How Ofo spun out of control: An ex-employee’s account

The following is an adapted translation of this article in Xin Caijing by Weiwei An, She Qi, and Cong Jian. The Ofo employee quoted in this article is using a pseudonym, and while Xin Caijing claims to have confirmed these accounts, Tech in Asia has not independently verified them.

On his last day, Li Ming left Ofo quietly, waiting until the office was empty to pack up and leave.

He told us that he just got notification from Ofo that at his third-tier city station, the bike-sharing company could only afford to keep one person. He was one of three employees at that time, which meant that he had to fire two people. One of them was himself.

The city manager

As the city manager, Li had seen Ofo’s cash-burning and sometimes baffling strategy play out firsthand, and had seen how its lack of effective management systems had created city-level breeding grounds for a variety of problems.

Before leaving, he wrote a letter to Ofo CEO and founder Dai Wei, detailing instances of deception, fraudulent reporting, and corruption. Dai Wei replied, promising that he would not ignore this voice from one of his city outposts.

Ofo’s founder and CEO Dai Wei / Photo credit: Ofo

Li said he has seen Dai several times, and still thinks well of him. Dai is an open communicator who’s willing to accept criticism and is “good to the people below him,” says Li.

But Li was unimpressed by Dai’s announcement back in May that the company planned to continue fighting independently rather than pursue acquisition. Having worked at Ofo for nearly two years, he had seen how quickly the company was burning through its funding, he had seen the corruption of his colleagues, and he had seen that within the team, having ability wasn’t enough to secure promotions. “Although I was thankful to Ofo, I no longer wanted to fight for it,” he said.

By the time he left, Li wasn’t particularly worked up about the layoffs. His departure came in the third round of job cuts, but for Li’s station, all the drama had come after the previous round of layoffs, which he had survived. He remembers a team dinner during that period – around the Lunar New Year holiday – that began with casual chatting but ended with drinking, sad conversations, and tears. The few that had survived the second round of layoffs knew that a third was not too far behind, Li said. One employee was so upset that she quit even though she hadn’t been laid off yet, rejecting a generous year-end bonus Li had arranged for her.

“I’m sad thinking about that,” he said.

Ofo has never defaulted on employee salaries, and it pays compensation for layoffs. But money was definitely tight. In February 2018, the company mortgaged its bicycles for a US$246 million loan from Alibaba, and it raised another US$866 million from the online shopping behemoth by selling more equity in March.

And while outsiders saw that money as Ofo’s lifeline, it didn’t change much for Li. First came cuts to the operation and management teams at his city station. They accounted for more than 50 people and were one of the company’s largest expenses, as they were in charge of sourcing, repairing, and dispatching Ofo’s ubiquitous yellow bicycles.

The removal of these teams meant that nobody in Li’s city was in charge of the bikes anymore. While later layoffs were necessary because of financial pressures, Li said that the feeling was the first set of layoffs was excessive, and effectively crippled the team, making further layoffs down the road an inevitability.

After leaving, Li wasn’t surprised to see fewer yellow bikes on the road, and what bikes he did see in worse and worse shape. He knew that his city had no one to repair or replace them. In fact, he hasn’t returned to the local office since his departure, and he’s not sure it still has anyone at all.

The good times

The bike maker

Relationship breakdown

Corruption gives way to deadlock