The little talked about (until it failed) “Airbnb killer” – Wimdu is going belly up. The startup launched back in 2011 has announced it will “cease operating by the end of 2018.” The German company counts 100 employees located in Berlin and Lisbon.
The startup founded by serial entrepreneurs Arne Bleckwenn and Hinrich Dreiling was acquired in 2016 by Wyndham brand Novasol, which is in turn owned by American investment firm Platinum Equity, LLC. Now that I’ve covered the brief history of the company, a burning question arises for me as a technology writer, “How can investors tell they wasted tens of millions of dollars or euros?”
Since Wimdu was eventually acquired, it seems fair to say that the initial $90 million invested by Kinnevik and Rocket Internet may have been partially recouped. With no disclosure of the details of that deal, we cannot know exactly who won and lost “how much” on Wimdu. What we do know is that they sought out and took a measly $1 million advertising for equity deal from Italian conglomerate Mediaset back in 2013, which was apparently used to expand Wimdu to other markets.
The company first went into a downward spiral once the Germans began regulatory moves on peer-to-peer property rental companies back in 2013, even though there were claims the startup was on the most to positive cash flow, which is what cemented Airbnb’s success. Another thing that differentiates Airbnb (besides stellar customer service) is their PR and marketing effort, not to mention their legal department, all of which costs bucks. I mention this because anybody expecting to throw in $90 million bucks to do battle against $30 billion is just nuts. You’d either have to have one heck of an innovation or a niche region you could win revenue from in order to build on the business. And anybody should know, Germany just “ain’t it” where innovation in the market will matter.
Now the stakeholders say they are working with the roughly 100 staff to ensure current bookings and clients are satisfied until the final closure of the company. The announcement by Wimbu says all guests and hosts having 2018 bookings – with a check-in date occurring before or on the 31-December-2018 – will be carried out professionally and reliably. All guests with 2019 bookings – with a check-in date occurring after the 31-December-2018 – will be contacted separately to deal with their respective booking.
Since its founding, Wimdu has been at the center of a good many controversies, which represents the preponderance of press and branding the company gleaned over the years. At least this is my assessment. Since the acquisition back in 2016, Wimdu’s crew never were able to resurrect the brand. Part of the reason for this appears to be the fact Wimdu focused almost all it’s PR and marketing effort on the German market, which was the niche that got them in trouble in the first place. Prior to 2014 Wimbdu’s media and ad effort was far more balanced, with TechCrunch, TheNextWeb, Business Insider, and many other English and international media brands reporting.
Lawsuits gobbling up funding, trying to compete with a multi-billion dollar startup like Airbnb, and any tiny mistargeting on the part of this company was sure to spell disaster. $90 million dollars seems to have vaporized into the same dead pool that has claimed tens of billions over the last decade and a half. The funny thing about Wimdu for me is, it seems like very little of that $90 million went to marketing the one startup that might have taken on Airbnb. Maybe more cash could have made a difference. It seems like it doesn’t matter now.