We’ve been following Fab since before it was a design sale site, and its growth story is really unbelievable.
Founder Jason Goldberg has been a tech entrepreneur since 1999. He launched Fab last winter as a daily deals site he described as a “gay social network mashed with a gay Groupon.” (see the screenshot below)
When the idea wasn’t gaining traction, Goldberg pivoted the company and turned it into a home decor and design sale site. He relaunched the current version of Fab on June 9, 2011.
Almost as soon as he made the change, Fab took off. By June 16, Fab grew to 240,000 users and was growing by 5,000 users per day. It attracted Ashton Kutcher, SoftTech VC and SV Angel as investors, who invested ahead of a larger $7.7 million round of financing led by Menlo Ventures.
Two months in, Fab’s users doubled to 500,000, making it the fastest growing flash sales site in the US.
At three months, Fab hit 600,000 users and was generating $100,000 per day from online sales. Goldberg told us expected 2011 revenue was in the double-digit millions.
On October 11, we reported that Fab reached 750,000 users and launched mobile products.Now, just 17 days later, it’s hovering around the 900,000 user mark. It has an annual revenue run rate of $50 million and 2011 expected revenue of $20 million.
If you assume Fab keeps 30% of that, that’s still pretty amazing for a company that isn’t even six months old.
Indeed, a source close to the company tells us Fab is operating with healthy sales margins, and that it has been profitable every month except for investments in its future growth, like marketing.
How does any startup obtain these growth figures?
Part of the story is virality. Fab uses a clever incentive-driven invite scheme. Users request an invite and then gain different levels of access based on how many of their friends join.
Goldberg also initially ran a batch of Facebook ads to gain traction. The ads targeted people who follow design blogs.
Founder Jason Goldberg says Fab’s growth can be attributed to three things.
“More than half of our members have come via social. Very few have come from paid sources,” he says.
“We owe our growth to 3 things:
- The products we sell. We really believe that we are in the design inspiration business, not the design sales business. Every day we try to inspire people with the products we offer on our site. If we inspire them, the sales will come. People love sharing their latest design find. When we do a good job of exciting and inspiring people, social sharing just happens naturally.
- The design of our site itself. We have a beautiful site selling beautiful things, yet we make it easy and approachable, simple and affordable. And Fun!
- Social is in our DNA at Fab.com. The entire experience is all about design being a social experience. We’ll be doing much much more to really innovate in social commerce in the coming weeks, like no site has ever done before.”
Here’s a chart Fab posted on its blog today outlining orders by month since its June launch so you can see how the company has scaled: