WEBVTT - Inside the Spectacular Failure of Fab.com

0:00:00.080 --> 0:00:02.759
<v Speaker 1>We're going to start our story today. On June eighteenth,

0:00:02.960 --> 0:00:06.480
<v Speaker 1>two thousand and thirteen, this was the day that Jason Goldberg,

0:00:06.600 --> 0:00:09.760
<v Speaker 1>the founder and CEO of an online startup called fab

0:00:09.840 --> 0:00:12.440
<v Speaker 1>dot com, announced that he had just raised a big

0:00:12.520 --> 0:00:19.000
<v Speaker 1>round of funding. Online retailer Fab dot Com announced a

0:00:19.040 --> 0:00:21.680
<v Speaker 1>new round of financing today that values of the company

0:00:21.720 --> 0:00:24.120
<v Speaker 1>at about a billion dollars. Now, that makes the company

0:00:24.160 --> 0:00:27.000
<v Speaker 1>one of the most valuable startups in New York. A

0:00:27.040 --> 0:00:29.200
<v Speaker 1>billion today doesn't sound like that big of a deal.

0:00:29.320 --> 0:00:32.199
<v Speaker 1>I mean, Uber is worth what sixty billion dollars, but

0:00:32.280 --> 0:00:35.599
<v Speaker 1>at the time it was an incredibly exclusive club, very

0:00:35.680 --> 0:00:38.239
<v Speaker 1>rare achievement. Jason was in our bloombrick headquarters in New

0:00:38.280 --> 0:00:40.920
<v Speaker 1>York to talk about the successive is fundraising, and he

0:00:41.159 --> 0:00:43.080
<v Speaker 1>was beaming on TV. The way we look at the

0:00:43.120 --> 0:00:46.720
<v Speaker 1>world is that there are currently four e commerce companies

0:00:46.760 --> 0:00:50.760
<v Speaker 1>that are worth more than ten billion dollars, Amazon, Racketan

0:00:51.000 --> 0:00:54.000
<v Speaker 1>and Japan, Ali Baba and China and eBay, and we

0:00:54.040 --> 0:00:56.040
<v Speaker 1>think Fab has a legitimate chance of being the fifth one.

0:00:56.360 --> 0:00:57.920
<v Speaker 1>But as soon as he got up the set, he

0:00:57.960 --> 0:01:01.040
<v Speaker 1>walked downstairs to meet with the jackals the media. You

0:01:01.160 --> 0:01:04.680
<v Speaker 1>Sarah I told him I had some documents to show him.

0:01:04.720 --> 0:01:06.920
<v Speaker 1>It wasn't that excited about it. But the background is

0:01:07.040 --> 0:01:09.479
<v Speaker 1>a couple of weeks earlier, I had met a fab

0:01:09.520 --> 0:01:13.720
<v Speaker 1>former employee who told me about how dysfunctional the startup

0:01:13.920 --> 0:01:17.280
<v Speaker 1>was internally, that they had missed the revenue targets a

0:01:17.360 --> 0:01:22.320
<v Speaker 1>year earlier. By over, he introduced me to more employees.

0:01:22.360 --> 0:01:25.120
<v Speaker 1>To introduced me to more employees, and I ended up

0:01:25.120 --> 0:01:28.000
<v Speaker 1>with the stack of emails that showed a little bit

0:01:28.040 --> 0:01:31.160
<v Speaker 1>about the company culture and how difficult it was for

0:01:31.360 --> 0:01:34.440
<v Speaker 1>some people to work there, and also just how many

0:01:34.480 --> 0:01:37.080
<v Speaker 1>executives had departed in the last year. It was about

0:01:37.120 --> 0:01:40.200
<v Speaker 1>eleven people. So Jason had presented this rosie picture on

0:01:40.280 --> 0:01:43.760
<v Speaker 1>TV and then you presented him with these very uncomfortable

0:01:43.800 --> 0:01:46.039
<v Speaker 1>internal emails. How did he respond to that? So the

0:01:46.080 --> 0:01:49.520
<v Speaker 1>thing about Jason is he's kind of a politician. He's

0:01:49.680 --> 0:01:52.840
<v Speaker 1>very good at getting people on his side, being a

0:01:52.960 --> 0:01:56.520
<v Speaker 1>very sympathetic character explaining his position. And so at the

0:01:56.520 --> 0:01:59.360
<v Speaker 1>time we met, Jason was still very much in sales mode.

0:01:59.760 --> 0:02:03.000
<v Speaker 1>He was like, maybe just don't understand that the culture

0:02:03.000 --> 0:02:04.760
<v Speaker 1>of our startup. Maybe you need to come to our

0:02:04.800 --> 0:02:08.240
<v Speaker 1>headquarters and will show you how it is to be Fab.

0:02:09.360 --> 0:02:11.400
<v Speaker 1>So I presume you went, you visited the company, you

0:02:11.480 --> 0:02:13.000
<v Speaker 1>drank a little bit of their kool aid, and then

0:02:13.000 --> 0:02:16.079
<v Speaker 1>you still publish a very harsh story. And what happens

0:02:16.080 --> 0:02:19.440
<v Speaker 1>after that it was kind of war. At that point,

0:02:19.560 --> 0:02:22.959
<v Speaker 1>Jason put out a blog post saying that there had

0:02:22.960 --> 0:02:27.399
<v Speaker 1>been blatant misrepresentations in the story. He denied it all,

0:02:27.520 --> 0:02:31.200
<v Speaker 1>he spun. But it turned out that wasn't a blatant misrepresentation,

0:02:31.240 --> 0:02:33.520
<v Speaker 1>and it was really the beginning of the end for

0:02:33.600 --> 0:02:36.400
<v Speaker 1>fab dot com. I spent the next year reporting on

0:02:36.520 --> 0:02:41.760
<v Speaker 1>layoffs after layoffs, everything unraveled, and eventually Fab got sold

0:02:41.840 --> 0:02:55.440
<v Speaker 1>for fifteen million. Hi, this is Brad Stone and I'm

0:02:55.480 --> 0:02:58.359
<v Speaker 1>Sarah Fryer, and this week on our very first episode

0:02:58.360 --> 0:03:01.680
<v Speaker 1>of Decrypted, we're going to hear from Jason Goldberg. This

0:03:01.720 --> 0:03:04.440
<v Speaker 1>is a particularly personal story for him, and it's a

0:03:04.440 --> 0:03:07.320
<v Speaker 1>little bit of a personal story for you too, Sarah. Right. Well,

0:03:07.360 --> 0:03:10.120
<v Speaker 1>for for me, it was just a constant back and

0:03:10.160 --> 0:03:13.440
<v Speaker 1>forth between me and it's entrepreneur back in the day,

0:03:13.480 --> 0:03:16.000
<v Speaker 1>and now we get to actually talk it out. We

0:03:16.120 --> 0:03:18.880
<v Speaker 1>spend so much time talking about all the successes here

0:03:18.919 --> 0:03:21.960
<v Speaker 1>until Icon Valley, but we really don't talk enough about

0:03:22.000 --> 0:03:24.359
<v Speaker 1>what it's really like to drive an entire company into

0:03:24.400 --> 0:03:27.720
<v Speaker 1>the ground and leave a smoking, crater sized hole and

0:03:27.760 --> 0:03:29.840
<v Speaker 1>failure just the way things in for the vast majority

0:03:29.840 --> 0:03:33.840
<v Speaker 1>of tech companies. It's brutal, it's emotional, it's public, and

0:03:34.000 --> 0:03:37.760
<v Speaker 1>it's kind of embarrassing, and for some reason, somehow a

0:03:37.760 --> 0:03:39.880
<v Speaker 1>lot of founders find a way to pick themselves back

0:03:40.000 --> 0:03:43.320
<v Speaker 1>up and start a new company all over again. Jason

0:03:43.400 --> 0:03:45.920
<v Speaker 1>is now launching an app called Peopo, and that's why

0:03:45.960 --> 0:03:48.440
<v Speaker 1>he agreed to talk to me, probably so he can

0:03:48.440 --> 0:03:51.080
<v Speaker 1>put all of this behind him. He called me the

0:03:51.080 --> 0:03:53.800
<v Speaker 1>other week from Puna, India, where he was putting the

0:03:53.840 --> 0:03:56.720
<v Speaker 1>finishing touches on his new startup before launch. You know,

0:03:56.760 --> 0:04:01.400
<v Speaker 1>we had all sorts of promise and opportunity and it

0:04:01.480 --> 0:04:04.640
<v Speaker 1>didn't work. And you know, I think my my, my

0:04:04.840 --> 0:04:07.520
<v Speaker 1>biggest emotion of it is, you know, just you know

0:04:07.640 --> 0:04:12.720
<v Speaker 1>that I'm sorry. So let's take this from the beginning.

0:04:13.040 --> 0:04:15.960
<v Speaker 1>Sarah tell us about Jason and fat So. Jason is

0:04:16.000 --> 0:04:20.320
<v Speaker 1>not your typical engineer founder. He came up through the

0:04:20.360 --> 0:04:23.520
<v Speaker 1>Clinton White House. He's kind of a serial entrepreneur with

0:04:23.800 --> 0:04:28.040
<v Speaker 1>a lot of suave personality. He gets his suits tailored

0:04:28.080 --> 0:04:31.320
<v Speaker 1>at Bottega Vanetta. He takes an uber everywhere, it doesn't

0:04:31.320 --> 0:04:34.640
<v Speaker 1>take the subway, and he sort of got this presence

0:04:34.880 --> 0:04:38.440
<v Speaker 1>and he partnered with this guy Bradford Shellhammer, who has

0:04:38.480 --> 0:04:42.960
<v Speaker 1>this incredible design aesthetic, and together they founded this site

0:04:43.000 --> 0:04:46.920
<v Speaker 1>called Fabulous, which was a gay social network and it

0:04:47.040 --> 0:04:52.400
<v Speaker 1>wasn't really going too well, but Bradford, with his design shops,

0:04:52.440 --> 0:04:55.520
<v Speaker 1>started picking out these products that he really liked and

0:04:55.560 --> 0:04:58.040
<v Speaker 1>he started doing this big gay deal of the day.

0:04:58.240 --> 0:05:01.520
<v Speaker 1>This was at the height of group on and Living Social.

0:05:01.560 --> 0:05:03.960
<v Speaker 1>Everyone was going crazy about these things and those deals

0:05:04.000 --> 0:05:07.200
<v Speaker 1>really took off, and eventually Bradford and Jason realized that

0:05:07.240 --> 0:05:09.839
<v Speaker 1>should be our company, so they shut that down. They

0:05:09.960 --> 0:05:12.360
<v Speaker 1>launched this new site a couple of months later with

0:05:12.520 --> 0:05:16.080
<v Speaker 1>all of these really quirky, interesting products that you really

0:05:16.120 --> 0:05:18.640
<v Speaker 1>just couldn't find anywhere else. Yeah, I remember how much

0:05:18.640 --> 0:05:21.000
<v Speaker 1>attention and hope there was around fab dot com and

0:05:21.080 --> 0:05:24.040
<v Speaker 1>there could be this large space in e commerce outside

0:05:24.040 --> 0:05:26.880
<v Speaker 1>of the amazons and the e bays for boutique products

0:05:26.960 --> 0:05:30.400
<v Speaker 1>and eccentric product categories. You know, it took off like

0:05:30.440 --> 0:05:32.719
<v Speaker 1>a rocket ship. Um. You know, when we launched we

0:05:32.760 --> 0:05:35.640
<v Speaker 1>had a really small team we had. You know, I

0:05:35.680 --> 0:05:38.359
<v Speaker 1>think we had fifteen people at most in New York

0:05:38.480 --> 0:05:42.600
<v Speaker 1>and we had a team of like fifteen people in Puta, India,

0:05:42.920 --> 0:05:46.400
<v Speaker 1>and you know it it was it was kind of incredible.

0:05:46.400 --> 0:05:48.719
<v Speaker 1>I mean it was like, we sold a million dollars

0:05:48.720 --> 0:05:51.760
<v Speaker 1>of the merchandise in our first twenty days. Um, we

0:05:51.760 --> 0:05:54.719
<v Speaker 1>were profitable, uh, you know, kind of a casual basis

0:05:54.760 --> 0:05:57.280
<v Speaker 1>in the first month, and I was like, whoa, we

0:05:57.360 --> 0:06:01.320
<v Speaker 1>really had something in our hands. And um, in just

0:06:01.400 --> 0:06:04.960
<v Speaker 1>six months, FABS old twenty million and merchandise. They raised

0:06:04.960 --> 0:06:08.920
<v Speaker 1>money from investors at a two million valuation. And honestly,

0:06:09.000 --> 0:06:11.560
<v Speaker 1>their biggest problem was that they couldn't keep up with demand.

0:06:12.000 --> 0:06:14.360
<v Speaker 1>They were selling out of products too quickly and couldn't

0:06:14.360 --> 0:06:16.720
<v Speaker 1>get things shipped fast enough. Right, So what did this mean?

0:06:16.760 --> 0:06:18.880
<v Speaker 1>I mean, they sound like good problems to have, But

0:06:19.040 --> 0:06:21.200
<v Speaker 1>what's the challenge. I just heard about a lot of

0:06:21.240 --> 0:06:23.840
<v Speaker 1>angry customers who had to wait for months before they

0:06:23.839 --> 0:06:27.320
<v Speaker 1>got what they ordered. And while still dealing with all

0:06:27.360 --> 0:06:31.560
<v Speaker 1>those issues, Jason and his executive team got wind of

0:06:31.640 --> 0:06:35.719
<v Speaker 1>some copycat companies in Europe and they decided to launch

0:06:35.800 --> 0:06:38.560
<v Speaker 1>there and compete with them and crush them early. That

0:06:38.600 --> 0:06:40.920
<v Speaker 1>was an early I think when you have a lot

0:06:41.000 --> 0:06:44.440
<v Speaker 1>of you know, smart people who tell you that, hey,

0:06:44.520 --> 0:06:46.160
<v Speaker 1>you know, you really should try, you know, going to

0:06:46.240 --> 0:06:48.919
<v Speaker 1>Europe faster. And you know, we saw what happened with Airbnb,

0:06:49.160 --> 0:06:52.200
<v Speaker 1>or we saw what happened with Pinterests or whatever it

0:06:52.279 --> 0:06:54.159
<v Speaker 1>might be, you know you should go and you know,

0:06:54.279 --> 0:06:57.160
<v Speaker 1>and and try to you know, going faster. I allowed

0:06:57.160 --> 0:06:59.120
<v Speaker 1>myself to believe that, okay, you know, we should give

0:06:59.160 --> 0:07:00.880
<v Speaker 1>it a look, and and then once we gave it

0:07:00.880 --> 0:07:02.520
<v Speaker 1>a up, we got really excited about it. And so

0:07:02.720 --> 0:07:05.640
<v Speaker 1>ultimately it became a distraction for both Jason and Bradford.

0:07:05.760 --> 0:07:07.320
<v Speaker 1>And at one point they were spending a couple of

0:07:07.360 --> 0:07:09.240
<v Speaker 1>weeks out of the month. They're trying to set up

0:07:09.480 --> 0:07:11.600
<v Speaker 1>the right teams and the right executives to run the

0:07:11.640 --> 0:07:14.720
<v Speaker 1>year of operation, while they still had all these problems

0:07:14.720 --> 0:07:18.040
<v Speaker 1>in the US with merchandising and inventory. It was just

0:07:18.120 --> 0:07:24.080
<v Speaker 1>getting to be too much. In our first year, we

0:07:24.120 --> 0:07:26.760
<v Speaker 1>worked with more than five thousand designers and sold nearly

0:07:26.840 --> 0:07:29.800
<v Speaker 1>two million products, and our dreams for FAB are just

0:07:30.040 --> 0:07:34.120
<v Speaker 1>getting started. And even though expanding geographically onto an entirely

0:07:34.400 --> 0:07:37.720
<v Speaker 1>new continent, FAB was expanding in some more product categories.

0:07:37.840 --> 0:07:41.960
<v Speaker 1>This is about authenticity. This is about showing people products

0:07:41.960 --> 0:07:44.800
<v Speaker 1>they will love and delighting them day after day, adult products,

0:07:45.000 --> 0:07:47.280
<v Speaker 1>pet products, all sorts of things that they had to

0:07:47.360 --> 0:07:51.239
<v Speaker 1>find interesting, unique things for. Jason said that the quality

0:07:51.360 --> 0:07:54.120
<v Speaker 1>started to deteriorate. At fab. We believe we have a

0:07:54.160 --> 0:07:57.760
<v Speaker 1>special opportunity to become the world's greatest design resource. On

0:07:57.840 --> 0:08:01.320
<v Speaker 1>the outside, everything's still looked great. I I remember spring

0:08:01.320 --> 0:08:04.680
<v Speaker 1>two thousand thirteen story fab dot com winning the e

0:08:04.800 --> 0:08:07.880
<v Speaker 1>commerce war with whimsy. Not quite sure if I remember

0:08:07.880 --> 0:08:11.480
<v Speaker 1>who wrote that one. That might have been me. Okay,

0:08:11.520 --> 0:08:14.040
<v Speaker 1>that was me. But inside, as you found out later,

0:08:14.400 --> 0:08:17.400
<v Speaker 1>things were starting to fall apart. Well. They were spending

0:08:17.520 --> 0:08:20.080
<v Speaker 1>so much money on marketing, I think like thirty million

0:08:20.400 --> 0:08:24.800
<v Speaker 1>in and the customers they were getting through marketing. Per

0:08:24.920 --> 0:08:28.440
<v Speaker 1>Jacent's calculations, he thought that they would be as dedicated

0:08:28.560 --> 0:08:31.600
<v Speaker 1>as the early customers. That's how he built all his projections,

0:08:31.640 --> 0:08:34.480
<v Speaker 1>But in fact they were kind of one and done,

0:08:34.520 --> 0:08:36.360
<v Speaker 1>like they would buy one product and never come back

0:08:36.400 --> 0:08:39.520
<v Speaker 1>to the site. And behind the scenes he was out

0:08:39.520 --> 0:08:43.160
<v Speaker 1>there frantically trying to raise money to fit those growth projections.

0:08:43.800 --> 0:08:46.680
<v Speaker 1>But people were actually a little bit skeptical and he

0:08:46.840 --> 0:08:49.400
<v Speaker 1>fell short. He ended up with only a hundred fifty

0:08:49.400 --> 0:08:51.840
<v Speaker 1>million of the three hundred million he thought he needed.

0:08:52.160 --> 0:08:55.800
<v Speaker 1>What feeling at that time because everyone who talked to

0:08:55.800 --> 0:09:00.760
<v Speaker 1>you around then describes you as just being completely, you know,

0:09:01.920 --> 0:09:07.520
<v Speaker 1>religious about Fab's vision. And in anyone who thought that

0:09:07.520 --> 0:09:10.040
<v Speaker 1>that the company maybe wasn't going to grow as fast,

0:09:10.400 --> 0:09:12.840
<v Speaker 1>UM would would get talked out of it. It is

0:09:12.880 --> 0:09:15.800
<v Speaker 1>quite possible that, you know, I think you're in a

0:09:15.840 --> 0:09:18.520
<v Speaker 1>situation like that, then maybe you can get somewhat delusional

0:09:18.960 --> 0:09:22.800
<v Speaker 1>um in thinking that you can just figure it out. UM.

0:09:22.960 --> 0:09:26.280
<v Speaker 1>And also you know, just you know, it's like you

0:09:26.280 --> 0:09:29.240
<v Speaker 1>you see that you know in that that you're growing,

0:09:29.440 --> 0:09:31.360
<v Speaker 1>and that if you can figure out way to keep growing,

0:09:31.440 --> 0:09:33.840
<v Speaker 1>that you can kind of grow your way through it. UM.

0:09:34.240 --> 0:09:36.920
<v Speaker 1>And I think it was also kind of a fear

0:09:37.000 --> 0:09:40.760
<v Speaker 1>for what happens if we don't if we, if we,

0:09:40.880 --> 0:09:42.599
<v Speaker 1>if we if you know, if we did hit you

0:09:42.760 --> 0:09:45.320
<v Speaker 1>slam on, if we did hit the brakes and we

0:09:45.360 --> 0:09:48.200
<v Speaker 1>said let's not grow as fast, that would that would

0:09:48.200 --> 0:09:50.960
<v Speaker 1>have meant, you know, it's pretty ter Cronian layoffs. And

0:09:51.000 --> 0:09:53.160
<v Speaker 1>that brings us to the moment where we started today's

0:09:53.160 --> 0:09:55.960
<v Speaker 1>show with us now for an exclusive interview is Fab

0:09:56.000 --> 0:09:59.280
<v Speaker 1>dot com CEO Jason Goldberg. Jason, great to see you.

0:09:59.480 --> 0:10:02.319
<v Speaker 1>Thanks for the scoop, huge cash infusion for you and

0:10:02.360 --> 0:10:04.120
<v Speaker 1>your company. What are you going to do with them?

0:10:04.160 --> 0:10:06.640
<v Speaker 1>On TV, things seemed to be doing so well. Jason

0:10:06.679 --> 0:10:09.480
<v Speaker 1>looked so proud, but in reality he was backed into

0:10:09.480 --> 0:10:12.959
<v Speaker 1>a corner. And then Sarah, you present him with the emails.

0:10:13.760 --> 0:10:16.280
<v Speaker 1>You know, I was very proud of the company, very

0:10:16.280 --> 0:10:21.880
<v Speaker 1>protective of the company, and UM and I also was

0:10:22.360 --> 0:10:26.240
<v Speaker 1>scared at the time, um, because you know, I was

0:10:26.320 --> 0:10:28.960
<v Speaker 1>in the midst of, you know, going through a fundraising

0:10:29.000 --> 0:10:31.559
<v Speaker 1>process where you know, we raised a lot of money,

0:10:31.559 --> 0:10:35.080
<v Speaker 1>but I also knew that we didn't have enough, and UM,

0:10:35.240 --> 0:10:37.080
<v Speaker 1>I was worried about kind of like the chinks in

0:10:37.080 --> 0:10:45.800
<v Speaker 1>the armor. And at least to the public and to me,

0:10:46.360 --> 0:10:50.040
<v Speaker 1>he was denying that things were pretty bad, but Fab's

0:10:50.080 --> 0:10:53.000
<v Speaker 1>board members were looking at the company's numbers and urging

0:10:53.120 --> 0:10:56.720
<v Speaker 1>Jason to face reality. Howard Morgan was an early investor

0:10:56.800 --> 0:10:59.600
<v Speaker 1>in FAB and he also sat on Fab's board. This

0:10:59.640 --> 0:11:02.960
<v Speaker 1>is what he was telling Jason at the time. At

0:11:03.040 --> 0:11:04.920
<v Speaker 1>this current rate, you're gonna be out of money much

0:11:04.960 --> 0:11:08.400
<v Speaker 1>too quickly. You've got to really make radical changes here.

0:11:08.440 --> 0:11:11.400
<v Speaker 1>You've got to make radical cuts. You've got to change

0:11:11.440 --> 0:11:13.920
<v Speaker 1>some of the culture, because there was a very free

0:11:13.920 --> 0:11:17.400
<v Speaker 1>spending culture for quite a while as well. Uh you know,

0:11:17.960 --> 0:11:21.720
<v Speaker 1>Jason and Bradford were getting off for Europe a couple

0:11:21.720 --> 0:11:25.800
<v Speaker 1>of times a month, and uh, you know, we're entertaining

0:11:26.480 --> 0:11:30.439
<v Speaker 1>uh merchants and suppliers and stuff like that. You've got

0:11:30.440 --> 0:11:34.320
<v Speaker 1>to cut all that. So it took a bit for

0:11:34.400 --> 0:11:37.480
<v Speaker 1>this message to really reached Jason, but Howard says that

0:11:37.520 --> 0:11:40.760
<v Speaker 1>to his credit, Jason acted fast. Wants to click for him,

0:11:40.880 --> 0:11:43.480
<v Speaker 1>and it wasn't just about cutting back on his first

0:11:43.480 --> 0:11:47.080
<v Speaker 1>class flights to Europe and five star hotel stays. Just

0:11:47.120 --> 0:11:49.440
<v Speaker 1>a little more than a month after that TV interview,

0:11:49.679 --> 0:11:52.679
<v Speaker 1>fabulaid off a hundred employees in Berlin to refocus in

0:11:52.720 --> 0:11:55.800
<v Speaker 1>the US, and they cut another hundred employees, mostly in

0:11:55.800 --> 0:11:58.200
<v Speaker 1>New York two months after that. And in those difficult months,

0:11:58.280 --> 0:12:01.240
<v Speaker 1>Jason's best friend and co founder also left. Yeah, I

0:12:01.320 --> 0:12:04.040
<v Speaker 1>reached out to Bradford to see if he would chat

0:12:04.080 --> 0:12:07.920
<v Speaker 1>with us, he said in a Twitter direct message that quote.

0:12:08.000 --> 0:12:10.640
<v Speaker 1>I've put that way behind me and I'm focusing forward.

0:12:10.800 --> 0:12:15.640
<v Speaker 1>I hope you understand Bradford's nowaty day. You know my

0:12:15.679 --> 0:12:18.400
<v Speaker 1>co founder, Bradford was, you know, my best friend. We

0:12:18.520 --> 0:12:21.480
<v Speaker 1>you know, built the business together, you know, um, you

0:12:21.520 --> 0:12:24.400
<v Speaker 1>know he he and I did not kind of see

0:12:24.400 --> 0:12:29.920
<v Speaker 1>eyed eye on um the needs for cuts and um

0:12:29.960 --> 0:12:32.000
<v Speaker 1>and how deep we should go with the cuts. And

0:12:32.000 --> 0:12:35.520
<v Speaker 1>it's very hard for him. And where I failed was

0:12:35.559 --> 0:12:37.800
<v Speaker 1>I should have found a way to keep him on

0:12:37.880 --> 0:12:44.480
<v Speaker 1>and involve him. Despite those cost cuts, Jason was never

0:12:44.520 --> 0:12:47.840
<v Speaker 1>able to turn things back around again. After some more layoffs.

0:12:47.880 --> 0:12:51.520
<v Speaker 1>In early Jason sold FAB to private equity firm for

0:12:51.640 --> 0:12:54.560
<v Speaker 1>fifteen million. He used that money to fund a spin

0:12:54.600 --> 0:12:58.640
<v Speaker 1>off site called him that made custom design furniture, and

0:12:58.880 --> 0:13:01.960
<v Speaker 1>I never really took off either. Jason sold that company

0:13:02.000 --> 0:13:05.240
<v Speaker 1>earlier this year. So to recap, Jason Goldberg laid off

0:13:05.320 --> 0:13:07.960
<v Speaker 1>hundreds of employees, lost hundreds of millions of dollars of

0:13:08.000 --> 0:13:11.000
<v Speaker 1>his investors money, had a falling out with his best friend,

0:13:11.040 --> 0:13:14.960
<v Speaker 1>and became a poster child for a start up belly flop.

0:13:15.040 --> 0:13:17.080
<v Speaker 1>And yet he's still in the game and he's got

0:13:17.120 --> 0:13:19.640
<v Speaker 1>a new company. So much hype back then, but his

0:13:19.679 --> 0:13:22.600
<v Speaker 1>new company, he's lying low. It's based in Berlin, and

0:13:22.800 --> 0:13:25.840
<v Speaker 1>his engineering team is in India. But you're right. For

0:13:25.920 --> 0:13:28.160
<v Speaker 1>most people, you'd think that would be enough to keep

0:13:28.200 --> 0:13:31.360
<v Speaker 1>you on the sidelines, but really not Jason. That new

0:13:31.400 --> 0:13:34.360
<v Speaker 1>company he started just a day after he signed the

0:13:34.360 --> 0:13:39.000
<v Speaker 1>deal with him. That's I guess part of my therapy

0:13:39.120 --> 0:13:43.040
<v Speaker 1>is just building something. And um, you know, I I

0:13:44.240 --> 0:13:48.920
<v Speaker 1>love designing products. I love figuring out use cases, uh

0:13:49.120 --> 0:13:52.320
<v Speaker 1>and acknowledging that you know, when it comes to turn

0:13:52.320 --> 0:13:54.560
<v Speaker 1>it into a business that I have to make sure

0:13:54.679 --> 0:13:59.080
<v Speaker 1>to avoid the missteps that we have with the What

0:13:59.160 --> 0:14:03.920
<v Speaker 1>about you, I mean, what about your family and friends,

0:14:03.960 --> 0:14:09.719
<v Speaker 1>your new life in Berlin? Um, how are you? How

0:14:09.720 --> 0:14:13.560
<v Speaker 1>are you doing just in terms of personally coping with

0:14:13.600 --> 0:14:16.679
<v Speaker 1>everything you obviously you know from on a on a

0:14:17.240 --> 0:14:20.600
<v Speaker 1>friends standpoint. You know, I got divorced from Bradford basically

0:14:20.800 --> 0:14:23.400
<v Speaker 1>right and so that you know, and then we were friendly.

0:14:23.440 --> 0:14:24.800
<v Speaker 1>Now took us a while to be able to talk

0:14:24.840 --> 0:14:27.240
<v Speaker 1>to each other. And you know, we've seen each other

0:14:27.280 --> 0:14:29.240
<v Speaker 1>a few times and we have a lot of friends

0:14:29.240 --> 0:14:31.400
<v Speaker 1>in common, but you know, the relationship is seen hard

0:14:31.440 --> 0:14:33.440
<v Speaker 1>for to ever be the same. And I think we

0:14:33.440 --> 0:14:36.600
<v Speaker 1>we have, we developed a mutual respect. Um, But it's

0:14:36.640 --> 0:14:38.320
<v Speaker 1>it's you know, it's it's not the same and we're

0:14:38.320 --> 0:14:41.600
<v Speaker 1>not best friends anymore. One relationship Jason has kept is

0:14:41.600 --> 0:14:44.200
<v Speaker 1>the one with his husband. He and Chris got married

0:14:44.200 --> 0:14:46.280
<v Speaker 1>in two twelve, which was back when things were still

0:14:46.320 --> 0:14:49.040
<v Speaker 1>really good with BAB, and they stayed together even in

0:14:49.080 --> 0:14:51.920
<v Speaker 1>the aftermath of bab Stermize. Now they live in Berlin together.

0:14:52.360 --> 0:14:55.960
<v Speaker 1>We're both enjoyed living in Berlin and um getting you know,

0:14:56.040 --> 0:14:57.880
<v Speaker 1>kind of getting away from some of the kind of

0:14:57.920 --> 0:15:00.760
<v Speaker 1>spotlight and glare from the kind the star in the world.

0:15:01.000 --> 0:15:05.040
<v Speaker 1>But I said this year sixteen is you know, people

0:15:05.040 --> 0:15:07.720
<v Speaker 1>who know me really well, and I've got a very good,

0:15:07.760 --> 0:15:10.680
<v Speaker 1>you know, group of friends all around the world. Um,

0:15:10.720 --> 0:15:12.520
<v Speaker 1>you know, they would say that they haven't seen me

0:15:12.640 --> 0:15:15.720
<v Speaker 1>this kind of um at peace and kind of mellow

0:15:15.720 --> 0:15:18.280
<v Speaker 1>in a long time. Jason says that more than anything,

0:15:18.320 --> 0:15:20.920
<v Speaker 1>he's just really sorry that you'd let his employees down

0:15:21.000 --> 0:15:24.440
<v Speaker 1>at FAB, and he feels awful that Fab's investors never

0:15:24.440 --> 0:15:27.960
<v Speaker 1>made a return on their investments. But Howard Morgan, who's

0:15:28.000 --> 0:15:30.440
<v Speaker 1>that FAB investor and board member we've heard from earlier,

0:15:31.080 --> 0:15:33.600
<v Speaker 1>says he doesn't regret investing in FAB. But I don't

0:15:33.600 --> 0:15:35.480
<v Speaker 1>regret I don't regret doing it. Because we have to

0:15:35.520 --> 0:15:37.480
<v Speaker 1>swing for the fences in order to get the big

0:15:37.480 --> 0:15:39.840
<v Speaker 1>wins that we get. We were the first people in Uber,

0:15:39.880 --> 0:15:42.720
<v Speaker 1>were the first people in Blue Apron. I mean, you know,

0:15:42.960 --> 0:15:44.640
<v Speaker 1>so we we've had we had some some of our

0:15:44.680 --> 0:15:49.280
<v Speaker 1>successes as well. Howard Morgan even invested his personal money

0:15:49.360 --> 0:15:53.280
<v Speaker 1>in the startup that Bradford Shellhammer started after he left FAB.

0:15:54.360 --> 0:15:56.680
<v Speaker 1>I asked him if given the opportunity, he would invest

0:15:56.680 --> 0:16:00.600
<v Speaker 1>in Jason's new startup too well first round because the

0:16:00.640 --> 0:16:04.800
<v Speaker 1>idea conflicts with another one about company. So but I

0:16:04.800 --> 0:16:08.200
<v Speaker 1>would invest in Jason again, absolutely, because you feel like

0:16:08.200 --> 0:16:11.920
<v Speaker 1>you've learned. I know that he's learned. I mean I

0:16:11.960 --> 0:16:14.560
<v Speaker 1>see what he's trying to do with with with Pico uh.

0:16:14.800 --> 0:16:17.640
<v Speaker 1>And not not only has he learned, but he's quite

0:16:17.680 --> 0:16:21.160
<v Speaker 1>a bit humbler, I think. And he still has the

0:16:21.240 --> 0:16:24.000
<v Speaker 1>skills to design great products and to motivate people to

0:16:24.120 --> 0:16:31.440
<v Speaker 1>join them in the effort. The stories are really a

0:16:31.480 --> 0:16:36.040
<v Speaker 1>great commentary on Silicon Valley and how it perhaps doesn't

0:16:36.080 --> 0:16:39.360
<v Speaker 1>celebrate failure as much as it says, but it tolerates failure,

0:16:39.400 --> 0:16:41.840
<v Speaker 1>and an entrepreneur can drive a company into the ground,

0:16:42.000 --> 0:16:46.760
<v Speaker 1>can fail very visibly, and yet there's always the second chance.

0:16:46.760 --> 0:16:49.000
<v Speaker 1>There's going to be someone out there who believes that

0:16:49.080 --> 0:16:52.080
<v Speaker 1>he or she has learned from their mistakes and deserves

0:16:52.160 --> 0:16:55.080
<v Speaker 1>to try it again. Well, failure in Silicon Valley is

0:16:55.080 --> 0:16:59.880
<v Speaker 1>actually widely celebrated. You see see posters and Facebook's wall

0:17:00.080 --> 0:17:03.920
<v Speaker 1>saying um, move fast, break things, fail fast fail. Often

0:17:04.119 --> 0:17:08.480
<v Speaker 1>you have entrepreneurs who write these heartfelt medium posts about

0:17:08.520 --> 0:17:11.200
<v Speaker 1>what they learned after they had to shut the lights

0:17:11.240 --> 0:17:15.159
<v Speaker 1>off at their startup. And in this failure is unique

0:17:15.160 --> 0:17:17.879
<v Speaker 1>because of how how big it was, but it doesn't

0:17:17.920 --> 0:17:21.439
<v Speaker 1>make it any less a part of the Silicon Valley

0:17:21.480 --> 0:17:24.320
<v Speaker 1>culture where we all sort of feel like, if you're

0:17:24.320 --> 0:17:27.480
<v Speaker 1>going to take these big risks, some things aren't going

0:17:27.520 --> 0:17:31.040
<v Speaker 1>to work out. And actually more than startups fail. But

0:17:31.160 --> 0:17:32.879
<v Speaker 1>let me ask you this, So let's go back to

0:17:32.880 --> 0:17:36.040
<v Speaker 1>where we started the show two thirteen. You're seeing him

0:17:36.080 --> 0:17:39.720
<v Speaker 1>in the Bloomberg offices. Uh, you're presenting him all these

0:17:39.840 --> 0:17:42.800
<v Speaker 1>uh internal emails and documents from the company, and he's

0:17:42.800 --> 0:17:45.280
<v Speaker 1>trying to persuade you not to run the story. Is

0:17:45.320 --> 0:17:47.840
<v Speaker 1>he now fast forward to today? Do you think he's

0:17:47.840 --> 0:17:50.600
<v Speaker 1>still spinning you in terms of how he says he's

0:17:50.680 --> 0:17:53.879
<v Speaker 1>learned and he says he's moved on, and um, you know,

0:17:53.880 --> 0:17:56.199
<v Speaker 1>it's a much more humble I mean, I think I

0:17:56.240 --> 0:17:59.520
<v Speaker 1>think any any time you go through something like that,

0:17:59.640 --> 0:18:01.760
<v Speaker 1>you kind of have to force yourself to learn if

0:18:01.760 --> 0:18:03.680
<v Speaker 1>you're going to have the confidence to go out there

0:18:03.680 --> 0:18:06.760
<v Speaker 1>and do something again. But what I will say is,

0:18:07.680 --> 0:18:10.080
<v Speaker 1>oh my gosh, I'm reporting for this podcast, and in

0:18:10.240 --> 0:18:13.280
<v Speaker 1>reporting on Jason in the past, there are so many

0:18:13.359 --> 0:18:18.800
<v Speaker 1>people who will not cannot refuse to forget times that

0:18:18.880 --> 0:18:22.399
<v Speaker 1>he's he's spun them, or lie to them or or

0:18:22.440 --> 0:18:26.159
<v Speaker 1>screwed them over. And so I think after a while

0:18:26.320 --> 0:18:30.520
<v Speaker 1>it becomes difficult to to believe. And I think, you know,

0:18:30.560 --> 0:18:33.239
<v Speaker 1>even for Jason himself, he has to pick himself back up.

0:18:33.320 --> 0:18:35.880
<v Speaker 1>And for you personally, are you still skeptical my job?

0:18:36.440 --> 0:18:38.600
<v Speaker 1>Are there days where I'm like, you know, gosh, I'll

0:18:38.600 --> 0:18:40.439
<v Speaker 1>never you know, I'll never work again. And you know,

0:18:40.440 --> 0:18:43.040
<v Speaker 1>who's want to hire this guy or invest in this guy?

0:18:43.200 --> 0:18:46.320
<v Speaker 1>And yeah, but not too much. I mean, I think

0:18:46.359 --> 0:18:48.600
<v Speaker 1>for the for the most part, I think the attitude

0:18:48.600 --> 0:18:52.760
<v Speaker 1>of you know, I think that I have some talents

0:18:53.160 --> 0:18:56.720
<v Speaker 1>and that has some flaws, and I need to prove

0:18:56.760 --> 0:18:59.280
<v Speaker 1>to myself and to others that the talents can overcome

0:18:59.280 --> 0:19:01.439
<v Speaker 1>the flaws and I can improve on the laws and

0:19:02.000 --> 0:19:05.280
<v Speaker 1>um and be successful. And that's what I'm setting out

0:19:05.320 --> 0:19:09.879
<v Speaker 1>to do right now. Well, that's it for this week's

0:19:09.920 --> 0:19:13.720
<v Speaker 1>episode of Decrypted. Thanks for listening. If you haven't already,

0:19:13.760 --> 0:19:15.879
<v Speaker 1>subscribe to our show and iTunes or any of the

0:19:15.920 --> 0:19:18.960
<v Speaker 1>great podcast apps out there and leave us a grating

0:19:18.960 --> 0:19:21.320
<v Speaker 1>and review that goes a long way and getting our

0:19:21.320 --> 0:19:23.199
<v Speaker 1>show in front of more people, and tell us what

0:19:23.240 --> 0:19:25.439
<v Speaker 1>you thought of today's show. You can talk to me

0:19:25.480 --> 0:19:28.919
<v Speaker 1>on Twitter at at brad Stone, Sarah's at Sarah Fryer,

0:19:29.200 --> 0:19:32.440
<v Speaker 1>and you can follow our whole tech team at at Technology.

0:19:32.760 --> 0:19:36.080
<v Speaker 1>This episode was produced by Liz Smith and Akiato. Aaron

0:19:36.080 --> 0:19:39.040
<v Speaker 1>Black assisted with reporting my print story, which I hope

0:19:39.040 --> 0:19:41.959
<v Speaker 1>you'll check out on our beautiful, newly designed tech page

0:19:42.000 --> 0:19:46.000
<v Speaker 1>at Bloomberg dot com. Slash Tech was edited by Emily Busso.

0:19:46.560 --> 0:19:49.320
<v Speaker 1>ALC McCabe is head of Bloomberg Podcast. We'll see you

0:19:49.400 --> 0:19:49.840
<v Speaker 1>next week.