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How Nasty Gal Went from an $85M Company to Bankruptcy

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Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#101

Post by charlesdm »

wpietri wrote: post #97
tedmiston wrote: post #93

Earlier quoted context omitted.

Was it really ever an $85M business if it never technically made money? (Per EBITDA)

Yes. When people size a business in dollar terms I think they're usually talking about revenue. Because a) it's a clear, concrete measure, b) it's indicative of consumer demand, and c) it allows you to ignore all of the gross and subtle factors that influence profit. (I think the second-most common way to use the phrase is in market cap terms, but that only works well for publicly traded companies.) For example, cons…

Revenue is vanity. Profit is sanity.

Revenue means nothing if you can't flip the profit switch.

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#102

Post by hurbledr »

throwaway2048 wrote: post #94
tyre wrote: post #86

Earlier quoted context omitted.

I don't think it is universally agreed that Uber is successful despite its culture. It may be that, in at least some industries, ruthless aggression is a financially advantageous attitude. Investment banking comes to mind. If we want to change culture, it has to be for reasons other than money. The Pyramids were a phenomenal project that we couldn't realistically replicate today (due to costs), but I'm okay sacrifici…

The pyramids wern't built by slave labour. https://en.wikipedia.org/wiki/Egyptian_pyramid_construction_...

Your source doesn't agree with your statement.

from the wiki page: In addition to the many unresolved arguments about the construction techniques, there have been disagreements as to the kind of workforce used. The Greeks, many years after the event, believed that the pyramids must have been built by slave labor. Archaeologists now believe that the Great Pyramid of Giza (at least) was built by tens of thousands of skilled workers who camped near the pyramids and worked for a salary or as a form of tax payment (levy) until the construction was completed, pointing to workers' cemeteries discovered in 1990 by archaeologists Zahi Hawass and Mark Lehner. For the Middle Kingdom Pyramid of Amenemhat II, there is evidence from the annal stone of the king that foreigners from Palestine were used.[1]

Couple points. You can be both a skilled worker and a slave. Also, if you are working to pay off a tax debt, that pretty much makes you an indentured servant or slave.

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#103

Post by ScottBurson »

narrowrail wrote: post #52
raiyu wrote: post #46

It looks like overall a classic mistake of trying to go too fast too soon. The issue with taking on VC capital is that you need to be in control of how you spend that money, and if you don't need it, then don't take it. There are also challenges with any business in crossing the chasm. Selling to more customers, or a different set of customers is akin to searching for product market fit a second time and is tricky li…

I hope it doesn't sound too pedantic, but the 'C' in VC stands for capital, so saying money or capital after VC is redundant. The only reason I was driven to write this is because of how many times it was written.

Yesterday I used my PIN number to withdraw $200 dollars from my bank.

(We all have our little pet peeves :-)

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#104

Post by lern_too_spel »

jimmywanger wrote: post #48
cookiecaper wrote: post #42

Earlier quoted context omitted.

Revenue is absolute. Money either came in or it didn't. Profit is fungible because the accountants and business principals decide what counts as a cost and what counts as a surplus. An infamous example of this is "Hollywood accounting" [0], whereby major studios spin off independent LLCs for each film project they pursue, charge these LLCs exorbitant fees for marketing, distribution, etc., and then the LLCs never pos…

> Revenue is absolute. Money either came in or it didn't. That's actually quite incorrect. The way you recognize revenue and the timelines over which you recognize them are different. Two example. One is groupon, another is more universally applicable. So for Groupon, if you as a customer pay 10 dollars, groupon gets 5 dollars and the merchant gets 5 dollars. Groupon was recognizing 10 dollars as revenue and five dol…

You're both right. Revenue growth within a market is absolute for a growth stage company. Profit, revenue, and profit growth are nearly meaningless until the company has stabilized.

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#105

Post by asdfasdf32r3 »

charlesdm wrote: post #101
wpietri wrote: post #97

Earlier quoted context omitted.

Yes. When people size a business in dollar terms I think they're usually talking about revenue. Because a) it's a clear, concrete measure, b) it's indicative of consumer demand, and c) it allows you to ignore all of the gross and subtle factors that influence profit. (I think the second-most common way to use the phrase is in market cap terms, but that only works well for publicly traded companies.) For example, cons…

Revenue is vanity. Profit is sanity. Revenue means nothing if you can't flip the profit switch.

I don't think this accurately captures the trade-off that exists implicit in things like this, the risk/reward.

Prioritizing profit early on could mean less reinvestment, slower growth, and ultimately less dominance of an industry (or a smaller industry).

Depends on your risk appetite. For many investors, the biggest cost is how much of their time it takes for a projected possible payout.

It's a different argument that people aren't accurately evaluating the inputs. But to hyperbolically state one is vanity, the other sanity, reflects but one perspective.

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#106

Post by Wall_Street »

charlesdm wrote: post #101
wpietri wrote: post #97

Earlier quoted context omitted.

Yes. When people size a business in dollar terms I think they're usually talking about revenue. Because a) it's a clear, concrete measure, b) it's indicative of consumer demand, and c) it allows you to ignore all of the gross and subtle factors that influence profit. (I think the second-most common way to use the phrase is in market cap terms, but that only works well for publicly traded companies.) For example, cons…

Revenue is vanity. Profit is sanity. Revenue means nothing if you can't flip the profit switch.

In Silicon Valley they don't take profit seriously, do they ?

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#107

Post by spaceflunky »

Asparagirl wrote: post #90
spaceflunky wrote: post #80

Earlier quoted context omitted.

The unique thing about NG was that between 2010-2011 they had explosive growth and high profit margins selling the cheap clothes they were buying from commodity asian vendors. The real secret sauce to NG's success was that the first couple of employees were expert buyers and knew how to spot profitable trends. Keep in mind Amoruso only knew how to buy and sell vintage. It was only after Amorus hired her first employe…

I read her book, and if I remember correctly, she claims she had turned down a lot of VC's swarming to get a piece of the company. There was the anecdote about the VC who called and left a rambling message on her phone and later said he had been so high partying that he didn't remember it, or something like that? The implication was that a few of the nerdy-preppy SV VC's were hilariously pretending they were party an…

Complete fiction. Most of that book is her posturing about how great she thinks she is. See statements about cult of personality.

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#108

Post by [deleted] »

Asparagirl wrote: post #90
spaceflunky wrote: post #80

Earlier quoted context omitted.

The unique thing about NG was that between 2010-2011 they had explosive growth and high profit margins selling the cheap clothes they were buying from commodity asian vendors. The real secret sauce to NG's success was that the first couple of employees were expert buyers and knew how to spot profitable trends. Keep in mind Amoruso only knew how to buy and sell vintage. It was only after Amorus hired her first employe…

I read her book, and if I remember correctly, she claims she had turned down a lot of VC's swarming to get a piece of the company. There was the anecdote about the VC who called and left a rambling message on her phone and later said he had been so high partying that he didn't remember it, or something like that? The implication was that a few of the nerdy-preppy SV VC's were hilariously pretending they were party an…

[deleted]

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#109

Post by spaceflunky »

jdmichal wrote: post #99
edshiro wrote: post #70

Earlier quoted context omitted.

Thank you for the insights into the company. I don't know whether this is common in VC backed companies, but I am surprised at the lack of governance around spending of company money for personal gain. 500K on a ghostwriter when you are trying to steady the ship and then make it move full steam ahead??! That sounds insane and if I were an investor I'd kick that CEO's ass. Moreover, very surprised Index Ventures poure…

I'm pretty surprised at that personal spending on the company dime also. That's the kind of thing that pierces the veil and can get you personally liable for company actions and debts... Which might very well come out to play in bankruptcy court.

It was crazy. At her peak she has three personal assistants on the company dime. One to handle work stuff, one to handle household stuff like her dogs, and there other for special projects. She also spent at least $1MM on her wedding which btw only lasted 6 months before she got divorced.

Re: How Nasty Gal Went from an $85M Company to Bankruptcy

#110

Post by spaceflunky »

pryelluw wrote: post #96
spaceflunky wrote: post #88

Earlier quoted context omitted.

For the betterment of humanity, let's hope not. Lest we create another DJT.

I don't know the lady herself or know much about NG, but villifying her like this is silly.

She's legit not a good person, that I can guarantee you. Look at her story. It's borderline sociopathic. She brags about stealing and swindling to get her start. She had terrible eBay feedback. She's been sued multiple times for mistreatment of employees. She spent $1m on a wedding that was annulled 6 months later. She has a clear pattern of terrible behavior.
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