Jason Del Rey

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Fab to Lay Off at Least Another 50 Employees

fab broken heart layoffs

Restructuring efforts at Fab are about to hit its New York headquarters hard, according to sources close to the situation.

The e-commerce startup, which recently received massive funding, is getting ready to announce another round of layoffs in the U.S., and is also considering making more cuts to its already decimated European staff, sources told AllThingsD.

Fab spokeswoman Deborah Roth said earlier this week that the company would soon announce “management changes,” but the additional layoffs are actually expected to affect at least 50 employees across all levels of its New York headquarters, sources said. Affected employees there are expected to be notified on Friday that they will be kept on at Fab for only three more months, according to a person close to the company. Fab’s New York headquarters currently is home to between 150 and 200 employees.

Asked for comment today, Roth directed me to the statement she issued earlier this week that said in part that “Fab is undergoing management changes as we realign the business to execute on our 2014-2017 plan.”

These layoffs would mark the third round of staff cuts in recent months, which have already eliminated at least 250 employees — more than a third of Fab’s staff — as CEO Jason Goldberg attempts to transform his heavily-funded startup from its flash-sales roots into a mainstream online catalog.

The decision to spread the layoffs over several rounds of cuts has been puzzling to many people inside the company, and has recruiters homing in on the company’s top executives, industry sources said.

“When you make three consecutive cuts, you’re very vulnerable,” one of these people told AllThingsD.

The company has already lost co-founder and design chief Bradford Shellhammer, who announced earlier this month that he would step away from the company’s day-to-day operations. Sources said that Goldberg had spoken to Shellhammer about scaling back his duties, which had included managing merchandising operations, to focus exclusively on choosing products to sell on Fab. Shellhammer is said to have initially agreed to this plan, but then decided shortly thereafter to leave the company instead.

Beth Ferreira, the company’s COO, is also planning to leave Fab in the next two months, as AllThingsD and others reported earlier this week. She has played a critical role in creating the systems and processes that currently power Fab’s logistics and customer-service operations.

The layoffs and executive departures mark a dramatic turn of events for a company that was valued at $1 billion when it raised more than $150 million in venture funding this summer.

Now, just five months later, Fab finds itself in turmoil, and its board finds itself betting that the CEO who has led the company to this point will be the same one that can lead a much leaner company toward a profitable future.

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— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald