Etsy is under pressure to start acting more like a conventional company
bloomberg.com
bloomberg.com
Currently they're going through a round of "let's alienate all the small unique sellers that are still using our service" by changing their payment policies. Sellers are being required to accept Etsy's payment processing, where before accepting Paypal was sufficient. Signing up for Etsy's payment processing requires giving Etsy a whole bunch of private information that a lot of sellers (at least in the internet circles I run in) are not comfortable giving out to Etsy, especially sellers that do not live in the US.
Etsy is quickly losing the sellers that make their site worth visiting to Storenvy.
> Any product containing any hazardous or dangerous material including mercury or any product whose use is regulated by any law in any jurisdiction.
I get what they're trying to do, but that's pretty broad
https://support.storenvy.com/customer/portal/articles/93987-...
Most of the other hand-crafted things I would consider checking Etsy for first are things like jewelry and pottery. Unless you're using lead-based glazes, I think those sellers are all pretty safe going to Storenvy.
I just know that a large percentage of the makers I follow on social media have been complaining about these new payment policies in the past few weeks, and many of them have already opened Storenvy shops.
That doesn't mean say product which is banned in your jurisdiction.
It means any product that is regulated (as in, there is any law at all governing its use) in any jurisdiction.
Like for example plastic is normally pretty harmless, but maybe theres a law in Portugal saying there can't be a certain amount of plastic in soft drinks and now its restricted
IANAL but I thought this wording was interesting and took it to its logical extremes.
It looks like Etsy's policy is a little more explicit about it being the seller's job to make sure whatever it is is legal wherever it is.
https://www.etsy.com/legal/prohibited
> Due to the potential harm caused by hazardous materials, as well as complex legal regulations surrounding such materials, including shipping restrictions, hazardous materials are prohibited on Etsy
Etsy doesn't define "hazardous materials" in their policy though, just provides a few examples.
> Our marketplaces provides a direct connection between buyers and sellers around the world. If you buy or sell an item from another country, or if you enter into a transaction with someone across international borders, you are responsible for complying with international trade restrictions, including restrictions put into place by the US Office of Foreign Assets Control (“OFAC”), regardless of your location.
Toy safety? For example, all the "toy" sections of 16 CFR Part 1500?[1]
[1] https://www.law.cornell.edu/cfr/text/16/part-1500 Found via a link on my (shameless plug) "A feel for: torque"[2], under 10^-1 Newton-meters. [2] http://www.clarifyscience.info/part/ZoomB?v=A&p=CK6Ji&m=torq...
Each doll is made of 15+ individually cast pieces (at minimum - two feet, two calves, two thighs, two hands, two forearms, two upper arms, torso, head and headcap, and that is for a single-jointed doll with a one-piece torso, many dolls will also have extra knee, elbow, wrist, and ankle pieces, and the torso may be in two or three pieces instead of one).
Those pieces then have to be hand-finished (removal of extra flashing material, sometimes elastic channels drilled for the stringing if that was not already included in the mold, sometimes full seam sanding), and assembled with elastic and metal hooks.
The silicone molds are only good for about 10-20 castings before they start having enough wear and tear to reduce the quality of the resulting doll, so a lot of the material cost is actually in the silicone (platinum-cure silicone is much more expensive than resin). New molds then must be made off of the original master sculpture.
Then, if you bought the doll with a face up, an artist hand paints the doll's features with pastels and acrylic paints. And if you bought it blank, you will have to either paint the face yourself or commission someone to do so eventually, as blank dolls really don't have anything in the way of features - imagine a 3d model with no textures applied.
So that's just the incremental cost of each individual doll. On top of that you have to pay for artist development time of new sculpts, marketing and websites, translators if you want to be able to sell your dolls worldwide, all other other usual overhead costs of running any sort of business, etc.
Edit: Also, I don't know if most people really realize the size of some of these dolls. The ones I have that start broaching the $1k mark are anywhere from 65-72cm tall, and weigh as much as 10 lbs. One of mine is 80cm tall, meant to represent a 12ish year old girl in 1:2 scale. She's so big I buy her shoes from the toddler department, not a doll shop.
In the past everything was expensive. The world of mass production hides from us how much it costs to make 1 of something. A few hundred years ago books were insanely expensive and almost nobody had them. A hundred years ago toys were hand made and expensive and a child might have one or two, most likely passed down from someone else.
We live in a world where the amount of cheap stuff has exploded beyond the imaginations of anyone from the past.
[1]http://www.latimes.com/health/la-he-pro-con2-2009nov02-story...
It's strange to me that Friedman is viewed (at least by economists and "business" folk) as a paragon of logical reasoning and empiricism, all the while his views reek so strongly of ideology. There are tons of reasons why the quoted statement might be false whether you're a policy maker (negative externalities) or even the most cold-hearted capitalist (short-term incentives).
Perhaps relatedly, it's actually not true that corporate responsibility to profit is codified in the law. See e.g. https://en.wikipedia.org/wiki/Shlensky_v._Wrigley (discussed further in https://www.amazon.co.uk/Shareholder-Value-Myth-Shareholders...)
Motivated reasoning is a very powerful force. Of course people with the same ideology are going to hold up someone who supports them as a paragon of reason, and use him as protective camoflage for policies harmful to the rest of us.
The obvious argument, especially in Etsy's case is 'well, this works for the short term but can mean no profits in the long term as you commoditize your business and what makes a company like Etsy, Etsy fades into market oblivion.'
To which the next statement is 'Oh. Well, Friedman meant all expected profits even into the long term.' which may even be true, but the statement is used to justify all sorts of business behavior that is not in keeping with that idea.
In Etsy's case, paying above market wages and benefits does nothing for the company and it's shareholders, it's just a gift from the CEO to workers, paid for out of shareholder accounts. Etsy didn't get the best web site or software out from it, they got rampant entitlement and sub-par work.
Again, we can use Friedman on both sides of the argument (which was my original point as to the meaningless of the statement if not in original intent then in popular application).
I could argue under the same statement that such a move would do plenty for the company in establishing itself as a very good place to work making it likely to attract and retain top talent. It could also make individuals 'hand crafting' items to sell, who are more likely to be a conscientious lot, feel good about continuing to do business with Etsy. These factors could lead to a more solid niche in the market, longer company survival, and more consistent profits over time.
I'm not saying that's what I believe but let's assume it is true.
Since long term profit projections get hazy, the safer bet almost always is to follow a short term profit argument and take surer profits as soon as possible even though, in perfect hindsight, a long term approach would have yielded greater overall profits.
I'd bet this happens a lot and this idea that everything is subservient to profits paradoxically hurts value more than it helps.
Market value means that your turnover should already be low, your employees can't leave for better paying jobs. Obviously there is more to retainment than just wages, there is managerial competency and how you treat people. Bad workplaces have to pay more than market to retain people, good workplaces shouldn't.
But again, it's a silly argument that paying substantially more than market is going to benefit shareholders in some obtuse way. There are as many disadvantages as advantages, such building a complacent, insular underperforming culture just like that Etsy appears to have.
And another is using excess comp to build a "cult of personality" so the CEO can be worshipped, and those are terrible for business/shareholders.
"It could also make individuals 'hand crafting' items to sell, who are more likely to be a conscientious lot, feel good about continuing to do business with Etsy. These factors could lead to a more solid niche in the market, longer company survival, and more consistent profits over time. I'm not saying that's what I believe but let's assume it is true."
Do you really think those people are going to leave Etsy because it no longer has the CEO's cult cheerleader squad decorating the offices?
"Since long term profit projections get hazy, the safer bet almost always is to follow a short term profit argument and take surer profits as soon as possible even though, in perfect hindsight, a long term approach would have yielded greater overall profits."
Do you really think Etsy's massive admin spending, far higher than similar companies, is really translating into long term value and higher profits? This is money not spent on partners or customers or brand, but internally.
"I'd bet this happens a lot and this idea that everything is subservient to profits paradoxically hurts value more than it helps."
The easiest response is to ask you to read some Warren Buffett. All his shareholder letters are free to read going back to the 1970s on Berkshirehathway.com. Long term value in a business is created by building a unique and defensible product offering, a brand, a technology, etc.
It's not from throwing more employee parties and increasing employee compensation. Employees can walk out the door at any time, even the CEO. One of Warren's favorite quotes is you want a business any fool can run, because sooner or later a fool will be running it.
In Etsy's case, it needs to be the best source/destination for it's unique crafts. To do that it needs to provide a viable market place to it's partners. Otherwise it's entire business will just dissipate to Amazon and Ebay and the Kum ba yah nirvana will disappear anyways.
Paying engineers $200k a year when they would be content if they made $150k a year is simply wasting $50k each on something that doesn't add value to the business. That excess comp would be far better spent hiring more people to build more and better competitive advantages, or marketing campaigns to get more partners and better build Etsy's brand, or kept in the bank to safeguard against rainy days, or returned to the shareholders as dividends and better support the value of it's stock.
The curve isn't flat.
>Do you really think those people are going to leave Etsy because it no longer has the CEO's cult cheerleader squad decorating the offices?
I think people that spend their time learning a craft then peddling hand crafted objects for, let's face it, love over money, will not want to work for anything approaching a Wal-Mart or other 'soulless corporation'. Speaking generally, of course.
I've read plenty of Buffet, Munger, Graham, Dodd and the rest. Pretty common knowledge.
What you are missing in your analysis is that Buffet et. al. invest in very well understood businesses (hell, they didn't even touch Amazon). Very well understood businesses tend to have very well understood systems (including the people and their roles and contribution to those systems. They have settled to a point where they /are/ interchangeable. They also tend to be boring and have well understood moats like huge capital or regulatory requirements. They can thrive in the fat part of the curve (or even a bit below it if they have stellar management).
Etsy is none of those things. They are carving out a new niche (or an very old niche with very new scope) with new technology in a constantly changing landscape that, really, anyone with a laptop and some free time could monkey. They will die if they try to live with average, interchangeable parts. No doubt about it.
But truth is, their business isn't from Mars, it's easy to understand, even if it's not easy to optimize. And if they truly need special custom development, why are they so poor at doing it? Where are the benefits of all that admin spending?
And BTW, I can't think of one Berkshire business that has any significant moat from "like huge capital or regulatory requirements". In Insurance their real moat is either the direct cost model (GEICO), or their underwriting discipline and long term thinking.
Etsy should know what makes it special to customers. Why isn't it more efficient at delivering that?
It is a Very Hard Problem and I don't envy them at all.
Verification of authenticity. I honestly wouldn't know where to begin. Spot check with live people? Expensive and begging for errors. Have sellers document their process? Easy to fake and expensive to check. Have a hair trigger for banning people that are clearly breaking the rules?
They also have the structural problem that Painstakingly Crafted generally takes time. That means less throughput.
And all of that is on top of the general problems of running an internet retailer with global reach.
Because of all of the pressures of throughput and the cost of verification they decided to ignore all of that and just give up, for the most part. And now it is a race to find a new 'quirky stuff that looks crafty' niche like an online Hobby Lobby to live in or lose their brand completely. I don't think it will work in the long term and I think we are witnessing a slow motion Pets.com.
Probably, what they'd need to do is split what they are doing.
One side would be how most of Esty is right now: a bunch of Hobby Lobby level quality crafty looking things that aren't actually hand crafted in any meaningful sense. It would be the place to go to get cheap, somewhat unusual gifts.
On the other side would be high end items. Hand crafted $2000 rocking chairs, for example. Something that can be marked up significantly and that it is worth it to go the extra mile by Etsy and sellers to verify is handcrafted. Maybe video walkthroughs of the process, spot checks, samples sent in to Etsy to be examined by experts etc.
Sellers can exist in both areas or one. The Verified Crafted side would buttress the Crafty but not Crafted side brand wise and the Crafty side would have a larger, more predictable income stream to make sure Verified Crafted can tackle the sticky problems it faces.
Speaking of Buffet, this sounds a little bit like his explanation of the "Institutional Imperative" http://www.berkshirehathaway.com/letters/1989.html (just above the 'miscellaneous' section at the bottom)
This isn't an argument about making the company "soulless". You can still have a great and fun work environment without spending 25% of sales on admin. And much of what makes work enjoyable isn't benefits, but leadership. Having management that is competent, humble, approachable, and driven to empower employees can change a lot.
I should have said G&A (general and administrative expenses). Essentially the cost of your workforce, the offices, benefits, etc. Etsy's is huge compared to any reasonable comp, and nowhere has anyone explained why it must be so.
Ebay has bigger economies of scale, so maybe Etsy can't really get to 10% with their smaller sales, but it should be in the 10-20% range. If it's "correct" number for G&A is 14%, they are essentially taking 10% of every sales dollar to spend on a party for the employees.
It also means their total compensation per employee might be as much as 70% higher than market. Total comp is pay, payroll taxes, benefits such as medical/dental/parking/mass transit/etc. Probably not, since it also includes office expense such as the cost of the CEO's merry band of office decorators. But it's not hard to imagine that they might be 40-50% over market in employee comp, plus spend way too much on office costs.
So you are talking about executive management, finance, and other overhead staff not developers or product development.
I asked because you mentioned developer salaries earlier in the thread.
24% does seem awfully high.
The real problem in compensation is executive pay, which reaches extraordinary levels, explicitly rewards failure (Yahoo passim) and tends to be a gift from the CEO to themselves.
Death of the author. Most people who read, and quote, Friedman's quote, haven't read Friedman's other writings or watched his speeches. People can't apply context that they don't have.
"We made this decision because it improves environmental sustainability" may or may not be a prudent decision depending on whether the justification of environmental sustainability correlates positively or negatively with financial success.
Clearly running your business into the ground through over-spending, even if it generates modest short-term results, is a poor application of Friedman's idea.
This might be a case of where there's a vocal minority who like to quote Friedman when it's convenient for their political position, so I do understand why it is hard to avoid the impression you have.
His academic contributions to the field are recognized when they've held up, but his views and who he sided with is not without criticism.
In the U.K. at least his views, along with Hayek's, tend to be associated indelibly with Margaret Thatcher. If there's someone who is seen as a paragon of reason whilst being actually quite ideologically biased, it's Adam Smith.
I don't know exactly what it'd look like if a man on the street started acting like Shell is acting in the Arctic, but I'm quite sure there would be severe and immediate consequences.
A single business is not responsible for externalities, any more than a single citizen is. We are ALL responsible for negative externalities like pollution and have to solve those problems together, using the political process and sharing the costs among everyone.
And his statement isn't specific to the short term. Increasing profits is maximizing total profits. Making of ton of profits today and none thereafter is in no way as good as making a ton more profits over time.
Imagine you can invest your life savings of $100,000 and a lot of sweat equity to build a business (including the opportunity cost of giving up your $100k a year job). You estimate it will fail half the time and you will lose your life savings. But the other half of the time you estimate will make $500k a year in profit, after paying all employee compensation, taxes and other costs.
Then you are told that if you succeed, you can't have the $500k a year. That half of that has to go to the employees who risked nothing and got market wages from you for helping build the business (and quit whenever they pleased for better compensation elsewhere). And another half has to go to the "community" to help support the arts, or some other noble cause that did nothing to help you start or grow your business.
You still want to risk your life savings?
Companies are owned by shareholders. Property rights are one of the most fundamental liberties we have. I don't go into your house and raid your fridge whenever I feel like it. Why should you be able to go into my business and tell me how I need to spend my money?
If you are environmentally conscious and decide to standardize all your cars on the cleaner catalytic converter, and consumers react poorly and sales suffer, you aren't serving your shareholders. It's not a problem your company can or should solve, you are part of a shared organizations and your ownership doesn't trump your shareholders.
Instead you should take your share of the profits and your massive paycheck and work to get cleaner and more intelligent exhaust standards put into law, so that all new cleaner catalytic converters are as clean as you think they should be. Or find alternative and better ways to reduce emissions.
But you can't steal profits from your shareholders to fit your own agenda.
It is "contra-survival" to poison the air. You cannot breath profits.
The world is bubble-shaped, and we are all trapped together sandwiched between hard vacuum and molten rock.
Poisoning in the short-term to make money to make laws to stop poisoning in the long-term is a poor strategy, and I think we as sentient human beings can do better.
"Never let ideological purity interfere with effective action."
Whether your metric for this disaster is cash or clean air I think the proximate cause was profit-seeking to the exclusion of other values.
I think this is especially true in the case of Etsy, which as the article points out, is registered as a B corporation and so arguably has agreement from the shareholders that benefiting society is part of the mandate of the company.
And Etsy isn't a B corporation. It's CEO tried to make it one and failed.
- https://www.bcorporation.net/community/etsy
- https://blog.etsy.com/news/2012/etsy-joins-the-b-corporation...
So it's temporary status doesn't belie the fact it's not going to be one and shouldn't be treated as one.
Here's what 3 minutes of googling indicates:
* most states have b corps * most states that have b corps based them on the Model Benefit Act, drafted by B-Lab * Delaware has b corps, but they are not based on the Model Benefit Act * whether the Model Benefit Act was used affects all sorts of things (requirements, reporting, standards, decision makers, enforcement…)
So it seems fair to say that delaware has b corps, but they are not like the others.
Their website says Etsy has been a certified B Corp since 2012: https://www.bcorporation.net/community/etsy
If we go by your logic, then the only thing people are allowed to pool their money together for is to make the most money possible. Am I not allowed to incorporate a public company that has another purpose? A company is, and should be, controlled by the shareholders, since they are the owners. If those shareholders want to do something besides maximize their profits, they should be allowed to do that.
And then, when other people buy a controlling interest in your company, they are just as free to change it. Public companies do what a majority of their shareholders want, and people who buy stock are overwhelmingly interested in profit.
This argument of shareholders wanting to be ecologically conscious is such a privileged idea. The majority of money in the stock market doesn't come from the rich who can afford to be flippant with their stock returns. It comes from people relying on consistent equity appreciation so they can afford to retire.
We already know how to deal with negative externalities such as pollution. Evaluate how much it costs society and tax it accordingly.
I don't understand this, can it not be the case that the companies can 'afford' to keep polluting, even if paying the tax? Especially if pollution "cost on society" is relatively constant or not increasing according to profit. How is this cost on society determined, and what if I think that the cost is too high, even for taxation to deal with it?
This seems like a band aid on one of the problems inherent with the profit motive.
http://www.nytimes.com/1970/09/13/archives/a-friedman-doctri...
Another option: work where what you do is largely represented by upper management. They make the decisions and if they worked in your discipline they will empathize with you, defend you, and promote you.
Speak for yourself. My non-tech employer (small manufacturer) treats me very well and despite being anything but an exceptional developer my experience is that developers are closer to being regarded as magicians in these environments.
That's of course a very anecdotal impression, but so is yours.
Typically with a smaller & medium-sized businesses (<200 employees), the owner is generally and acutely aware of each individuals impact to the company and would hopefully treat and compensate people commensurate to their value and impact.
There's still a lot of people who view tech folks as wizards of black magic. All they know in their tenure in the business is that some process used to take 5 people 3 work-days to build a widget, while now, the software by the dev + some new fangled machine allows 1 person to build the widget in half a day.
When I did consulting work for a small print-shop during my college days, they were always very appreciative of the work I did and had no problem paying for my work.
1) Create an Etsy review site/blog/mailing list that points to the "good" merchants.
2) IndieHackers for Etsy. Do some interviews with legit Etsy owners who sell quality stuff and make a living on Etsy.
3) Independent review company that rates etsy sellers.
4) Hard mode: compete directly with Etsy and have some sort of verification process that you're not drop-shipping crap from China.
I would say the safest is actually #4 without taking VC or going public. Etsy already validated the hand crafted market, but imho it isn't a devour the world market. The desire for ever expanding growth has increasingly forced Etsy to effectively abandon this market, leaving a hole for you to step into.
To me it's fascinating how deep in the technical weeds it is. For example, suggesting changes to their search ranking algorithms.
Some of it strikes me as likely inaccurate. E.G.
"It is black-and-white’s understanding that more than 50% of the approximately 450 people on the R&D team focus on maintaining the Company’s costly internal infrastructure. A shift to the public cloud would provide long-term cost savings while also establishing a more flexible infrastructure to support future growth."
I doubt that Etsy can significantly reduce headcount by moving their servers from on-prem to public cloud.
>It is black-and-white’s understanding that Etsy’s current search algorithm is scored to favor new sellers and other factors instead of trying to deliver the listings that are most likely to convert, leaving its marketplace drastically under-monetized. This is in stark contrast to other comparable online marketplace practices.
There's a delicate balance to be struck on a platform like Etsy between highlighting new sellers and concentrating sales into a smaller number of high volume sellers.
Etsy surely has a very long tail of inexperienced new sellers. Some will blossom into successful online businesses and some will falter and drop off, but the first step of that process is to get them hooked on the platform. An early sale goes a long way towards encouraging new people to keep working on their products.
Rejiggering their search algorithm to bury new sellers underneath all the existing, high-converting popular products feels like something that will slowly have negative long term effects on the breadth of their seller base and the kinds of products that you might find.
Investors are regular people and like regular people they like being around the devil they know vs the one they don't.
The profits from it are owed to the owners, not the suppliers, nor the employees. If you want to do something different with those profits, then you should not invite other investors in as partners, then use some of their share of the profits to fund your own CEO cult.
When investors put their money into a B-Corp they have decided to invest in a company that has declared that profit is not their only motive. I was working for the first B-Corp to become publicly traded. At that point the leadership was forced to test their idealist goals vs the pressures of forecastable quarter after quarter growth.
My guess is Etsy hit it big on the niche craft market but didn't know where to go from there.
Edit: sorry, I meant soaring this week.
If there's money to be made in the model, they're pretty well established as experts finding it.
I heard the investment news via David Johnson on KRLD, he's worth following.
Laws. Culture. Press. These things stand in the way of trying to be public while saying you won't act like a public company (by being a b-corp for example).
Public companies have functionally modular governance, which means if I don't like you (manager) and your ideas, my friends and I can buy enough governance units until you have to listen to us. It's not quite that straightforward but it's pretty much how it works.
In a way, it's similar to venture—you can try to escape the gravity of venture norms but to do that you need viral + network effect growth.
In the Market, you can try to escape the gravity of public company norms but to do that you need Amazon level revenue growth and the temerity of Jeff Bezos. Even then its an outside bet.
Rabois says startups should go public and I suspect his approach to the problem is he believes (im armchairing here) that the problem of founders hiding mistakes / making intellectually lazy decisions / not serving the financial goals / creating weird preference structures trying to raise money at scale from funds >> public market shareholders killing a geese for next quarters egg.
I am not sure if people see the contradiction of the platform, create a massive global online market place for handmade, unique expensive items. I mean, how could those two things every come into conflict with each other?
The seller needs to show that their items are unique by making them to order at a customer's spec. Keep prices down by not starting each item from scratch, but customizing a base product.
You make rings? Have a bunch of nice rings that you resell. Maybe even import them from China and sell on your store. But build your reputation by providing customized versions of those rings. Not by simply printing the buyer's name on them, but changing the type or number of stones, the metal, thickness, how the wiring is knotted, etc. Those are all ways to stand out from the high-volume crap and still keep the price reasonable.
I'm not an insider by any means but I've heard some fascinating stories over the years about how the company has coped (and failed to cope) with the trappings of success.
>Etsy’s insistence on running its own servers rather than using cloud-based services and software offered by companies such as Google and Amazon—an emphasis that was known, under Dickerson, as “code as craft”
That reminds me of the silly StackOverflow "if you are a real <hacker/programmer/developer/whatever> you must setup your own servers". There are certain benefits of cloud or not, but this kind of thinking confuses me. Why stop there? Do they build their own Ethernet cables? Racks? Make their own distros, compilers, etc.? Build their own network -- after all, your network is critical in delivering pages to your users, why outsource this to XO and Cogent and so on?
Edit: Yes, I understand the pricing differences of cloud. So just say "it's cheaper to run our own stuff", don't pretend its due to some desire for "craft".
>food scraps were packed onto a Dutch cargo bike, which an “office ecologist” would pedal several miles to a Brooklyn farm
It's like they want to parody themselves?
>Senior Engineer..."I’m just allergic to capitalism"
But presumably not allergic to using capitalists money to hire people to bike your leftovers around town.
Ehm, no. But if you outsource your servers, you’ve got an entirely different set of issues.
I’m currently renting dedicated servers, paying around 20$ a month, for something that would cost me 900$ a month with Google Cloud Platform, or around 60'000$ a month with Firebase. Outsourcing servers – unless you have highly variable load – is always literally burning money.
Remember that Google, Amazon, etc have to pay their devs Silicon Valley wages, while you can operate elsewhere, and pay half that, and save money with hardware, too.
You can check out https://gist.github.com/justjanne/205cc548148829078d4bf2fd39...
I’m personally actually paying 30€ now, for several Dediboxes from Online, running kubernetes.
The big issues of Google, AWS, etc is the cost for bandwidth and performance – I can transfer 180TB in one month on one server, and pay no extra fee, and don’t get throttled – while a startup using Firebase might end up paying 7000% more (or worse).
Capitalism isn't without its bugaboos, but the wholesale rejection I hear people making can only come from a place of ignorance.
Yet I'm also aware that it dehumanizes anyone who can't produce value within that model.
Therefore I support attempts to make it inclusive of all human beings, even if that means making the model "less ideal" or "less pure". I find it strange that we somehow have come to value assets over humans. Yes, that means I will loose out on some of the value I earn and I'm ok with that.
I've got a hard time taking an "I'm allergic to capitalism" tweet seriously coming from someone who 1) lists all the ways they participate in capitalism in their profile and 2) makes this statement in the context of their job which depends completely on capitalism functioning.
> Yup, everytime I hear someone complain about feudalism I eyeroll because they clearly aren't "woke" enough to realize that feudalism is the reason they can remain blissfully ignorant of how feudalism supports their blissful ignorance.
> Feudalism isn't without its bugaboos, but the wholesale rejection I hear people making can only come from a place of ignorance.
> So now that we aren't avoiding that we live in and understand our feudalistic society let's be realist and figure out things in perspective.
>but the wholesale rejection I hear people making can only come from a place of ignorance.
You went from "complaining about capitalism" to "wholesale rejection of capitalism". We call that shifting-of-goal-posts-ism. :P
Capitalism > productivity > abundance > social welfare
The /it depends/its complicated/its a grey area/ way of thinking is an essential analysis tool, but the average person can't be motivated towards an ideology (political, economic or social) using that. To me, the most progress is made by adopting a zealous attitude at the beginning and then making major course corrections, rather than pissing about with optimizing via micro adjustments from the start. e.g. Give people unfettered capitalism, and then when you get 13 year old kids in coal mines, you give them unfettered welfare/workers comp for a bit, etc. That way both the negative and positive impact from policies is permanently etched in history.
Because using EC2/GCE infrastructure is an incredible waste of money if you have any reasonable-sized base-load and bandwidth utilization.
So why then can't they build and maintain the best infrastructure? Why does it suck so?
If you have static usage, or at least a base load owning your own hardware to support it does make sense though, colo space is cheap, the biggest disadvantage from a financial perspective to owning your own gear is you have a depreciating CapEx instead of a 100% deductible OpEx.
https://codeascraft.com/2012/08/31/what-hardware-powers-etsy...
When you're starting out, hosted solutions will save you a lot of time. Running your own servers is a high cost and you need a dedicated team. But once you're pulling in that revenue and can afford it, running your own can save you some money and add a lot of flexibility.
If you're starting out, I highly recommend not tightly coupling yourself to a single service (using AMIs or any really specific AWS stuff) but write your provisioning scripts in such a way as you can plug in different services or deploy locally. Things like Terraform + a provisioner (Ansible/Puppet/etc) can make it easy to move your system to another provider or host your own and more easily measure costs.
People used to ask us when we started Userify (SSH Key management, https://userify.com)... what happens when AWS clones you?
Well.. that was five years ago, and they haven't cloned us yet. But even if they ever did, they have a vested interest in ensuring lock-in to AWS, so they will always choose to make things work with things that only they offer (such as IAM) instead of making it cross-cloud. That makes things a lot more challenging for large enterprises, especially when you're talking about users that may have to log in to servers hosted in multiple clouds. Having multiple sources of truth doesn't work at scale.
Most large organizations are at least on AWS, GCP, and/or Azure already, so I don't really think Userify's SSH key management (or any other cross-cloud tools like ansible/pupet/terraform/etc) are going away anytime soon.
Amazon aren't stupid, and to really realise the full value/potential of their cloud offering you kind of have to design for the proprietary features of their stack, which of course is the whole point - driving you to be locked in as much as they can. Treat them as just a bunch of generic compute boxes in the cloud and you will end up driving your costs up, not to mention often markedly increasing the complexity of your deployment.
We have a lot of clients who say they want to be multi-cloud, they say they're afraid of being locked into AWS or GCE, and in practice nobody except the supermassive companies out there ever actually do move between them. To that end, we pretty much standardized on using the platform-specific options: CloudFormation, Azure Resource Manager, and Google Cloud Deployment Manager.
(There is a small argument to some of the ancillary services that Terraform can wire up, but to be honest I rarely find a compelling reason to put up with Terraform and its lovely habit of fragging my state in order to wire those up declaratively rather than using a little imperative glue within Auster[0] to do it.)
CloudFormation isn't perfect--but it isn't a hand grenade.
Has that changed since?
AWS is great for prototyping, for scaling into new territories (you need a Point of presence in Tokyo for your new startup? great, AWS), but not for running a boring e-commerce site (buy cheap shit in 2 DCs, run replication to keep things in sync, pay someone for BGP + DNS failover, call it a day).
I have setup a streaming website with 500k/d visitors, and it runs on 7 servers for 2000$ a month give or take.
That's very, very cheap compared to GAE or AWS.
By this I mean that in such a business the issues surrounding servers and even software should be very minor compared to the bread and butter of helping people sell stuff so money is made. The costs of said servers and software should also be minimal vs things like sales and marketing costs.
For example: A dedicated m4.16xLarge EC2 instance in AWS is $3987/month. You could build that same server for $15,000 through Dell, lease it at $400/month (OpEx), and colo it with a 1GB/s connection for $150/month.
So you need that m4.16xlarge to handle the load, and honestly, there's no single instance available on Amazon that I've found that can come anywhere near the performance of physical hardware when it comes to handling database loads. Right now I am running ten r4.16xlarge instances to do the job of two Dell R710s, at considerably reduced performance even still.
I do run a database on my server (which isn't even a Large) for an e-commerce site. It fits handily in half a gig of ram. The hundreds of products we offer have associated images, but we just store the filenames in the database and they load from disk (or, more likely, Cloudflare cache). Honestly, it could be a static site but the database is a convenient way to edit the content and control the presentation.
You have 640 CPUs running at multiple gigahertz and trillions of bytes of RAM. What kind of workload requires that insane amount of compute power?
Part of the problem is that the network disk that EC2 provides as EBS is 100x slower than local disk, so keeping all the indexes and data in memory is the only way to replicate physical hardware performance.
If anyone knows of a better EC2 setup for PostgreSQL, I'm all ears.
> If anyone knows of a better EC2 setup for PostgreSQL, I'm all ears.
Have a proper replication & archiving setup, and use instance storage. If you have configured streaming replication to 1-2 other servers, and archive your WAL to s3 (using wal-e or such), you're already above EBS's guarantees (99.9% durability IIRC?).
Still doesn't even remotely compete with what you can get with "normal" hardware.
Yes, cost per compute measurable (memory, CPU, etc) is higher in the cloud. But what's never mentioned when people complain about the cloud being expensive:
a) ISP and CoLo costs
b) Redundancy/Multiple AZs
c) Backups
d) Failure recovery/cutover
e) Support
f) Monitoring/Health statistics
g) The other goodies that come along with being in the cloud(Lambda, CloudFront, Route53, SQS, etc)
I feel like we're at a point where people should have to justify why they are running their own data centers vs. having to justify why they're running in the cloud. There's obviously many very good reasons to do either, or both, but if you don't already have a data center, you better have some damn good reasons for starting one up.
> Except then you're stuck with a $15K server, and you had to spend all 15K up front
Also, tying yourself exclusively to AWS services is not a good long term strategy because then you have vendor lock-in that's worse than being stuck with some old hardware.
If you don't need the scaling abilities of cloud, then it just doesn't justify the added expense because no matter what you say, you still need people to manage systems.
A) Colo is $50-150/U with blended top tier bandwidth, 99th% billing and usually includes remote hands time.
B) Even with 100% redundancy you're still ahead by $3000/month. Please understand Amazon offers absolutely no redundancy built in and nodes go down regularly. It is up to you as a developer to build redundancy around the tools they offer.
C) Amazon doesn't take backups for you. You have to pay for this either way.
D) Again Amazon doesn't handle this for you. You have to pay either way. Buying an exact replica of the hardware I've mentioned and cololocating it elsewhere still puts you ahead by $3000/month.
E) What support do you need? Dell offers same day or even 4 hour parts replacement with the appropriate warranty service. Most Colos offer remote hands for free up to a certain hourly.
F) Lots of ways to handle this. You can use IPMI, built in OS tools, etc. There isn't much exclusive to AWS you can't easily replicate elsewhere.
G) I never said not to use Amazon for anything. In fact you should be building your applications for scaleability INTO the cloud. This is part of the idea behind the whole microservices movement.
What I mean is : if you make a list of "shit that's wrong with my crafted good selling business", "how the servers are made" wouldn't be in the top 10 things to worry about. The fact that they're arguing that said servers should be sourced in a very cost-inefficient way makes it even more odd.
Consider for example this : http://www.zdnet.com/article/snapchat-spending-2-billion-ove... which, other than here, nobody seemed to question as strange.
If this is all you see when it comes getting servers or working with Cloud servers/services, then you don't know what you are talking about.
You don't build for one massive single server, you build for a bunch of small ones that spin up and down as needed. It's micro services or you are wasting your time and money.
At stage one, with <1000 visitors per day, I can get by on a $5/mo Digital Ocean node or $20 Linode. Just the fact that they're even numbers means I'm leaving something on the table, but just the cost per hour for talking about buying, building, and colocating my own machines is more expensive than this.
Stage two is a sweet spot where running your own 5-25 machines makes sense for stable, medium-sized, medium traffic businesses.
After that, though, stage 3 is when gets to be too much for one combination programmer/devops employee to manage in their spare time, and it makes sense to go back to the cloud and have someone else manage all of that for you. A lot of startups focused on rapid growth like to skip step 2 and go straight to this stage. When you outgrow the "do whatever's cheapest" stage of hosting, it can become untenable to explain to your investors that a few thousand in server hardware will probably be adequate for the next few years, and they'll see a nice return of a fraction of an employee per month on hosting if it's done most efficiently.
Somewhere in the stratosphere, stage 4 is when it again becomes more reasonable to hire an internal team to assemble and maintain your computing resources. Perhaps you can instead convince your investors that this is your target? After all, Facebook, Amazon, Google, and Microsoft are on their own hardware...
This seems unlikely to be true unless your software engineers love doing ops (and the needs of the business don't need those on software.)
The salaries of having Operations that can replace failed hardware 24/7 (and w/ vacations) alone is more expensive than a company like Etsy should have in ops. Then there is the cost of the pipe, power, and redundancies. Even higher up, managing all of the depreciation in accounting is going to have costs compared to a expense line item.
Hardware failures are far less common than you believe. I lost one hard drive in 10 years and because it was a RAID array it didn't even fail.
> Hardware failures are far less common than you believe.
Your experience may vary; I once rented metal from Softlayer (running ~15 shards, about 60 boxes), we had a number of drives* fail, a couple of the rack controllers, some raid controllers, and one time a power supply over a 3 year period. On the worst RAID failure, we sent one of our employees across country to manage the recovery directly.
*Some hard drive failures related to 2012 Seagate 3TB drive issue. One failed within a week of being replaced.
Softlayer had a team monitoring our servers and working through issues with us; Other than supplier issues I blame them for nothing.
In that worst scenario; we ran off our geo redundant slave for the better part of a week.
Yup, this is definitely something only a non-technical person would say (or more specifically: something a business analyst cut-and-pasting snippets of advice fed to him by the various tech-oriented randos he happens to know very likely would say).
or whom he has investments or partnerships with...
I think your criticism would make sense if the article was accurate. But I don't think this quote
> Etsy’s insistence on running its own servers rather than using cloud-based services and software offered by companies such as Google and Amazon—an emphasis that was known, under Dickerson, as “code as craft”
is accurate. AFAIK no one at Etsy has said that they run their own servers because it's more authentic, part of their "craft" in a way that using cloud servers could not be, etc.
There's some actual information on their thinking behind running their own servers at https://www.nextplatform.com/2015/04/07/etsy-shows-how-to-be... , which boils down to three points
1) Etsy has been around longer than EC2 2) Etsy does not have a spikey workload that would benefit from scaling up/down 3) Etsy thinks they can run more efficiently on bare metal
Flickr's other direct descendant, culturally, is Slack. Those are nerdy, charming, funny cultures. "Code as Craft" is a cute pun. Taking it entirely literally is a really big point-miss.
I'm not sure I would agree with that based on a recent-ish post on “code as craft” the Etsy engineering blog:
"At Etsy, the vast majority of our computing happens on physical servers that live in our own data centers. Since we don’t do much in the cloud, we’ve developed tools to automate away some of the most tedious aspects of managing physical infrastructure. This tooling helps us take new hardware from initial power on to being production-ready in a manner of minutes, saving time and energy for both data center technicians racking hardware and engineers who need to bring up new servers. It was only recently, however, that this toolset started getting the love and attention that really exemplifies the idea of code as craft."
Source: https://codeascraft.com/2016/02/22/putting-the-dev-in-devops...
Tangentially related to the hardware discussion - a bit of dated hardware post:
https://codeascraft.com/2012/08/31/what-hardware-powers-etsy...
Just because someone sees the work that is done as part of a more cost effective solution as 'craft', doesn't mean it is actually done solely for that reason..
automated cloud deploy pipelines likely would also fit the bill and could be blogged about just in the same way, as one small example...
This is a good point. My company is on cloud servers, but not EC2 since EC2 didn't exist when we moved to the cloud.
Not saying EC2 is right for everyone, just that this particular point is bad.
The problem, as ever, is about filtering. For every quality piece there 50 amateurish things cobbled together from steel pipes and reclaimed wood (or worse: distressed "shabby chic" furniture made to look like something you'd find in an old B&B on the French Riviera). With all the AI being thrown around, can't someone build a "tastefulness" filter?
Especially in regards to furniture, buying online, sight unseen still isn't a great proposition. We don't expect it will ever be.
Perhaps though online could be a great first step filtering process. Find a bunch of stuff that fits the rough parameters of what you are looking for and looks good in your space then go someplace to try them out with a well kept appointment and ready to go same day follow you home delivery should you decide to buy something.
Maybe this already exists? I haven't had to buy any furniture is several years so not sure what the current state of the markets is.
They talk about their curation algorithms here:
https://devblogs.nvidia.com/parallelforall/understanding-aes...
It turns out taste varies.
Perhaps a set of AI filters could be built, and Netlix or Pandora style whichever one a person agrees with more often is selected and more results from it are presented to them.
Or perhaps a Convolution Network trained to filter per person or something equally wasteful if the allocations of Etsy's budget actually match the article. But of course those GPUs would be locally sourced and powered by renewable hamster wheels and 100% organic hamsters.
[1] https://www.etsy.com/shop/GrainyDayCreations, https://www.etsy.com/shop/PurpleHeartUK, https://www.etsy.com/shop/BigSwigDesign, https://www.etsy.com/shop/CraftyMamaGifts, etc.
I've long wanted an extension for Google Image Search, eBay, Etsy, etc. that simply filtered out all listings with images of items with pure white backgrounds. That would go a long ways toward a "tastefulness filter".
Huge indicator of handmade / vintage / used items sold by an individual seller vs. a new item being dropshipped from Amazon or China.
So many times people fail to look at problems in terms of trade-offs instead of right/wrong or fashionable/faus pax
Running your own infra vs public cloud has so many considerations beyond a simple price tag. Massive scale companies on AWS have hadoop clusters just to work out their goddamn bill. But there are considerations you have to make about the number of people to maintain something and how that affects your org on just a cultural/sustainability level, what the velocity of SaaS allows you, etc.
Running your own infra doesn't have to be full of cruft. And maybe the rolling-your-own approach to certain things is paradigmatic to the way your business works, maybe it isn't. You have to figure out the trade-offs.
Newer, fashionable tech is often decorated with tag lines of "faster, cheaper, better". That's actually not what I care about. Instead, sell me on "recoverable", "debuggable", and "sustainable".
Not just Etsy, go pick any online marketplace right now, they all are filled with cheap Chinese junk.
80% of the Fortune 500 list in the 1960s is gone. Survival is not guaranteed of any of company. So why get so worried about it?
You know why they do it that way? Because the people there decided to.
What's more self-parodying? People on here grousing about the issues of our society, only to lean into more capitalism and VC/startup life?
Or people deciding to bike their food "several miles" for their own reasons?
Capitalism has issues, society has issues, the modern phenomenon of worshipping the wealthy and "self made" has issues. I think it's possible to see those issues and want to address them without decrying the idea or system as a whole as this guy does.
Someone forgot to remind this guy that Developers suck at running servers. Been a heavy line Unix admin for 16 years now and never have run across a server(s) built/operated/maintained by a developer that was not a steaming pile of garbage.
What comments? All I see is an eternally-extending page, typical of news sites that tack every story on to the end of the prior one. In fact, when I scroll to the bottom of the story, the URL itself in my URL/search bar changes to match the title of the story.
> Jason Wong, a former engineer, urged his ex-colleagues to “fight” for “all the sellers who rely on you, for the values that Etsy stands for, for all the things you love about working there.”
> “I’m not crying,” wrote Katherine Daniels, a senior engineer. “I’m just allergic to capitalism.”
"For all the things you love about working there"... so basically fight for your overly cushy job where you were overpaid to organize paperclips, because of untracked spending. I'm being somewhat facetious but you get the point. I also have no problems with cushy or overly cushy, more power to you if you find something like that, it's awesome... just don't be an entitled goomba when things end.
"Allergic to capitalism". This is just stupid. You're allergic for a company to cut their spending to not-insane levels?
He personally finds this shift questionable because those might not have been the core values that motivated him (and perhaps his colleagues). I'm not sure if that makes him an "entitled goomba."
I do agree that the second quote is purely stupid. You work(ed) at a online marketplace, of all things and _now_ you're allergic to capitalism?
I have ordered something off of Etsy 3 times. 2 of those times, there was a minor "customer service" level issue. Once, I accidentally put in the wrong zip code and, after the package was returned to the seller, I was refused any refund (it was "my fault" -- too bad). Another time, I was shipped the wrong item and the back-and-forth between the seller to replace the item ended up taking more time than I was willing to spend on said $15 item and I gave up.
In the first case, I did reach out to Etsy, and was told to resolve the issue with the seller. After much back-and-forth, with the seller insisting it was my fault for typoing the zip code and there was nothing they could do short of re-ordering (and re-paying) entirely, I ended up convincing them to let me directly Paypal them shipping costs for the second attempt at shipping, which went fine.
This process took entirely too much time (especially when one thinks of experiences with Amazon -- where they resend stuff in orders-gone-awry right away, without any question, or significant delay).
My main impression of Etsy is: there are some cool items in its unique/niche marketplace and I would like to buy stuff off of Etsy more often in general, but the site is largely irrelevant to me as a "place to shop" because of the lack of an empowered Etsy customer service level between the buyer and seller -- protecting and advocating for both parties. Of course, not all sellers are at fault here, and I'm sure many Etsy sellers (probably the majority?) facilitate minor order issues brilliantly. This is just my personal experience.
I would feel a lot better about Etsy if I knew I had someone with the power (at Etsy) to help when something unexpectedly went wrong with an order, regardless of where the fault lies. I kind of felt like it was a cop-out by Etsy to place all customer service expectations on the buyer and seller directly.
Anyway, I like the concept of Etsy a lot (I helped my 67 year old mother open an account to sell her embroidery!), but I can't spend 10+ emails worth of time over 2 weeks trying to fix minor order issues, which, in my personal anecdotal experience, has been the case exactly 66.6% of the time.
If Etsy promoted a strong customer-positive service vibe -- as the empowered middle-person between the seller/maker and buyer -- I'd feel a lot better about trying again to buy stuff via it.
And this isn't an entirely buyer-sided argument. I would hope that Etsy sees customer service as a boon to both seller and buyer, and would make life easy on the seller as well as the buyer when these small "consumer snafus" show up. For example, not wasting the sellers time, or charging them fees, or being stingy about refunding fees, when minor things like this happen. It seems self-evident that a protected seller -- one who doesn't have to worry about Etsy putting them through the ringer over a minor order mistake -- would make a happier seller. Which seems like it would naturally trickle down to happier buyers as well.
The "credit" (my money) goes to the people that made and got the product to me.
I think the appropriate level of discussion is "at what level is art conodditised" to which I would say "I have no idea, but somewhere before it's printed on clothing and sold to me".
Other people who value different aspects of fashion are likely to disagree, but in general I don't highly value the creativity in clothing
If you don't want to be beholden to third parties, then don't sell part of your business.
It's a Wall St myth that quarterly returns are the best thing to optimize for generating shareholder value or that executives are obligated to do so.
It's the kind of capitalism that tells you the most efficient way to heat your house is to set it on fire.
I certainly agree that the boost-short-term-profit-to-get-rich-then-bail is deeply unethical (and sometimes illegal).
However, "doing it right", and using the added wealth to grow the business in the long term will benefit everyone (founders, shareholders, consumers, and the economy), and is one of the BEST parts of capitalism.
And it's not a wall street myth that quarterly returns are the best thing, more a CNN/Stock Trader myth. There are a huge number of investors like Warren Buffett who know that is entirely wrong.
But it's a common misconception that cutting spending is bad for business. In this case they are cutting a deluded CEO who had his own personality cult and a massive team of paid cheerleaders. Overpaying employees isn't "investing", paying closer to market isn't going to hurt the business. On the contrary, it can focus it and unleash greater growth.
When Steve Jobs came back to Apple he cut the Newton, dozens of Mac hardware projects, and almost all advanced R&D. He focused the Mac team on four market segments and only four computers. He focused remaining research on areas that could lead to products they understood, mainly touchpads. It took them nearly 10 years of careful iteration, (they designed the iPad first and Steve refused to launch it) before they built the iPhone.
But if Steve hadn't focused on getting Apple's quarterly burn down, they never would have made it. If he hadn't focused their efforts, they likely never would have made great products. If he had thrown money at every half baked idea, they would have died.
One of the things that angers me the most about people like Carl Ichan is that he believe that, just because he has money, he has the right to tell companies how to run themselves. Often times he buys shares in companies just for this purpose. Nobody forced him to buy those shares.
Because EBAY was already in that market! It's really no wonder Etsy has tanked as a community, sellers fleeing in droves, as the company works hard to destroy what it was, something unique, successful (even if it wasn't eating the world) and highly responsive to user's needs, into YET ANOTHER EBAY CLONE full of sweatshop manufactured crap.
Hooray for Capitalism! Race to the bottom!
/rant
> Sellers who developed successful products were prohibited by Etsy policy from hiring employees to help them expand
Isn't that cruel? Your XYZ craft is amazing and people love it, but you can hire someone to help you make more. Then, the demand is just absorbed by copycats.
Not at all, that's inherent to the whole idea of handmade. Your product probably won't be the same if you get someone helping you with it; certainly the handmadiness that people are paying you for won't be there any more. If your product is good enough to stand on its own merits then you can sell it conventionally.
> Then, the demand is just absorbed by copycats.
Any copycat presumably has to stand on their own and earn their own reputation. If you've got positive reviews for the product you handmade, that shouldn't transfer over to someone else making it, even if that someone else is employed by you.
And for all the good those excess benefits did in attracting top talent, why is Etsy's software so crappy?