Mission Based Businesses
I've talked a fair bit here about the passion for the problem being an important part of entrepreneurial success. I was reminded of that when I read Max Chafkin's profile of Rob Kalin and Etsy this morning.
If you click on that link and read the entire piece, you'll come away wondering how Etsy can be a successful business. Rob does not come across as a business oriented person. And Etsy comes across like a big chaotic flea market. Both are sort of true. But Etsy is a very successful business, growing rapidly, making profits, cash flow, and very much a candidate to produce a lot more of both in the coming years.
What comes first at Etsy is the problem/mission. Etsy wants to make life easier and better for people who make things and who want to make money from doing that, either part time or full time. Etsy is about commerce between two people, one who makes something and one who wants to buy it. Rob even says in the article that trying to maximize shareholder value is "ridiculous," adding, "I couldn't run a company where you had to use that as an excuse for why it was doing things."
And yet the shares our firm bought in Etsy back in 2006 have gone up in value more than 10x based on the last stock purchased in the company (last summer). One of the things I've learned over the years by working with special people like Rob is that you can create shareholder value as "exhaust" by focusing on an alternative mission, one that is closer to real problems faced by real people.
We look for that passion for solving a real problem when we meet with entrepreneurs. As my former partner Jerry says "those who are in it just for the money are not the ones to back". So true.