Sep 16, 2015 · 16 minutes

Years ago, I remember Jason Goldberg, the co-founder of Fab, asking me how many times I’d ordered from the company.

My answer at the time: Only twice. Goldberg told me that three orders was the magic number for a Fab customer, and he was elated I was just one away. He urged me to go shop.

That conversation was so long ago, long before Fab became the first iconic unicorpse of our great age of unicorns. It was so long ago, inf fact, that I can’t even remember why order number three was so magic. Was that the point when the company’s steep customer acquisition cost meant I was finally profitable for Fab? Or did it have to do with cementing a pattern of behavior?

That magic number idea resurfaced in my mind Monday night as I was placing my third order from Bezar-- the Fab “do-over” launched earlier this year by Fab’s other co-founder Bradford Shellhammer.

The meaning of that number is very different for Bezar. The company hasn’t raised nearly as much money as Fab did, and doesn’t ever plan to. Also, Bezar is laser focused on first purchase profitability, on the assumption that a customer may not return a second time, let alone a third. “Gone are the days where anyone can count on someone coming back three times to make money off them,” founder Bradford Shellhammer tells me. “People are fickle and they have lots of options.”

The company doesn’t always hit that first purchase profitability goal, but Bezar’s gross margins are over 50%. In some months, they are north of 60%, Shellhammer says. That’s because of discipline, but also because of the advantages of categories like jewelry, home accessories and art, where there’s far more pricing room than, say, food or gadgets.

Of course, Fab should have had that advantage too.

This time around, Shellhammer’s trade-off is growth. There’s no more magic venture math of what happens after three purchases. This time, when I hit order number three, I got a note. An email from Shellhammer simply thanking me.

It’s a nice touch. I do that too when I recognize a new Pando member by name. But the hard facts are: I’m able to do that because a good day for us is 30 new members. The volume of transactions at Bezar can’t be massive if Shellhammer is noticing individual customers. “It’s sustainable and comfortable,” he says. “I’m OK with growing at a steady pace.”

No kidding. He’s played the go big or go home game before. It cost him a company, a best friend, and there was a pretty bruising emotional aftermath.

Last spring, Shellhammer spoke at Pandoland, and at the speaker dinner he introduced himself to a local entrepreneur in the healthcare space who’d somehow missed the rise and fall of Fab. Shellhammer detailed how much money they’d raised-- some $336 million in 11 rounds from some 35 investors-- almost as a confession. The entrepreneur congratulated him, impressed. “Please don’t congratulate me,” Shellhammer said. “It wasn’t a good thing.”

Bezar in contrast has raised a tiny $2.3 million.

On stage the next day, Shellhammer spoke openly and honestly about what all went wrong from Fab, how he’d come to peace with it, what motivated him to try again, and what this do-over of an ecommerce site centered around his quirky aesthetic would do differently.

My three-purchase milestone caused me to reflect on my experience with using both Fab and Bezar as a consumer. A few differences stand out.

The first is the types of things I’m purchasing. The fact that there’s a difference at all is remarkable, because Shellhammer was the “secret sauce” of Fab-- the man with the quirky, just-out-there-enough design touch that couldn’t be taught, and couldn’t be scaled… at least the way Fab tried to do it. That should have been the constant. That was the reason I was glad “Fab” was back to some degree when Bezar launched.

Bezar has the same eclectic feel, but it’s elevated, curated with just four new virtual pop up shops per day. “I’ve grown up a lot in five years,” Shellhammer says. I wondered whether it was that as much as Fab’s growth pressures forcing him to widen his aesthetic artificially. He acknowledged it was likely a little bit of each.

“I’m not building the same company,” he says. “We have higher quality and a higher price point than in the past. I’m a very different person and what I like is different and this world is different. I’ve grown up a little bit over the last four or five years.

“I was naive,” he continues. “I thought one brand could be everything to all people, but this time we are laser focused. I think we have a real opportunity to take thirty-somethings and fill their homes with really cool shit because they don’t have a lot of options.”

Fab tried to just stand for “good design,” and arguably that broad of a mandate was to blame for its demise along with the wild customer acquisition costs and over-capitalization. It’d be easy for Shellhammer to throw the blame all on Goldberg-- the architect of the business. But he’s spent the last few years doing too much soul searching to take that easy emotional out.

What’s so interesting about Bezar is how reminiscent of Fab it is-- on paper. It’s rare you see a serial entrepreneur essentially try the exact same thing again. But in the product-- the place you’d least expect-- there are subtle but significant shifts. But while surprising, it makes sense if you consider that both sites were built to be reflections of Shellhammer, and how much the Fab experience and the emotional aftermath forever changed him. The sites couldn’t possibly feel the same.

Some examples of the distinction in product, from my point of view as a customer:

I don’t remember what my first three Fab orders were. But I do remember three things I ordered: A print of a velvet Dolly Parton painting for my brother, some balloon animal pillows for Paul Carr that looked remarkably like the old NSFWCORP logo and are still in storage in Vegas somewhere, and a necklace with a tiny unfinished diamond on it when my daughter-- my own little diamond in the rough-- was born.

Everything I’ve bought from Bezar has color or whimsy to it, but they are more substantial somehow than a velvet Dolly Parton poster. (Much as I still love that purchase.) There are the elephant, dinosaur, and turtle planters peppered around my house with succulents growing out of their backs-- a sort of modern, upscale ChiaPet. And the twin terrariums on my mantle-- one with two tiny little kids wandering through a wooded ecosystem and the other across the way where a lone woman is holding an “I love you!” sign pointed right at them. All of the above came from Twig Terrariums in Brooklyn, a small shop that considers its work “living sculptures” that I would have never discovered on my own.

That was purchase #1.

Purchase #2 was jewelry from a small Texas designer called F is for Frank. I got a dramatic rabbit head ring. My son and I are both year of the rabbit, and I’m always looking for rabbit jewelry that isn’t too juvenile or cutesy. I also got some skull stud earrings from the same designer that I wear almost every day.

Purchase #3 -- made this past Monday night-- was my largest yet. I bought eight boldly patterned pillows for my living room couch, mostly in different patterns of chevrons. I also bought two pieces of art. One from an artist in Istanbul, and one from an artist in Jakarta. Both were young women, and I was touched by their profile as much as their work. The one from Jakarta in particular, weaves in so much of her home country’s color and spiritual influences that I was nostalgic looking at her collection. Indonesia was one of my favorite places I spent time researching my second book.

Here’s the interesting thing: I didn’t have to look at my receipt to remember all of those above details. The fact that I remember where each of those vendors, designers, and artists are from, and in many cases their names is remarkable. I can’t remember the story or hometown of any vendor I ever bought from at Fab.

That’s not just because my Fab orders were made longer ago -- with Bezar, Shellhammer has focused on putting the individual designers, their pictures and their stories front and center this time. It all feels more hand-picked and personal. At Pandoland he described it as the soul of the company. It sounded like clever marketing, but he’s actually backed it up in the product. In several cases, the stories or pictures of the designers is what has made the purchase more emotional-- and closes the sale for me.

When we spoke yesterday, Shellhammer talked about how his failure with Fab made his relationship with vendors even stronger. “I am more committed to this community than I was ten years ago when I started my career or five years ago or even last year,” he says. “They understand what I went through, because they are small businesses too. We’ve all felt pain. There’s a sense that we’re in this together there wasn’t before. They give us their best price, but we also make sure they make money on each order. This business has to have some sort of social or moral compass.”

If Fab’s “good problem to have” was the negative effects of how much cash it raised, this insight is its silver lining. The company flamed out so hugely that it likely will become a Harvard Business School case study for decades, and yet, that failure didn’t alienate Shellhammer from his community of vendors-- it bonded them more. “At Fab, I was more like a rockstar parachuting into trade shows; people just wanted to take a picture with me,” he says. “Now the conversations are more intimate, with more humility.”

Shellhammer hates to think of Bezar in relation to Fab, insisting it’s a totally new distinct venture. But I tell him he’s dreaming if he thinks the world will ever see it that way. There’s no way to see them as distinct. They are two ecommerce businesses centered around his aesthetic as its core. One hopelessly in reaction to what happened to the other. How could it not be? The alternative is he learned nothing from Fab.

What’s amazing isn’t that he’s trying again, doing things on the business end diametrically differently than what didn’t work before. What’s amazing is that he still trusts his gut as a merchant as much as he does. That he still trusts that the world wants his aesthetic. That it can scale into something large-- even if it’s not quite as large or anywhere near as fast growing as Fab’s projections.

A lot of the company is a throwback to what was hot in the era of Fab. For instance, he still talks about Bezar as editorial content as much as ecommece. Commerce as content was a huge buzz-phrase a few years ago, that mostly flamed out as much as flash sales and subscription commerce.

He also still clings to time-limited sales of merchandize -- even though Zulily was the last site born from that wave that once looked promising and ultimately disappointed. He stubbornly points to a difference between “Flash sales” and “pop up shops.” “This is not flash,” he says. “These are not brands you’ve seen before, these are not products you’ve seen before, and a lot of times they aren’t discounted. It’s just a really cool mechanism for discovering new stuff.” The rest of the world-- investors, consumers, etc-- may not see that distinction so clearly.

Indeed, the pop up shop nature of the site gives me a reason to go to Bezar nearly everyday for about five or ten minutes during a mid-morning work break. I probably wouldn’t do that if it was a more traditional retail model. But I’ve also abandoned shopping carts and when I’ve come back, that sale is done, and Bezar has lost a sale.

The most anachronistic annoyance of the site: You still have to log in to browse Bezar, although admittedly the standardization of Facebook logins makes that hurdle less than it used to be.

The shipping times are still longer than we’d expect in an Amazon world-- something Fab struggled with early on-- but Bezar owns that annoyance, boasting “it’s worth the wait!” at checkout.

Shipping is most definitely not free.

And Shellhammer still believes he can make the world a more colorful, well designed place.

Each of these moves are such a throwback to the things that mostly haven’t worked about ecommerce, doubling down on them is something you’d be more likely to see from a confident entrepreneur coming off a big win… not an epic loss.

Some of it is going to change as the site grows. He wouldn’t give specifics but says some “big changes” are coming to Bezar, saying “I’m not giving anything away, but you are clearly articulating a common predicament we’ve found” when it comes to time-limited sales. But he’s determined that Bezar’s importance as an editorial voice never be compromised. It’s one of the reasons vendors want to be on their site and give them such good prices.

None of this confidence is as easy as it seems. “This is an up and down business as you know,” he says. “I have to come home every once in a while and tell myself to keep going, to keep going in the way I want to do it. There are so many things I want to keep doing the way I’ve done them my entire life.”

It’s obvious why this time around, Shellhammer wants to go with his business gut to grow slower. If he’s wrong, he’s wrong. And he’ll no longer have the lingering wonder if he may have been right. But what’s surprising is that the experience didn’t cause him to doubt even more. How he’s stuck with an evolved version of his merchant gut, even as its evolved and become more distilled and focused.

Because it wasn’t just Fab. Look at the implosions of ShoeDazzle and Beachmint, and the dramatic stumbles and slowing of onetime rocketships like Gilt, OneKingsLane, and Zulily.

Many people have walked away from merchant-driven ecommerce. Jeff Clavier, for one, got so burned by the evaporating promise of ecommerce that he threw up his hands after Fab. “We don’t do ecommerce anymore,” he told me the last time we spoke. It’s basically become a four letter word in the Valley, unless you broaden the category to include things like Uber and Airbnb. Fab caused a lot of that sentiment.

We talk about serial entrepreneurs a lot in the Valley. There’s a blind belief that they always do better, but that’s not the case. Remember another iconic flameout that raised too much cash, Color? Or Sean Parker’s Airtime?

Greylock dug deeper into the research a few years back to try to figure out if serial entrepreneurs really did do a better job. They found a more nuanced answer than the conventional wisdom. In enterprise software, absolutely. There’s a set playbook to building a product customers want and selling it to CIOs. If you’ve done it once, you know them, you have credibility, and it’s easier.

In consumer, Greylock found that serial entrepreneurs did better when they were trying something again in the same industry. When they tried a totally new industry the mere fact that they’d built a company before wasn’t that much help. The example given of the former is frequently Evan Williams who founded Blogger, Twitter, and Medium-- all three around communication and messaging platforms. But even then, Blogger was sold for a small sub-$50 million exit, and Medium’s future is far from assured.

Over the decades I’ve covered entrepreneurs, I’ve started to doubt this myth of the serial entrepreneur, because I’ve watched so many do it once and then try to do it again. Sure, I’ve seen a lot of founders who have an easier time raising money, getting press, and attracting talent a second time around. And a lot find soft landings when it doesn’t quite work at higher prices than a first-timer would. But they have a whole new set of psychological issues that can weigh on them. And that makes the experience feel surprisingly new from what they lived before.

Some don’t have the same hunger, because they’ve already made it. Some on the other side of success-- with planes, luxury homes, and a world of yes-men at their disposal-- simply struggle to find the same hustle and drive. Some pushed too hard for a second act, and didn’t find a mission they were as passionate about. And others carry deep anxiety that they won’t live up to their younger selves.

This baggage-- even with success-- has foiled even the best entrepreneurs at times. Max Levchin was more obsessed with outdoing his younger self with Slide than he was the company’s core business. A younger undisciplined Steve Jobs who was smarting from his Apple expulsion went rogue at NeXT obsessed with proving all his instincts were right and he didn’t need any reigning in. Jeff Bezos was once asked if he’d ever start another company, and he scoffed. He said it’d be like going back to kindergarten again.

Bezar is a risk for Shellhammer. After all, he cashed out enough shares when Fab was riding high to be in a good spot. And because he wasn’t in charge of the business end, he could easily sit back and cast sidelong glances at Goldberg for the rest of his career and let him take all the blame.

But now it’ll be his business mind we’ll all evaluate, not just his unquestionable design aesthetic.


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