Hot startup Fab changes business model again, fires 100

The up-and-coming startup lays off employees at its Berlin office after it ends flash sales -- yet another business model change.

Donna Tam Staff Writer / News
Donna Tam covers Amazon and other fun stuff for CNET News. She is a San Francisco native who enjoys feasting, merrymaking, checking her Gmail and reading her Kindle.
Donna Tam
2 min read

Fab has laid off 100 employees from its Berlin office and is asking 30 people to move to its New York office, the company announced on Tuesday.

It's disappointing news from an up-and-coming startup that's said to be worth $1 billion, but CEO Jason Goldberg said the company is shrinking its operations in Berlin as a part of the company's recent move away from flash sales. It was the latest business model change from Fab, which started as a gay social network before transforming into an e-commerce site.

Goldberg wrote in his blog that flash sales made it difficult to offer customers free or fast shipping, which is the direction Fab has been building toward. Fab also needed more people to make flash sales work. He said it won't affect Fab's customer service in Europe.

"Up until now Fab essentially ran two separate flash-sales businesses, one in the U.S. and another in Europe. There is a high percentage of supplier and SKU overlap between the two regions but the nature of flash sales coming and going daily required us to build up large teams in both locations doing much of the same thing," he wrote. " To support this evolution of our business model, we are taking big steps today to also evolve our operating model."

Fab will consolidate its merchandizing, marketing, and operations into a single team in New York, with plans to double its engineering team. Jobs like customer service, returns, shipping, logistics, finance, IT, and HR will stay in Europe. This will bring Fab's entire employee count to 600, but Goldberg adds, the company is still hiring for 70 positions globally.