Jason Goldberg: What Went Wrong at Fab
In a 3,500-word blog post on Tuesday, Goldberg went into even greater detail in accepting blame for the many hits that Fab has taken over the last year, which include a massive round of layoffs that reduced the e-commerce company's headcount from 700 to 300. In the post--which Goldberg, a prolific blogger, says will be his last until next quarter--he admits that he had lost perspective at Fab. "We had started to dream in billions when we should have been focused on making one day simply better than the one before it," he writes.
Next he rounds up a list of 16 lessons he's learned (the very hard way) about running startups, which paint a pretty clear picture of what led to the apparent implosion of Fab, a company valued at $1 billion shortly before conditions began to deteriorate. Here, a recap of mistakes Goldberg owns up to and what he (and others) can learn from them:
Focusing on the top line, not the bottom
Fab was experiencing meteoric growth and had just obtained $150 million in funding, all of which made it look, from a distance, like a healthy company. Meanwhile, Goldberg writes, the bottom line was suffering. Despite the new funding, he was still desperate for cash.
"When I made the difficult decision to cut expenses at Fab in mid-2013 I had essentially two options in front of me: keep growing at the pace we were growing and hope I could raise even more money down the road, or scale back and control our own destiny. I chose the latter," he writes, admitting fault for letting matters get that dire. He also uses the mantra "Cash is King" to justify his decision to suddenly and drastically downsize the company. "With a $1B valuation we have a lot to prove," he writes. "We now have the money and ample time to prove it."
It's often said that good managers know how to delegate. Goldberg writes that the opposite is true, admitting that as the business grew, and he took his eyes off of various departments, the company started to lose cohesion, and worse, employees came to resent it.
"When I spent less time asking about and talking about certain departments at Fab, those functions perceived it as a lack of interest and understanding on my part," he writes. "As CEO, you can’t let that happen. You have to take an equal and keen interest in all facets of the company."
Pointing the finger
It's easy to play the blame game. Goldberg admits that back when Fab was aggressively expanding into Europe, he allowed employees to forge ahead on the plan even though he knew it wasn't in the best interests of the company. When the European expansion failed, he was inclined to blame the department that had pushed the plan forward. Now, he realizes, he can only blame himself.
"I had already set the tone that growth mattered more than efficiency in the near term. By championing growth on the one hand while questioning efficiency on the other, all I was doing was confusing the team, not leading them," he writes.
"As the CEO, it’s all your fault because you set the tone for the entire business," he adds.
Growing for growth's sake
When you're growing as quickly as Fab did, it's tough to get in the way of your own success. But as Goldberg knows too well, mission drift is often a side effect of insane growth. Fab was supposed to be devoted to design, but the opportunity to grow changed that. Before he knew it, the company had strayed so far from its commitment to design that it had begun selling steaks online.
Goldberg writes that the new goal is to be the best, not the biggest. He writes, "We would rather take it slower and get it right than go too fast."
Running his mouth
Personally, I've always had a soft spot for Jason Goldberg, because whenever I've interviewed him, he's been open and forthcoming about the ins and outs of Fab. Candor like that is a rarity among founders of privately held companies--and, Goldberg writes, a huge mistake on his part.
"Your competitors don't need to know what you're up to. The business press doesn't need to know what you're up to," he writes. "You don't need to share anything. So, don't."
In the past, Goldberg has been open about disclosing revenue. Now he vows to stop. He's touted Fab's every victory on his blog. Now he says he'll wait to toot his own horn until those victories prove lasting. And while he's been honest about his personal life and his experience as CEO in the past, Goldberg says he's learning to shut up (albeit slowly, if this lengthy and deeply personal blog post is any indication). "Despite what you may tell yourself, not many consumers actually want to get to know the CEO of the companies they interact with," he writes. "It's not about you. It's all about the product."