over a year ago, the then high-flying Fab Inc. was rumored to be worth $1 billion.
Now, with accusations of mismanagement swirling, the e-commerce start-up is reportedly ready to call
it quits. Sources tell ValleyWag
that Fab could completely shut down before the end of the year.
Jason Goldberg, co-founder and CEO of Fab, was quick to denounce the report,
on Wednesday. "Bullshit hateful rumors of @fab shutting down are just that. Bullshit hate," Goldberg tweeted. “We’ve got years of money & a sound plan. Proof in time."
Founded as a gay-centric social network, Fab took off as a design-focused e-commerce platform about three years ago.
Since then, however, analysts and Web watchers have voiced
concerns about the company’s aggressive growth strategy, low margins and threats from mammoth competitors like Amazon and eBay.
“Seems to me that Fab has been a colossally
mismanaged,” Forrester analyst Sucharita Mulpuru-Kodali said Wednesday. “The fundamentals of the business aren't that bad because they can do a lot of drop-shipping, but they had such high
expectations for revenue and VC expectations were out of line with what a business like that should realistically generate.”
Worse still, analysts said Fab’s demise
would likely hurt the entire sector. “Hopefully [the] reports are not true, as a flame out like this would be negative for private companies looking for funding,” said Kerry Rice, an
Internet analyst at Needham & Company.
Fab.com is reportedly in the process of cutting about one-third of its global workforce, or as many as 90 employees. As Re/Code
reported last week, the company’s New York headquarters is expected to bear the brunch of the bloodletting.
In a statement, the company said: "Rumors that Fab is exiting the U.S.
market are entirely false. We have money in the bank and a low burn rate that will carry us through several years. We are heads-down implementing our long-term strategy, creating a strong and lasting
future for the company."
Fab has raised a total of $310 million, most recently taking $150 million last summer