How Nasty Gal Went from an $85M Company to Bankruptcy
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How Nasty Gal Went from an $85M Company to Bankruptcy
1–10 of 123 posts
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#2Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#3Can't read the article without a subscription to WSJ
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#4The most interesting part of this to me is the purchase by Boohoo.com, itself capitalising on legendary dotcom failure boo.com's branding.
It sounds very much like the parent is running a business model very similar to the "one last draw" model Warren Buffet was so successful with earlier in his career.
It might make a lot of sense for the right type of investor, too. The growth won't likely be there in the long term (minus an unlikely resurgence), but revenue will come early, meaning a fast if limited return.
I'd be interested to know what kind of revenue Nasty Gal is doing now, obviously it's not anything like $85m on a price of $20m.
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#5Can't read the article without a subscription to WSJ
Oh dear - they closed the loophole. It's a shame, but if it's something they need to do to survive then fair play. I do wonder if these should be permitted on HN now though...
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#6Can't read the article without a subscription to WSJ
Oh dear - they closed the loophole. It's a shame, but if it's something they need to do to survive then fair play. I do wonder if these should be permitted on HN now though...
How could a site make an article behind a paywall that's available for free somewhere else, especially if it's not their article...
getting money from others work seems a little bit odd.
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#7Oh snap, I didn't expect this headline sentence to end this way. It was so lauded in the media for a while. Good PR.
(File under sama's warning about founders falling in love with personal press? http://blog.samaltman.com/the-post-yc-slump)
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#8Earlier quoted context omitted.
Oh dear - they closed the loophole. It's a shame, but if it's something they need to do to survive then fair play. I do wonder if these should be permitted on HN now though...
How could a site make an article behind a paywall that's available for free somewhere else, especially if it's not their article... getting money from others work seems a little bit odd.
yeah, no clue. after seeing this article behind a paywall I simply googled "nasty gal" and the results returned this article first and a LA Times version of the story second. no paywall on the LAT for me. whether or not the story was the same quality, I have no idea.
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#9The most interesting part of this to me is the purchase by Boohoo.com, itself capitalising on legendary dotcom failure boo.com's branding. It sounds very much like the parent is running a business model very similar to the "one last draw" model Warren Buffet was so successful with earlier in his career. It might make a lot of sense for the right type of investor, too. The growth won't likely be there in the long term…
Revenue is vanity. Profit is reality.
Selling $85MM in 2014 is nifty, but fashion industry is hard. Average EBITA is maybe 10%: http://www.mckinsey.com/industries/retail/our-insights/the-s... to realize how brutal it is.
Let's piece this together...
She had 280 FTE at 2013 and got into a lease for 500k sqft warehouse: http://www.inc.com/30under30/donna-fenn/nasty-gal-sophia-amo...
At ~$60k/yr avg and we'll pretend a killer deal on the space at ~$30/sqft, half off the avg ask that year in KY http://www.loopnet.com/Louisville_Kentucky_Market-Trends, her bill was probably $31.8MM.
She also got into manufacturing. And with how much she was willing to spend, I would imagine she threw maybe $1MM here and $1MM there for that. Probably another few millions on the two B&M.
Boom, that's $40MM gone, just like that.
Smart VCs don't invest in ecommerce. The investors bought into Sophia Amoruso's narrative. The second she took the money she had to spend the money so can't blame her for that.
That warehouse must have been albatross around the neck. She thought they could repeat the $85MM high score but clearly that didn't happen; they never mentioned revenue numbers ever again.
Next year she asked for another $24MM, prob to cover for the lease and half the head count. But again, another bad year.
All the while she got distracted writing her vanity book, going on her vanity tour, rationalizing what's good for her must be good for the brand.
So 3 years in they lost $64MM just like that chasing after the dragon.
Crazy ride.
Who's got next?
Re: How Nasty Gal Went from an $85M Company to Bankruptcy
#10The most interesting part of this to me is the purchase by Boohoo.com, itself capitalising on legendary dotcom failure boo.com's branding. It sounds very much like the parent is running a business model very similar to the "one last draw" model Warren Buffet was so successful with earlier in his career. It might make a lot of sense for the right type of investor, too. The growth won't likely be there in the long term…
Revenue is vanity. Profit is reality. Selling $85MM in 2014 is nifty, but fashion industry is hard. Average EBITA is maybe 10%: http://www.mckinsey.com/industries/retail/our-insights/the-s... to realize how brutal it is. Let's piece this together... She had 280 FTE at 2013 and got into a lease for 500k sqft warehouse: http://www.inc.com/30under30/donna-fenn/nasty-gal-sophia-amo... At ~$60k/yr avg and we'll pretend a…
Your cost, ~$60/sqft, on industrial warehouse space is off by a factor of about 10. http://www.kcrea.com/cre/louisville-ky-industrial-space-for-...
It goes for around $5-$6/SF annually.