First WeWork and now Wag, a dog-walking startup that is also another softbank backed failure that is making people to question Softbank operations and policies. Perhaps an investigation should be launched into its funding policies and to check if there were any abnormalities.
In early 2018, the founders of the dog-walking startup announced they had landed a $300 million investment from Softbank’s Vision Fund. The world's largest tech investor, SoftBank had US$93 billi
on at its disposal and a network of global connections second to none.
Wag was founded in 2015 at the height of the on-demand wave, by brothers Joshua and Jonathan Viner, along with Jason Meltzer. Together, they emulated Uber’s strategy: connect pet owners with Wag's network of dog walkers, who work as independent contractors.
By the time of the SoftBank deal, Wag had reached 100 US cities. With SoftBank's backing, and the appointment of a veteran CEO around the same time, Wag looked primed to become a global pet care services leader.
18 months later, SoftBank and Wag have fallen short. Wag has gone through multiple rounds of layoffs, endured management changes, and shuttered its customer service hub in the Hollywood Hills, according to interviews with 17 former employees who've recently left Wag, some as part of layoffs.
Former employees claim that Hilary Schneider, a veteran tech executive who joined Wag as CEO in January 2018, has yet to get a handle on fundamental issues facing the business , including growth, safety of pets, and customer service.
The startup fallings highlight the challenges that startups face in trying to apply the popular on-demand model to upend a range of industries in pursuit of rocket ship growth, even with a war chest of funding. It comes amid broader doubts about SoftBank's strategy to pump vast amounts of capital into flashy tech startups. Two of SoftBank's other large investments, Uber and WeWork, have received pushback from public market investors.
A Wag staff commented in a phone interview with Thailand Startup News on conditions of anonymity "senior leadership is highly intentional with its direction of Wag, using a data-driven approach to guide strategy and growth, while also improving the customer experience.The company also repeatedly stressed that it is working to grow thoughtfully to add long term value for the business, while focusing on "driving customer retention and loyalty."
The company's once compelling growth has declined while Rover, its main competitor, continues to see increased sales and to dominate over Wag, according to market data. Wag started as a dog-walking startup, whereas Rover launched four years earlier as a boarding service for canines, a more costly but typically less frequent need for pet owners. Both now have expanded upon their original offerings to become directly competitive. This year, Rover branched out to include services for cats.
SoftBank deal, rocketed Wag's valuation to north of $600 million according to Prime Unicorn Index, which tracks valuations of privately-held companies, at that time Wag was gaining market-share over Rover. It held nearly 23% in the first quarter of 2018. However, it now holds about 16% of the market compared to Rover, data from Second Measure shows.
Wag's struggles since raising hundreds of millions of dollars casts doubt on SoftBank's ability to declare winners in the market with its checkbook alone. It also highlights the challenges of trying to scale an Uber-style business that impacts not just real customers, but their beloved pets.
After the WeWork scandal, Softbanks choice of startups its backs is beginning to raise a lot of questions and doubts over the funding entity’s integrity and credibility.