“It was like the fog of war or the fog of crazy valuations, and the tech industry collectively losing its mind,” co-founder and CEO Max Rhodes tells Fortune. “We got a little addicted to vanity metrics to pump growth.” 

Now, Faire has re-engineered itself with a healthier business model for the long haul.

Faire was mostly recently valued at $5.2 billion last November in a $100 million tender offer. That’s less than half its peak valuation of $12.6 billion in May 2022, when its heady rise attracted eager investors. (The company had been valued at $1 billion just 18 months prior.) 

The problem Faire ran into, Rhodes recalls, is that the pursuit of fast growth was causing questionable decision-making that could have jeopardized Faire down the road.

The company, whose name means “to do” in French and evokes trade shows, operates as a digital marketplace to connect independent retailers and independent brands. Its platform is similar to Shopify in that it powers smaller businesses’ ecommerce, and democratizes technology once reserved for larger retail players. The brands that list goods on Faire—in categories such as decor, food, beauty, jewelry and apparel—pay a commission on items sold to retailers, which typically have one or two locations, like New York’s Strand bookstore chain or Washington, D.C.’s National Archives Museum. About 500,000 retailers and 100,000 brands now use the site.

Small, independent retailers still largely get their inventory by going to trade shows. Indeed, the idea for Faire, founded in 2017, came from Rhodes’ prior experience selling high-end umbrellas. (He later entered the tech world, including a stint as an early product lead at Square, where he worked on Cash App.) He remembers being deflated after attending a trade show at New York’s Javits Center; he’d paid a $15,000 fee to sell his wares with only $2,000 worth of orders to show for it.

Early on, Faire lined up brands at breakneck speed, which eventually led to retailer churn and high marketing costs to regularly recruit new buyers. 

Faire felt like a runaway train. The only way to slow it down to a sustainable speed was to focus on “high-quality supply,” Rhodes said. In 2022, Faire gave many brands the boot and deliberately shrunk the company. It cut jobs and introduced technology aimed at retaining customers long-term.  

“Reorder rates for the products retailers are buying have gone way up and that’s leading them to come back,” says Rhodes. 

In its most recent quarter, Faire earned $750 million in annualized revenue, up 49% from a year earlier. More crucially for Wall Street, Faire broke even on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis for the first time.

Faire’s finance chief Jason Lee said he is readying the company for an IPO without committing to a specific timeline. The company’s goal for an IPO and beyond is to maintain the discipline it found in 2022. 

“The No. 1 thing on the path to durable success in business is solving problems for customers,” says Rhodes. “Retailers don’t care about how much they’re buying, they care about the quality of what they are buying and whether it actually sells.”

See you tomorrow,

Phil Wahba
X: @philwahba
Email: phil.wahba@fortune.com

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VENTURE CAPITAL

- Casap, a New York-based provider of an AI agent platform for financial services, raised $56 million in Series B funding. Base10 Partners led the round and was joined by Experian and Synchrony.

- Wabi, a San Francisco-based developer of a shared personal AI assistant, raised $55 million in funding. IVP led the round and was joined by Andreessen Horowitz, Forerunner, Amazon Alexa Fund, and angel investors.

- Collective, a San Francisco-based provider of AI-powered financial software and services for solo entrepreneurs, raised $40 million in Series B funding. General Catalyst, QED, and Gradient Ventures led the round and was joined by Intuit Ventures, FT Partners, and SemperVirens. 

- Dream, a San Francisco-based developer of AI models that automate building design and engineering, raised $17 million in seed funding from Andreessen Horowitz, SV Angel, XYZ, Zigg Capital, and others.

- TrashLab, a San Francisco-based provider of AI-powered operating software for waste haulers, raised $12 million in growth funding. Ventana led the round and was joined by existing investors Bienville Capital, Harlem Capital, and CreativeCo.

IPOS

- Aspen Neuroscience, a San Diego, Calif.-based developer of stem cell therapies for Parkinson’s disease, raised $141 million in an offering of 9.4 million shares priced at $15 on the Nasdaq. 

PEOPLE

- Headline, a San Francisco-based venture capital firm, named Jake Storm a general partner. Storm previously served as a general partner at Felicis.