5 Things to Learn From The Nasty Gal Bankruptcy

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The trendy retail startup Nasty Gal spent years as a success story. Led by founder Sophia Amoruso, the company seemed to have a knack for picking items that women just had to have. Between that and a smart e-commerce strategy, Nasty Gal seemed unstoppable – or at least it did until November 2016 when the company filed for bankruptcy. Amoruso was celebrated for her unconventional background and Girl Boss persona, but there are some ways where conventional wisdom may have benefited her. While everything is clearer in hindsight, here are some things we think #GirlBosses (and other would-be entrepreneurs) can learn from the Nasty Gal bankruptcy.


1. A Bankruptcy Does Not Equal a Failed Business Concept

The important thing to remember is that bankruptcy does not necessarily equal failure. Sometimes, it is a smart move. "[Nasty Gal] was my first business and I got really far," says Amoruso. "Filing for bankruptcy is actually the most responsible decision for the business." If done right, the company could easily come back from all this, with a fresh eye on its structure and a little wiser for the wear.


2. It Is Possible to Grow Too Fast

Nasty Gal was "able to grow their sales very quickly," explains Allison Enright via The New York Times. "But you can always grow really fast and not make any money." The company posted sales of $10 million in 2010, which is impressive enough, but that figure had grown to almost three times that value ($28 million) by the end of the following year. By 2012, Nasty Gal's revenue topped $100 million. To keep up, Nasty Gal went on a hiring spree. In just two years, the company went from 40 employees to 280. Very quickly, the feeling in the company changed from friends and family working toward a cause to a more bureaucratic system -- and all the growing pains that came with it.


3. You Can Hire Management Experience

Don't be afraid to ask for the help you need. Danny Rimer, one of the lead investors in Index Ventures, a company that invested millions in Nasty Gal, has said that, in the year he worked with Amoruso, he noticed Nasty Gal lacked the management experience it needed to grow. "Since Sophia bootstrapped much of the business," says Rimer, "many aspects of the next stage of scaling are new to her." Index Ventures sent Tony Zappala, another investor with the company, to help bring Nasty Gal's operations to the next level -- but it was a case of too little, too late. Navigating growth, especially significant, exponential growth, requires business acumen and knowledge, so make sure your company has the components it needs for each phase of your journey.


4. Founder Does Not Have to Equal Manager

Also, pay attention to your role in the company. Just because you founded a company or pioneered a concept, it doesn't mean you have to be responsible for the day-to-day decisions. You can outsource any part of your job you don't like, including the management of your company. "I didn't love having eight people reporting to me and asking me over and over if we're hitting targets," says Amoruso. "I'm a creative. I'm a brand-builder. I'm a rainmaker. I'm a pretty good marketer, but that's not something I want to do every day."


5. Companies Can Survive Bankruptcy

After news of the Nasty Gal bankruptcy made headlines, Amoruso wrote a message to all her fans on Twitter: "A decade above the influence. Onward babies. I love you." And "onward" is right. The thing is, a bankruptcy does not mean your company is gone. It could actually help you get back on track. By filing for bankruptcy, Nasty Gal is going to have some help restructuring its debts and it's going to have a chance to address liquidity issues.

We, along with many others, are hoping for the best. Girl Power.