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?
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?
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[ 3.3 ms ] story [ 19.1 ms ] threadAt 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?