The ongoing struggles of Karmaloop have been well-documented, from initial reports that the company was filing for bankruptcy to the speculation that Kanye and Damon Dash would be straight up buying the company. The Boston Globe, who has been on the beat covering the company, went inside Karmaloop to see where things went wrong. Like many companies who blew up fast and quickly flamed out, it seems that the 'Loop bit off a little more than it could chew in a series of failed projects.
After growing to more than $125 million in annual sales, the vision to build a company that touched more than just clothing became too strong, it seems. There was the ambitious attempt to start a television channel in the same vein as MTV that ended up costing $14 million and not once airing a show. Then, the fact that not a single investor of the 280 Karmaloop approached in the past two years provided any funding to the struggling company became a red flag according to The Globe.
Karmaloop's side projects like Boylston Trading Co. and MissKL popped up and promptly folded, costing even more money. According to the bankruptcy materials, it was $100 million in debt at the time of filing, $19 million of that owed directly to vendors. While Karmaloop still brought in $80 million last year, that amounted to just a third of its 2013 numbers. The bankruptcy materials also break down just how much it still owes to vendors: more than $155,000 to Vans, more than $313,000 to 10.Deep and more than $586,000 to Huf. (No word on how much of that number is due directly to weed socks, but ayy 4/20 blaze up, fam.) This is, of course, not to mention the many smaller brands owed less money that they probably won't ever end up receiving, as the bigger companies typically come first.
Now, Karmaloop will be up for auction next month as part of its bankruptcy process, the starting bid set at a paltry $13 million. We'll see if anyone takes the bait.