There hasn't been a single piece of good news from Fab.com in a very long time. Layoffs, mismanagement, plummeting morale, and executive reshuffles have erased Fab's early rep as a cheery decor startup with tons of money in the bank. Now, the bad can't get much worse: we're hearing Fab is already starting to shut down.
Last month's bloodletting, multiple sources say, was the beginning of the end of Fab, a company once considered one of the most promising new internet retail outfits in the world. The layoffs were not part of some last-ditch effort to stabilize the company, but the start of a longer process that will see the company slowly unscrew and disassemble itself, like so many overpriced designer sofas.
Insiders tell me that even the Fab.com survivors—down to between 10 and 15 in the New York HQ—have all been given ending dates for their remaining jobs. These stragglers who weren't immediately fired will be gradually let go over the course of six months, with the latest remnants of Fab departing by January 2015 (a Fab spokesperson denied these are end dates, instead saying employees "have minimum guarantees of employment").
If this doesn't sound like enough people to run a company that's meant to be the Ikea of fluorescent typewriters and kooky throw pillows, that's because it's not meant to be. Sources say the team that's staying on through the end of the year is purely transitional—that is, to oversee the transition from existence to nonexistence, managing the e-commerce operation while it sells the remainder of its inventory. Once the last $17 metal pinwheel is gone from the warehouse, that is supposedly it for Fab's American operations.
But not the end for Fab's ostentatious CEO Jason Goldberg, who we're told is soon moving to Berlin, where perhaps it's not as widely known that this is his second ill-fated attempt at startup success. No matter the reason, it's hard to imagine a CEO leaving his American company for Germany if his American company is anything but dead or largely fucked. When I asked Goldberg about the move, I received only a response from a spokesperson: "Jason will be splitting his time between our offices for the foreseeable future."
None of the Fab insiders who've spoken to me seem surprised by what appears to be the company's imminent and final implosion. Those still at the office spend their time on Facebook. There's little real work left to do, except maybe job hunt (Fab, to its credit, offers generous severance packages and headhunting services). The company's burn rate is as high as $9 million per month according to one source, with as little as $30 million left in the bank—that's after chewing through hundreds of millions of dollars in venture funding over the years. Perhaps cash is what Fab used to stuff its new in-house line of custom sofas, which a company source tells me would need to sell for 30 years to recoup what was spent designing them.
But they won't have 30 years, or even a very big part of one year. If the company proceeds with its "transitional" end game as it's planned now, none of its most recent initiatives—the Nordic Collection, the pop-up store in Soho—will ever have a shot. All that'll remain is more bonus miles for Jason Goldberg, a haunting billion dollar valuation, and a few other vestiges of better times:
"It's Happy Socks Day at Fab," says Jason Goldberg, the company's chief executive and founder, as he checks digital dashboards on his iMac screen that continually chart customer sharing and spending. "It's socktastic!"