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Notes From Chad: Funding Etsy’s Future

May 9, 2012

by Chad Dickerson handmade and vintage goods

I joined Etsy back in September 2008 because fundamentally I was inspired by the community of sellers and all they represented: art, beauty, collaboration, and the success of individual people around the world making and selling amazing things.

At the time, Etsy had grown beyond all expectations and was going through growing pains. I was still unpacking from my recent move as I wrote my first note to the community and was really excited to be there to move past those challenges and help Etsy move forward.

Looking back, Etsy was quite small by today’s measures — the community sold $7.93 million of goods in that September, my first month at Etsy. We had about 50 employees and we were in an office in downtown Brooklyn with a broken elevator that famously had a sign that read, “You gotta press up to go down.”

Almost four years later, many things have changed. We have different offices near the Brooklyn Bridge, a working elevator, almost 300 employees, and last month alone, the community sold about $65 million in goods. Each month, 40 million people around the world visit Etsy, with 15 million registered members and 875,000 sellers generating those sales in 150 countries.

Today, I want to tell you about some exciting news for our future but first I’d like to take a step back and look at Etsy in the big picture, how we are thinking about the company, and what’s ahead.

Etsy in the big picture 

The company is almost seven years old and we are all very happy with how far we have gotten together.  There is a lot to be proud of and the site and the community are remarkable. The past nine months since I became CEO have been full of forward progress, too. We’ve continued to improve the search experience, delivered a new Search Ads product, delivered Shop Stats, launched the Etsy iPhone app, had our best holiday season in history, started rolling out direct checkout, debuted Etsy in French, delivered new category experiences, and acquired Trunkt.

Even with the progress we have made together, we are not satisfied.

We believe, more than ever, that Etsy can help fundamentally change the way the world works by making it possible for individuals to make and sell things to other people around the globe — a people-powered economy. We have been effecting that change in small but increasingly meaningful ways. Not that long ago, in September 2011, we ran Hello Etsy in Berlin, our first conference which took on the broader focus of small business and sustainability. The description of Hello Etsy that we published last fall provides an inspiring blueprint for the better world that we envision:

Decades of an unyielding focus on economic growth and a corporate mentality has left us ever more disconnected with nature, our communities, and the people and processes behind the objects in our lives. We think this is unethical, unsustainable, and unfun. However, with the rise of small businesses around the world we feel hope and see real opportunities: Opportunities for us to measure success in new ways… to build local, living economies, and most importantly, to help create a more permanent future.

More than 500 independent business owners from 17 countries came for sessions on building “human-scale economies” and social entrepreneurship, while satellites beamed the programming to smaller gatherings in six other cities. Angela D’Alton (one of the attendees, and now an Etsy employee in Australia) called Hello Etsy, “possibly not only the best conference ever, but potentially one of the most important to the global economy.” Hello Etsy helped us fully realize that Etsy is more than just an online marketplace. Etsy is a beacon in the world for running businesses sustainably, responsibly, and profitably, with people at the center. The kind of sharing and cooperation you see on Etsy — what has been called a “sharing economy” that is part of a broader “quiet revolution” — can help businesses change the world. Etsy is helping power that revolution, and although we’ve been at it for seven years, it feels like we are just getting started.

Etsy, the company

We also want to make sure we are operating Etsy with sound principles that we can be proud of as we continue to grow. In other words, we want to talk the talk and walk the walk. Inspired by the experience at Hello Etsy, I spent a lot of time working with a group of people here at Etsy (led by Matt Stinchcomb and Randy J. Hunt) discussing what we needed to do to make sure that Etsy — the company — continued to operate according to a set of values. After a lot of discussion about what kind of company we are and aspired to be, the team defined these core values for the company:

  • We are a mindful, transparent, and humane business.
  • We plan and build for the long term.
  • We value craftsmanship in all we make.
  • We believe fun should be part of everything we do.
  • We keep it real, always.

In stating these values, we wanted to hold ourselves to a higher standard than most companies and articulate the guiding principles for Etsy that would be an anchor as we grow and change. There is no doubt that Etsy has been a successful business, but we don’t want to be just that. We want the company to last for a very long time and clearly stand for something in the world.

Measuring oneself against a set of philosophical values is inherently challenging, so we looked for ways to evaluate how we as a company operate to see how well our values hold up. That’s part of what we mean by “keeping it real, always.” In looking for a framework, we found the B Corporation (for “benefit corporation”) movement. B Corporations are a new kind of company that uses the power of business to solve social and environmental problems. (It’s like a LEED certification or Fair Trade certification, but for a business, not just a building or a bag of coffee.) B Lab, a non-profit, describes the B Corporation movement like this:

When you support a B Corporation, you’re supporting a better way to do business. Governments and nonprofits are necessary but insufficient to solve today’s most pressing problems. Business is the most powerful force on the planet and can be a positive instrument for change.

To read more about B Lab and the B Corporation movement, take a look at this companion post.

B Lab provides a rigorous independent third-party framework for assessing how you’re doing as a business when it comes to employee, community, and environmental interests. Etsy has gone through the assessment and we learned so much about what we are doing right and where we can improve. After successfully completing the independent B Lab assessment, we are proud to announce that Etsy is now a Certified B Corporation™. There are over 500 certified B Corps but Etsy will be among the biggest, along with mission-driven companies like Patagonia and Seventh Generation.

I think becoming a Certified B Corporation is one of the most important things Etsy has ever done. It helps us keep an eye on the “mindful, transparent, and humane” values we aspire to, and also keeps us focused on our intention to “plan and build for the long term,” not just when it comes to Etsy but for the world at large. Like other Certified B Corporations, B Lab is publishing our scores from the assessment. In being transparent, we are openly challenging ourselves to continually improve how we impact the world with our company. Like most businesses, we are imperfect, but we are publicly committing ourselves to upholding our values and grading ourselves for the long term. This is how we hope to make a better world and inspire other companies to do the same.

Changing the world

With all the talk about how far we have come, it is tempting to think of Etsy as “big” now. When I look at Etsy, though, I see a tiny seedling. Last year, over $525 million (525 with 6 more zeroes) changed hands among people on Etsy, and worldwide GDP was over $60 trillion dollars (that’s 600 with eleven more zeros). The Etsy economy represents 8.75 ten-thousandths of one percent of the global economy. We have a long way to go and grow. But we don’t think of it as Etsy becoming more like the rest of the world, rather the rest of the world becoming more like Etsy.

We want to do more for our community and we want to make sure Etsy grows and prospers. Today, we are announcing that we are adding some new resources to match our world-changing ambitions. Etsy has closed $40 million of funding from a roster of investors who have been believers in Etsy for a long time. In fact, all of Etsy’s existing investors — Burda, Union Square Ventures, Accel Partners, and Index Ventures (who led this investment round) — committed to Etsy in a big way. They’ve continued to invest all along because they fundamentally believe in Etsy and what we’re doing. I couldn’t be happier to have such a committed set of partners who “get it” along for the next stage.

What do we plan to do with the money we’ve raised? Two simple things, really: we plan to grow Etsy into an economic force all around the world and we want to provide more products and services to help sellers succeed and build their businesses on the Etsy platform. You’ve seen a start in some of these areas — our Etsy in German and French launches, the beginning of the direct checkout rollout to make transactions smoother on Etsy, and our recent acquisition of Trunkt to provide a stepping stone for new kinds of wholesale opportunities for sellers. Expect things to move at a faster pace as we add even more resources.

The funding also ensures that the company has the operating funds to last for many years so that the Etsy community is in a position to succeed for a very long time. We also want to be able to make decisions like the one you saw last week with “no longer pay for quantity up front,” where frankly, Etsy loses money but it’s the right thing to do for sellers. As we stated in our values, we plan and build for the long term.

The future and a backward glance o’er travel’d roads

We feel a great sense of responsibility for and duty to the community we are building with you, and with our new Certified B Corp status, we’ve made a public commitment to continuing to be a values-based company as we grow, change, and invest in the future we want to shape. We know a lot of people depend on us to run their businesses and we take that really seriously. We’re more committed than ever to running a business that you can rely on and grow with. Etsy is a marvelous force in the world, and we want to share it far and wide.

At the end of the day, Etsy — the company and the community — is about people collaborating on all kinds of wonderful creative pursuits. In my daily work, I try to stop and admire the process of creation around me. Every day when I walk to our offices in Brooklyn, I walk past the spot where in 1855 the printers Andrew and James Rome typeset and printed the first edition of Leaves of Grass by great American poet Walt Whitman. Whitman was a Brooklyn resident for most of his life and stopped by the Rome Brothers’ shop to set some of the type himself. The building itself is no longer there, but it’s remarkable to think that exactly 150 years later, barely three-quarters of a mile away, Rob, Chris, Haim, and Jared were doing the the 21st century equivalent of typesetting in coding the original version of Much later in life, Whitman wrote an essay and he entitled it “A Backward Glance o’er Travel’d Roads,” concluding:

the strongest and sweetest songs yet remain to be sung

And so it is with Etsy.  We’re looking forward to taking you along on the journey.