Like many other dot coms, their day of reckoning came. They had grown to three thousand employees and the press release came out that they were laying oﬀ a third of their staﬀ. I got a call from their CFO assuring us that this was merely a “cost correction” and that it would result in a more rational cost structure. This is generally finance speak for “The shit is hitting the fan and we can’t cut staﬀ quick enough.” I thanked him for the call, and candidly communicated that while I understood he was calling to reassure us, we had to interpret the information that they were having financial trouble. I communicated that their outstanding balance would be immediately due and until we received payment, we would suspend shipping gift cards. He said, “I don’t control the accounts payable department.” I pushed back and said, “I don’t ship the gift cards, but I can get someone who does to stop shipping them.”
Part of this was prudent judgment on our part. Part of it was if they defaulted, it would be a huge blow to our cash flow. Lack of cash makes you bold. Without cash you don’t have options.