It Ain’t Easy Being Etsy
Stinchcomb has been with Etsy, whose main offices are in Dumbo, since nearly the beginning. One of the founders of the indie band French Kicks, he ended up in the handmade world more or less by accident when a sideline making t-shirts for area bands snowballed into an actual screen-printing business. Several months after Etsy’s launch, Kalin—who was Stinchcomb’s roommate in Fort Greene at the time—recruited him to handle marketing for the company, telling him to apply what he’d learned building up French Kicks’ fanbase to drawing sellers to Etsy.
Kalin’s path to arts-and-crafts moguldom was similarly unscripted. Accounts of Etsy’s rise have often included somewhat grandiose quotes making it sound like he planned it this way all along (“I wanted to change the world. My goal was to empower people to make a living making things,” he explained in a 2009 CNNMoney story), but, says fellow co-founder Maguire (who, along with Schoppik, left the company in 2008), the notion that they started Etsy with the single-minded aim of spreading the handmade ethos “is a little bit of reverse history writing.”
“Neither of us in the beginning were all about handmade stuff, like ‘Oh my god I need everything to be handmade,’” he says. “There’s a kind of PR line to push the gospel of handmade, but that isn’t what it was founded on. It was founded on an opportunity and thinking that this stuff was really cool, but it certainly wasn’t about—at least in the beginning—changing the way the economy works, which is kind of the way it’s pitched now.”
According to Jean Railla, a writer and the wife of one of Maguire’s and Kalin’s professors at NYU, the pair came to crafting more through their computer backgrounds than any deep passion for handmade goods. Their introduction to the craft world, she says, came mainly through the work she hired them to do on her website GetCrafty.com, an online forum for DIY-types that she launched in 1997. That work led to freelance projects for the site Craftster.org—a community of around 100,000 arts-and-crafts enthusiasts—and through their interactions with users at both venues, they came to realize there was no good place for people to sell their handmade goods. “We thought, well, we could totally build that,” Maguire says. And so Etsy was born.
The original plan was to take on the arts-and-crafts market first and then move more broadly into ecommerce, ultimately competing with established marketplaces like eBay. The decision to concentrate exclusively on handmade came a little later, Maguire says, as they realized that the market for these goods was significantly larger than they’d thought and that changing the face of global commerce made for a rather good sales pitch.
“It made a better story, and if you have a better story, it’s a lot easier to get articles written about you and raise money,” he says. “Venture capitalists love that. They love a story. They love to brag about their portfolios… about how some company of theirs is doing something amazing. So if you feed them a story that they can feed to other people, it makes their job easier.”
Etsy has never had a problem getting money. Beginning with an initial $50,000 investment from a well-off real estate contact of Kalin’s, the company has raised more than $50 million. In 2006, a chance email from Kalin to Flickr co-founder Caterina Fake led to a $1 million Series A funding round. In January 2008, the company secured another $27.5 million from investors including venture capital firms Accel Partners and Union Square Ventures. Last August, it raised an additional $20 million in a round led by Index Ventures, and heading into 2011 it was valued at roughly $300 million.
Not bad for a company that, as Stinchcomb recalls it, launched without a discernable business plan. “An important part of the culture of the company comes from the fact that everyone who was doing it was coming more from being a maker of things or from some creative pursuit more than a business one,” he says. “That I think really actually cemented the vibe and the values of the company early on, where we weren’t like, ‘What’s the business model? How much money can we make?’”
This seat-of-the-pants ethic is charming, befitting a company founded by a handful of accidental DIYers. It can seem somewhat less charming, though, when you consider that Etsy’s revenues are directly tied to the revenues of its sellers. “How much money can we make?” might not be management’s primary concern (although this seems disingenuous given the millions in venture capital that’s been sunk into the enterprise), but it’s certainly on the minds of
many of its members.