
PCH International in Talks to Buy Fab for $15M - nikhilpandit
http://techcrunch.com/2014/11/20/pch-international-in-talks-to-buy-fab-for-15-million/
======
jackgavigan
At first glance, it may seem like a startup that raised >$300m is selling
itself for $15m but that's not the case at all. Earlier this year, Fab
effectively pivoted from selling stuff designed and manufactured by other
companies to designing, selling and manufacturing - and the other those words
are in is significant - their own products (i.e. vertical-integration)[1].
That pivot was given a new brand (Hem.com) and it looks like the old Fab brand
and business are being sold off, and the focus is now on Hem which, I presume,
has the same shareholders that Fab had.

1: www.digitaltrends.com/home/hem-new-venture-fab-like-ikea-customizable-
furniture/

~~~
jgalt212
Yes, I'm sure the deal was structured so that Andreesen Horowitz and other
late stage investors won't have to take an immediate 99% loss on their Fab
investment.

------
001sky
At first I was confused on who these guys were.

[http://techcrunch.com/2013/07/29/just-fab-sues-fab-over-
trad...](http://techcrunch.com/2013/07/29/just-fab-sues-fab-over-trademark-
infringement-unfair-competition-and-more-fab-says-it-will-aggressively-defend-
our-brand/)

Two founders with the same last name

found companies with the same corporate name.

Not to be confused with "JustFab"[1]

_____________________________________________

[1] _Why can a scam company raise $40 Million Series C + $76 Million Series
B?_

"[https://news.ycombinator.com/item?id=6455391"](https://news.ycombinator.com/item?id=6455391")

[http://www.matrixpartners.com/entrepreneur-
stories/adam_gold...](http://www.matrixpartners.com/entrepreneur-
stories/adam_goldenberg/)

(Obligatory reply from VC is below)

[https://news.ycombinator.com/item?id=6455575](https://news.ycombinator.com/item?id=6455575)

Turns out they are litigating the names

~~~
creamyhorror
Were JustFab ever legally punished for their deceptive "payment" process? I'm
guessing not. Their current site now shows regular and membership options
(like they did on their German site 1-2 years ago), but they still don't state
it's a subscription up-front or in the costs box.

------
drinkzima
I don't mean this in a negative way, but how does a CEO retain control through
a fall from $1B+ to $15M? Isn't that endemic of significant mismanagement, at
least in expectations?

~~~
antr
IMHO, it can go both ways. It can definitely be mismanagement, but it can also
be mismanagement by the VCs who have outbid each other on a "hot" company. To
a large extent it is the CEOs role to maximise capital raised while reducing
shareholder dilution.

I don't know the specifics of Fab, but from the outside it can be anyones
responsibility. Fab was valued at $1bn because investors paid that valuation,
so I'd be curious to see how Fab was pitched at the investment committee in
each of the VC shops during the C + D rounds: Andreessen Horowitz, Atomico...

------
dangoldin
A bit bittersweet for me. I had a failed startup a year ago where we were
trying to connect consumers with local woodworkers and metalworkers. At the
time, we attributed our lack of success to Fab and their ability to convince
consumers to focus on discounts. We had a ton of other reasons for failing but
ecommerce, especially for higher ticket items is extremely difficult and
definitely sucks that they didn't make it work. On an abstract level I feel
validated that their model didn't succeed but I also sympathize with the
founders and the rest of the team. Hopefully they learned a ton and land on
their feet.

~~~
aaronbrethorst
I'm sure Jason will be just fine.

[http://www.geekwire.com/2012/lessons-learned-jobster-
jason-g...](http://www.geekwire.com/2012/lessons-learned-jobster-jason-
goldbergs-fabcom-lands-105m/)

~~~
dangoldin
Not so much worried about him - more the rest of the team but hopefully they
learned a ton during the experience.

------
adventured
I'm always curious what goes into a decision to sell at all in a situation
like this.

$336 million raised, sold for $15 million

Is there actually a good reason to bother to do that?

Whatever the case, this is one that'll be referred to with the market bubble
of 2012-2014 (along with perhaps Twitter's former $48 billion market cap,
Zynga's $15b valuation, the insanity that surrounded Groupon and its $20b
valuation, and so on).

~~~
001sky
No idea about this specific case, but the assumption of liabilities may or may
not be involved. There are also some ethical considerations about keeping jobs
in a going concern (however minimal), and some PR considerations about
liquidation, etc. It wouldn't be out of order for a company with $300MM in
funraising to have $15mm in misc. liabilities.

------
dmamills
I always really enjoyed the products Fab procured, but most of it was way
outside my price range, and now they have pivoted to hem, where they sell this
table ([http://hem.com/en-gb/product/bento-dinner-table-
long-10022](http://hem.com/en-gb/product/bento-dinner-table-long-10022)) for
~1200$ USD

~~~
mikeyouse
Oddly, the table is priced identically in Euros and Dollars ($999 and 999€).

~~~
wheels
That's fairly common. German prices include 19% sales tax.

------
adaml_623
"Fab has seen some drastic changes in its 3 years of operation. It started out
as a dating site for the gay community and then relaunched as a flash sale
site for home decor. Fab announced just six months after the pivot that it had
grown its membership to 2 million, "

Is that stretching the definition of pivot just a bit too far?

------
fraserharris
Fab Inc is selling off what remains of the Fab brand & website(s). This should
not be a surprise to anyone given they pivoted to Hem in Sept:

[http://techcrunch.com/2014/09/29/hem-fab-europe-
furniture/](http://techcrunch.com/2014/09/29/hem-fab-europe-furniture/)

------
rattray
I had the pleasure of visiting the PCH Shenzen office recently. Surprisingly
cool company. Through an accelerator they help make some interesting products,
including Navdy.

Quite curious to see what they'd do with the Fab brand.

------
jpeg_hero
oww.. the half-stock/half-cash is the insult to injury.

nastygal, modcloth (well funded ecommerce) also having tough time.

good reminder that 1) ecommerce is hard and 2) vanity metrics on ecommerce is
an order magnitude larger than most many entrepreneurs think:

"$10 million in goods sold this year" \--> not at scale

"$1.5 million sold a day" \--> still not at scale!

~~~
001sky
CEO _“It’s not that hard to build a $100 million revenue e-commerce business,
but how do you scale ... "_

er, yep that's not good.

