

Bouncing back from losing $20 million - dats
http://www.texasstartupblog.com/2008/08/04/layerone/

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

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byrneseyeview
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?

