Another One Bites the Dust
Howard Marks
152

Yeah. Something is not right with the current model. The design through which capital is provided to promising companies is broken.

The inherent dependence on the VC’s and the limited amount of capital that can be supplied ‘is a design problem’.

Now you are suggesting that this company, Dot & Bo could have survived, even thrived if they could somehow raise capital directly from their existing customers and fans.

In an interview with recode.net, Soohoo mentioned “At the end of the day, the market was frozen over and the sector was out of favor, which is why we went the M&A route.”

The ‘sector’ was out of favor, because there was a limited amount ‘venture ’capital’ for it (that sector).

Now imagine if Dot & Bo could somehow raise three rounds from their fan base:

Round 1: $5 from one million supporters: $5 million.

Round 2: $10 from 500,000 supporters: $5 million.

This could have proven to be enough capital to not just sustain, but grow the business. Then an year and a half later, another round would have been raised:

Round 3: $20 from one million supporters: $20 million.

During each successive stage, the supporters would have been provided with a share in the company.

The company thrives and the shareholders make money by diversifying their portfolio.

It sounds like there are much more avenues of powering many ‘positive sum games’ via such a construct vs the zero sum games that may exist today. This is not the fault of individuals or constructs, it is a design issue.

So let’s design good systems that help create more positive sum games! And so companies like Dot & Bo do not have to fold up because their is a limited amount of supply available through the tap. When we can simply tap into a giant pipeline.