4 ms·

The 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

The 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.

alaskamiller 10y ago
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-state-of-fashion 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-amoruso-2013.html 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 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?
- ghshephard 10y ago
  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-lease http://www.kcrea.com/cre/louisville-ky-industrial-space-for-... It goes for around $5-$6/SF annually.
  - alaskamiller 10y ago
    No, in commercial real estate when you say $30/sqft it's already annualized. That's 30 / 12 = $2.5/sqft/mo. Also you're looking at listings for 10k or less, at 500k space it's a very very very different game.
    - ghshephard 10y ago
      Wouldn't you get a break on larger warehouses versus smaller ones? Also, as a comparable, I'm checking out this: https://www.houston.org/newgen/17_Commercial_Real_Estate/17C%20W005%20Industrial%20Space%20Cost%20Comparison.pdf https://www.houston.org/newgen/17_Commercial_Real_Estate/17C... San Francisco (highest I could find) - is $34.32/sq foot/annually. So, applying your rule, one would pay $34/sq/foot/month. So - a typical 1500 square foot commercial office would be $51,000/month? Seems high even for San Francisco. If we instead divided by 12, $2.86/sf/month, then $4300/month for 1500 square feet seems within the realm of reason. How certain are you that these rates are already converted into monthly values? I found one monthly rate for Kentucky, 2,500 - 8,432 SF, $1,016 - 5,578 (Monthly). That would be $0.40/month - $0.66/month, or, multiplied by 12, $4.80-$8/year. Right within the expected range.
      - ghshephard 10y ago
        Here's good comparable with monthly and annual rates (it's big, modern): http://www.kcrea.com/listing/29969851/9101-Minor-Ln-Louisville-KY-40219 http://www.kcrea.com/listing/29969851/9101-Minor-Ln-Louisvil... 324,730 sq feet. $3.95 PSF/Annual or $106,890/month. $106,890 * 12 = $1,282,680/year / 324730 sq feet = $3.95/year/sq foot. And you get 35 Docks on 21 acres to boot.
monkeyprojects 10y ago
As someone who worked at Boo.com - escaping in Feb 2000 as its death become obvious to anyone, I don't think boohoo.com capitalises on boo.com - most people have never heard of boo.com..
- headmelted 10y ago
  Were I local to you (Northern Ireland, so I'm almost certainly not), I'd love to buy you a coffee and pick your brains about what that was like. I have to say though, boohoo.com quite clearly capitalises on boo's branding and history. In fact, if I'm not mistaken it originally mimicked the typeface and name of Ernst Malmsten's book about the boo.com story, which is kind of ironic given the circumstances. Book: http://t1.gstatic.com/images?q=tbn:ANd9GcTPf1rQbytroVo7SYUhV5xDvrJgiU4xFCGjWJfSRXUj10WSKAzc http://t1.gstatic.com/images?q=tbn:ANd9GcTPf1rQbytroVo7SYUhV... Boohoo logo (now): http://www.boohoo.com/content/ebiz/boohoo/resources/images/logo_m.png http://www.boohoo.com/content/ebiz/boohoo/resources/images/l... (To be fair, Boohoo have altered their branding over time but the similarities are still recognisable I think?).
  - Ntrails 10y ago
    I mean, yes it may have a lot of references to Boo.com but as I've never heard of Boo.com I think that your parent comment probably has some validity.
hxta98596 10y ago
I agree this was very interesting especially if it really only included just the brand name and the company's customer list: > "Nasty Gal preparing to sell its brand name and other intellectual property for $20 million" Was any remaining inventory included? Were the social network accounts included?... It's hard to judge a $20mm deal without knowing more info. But $20mm buys a lot of ads and other marketing campaigns. Also brands that target more specific age groups often have their brand name goodwill overvalued when bought. These companies must introduce themselves to a new younger batch of customers at a much higher cycle rate, which is hard to calculate for younger companies. There is a price for a brand name and a large instagram following, but $20mm (about a dollar per instagram follower for Nasty Gal) sounds very high.
- spaceflunky 10y ago
  According to the bankruptcy docs, NG had about $70M in top line revenue which they were generating a loss on. In an e-commerce business, the brand, url, and email list are the most valuable assets. Email lists are super fucking valuable, because emails convert to sales very well. No inventory was included in the deal. BooHoo is basically going to use their existing supply and fulfillment channels to sell their inventory on NastyGal.com. Basically NG, will just be a front more boohoo.com inventory.

alaskamiller 10y ago

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-state-of-fashion 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-amoruso-2013.html 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 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?

ghshephard 10y ago
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-lease http://www.kcrea.com/cre/louisville-ky-industrial-space-for-... It goes for around $5-$6/SF annually.
- alaskamiller 10y ago
  No, in commercial real estate when you say $30/sqft it's already annualized. That's 30 / 12 = $2.5/sqft/mo. Also you're looking at listings for 10k or less, at 500k space it's a very very very different game.
  - ghshephard 10y ago
    Wouldn't you get a break on larger warehouses versus smaller ones? Also, as a comparable, I'm checking out this: https://www.houston.org/newgen/17_Commercial_Real_Estate/17C%20W005%20Industrial%20Space%20Cost%20Comparison.pdf https://www.houston.org/newgen/17_Commercial_Real_Estate/17C... San Francisco (highest I could find) - is $34.32/sq foot/annually. So, applying your rule, one would pay $34/sq/foot/month. So - a typical 1500 square foot commercial office would be $51,000/month? Seems high even for San Francisco. If we instead divided by 12, $2.86/sf/month, then $4300/month for 1500 square feet seems within the realm of reason. How certain are you that these rates are already converted into monthly values? I found one monthly rate for Kentucky, 2,500 - 8,432 SF, $1,016 - 5,578 (Monthly). That would be $0.40/month - $0.66/month, or, multiplied by 12, $4.80-$8/year. Right within the expected range.
    - ghshephard 10y ago
      Here's good comparable with monthly and annual rates (it's big, modern): http://www.kcrea.com/listing/29969851/9101-Minor-Ln-Louisville-KY-40219 http://www.kcrea.com/listing/29969851/9101-Minor-Ln-Louisvil... 324,730 sq feet. $3.95 PSF/Annual or $106,890/month. $106,890 * 12 = $1,282,680/year / 324730 sq feet = $3.95/year/sq foot. And you get 35 Docks on 21 acres to boot.

monkeyprojects 10y ago

As someone who worked at Boo.com - escaping in Feb 2000 as its death become obvious to anyone, I don't think boohoo.com capitalises on boo.com - most people have never heard of boo.com..

headmelted 10y ago
Were I local to you (Northern Ireland, so I'm almost certainly not), I'd love to buy you a coffee and pick your brains about what that was like. I have to say though, boohoo.com quite clearly capitalises on boo's branding and history. In fact, if I'm not mistaken it originally mimicked the typeface and name of Ernst Malmsten's book about the boo.com story, which is kind of ironic given the circumstances. Book: http://t1.gstatic.com/images?q=tbn:ANd9GcTPf1rQbytroVo7SYUhV5xDvrJgiU4xFCGjWJfSRXUj10WSKAzc http://t1.gstatic.com/images?q=tbn:ANd9GcTPf1rQbytroVo7SYUhV... Boohoo logo (now): http://www.boohoo.com/content/ebiz/boohoo/resources/images/logo_m.png http://www.boohoo.com/content/ebiz/boohoo/resources/images/l... (To be fair, Boohoo have altered their branding over time but the similarities are still recognisable I think?).
- Ntrails 10y ago
  I mean, yes it may have a lot of references to Boo.com but as I've never heard of Boo.com I think that your parent comment probably has some validity.

hxta98596 10y ago

I agree this was very interesting especially if it really only included just the brand name and the company's customer list: > "Nasty Gal preparing to sell its brand name and other intellectual property for $20 million" Was any remaining inventory included? Were the social network accounts included?... It's hard to judge a $20mm deal without knowing more info. But $20mm buys a lot of ads and other marketing campaigns. Also brands that target more specific age groups often have their brand name goodwill overvalued when bought. These companies must introduce themselves to a new younger batch of customers at a much higher cycle rate, which is hard to calculate for younger companies. There is a price for a brand name and a large instagram following, but $20mm (about a dollar per instagram follower for Nasty Gal) sounds very high.

spaceflunky 10y ago
According to the bankruptcy docs, NG had about $70M in top line revenue which they were generating a loss on. In an e-commerce business, the brand, url, and email list are the most valuable assets. Email lists are super fucking valuable, because emails convert to sales very well. No inventory was included in the deal. BooHoo is basically going to use their existing supply and fulfillment channels to sell their inventory on NastyGal.com. Basically NG, will just be a front more boohoo.com inventory.