Two years ago, 30-something Sophie Amoruso was a poster child for Millennial business savvy. Her company reported $85 million in revenue for 2014. She had two successful books on the market. She was in talks with Netflix for a series about her life.
Now, Amoruso is out as CEO of Nasty Gal, and the company has filed for bankruptcy. Its brick-and-mortar stores will shortly close, and its online brand has been sold to a competitor.
Nasty Gal is one of many Gen Y-led startups that showed early promise before falling flat. Some would say that this example and other press-worthy failures like Elizabeth Holmes are evidence that this generation is still too young or immature to lead well, despite a few shining outliers like Zuckerberg and the Olsen twins.
These anomalies don't make a trend, however, and the overall stats are still to play out. But other would-be #Girlbosses and #Brobosses should certainly take the time to examine where their peers got it wrong. Here are some lessons that young entrepreneurs must learn in order to avoid Amoruso's missteps. Many of us old timers could stand to remember these, too.
1. Take the time to learn Finance 101.
That Amoruso didn't go to college isn't necessarily a strike against her. Many successful business leaders earned their diplomas in the school of life. But Amoruso made some very basic mistakes with investors' cash. An aggressive ad and marketing campaign boosted short-term sales (hence their 2014 success), but was not sustainable. Amoruso would have been wise to study all of the possible outcomes from this startup technique. Either books or savvy mentors could have shown her the true nature of the risks and kept her from fixating solely on the possible rewards.
2. Keep your hands on the wheel.
As Amoruso grew her company from eBay store to fashion empire, she began to attract as much attention as her hip company. Why not? She's smart, funny, brutally honest, and beautiful. She made savvy use of media interest, resulting in the opportunity to write and promote two popular books, Girl Boss and Nasty Galaxy, as well as negotiating a TV dramatization of her life. Unfortunately, the opportunity to grow her personal brand also distracted her from leadership responsibilities at the office. She was often gone for book tours and meetings. When she was there, partners and employees complained that her focus was often split. Amoruso's "distracted driving" of the company eventually resulted in demands that she give up the wheel. She stepped down as CEO in 2015.
3. Keep an eye on your cash.
The fashion business is all about image, so it's no surprise that Nasty Gal went all out for its flagship stores. But even during the company's biggest growth phase, most of the expert observers felt that Nasty Gal had built too big, too soon, and dropped too much cash in the process. Like many young professionals after their first big raise, the company did not commit to living within its means. When the revenue dropped off, they had no reserves to fall back on and no way to pay current debts. And unlike many 20-somethings, there was no way to move back into mom's basement.
4. Be there for your people.
Amoruso's first employees worked closely with her to build the company, and understood both her strengths and her weaknesses. There was loyalty and personal commitment on both sides. But as the circle grew larger, and Amoruso spent more time away from the office, her management style began to frustrate newer employees who did not know her as well. Eventually, even old friends began to feel she no longer had time to lead them. Her leadership skills did not grow with the company, so eventually, she stopped being the right person for the job.
5. Look beyond your crowd.
Amoruso's early success came from her personal style and great instincts about what young, cool, urban women liked. But as the company expanded to a much wider market, she and her team assumed that potential customers in other markets would want the same things. It turns out that the tastes of girls in Dallas or Manchester, New Hampshire might not be a perfect match with the ladies of L.A. The company did not act quickly enough to create new products, or to meet the price points those customers expected.