4 ms·

The scourge of private equity claims another victim.

snapcaster 2y ago
Is this fair? I mean, i'm not saying PE didn't accelerate demise or something but this business model is so doomed it doesn't seem fair to blame PE
- notcancer 2y ago
  Yeah, selling goods at a store is so 2006. Everyone knows the only real businesses left are memecoins, SaaS, and consulting. Everyone else should get a real job.
  - snapcaster 2y ago
    I wasn't saying it was doomed because it's brick and mortar retail. I was saying it was doomed because 100% of the people i know who are into this stuff have shifted to buying online. Arts and crafts require a really long tail of different varieties of things it's a particularly hard retail business imo
- Blackthorn 2y ago
  Well let's see, without PE they wouldn't have been loaded with absurd debt. So... Yeah, this bankruptcy is absolutely fair to blame pe on.
- jordanb 2y ago
  Every time PE wrecks a company their excuse is "it was doomed anyway." That's not a falsifiable statement, except then you look at competitors that weren't wrecked by PE and they're doing fine. The entire original "retailpocalypse" was an orgy of PE in retail. If you wanted to know which retailers were going to survive all you had to do is look at the ownership.
- GeekyBear 2y ago
  If you are the kind of person who is entertained by making your own clothing, you're probably also entertained by seeing and selecting the materials that go into your projects. It's no more an obsolete business model than something like a Bass Pro Shop. It's just a different hobby.
  - snapcaster 2y ago
    This is a good point, maybe i'm too pessimistic on these sorts of businesses
alephnerd 2y ago
The economics of a big-box single dedicated store for hobbyists a la Joann's doesn't work anymore. The textiles industry is almost entirely outsourced, and the margins of being a middleman like Joann's doesn't work when imports are growing expensive AND online stores can sell similar products at a lower price, and your prices are roughly comparable to the local mom-and-pop. Furthermore, assuming it's PE that causes companies to fail is a reversal of cause and effect. You sell to PE when your company or organization's "gas" is largely spent, and there is no foreseeable growth, so you cannot raise money traditionally. For every Joann (stripped for parts by PE) you can also point to a Sailpoint (taken private by a PE and now one of the first IPOs in 2025)
- notcancer 2y ago
  Call me old-fashioned, but maybe craft stores don't need infinite double-digit growth.
  - alephnerd 2y ago
    Then why should I (or my 401K provider) put my money in Joanns? And this is why companies get sold to PE - traditional investors are investing to make money. If an asset isn't making money (eg. Joann's), you invest elsewhere (eg. Alphabet). And if you're on HN, you probably have a 401K or IRA and are also enabling this, so cut the "holier than thou" BS.
    - wrs 2y ago
      If Joann’s doesn’t grow then why does it need your investment?
      - alephnerd 2y ago
        A company like Joann's still need to service debt, salaries, inventory, maintainance, etc. If revenue remains flat or grows at a lower rate than COGS, then you need an influx of capital to manage this. But this is a bum deal in a lot of cases.
selectodude 2y ago
It was really the first round of tariffs on China. They were competing against a bunch of Chinese drop shippers operating under the de minimis exception. They were paying more for yarn wholesale than you were paying to get it sent to your door because of the tariffs.
- GenerocUsername 2y ago
  I want this to make sense... But that doesn't make sense. Wouldn't the chinese dropshippers be hit with Tariffs
  - infecto 2y ago
    de minimis refers to the Section 321 exemption, which allows shipments valued at $800 or less to enter duty-free and without formal customs entry

Is this fair? I mean, i'm not saying PE didn't accelerate demise or something but this business model is so doomed it doesn't seem fair to blame PE

notcancer 2y ago
Yeah, selling goods at a store is so 2006. Everyone knows the only real businesses left are memecoins, SaaS, and consulting. Everyone else should get a real job.
- snapcaster 2y ago
  I wasn't saying it was doomed because it's brick and mortar retail. I was saying it was doomed because 100% of the people i know who are into this stuff have shifted to buying online. Arts and crafts require a really long tail of different varieties of things it's a particularly hard retail business imo
Blackthorn 2y ago
Well let's see, without PE they wouldn't have been loaded with absurd debt. So... Yeah, this bankruptcy is absolutely fair to blame pe on.
jordanb 2y ago
Every time PE wrecks a company their excuse is "it was doomed anyway." That's not a falsifiable statement, except then you look at competitors that weren't wrecked by PE and they're doing fine. The entire original "retailpocalypse" was an orgy of PE in retail. If you wanted to know which retailers were going to survive all you had to do is look at the ownership.
GeekyBear 2y ago
If you are the kind of person who is entertained by making your own clothing, you're probably also entertained by seeing and selecting the materials that go into your projects. It's no more an obsolete business model than something like a Bass Pro Shop. It's just a different hobby.
- snapcaster 2y ago
  This is a good point, maybe i'm too pessimistic on these sorts of businesses

alephnerd 2y ago

The economics of a big-box single dedicated store for hobbyists a la Joann's doesn't work anymore. The textiles industry is almost entirely outsourced, and the margins of being a middleman like Joann's doesn't work when imports are growing expensive AND online stores can sell similar products at a lower price, and your prices are roughly comparable to the local mom-and-pop. Furthermore, assuming it's PE that causes companies to fail is a reversal of cause and effect. You sell to PE when your company or organization's "gas" is largely spent, and there is no foreseeable growth, so you cannot raise money traditionally. For every Joann (stripped for parts by PE) you can also point to a Sailpoint (taken private by a PE and now one of the first IPOs in 2025)

notcancer 2y ago
Call me old-fashioned, but maybe craft stores don't need infinite double-digit growth.
- alephnerd 2y ago
  Then why should I (or my 401K provider) put my money in Joanns? And this is why companies get sold to PE - traditional investors are investing to make money. If an asset isn't making money (eg. Joann's), you invest elsewhere (eg. Alphabet). And if you're on HN, you probably have a 401K or IRA and are also enabling this, so cut the "holier than thou" BS.
  - wrs 2y ago
    If Joann’s doesn’t grow then why does it need your investment?
    - alephnerd 2y ago
      A company like Joann's still need to service debt, salaries, inventory, maintainance, etc. If revenue remains flat or grows at a lower rate than COGS, then you need an influx of capital to manage this. But this is a bum deal in a lot of cases.

selectodude 2y ago

It was really the first round of tariffs on China. They were competing against a bunch of Chinese drop shippers operating under the de minimis exception. They were paying more for yarn wholesale than you were paying to get it sent to your door because of the tariffs.

GenerocUsername 2y ago
I want this to make sense... But that doesn't make sense. Wouldn't the chinese dropshippers be hit with Tariffs
- infecto 2y ago
  de minimis refers to the Section 321 exemption, which allows shipments valued at $800 or less to enter duty-free and without formal customs entry