A recurring pattern that seems to show up again and again in business: expansion is dangerous, and everyone really only learns this through pain.
This relates well to Alex Hormozi’s idea of “More, better, new” as a framework of prioritization when growing a business.
His idea is that you should first try to do more of what is already working, which is usually just scaling your existing marketing channels. Then, if more isn’t working, you try to improve it (both the product or the process). And only if both of these aren’t helping growth then you should try something new. This case illustrates why “new” is so dangerous, it comes with way more unknowns and uncertainties. Whereas just scaling or improving your processes/products can be done incrementally and with less big bets.
But of course the hard thing about business is that you have to take big bets. I think it’s worth noting that every businessperson I’ve ever read about who had a near death experience from expansion eventually learn to expand safely (in the sense that their future expansions would not have killed the company even if it goes badly).
Estée Lauder did a lot of expansion later on, and they never made the cash flow mistake again. Ditto for Amazon, and for my boss, and, well, Danny Meyer learnt from his dad, I guess, so never suffered it directly.
And of course there’s selection bias going on here — those who died and could not come back did not? — but survival is the point.