Meet the Gay Power Duo Behind Fab.com
By Aaron Hicklin
Goldberg wasn’t exaggerating. By the end of last year, Fab was selling 24 items a minute and had grown to a staff of 650 with 12 million members. An awful lot of people have come to rely on Shellhammer to design their lives, whether with a blue papier-mâché rhino head or a pouf in the style of Warhol’s Brillo box. In the run-up to the holidays last year, the best-selling item on Fab was the Beardo -- a woolen ski hat with a knit beard sewn into it (pictured). They moved 25,000 of them at $26 a pop. All in all, Fab made $45 million in revenue in the last quarter of 2012. It’s stats like those that have catapulted it to No. 5 on Fast Company magazine’s annual list of the most innovative companies in America, a few spots below Amazon and six places above Google.
Of course, until you find yourself on Fab.com, you might not realize just how much you need a Beardo or a Brillo pouf, but part of the genius of Goldberg and Shellhammer was to see that people don’t always buy what they need; often, they buy what makes them laugh. Wit and whimsy are a big part of what makes Fab work. This is a website that stocks 31 varieties of bow ties—for dogs. “When a lot of people think about design, they think about a very high-end version,” says Goldberg. “What Bradford understands is that there’s beauty in products in all categories and at all prices—it doesn’t have to be all boring, ultra-modern, and slick, and that was our aha.”
Fab’s rapid growth -- in a down economy -- has confounded skeptics who doubted the demand for a design sales site, but it’s proof of Goldberg’s savvy in building a company around Shellhammer’s personality and point of view. “One thing about Fab, compared to Gilt or Groupon, is that we never celebrated the deal, we celebrated the product,” says Shellhammer. “So even people not in the market for a new sofa are almost consuming Fab the way they would a blog or a shelter magazine.” The irony, of course, is that by focusing on a subject they feel so passionately about, Fab has become the very thing they once intended for Fabulis -- an online club everyone wants to belong to.
Although it started as a flash sales site, a large part of Fab’s revenue now comes from full-priced items, and the range is growing—from 2,000 products in 2011 to 15,000 products at the beginning of 2013. “Every year we’re going to reinvent this business,” says Goldberg. “You reimagine, you rethink how you can do things better—the companies that do that are the ones that stay ahead.” He likes to quote Bill Gates, who at the height of Microsoft’s domination used to tell his staff that the company was going out of business. “People would say, ‘Bill, we have a billion dollars in the bank,’ and he’d say, ‘Yes, and we’ll be out of business if we don’t do this right.’ ”
Doing it right includes improving their delivery times. Review sites online are littered with complaints of excessively long waits, exactly the kind of experience that dissuades customers from returning. In an effort to improve the service, Fab opened its own warehouse in New Jersey last year (a second is planned for California) and Goldberg claims most orders now ship within 24 hours of being placed, but winning and retaining customer loyalty is a time-consuming and expensive exercise. Behind closed doors, critics point out that Fab is spending more than it earns to maintain its growth -- which is OK for now, but hardly viable in the long term. Or, as one tech entrepreneur put it, “If you start selling sandwiches on the corner for 50 cents, you will build a business very quickly, but it’s not sustainable.” Of course, there were plenty of critics of Amazon a decade ago who said much the same thing, and look how that turned out.
It’s not just onlookers who have been taken aback by Fab’s explosive growth. To follow Shellhammer’s Instagram feed is to live vicariously in the many vibrant sneakers of a man always on the move -- one day in Paris, the next in London, bouncing to and from Fab’s European hub in Berlin so often that he has a permanent suite at the Soho House there. No wonder he compares the last few years to living in Pee-wee Herman’s fantasy house. “It’s kind of nuts,” Shellhammer says, before plunging into a story about a recent dinner at the London home of Niklas Zennström, founder and creator of Skype. “It was all CEOs of companies, and we sit down and everyone wants to talk about Fab -- they were all so excited about it. I’m sitting there thinking, You founded Skype, and I’m the one talking?”
If you search online, you can find a 23-minute video of Jason Goldberg speaking to a group of young entrepreneurs about the now-famous pivot from Fabulis to Fab. He runs through his story, outlines his mantra (focus on the one thing you are good at), and then, during questions, he lets slip a crucial insight. “I might get into trouble for this,” he starts. “But if I were to tell a recruiter what to look for in finding a Fab employee, I’d say, ‘Go find the smartest people you know who are also the weirdest oddballs, and we’ll take them.’ ” Although Goldberg is talking about office culture, the subtext is unmistakable: Fab is a gay-owned company in an overwhelmingly heterosexual industry. It’s somewhat telling that Fab was hatched in New York and not Silicon Valley, where people like Shellhammer, in particular -- “I’ve always been loud, I’ve always been colorful, I’ve always been bright,” he says—are few and far between, and almost never at the top of a company masthead.
The fact that two founders of Fab are gay (a third, their CTO, is based in India) is an important distinction in a society fairly starved for examples of successful gay entrepreneurs. Goldberg and Shellhammer treat their sexuality matter-of-factly, even as a point of pride, and their self-confidence is exactly what people mean when they talk about mentors and role models. For Goldberg, moreover, their sexuality is not incidental to their success, but complicit in it. “Fab could only have been started by a couple of gay men,” he says. “We’ve brought a gay sensibility in taste and style that’s a little more risk-taking, a little eclectic, humorous, and left-of-center.”