How a Hot $100 Million Design Startup Collapsed Overnight

Ultimately, Proenza’s fortunes unravelled for many of the same reasons so many of its peers are no longer in business: misallocation of funds, disagreements with investors, seismic shifts in the industry at large, and a fashion ecosystem that did a poor job of preparing young designers for the realities of entrepreneurship.

There are some phenomenal products in some of the companies that were overfunded and are haunted by past decisions. The valuations at which these companies raised capital set them on the wrong path - a path that fails to attract and reward critical talent, a path that incentivizes excess expenditure for growth at the expense of structuring a busine... See more

But this isn’t really a story about the consequences of raising too much venture capital, or even about branding. It’s mostly a story about a not-great business that never figured itself out — where customers spent too little and didn’t come back enough.

Perhaps the original mistake of the DTCs wasn’t in their vision, but in their decision to take the venture capital in the first place.

Don’t be a product visionary—or, worse, a product dictator. Your company shouldn’t be a cult of personality, building exclusively what you want on the timelines you decide. WeWork is one example of how that path leads to certain doom. Among the numerous excesses, questionable decision making, and lavish capital infusions based on little evidence th... See more

“If you look at our original business model with the verticalized law firm, a lot of these companies that have this kind of full stack model are not going to survive,” Kan explained. “A lot of these companies, Atrium included, did not figure out how to make a dent in operational efficiency.”