This Startup Stranded Customers Overseas With No Refunds

(Bloomberg Businessweek) -- Megan Mann’s month in the beautiful Brazilian city of Florianópolis got off to a lousy start. The 32-year-old online marketer flew there from Buenos Aires at the end of April with about a dozen other people. All were customers or employees of We Roam, a startup that was basically a travel agency crossed with WeWork. (No relation, though the confusion seems inevitable.) We Roam, which pitched “digital nomads” on traveling the world while working remotely, had organized a series of 12 monthlong stays in different countries, promising to book the apartments, offices, and airfare in exchange for $2,000 a month and an upfront deposit of a few thousand dollars per person. Some of Mann’s travel companions had joined the trip midway or planned to bail early, but when she went to bed for the first time in her Florianópolis apartment, stop No. 5, she was in for the whole year, she says. Then she woke up to an email labeled “Urgent Message From The CEO,” in which We Roam head Nathan Yates got right to the point.

“Dear Members,” wrote Yates, who declined to comment for this story, “there are no words for this. I am devastated to announce that our dream, our family, our company can no longer continue.” Following a couple of lawsuits, We Roam had run out of money and would “begin unwinding things immediately.” For Mann and her fellow travelers, that meant they had the next few weeks to stay in their Florianópolis housing, as well as prearranged plane tickets to their next destination, Medellín, Colombia. But Yates was shutting down the company without securing their accommodations in Medellin, settling anything about the other planned legs of their journey, or figuring out how they’d ultimately get back to the U.S. “We felt abandoned,” Mann says. “We were left in a country and told, You have a flight to get somewhere else, but it’s not a flight home, it’s to your next destination, where there is nothing waiting for you.”

Most of the 6.5 million startups created annually in the U.S. are doomed. Fifty to ninety percent fail, depending on who’s estimating. Sometimes that means an app no longer loads its takeout menus, or you have to switch vendors for your IT software. We Roam is a reminder that a company’s death can have messier consequences. Beyond costing customers and employees money, it can strand them overseas or force them to replan a year of their lives. And of course, when there’s not enough cash to go around at the bitter end, the customers are usually last in line for refunds. We Roam customers estimate that, all together, they lost more than $100,000 when the company shuttered.

Yates, who called himself an “adventure capitalist” on his Instagram profile, co-founded We Roam in 2016 to sell the stuff of daydreams. What if you could live in Thailand and Indonesia and Australia and Croatia for $2,000 a month, all while keeping your day job? What if you pioneered a new kind of professional life? What greater ennui could travel erase? “I wanted to go on We Roam because I felt like there was something missing in my life and I didn’t know what,” a young woman says in one of the company’s promotional videos.

This was Yates’s first startup effort. Previously, he was a corporate attorney in New York City, where his co-founder, Sean Harvey, worked in sales at Yelp, according to their LinkedIn profiles. The two men didn’t raise any equity funding from venture capitalists, according to emails Yates sent customers that were later seen by Bloomberg Businessweek. They put up their own money and took out loans. By the time it shut down, We Roam had around a dozen employees, including two each accompanying each of its four active trips, according to a former staffer.

We Roam tended to attract customers on quests of some kind. Some were recently divorced or dumped, others trying to heal from traumas of different sorts. They were copywriters, retail merchandisers, online English teachers, movie trailer editors, and cybersecurity consultants. Yates’s company promised them training wheels for a life of adventure: an itinerary, an internet connection, a couple of planned outings each month, and guaranteed travel buddies. “Their whole Instagram and social media presence was young, privileged, good-looking people having a good time, on their laptops laughing in Naples or with their laptop at the end of the pier,” says Todd Weinberger, a 47-year-old magazine art director who was traveling in Buenos Aires when We Roam shut down. “I made fun of it to my friends, but I still bought into it.” Yates said on his LinkedIn profile that the company grossed $2 million in revenue in its first year.

Mann had already been living in Boise and trying to figure out how to travel and work remotely when We Roam came along. She decided to apply after taking a trip of her own to Croatia, and flew to Bali with We Roam on Jan. 2. A staffer picked her up at the airport and took her to her apartment, where she met her fellow Roamers. “It was one of the most exciting points of my life,” she says. “Embarking on an entire year of something new.” January was a whirlwind of nocturnal work schedules, thrilling new sights and foods, and tripmates who quickly became family.

The next month, while Mann’s group was in Cambodia, Yates announced that the company was rebranding as WY_CO, as in “Why?” At the same time, Harvey, who declined to comment for this story, left the company, and Yates didn’t respond to a request for comment on the split. He did, however, publish a meandering Medium post on the name change that featured a stylized portrait of himself and compared WY_CO to rappers Drake and 2 Chainz. Yates also suggested the switch was prompted by intellectual-property disputes.

“I started to get a little bit of a feeling of, Are things OK?” Mann says, and the uncertainty lingered through her trips to Australia and Argentina. At the end of April, just after the group landed in Florianópolis, she got her answer.

We Roam’s sudden rebrand, Yates wrote in his urgent email, had been part of a settlement agreement with a competitor that sued over the name. He didn’t name it, but court records show it was Roam International Inc., a global WeWork look-alike. We Roam was also paying “large” quarterly settlement payments to another competitor, Yates wrote. He didn’t name the competitor, which according to court records was Remote Year. That company sued in February 2017, alleging that We Roam stole trade secrets.

We Roam was already low on cash from the lawsuits when it had to change its name to WY_CO, which kneecapped its brand awareness and rankings in Google and other search engines. “The total number of members we have signed up for June is less than half what we had in January, and by fall we are now projecting at just a handful of people,” Yates wrote in the email that surprised Mann. He said that the company had just realized it had a month or two of money left a week earlier, after revising its cash-flow projections based on lower signups, and that a brief scramble for investors over the next several days drew no takers. “By my failure to keep this together, and alive, I am affecting the lives of clients, friends and family,” he wrote. “I will carry the weight of this reality the rest of my life.”

As Mann sat in bed reading the email, “everything was crashing before my eyes,” she recalls. “I was feeling sad and emotional for my friends, We Roam’s employees, who I’d become friends with. And then, immediately what popped into my head was, Work is going to make me go home.” Like many other Roamers, she’d been able to get approval for long-term remote work only because she was traveling with an established company. “I had set my life up and housing up to be gone for a year. I’d found people to watch my dogs. And now I’m five months in. I can’t just go back.”

Improbably, Mann’s boss agreed to let her keep working remotely for their online marketing company, so she and several other Roamers have continued on their own smaller trip, booking Airbnbs and paying for short-term workspaces. For others, the path ahead was more bewildering. One customer who’d paid a trip deposit says she wasn’t copied on the email about the company’s failure and had to hear about it secondhand. Some We Roam customers had just landed for their first month when they were told the company was defunct. A few suddenly unemployed staffers in Florianópolis and other cities, who didn’t yet have airfare back to the U.S., stuck around without pay for a couple of weeks, trying to help customers figure out a way forward.

Yates’s emails said he was trying to sell some of the company’s intellectual property to pay customers back. But as the months wore on, Roamers started to realize they weren’t likely to see a dime. Some spoke to lawyers and also learned they didn’t have much legal recourse, because We Roam’s lenders had a stronger claim to any value that might be left over. In a June email, Yates wrote that some of the company’s financial lenders were “coming after myself and my co-founder personally,” and that others had seized control of the company when it was clear it was in financial distress.

Amid the chaos, the jilted customers on We Roam trips in Buenos Aires, Lima, Florianópolis, and Medellin, plus those whose trips hadn’t quite started yet, found one another. Yates had emailed a large group of them in May about discounts he’d arranged for them with other travel companies such as Hacker Paradise. He’d neglected to blind-copy people on the list, and in July the recipients started asking one another if they’d made progress with refunds. One woman, 30-year-old Rhiannon Cook, asked everyone to submit how much money they lost to a Google spreadsheet. In total, 33 people say they’re out about $107,000, according to Cook, who says she lost about $4,000. One woman says she’s down $11,500.

“For me, where I come from, $4,000 is not a little amount of money,” Cook says. “We paid for goods and services that were never rendered, and they took our money.” A handful of customers were able to get refunds because they paid with PayPal, which agreed to refund them. Every customer and former employee who spoke to Bloomberg Businessweek said they hadn’t heard of anyone being repaid directly by the company.

Emily Bahe, a 32-year-old freelance designer from Kansas City, Mo., had been planning to leave on a three-month We Roam trip in August and had paid a $900 installment on her deposit five days before the company closed. That timing was “a hard pill to swallow,” she said. “It’s hard for me to understand or believe that they didn’t know at the time what was happening and, in my mind, shouldn’t have accepted that payment.” Another customer, Erin Sweeney, sued We Roam in small claims court in Cook County, Ill., for $4,550, the cost of her deposit and airfare for the trip she never got to take. She declined to comment, but court records show We Roam didn’t appear in court to contest the claim, so she was awarded a default judgment for that amount. It’s unclear if she’ll be able to collect it.

Harvey filed for personal bankruptcy in New York in August and was able to discharge more than $280,000 worth of debt, court records show. As of publication, his LinkedIn profile lists him as “CRO” of Broker Buddha, a startup whose pitch is decidedly less romantic than We Roam’s. It automates the processing of insurance forms.

We Roam’s customers can’t help but notice that Yates’s Instagram shows him traveling through Cape Town and California’s Joshua Tree National Park. (Some selected hashtags: #travelgram #wanderlust #happy.) Yates’s LinkedIn profile says he’s now CEO of a custom-made surfboard company based in New York. In a November email to a customer, Yates wrote that he now lives in Africa and is “hoping to avoid personal bankruptcy altogether by restructuring my debt and/or delaying the majority of repayment until (and if) I return to the U.S.”

To contact the editor responsible for this story: Jeff Muskus at jmuskus@bloomberg.net, Emily Biuso

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