Posts from Etsy

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.

#VC & Technology


We largely invest in consumer web services with a large number of engaged users where the users create the content. Services like this can become messy and hard to navigate. There is always a signal to noise issue.

I'm a big fan of curation in these services. Twitter has lists. Etsy has favorites. Tumblr has tag pages. These are all variations of curation in services that have a lot of noise in them.

Recently Kickstarter launched their own version of curation called Curated Pages. In the Kickstarter model, "Curated Pages are a way for organizations, institutions, and (soon) individuals to share projects they love on Kickstarter."

Here are some of my favorite Curated Pages:

The Magnum Foundation Emergency Fund – The Magnum Foundation Emergency Fund provides grants to photographers who are documenting social and political issues around the world. Now with Kickstarter, we can all help fund these important projects.

NYU's ITP Program – NYC's "media lab" and one of the most impactful and important pieces of NYC's tech community. They've curated a page of projects they like.

Creative Commons – The Creative Commons organization evangelizes for technology and legal frameworks that facilitate sharing and creativity.

The Sundance Institute – A curated page promoting Kickstarter projects from Sundance supported artists.

You can find all of the current curated pages at the bottom of the Kickstarter home page.

If you are interested in curating a page on Kickstarter, this feature will be made available to everyone soon.

If you are building a marketplace or a social platform, make sure to build curation into your model. It will make the service easier for everyone to navigate, particularly new users.


Etsy Taste Test

I spent some time this morning playing around with an "experiment" our portfolio company Etsy has launched on the web. It is called the Etsy Taste Test.

It looks like this:

Etsy taste test

The idea is you click on stuff you like and Etsy builds a "taste map" for you. The end result is a set of recommendations for you. As Etsy has grown, the "discovery problem" has become an issue. Etsy has a bunch of stuff coming out to address that issue and this is an example of one of them.

Give it a try and let me know what you think.


I Told You So

I don't like to say "I told you so." It's not nice.

But I feel it a lot. And my greatest I Told You So moments are with my kids.

Yesterday I saw that my oldest daughter is moving her photoblog to Tumblr. When she first set up her photoblog on Blogger, it killed me. I said, "why not Tumblr?" She said, "I like the way Blogger looks." Now she is moving to Tumblr. Yesss.

This past weekend my son and I were on the couch in the family rooom watching football. He picked up his iPhone and checked his Twitter. Big smile. I tried so hard to get my kids to use Twitter. But it was always "Facebook is better for me dad."  But the football players Josh loves aren't on Facebook, they are on Twitter. So he uses Twitter to follow them. Yess.

For years I tried to get my girls to shop on Etsy. They just didn't get it. Then last spring my daughter came home from college and told me that she was "addicted to Etsy." Turns out that she thinks Etsy is the best vintage store on the web. Yesss.

I care a lot about what my kids do. Because they are my best panel/focus group. We've made a bunch of investments in companies they don't use and don't understand. But over time they have adopted many of them. Of course, some of that may have to do with my incessant advocacy of the services we invest in. But I think that actually hurts me in the short run. Most teenagers don't want to be associated with stuff their parents like.

But I am proud to say that my kids have come around to many of the services we invest in over time. And when it happens, I am so tempted to say "I told you so." But I don't. I just bite my lip and smile. 


The Office Matters

Eatsy at Etsy
Originally uploaded by Etsy Labs.

Our portflio company Etsy has a person who is focused on the office, company culture, and making the work space as comfortable as possible. They have a chef come in and cook a healthy lunch for everyone three times a week. They called that program Eatsy.

Etsy launched in June 2005 and is over five years old. The company has well over 100 employees and is growing fast. They can afford to invest in things like the office and feeding their employees healthy lunches.

Every time I visit Etsy, I am reminded how important the "vibe of the office" matters. You walk in the door and you are hit with the company culture right in the face. You feel warm, cozy, happy, and comfortable at Etsy. And that feeling lasts well beyond the first steps inside the office.

When I was at Etsy earlier this week, I saw that they have been covering the air conditioning ducts with knitted covers. I took a photo and posted it to my tumblog.

Etsy ducts

You may laugh and say this stuff is frivilous and a waste of time. But I can assure you that is not true. Etsy is a recruiting machine. They are getting the best talent in NYC to come to their company now. It is not just the vibe for sure. They have big and interesting engineering challenges. They are doing cutting edge things in marketing and customer service. But little things like socks on the ducts and fresh and healthy food for lunch three times a week also makes a big difference.

When you are less than ten people, it is hard to invest in stuff like this. All you can do is focus on getting your product right and launching it. You will work out of any space that is warm and hopefully quiet.

But as your company grows, you need to pay attention to the office and the culture. It matters.

#VC & Technology

Code As Craft

Software engineers are the guts of every company we are invested in. Their work is often behind the scenes and all that most of us see is the end product, and often just the front end of the end product.

I've noticed a trend in our portfolio and elsewhere to change that. A good example is Etsy's new engineering blog, Code As Craft. I love the name. Code is craft, and a very important craft at that. Chad Dickerson, Etsy's VP Engineering, writes in the first post on the Code As Craft blog:

At Etsy, our mission is to enable
people to make a living making things.  The engineers who make Etsy
make our living making something we love: software.  We think of our
code as craft — hence the name of the blog.  Here we’ll write about our
craft and our collective experience building and running Etsy, the
world’s most vibrant handmade marketplace.

Well said Chad.

Here are a couple other examples in our portfolio:

I am sure that there are a bunch of other great examples of this going on. If you know of any, please leave a link in the comments. I'm pleased that the work of the software engineers is starting to see the light of day. 

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