). This is seen as a consolidation strategy to strengthen its core business against rival Uber. It had also pulled its legs out from grocery and food delivery businesses as well.
One of the top Ola executives, said, “Since the acquisition, Ola has been unclear about the brand positioning of TaxiForSure. Silently, the TaxiForSure fleet was transferred to Ola supply and even incentives were more lucrative for Ola vs TaxiForSure.”
Of the total 1300 TaxiForSure employees, only 250 have been retained from three major cities and 30 each in the smaller cities.
Ola has been facing problems from both ends this year. With surge pricing, licence issues and competition in the Indian market on one hand and getting threats to get banned from Mumbai taxi and auto rickshaw unions on the other, it had to resort to consolidation strategies.
Founded by IIM-Ahmedabad alumni Aprameya Radhakrishna and Raghunandan G in 2011, TaxiForSure had raised around $60 Mn before acquisition from investors such as Accel Partners US, Accel India, Bessemer Venture Partners and Helion Venture Partners.
Both the founders and the top management of TFS had stepped down from the company post-acquisition. Four months later, Arvind Singhal (the then CEO of TFS) had also resigned from the company and Pallav Singh who was one of the early employees at Ola was appointed as the CEO.
In last two years, Ola also witnessed a lot of structural changes and exits of some prominent people. This included the head of cabs category management Pradeep Dodle, associate vice president of products Harsha Kumar and Ola’s payments business head Rushil Goel.
The only ray of hope was seen with Ola’s valuation marked up to $4.2 Bn after $50 Mn Investment From US Based Vanguard.