Fab Europe no more: The dramatic retreat is complete

By Erin Griffith , written on January 8, 2014

From The News Desk

Say what you want about's disastrous 2013 -- and we and plenty of others have -- CEO Jason Goldberg is nothing if not ambitious. Last year the commerce company raised a whopping $150 million at a billion dollar valuation, and Goldberg vowed that Fab would become the next Amazon.

Now that that hasn't panned out so well (layoffs, more layoffs, executive departures, pivots, etc), Goldberg has gone full force into a new startup belief system: Taking his time to get it right.

In a blog post published yesterday, Goldberg outlines his new learned-by-fire philosophy: Slow growth, cut the burn rate, "strengthen the foundation." He noted that, before, Fab wasn't fully transparent. But also, Fab was too transparent. Fab lost sight of its vision and also lost perspective, which is easy to do when "you grow revenue 500% year over year and become a media darling overnight," he wrote. The message is Fab messed up, but Fab will rise again.

This is not Goldberg's first mea culpa over Fab's shortcomings. Last year he announced a "refounding" of the company amid layoffs and executive departures.

But a blog post is just talk. Fortunately, Fab also took a big step to prove this new approach is not all talk: It was revealed that Fab Europe is pretty much done. The company has scaled back its offerings there to almost nothing. Fab won't be selling goods from outside designers, according to statements made by a spokesperson to "We’re taking a break from selling products made by others in the EU region at this time." The only goods European customers can buy from Fab are custom furniture, made possible through Fab's acquisition of German custom furniture business called Massivkonzept for $20 million to $30 million in stock last April.

It's not terribly surprising. As we first wrote back in November, Goldberg's maniacal desire to crush a European Fab clone dramatically accelerated the company's expansion plans. Fab wouldn't have moved into Europe so aggressively and so early -- the company opened a Berlin office with at least 125 employees just nine months into its existence -- if not for the desire to beat the Samwer brothers' copycat, Bamarang. "Let me put bamarang and the other copycats on notice. Ripping someone off is not going to work in this space," Goldberg wrote in a blog post.

Fab succeeded in crushing the Samwer's clone, Bamarang, which shut down. Goldberg gloated at the time: "I would say ‘thank you’ to the Samwer brothers for helping us build a business in Europe faster than we would have otherwise." But he almost killed Fab in the process. We highlighted it as one of the main reasons Fab struggled last year, and when layoffs hit Fab, that Berlin office was among the first in line for downsizing.

Painful memories from the failed expansion are all over Goldberg's list of 16 lessons he learned in 2013. "Startups are hard"? Yeah, that's why you nail one country first before you expand to 30. "Cash is King?" Europe was a huge cash drain. And most directly, no. 6: "Be present," where Goldberg talks about the toll his travel took on the company.

Two years after Fab jumped into Europe in a huge way, the retreat is almost complete. Fab's revenue may take a hit while it figures out how to become profitable, considering international made up 30 percent of sales as of September 2012.

But today's news -- scaling back offerings instead of pushing crazy expansion -- might actually be encouraging for the company. Fab making it out of 2014 alive with Goldberg as CEO requires him resetting his crazy ambitions. This pull-back shows that Goldberg's new religion -- patience, austerity, conservative growth -- may not be all talk.