Bouncing back from losing $20 million(texasstartupblog.com)

30 pointsby dats18 anni fa3 comments

http://www.texasstartupblog.com/2008/08/04/layerone/

4 comments

amuse18 anni fa

The main problem we had was lack of capital to fund our expansion. We were in a catch-22 at the time. Our investors didn't want to give us additional capital until we had leased the 'hard-to-get' spaces within popular telco-hotels around the country. The landlords didn't want to lease us space until we had the money to build out the spaces (typically $10MM per location). By July 2001 we had more than $1,000,000 in monthly lease payments for spaces we didn't have the funds to complete. It was a nightmare. Once we filed Chapter 11 we were able to immediately reject the leases that we had not built out. By cutting heads from around 60 to 16 I think and keeping only our profitable or breakeven facilities we were cashflow neutral almost immediately. It took a couple of months and we became profitable. Of course, it was easy without the leases.

At the end of the day, if I knew that I would ONLY have $20MM to build my business I could have done a great job. The problem was that I thought I was going to have $120MM to build it - I built an infrastructure to support a $100MM business, not a $20MM. Does this make sense?

[deleted]18 anni fa

iron_ball18 anni fa

Give me $20 million to invest at the blackjack table. When I lose, you eat the cost. When I win, I get 2%.

byrneseyeview18 anni fa

Enjoyable, but I wonder what changed about the business: how was it nonviable without a huge funding round in 2000, but then only viable with significant cutbacks from 2001 on?