Fab Lays Off One-Third of Global Headcount, Slashing New York City Staff | Hacker News Reader

Fab Lays Off One-Third of Global Headcount, Slashing New York City Staff

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68 pointsILIKEPONIES46 comments

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...

> why are you here

To get fucking fired by incompetent blowhards apparently.

That appears to be the norm with most startups, and companies for that matter. Sad state of affairs.

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

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

How much of it was spent on salaries for managers?

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.

Of course, and it was the execution choices by management that allocated that $300 million in such a way that they didn't arrive at a sustainable business. As such the business goes down the drain and the employees with it.

Employees received an average of $1MM over their time there?

Global workforce is/was ~275-300 according to the article.

More interestingly, how much did Goldberg take off the table in these huge later rounds?

Very simplistic view. When VCs put in that much cash, they also pressure management to spend it as fast as they can and expand and conquer new markets. That's the bet. That's the game.

Fab did that and it turned out the market was not there to float the investment. It happens, sometimes the firm beats the odds and people celebrate the management and their free spending ways as the reason for impressive growth. The ignore all the mistakes because the end result is all that matters.

Sometimes the bet doesn't pay off and here we are. Blaming the management and all the mistakes they made as the reason they ended up in this situation. The reality is the VCs, the management, and the employees know the truth. It is a game, it is a bet. If it folds, they move on.

Not sure why people get so worked up, lash out against management and go on and on about calling them "evil". It is a cop out. A lot of those same people were calling that same management "geniuses" for the rapid growth a couple of years ago.

Just a reminder: the employees they chew up and spit out during this process are human beings.

Just a reminder: the employees know it is a startup and they know the risk. That is why they picked Fab because of the potential upside vs. working at a place like IBM.

still no reason to treat them like dog poo. there are ways of inspiring your team and calling them expendable etc... ain't one of them.

"Ultimately, if your goal is to build a great company — and that is our goal — you have to figure out your sustainable customer value proposition (your product differentiation) and your business model. Growth without solving for the USP and equation of the business only gets you so far."

So the way to rally the troops is to spout a bunch of talking points from the VC pitch deck?

Source: http://www.thesups.com/news/its-a-fuing-startup-why-are-you-...

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.

When did you do business with them? Early days or more recently?

Curious because that seems at odds with the experience of at least 1 other vendor posting in these comments...

This reflects what I have read elsewhere.

What they would do is bid wastefully using weak creative and little targeting as if they were actively trying to waste as much money as possible (which may have been what they were doing).

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.

Meh, there are hedge funds powered by Excel.

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

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

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

Oh exactly, not sure why we should care about an ecommerce site with layoffs, as opposed to the 100s of other companies with layoffs. Including HP laying off 16,000.

omg is that a recent development? Which departments are affected? (PC business I presume)

http://recode.net/2014/05/22/hp-shares-slip-as-q2-sales-come...

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.

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.

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

http://www.fastcompany.com/1835757/fabcom-ready-set-reset

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...

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.

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.

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

http://www.entrepreneur.com/article/230081

Search for "what went wrong"

This is literally the first time I've ever heard of this company.

I see some of their stuff in target, they have a little section at the store near me. The products generally seem useful and well made and reasonably priced.

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.

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

gentlest grammar correction i have ever seen on the internet. bravo!

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?

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).

how language evolves

It's an excellent eggcorn, at any rate: https://en.wikipedia.org/wiki/Eggcorn

or perhaps primo uomo, if this cat's male.

Dude good job this is the best way I have seen correcting a persons grammar with out derailing the argument.

That's a bit extreme. If they offered me 500k in cash to work for them, I would take any shit management throws as me. :)

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.

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

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