Fab Is Firing 100 People For The Second Time A Few Months After Raising $150 Million
84 of those firings are from the company's New York headquarters. The latest round of firings brings the full time headcount down to 440 people from over 600 earlier this year. This round of cuts includes nearly a fifth of the company's staff.
The firings, according to Goldberg, are for two reasons. Fab really wants to get profitable and is aggressively shifting away from flash sales and towards an inventory model. It plans to roll out a new website and mobile app by November.
Here's Goldberg's explanation:
"Fab is investing tens of millions of dollars in developing and acquiring fresh merchandise for our customers at amazing prices .... To pay for that, while accelerating our path to profitability, we've made the tough but correct decision to eliminate positions that are either legacies of our former flash-sales business model or are part of current processes that can be managed with innovative technology and fewer people."
The company signaled potential cuts in a memo earlier this week. It makes sense that the company would cut people that were hired for a flash sales business that it's no longer focusing on. But the size of the cuts, and the fact that a lot of are for cost reasons indicate that the company's probably burning through more cash than it's comfortable with, despite having raised more than $320 million in total in the last two years.
There appears to be a lot of pressure, whether from Goldberg or on him, to get profitable quickly.
"The impetus behind this decision is our plan to accelerate Fab's path to profitability," Goldberg writes. "We are certain that driving towards a profitable Fab in the near-term is the way to build the best Fab for the long-term benefit of our customers."