In one of the most bizarre bits of TV booking this year, Sky News on Monday got Dan Wagner, the CEO and founder of collapsed payments business Powa Technologies, to debate the future of the High Street.
And to make matters worse, the moderator missed a huge open goal by failing to ask Wagner about the failure of his business, which was once reportedly worth $2.7 billion (£1.8 billion) but went bankrupt in February with just £250,000 ($354,400) in the bank.
Wagner chose to omit Powa altogether in any of his answers about whether the High Street was dead, but managed to leave a Powa shaped hole in his answers by outlining problems with retail that, lo and behold, Powa was designed to fix.
Asked how to get more people making trips to the shops, Wagner said: “When you go into an offline environment, there’s nothing compelling about that, we talk about seeing products but that’s about it. There needs to be more of an engagement to drive people out of there homes and into those stores and make that more compelling.”
Powa’s flagship product, PowaTag, was designed to be a bit like Shazam for retail. Consumers could use it to scan the world around them — QR codes, audiowaves, adverts — and then be allowed to buy and see details for whatever they scanned. This would certainly spice up the “offline environment.”
The problem is both retailers and customers were lukewarm on Powa’s vision of the future. Despite claiming to have signed up over 1,200 retailers, only around 100 actually signed deals with Powa and these didn’t generate any revenue.
Wagner has been lying low since the collapse of Powa in February, which lost investors at least $150 million (£105 million) and resulted in at least 75 redundancies. But he now appears to be doing a little bit of a media tour.
On Sunday, Wagner gave his first public interview since Powa’s collapse to BBC Radio 4’s In Business programme. This time, the presenters DID ask what went wrong with Powa.
Wagner professed complete ignorance, insisting that Powa was going perfectly smoothly until Wellington Management, the Boston investment house that is Powa’s biggest investor, pulled the plug by calling in $60 million (£42.3 million) of loans that were due.
I think the majority of my staff know that I was absolutely committed to making a success of my business and the circumstances surrounding its demise were very deeply disappointing to everybody. I would hope they would not blame me for what happened but some of them will undoubtedly feel that way.
I have to say that I’m as bemused as everybody else. The board did not want the business to go into administration, it was called by the debt line. That’s how they triggered the administration. But it doesn’t make any sense, I don’t think to them or to anyone else watching this, because it’s just value destructive. They didn’t tell us or the board. It was a complete shock.
It’s the business equivalent of walking across the street and being hit by a car. It’s one of those things that is completely random. It doesn’t necessarily reflect on what we were building. It doesn’t necessarily reflect on the capability or the experience or the management capacity to deliver value. It doesn’t necessarily reflect whether the valuation was right or wrong. Certainly in this case, I can tell you it was just one of those extraordinary things that should never have happened.
Wagner’s comments are at odds with Deloitte’s insolvency report into the business, released last Friday, which points to serious problems within the business.
The report shows Powa made a loss of £38.5 million ($54.5 million) on revenue of £1 million ($1.4 million) in 2014 and lost £31.8 million ($45 million) on revenue of £4.8 million ($6.8 million) in 2015. It was “in essence pre-revenue” as late as 2015 despite sucking up a phenomenal £143.94 million ($203.7 million) in both debt and equity, since 2013. Practically none of that is left.
Wagner may be “bemused” and find it a “complete shock” but the financials paint a picture of a business that was seriously struggling. It’s not surprising Wellington pulled the plug.