That lets Bristlecone charge effective interest rates ranging from about 36 percent to 170 percent on an annualized basis, based on sample rates published on its website. (Bristlecone doesn’t express its pricing in terms of APR, since Wunderlich says it underwrites leases, not loans. The effective interest rates quoted here represent the rates borrowers would pay if they took out term loans with the same payback costs and schedule as a Bristlecone lease.) Those rates may sound high to borrowers used to paying 15 percent on their credit card, but Wunderlich says they’re a fraction of what payday and other subprime lenders charge.
“When you really look at how the credit situation is set up in the United States, it’s highly discriminatory,” he said. “People are like, ‘Oh, high interest rates, that’s bad.’ But it’s like—not really. It can be. But if used properly, it can be very good.”
Wunderlich grew up in Elko, Nevada, home to one of the largest gold-mining operations in the U.S. His parents managed local casinos; his grandfather once owned a furniture store that sold mattresses to the local brothels. Dusty won a golf scholarship to Missouri State University, earned two business degrees, then moved back to Nevada to work as an analyst at a gaming company. There, he struck up a golf-course friendship with a financier named Alfred Villalobos whose firm, Arvco Financial Ventures LLC, helped hedge funds and private equity firms win business from the California Public Employees’ Retirement System.
Villalobos took Wunderlich under his wing, hired him in 2006, and sent him around the globe in search of investors for deals in the new energy sector. But in 2010, Wunderlich felt an itch to strike out on his own. Nevada’s public school system had just established a fund to make private equity investments in local businesses, and Wunderlich set up a one-man advisory firm to help the state score deals. (He picked the right time to make the career move: Villalobos later was criminally charged with bribing the former head of CalPERS and pleaded not guilty. He committed suicide in 2015. His lawyers said at the time that he had been ill for at least two years.)
The advisory business was slow going. Wunderlich merged it into a Sacramento-based investment bank, where he did advisory work for a paddleboard company and considered buying into a company raising money from Chinese investors for luxury real estate projects. Then he saw his opportunity: A lender specializing in financing furniture, electric scooters, and all-terrain vehicles was looking for a buyer, and it fell to him to examine the books. The deal fell through, but he came away impressed by the economics of high-interest loans.
It was 2012, still early in the U.S. economy's slow recovery, and Reno home prices were less than half of their boom-time highs. Local unemployment was at 12 percent. And Wunderlich noticed something else: Spending on restaurant meals had plunged during the recession, according to Census data, but spending on pet food had ticked up.
Thus was born the idea to finance purebred dogs.
Wunderlich considered various credit models before he landed on the closed-end lease, which gave him free rein from usury laws in all 50 states. It seemed well-suited to an era when the housing crisis was threatening to sour Americans permanently on mortgages, credit card loans, even the concept of ownership.
“When I take a good hard look at what the world will be like in 10 years, I think most things are going to be on lease”
He recruited a former hedge fund salesman named Kyle Ferguson as co-founder and launched Wags Lending, thinking dog leases would mark just the first step in a vertically integrated pet-financing company that would eventually include food deliveries, chew-toy subscriptions, and veterinary loans. Then their point-of-sale lease financing became a hit, and they decided to double down on it.