How Fab Raised $40 million with a lot of data and not much pain | Hacker News Reader

How Fab Raised $40 million with a lot of data and not much pain

betashop.com

89 pointsbetashop19 comments

This approach works brilliantly if:

1. You trust your potential investors. Curate your shortlist through your network and aim for the best of the bunch. Emphasize your network's recommendations rather than chasing name-brands.

2. You have real data. Most applicable for growth rounds. Doesn't apply to most seed / Series A rounds unless you're really kicking ass early

And you will not find a VC who wouldn't be thrilled to hear of this approach. Saves time and adds extra depth to those in-person discussions.

If you've got incredible data, by all means sell with it.

But FAB.com was never going to have to "go through the typical dog and pony show"

They're crazy hot.

There's "no doubt that [they'll] hit $100M in revenue fairly soon"

Remember the story about Zuck showing up in a bathrobe?

When you're the hot chick, you don't have to play by any rules.

What is Fab.com? The article didn't explain and the site is apparently by invitation only.

It looks like another site selling designer goods on sale. I signed up with a disposable email, but I was not immediately given an invite. I was shown upcoming sales though. http://www.samplesalesites.com/2011/12/thursday-1215-online-... has a list of upcoming sales.

For example they will have a designer clock for sale later. http://diamantinidomeniconi.it/clocks/Plex-Led

I'm sure there is a market for the site, but I'm definitely not in it.

Not exactly. It isn't like a Gilt or whatever. Its closer to an Ikea. Most of its products are small, not too expensive, and not clothes or furniture. Their schtick is, as it said in the article, design. Example: they were selling these for like $6 http://helveticards.uberdm.com/

"Remember the story about Zuck showing up in a bathrobe?"

The movie version ends with that investor investing in Facebook. In the real-life version, they never did invest, and Zuckerberg now says he feels very badly about the whole incident.

$100 million in revenue... did they calculate that using Groupon accounting? meaning the retail price counts as revenue, even though it's sold at 50-70% off? And if they're selling stuff for other companies, then isn't the commission just the revenue, nothing more? I can't help but wonder if these numbers they quote are just greatly exaggerated.. I mean, they barely have a million members right now, and they can't all be buying stuff everyday.

I'm not sure if they are counting the retail price as revenue instead of the price they sell to their customer at. Where do you get this impression from?

I've been on Fab for a while now. I love the site, and have purchased a few things from it. That said, it's still a niche site. I'm a little confused as to how they are going to use a $40 million dollar investment. Is this to give them the ability to buy better deals from suppliers?

Looking at RJ Metrics, $500/Mo for their cheapest plan is bit pricey.

Crazy expensive for a small startup. But the OP is an investor in RJ Metrics, so of course it's the bee's knees to him.

The Fab mobile app is pretty sexy on iOS. I haven't seen many apps that get me excited about mobile shopping, but this one always has me giddy about what cool items they'll dig up next.

can someone please answer me why companies like this need to raise money? when they were already on a run-rate to hit $100MM? soon?

They're going to hit $100M in revenue; that's not profit. Their margins at their current size might be low. If they want to grow to $400M in a couple years, they have to spend a lot of money quickly. Particularly if they have low customer acquisition costs, but it takes 2 years to realize the full lifetime value of the customer, they would be foolish to wait for the money to come in via profits.

In addition to needing more money to grow quickly, you don't want to underestimate the power of having Andreesen Horowitz or any strong investor in your corner. Look at YC, for example. $20k is nothing compared to the real value they generate through their connections and other benefits. Top tier VCs are the same - providing connections, advice, guidance, keeping you focused, and helping you navigate things in the future like more funding, an IPO, etc., things they've done many, many times, and perhaps Fab's founders never have.

anybody else use RJ Metrics? Any thoughts?

Test RJ Metrics, Mixpanel and KISSMetrics for your web apps. Lots of small nuances in all three. RJ tends to be strongest in ecommerce in particular

By just throwing the RJ Metrics data at the VC's like that, aren't you asking them to do a lot of extra work that they shouldn't have to?

Wouldn't it be better to prepare some sort of story for you data, present that to them, then say, "Don't just take our word for it, take a look at the data for yourselves"? That way, they're sure not to miss the major components that differentiate your company.

(I obviously am no expert on this.)

If you are a startup with close to $100M in revenues in someways you want the investors who are willing to do the work themselves. Early stage companies need to sell a story. More established ones want investors who understand the story they are already telling.

This advice is solid but I'd think that there are very few companies which it fits.

Data speaks volumes at any stage. Fab is an extreme example though stating key metrics upfront goes a long way in capturing interest. If you're looking for a seed round to build metrics, at least show that you know which metrics to optimize and that you have a detailed plan on how to test & refine them

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