Index Insight

The Etsy Factor

  • Etsy CEO Chad Dickerson

Posted on 16 Mar 2014

Etsy CEO Chad Dickerson on reinventing retail and why community must have soul.

Attend any startup demo day or pitching session and there are certain nails-on-a-blackboard stock phrases you’re all but certain to hear. Among these, is the claim: “We’re reinventing”, as in “We’re reinventing department stores/laundry/pet-food etc”. In almost every case the assertion is little more than wishful thinking. But, very occasionally, a company will come along, seemingly from nowhere, and disrupt a traditional sector so persuasively that the entire industry around it will be changed for good.

Etsy, the globe-spanning marketplace for vintage and handmade items, art and supplies, is one such case. Headquartered in DUMBO, Brooklyn, with a lobby presided over by a lugubrious-looking giant cardboard “owl-like being” (and offspring), the company enables anyone, almost anywhere, to create a business around their passions, thereby unleashing a tidal wave of micro-entrepreneurship.

“To get started on Etsy is very easy,” says the company’s CEO Chad Dickerson, who has been in post since 2011, after joining from Yahoo! initially as Etsy’s CTO. “You can literally open a business by spending 20 cents to list an item and then you are up and running with a worldwide audience of about 60 million.”

It’s the truly global nature of Etsy’s marketplace, which currently covers 202 countries, that has proved transformative for makers and sellers, he says. “International is now about 20% of gross merchandise sales at Etsy and it is continuing to grow -- and it’s growing because sellers around the world can basically find any market they want to focus on. There are really no boundaries on where people can buy and sell.”

The global aspect empowers buyers, too, whose (nearly) every taste is catered for, says Dickerson, who cites the example of traditional Italian cobbling. “We have Italian shoe-makers on Etsy, who send you a kit and you measure your own foot - and you order shoes that way,” he says.

“So all the craft traditions of the world, which go back into prehistory, come forth again on Etsy. In the same way Facebook really grew quickly because people have always had friends and acquaintances, so Etsy is about making things and trading them -- and that very human marketplace which has always been with us.”

Community with soul

While most Internet-based companies talk a fine game when it comes to community, Etsy is one of the very few to understand what makes them tick and how to ensure they live and breathe. To that end, it encouraged the creation of around 8,000 “Etsy teams” -- essentially self-organized groups of sellers embedded within their local communities around the world, who meet and collaborate offline to run their online business. 

Asked for his golden rules on how to create and grow online marketplaces, Dickerson stresses the critical importance of community.

“When you look at the beginning of Etsy, and then Etsy today, the community is central and always will be,” he says. “You should always remember that a marketplace is made up of people and it should be very human-friendly. When you do business with a retailer like Amazon, you may get what you want, but there’s no soul to it. A community is what provides the soul.”

He expands: “If you buy something on Etsy, you often get a custom box with a handwritten note with your name on it. I ordered a jacket one time and the seller wrote to me that they’d thrown a tie into the box, and said ‘This tie looks really good with this jacket’. That just doesn’t happen when you order from Amazon. No one throws in an extra disk drive.”

His second tip is rather more concise: “Don’t take too much,” he cautions. “One of the reasons Etsy has grown is because the business model is fair and equitable. When you sell something on Etsy, Etsy gets 3.5% and the seller gets 96.5%. That’s allowed us to achieve scale, because it’s a good deal and it lets people get started quickly.”

3D Printing Revolution

One issue that Etsy, whose gross merchandise sales will “significantly” pass $1bn this year, has had to confront, given that it’s a marketplace encompassing jewellery, clothing, furniture, homeware, art and more, is ensuring that it always stays true to its core principle - namely, that everything featured on the site is handmade and authentic.

As Etsy is not a ‘jury marketplace’ and doesn’t review items as they come in, it relies - in part - upon its community to flag products which it thinks don’t match the site’s policies. 

“If the community see an item they think is not vintage (and vintage is twenty years old or older), they can flag it,” says Dickerson. “They can do the same thing if they suspect it’s not handmade. We also use technology -- we can recognize signals like activity that suggests something may not be handmade or may not be fit for Etsy.

“A team we have inside the company, called Trust & Safety, then look at the combined output of what the community is reporting, and what our software is reporting, and they basically do investigations to see what fits the policies and what doesn’t. Then we take things down that don’t fit the policies.”

Yet, a major challenge for Etsy lying ahead, Dickerson concedes, is defining what handmade and creativity mean amid the onrush of rapidly-evolving technology.

He reaches for a nearby kitchen chopping-board, to illustrate his point. “This cutting-board is made by a seller in Williamsburg, here in Brooklyn, whose design is actually created on a computer. The saw that cuts the shape is a computer-driven saw, but it’s made in a small workshop run by a husband and wife. Is this still handmade?”

He leaves the question hanging for a moment, before answering it himself. “We think it is.”

How does he think the 3D printing revolution will impact upon Etsy’s ethos?

“We have people today on Etsy selling items with parts from 3D printers,” he replies. “There are people, for example, making really interesting jewellery.”

He pauses, choosing his words carefully. “The way we see these things is that machines, which enable creativity, are really liberating machines. If you look back through the history of labour-saving machines, if you look at the sewing machine, for example, when the first commercial sewing machine was introduced in the late 1700s in France, tailors rioted.

“3D printers and CNC equipment are really the sewing machines of today and they’ll continue to become more commonplace.”

Silicon Valley is the new Hollywood

Dickerson, by dint of being at Etsy’s helm, has joined the front ranks of tech superstars. Yet his was no overnight rise - indeed, he came up the hard way, working, among other roles, as CTO of Salon and InfoWorld Media Group before joining Yahoo!. So does he worry that too many young founders are drawn to tech simply because it’s hot, cool and deemed to be a route to fast riches right now, rather than because they have a specific problem they want to solve or a vision they want to bring to life?

He nods. “Fame and glory are the absolute wrong reasons to get into this. The right reason is building a product that you love, for customers you love.

“I think one of the things about Silicon Valley right now, is that it’s almost like the new Hollywood. I started out pretty early in the business and I was in San Francisco in the dot com bubble. Even then, when it was kind of crazy, I felt like the people I worked with were doing it because they loved building things for the Internet. People talk about it as a gold rush, but at least the people I hung out with we were like: ‘Wow, we’re building these amazing things!’

“That’s why I prefer working with people who are excited about what they are building and not excited about the recognition or the number of Twitter followers they get.” He smiles. “For me, it always was about the building.”