I am Hertz Alumni, 2011-2016. We had a great group of engineers and product people, many of us far too talented to be in company like what hertz turned into. We were under the leadership of an incredible division head and most of the folks in our group felt a deep sense of loyalty to her. Nearly all of us, including that division head, are gone now, mostly laid off. If you poll any random Hertz alumnus, the story you're likely to hear is "we had a great team and incompetent senior management."
To us, there is a quote in a different bloomberg article from last week [1] which strikes us as accurate. Attributed to Maryanne Keller, who is referred to in this article, it says:
> 'It’s a saga about gross mismanagement,” said Maryann Keller, a longtime auto-
> industry consultant who was on the board of Dollar Thrifty when Hertz acquired
> the company. “It could have been salvaged had he picked the right management,”
> she said, referring to Icahn.'
Icahn lost $1.6b. Thousands of us lost our jobs. But these C-suiters sailed the company to bankruptcy over five years, each of them extracting 7 or 8 figure bonuses. The CIO who laid us all off, for example, received $6.5 million compensation that year [2]. (Sidenote, the work we were doing was replaced with Accenture consultants, who couldn't handle it, screwing up so bad they ended up in court [3].)
One former colleague of mine wrote a post on LinkedIn suggesting Icahn was the unwitting victim of untenable debt situation, and while he may be correct that the debt made it difficult, Icahn can read a balance sheet and he understood the situation.
I can't speak about Marinello's performance, but I agree that the problem dates back to 2014 or even earlier. People have a widespread belief that Frissora was flying too close to the sun, driven by his aggressive personality. Despite his flaws, he had a great team of people who kept the business running, and it wasn't Frissora who fired them all. Nobody, it turns out, was a fan of him. But everyone agrees he was far better than the gang of unusually wealthy miscreants that Icahn replaced him with.
I had the unfortunate opportunity as an Accenture consultant to work on the Hertz redesign. It was a shit show and hands down the worst project I've ever been on. I left Accenture but not sure how much I'm allowed to talk about it.
Needless to say, leadership across ALL disciplines (mobile, front-end, backend, etc) was a fucking joke and they didn't listen to the red flags we brought up in literal sprint 1.
2014 - its interesting this is when headquarters moved from NJ to Florida. Its a bit like SV - are California/North East expensive because its worth it? I'm not sure if Hertz went downhill because of the move or you just can't run a smart company from Florida.
We overlapped for a short time. It was my first job straight out of college. I worked around some really nice people but even my inexperienced self knew that it wasn't a good environment to grow (terrible code base, silo-ed teams, archaic processes, weeks onboarding, etc) so I left after 6 months.
I think it was about a year later when I heard the IT team was fired. The kicker: a lot were hired by IBM _and subsequently contracted to work for Hertz_ on the exact thing they were working on before.
> Sidenote, the work we were doing was replaced with Accenture consultants, who couldn't handle it, screwing up so bad they ended up in court [3].
And elsewhere...
> I had the unfortunate opportunity as an Accenture consultant to work on the Hertz redesign. ... Needless to say, leadership across ALL disciplines (mobile, front-end, backend, etc) was a fucking joke and they [presumably Hertz?] didn't listen to the red flags we brought up in literal sprint 1.
hertz had a 'hackathon' (more like datathon?) at my university in 2013. They gave us data (no PII but demographics such as age) along with other store sales, etc. goal, take the data and draw some insights.
I showed them a chart on how the average age of their customer was going up and they were failing to get newer and younger customers. I also showed search trends on car rentals going down, and search trends on ride sharing going up. They didn't like my presentation at all =|
What an incredible way for a company to signal that they only want sycophants. Good on you for pointing out what probably should have been obvious to them.
Honestly this is a good thing. There are too many big companies, not enough small, we need more to fail - esp the type that have gone through lots of mergers to reduce competition.
Have you ever rented a car from a small company? The entire process sucks. Yea it is ok if it is a once a year vacation. But for a business trip it is such a waste of time.
i could get on board with this. Its shortsighted when companies are bailed out for being "too big too fail" so then we don't get a bunch of small companies filling the vacuum.
I think the most “duhhh” moment was moving the headquarters. Of course they lost a ton of experienced and qualified staff when they moved the headquarters to Florida. Why wasn’t this seen coming?
I don't want to reply with a blanket statement, but a lot of the times senior management just doesn't understand how much work it takes to build complex IT systems and how a great team can make it happen. They see IT as disposable and expect anybody with some computer skills to be able to do complex work.
The headquarters are in Estero/Ft Meyers florida. I would know little to nothing about this place except I have a friend living there. He was in golf course management, which should give you a hint about the type of town this is. It is largely a place for wealthy northern folks to spend the winter. To me it seems that the move was so that the CEO could live in a resort town.
Full disclosure: I've worked in PE before, though I do not currently. Did not directly do anything involving LBOs.
Companies seeking LBOs are not generally in a great financial position. As a result, they tend to go bankrupt at a much higher rate than would otherwise be experienced. Hertz LBO happened before Icahn (a HF manager) got involved. People like Icahn don't invest in a company to lose money — clearly he believed that the company still had value even after PE got involved.
In the end Kathryn Marinello failed. She was at the helm for years where she could have positioned the company better. Blaming it on a 2014 misfilling and the wasted years cleaning it up only gives false cover. She didn't pay back debit when times were better because it would have affected her compension.
Compensation incentives are there for a reason. Acting according to them just means fulfilling the shareholders wishes. (Unless the shareholders are idiots or impotent and the board set the wrong incentives.)
Running a riskier strategy that fails under a pandemic is a perfectly cromulent business decision to make. Shareholders and creditors knew what they were in for.
Not all gambles pay off. That doesn't mean taking on any risk whatsoever is wrong.
I don’t know if that’s fair. Hertz floundered for over a decade with leveraged buyouts, failed mergers, market missteps and accounting falsehoods. She got 9 quarters to turn that around, she was headed in the right direction, but it was too little too late.
US companies aren't supposed to pay back debt (in Hertz's case, how did 2005 affect the balance sheet?) because that would be an inefficient use of capital. US consumers are supposed to spend, not save, to stimulate the economy. US government is supposed to run a deficit, not a surplus.
And yet the aggregate US net worth is positive: about 5x its GDP. What sector have I missed?
> The company also found that Dollar Thrifty had let the tires on its cars get thinner than Hertz allowed, and many had to be replaced at a cost of $30 million
I always wonder if its worth going cheaper or more expensive when renting cars. Stuff like this is interesting, I wonder how many other corners are cut at the cheaper places.
I've always rented from Hertz because they've historically been the least hassle, if more expensive than Enterprise.
I live in downtown Toronto and don't own a car. I use car sharing for local needs, but the traditional car rental companies for when I need to leave the city. Enterprise has been consistently terrible. On multiple occasions I've had to wait hours past my scheduled pick-up time due to either understaffing, overbooking, and/or due to other events. Enterprise apparently has a deal with insurance companies where they loan cars after accidents. I once had to wait 12 hours for a car as they were over-booked due to accidents after a snow storm. One time I was rear-ended in an enterprise-rented car. The other person's insurance dealt with the damages, but 18 months later they called me up, demanding payment for the time the car was in the shop.
I used to rent from national/alamo as they would rent to me w/o mandatory extra insurance when I was under 25. They were bought out by enterprise and almost immediately went downhill.
Hertz has always had a car available when promised. I can also take the rentals across the border to the US w/o extra fees. Twice they had to upsize my car for whatever reasons and they gave me a discount to deal with the greater fuel consumption.
As somebody who is a loyal Hertz customer, I worry what the company will look like after the bankruptcy.
The more and less expensive places are owned by the same companies in most cases. The flagship gets the newest cars. When they get a bit older, they get moved to the mid-tier prices, then to the cheapest places, before sold as used cars in wholesale. So that would be Hertz-Dollar-Thrifty, And you can quickly find out many of the rest. I don’t know how Enterprise manages its fleet though.
It's stunning to me that such a (seemingly?) relatively modest maintenance cost would be specifically called out as a massive oversight.
Perhaps I'm thinking about this the wrong way. Oil changes cost next to nothing, the customer pays for fuel, everything from brakes to suspension components on down to wiper blades are irrelevant when they sell the cars before any of that stuff needs to be replaced. Maybe tires actually are their biggest wear item?
While you might generally not have to replace tires before, say, 30k miles, the tires on a rental car do not exactly live an easy life, and when you're talking about fleets going up to 50k miles, they'll absolutely be needing replacement.
It also makes me wonder if Dollar Thrifty was letting them get illegally low, or just below the Hertz standard.
I was able to get very cheap deals at renown companies with high quality service and also had to use expensive deals at very shitty ones.
With massive rental cars franchising you never know. Rental car is always a potential problem and should be treated as such.
Hence, the main property you should be looking for is how does the rental company manage problems. Starting from the rental garage (when you point to some issue like worn out tires) and throughout the road.
Also it means you should make some trial and errors.
[+] [-] stevetursi|5 years ago|reply
To us, there is a quote in a different bloomberg article from last week [1] which strikes us as accurate. Attributed to Maryanne Keller, who is referred to in this article, it says:
> 'It’s a saga about gross mismanagement,” said Maryann Keller, a longtime auto-
> industry consultant who was on the board of Dollar Thrifty when Hertz acquired
> the company. “It could have been salvaged had he picked the right management,”
> she said, referring to Icahn.'
Icahn lost $1.6b. Thousands of us lost our jobs. But these C-suiters sailed the company to bankruptcy over five years, each of them extracting 7 or 8 figure bonuses. The CIO who laid us all off, for example, received $6.5 million compensation that year [2]. (Sidenote, the work we were doing was replaced with Accenture consultants, who couldn't handle it, screwing up so bad they ended up in court [3].)
One former colleague of mine wrote a post on LinkedIn suggesting Icahn was the unwitting victim of untenable debt situation, and while he may be correct that the debt made it difficult, Icahn can read a balance sheet and he understood the situation.
I can't speak about Marinello's performance, but I agree that the problem dates back to 2014 or even earlier. People have a widespread belief that Frissora was flying too close to the sun, driven by his aggressive personality. Despite his flaws, he had a great team of people who kept the business running, and it wasn't Frissora who fired them all. Nobody, it turns out, was a fan of him. But everyone agrees he was far better than the gang of unusually wealthy miscreants that Icahn replaced him with.
[1] https://www.bloomberg.com/news/articles/2020-05-27/icahn-fil...
[2] https://www.cio.com/article/3404205/how-much-do-cios-really-...
[3] https://news.ycombinator.com/item?id=19737070
[+] [-] thoughtpalette|5 years ago|reply
Needless to say, leadership across ALL disciplines (mobile, front-end, backend, etc) was a fucking joke and they didn't listen to the red flags we brought up in literal sprint 1.
Sorry to hear about your Hertz experience.
[+] [-] rectang|5 years ago|reply
The incentives encourage destruction through short term value extraction at the expense of long term health.
[+] [-] michaelcampbell|5 years ago|reply
Whether or not it's true, I think you'll find this sentiment from any engineering level alum from a big company that died.
[+] [-] rb808|5 years ago|reply
[+] [-] mpalczewski|5 years ago|reply
[+] [-] gandreani|5 years ago|reply
I think it was about a year later when I heard the IT team was fired. The kicker: a lot were hired by IBM _and subsequently contracted to work for Hertz_ on the exact thing they were working on before.
Safe to say I didn't regret my decision at all
[+] [-] michaelcampbell|5 years ago|reply
> Sidenote, the work we were doing was replaced with Accenture consultants, who couldn't handle it, screwing up so bad they ended up in court [3].
And elsewhere...
> I had the unfortunate opportunity as an Accenture consultant to work on the Hertz redesign. ... Needless to say, leadership across ALL disciplines (mobile, front-end, backend, etc) was a fucking joke and they [presumably Hertz?] didn't listen to the red flags we brought up in literal sprint 1.
[+] [-] ponker|5 years ago|reply
[+] [-] autokad|5 years ago|reply
I showed them a chart on how the average age of their customer was going up and they were failing to get newer and younger customers. I also showed search trends on car rentals going down, and search trends on ride sharing going up. They didn't like my presentation at all =|
[+] [-] save_ferris|5 years ago|reply
[+] [-] rb808|5 years ago|reply
[+] [-] PacketPaul|5 years ago|reply
[+] [-] puranjay|5 years ago|reply
Smaller players would also be far less likely to enter less lucrative markets.
[+] [-] devmunchies|5 years ago|reply
[+] [-] ashtonkem|5 years ago|reply
[+] [-] robohoe|5 years ago|reply
[+] [-] S_A_P|5 years ago|reply
[+] [-] michaelcampbell|5 years ago|reply
[+] [-] elliekelly|5 years ago|reply
[+] [-] atyppo|5 years ago|reply
Companies seeking LBOs are not generally in a great financial position. As a result, they tend to go bankrupt at a much higher rate than would otherwise be experienced. Hertz LBO happened before Icahn (a HF manager) got involved. People like Icahn don't invest in a company to lose money — clearly he believed that the company still had value even after PE got involved.
[+] [-] namdnay|5 years ago|reply
[+] [-] wolco|5 years ago|reply
[+] [-] eru|5 years ago|reply
Compensation incentives are there for a reason. Acting according to them just means fulfilling the shareholders wishes. (Unless the shareholders are idiots or impotent and the board set the wrong incentives.)
Running a riskier strategy that fails under a pandemic is a perfectly cromulent business decision to make. Shareholders and creditors knew what they were in for.
Not all gambles pay off. That doesn't mean taking on any risk whatsoever is wrong.
[+] [-] mft_|5 years ago|reply
Probably fairer to say that a decade of CEOs all failed.
[+] [-] LatteLazy|5 years ago|reply
[+] [-] LaundroMat|5 years ago|reply
[+] [-] tonetheman|5 years ago|reply
[+] [-] blargmaster33|5 years ago|reply
[deleted]
[+] [-] 082349872349872|5 years ago|reply
And yet the aggregate US net worth is positive: about 5x its GDP. What sector have I missed?
[+] [-] rb808|5 years ago|reply
I always wonder if its worth going cheaper or more expensive when renting cars. Stuff like this is interesting, I wonder how many other corners are cut at the cheaper places.
[+] [-] hylaride|5 years ago|reply
I live in downtown Toronto and don't own a car. I use car sharing for local needs, but the traditional car rental companies for when I need to leave the city. Enterprise has been consistently terrible. On multiple occasions I've had to wait hours past my scheduled pick-up time due to either understaffing, overbooking, and/or due to other events. Enterprise apparently has a deal with insurance companies where they loan cars after accidents. I once had to wait 12 hours for a car as they were over-booked due to accidents after a snow storm. One time I was rear-ended in an enterprise-rented car. The other person's insurance dealt with the damages, but 18 months later they called me up, demanding payment for the time the car was in the shop.
I used to rent from national/alamo as they would rent to me w/o mandatory extra insurance when I was under 25. They were bought out by enterprise and almost immediately went downhill.
Hertz has always had a car available when promised. I can also take the rentals across the border to the US w/o extra fees. Twice they had to upsize my car for whatever reasons and they gave me a discount to deal with the greater fuel consumption.
As somebody who is a loyal Hertz customer, I worry what the company will look like after the bankruptcy.
[+] [-] ebiester|5 years ago|reply
[+] [-] rconti|5 years ago|reply
Perhaps I'm thinking about this the wrong way. Oil changes cost next to nothing, the customer pays for fuel, everything from brakes to suspension components on down to wiper blades are irrelevant when they sell the cars before any of that stuff needs to be replaced. Maybe tires actually are their biggest wear item?
While you might generally not have to replace tires before, say, 30k miles, the tires on a rental car do not exactly live an easy life, and when you're talking about fleets going up to 50k miles, they'll absolutely be needing replacement.
It also makes me wonder if Dollar Thrifty was letting them get illegally low, or just below the Hertz standard.
[+] [-] juskrey|5 years ago|reply
With massive rental cars franchising you never know. Rental car is always a potential problem and should be treated as such.
Hence, the main property you should be looking for is how does the rental company manage problems. Starting from the rental garage (when you point to some issue like worn out tires) and throughout the road. Also it means you should make some trial and errors.
[+] [-] nick_kline|5 years ago|reply
[+] [-] dzonga|5 years ago|reply
[+] [-] ipnon|5 years ago|reply
[0] https://turo.com/
[+] [-] smachiz|5 years ago|reply
Hertz's troubles seem pretty unrelated to the experience as a consumer.
While Turo is great for your weekend trip or whatever, it is not at all good for a business traveler.