Inside the Revolution at Etsy
nytimes.com
nytimes.com
This. I went on Etsy recently for the first time in a few years looking for a few different handmade items. They were nearly impossible to find amid a flood of mass-produced commercial items. Etsy is nearly indistinguishable from Michael's or Joann's art supply stores, or worse. I have no intention of shopping there again.
Sellers need a “Maker Strike” like YouTube channels to keep folks honest. Also, raise the bar such that sellers have to put in mental, creative and time investment and are cut out if they repeatedly sell junk. Can’t just sign up as a seller the same day and spam stuff from AliBaba and say it’s “handmade” or “vintage.”
Next, have a buyer to seller/creator feedback method that influences item ranking so junk is pushed down and out.
Maybe use AI/ML/DL to spot product descriptions and images that are copied or similar to determine if items are new, mass-manufactured products... and, sure have an appeals process.
PS: My disabled mom makes handmade jewelry that people beg to pay money for, but I’m hesitant to recommend Etsy considering the diluted execution of the original business model.
This train left the station years ago:
https://www.wired.com/2014/04/why-etsys-future-depends-on-le...
Wut. You think it's a good thing to cut her off from the best venue on the web for her work because of an altered business model?
Of course, there's a lot of mass produced knicknacks even among "crafts" sold at fairs and stores. But it tends to not be quite so much mass-produced and crappy.
In the same way that many small-scale sites/stores that curate contents can be said to have unique value proposition and competitive advantage. That's not a knock on them by the way. Many are good at what they do and add value. Not everything needs to be Internet-scale but you sort of have to be one or the other.
Likewise, if you resist growing and have competition, they will see the opening you leave, continue growing, and then look to use that leverage to buy or kill your business.
Is this true? I suspect that a majority of small business are at equilibrium, providing income to the owner/operator. I just don't have the data to prove it.
Unfortunately, I suspect most of these businesses are vulnerable to larger competitors, market fluctuations and other risk factors that one would want a growing business to protect against.
However I'm sure many businesses have managed to keep things fairly stable with modest growth and loyal customers for the lifespan of their owners relationship with the business. I'm just not sure if that is enough to support the fact that there is in fact a state of equilibrium for a business.
Many small businesses are. It's a key insight to serving that community as a b2b provider that growth and new business aren't the selling points they are to larger businesses. What most small businesses we talked to wanted was quality customers who will bring dependable, repeat business. They want to operate as close to capacity as possible with as little uncertainty as possible. Too much business overwhelms them. Too little starves them. Helping them keep to the sweet spot at the upper end of their capacity made them much happier than just trying to drive as much business to them as possible.
1) without etsy, you really would be stuck with Michaels quality crafts. I’m pretty sure I can’t buy a solid oak spice rack from michaels of any decent quality. Or a retro pipe box, or a certain type of mens jewelry... you get the picture.
2. Nobody else is trying to corner the market Etsy originally carved out for itself. Amazon, Jet, Ebay, and Alibaba all are terrible for showing craftwork rather than a mass produced consumer piece with significant stock. If amazon had an etsy clone that improved on it at all, I would totally split my patronage, but there’s realistically no competitor online.
3. You can actually buy locally and keep your money mostly local. Places like amazon make this extremely difficult to figure out and prioritize.
4. Many etsy shop owners use etsy as a shop front, not as a sales driver. Assuming the main point of etsy is to buy a great product directly from the buyer will probably lead to shitty experiences. This is much more like a flea market, complete with regret purchases. It is not a convenient online shop for avoiding regret.
Am I asking you to excuse etsy’s issues? Hell no. But you’re also not addressing massive parts about how the site functions for both its sellers and consumers.
Look at the landing page for "Home & Living" and you'll see what I mean: https://www.etsy.com/c/home-and-living?ref=catnav-891
I could see how some specific topics might still have more handmade items than not.
That said, I have too much stuff and I just tend to be uninterested in buying more even if there's nothing wrong per se with individual pieces.
So my wife sticks to marketing and directing people directly to her Etsy store.
Just a question: would you not buy something via Etsy (as in, found something you liked some other method but had to buy it through Etsy), or just not shop using Etsy?
For all the talk of "doing good" and maintaining a strong corporate culture, if those things aren't contributing to the bottom line, they'll be axed.
I get the tension between impacting the world for the better and keeping an ever-increasing number of lights on. It is an interesting tension.
Outside funders may give lip service to it, but they don't care shit about your values, and honestly I think it would be better if all sides acknowledged this instead of pretending this wasn't the case.
I totally agree -- I work for a business like this right now, but the business is 100% owned by the cofounders. Toms or Patagonia or any other number of examples abound.
The difference between us and Etsy though is Etsy was losing millions of dollars, and took on VC, and continued losing millions. I wouldn't say the investors were "were more interested in profit than doing good," except incidentally. They were/are interested in keeping the ship moving; no entity, not even a charity or non-profit, can run in the red quarter after quarter and still continue to exist. This isn't profit or no profit, this is surviving or folding. Would it be better for the world if Etsy weren't around at all? I don't think so, but I'm pragmatic like that.
Edit: See also sibling comment, hn_throwaway_99 also said it well.
Instead I think most of the Etsy leadership and employees forgot that they were running a business at all. That's fine when you're riding on the back of a great business model with solid fundamentals (see most big tech companies), but it fails when you're running a niche business with low margins even in the best case.
It's hard not to sound like a handlebar mustache villain when criticizing Etsy's original business practices, but work is work, not a therapy group. If employees find corporate governance so horrible, hey, they're free to start companies that align with their values.
But maybe they'll prove me wrong, who knows.
"There's only so much wiggle room as a public company,"
said Mr. Stinchcomb, the early employee. "If you
really want to build a company that works for people and
the planet, capitalism isn’t the solution."
...
"To all the people who say taking Etsy public was a
mistake, I say that's ridiculous," Mr. Wilson said.
"There are some people who will say, 'Well, it’s not
right for me. I like the old culture.' Well, I'm sorry
about that. Going public was the best thing that ever
happened to this company."
People learn from their mistakes, but apparently Fred has not.
"I have heard from quite a few founders that they read the book Hatching Twitter and came away thinking that they would not want to work with me. That sucks for me but I don’t regret anything I did or said in the events that were described in that book." [0]
[0] https://www.quora.com/What-does-Fred-Wilson-think-about-Hatc...
Etsy grew rapidly and organically for a decade, and never figured out how to grow intentionally in an ROI-positive way. As a private company it was not particularly concerned with revenue per employee, and headcount expanded like a gas to fill available revenue. After going public it was way too slow to realize that this wasn't going to fool the public market.
I feel deranged pointing this out, but hiring triple the headcount you need to run your business is not a progressive social value. I don't know what it is.
n.b. I worked for Etsy from 2007-2014. My own values force me to own this.
To me it feels like a byproduct of an overemphasis on a certain kind of inclusiveness, in which people are elevated based on how long they’ve been around and how much buyin there is into the mission. Everyone’s opinion is valued, everyone wants resources, everyone wants to be promoted. If there’s not money constraints or a sense of practicality driving decisions, everyone gets headcount and promotions, driving bloat.
My last job was with a very mission driven startup. We were short on money so headcount wasn’t bloated, but we were plagued by “managers” with no one under them who’d been around since the beginning and didn’t contribute much. The product drifted, and we wasted a lot of time.
I switched to a new, more unapologetically capitalist company, and my team has been subject to some absolutely cold blooded re-orgs. It’s a much less friendly place, but much, much better run in terms of getting stuff done.
Not sure what the moral is. I made some great friends at the first company, not so much at the second. But the new place is in many ways a much less frustrating place to work.
There's a certain bay area company that has a large developer office here in my rural state. They've been hiring as fast as they can for the past few years. From all my friends who work there, I get the impression that there are way more people now than there is actual work to do. And yet they continue to hire because I assume head count alone is primary metric.
Now I am curious. What's so wrongheaded about it?
From an investor's point of view this would not be ideal. Having said that, from a broader societal point of view, it's less clear.
Put it this way: as an investor, I am going to view a business that has 1 employee (on $100k) and $1m in profit much more favourably than a business that has 10 employees (on $100k) and $0.1m in profit. From the broader societal point of view though, the second arrangement could be better.
More activities across the same labor pool makes more wealth in a society than fewer activities which consume all available resources. This is why we're much richer now that 70% of workers aren't farmers.
All hypothetical. But the point is wealth can't be the only measure of success.
There was zero reason for Etsy not to be profitable. It over-hired and over-spent.
Wouldn't it have been fine to not go public?
That is, it sounds like, regardless of whether Etsy was profitable (in the sense of producing dividends), it was at least breaking even: it was hiring as many people as it could support on revenue, but not more, and certainly not as many people as it could support on venture capital raised in exchange for equity (or worse, debt). Is that correct?
If so, why should a company like Etsy even bother to go public? What did it gain that was worth being subject to the judgment of people whose value system is that breaking even isn't a good goal?
(I got an Etsy job offer days before the layoffs. It basically sounded like the Etsy I wanted to join died that day, and I still haven't understood why the "old Etsy," pre-IPO, couldn't have lived.)
Etsy took $85m in VC funding. Those VCs want an exit. So, in my mind, they made the decision to eventually go public at the same time they made the decision to take that funding.
I do agree with your broader point "Wouldn't it have been fine to not go public?" but I think if you want to plan to not go public, you probably should bootstrap your company instead of taking VC funding.
I'd be curious to learn Fred Wilson's explanation why going public was the best thing that ever happened to Etsy.
- A hated executive team that wreaked absolute havoc in the lives of thousands of people for the sake of a thought experiment which failed, which had failed elsewhere, and could have been implemented in a sensitive and non damaging way anyway. I met a member of this cabal socially years later, and because of personal connections and the need for social smoothness (I have a family and a mortgage so I can't just flounce about) I was compelled to play nice and chat. Over the course of the conversation I realised that this team believed that they had been on a mission to save the company and that they had succeeded, that they were loved by the people they had maimed (many of whom would have had to be restrained had they been in earshot of the conversation) and that they had been removed and denied the credit by "dark forces"!
- Employees who when asked opinions about strategic decisions articulate positions that are the polar opposite of the agreed corporate position and sound lunatic (initially) but on reflection, well it turns out that these positions are absolutely as consistent and coherent as the product of 100 slide decks.
- Retired colleagues who ask about some initiative or team that is now entirely forgotten in the corporate body, but when it is mentioned I suddenly realise that it was hugely important and significant, but like Stalin's victims, it's been airbrushed out of history!
- Execs who's focus is on trivial aspects of the business and / or who openly articulate conspiracy theories about grass root business units "I bet they're itching to..."
From Wilson's point of view the pressures and outcomes that he observes are likely significantly resolved and mitigated by the IPO that they did. He probably reflects over a view that moved from immanent displacement and forced illiquidity (due to investors refusing to wave conditions and covenants in agreements that would then mean that no new cash could be generated) to a sunlit upland of board freedom (now threatened by asset strippers). This is not a perspective shared by the founders or employees or even customers, but Wilson almost certainly hasn't spent the considerable cognition required to get that idea.
And this is the problem, even relatively little companies like Etsy are staggeringly complex, there's just too much to consider for a human to fit the required views in. To get the view you have to constantly review and consider and check.. leaving no time to do, and do is needed!
Roll on corporate AI!
*Successful long term because ultimately seeking profit above all leads to reputational harm and resulting a downward spiral (or if lucky an oligopoly).
Not at all. If seeking profit leads to a downward spiral, then the managers are mistaken about how to seek profit. In particular, treating employees and customers well is an excellent strategy for making profits.
For example, I asked a used car salesman acquaintance how to tell if a car dealership was reputable or not. He said it's easy - have they been in business more than 5 years? If they have, they are running on repeat business. Bad dealerships run out of suckers before 5 years.
Maybe that’s what he’s doing: reducing liabilities (ie salaries) and making revenue look good to spark M&A interest, while also considering survivability without an exit.
It seems much more likely that eBay, AliBaba or Amazon would kill it if one of them bought it.
Pretty sure that's a fantastic way to keep out the actual artisans/starving artists/craftspeople and only allow in the kind of people who can gather up the cash to stock up on tons of Alibaba garbage.
Facebook/Instagram/WhatsApp, Yahoo/Flickr/Tumblr, Baidu, Twitter, Netflix, eBay, Alibaba/AliExpress, PayPal, Rakuten,The Priceline Group (Priceline, kayak, etc), etc.