Know your margins like the back of your hand

Danielle Morrill had another heart wrenching post about failure today.  This time instead of breaking down her own company’s failure, she dug into the failure of one time Silicon Valley darling Ecomom.

This analysis is even more heart wrenching since the founder and CEO of Ecomom recently committed suicide, which some attribute to the companies failings.

Danielle’s main point in her blog post rehashing the failure of Ecomom is that basic business math should have signaled to top management and investors that it was on a doomed trajectory.  The company was growing revenue with negative margins (selling a dollar for fifteen cents), and there is no excuse for not knowing when your margins are unsustainable.

Danielle states:

operating the business in a way that will ensure its survival is your #1 priority. Sexy top line numbers might get you a pat on the head or line the pockets of the sales guy, but strategic long term thinking by professional managements wins every time (even when it fails).

Read the full blog post here for more analysis of the Ecomom situation.

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