Liam Casey, the founder and CEO of PCH.
Ian Allen
Fab.com, the massive and eclectic online design emporium, has gone through a few reincarnations since it was founded in 2010. First a social network for gay men, its founders then flipped it into a flash-sale site for quirky household products—in the process raising over $300 million in venture capital. But that fad didn’t last, and Fab moved to selling in-house designs online.
Today marks yet another new chapter for Fab: PCH International, the company that designs supply chain solutions for hardware startups, is buying Fab for an undisclosed amount. This move isn’t about making Fab run better. It’s about turning PCH into a vertically integrated powerhouse for hardware startups.
Fab founder and CEO Jason Goldberg won’t be continuing with the company, but other than that, PCH founder and CEO Liam Casey says the acquisition won’t mean many dramatic changes for Fab. “We’re really excited about the way [Fab general manager Renee Wong] has managed the team,” Casey says, nodding to the streamlining and restructuring that’s taken place in recent months, after a couple of beleaguered years for Fab. (Once valued at $1 billion, rumors last fall suggested it would only sell for $15 million.)
One of the changes Wong introduced was to start cutting down on the amount of inventory Fab kept sitting around in huge warehouses. That’s crucial to Casey, because for PCH the purchase is a step towards executing on his novel, grand idea of how could retail can work, and “having warehouses full of inventory is a big concern for us,” Casey says. “That slows you down as a company.” That’s a lesson that should prove vital to the hardware startups that Casey’s company is betting on.
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One of the startups to come out of Highway1's first class was Drop, a smart kitchen scale that walks would-be bakers through the exact ingredient amounts that they need, and can easily recalibrate proportions.Photos by Drop
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Another Highway1-incubated startup: Cue, which aims to bring lab diagnostics to the home. Photos by Cue
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Skylock, a bluetooth gadget, gives bike riders keyless entry but also allows them to share access to their bike.Photo: Velo Labs
From Furniture to Hardware
Casey has a specific vision for how hardware retail should work: rather than work with traditional big box retailers that demand a certain amount of inventory up front, startups should gage consumer interest before they manufacture products. Recently, PCH, through its Highway 1 program, has incubated Cue, a smart at-home medical device; Flic, an open-source tactile button for controlling digital apps; and the Drop Smart Scale. All of those tiny startups could’ve been hammered by the demands of traditional retail; instead, PCH worked with them to determine market reach, and to manufacture accordingly. “We love to replace inventory with data,” he says.
That data has to come from somewhere. For some new gadgets, it’s easily culled through the community created by Kickstarter campaigns. For PCH, Fab’s user base—still robust, even after all the company’s struggles—is a new kind of data-creating community. That community could become a new market for some of the gadgets that PCH already works with, and it could be a pool of users whose shopping habits inform new, curated product lines. Casey compares this idea to what Netflix has done with original programming, so you can imagine that while Fab keeps humming along, new designers will work with both PCH and Fab to create newer, special-edition products based on what they’re already showing interest in.
To pull this off, PCH will need to find harmony between the tech-heavy companies it typically works with, and Fab’s millions of shoppers who are used to items like quirky chairs and lamps. If it does, it’s on to a big idea for retail: a one-stop-shop that’s looking out for every player, from the idea man to the manufacturer to the buyer. “For us that’s always been a focus: how do you manage every step of the experience?” Casey says.
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