jswede wrote:GlenRiceARoni wrote:MrCheerios wrote:Doesn't cost enough to start it? It's already started. If he's already selling merchandise and taking pre-orders, he's got employees. Unless he's designed and maintained the website, designed the shoes, and doing all the bookkeeping himself the labor costs alone are probably a quarter million a year at the very least.
I had a small business with five full time and a handful of part time staff. None of my employees were college educated or highly trained, but wages alone approached $200k annually, not including benefits. There are tons of expenses in every business beyond inventory costs. And his employees are going to be much more expensive than mine were. Getting a business off the ground takes a lot of initial investment, even an online retailer. If you're at the point where you're ready to deliver product, you're invested for several hundred thousand.
Most people need to take out loans to start businesses. He's got his son.
Any business started with debt is a bad business. If the business is a good opportunity people want equity in it. Mark Cuban said that.
And he isn't hiring employees. He is most likely outsourcing the work or giving up a sliver of equity for people taking on roles and responsibilities.
I've worked in the venture capital arena. Your ideas of how startup companies work are way off base.
The only reason a startup company would take on debt is if they need to balance their corporate financing structure and lower their cost of capital. You take on debt on your balance sheet to use the interest on the loan to write off against early revenue. This business is just entering the revenue stage.
He's got plenty of capital to finance a website.
Matt Drudge runs his entire website out of a condo with one employee. A slightly bigger operation.
"Get Out the Way, Let the Real F. Ballas thru" - Juvenile
You have very little idea what you are talking about. Starting a company with debt is how you get rich. You keep the equity. Starting a company by selling ownership stake is how you get others rich. Do you see now why Mark Cuban said that?
Yo buddy. You don't take on debt if you don't have to unless its to offset revenue.
And of course you dont want to give up equity if you dont have to. Thats just the way things work.
When someone issues debt financing to a startup they take warrants so if the company blows up the people who took the risk financing them make out too.
"Get Out the Way, Let the Real F. Ballas thru" - Juvenile
