This story is part of CNBC Make It’s The Moment series, in which highly successful people reveal the defining moments that changed the trajectory of their lives and careers, and tell us what inspired them to leap into unknown territory.
Most CEOs may become pessimistic if their company loses more than half of its valuation. For Faire co-founder and CEO Max Rhodes, the feeling is akin to relief and optimism that his business’s best days may yet be ahead.
Faire is an online wholesale marketplace that connects artisan and other independent brands with small retailers looking for new products to sell in their stores. The company’s most recent valuation was $5.2 billion after a stock offering in November, less than half the highest valuation of $12.59 billion it achieved after a May 2022 funding round, a Fair spokesperson said.
Rose and co-founders Marcelo Cortez, Jeffrey Kolovson and Daniele Perito launched the company in 2017 and quickly raised more than $1 billion over the next five years. The attention from investors was enticing, and soon the company was chasing “vanity metrics,” Rose says, while growing its headcount to 1,200 people.
“We’ve become addicted to growth rates,” says Rose, 39.
It wasn’t until that moment in April 2022 that the company, he says, caused Rose to re-evaluate his company’s approach.
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Rose said Fair’s revenue growth was slowing, so he decided to look at some of the underlying numbers of the business. He said he found that if left unchecked, Faire could sink, leading to lower retention rates, customer complaints about the state of the platform, and users who joined just to take advantage of short-term discounts and incentives to leave Faire permanently.
One option for Fehr is to spend more cash in hopes of reigniting earnings growth. Instead, the startup intentionally slowed down, cut spending, cut its workforce by about 20%, and eliminated many of the incentives and discounts it used to attract new customers. Rose says the decision was painful, humbling and necessary.
But within a few months, revenue growth picked up, Rose said. More recently, Fair’s 2025 revenue is up 32% compared to 2024, customer retention is “up quite a bit,” and the company is projected to “break even in the near future,” he said. (Fair declined to provide documentation to verify its revenue growth.)
Even if it is profitable, Fehr could face stiff competition. Its closest rivals also have valuations in the billions of dollars. Paris-based startup Encore Store is reportedly worth $2 billion post-money as of January 2022. Both companies compete with physical trade shows, the largest annual events where tens of thousands of retailers can buy inventory directly from exhibiting brands.
After losing popularity due to the coronavirus pandemic, these trade shows have rebounded to an estimated market size of nearly $16 billion in 2024, according to PwC.
Here, Rose discusses the role that arrogance played in Fair’s initial rise, the red flags that led to its reshaping, and why leaders should always be wary of feeling invincible.
CNBC Make It: Looking back, why didn’t you see the red flags sooner?
Rose: It’s embarrassing, but I think arrogance was definitely a factor. Our valuation doubled every six months. We grew from a $1 billion valuation to a $12 billion valuation in about 18 months. I think we got a little lost in the process.
We started taking shortcuts. We took all of this funding, about $1 billion, and started trying to leverage capital as a shortcut to faster growth. We doubled our headcount two years in a row, and (revenue) growth continued to accelerate. So we thought this was a signal that (our strategy) was working.
Feeling like you have unlimited capital can make you really undisciplined.
max rose
Co-founder and CEO of Fair Inc.
But it didn’t really work. In 2021, people had a lot of money and time on their hands because (trade fairs that traditionally bring together artisans and retailers) were canceled and there was a huge stimulus to the economy. Some of the things that drove the growth curve weren’t really what we were doing. That’s exactly what happened to us.
We had a billion dollars. It felt like an endless runway. Feeling like you have unlimited capital can make you really undisciplined. I wasn’t a skeptic. I thought, “Oh, great. Everything we’re doing is working. There’s no stopping us!”
CNBC Make It: What were the biggest red flags you discovered when you started investigating the causes of slowing growth?
Rose: I spent a lot of time combing through all the metrics we used to measure the health of our business, such as customer retention and spending habits. I spent a lot of time talking to retailers and a lot of time using the products myself.
It was quite shocking. Retention rates were declining. Some of the customers I was talking to came with incentives, but they didn’t even know what a fair was. We didn’t have a real relationship with them. After adding all these things, my website slowed down a lot due to the load. It was a much worse product and experience than a year ago.
That really started ringing alarm bells in my head. It’s a cognitive dissonance that goes from knowing, “We’re a $12 billion company, and we’re going to be a $100 billion company in a few years,” to, “Oh my god, if we don’t clean up our act, we won’t even be a company.”
Another signal: Honestly, I felt bad, if that makes sense. I felt uncomfortable in a fundamental sense. I felt like I wasn’t living my values. We felt invincible and lost.
CNBC Make It: What are the risks of spending cuts and layoffs?
Rose: We knew it was the right thing to do, so once we started looking at (the underlying metrics) there was no big question about doing it. But it was scary because it felt like the world had changed and that we were acknowledging the mistakes we had made and their consequences.
It’s the hardest thing I’ve ever done, certainly in my professional life and probably in my personal life as well. I was definitely worried about how people would view me and how people would view the fair. I was worried that people would quit and the shine would fade from the company.
We were spending a lot (of cash), but it wasn’t an existential thing (in the sense of running out of money). It was a real possibility (in a way) that we would lose all the momentum we had built and end up with a product that wasn’t that good.
If that happens, even an infinite runway won’t work. We might survive another 20 years as a business, but we won’t be able to do anything important. You can’t make a real impact on the world.
Ultimately, it came back to be a north star for us. That means serving our community and helping our customers succeed. The organization was extremely bloated. There was a lot of bureaucracy. Once we (addressed it), it started moving much faster.
CNBC Make It: Is there anything you wish you had done differently?
Rose: It was very stressful. To be honest, there’s no way it shouldn’t be.
I was going to say that I should have tried to show more empathy for myself. Because I was really hard on myself in the process. But in a way, experiencing such things is part of life. It’s part of building a company. If you look at all the really great companies that I admire, almost all of them have had near-death experiences.
If you look at all the really great companies that I admire, almost all of them have had near-death experiences.
max rose
Co-founder and CEO of Fair Inc.
Through that process, (Fair) became a stronger company. I think being reminded in a traumatic way of the importance of staying focused on the customer has made me a better leader. (Our) employees knew that our growth was slowing. We explained why we do it. Ultimately (after layoffs) we were able to achieve good (employee) retention.
And it started growing faster again. We’re back to a place where people can understand our path to becoming a $12 billion company in the not-too-distant future.
CNBC Make It: What advice do you have for other entrepreneurs on how to navigate positive outcomes and spot potentially destructive red flags?
Rose: Check your cognitive biases, especially if you’re starting to feel invincible or unstoppable. It can happen. Success comes with risk.
The second thing, and perhaps the most important thing, is to stay grounded in your principles and core values. What made it successful in the first place? For us, we’re very mission-driven and customer-focused. We take the quality of the experiences we create very seriously. We (should have) remained firmly rooted in our principles along the way. We have lost touch with ourselves as an organization. I think I lost track of who I am as a founder.
Having a good board and listening to the board is another matter. Having an advisor who confirms the reality and responds honestly is important.
This interview has been edited and condensed for clarity.
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