Fab will announce its fourth round of layoffs in 10 months tomorrow. The ecommerce company expects to cut 80 to 90 jobs, all from its headquarters in New York. A spokesperson confirmed the decision after Buzzfeed broke the news of an email from the human resources instructing employees not to come in tomorrow.
According to Buzzfeed, "anxiety gripped" staffers were told "to await further instructions for one-on-one-meetings." Fab raised $336 million in venture capital from Andreessen Horowitz, Ashton Kutcher, First Round Capital, SoftTech VC and many other investors, who once valued the company at more than $1 billion. Fab had 700 employees at its peak. After tomorrow's layoffs, which will shed about a third of its staff worldwide, Fab will be down to 200 employees.
Just as it did with the last round of layoffs, Fab is positioning cuts as part of its new strategy to move away from flash sales. A spokesperson touted "great success" in "recent private label initiatives and customized furniture launches," including selling couches on the Internet, if you can believe that:
The company had been seeking a new sustainable business model beyond flash sales, and in the past six months put great effort into launching its own line of sofas last week. The timeline for doing so was described as "unrealistic," but the company apparently pulled it off and that launch now stands as a point of pride internally, according to two people familiar with the company's operations. Fab launched three private label collections at NYCxDesign last week, and began hosting its first showroom in New York.
As its comes back down to Earth, Fab sounds more and more like e-tailers, as they used to call them in the dotcom days. In addition to that showroom in Manhattan, Fab has morphed into "a more standard e-commerce shop with predictable inventory needs."
It's not clear why Goldberg and his backers, who watched him flail through his previous company Jobster, thought this "precariously constructed" concept would be immune to the same pressures of the flash sales companies that came before it, like Gilt Groupe, which was downsizing just as Fab's valuation soared. But, as Goldberg has grown fond of saying, "It's a fucking startup."
To contact the author of this post, please email firstname.lastname@example.org.
[Image via Getty]