Going Public: Tough Love for Unhappy Etsy Sellers
You may have heard the news last week that handmade marketplace giant Etsy intends to go public in 2015 with an IPO (initial public offering) possible as early as this quarter. The move is a big deal, both as an evolution of a business that’s been going strong since 2005, and because few New York-based technology startups have been able to make the leap to the stock market in the last decade and a half.
But on a micro level, I’ve been hearing a lot of grumbling about this news from Etsy sellers akin to the complaints about Etsy’s policy shift to allow sellers to list certain manufactured goods, or further back when Chad Dickerson assumed the role of CEO and Rob Kalin (the company’s visionary founder) stepped down. A lot of the current arguments seem to fall around this general sentiment:
As a publicly traded company, Etsy will be obligated to cater to their shareholders’ interests. This will continue to destroy things for us, the sellers!
I get really frustrated when I read things like this, so I’d like to offer up three points of rebuttal and a call to action:
Etsy is a Business, Not a Non-Profit
Etsy is a marketplace and a technology startup. We often forget that they have always been concerned about their bottom line. When Etsy first launched, their success depended largely on their ability to cultivate an audience that valued handmade, was willing to pay for it, and provide tools that made it easy for their shoppers to find what they were looking for. For this reason, many sellers viewed Etsy as a benevolent craft god with noble and altruistic intentions. Yes, they are a mission- and values-driven business. Let’s not forget the business part of it, though. Combined with extremely accessible fees (a great hook to bring in more sellers), it’s easy to overlook that since day one, Etsy has had investors to appease, a bottom line to focus on, and a business to run. Going public isn’t really going to change that.
Etsy does not subsist on listing and transaction fees alone. From the beginning they’ve sought out investments from venture capital firms and individuals who believe in their mission, their values, and their business, and are willing to provide money to help achieve that. In return, they often have a say in how the business is run, and are promised a return on their investment through shares in the company. At this point in time, Etsy has been profitable for a number of years, and they’re ready to take a natural next step to being publicly traded.
What’s great about going public is that Etsy is allowing more people who believe in their mission, values, and business model to get on board and support them. And the more shareholders Etsy has, the less sway any one individual might have with their own interests. There’s also a level of public accountability and transparency that is achieved through financial reports, shareholder’s meetings, and legal filings — something we don’t get currently.
But more importantly, Etsy is opening the door for its own sellers to invest in the marketplace that they’ve helped build for nearly a decade. You or I have the opportunity to have our own slice of the pie and be part of their growth. This will continue to elevate the maker movement and bring more and more people to Etsy’s marketplace.
Etsy is a Connector, Not a Community
For many, Etsy has provided an immense sense of community, especially for those who started selling on it in the early years. I experienced it myself when I started my own handmade business in 2008. I found my “tribe” where I didn’t know one existed. It was a place where other people valued what I made, encouraged me to succeed, and through meeting my local street team I forged many friendships and mentor-like relationships that would benefit my business (and ultimately provide the seed for creating Maker’s Nation).
But Etsy isn’t itself the community — it merely provides a connection to other like-minded people. Through forums, treasuries, and street teams, Etsy has always fostered a community of handmade sellers that bonds together to support each other. A community is made of people that share common goals and aspirations. Etsy may provide a home base within which the handmade community could develop, but it’s the person-to-person relationship that is the meat of how this community works.
Meeting Etsy sellers face-to-face was the biggest benefit for me, and I’ve heard the same from others as well. Through that common ground we spark discussion, support, and friendship, and that’s the true nature of community. Faced with these changes, it’s easy to let the emotional connection to this community influence our reactions, but we need to remember that what matters most are the people, not the way in which those people met. Economies of scale make it harder and harder for the big entity of Etsy to stay rooted in the people (though they do make significant effort), but we as individuals don’t face that same challenge. Our people are right in front of us.
Etsy is a Platform, Not a Strategy
Even though they may not realize it, too many people have relied on Etsy as a marketing strategy, not a marketplace. I can’t tell you how many times I’ve heard Etsy sellers long for being featured on the front page or on Etsy’s blog, thinking that’s the chance they have at being successful. I also hear a lot of talk about “getting found” or “being discovered” through search results. Almost as if there’s some magical pot of gold at the end of the search rainbow with a leprechaun that’s trying his hardest to find you.
While editorial features and organic traffic like that may be a boon to your creative business, the hard truth is that the responsibility for finding your audience and marketing your work to them is yours and yours alone. Search engine optimization is important, but it is only one of many tools in your marketing arsenal. You cannot bank your success as a business owner on the choices of others — you must focus on what you personally can control.
There is a perfect parallel to this in the app development world. In 2008, Apple opened up their mobile operating system (iOS) to third-party developers through a software development kit, and followed that up by opening up a marketplace much like Etsy but for third-party apps. The Apple App Store started out very small, with a mere 500 apps available for sale or free download at launch. In addition to encouraging development of apps by improving their tools, they set out with a huge editorial presence to feature new and innovative apps prominently in their marketing.
The low numbers of apps and hungry customers created a “gold rush” for developers who were eager to make something great and reap the rewards. But the number of apps offered up by developers (both corporate and independent) sky-rocketed with the popularity of Apple’s hardware, and today there are more than 1.3 million apps available, making it increasingly difficult for developers to make a living through app sales alone.
When an independent app developer decides to sell an app, the thought of being featured by Apple on the front page of the App Store is not a valid marketing strategy. A developer simply can’t count on that as a reliable means of having their app seen by the right people. An editorial feature would no doubt be an amazing boost to an app’s popularity, but it is the icing on the cake, not the primary means of selling. Just like Etsy, there is too much noise on the App Store for a single product to make a splash (you may also note that the ratio of good apps to terrible apps is very similar to the products available on Etsy, and that just like Etsy, the App Store has cultivated an audience that often values price over quality).
Sitting back and solely waiting to be “found” by others or wishing that a platform would just feature us (and then we’d be set!) is lazy and disillusioned.
Forge Your Own Path
As makers, we must take responsibility for the success of our own business and not leave things in the hands of others to determine whether or not we make it. It’s easy to sit back and complain about what’s happening around you, but it’s counterproductive. If you step out of mediocrity, make an amazing product, know who your customers are and where to find them, and take your business seriously, you will thrive. If you don’t like the direction Etsy has been headed in from the start, you should walk away and find another solution. If you’ve put all of your eggs in the Etsy basket and have yet to see a reward, take a step back and re-evaluate your business. Maybe Etsy is just one prong in your approach to selling your work. Maybe you’d have more success on a different platform or by selling in-person instead of (or in addition to) online.
There are plenty of opportunities out there for you. It’s easier than ever to set up your own website or create your own online shop, free of controversial privacy policies and un-policed resellers. There are other marketplace options out there, as well. Just because Etsy is the biggest doesn’t necessarily mean they’re the best for you. Do your research, find one (or more) that aligns with your values, and set up shop with a new strategy.
Where you go from here is entirely up to you. You’re in charge.
- It Doesn’t Matter What Etsy Does: Some Real Talk About the Conversation We Keep Having on Academy of Handmade Artists and Supporters. Many thanks to Sharon and KC for inspiring me to write this essay.
- Community is not Clubs: How We’re Segregating the Internet & What We Can Do by Jessika Hepburn on Oh My! Handmade Goodness
- I have a brand, I have a soul. by illustrator and designer Katie Daisy on her blog. Hat-tip to Jessika for linking to this in the comments of the Academy of Handmade post mentioned above.
- A related essay I wrote about Etsy’s CEO transition from a few years ago on my personal blog: On Etsy, Rob Kalin, and Entitled Artists
Isaac Watson is the founder of Maker’s Nation, an emerging nonprofit focused on teaching business skills, providing resources, and building a thriving community of independent creative entrepreneurs. You can learn more at makersnation.org and follow @MakersNation on Twitter.
Originally published at www.makersnation.org on January 19, 2015.