After $336 million in VC funding, reaching a valuation of $1 billion and a staff of 700 employees, how did Jason Goldberg describe his troubled company Fab last month?
It’s a f*cking startup.
In a public memo, now deleted from his blog but preserved in angry amber by the snarkers at Valleywag, he sprinkled the f-word around more liberally than a Tarantino character and hammered out the message that despite it all, the company was still a startup.
Today, Fab is making more layoffs and will be down to 200 employees.
The black hole
There’s a point at which the word “startup” becomes a crutch.
That’s arguably what has happened with Fab. Starting out as a gay social network before metamorphosing into a flash deals site then into a more traditional style-orientated online retailer, the amount of money, time and people poured into what now looks like a black hole would be shocking to any sector besides the startup world.
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At his previous startup, Jobster, Goldberg managed to burn through $48m in VC funding. So far it seems Fab’s greatest success is to chew up even larger piles of other people’s money.
The reason I’m picking on Fab in particular is that it illustrates a problem with the world “startup” and the culture that comes along with it in forty foot high neon letters.
Even after all that investment and ramping up Fab to hundreds of employees, Goldberg was still clutching on to the notion that it was somehow early days, as if defining your business as a startup and not a grown up company is a kind of cheat code for avoiding the inevitable.
No amount of kooky soft furnishings and free food can make employees feel better about the dawning reality that jobs are going and money isn’t coming.
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Just a phase
The idea that it’s fine to take your time working out how to make money as long as you can hustle up enough venture funding was further strengthened by the announcement earlier this month that Quora is joining the latest batch of Y-Combinator companies.
The five-year-old Q+A site has raised over $141 million – $80 million of that this year – but is joining the accelerator, normally a berth for early stage firms, as “an experiment”.
To at least some of those investors who’ve put tens of millions into Adam D’Angelo’s baby the move must have been more than a little worrying. Quora has said it wants to “remain independent forever” but what about a return on investment?
At some point, a company has to grow up. Its time as a startup should be a productive phase not a way of life.
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Of course keeping the best parts of the startup mindset is important – flexibility in roles, optimism, quick decision making – and corporations spend millions trying to suddenly inject those qualities into their hidebound, siloed organisations.
But you have to grow beyond that.
There would be fewer job losses and less wasted investment capital if more founders were focused on building businesses that left the startup label behind than clutching on to it as a safety blanket. Fab is not a startup, it’s a business that’s failing.