Burn Rate Denial Until the Doctor Arrives

“back. This would give us some more cash to play with. But it was only a stopgap. We were now burning an average of $10 million a month.”

“Once we had finished the letter, Edward, Jay and I stayed on to discuss exactly what our restructuring ‘scenario’ would entail. At some point a banker from J.P. Morgan’s New York office, Alexander Fuchs, who had been involved in putting together the private placement memorandum, stopped by and stayed most of the evening. This was the nearest bankers came to being doctors. I half expected him to be wearing a stethoscope. “You’ve got to get your burn rate right down,’ he advised, ‘and cut your staff by 50 per cent. This is your last chance to get your cost structure in shape.’ His point was that because of the five months’ delay in launching our site, we had a very high burn rate which our early revenues did not support. As it would take some time to ramp up revenues, it was vital in the interim to address this imbalance if we were to avoid scaring investors off.”