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From Gay To Pay: How Fab.com Became The Hottest Online Retailer

This article is more than 10 years old.

This article appears in the May 21, 2012, issue of Forbes magazine.

Bradford Shellhammer is sitting at the head of a conference-room table at the New York City office of his startup Fab.com. He’s flanked by 20 of his product buyers, who are all watching him slide down in his chair, then slide up, then slide down again.

He’s demonstrating the “Beach Thingy,” a flat, brightly colored plastic back of a chair with two spikes that anchor it in the sand. One of the buyers says it’s just a piece of plastic. Shellhammer disagrees. “It’s perfect because you can lay your towel down and slide up or down. And with a stomach like mine I hate getting in and out of the chair and having to suck it in. It’s perfect. This is why I’m a good salesperson,” he says, laughing.

The buyers take turns pitching Shellhammer stuff they think belongs on Fab.com, which means almost anything: cutlery, T-shirts, dog food bowls, wall planters and wine refrigerators. The common denominator is that it has to be something Shellhammer likes, which usually means brightly colored, whimsical, something you haven’t seen before, from a young designer no one’s heard of. When a buyer strikes his fancy, approval comes punctuated with “Love!,” “Holy sh-t!”, “Very nice!” or all three.

Very nice is right. Launched last June, Fab expects to do $100 million in sales this year but has already passed $300,000 per day. Fab has been called the fastest e-commerce company to reach 1 million users, which it did in five months. It now has 3.5 million registered customers. The company was cofounded by chief creative officer Shellhammer and CEO Jason Goldberg, who previously founded and sold two other startups, Jobster and Socialmedian. Fab has 155 employees in the U.S. and 250 worldwide, with plans for global expansion with the $40 million it raised in December from a group led by Andreessen Horowitz at about a $200 million valuation.

Fab’s growth is propelled by its shrewd adoption of social commerce. A wave of visual social media startups such as Tumblr and more recently ­Pinterest have hooked millions of people on snipping images and sharing them with friends on an infinite feed. Like Tumblr or Pinterest, Fab customers have a visual feed where they can “fave” (the equivalent of a Facebook “Like”) or comment on images. Unlike Pinterest or Tumblr, Fab lets them buy what they see on the site.

Unlike Amazon and Wal-Mart, which strive to get you the lowest possible prices on common items, Fab offers things you haven’t seen before, at some discount. Unlike Etsy or eBay, where consumers wade through thousands of listings, Fab narrows the choices down to what ­Shellhammer likes. The 35-year-old previously headed Blu Dot’s retail store in New York, had been a freelance interior decorator and a writer for Dwell and had his own popular blog. “I don’t view [picking products] as a special talent. For me it’s just how I live my life,” says Shellhammer.

For small designers Fab can be a new lifeline. Los Angeles jewelry ­designer Jen Murse, 31, at first dismissed putting her jewelry on Fab. She’d been approached by other sites that sought to buy products from her below cost so they could sell them at fire-sale prices. But Shellhammer persuaded her to try it by guaranteeing she’d get paid more than her cost. Her Plastique jewelry went on sale in July 2011 on Fab. A few days later Barneys contacted Murse and included her pieces in its heavily promoted Lady Gaga holiday ­collection.

MJ Barton, 27, turns guitar picks  into bracelets and necklaces. A Fab buyer found her Electric Picks in October at a Brooklyn vintage market. Barton’s three-day Fab sale in November sold more than she normally did in a month. Urban Outfitters quickly called and lined up her product for its holiday sales rush. Now she makes custom designs for Willie Nelson, New York Knick Carmelo Anthony and rapper Flo Rida.

Fab faces many competitors, especially in home decor, from startups to the Crate & Barrels of the world. One Kings Lane is a larger startup that ­focuses specifically on decor and furniture, and flash-sale sites like Gilt Groupe are moving into home products. Shellhammer says Fab can win with better design sense and broader coverage of product categories than One Kings Lane. It’s not selling overstock like Gilt.

Fab’s success came quickly but not overnight. Its original business plan was a flop. It was born April 2010 as Fabulis.com, a gay social network with Yelp-like reviews, Foursquare-like check-ins and Groupon-like daily deals. As such a me-too site it never took off, so the founders pulled the plug in March 2011 with a heavy heart. “We couldn’t get our friends to use what we had dedicated a year of our lives to build,” Shellhammer says.

After a number of dinners and long debates, Goldberg and Shellhammer came up with the idea of selling unique design products online. Goldberg, who had built two other startups, convinced the board and investors, who had already put in more than $2 million, that he could switch course cheaply. Before the online store opened, the pair built an “inspiration wall” where people could sign in with their e-mail and post and fave photos of products they loved. That gave them 165,000 new members.

When it debuted in June, the site mixed high-priced furniture and low-priced kitsch and everything in between—much of it original. The Emeco Navy chairs refashioned from recycled Coke bottles were inspired by the Emeco chair in Shellhammer’s Hell’s Kitchen apartment. There were also autographed posters from famed (I heart NY) designer Milton Glaser that Shellhammer dug out of Glaser’s basement. The Moooi lamp, a 7-foot-tall black horse with a lampshade on its head, wasn’t an exclusive but would be unknown to most shoppers.

The site took off, grossing $1.3 million in its first 30 days, but it was built  for far bigger surges. Fab decided in October to hire seasoned executives in finance, operations and logistics. Fab built all its own billing and inventory management systems and its own customer service and content-management systems so that managers can see where products are at all times. Fab plans to double its tech team of 50 over the next nine months, because Goldberg wants control over the supply chain in order to get products to customers faster. Control is important because Fab adds 30 new sales per day and some items aren’t simple to ship, like furniture and posters.

Next up, the world. Fab just acquired a German startup. Goldberg believes there are a number of other international moves the company can make. And Fab has added new categories such as food, pets, kids and apparel, in addition to plans to soon sell its own branded line of products.

At the buying meeting, Shellhammer was shown some vintage Bazooka Joe and Garbage Pail Kids posters he liked. “You’re kidding me,” he says. “People are going to tweet like crazy about this! This is so good.”