Fabric laying off 40% of staff, pivoting business model

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Fabric raised $200 million in October 2021 for its ASRS technology. | Photo Credit: Fabric

Fabric, a developer of ASRS technology for micro-fulfillment applications, is laying off about 40% of its 300-person staff, or roughly 120 employees. The news was first reported by TechCrunch and since confirmed by The Robot Report. Founding CEO Elram Goren was replaced by COO Avi (Jack) Jacoby two weeks ago.

Formerly known as CommonSense Robotics, Fabric has headquarters in Israel and New York. Its R&D operations take place in Israel, while commercial operations happen in the U.S., which the company said is its main market.

Here is a statement Jacoby sent to The Robot Report via email:

“Most brands find Fabric’s technology so essential that they want to own their Fabric-powered fulfillment warehouses directly. As a result, we’re updating our strategic focus to transition our product offering from a service and network model to a hardware and software platform model.

“As part of this updated strategy, Elram Goren stepped down as CEO and will serve as a strategic advisor. We are also reorganizing the rest of our company structure, including reducing our global workforce by about 40%.

“Fabric’s purpose hasn’t changed. On-demand fulfillment is on the rise, and we are well positioned to lead the industry with robotic technology to empower brands to exceed their consumers’ expectations from click to doorstep.”

TechCrunch reported that impacted employees will be provided with a cash severance, extended benefits and job outplacement services.

Layoffs start hitting robotics companies
Less than 9 months ago, Fabric announced it closed $200 million in Series C funding. At the time, the Series C funding valued Fabric at more than $1 billion. The company has raised more than $336 million since it was founded in 2015.
More ASRS players have popped up over the last few years. AutoStore is perhaps the most well-known player of the bunch. AutoStore debuted on the Oslo Stock Exchange in October 2021 and generated $327.6 million in 2021, up 79.8% from 2020. AutoStore has 20,000-plus robots deployed across more than 35 countries to automate warehouses.
Unfortunately, layoffs appear to be coming hard for the robotics industry. This is the fifth time in just the last week The Robot Report has written about staff reductions. Pittsburgh-based Argo AI announced late last week it is laying off 150 employees and shutting down its autonomous vehicle operation in Washington, DC.
Starship Technologies, a sidewalk delivery robot company, recently laid off 11% of its global workforce. The company, which has engineering headquarters in Estonia and business headquarters in San Francisco, said it has been negatively impacted by the “dramatic downward shifts” in the global economy and investment market.
Similar downward shifts in the global investment market, specifically the investment market in China, were cited for the reported layoffs at Pudu Robotics, a Chinese developer of commercial service robots. And DoorDash shut down its subsidiary Chowbotics just 18 months after acquired by acquiring the business. DoorDash said it expects around 35 layoffs as a result of the shutdown, which will be effective August 31st, 2022.
Jacoby told TechCrunch that Fabric has “years of runway,” “is in a very good situation” and was not under pressure to make the decision.
“We are just doing what we believe will position us better in the market,” he said. “What is happening to the market has nothing to do with it, and the company’s financial situation is very good. This decision needed to be taken now because we need the runway to position ourselves better as a platform player.”