Forget what you know about the old Fab. This time CEO Jason Goldberg thinks he’s finally got it right with a new furniture site called Hem.
Investors can be forgiven for demanding Goldberg’s head given the sheer number of pivots the e-commerce site has endured. Goldberg is plotting yet another new path, and a new brand, to prove he can build a successful business on the back of $300 million in venture capital funding.
"I'll tell you what I told our investors: We never signed on to building a two-year business," Goldberg said when asked whether Fab, with the help of Hem, had the potential to grow into a multibillion-dollar business he promised them. "We signed onto build a business over 10, 20 years."
To get there, Goldberg will need to turn Hem into the kind of undisputed success that has eluded him thus far. Fab, whose main site Fab.com sells an array of funky and bright-colored clothing, art and home decor, has laid off around 500 of its 700 employees in under a year. The first layoffs occurred just one month after the company announced a $150 million venture capital investment, pushing total funding over $300 million. In total, Goldberg has overseen four rounds of cuts and restructurings, leaving many industry observers wondering if he had any clue what he was doing at all and why he was still in charge.
Hem, announced last week, is expected to launch in about three months and be dedicated exclusively to selling home decor and home furnishings that the company designs itself. It will stand out in multiple ways, according to Goldberg, in addition to its design aesthetic: furniture that can be customized to shoppers specifications; assembly that will often require no tools. By cutting out the middlemen, Goldberg vows its items will cost less and be of better quality since it will control the entire process from design to manufacturing.
"We're going with a full-stack approach," Goldberg said. "Like a Warby [Parker] or Bonobos for furnishings but we're even closer to the manufacturing than those guy are.”
Still, betting on furniture sales, a category of commerce that has been slow to come online, seems risky. Goldberg believes the company has seen enough positive results in its past private label furniture and home furnishings efforts to justify this new initiative. Its custom furniture business, which Fab bought its way into with the 2013 acquisition of Massivkonzept, does more than $10 million in sales and is near break even, Goldberg said. Fab also just bought a European furniture design firm called One Nordic.
Physical retail will also play a role in Hem's strategy. At launch, the brand will have three physical showrooms in Germany, Goldberg said, with potential additions in Stockholm, Helsinki and New York. The company will also likely sell its wares through some other retailers' stores.
"I'm not trying to make a business on just selling sofas online," Goldberg said.
While Goldberg sounds much more excited about this new brand than Fab itself, Fab.com will continue to exist, he said. Operations will be run by a small team in New York City, with the technology organization remaining overseas in India. Fab.com will focus on selling a wide assortment of items from other designers and retailers with an emphasis on "design gifts and collectibles," Goldberg said. Essentially all of the private-label sales on Fab will move over to Hem.
The problem for Goldberg is we’ve heard before that he had it all figured out. When Fab made its first cuts last summer, Goldberg said it was to realign resources to move away from a flash-sales model to a traditional online retail model. Things were under control. But then came layoffs No. 2, 3 and 4. The last one, the company said, was to free up even more resources to dedicate to selling its own line of furniture and furnishings.
If Hem doesn’t work out, does Goldberg believe he’ll finally be out of next chances? He laughed when asked about this.
"I can promise you that there will be many more chapters to the story,” he added. “We're going to keep trying.”
The Jason Goldberg roller coaster shows no signs of slowing down.
