Lawsuits unleashed
The risk of failure is inherent to entrepreneurialism. But Brandon Apparel's tanking yielded a series of lawsuits. A lender, Johnson Bank, sued Lefkofsky and won a default judgment of $11 million. The former owner of Brandon reportedly sued the company, as did National Football League Properties and Major League Baseball Properties. The city of Columbus, Wisc., loaned Brandon $750,000 to create jobs in the city, but the company closed the plant not long after getting the loan and the city was forced to write off the loan. "They basically bailed out of Columbus, and that seems to be their ongoing tactic," Columbus's city attorney said at the time.
In March 1999, Lefkofsky and Keywell founded Starbelly.com, which sold promotional t-shirts and coffee mugs. In August 1999, Starbelly raised $8 million from Chase Capital and Flatiron Partners, a deal that valued it at $32 million -- even though the company was on track to post a $2.5 million loss on $183,000 in revenues during its first six months of operation. In January 2000, Ha-Lo Industries, a promotional products company with five decades of experience, bought Starbelly -- now ten months old -- for $240 million. (Credit Suisse, one of Groupon's underwriters, advised Ha-Lo on the deal.)
The risk of failure is inherent to entrepreneurialism. But Brandon Apparel's tanking yielded a series of lawsuits. A lender, Johnson Bank, sued Lefkofsky and won a default judgment of $11 million. The former owner of Brandon reportedly sued the company, as did National Football League Properties and Major League Baseball Properties. The city of Columbus, Wisc., loaned Brandon $750,000 to create jobs in the city, but the company closed the plant not long after getting the loan and the city was forced to write off the loan. "They basically bailed out of Columbus, and that seems to be their ongoing tactic," Columbus's city attorney said at the time.
In March 1999, Lefkofsky and Keywell founded Starbelly.com, which sold promotional t-shirts and coffee mugs. In August 1999, Starbelly raised $8 million from Chase Capital and Flatiron Partners, a deal that valued it at $32 million -- even though the company was on track to post a $2.5 million loss on $183,000 in revenues during its first six months of operation. In January 2000, Ha-Lo Industries, a promotional products company with five decades of experience, bought Starbelly -- now ten months old -- for $240 million. (Credit Suisse, one of Groupon's underwriters, advised Ha-Lo on the deal.)
