(Bloomberg) -- Customer complaints about travel startup Pollen poured in so quickly that staffers couldn’t keep up. Over the last year, it was forced to cancel dozens of its luxury events, many featuring A-list musicians at posh beachfront locales, blaming the omicron variant of Covid-19. Pollen resorted to a slapdash triage system to handle refund requests: a spreadsheet that prioritized people who complained the loudest on social media.
There was a lot to gripe about. A January extravaganza in Cancun featuring reggaeton superstar J Balvin was called off just days before it was due to begin. That same month, the Departure music festival in Playa del Carmen, Mexico, featuring top electronic music artists, was abruptly postponed by a day, and then canceled—after many guests had arrived. Other events were scrapped. Promised refunds went unpaid for months, if at all.
“How can you STILL have the audacity to run more events NOT paying previous cancelled events refunds!!?,” Pollen customer Zahra Ali wrote on Twitter. “Absolute Jokes. Robbing people it’s disgusting. Do NOT use this service people.” Many customers on social media—and employees in interviews—compared Pollen to the 2017 Fyre Festival, the posh Bahamas event that devolved into chaos after organizers failed to deliver promised food, lodging and entertainment.
Cancellations, along with other pressures, caught up with Pollen last week, when its London-based owner Streatteam Software Ltd. said it hired Kroll LLC to handle a breakup and sale of its disparate businesses. It cited Covid-19 restrictions, the global economic downturn and bearish sentiment among venture investors, which combined to “put too much pressure on the business whilst at a critical stage of a startup’s maturity.”
But Pollen’s troubles extend far beyond Covid lockdowns and antsy funders. Interviews with 16 people, including former staffers, describe a startup derailed by missteps including unrealistic growth projections, misleading communication with customers, lavish employee perks and unmet financial obligations to departing workers. Before opting to dismantle through a restructuring, Streetteam Chief Executive Officer Callum Negus-Fancey worked unsuccessfully with bankers at Goldman Sachs Group Inc. to find a buyer for the company as a whole, according to a memo from the CEO reviewed by Bloomberg. A representative of Goldman Sachs declined to comment.
Founded in 2014 by Callum Negus-Fancey and his brother Liam, a pair of British entrepreneurs, Pollen boasted that it has raised more than $200 million from investors including Northzone Ventures, Molten Ventures and Lansdowne Partners. The company works with promoters and music festivals to plan travel experiences, such as a four-day music festival in Malta headlined by American rapper 50 Cent, or a two-day wilderness experience in the Alps led by a former special-forces sniper. Pollen hosted a three-day Justin Bieber extravaganza in Las Vegas last year.
As Covid lockdowns loosened and travelers began venturing out last year, Negus-Fancey had cause for optimism. Pollen said in July it saw a surge in growth in 2021, notching a sales increase of more than 300% compared with pre-pandemic levels. It had lofty goals for this year too, aiming to generate $376 million in bookings, according to an internal projection. That would have been a more than three-fold increase from 2021.
A party called Project Ocean, scheduled for summer 2023, would take place on a rented Caribbean island and cruise ships and feature some of the biggest names in music, according to a person familiar with the matter, citing internal projections. It would generate close to $40 million in sales, this person said. Pollen targeted $1 billion in gross bookings for 2023, according to a company presentation.
Pollen said in April it raised $150 million. The funding vaulted Pollen to a valuation of $800 million, not including the amount raised, according to a company document. Representatives of Pollen investors Northzone, Molten Ventures and Lansdowne Partners declined to comment.
But Pollen’s prospects worsened as omicron unleashed a cascade of event cancellations, customer complaints and refund demands. Of 360 events put on by Pollen in the last 12 months, 39 were called off, according to Daniel Ritterband, a spokesman for Pollen. Departure, the music festival in Playa del Carmen, was pulled at least in part because the company had failed to secure the necessary permits, according to two people familiar with the matter. “It’s completely untrue,” Ritterband said. “The government deemed it unsafe to continue with Departure because of the capacities, scale and shows Pollen had planned.”
Customers flooded social media with unflattering posts about the company. Aracely Salas, a 31-year-old customer from Dallas, said it took her about five months to get reimbursed for $2,400 for the four-day trip she had booked through Pollen for J Balvin, which was rescheduled for another date. San Francisco resident Mark Dangjaros, 27, said he shelled out $3,000 for an all-inclusive stay at the Departure festival, only to have his room downgraded weeks before arrival. After his plane touched down, he learned the event was postponed—then canceled. “As Thursday turned into Friday, the whole thing was like, 'Oh this is all not real’,” he said in an interview.
Some posts on Pollen’s Instagram account garnered hundreds of comments about cancellations, screenshots captured by Bloomberg show. Few remain visible. A former Pollen employee who was responsible for customer experience said that she was instructed to hide them. She requested anonymity discussing internal policies. A Pollen customer service manual reviewed by Bloomberg shows that the company policy is to suppress comments that include words like “scam” or “scammers,” as they are classified as “spam.”“Hide the comment”The manual also instructed employees to suppress comparisons to Fyre, such as “This has real Fyre fest vibes.” “Responding may come across as desperate,” the manual says. “We would hide the comment in this instance.” Ritterband compared Pollen to other companies that have social media content-moderation policies. Fyre Fest “is a lazy meme used anytime an experience gets cancelled, for any reason, in our industry,” Ritterband said, adding that like all travel companies Pollen has had to cancel events due to Covid-19 restrictions.
When it came to communications about refunds, the customer experience employee said she misled users about how soon they would get their money back. It was her job to keep customers happy, buy Pollen time and tell them that their refund was processing and would arrive within a week, she said. “I’m either lying to them that they'll get a refund or ignoring them completely,” she said, referring to the timeliness of refunds. Bloomberg reviewed an email Dangjaros received in April promising a refund within a week. As of August 15, the refund hadn’t arrived.
Ritterband said that customers are “triaged and prioritized fairly” when requesting refunds. Pollen aims to fulfill the requests within 90 days, and it has met this target 90% of the time since 2020, he said. Recovering money that was paid to hotels or vendors can take longer, he said. Pollen has paid more than $75 million in refunds since the pandemic began, internal Pollen documents reviewed by Bloomberg show.
Refunds were hardly the only line item boosting costs. As it grew, Pollen spent on employee perks, such as renting out England’s Osea Island, and flying staff from the US to a week-long retreat in the redwoods in California in 2019. There was also a partying culture to match the business, employees said. Lock-in events, where Pollen would pause work early for outings such as go-karting, often ended in late nights of drinking, followed by hangovers the following day, employees said. “Although we believe bringing people together is important to build community, we invest less than 1% of our annual budget on employee experiences,” Ritterband said.Negus-Fancey expensed almost £53,000 for a villa in Ibiza at the end of May, describing it as “accommodation and entertainment for key clients,” according to a report reviewed by Bloomberg. The charge represented two months of accommodations for 20 employees while events were happening on the island, and it was cheaper than a hotel, Ritterband said. He declined to identify the accommodation, saying that, “if published, it would still look opulent to current creditors.”Questions about executive-related expenses arose at a recent town hall meeting, with staff asking for greater transparency, former employees said. Pollen President James Ellis told staff that people who take Snoop Dogg to dinner can’t take him to McDonald’s, according to employees who attended the meeting.Pollen’s operating loss widened to 53 million pounds on sales of 48 million pounds in 2021, compared with a loss of 40 million pounds the prior year, according to a filing. Meanwhile, operating expenses ballooned to more than 100 million pounds last year compared with 60 million pounds a year earlier. As of the end of last year, the company had sufficient liquidity to meet its financial obligations, according to the filing.
Even so, concerns over the company’s financial footing surfaced within weeks of the April fundraising announcement, when Pollen cut about a third of its staff, or about 200 people. Many of those who lost their jobs are still awaiting severance pay, according to former employees who spoke to Bloomberg and requested anonymity for fear of not getting paid. In its statement regarding a breakup last week, Streetteam said it’s “working hard to get the best outcome for all stakeholders.”
“Greed, negligence, pride”
Some investors in the funding announced in April got cold feet, backing out or shifting commitments, Negus-Fancey said in his memo. The funding was due to be paid in tranches, assuming Pollen met certain growth metrics, the people said. It was also spread over two years and closed in December, Ritterband said. About $100 million was raised in 2021, company filings show. So far this year through July 18, the company had raised 900,000 pounds in cash from investors, and it had issued new convertible loans worth $31.5 million, the filings show.
Christine Osazuwa, who served as a strategy director for about 10 months at Pollen before departing in the spring, discussed her exit in a recent LinkedIn post. “This is greed, negligence, pride,” she wrote. “None of the senior leadership team will face any real consequences for what they have done when what they did had very serious consequences for the 700+ people that were previously on their payroll this year.”
By early June, some employees openly worried about Pollen’s solvency. “In the spirit of transparency, can't we just admit that we're broke?” one employee asked anonymously at a company town hall-style meeting held over an online Q&A tool. “We all know we have no money; it would feel so liberating if we just stopped with the excuses and admitted it.” Bloomberg reviewed screenshots of the posting.
The company hasn’t paid into the UK pension program for months, former employees said. Ritterband acknowledged that Pollen missed three months of pension contribution payments, but he said employees are protected under government provisions and “will not be negatively impacted.” He said the company is doing “everything we can to ensure the best outcome for all our stakeholders via the sale of our subsidiary companies.” Company directors are using “personal funds” to support the company during its restructuring, Ritterband said.Many remaining Pollen employees based in the UK have lost their jobs, Sky News reported Thursday. Pollen parent Streetteam informed staff that “only a handful” would remain, the news service reported.
In his memo to employees last week, Negus-Fancey apologized for failing to find a buyer. “I am sorry that I wasn’t able to close a deal in which we sold the business in its entirety and kept the whole company together,” he wrote. “Everything we have achieved is because of all of you.”
(Adds job cuts in penultimate paragraph; an earlier version corrected a reference to sales, making it bookings)
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