Posts from marketplaces

Etsy Studio

Yesterday was a big day for Etsy, a company that I have been invested in for eleven years and on the board of for ten of them.

The company launched Etsy Studio, an entirely new marketplace dedicated to craft supplies.

Craft supplies have always been available on Etsy and still are. But they are a category and, while they make up a material amount of the total volume sold on Etsy every year, they are not front and center in the buyer experience. Etsy thought they could do better for buyers of craft supplies and so, about a year ago, they went about making an entirely new marketplace dedicated to craft supplies.

Etsy Studio leverages all of the considerable investments Etsy has made in its technology stack over the years; search, discovery, checkout, promoted listings, machine learning, and more.

Etsy Studio launches with over 8 million items, compared to something like 200,000 to 300,000 at a typical craft store.

In addition, Etsy Studio features project-based shopping.

You find a project you want to do, like this paper flower spring wreath, and Etsy Studio will allow you to fill a shopping cart with everything you need to make it.

If you are a crafter and are looking for a better way to buy craft supplies and find new projects to do, check out Etsy Studio. I think you will find it to be a delightful experience.

The Kickstarter PBC Annual Report

Our portfolio company Kickstarter became a Public Benefit Corporation in the fall of 2015. I blogged about it at the time. A Public Benefit Corporation (PBC) is a specific type of corporation that allows for public benefit to be a charter purpose in addition to the traditional corporate goal of maximizing profit for shareholders (from Wikipedia).

One of the requirements of being a PBC is that you publish an Annual Benefit Statement after each full year as a PBC. Kickstarter published its first Annual Benefit Statement yesterday. You can read it here.

Here are some bits from the statement:

  • Our CEO’s total compensation in 2016 was 5.52x the median comp of all non-CEO, non-founder employees in 2016. A 2015 study by Glassdoor found that the average CEO earns 204x the median total worker compensation.
  • As of December 31, 2016, our team was majority women (53%), as was 61% of our Senior Team and half of our Executive Team.
  • 100% of our interns in 2016 joined us from New York-based organizations fighting inequality: Coalition for Queens, Prep for Prep, Ladders for Leaders, Tech Talent Pipeline, and ScriptED.
  • We donated 5% of our after-tax profits to six organizations working to build a more creative and equitable world.
  • We took advantage of two tax credits in 2016 and paid a combined effective tax rate of 25%.

I would encourage you all to read the entire statement. It stayed with me all day yesterday. I am proud to be a Director and investor in Kickstarter which is showing the world that you don’t need to choose between making money and doing right. You can do both at the same time.

Etsy’s Valentine’s Day Party

Yesterday, on Valentine’s Day, Etsy invited press to its headquarters in Brooklyn and took the covers off a bunch of things they have been working on for most of last year and will launch shortly. For those that don’t know, USV was one of the first investors in Etsy and I have been on the Board of Etsy for over a decade now.

Here are the details of what they talked about and showed yesterday:

Etsy Studio – This is a brand new marketplace, built from the ground up, to allow makers of craft supplies, large and small, to reach crafters all around the world. Etsy Studio will compete with retail stores like Michaels and others but with ~200x the inventory. A typical retail craft store will carry 30,000 to 40,000 SKUs. Etsy Studio will carry 8mm SKUs at launch.

Etsy also plans to bring the “joy of crafting” to Etsy Studio with its signature design and ease of use, but also with content and projects that connect what you want to make with the supplies you need to make it.

Etsy Studio will launch in April.

Etsy Shop Manager – Over the years Etsy has offered sellers the opportunity to use Etsy tools in a variety of places. They can use them on Etsy.com, they can use them in a craft fair with Etsy’s mobile apps and card reader, they can sell on their own website powered by Pattern, and soon, they can sell on Etsy Studio. And sellers can use Etsy’s advertising services, payment services, and shipping services on most of these sales channels.  If you follow this trend, it is clear that Etsy wants to help sellers sell wherever they want to sell. Etsy Shop Manager is an entirely new interface for sellers to manage their business. It puts all of the Etsy seller tools in one place and helps sellers decide which tools and which sales channels to use to grow their business.

There are a bunch of other things Etsy has been building to make all of this work like structured data and search, a new and better way to manage inventory, and the ability to check out with as many items in your basket as you want.

Since I started working with Etsy over ten years ago, they have been committed to a single idea – that there is an emerging economy of creative entrepreneurs who power a personal form of commerce that is better for everyone. Here are some stats that show the power of that idea:

  • Today, there are active Etsy sellers in 99% of the counties in the US and almost every country in the world.
  • Half of Etsy sellers start their shops to meet a financial need.
  • 87% of Etsy’s creative entrepreneurs are female.
  • Etsy’s 1.7 million sellers are able to create jobs and incomes for themselves and build value in their communities by connecting with 27 million buyers all through the Etsy platform.

Companies like Etsy don’t come around that often, but when they do, I am drawn to them. They are mission driven and they make things happen that need to happen. It’s very fulfilling to work with companies like this.

Ticket Bots

New York State put a law on its books this week making operating “ticket bots” illegal:

using ticket bots, maintaining an interest in or control of bots, and reselling tickets knowingly obtained with bots constitutes a class A misdemeanor. As such, violators could face substantial fines and imprisonment

As someone who has often lost out on tickets and was forced into the secondary market at double the price (or more), I appreciate the effort here to curb this abuse of the system.

But I do wonder if there are technical or market based solutions that would be more effective. And I wonder how New York State is going to enforce this new law.

A market based solution could be some sort of auction mechanism that effectively sells the tickets at “market value” and takes the profit out of scalping. Of course the effect of that might be to increase the cost of tickets to everyone and that might not be ideal. If that were paired with some sort of discount for fans and/or fanclub members, you might be able to keep the prices affordable for real fans and take the profits out of the scalping business.

Anyway, I am not griping about this new law. It could help at the margin. But I do yearn for a more elegant and market based solution that fixes the issue more systemically.

Shop Differently This Holiday Season

It’s Black Friday, the official start of the holiday shopping season. Here at AVC, we recommend shopping where you can find unique items that allow you to express your individuality. Etsy.com, of course.

Wattpad Studios

One of the things I am most proud of about our portfolio at USV is that we have invested in a handful of companies that are slowly but surely changing the way content creators reach their audience and make money doing that. I like to think of it as the evolution of the studio model that has prevailed in content for as long as I’ve been alive. Some of the companies that would fit into this category are Kickstarter, SoundCloud, YouNow, Splice, VHX, Mediachain, and Wattpad.

Wattpad is one of the most interesting of the bunch. Wattpad is a community of readers and writers that operates natively on the web and mobile devices. It is, along with Kindle and Audible, one of the “big three” in the Books category on mobile phones.

Wattpad has a global monthly audience of 45mm people, mostly young and trending female, that read stories that are written on Wattpad for the community of readers that is there. That’s a big number. And that has gotten the attention of the film and television business. In 2014, Wattpad author Anna Todd’s serialized story After (over 1.3 billion reads and more than 6 million comments) was optioned by Paramount and is now being developed into a feature film (it has also been published as a book by Simon & Schuster).

So Wattpad has created Wattpad Studios to help other authors on Wattpad do the same thing. And yesterday Wattpad Studios announced a partnership with Turner to create stories for Turner’s Tales From The Crypt.

The global internet allows anyone to be a writer and anyone to be a reader. The stories that emerge from this community powered content creation and consumption model on Wattpad are rich and diverse. And so it makes a ton of sense that Wattpad would help these emerging storytellers reach a broader audience through the power of film and television. This should be a good service to the Wattpad writer community and a good business too.

Video Of The Week: Creative Communities

I was surfing around YouTube today looking for something to watch (and post) this morning. I found this video with two of my favorite people, Esther Dyson and Chad Dickerson (Etsy’s CEO). This video is more than a year old so the data in it is not current. But the lessons on scaling and managing a creative community remain as relevant today as they were when they had this conversation.

Feature Friday: Customized 3D Printed Objects

Our portfolio company Shapeways offers customization options in their marketplace of 3D printed objects.

Let’s say you want a “card case” for your iPhone like this:

The 3D designer who designed this case and is selling it on Shapeways offers two ways you can customize it:

customization options on shapeways

You can search for customizable objects on Shapeways by checking this box in the marketplace home page:

check box

Shapeways is a great place to find unique objects for gifts and for yourself.  Customizing these objects makes them even more unique. So the next time you are looking for something special, go check out Shapeways and check the customizable box.

And if you are a 3D designer who sells designs on Shapeways, considering supporting customizable options. It makes your objects even more unique and interesting to buyers.

What Is Going To Happen In 2016

It’s easier to predict the medium to long term future. We will be able to tell our cars to take us home after a late night of new year’s partying within a decade. I sat next to a life sciences investor at a dinner a couple months ago who told me cancer will be a curable disease within the next decade. As amazing as these things sound, they are coming and soon.

But what will happen this year that we are now in? That’s a bit trickier. But I will take some shots this morning.

  1. Oculus will finally ship the Rift in 2016. Games and other VR apps for the Rift will be released. We just learned that the Touch controller won’t ship with the Rift and is delayed until later in 2016. I believe the initial commercial versions of Oculus technology will underwhelm. The technology has been so hyped and it is hard to live up to that. Games will be the strongest early use case, but not everyone is going to want to put on a headset to play a game. I think VR will only reach its true potential when they figure out how to deploy it in a more natural way.
  2. We will see a new form of wearables take off in 2016. The wrist is not the only place we might want to wear a computer on our bodies. If I had to guess, I would bet on something we wear in or on our ears.
  3. One of the big four will falter in 2016. My guess is Apple. They did not have a great year in 2015 and I’m thinking that it will get worse in 2016.
  4. The FAA regulations on the commercial drone industry will turn out to be a boon for the drone sector, legitimizing drone flights for all sorts of use cases and establishing clear rules for what is acceptable and what is not.
  5. The trend towards publishing inside of social networks (Facebook being the most popular one) will go badly for a number of high profile publishers who won’t be able to monetize as effectively inside social networks and there will be at least one high profile victim of this strategy who will go under as a result.
  6. Time Warner will spin off its HBO business to create a direct competitor to Netflix and the independent HBO will trade at a higher market cap than the entire Time Warner business did pre spinoff.
  7. Bitcoin finally finds a killer app with the emergence of Open Bazaar protocol powered zero take rate marketplaces. (note that OB1, an open bazaar powered service, is a USV portfolio company).
  8. Slack will become so pervasive inside of enterprises that spam will become a problem and third party Slack spam filters will emerge. At the same time, the Slack platform will take off and building Slack bots will become the next big thing in enterprise software.
  9. Donald Trump will be the Republican nominee and he will attack the tech sector for its support of immigrant labor. As a result the tech sector will line up behind Hillary Clinton who will be elected the first woman President.
  10. Markdown mania will hit the venture capital sector as VC firms follow Fidelity’s lead and start aggressively taking down the valuations in their portfolios. Crunchbase will start capturing this valuation data and will become a de-facto “yahoo finance” for the startup sector. Employees will realize their options are underwater and will start leaving tech startups in droves.

Some of these predictions border on the ridiculous and that is somewhat intentional. I think there is an element of truth (or at least possibility) in all of them. And I will come back to this list a year from now and review the results.

Best wishes to everyone for a happy and healthy 2016.