Under the leadership of charismatic Jason Goldberg, Fab was on a meteoric rise to the top. When the then-two-year-old e-commerce brand raised $150 million in funding mid-2013, it was valued at $1 billion. In February, the sale of Fab to PCH was announced. The deal closed in early March for $7 million in cash and $8 million in stock. I'm not writing this as an, "Oh, how the mighty have fallen!" piece. No, it's important for all entrepreneurs to understand just what happened within Fab.com that resulted in this startup's stratospheric rise--and, ultimately, its devastating defeat. What can you learn from Fab's fire sale?

Manage Growth Wisely

Growth within a startup is a good thing--you're not going to survive if you don't grow. However, it has to be controlled and intentional. Uncontrolled or mismanaged growth will eat a company's founders alive, destroying the company along the way. Fab grew so fast that its founder lost sight of his company's mission and overall goals. As noted in an earlier Inc. article, Goldberg was aware that staying on track would be critical to success. He said, "We would rather take it slower and get it right than go too fast." He didn't follow his own advice.

Master the Basics First

As the founder of a startup, it's easy to get ahead of yourself. You want to grow by hiring more employees and finding more office space. You want to push revenue to new heights. But the more you push, the easier it becomes to lose track of the basics. You need a solid base for moving forward, as this is what your company is built on. Fab neglected to focus on the basics. They rushed to purchase a warehouse, manufacture their own private label products, and acquire other companies. They jumped so far ahead that they never had their own e-commerce strategy in order.

Be the Best at One Thing

It's easy to chase the next big thing. It's even easier to get off track doing so. From a social network to a flash-sale site to a private label design retailer, we never knew just what Fab might become next. And as the company took on new identities and jumped headfirst into new markets, it became clear that the leadership at Fab didn't know what it would become next either. Call it a lack of organization. Call it "startup ADD." It cost Fab big time over the years. They had the opportunity to be the best at one thing, but could never get 100 percent focused on the task at hand and ended up sabotaging their own success.

Reality Check!

There's a huge difference between confidence in your company (and mission) and over-the-top bragging. Goldberg often takes a step or two over the line. A previous senior employee at Fab said, "He thinks he's the next Steve Jobs, but at least Jobs admitted he was an asshole." Burn, right? It would be easy to dismiss this as the grumbling of an unhappy employee, except Fab really did just sell off for a minuscule fraction of what it was once worth. Goldberg made it clear that he was the next big thing in the tech world. He made it clear that Fab was going to be an internet sensation. Unfortunately, this approach really did cloud his vision and ultimately contributed to the downfall of the company.

Looking for more startup advice? Be sure to avoid these top 18 entrepreneurial mistakes.

Published on: Apr 27, 2015