Etsy executives applaud as they open the Nasdaq MarketSite ahead of Etsy’s initial public offering in New York on April 16, 2015.
Michael Nagle | Mayor Bloomberg | fake images
In this weekly series, CNBC takes a look at the companies that made the inaugural Disruptor 50 list, 10 years later.
In 2005, Chris Maguire, Jared Tarbell, Rob Kalin, and Haim Schoppik were fed up with building websites for clients and wanted to create something of their own. Finally, they created a website for an online community called GetCrafty.com.
“It was mostly women creating and sharing their tips and how-to’s. And we thought it was really fun,” says Chris Maguire, co-founder of Etsy and current shareholder. “They kept saying in the [GetCrafty] forums at the time, ‘I wish there was a place to sell things I made, like eBay, too expensive and unwieldy. And there really isn’t much out there that, you know, caters to just us,'” he recalls.
That’s what led Maguire and his co-founders to say, “We could build that.”
Etsy has grown from that idea to become one of the largest e-commerce companies in the world. Approximately 95 million people used Etsy in 2021 to buy or sell items, according to the company’s 2021 annual publication. investor presentation. Maguire said it’s surreal how common the name Etsy has become, and not something he and other founders expected.
But as Etsy has grown far beyond its original goal—to create a sustainable place for people to buy and sell the things they make—it’s gotten harder to maintain its DIY ethos. Maguire says that being emotionally involved with the artisan community made the founders want to build something that fit their needs, and today, while Etsy still makes sure there’s a connection between buyer and seller that goes beyond a transaction, you have noticed that the company has become more like a sales machine.
“They had this playful aesthetic. And now I don’t see it as much on Etsy,” Maguire said. “It’s more geared towards, ‘We’re selling stuff and we’re selling as much as possible, and that should be the main goal.’ But it’s, you know, there’s not that much fun.”
Nowhere has this tension become more apparent than during the current furor among sellers after Etsy announced plans to increase its seller fees by 30%, from a total of 5% to 6.5% starting of April 11.
The company’s management, which only responded to email requests for comment, highlighted the access it provides to more than 95 million shoppers and says the improvements it makes translate directly into more sales for its more than 5 million customers. vendors.
Sellers remain unconvinced and, in the last week, as a sign of how some feel about the company, he thought about forming a union and continued to sell strike. An online petition that was created and described the demands of the sellers has obtained more than 80,000 signatures.
“We are navigating uncharted territory,” Kristi Cassidy, the main organizer of the strike, told CNBC.
Nicole Lewis, who has sale of handmade crayons on Etsy for 15 years, he told CNBC he doesn’t blame Etsy for raising transaction fees. “I think a lot of the original sellers who are upset with Etsy still see it as the Etsy of 2004, 2005, 2006,” Lewis said. “It’s not that anymore and it can’t be.”
In fact, the e-commerce industry has changed in the decade since Etsy first appeared on CNBC’s inaugural Disruptor 50 list.
Maguire, who now owns and operates Philadelphia’s Tubby Robot Ice Cream Factory, a home ice cream parlor and arcade, says that unlike ten or fifteen years ago, the industry is controlled by a few major players.
“When I first got interested in the Internet, I thought it was amazing that anybody could create their own website, put their own HTML and have their own domain, and have total control over it. That’s amazing,” Maguire said. “And that’s something that I think we’ve lost in the last decade. Some of that individuality.”
At the time of Etsy’s IPO in 2015, whose share price was $16, a valuation of $1.8 billion, it had just over a million sellers.
“The success of our business model is built on the success of our sellers,” said then Etsy CEO Chad Dickerson. told the New York Times. “That means we don’t have to choose between people and profit.”
But that has become an increasingly difficult line to walk as a public company with Wall Street on guard. The changes at Etsy go far beyond the latest transaction fee increases.
In 2017, Dickerson, who had led the company since 2011, was fired and board member Josh Silverman was named chief executive officer at a time when private equity firms and hedge funds were amassing shares. Fears of a potential takeover coincided with fears that the company’s mission would be lost.
AN New York Times Feature of 2017 noted that even as finances improved, in other respects “Etsy is barely recognizable.”
Although Dickerson came to Etsy from Silicon Valley, the company was and still is based in Brooklyn, and its multi-million dollar IPO was a watershed for the New York City startup world. It was also among CNBC’s most notable startups and Disruptor 50 companies to go public as certified B Corps (others include Warby Parker, Lemonade Insurance and Coursera), a rigorous certification process to show a company is aligned with social goals, but left that status after Silverman took over the reins of the company.
Etsy has also made a number of acquisitions under Silverman that have grown the markets geographically and in size. His first deal of 2018 was a $35 acquisition of German retailer DaWanda. Last year, Etsy spent $1.6 billion to acquire resale retailer DePop.
“Depop could be to Etsy what Venmo was to PayPal: The next generation’s pick,” Silverman said in an interview with CNBC’s Jim Cramer.
By some financial metrics, Etsy has shown impressive growth, especially during the pandemic, with sales growth exceeding 100% in 2020.
And it has continued to post strong numbers, with a most recent quarterly sales total of more than $4 billion and revenue topping $700 million. but he did forecast a slowdown in sales for the first quarter and the heady days of its pandemic-driven stock market boom are over. Etsy, which saw its market capitalization exceed $300 a share last year, has since wiped out two-thirds of that value as investors have fled the biggest winners of the pandemic.
Maguire is hopeful that while it’s hard to compete with the prices and convenience of monolithic operators, at some point people will tire of what e-commerce has become.
In a CNBC interview on IPO day in 2015, Dickerson said, “We really think of Etsy as a marketplace for creative entrepreneurs to make, buy, and sell unique products… We’re only in our 10th year as a company and they want to operate for decades and decades.
Lewis, the non-striking Etsy seller, seems doubtful that there will be a push back in e-commerce. Among his reasons for not joining the sellers’ strike, he told CNBC: “We compete with Amazon.”
—CNBC’s Annie Palmer contributed to this report.
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