Is this for real? Any outsider could have seen that this model was unsustainable from the start, with the business buying tickets at full price and then selling them at an unlimited rate for $9.99. To claim ignorance here as an investor just seems negligent.
If that's how those investors fund their companies, I've got this nifty bag of magic beans they might be interested in... For $1M, they'll grow $2M in beans, I promise!
You are reinforcing my point. If you do that, it would be fraud, plain and simple. You would have to pay the investors back and you will spend a couple of years in prison. You can't show up to the court and say, but your honour, they should have known better. Well, you can, but it would not change the court's decision in your favour.
Communications with the investors is not a place to play loose. If you say we are profitable and you are not, or we are sustainable and you are not, or we have a buyer lined up and you do not, you would find yourself in a world of trouble.
We don't know the full story of what was said, and it is possible the defendants lied about factual content, but right now it just sounds like sour grapes.
That’s just wrong.
This is quite common. I worked at a telecom that sold 0.99 unlimited 1-day calling cards and we predicted would spend less than 1 hour on the phone. People spent an average of 2+ hours on calls which made the product lose money. And some people spent all day on the product.
They could only ever make money if they convinced the people that hardly every go to the theaters to sign up en masse, but even at $10/month they couldn't get enough of that demographic before their cash ran out.
It's not an entirely dissimilar premise as Netflix. If all of Netflix's users started streaming as much as the top quartile do, they'd probably be in a bind as well with the huge increases in bandwidth and server costs.
> It pays theaters full price for each ticket, whether a member visits once or 31 times a month. It has to provide for customer service to support those 1.5 million people, many of whom have lobbed valid complaints—MoviePass issues debit cards to each of its members, and initially couldn't keep up with demand—as the service struggled with its rapid expansion. And that’s on top of the usual, unglamorous costs of running any business. (Backends don’t maintain themselves.)