In January 2007 I commented (LINK) on the new clothing company, Nau, and said I hoped they could stay in business, unlike predecessor company Zoza (LINK). Well, they didn't. They're going bankrupt. Argument is essentially that "capital markets didn't get the opportunity". Wrong. I've made that argument before with companies in which I've been involved but you can't blame the capital markets. Rather, management didn't properly assess capital market conditions and cash conservation didn't sufficiently match burn rate.
Both Nau and Zoza burned through some $35 million before crashing. I'm slowly learning that if you're dealing in physical goods, which of course have a cost of goods, unlike software, you're going to be on a much more conservative growth trajectory. A dot.com or software growth rate and valuation should not be planned for or expected by management and investors. Sad. Really nice clothing (both Zoza and Nau). Visions of environmental sustainability for the products. Too bad fiscal sustainability didn't make itself felt in the business model. I'll continue to wear my Zoza and my Nau and hopefully learn from these lessons.
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