
Fab Lays Off One-Third of Global Headcount, Slashing New York City Staff - ILIKEPONIES
http://techcrunch.com/2014/05/21/fab-lays-off-one-third-of-staff-from-new-york-city-office/?ncid=twittersocialshare
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scottfr
Remember the CEO's idiotic (and apparently now deleted) blog post: "It's a
fucking startup, why are you here" [1].

I guess 1/3 of the staff couldn't come up with a good enough answer. It's a
shame they're the one's getting axed and not the CEO.

[1] [http://www.fastcompany.com/3029439/most-innovative-
companies...](http://www.fastcompany.com/3029439/most-innovative-
companies/fab-ceo-sent-this-terrifying-memo-in-a-bizarre-attempt-to-rally-hi)

~~~
adventured
Management demolishes $300 million in venture capital, employees get axed
instead.

~~~
jpatokal
Most of that $300 million was spent on salaries for employees.

~~~
nerfhammer
How much of it was spent on salaries for managers?

~~~
tptacek
If most of the employees are technical, and the company is run like a typical
tech company (ie, with too much middle management, but not headcount literally
dominated by them), then line employee headcount costs likely dwarf those of
management.

That is one reason why executive compensation can get so outrageous; if you
have a lot of employees, most singular expenses become rounding errors.

------
ChrisNorstrom
EDIT: Experience with Fab is based on December 2012 - March 2013.

When I sold through them as a vendor I remember Fab being extremely
inefficient in nearly everything they did. I had to email a good 3-5 people to
get anything done because nothing was automated. From shipments to payments to
setting up the sale to uploading media and printing out orders and postage.
Everything was done manually by emailing someone and yes there were mistakes.

I had to use excel, save the file they emailed, and email it back to them just
to set up a proposal for a sale. Yes, Microsoft Excel. And they sent any type
of instructions in PDF formats.

They also used some really expensive shipping options even though I had
cheaper alternatives and was doing fulfillment myself. I had to manually sign
up for a UPS account and get approved to have them charged and all sorts of
nonsense. They also wanted me to set up a UPS pick up ($8) every day. With
their margins I just don't understand how they made money. Apparently they
weren't which is why things got bad.

And their marketing was just such a waste at times. They'd mail a 3 sided
folded postcard on extremely thick paper with only 3 random items on it (that
weren't even interesting) and their "Fab, Smile, you're designed to" logo.
They did a terrible job advertising and it all lacked thoughtfulness.

Their in-house fulfillment team used custom boxes that were printed in all
BLACK ink and on top of that had printing on the inside with their logos and
catch phrase on the inside and out. I have never in my life seen shipping
boxes that expensive used to ship an item.

EDIT: I'm not saying they weren't nice to work with, they were all extremely
pleasant, just the system of doing things was very inefficient. Rather than
emailing me so many different forms and PDF instructions they could have
linked to them on the FAB control panel. It's the CEOs job of ensuring the
systems a business uses are efficient and it seems that's what destroyed them.
Wasting money.

~~~
mtgentry
Sounds like early days to me. Using Excel makes sense if you're a startup
still figuring out what best practices are for fulfillment.

Fab was good to me on all fronts.

~~~
eli
Meh, there are hedge funds powered by Excel.

------
hkmurakami
Totally thought this was a semiconductor fab layoff and was utterly perplexed
by the NYC location. "Fabulous" makes more sense.

~~~
dbcooper
As did I. I was getting very worried about the next two nodes from IBM and
Global Foundries. ;-)

~~~
hkmurakami
Yup, totally thought that this was an IBM related thing, and that the "C" part
of NYC was a typo!

------
mtgentry
As someone who sold on Fab in the past, I wish them the best. They always
treated their vendors well and their operations team was top notch. Hopefully
they'll figure it out.

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aresant
I bought some stuff around Christmas and then got spammed out of love with
them.

I had no idea that they had made another pivot from the flash-sales site I
signed up for.

Checking out their current homepage and seeing them "reimaging" sofas as their
new business does not give me a lot of faith that they're going to have a
happy ending.

~~~
goatforce5
Before they were a flash sales site, they were a gay social network:

[http://www.fastcompany.com/1835757/fabcom-ready-set-
reset](http://www.fastcompany.com/1835757/fabcom-ready-set-reset)

------
abraham_s
The CEO was in news for being mad at someone who didn't switch seats with him
on a plane.

[http://www.businessinsider.com/fabcom-founder-baffled-by-
pas...](http://www.businessinsider.com/fabcom-founder-baffled-by-passenger-
who-declined-100-to-switch-seats-with-him-on-plane-2013-7)

------
jtchang
Competition has really heated up since the last time I checked out Fab.

It strikes me that this news is the first time I've heard about what Fab was
up to in a long time. I can't really think of anything that would make me go
"oh...let me go check out fab.com and see if they have it". This is unlike
groupon which seems to have spent an ungodly amount of money (in a good way)
in marketing and positioning.

~~~
kosei
Always seemed to me that Fab should have spent their money on marketing and
positioning, trying to put themselves as a major internet retailer for fashion
and modern, high-end living. Instead it appears that they went out of sight,
out of mind for many.

~~~
billmalarky
Most of Fab's growth was actually driven by high spending on marketing and
positioning.

[http://www.entrepreneur.com/article/230081](http://www.entrepreneur.com/article/230081)

Search for "what went wrong"

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iamleppert
Enough moves like this and nobody is going to want to work for this company.
Enough moves like this and the CEO (Jason), a huge pre-madonna and drama
queen, is going to have a tough time getting money from investors for his next
"venture". Kudos for him for trying, but he certainly strikes me as a CEO I
wouldn't want to work for.

~~~
md224
Just a quick note -- and don't feel bad, this is a common mistake -- the
phrase is actually "prima donna", not "pre-madonna".

~~~
twic
Perhaps he really was comparing Mr Goldberg to a young Mary of Nazareth? I
confess that the point of such an analogy eludes me. Something to do with
carpentry?

~~~
md224
Not sure if you're just being snarky, but I would assume people who write
"pre-Madonna" are under the impression it's a reference to the pop star (which
sort of makes sense).

~~~
ForHackernews
It's an excellent eggcorn, at any rate:
[https://en.wikipedia.org/wiki/Eggcorn](https://en.wikipedia.org/wiki/Eggcorn)

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amac
The private label strategy, though appearing as a last resort, does make some
sense i.e gross margins improvement. I think this serves as a lesson to those
folks operating with primarily or even just operating partly in ecommerce.
That is, if you're selling other people's stuff it's an efficiency play whilst
if you're selling your own stuff, you've got more room to maneuver with
margin.

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clamprecht
Anyone remember Jobster.com? Same CEO as Fab.com now.

