Published On: Fri, Jan 10th, 2014

The Power of Redemption : Snapchat Fixes Security Hole & Fab.com Re-calibrates Growth Path

Mea culpa, mea culpa, mea culpa is the new catechism for damage control in tech. Admit your sins; cleanse your soul as well as your hard drive and start the year afresh.

Of course you have to do it properly; after hot start-up Snapchat had been found months ago to have a serious security flaw that could allow malicious hackers to identify the personal details of millions of its users, it took the company ages to use the word “sorry”, even trying to deny for a long while that the issue was a bug and not a feature.

Last week the company finally said sorry, hidden away on their company blog after issuing a software patch to allow users to delete the functionality that links phone numbers to user name if they wished.

“We are sorry for any problems this issue may have caused you and we really appreciate your patience and support, ” Team Snapchat said.

Until now Snapchat simply refused to say sorry at all. Even when Evan Spiegel the Snapchat co-founder went on national television earlier he didn’t do apologize, and was content at the time to just say “I believe at the time we thought we had done enough, but in a business like this if you spend your time looking backwards, you’re just gonna kill yourself.” Now he’s gone and done it, albeit through the back door of the company blog.

Evan Spiegel Snapchat and Jason Golberg Fab.com Getty

Evan Spiegel Snapchat and Jason Golberg Fab.com/  Getty

Even so obviously he is learning about the power of redemptive PR fast, just like Chris Christie the Republican Governor of New Jersey whose aides had blocked traffic lanes to the George Washington Bridge in New York for several days before the holidays as political retribution against a local Mayor for not endorsing him before the recent state elections there.

When the inevitable incriminating emails came out, Christie quickly fired several aides this week and said what a terrible thing this was, it should never have happened and – of course – he certainly didn’t know anything about it at the time.

That is as close to groveling as a Governor of a leading state who hopes some day to be President will get. Of course his Democratic opponents have now launched a judicial investigation, so he had better hope nothing comes out that may again come back to haunt him.

As with Watergate, it’s not the crime itself but the cover up that can sometimes bring powerful people down.

Online retail start-up Fab.com’s CEO Jason Goldberg has just done the sackcloth and ashes thing much better – a model for all founding CEO’s who screw up to follow in fact. Definitely something to be filed away for future use – put it in the “what the f**k do I do now” file and hope you never have to use it.

A loquacious character who has tried to shape the image of his company through a regular blog of his own, Goldberg has recently admitted in great detail he just got it all wrong, and that he had been boosting the company much more than he should have been even as serious issues were cropping up in his business – publicly he is still a private company with no continuous public disclosure implications.

Fab.com originally raised some US$170 million of VC money to launch its online retail site and, in July 2013, raised another US$150 million in a subsequent financing round. This then valued the nascent would-be Amazon at a very cool US$1 Billion. It seems all the top venture investing names were there including Menlo Ventures, Andreessen Horowitz and ATomico Ventures.

However, instead of racing to profit as it had previously reportedly trumpeted to the world it was about to do, the company seemed to have stalled, with excess overhead just burning through lots of cash instead.

Jason Goldberg now writes candidly in his blog, “I freely admit, when you grow revenue 500 percent year over year and become a media darling overnight, it’s hard to keep perspective, ”

“No doubt, we had lost perspective at Fab. We had started to dream in billions when we should have been focused on making one day simply better than the one before it.”

Accordingly now Fab is cutting out the Flab with big staff cuts and, it seems, shifting away from an increasingly doubtful flash sales business model to become a global merchandising site instead. He has fired 400 people including several high priced execs and a co-founder in order to go back to basics.

The most important thing he recognizes in the blog, belatedly to be sure, but much better than not at all is,

“At Fab in 2012 and into the first half of 2013, for instance, the tone I set was to grow, grow, grow and create a billion dollar company. All decisions flowed from that.”

“So when I looked back in the second half of 2013 and asked why did we do x, y, z, the easy thing to do would be to blame managers for making poor decisions. But that would be wrong. The absolute truth is that the CEO – me – set the tone and all decisions flowed from that.

He is lucky to have the cash and the investment group he needs now to get it right. Not every start-up is so lucky. You can find the entire mea culpa thing on Jason Goldberg’s blog  and you may want to file it away too.

Read more about: , , , , , ,

Wordpress site Developed by Fixing WordPress Problems