One month after announcing a $150 million fundraise with more money on the way, Fab is laying off over 100 employees in its Berlin office.
Some of the laid off workers have been asked to stay on a few more months during the transition period, AllThingsD’s Jason Del Rey reports. 30-six employees are being asked to move to New York where Fab’s global headquarters is.
Jason Goldberg, Fab’s CEO, says the move will eliminate duplicate jobs in its European and U.S. offices. It will also help Fab become a global storefront, rather than the flash sales business it started as.
“Just the nature of the flash-sale business is that basically every single day you’re opening a new store with hundreds if not thousands of products,” Goldberg tells ATD. “Because of that, we had to replicate the exact same operation in Europe. But the best stores buy once, sell everywhere or make once, sell everywhere. Our aspiration is to be an amazing global store and, so, we need to start operating as a global store.”
The decision to layoff 15% of Fab’s 700-person staff wasn’t sudden. Goldberg says his management team has been mulling it over but it wasn’t ready to fully move away from flash sales until now. He also says investors in his last round were aware of the impending layoffs.
Another reason for the layoffs may be an attempt to lower Fab’s burn rate, which is known to be high. The company has raised $321 million to date.
Fab will still operate in Europe, but with a much smaller team. Goldberg says his company is hiring 70 positions elsewhere.
Here’s how Goldberg describes the decision on his blog, Betashop:
Today is a tough day for Fab and our amazingly talented and hard working team as we are putting into effect a considered initiative to centralize much of our operations at our New York headquarters. While the resultant efficiencies will add immense value to our growing global customer base, this change will also eliminate more than 100 positions in our Berlin office due to redundancies by the end of 2013,” Goldberg writes on his blog, Betashop.
…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.
To support this evolution of our business model, we are taking big steps today to also evolve our operating model. Fab will be consolidating much of our merchandising, marketing, and operations teams into a single global team in New York while, at the same time, planning on doubling our engineering team and hiring significantly in our sourcing and planning departments.
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