On the heels of my last post, I came across this from Karen. I head about this yesterday from my co-founder on a drive up to San Francisco to meet with a micro-fund venture capitalist. Interesting. Yea, crash & burn, but is that because the business plan stunk, or just the way things work out, sometimes? Essentially, they were funding their rapid business expansion through cash incentives given to them by mall owners across the country eager to both lease space long term and to partake in a potentially hot new retail chain. Commercial real estate is quite a different animal from residential. Giving seemingly huge incentives can be very important to success.

Personally, I think it’s a brilliant idea that was probably botched in the execution and/or the business cycle went against them. You have only so many avenues to grow a company rapidly, and if you want to play in women’s clothing retail, that’s what you have to do. First you’ve got the initial investment in time, money and sweat from founders; then cash from friends & family if you’re lucky enough to have such access. Then you get seed capital, and eventually, venture capital in several stages or rounds. Perhaps some venture debt along the way. VCs are sharks, and they”ll grab your company if you don’t prevent it (your company valuation should dictate the venture investment). Steve & Barry’s may have had some or all of these elements, but what better way to grow a business than to have someone give you capital? Huh? Millions. And that’s a dumb play? Of course, those mall owners were taking a risk, too, one which will apparently not pay off.

For the 2003 fiscal year, which ended Jan. 31, 2004, when Steve & Barry’s had 31 stores, tenant-improvement payments totaled $17.5 million, according to documents reviewed by The Wall Street Journal. The payments jumped to $58.6 million the next year, the documents say. The peak came in the 2006 fiscal year, when the company received $122.3 million in payments, but spent only about $59 million to build out new stores, leaving about $63 million in unused cash, the documents indicate. From fiscal years 2004 to 2007, the company received $380 million of payments.

I have no argument with the frugal, always financially sound, risk averse people of the world. Their great great grandchildren will enjoy the companies they create. I just like ballsy entrepreneurs better, and I’d rather enjoy my creations now, or just keep trying for a big play. If timing were different and someone had injected some caution into that plan, like, “we can’t live on this forever, y’know,” it probably might have worked. Then Steve & Barry would be geniuses.