Caving to gov’t, Poolus will reevaluate businessCarpool start-up Poolus is downsizing its business and its CEO is resigning, the company announced on Thursday, bowing to pressure from the government.
Late last year, the two-year-old start-up made frequent headlines in the local media after the Seoul Metropolitan Government asked the police to investigate Poolus over possible violations of the passenger transport service act.
“CEO Kim Tae-ho first expressed his intention to resign to the board of directors on June 7,” said a spokesman for Poolus. Kim is one of Poolus’ co-founders. He took the CEO position from former CEO Kim Ji-man, a serial entrepreneur and Socar founder who left Poolus in February last year.
“The company’s business was going through a difficult time, as the regulation issue led to low sales. The immediate plan is to reconsider our business model and conduct necessary measures for restructuring,” the spokesman added.
A recent post on the whistle-blowing app Blind claimed that the company announced it would cut 70 percent of its current work force. Poolus’ spokesman danced around the matter, saying that no definite decisions have been made regarding the details of the restructuring plan.
Poolus, established in May 2016, was once one of Korea’s most-anticipated transportation start-ups. Uber, which has succeeded elsewhere, is not present in Korea due to fierce backlash from the taxi industry. In November, Poolus received 22 billion won ($19.8 million), Korea’s largest-ever series A funding, making it one of the country’s most-funded start-ups of last year.
Despite the big investments, the company had net losses of 11.7 billion won last year. Sources in the start-up scene said the government’s fight with Poolus scared off drivers and eventually drove away sales.
Poolus’ conflict with the Seoul government started last November, not long after it received funding. The company announced a pilot service that would enable users to commute to and from work 24 hours a day.
Before, the start-up ran the carpool sharing platform only during the busy commuting hours of 5 a.m. to 11 a.m. and 5 p.m. to 2 a.m., based on a clause in the transport act that said non-professional drivers were allowed to share their vehicles for commuting.
The problem came from vagaries in the law regarding what times count as commuting. Poolus’ 24-hour pilot service was aimed at people with commuting hours outside of their original hours, and users had to choose two time slots for their commuting hours. The Seoul government, though, argued that 24-hour operation would make the service no different from “a taxi run by drivers with no taxi license.”
“There were rumors that Kim and the investors [who acquired shares after investing in the startup] had conflicting ideas about the business,” said an anonymous source in the local startup scene.
“Innovations in transportation are important, because in the new era, more people will work anywhere, anytime they want, so surely there will be more demand in the future,” said Koo Tae-eon, an attorney at Tech & Law and an external director of the Presidential Committee on the Fourth Industrial Revolution.
“We need strong domestic startups in this sector. The day will come when the government will inevitably have to ease regulations due to growing demand, and if domestic companies don’t secure their ground now, global firms like Uber and Grab will dominate the local market in no time once they set foot here.”
BY SONG KYOUNG-SON [email@example.com]