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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 spe
by edshiro 10y ago
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 poured $40M into this company. What were the reasons that motivated such a sizeable investment?
- spaceflunky 10y agoThe 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 employees that NG began to resale higher margin new clothing. When Index Ventures came along NG was profitable and their growth was impressive, therefore NG negotiated very favorable terms since they were well in the black. That said, Index was the only VC firm willing to make that investment. No other firms participated. Later on, all other venture capital NG received was in the form of very high interest, high risk loans. The problem was that when Amoruso got the money, she mismanaged that power and made horrible investments (she also pocked a lot of the investment from Index, buying a $5MM home, Porsches, and other luxury goods). She tried to shift away from what had made NG money in the first place, to high-risk vanity projects.
- Asparagirl 10y agoI 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 animal nasty boys to try to get a piece of the Nasty Gal deal.
- spaceflunky 10y agoComplete fiction. Most of that book is her posturing about how great she thinks she is. See statements about cult of personality.
- Asparagirl 10y agoI appreciate your taking the time to reply here. Working for toxic, crazy bosses is the worst. Unfortunately, I too speak from experience...
- deleted 10y ago[deleted]
- jdmichal 10y agoI'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.
- spaceflunky 10y agoIt 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.
- edshiro 10y agoCan't her investors sue her for mismanagement of assets? Or she just managed to take money off the table during the funding rounds, with investors approval as well. It's really upsetting to read about this kind of story. It seems that once the money poured in she completely lost it and thought she was the new Cleopatra. Money corrupts...