Fab.com's Internal Memo on Berlin Staff Cuts

Photographer: Jens Kalaene/dpa/Corbis

Employees of shopping portal Fab.Com work at the European headquarters of the US company at Rungerstrasse in Berlin, Germany, on July 1, 2013. Close

Employees of shopping portal Fab.Com work at the European headquarters of the US... Read More

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Photographer: Jens Kalaene/dpa/Corbis

Employees of shopping portal Fab.Com work at the European headquarters of the US company at Rungerstrasse in Berlin, Germany, on July 1, 2013.

Fab.com is cutting more than 100 employees in Berlin, CEO Jason Goldberg wrote in an announcement last week on his blog. Here is the internal e-mail he sent to Fab employees:

Jason Statement to Fab Berlin
July 30, 2013

Today is a tough day at Fab. I’m very sorry for what I have to announce today.

Before I get into the details around what today’s news means to each of you, I want to give you all a little background on why we are making some big changes in the way we operate. We have all invested our hearts and minds and energy into Fab and we all deserve to understand why we take certain actions.

As you all know, we’ve been going through a transformation this year from our roots as a flash sales website to becoming a global store.

Running a flash sales website is very different than running a global store.

When we were a flash sales website we essentially launched a new store every day -- and a different one in Europe than in the U.S. Each day we added hundreds if not thousands of new products to the store, mostly locally sourced. It took a lot of people and a ton of effort. We all worked the long hours and we all felt like there was always more work to do than we could possibly handle. And then each day the store turned over, again and again and again.

The best global stores don’t operate like that.

The way that stores operate and scale globally is to sell the same stuff everywhere. Make once, sell everywhere. Buy once, sell everywhere. That’s what Ikea does. That’s what Urban Outfitters does. That’s what ASOS does.

That’s what Fab needs to do.

We can’t have 2 different stores anymore. We need to have just 1 Fab store. That will enable us to sell better products, always in inventory, always shipped as fast as possible, and for us to always give our customers a consistent Fab experience in the U.S., Europe, and then in Asia.

Fab is very much committed to Europe and we plan to grow a billion dollar business in Europe over time. But, we will do it as one Fab, not as a separate company.

We have decided to centralize much of our global operations, mainly merchandising, marketing, and operations, at our New York headquarters.

*36 individuals from the Berlin team have been asked to move to New York.

*Fab DBY will remain in Berlin and we will be growing the Fab DBY team. We have 35 people in DBY now and we plan to have 70 by end of year. We will be opening more DBY showrooms and we are investing in DBY.

*15 individuals from the Fab Berlin team have been asked to stay on permanently in Berlin. Some will move to Fab DBY. Others will continue to support our Fab European sales.

*A handful of people are being asked to move to Eindhoven, where we will manage all of our European logistics.

*We are asking many of the CrackerJacks to stay until the end of the year. During that time we will evaluate where in the world it makes the most sense for Fab to run global customer service around-the-clock.

*Unfortunately, we will be eliminating more than 100 positions in our Berlin office due to redundancies.

*Everyone whose jobs have been made redundant will be given generous severance packages. We will also make efforts to help everyone with their job search.

*Some of the people whose jobs are redundant will have their last day be today. After this meeting they will learn about their severance package.

*Some of the people whose jobs are redundant will be offered the opportunity to work for a few more months with Fab, in exchange for an added bonus in addition to the severance.

*As noted, we have a number of openings at Fab DBY. If you are interested in applying we encourage you to do so.

Directly after this meeting you will learn what category your job falls into and whether you will have the opportunity to start your new job search immediately or if you will consider working with us through a multi-month transitional period during the fall and winter.

This decision is personally painful but strategically sound and, critically, not a result of any financial difficulties or a change in commitment to Berlin, Germany, the UK, the broader EU or our overall growth. Fab is on very sound financial footing and has incredible momentum in our global growth. Fab closed $150M in financing a few weeks ago -- the largest single venture capital investment round in the world in the second quarter of 2013. We’re doing this because simply it’s smart business. Centralized operations are the most efficient and will enable us to exceed customer expectations on a global scale.

All of you have poured your heart and soul into this company and we are deeply grateful to you for that.

As you can imagine, there will be public interest in this decision and most of it will center around what this means to Fab as a business overall. While we will be managing that appropriately, we’d like to remain focused today, this week, on you - supporting all of you who contributed to creating this resonant, robust, beautiful Fab office in Berlin. It will continue to be crucial to our global success.

For those of you who are leaving us this week, I promise you that we will maintain the same vibrancy and commitment to the German, EU, and global market that you’ve established.

All of our leaders are available to you to answer any questions you may have and Bradford, Beth, Matt, Grace, Allison and I will be here all week and also around if you want to specifically ask me questions.

I know this is a lot to take in and we’ve prepared a number of documents as well as a more individual specific meeting directly following this one that we believe will best answer your questions and concerns.

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