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A comment on Benchmarks for Startup Spend and Cash Burn. Parent comment

Re:Benchmarks for Startup Spend and Cash Burn by maneesh on Tuesday December 11, 2018 @04:11PM (#18658926)
Ahh, the dreaded Cash Conversion Cycle (or "Succeeding yourself to death") I'm a wearable device founder, and it's AMAZING watching how often this happens to my hardware friends. Especially once they begin raising serious amounts of capital.

I had a friend who got into Walmart -- he was ECSTATIC. His product was a smart electronics product, and quickly shot up to being a heavy seller.

It sold so well---that he was bankrupt within six months.

Why? Because he paid his supplier upfront. Walmart didn't pay him until 60 or 90 days after sell-through. After the first run, Walmart wanted more, his P&L (accrual) showed profit, so he took a loan. Then another. Then suddenly he couldn't get any more loans. And he couldn't get a hold of product. And because of his fixed costs, there was no way to future payables could save him.

So common, and no one seems to know about it.

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Re:Benchmarks for Startup Spend and Cash Burn by gautamnarula on Tuesday December 11, 2018 @07:10PM (#18660215)
What should he have done? Negotiated a 60-90 day payment cycle with his supplier?
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Re:Benchmarks for Startup Spend and Cash Burn by jacobush on Tuesday December 11, 2018 @07:40PM (#18660378)
Turn down the Walmart offer...
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Re:Benchmarks for Startup Spend and Cash Burn by ptd on Tuesday December 11, 2018 @08:39PM (#18660661)
Accepting the offer is selling your car for gas money.
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Re:Benchmarks for Startup Spend and Cash Burn by anoncoward111 on Tuesday December 11, 2018 @10:16PM (#18661102)
seeing "got into Walmart" used like "got into Yale" is so weird and strange to me that it reminds me how increasingly clumpy and centralized everything is becoming in the world.

Instead of a mesh network of equal nodes, we have a tree of exponentially larger nodes (from bottom to top)

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Re:Benchmarks for Startup Spend and Cash Burn by martinald on Tuesday December 11, 2018 @11:35PM (#18661419)
Sorry, why wouldn't you use invoice factoring to solve this problem? Unless margins are so low that the factoring fees would put him into a loss. You'd get very competitive rates against someone like Walmart.
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Re:Benchmarks for Startup Spend and Cash Burn by maxxxxx on Tuesday December 11, 2018 @11:36PM (#18661426)
I just read by the Nike founder and he describes how for many years they had massive problems keeping the business afloat despite growing like crazy.
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