Powa Technologies, the London technology company once valued at £1.8 billion ($2.7 billion), has collapsed into administration, putting over 311 jobs at risk.
Deloitte confirmed over the weekend that it has been appointed to take over the business, which has run out of cash and can’t pay its debts.
The company has raised $175 million (£122 million) to date, but had only $250,000 (£175,200) in the bank at the start of February and debts of $16.4 million (£11.5 million). That’s despite $50 million of investment in 2015 and a loan from its biggest investor, Boston-based Wellington Management, as recently as November.
Despite the huge sums invested in Powa, which has partnered with the likes of Adidas and L’Oreal, CEO and founder Dan Wagner told staff in a video that the company was “basically pre-revenue,” according to a video seen by the Financial Times.
Since this ‘Unicorns’ horn and wings have fallen off everyone is running for the hills making the technology the excuse for the demise. This is simply ludicrous! People have jumped on the bandwagon slating QRCode technology without a thought of what actually happened at the company.
I’ve personally been in mobile and cross border payments for the last 5 years and know some of the guys very well over at Powa and trust me it’s not the tech.
QRCodes aren’t the problem, if it was Starbucks, Zapper, YoYo, Levelup or AliPay wouldn’t be as successful as they are. In Q3 2015 Starbucks did more than 9m mobile only transactions. LevelUp has more than 14,000 merchants using on a daily basis. AliPay is the biggest and fastest growing part of Alibaba and it’s only QR based.
Rather than blaming the technology or adoption how about people focus on the management and the investors. I set up my first business at 17 selling advertising space in 2001 and grew this business rapidly employing people all over the UK, so know how to grow a business. There’s lots of people in the payment’s space who have had success in the 90’s and since then have struggled with the rate in which technology is moving. They all claim to be the fathers of the internet and all claim everyone is dying to work with them and yet they’re all complete failures! The real question is Dan Wagner joining that heap? The more popular mobile payments got the more con-men turned up to take advantage and ran companies in to the ground with promises they couldn’t keep.
Website Glassdoor lets current and former employees leave anonymous reviews of companies. Being anonymous it’s hard to sift out the people with an axe to grind or from someone giving genuine feedback. But, taken in aggregate, they give interesting insight. Business Insider reviewed the 133 public reviews of Powa on Glassdoor. The most common rating of the company is just 1 star, with 50 reviewers giving this rating.
Staff consistently complained of the following:
“Company spends outrageous amounts of money on travel and parties for potential customers and vendors, yet leaving hundreds of unpaid bills and invoices stack up leaving people to scramble just to keep the lights on and not get evicted.”
“That a start-up with no revenue needs offices in the most expensive buildings in each city is one example of poor management at this company.”
(N.B – It’s estimated Salesforce Tower (Heron Tower) cost £2m p/a in rent alone)
“This company spends money like the world is coming to an end.”
High turnover of staff
“Most people get fired (more than 60%).”
“REDUNDANCIES!!! This is kinda a company tradition. Just to warn you, it happens every quarter of the year.”
“Senior leadership instability (supervisor changed 5 times in 10 months).”
“People that have done an outstanding job have been basically fired. I have no idea why this keeps happening but it does.”
“Management with no vision, lack of competence.”
“They do not appreciate your work, management use different excuses to destroy your years of work, re-design and ask you to rebuild it so that they can take over the control.”
“We all sit back and watch rolling our eyes as senior management changes direction.”
“Complete new management is needed. As long as they are there, nothing will go forward.”
High employee turnover, high spending, and poor management go some way to explaining the current turmoil at Powa, valued at $2.7 billion (£1.8 billion). We also need to look at the fact that the management team at Powa paid $75m in an all share buyout of MPayMe Ltd the creators of Znap, which had $120 in sales. Where did the insane price tag come from? I understand technology has a value, but $75m?
We also need to look at its biggest investor, Boston-based Wellington Management. What have these guys been doing whilst Powa has let it’s money go to it’s head. In November 2015 they were aware of Powa running out of money and gave them a loan of more than $16m, surely at this point it was time to come in and take control, consolidate, close offices, and get back to it’s roots and take one market at a time. Why did they not interview every employee to find the route of the issue or simply just read Glassdoor. No…. they just gave more money and buried their heads even further in to the sand.
With all this in mind and you still want to blame the technology? I think not.