Correction: HR head Allison Rutledge-Parisi is still with Fab.
It’s a new year, and Fab CEO Jason Goldberg has evidently decided it’s time to come clean about what’s really going on at Fab. The company was doing great—until it wasn’t. The company has laid off more than half of its workforce, lost several long-term execs—including its own co-founder—and now it looks like it’s paring down its European business to just custom-made furniture.
As is his wont, Goldberg took to his blog to explain why he made the choices he did.
“The decisions I made in the back-half of 2013 and the changes that resulted from them will enable Fab to be more customer focused, more resource efficient, and more long-term successful as we execute on our 2014-2017 plan,” he explained.
He goes on to write:
“When I made the difficult decision to cut expenses at Fab in mid-2013 I had essentially two options in front of me: keep growing at the pace we were growing and hope I could raise even more money down the road, or scale back and control our own destiny. I chose the latter. Yes, it is my fault for getting us in such a position in the first place, but the go forward decision was rather simple. I didn’t want to ever get in a position where we were desperate for cash. With a $1B valuation we have a lot to prove. We now have the money and ample time to prove it.”
In other words, Fab was burning through cash too quickly.
The company has raised $336 million since 2010, including a $150 million round last summer (which turned into a $165 million round two months later) at a pre-money valuation of $1 billion. The layoffs began almost immediately thereafter, starting with 100 employees at Fab’s Berlin office—ostensibly to consolidate operations in New York. That was followed by another round of layoffs…and another…and several executive cuts, until Fab’s workforce was whittled down to 300 from 700.
In the process, Fab lost its chief product officer David Paltiel, head of Fab’s custom furniture business Matt Baer, merchandising executives Grace Glenny and Tracy Doree, Fab’s head of user experience Devin Flaherty (who resigned), and chief operating officer Beth Ferreira. The company also lost its co-founder, Bradford Shellhammer, as it transitioned away from a flash sales model to a more traditional e-commerce model.
Goldberg’s blog post doesn’t betray any real sorrow over the losses. He acknowledges them and says the cuts were “painful,” but that they were necessary to ensure the success of the company. The post seems to indicate that Goldberg will be cracking down hard on the remaining team from here on out. He says he's going to travel less so he can be more present in the office to oversee operations. And then there's this passage:
“You know that saying, ‘Hire people who are better than you at what they do and then step back, get out of their way, and let them to do their jobs?’ — it’s wrong. The more correct way is: Hire people who are better than you at what they do and then roll up your sleeves and work with them and challenge them everyday.”
Yikes. That actually sounds…awful.