Fab.com throws in the big gay towel and bets on e-commerce

Does the world need a gay social network?

The answer is no, if you ask entrepreneur Jason Goldberg, who folded up shop on Fab.com after raising $3 million to build an online community targeted at gay men and is in the process of reinventing the startup as a daily-deals site for design enthusiasts.

It’s a surprising decision, given Goldberg’s aggressive push into the gay market. But Fab.com went through many business models since launching last year, from HotOrNot-style voting site to virtual-goods seller to, most recently, a gay daily deals site. That last business appears to be what stuck, minus the gay component.

In a blog post explaining his move, Goldberg argued that progress in gay rights over the past year lessened the need for a “gay Facebook.” That’s a glib argument that may have persuaded investors, but any student of modern gay history and culture would find it patently ridiculous, since people in the gay community have been talking about the postgay movement for more than a decade.

Could it be that the world needs gay websites — just not the one Goldberg and his team created?

Scott Gatz, the CEO of Fab.com’s erstwhile rival GayCities, certainly thinks so. “I think it’s a bit insulting to the users of Fab.com, the users of Gay.com, and the users of GayCities,” Gatz told me. “There’s a need and we’ve built a site for it.”

Gatz, a former Yahoo executive who launched GayCities in 2008, noted that 300,000 people have downloaded the GayCities iPhone app, and the site sees roughly 400,000 visitors a month. He recently landed the city of Chicago as an advertising customer in the municipality’s first-ever push to reach gay consumers.

According to Goldberg’s blog post, Fab.com grew to 100,000 members by the end of last year. He didn’t disclose monthly visitors or app downloads.

Fab.com faces considerable competition in the private-sales market, including One Kings Lane, the Kleiner Perkins-backed home-décor retailer. But I’ll be watching closely, since as much as I’m a fan of startups tackling the gay and lesbian market, I’ve also been a big believer in the new wave of socially-infused e-commerce businesses.