Taxi-hailing service Flywheel has replaced its CEO and CTO, the company said Thursday, coinciding with an injection of $12 million in funding from new and current investors.
Such restructuring typically signals trouble ahead for a nascent startup, but new CEO Rakesh Mathur said it's all just part of the company's plan to rev up operations.
Mathur replaces outgoing CEO Steve Humphreys, who will be "moving onto other endeavors."
"Flywheel is barely in its first innings, and is poised to transform the industry," Mathur said. "The true reason behind this change in leadership is to fuel the company's expansion."
Flywheel looks and feels a bit like the popular ride-sharing app Uber. It lets people hail a ride with a tap of a button on their smartphone and automatically processes customers' payments. Flywheel is different, though, in that it works exclusively with taxis -- not individuals driving their own cars. The company now aims expand to more cities and become a true competitor to ride-sharing rivals, like Uber and Lyft.
"The taxi industry is not going anywhere. It's way bigger than Uber," Mathur said. "We can rapidly get to critical mass in different geographies."
About 100 million cab rides take place each month, said Mathur. That's a huge market that Flywheel intends to partner with. Setting up shop in cities across the US should be easier for Flywheel than it's been for ride-sharing services, because taxi companies already have regulations and insurance issues hammered out. Flywheel also doesn't have to deal with recruiting drivers since it works with existing cabbie networks.
Launched last year, Flywheel so far operates in three cities -- San Francisco, Los Angeles and Seattle. San Francisco was its first market where it's took the city by storm. It partnered with the majority of San Francisco's taxi companies and more than 80 percent of the city's cabs now use the app.
"San Francisco is what I call a lab for us," Mathur said. "The most critical part is to get enough supply line."
"Flywheel is banking on the fact that partnering with the regulated taxi industry with its licensed professional drivers will be reassuring to potential customers who are wary of using ride-sharing companies out of safety concerns," said Tejas Mehta, an analyst with Parks Associates.
Flywheel chose a good week to announce its revamp. Ride-sharing service Uber is in the middle of a PR nightmare of its own making. This week, news hit that one executive wanted to spend $1 million to "dig up dirt on its critics in the media," while another reportedly tracked a BuzzFeed reporter without her knowledge. Uber has sincefor its corporate culture, business practices and privacy practices. The company's CEO Travis Kalanick has apologized.
Flywheel's new leadership team includes CFO Oneal Bhambani and CTO Percy Rajani. Flywheel's previous CTO Mark Towfiq will remain a "pivotal member" of the company. The CFO position is new.
TCW/Craton, Rockport Capital and Shasta Ventures participated in the latest investment. This brings the company's total funding to nearly $35 million.