Max’s tone is fair, but the facts he gathered are quite damning.
Here’s a few things we learned:
- Kalin says idea of creating shareholder value is “ridiculous.” He also says: “I speak to people in the business world and the technology world, but I don’t admire them.”
- As Etsy grew, Kalin showed his limits as a manager. He would come up with a new crazy idea every day. After a while, his technical co-founders left. One said working at Etsy “was like being in an abusive relationship.”
- So Kalin demoted himself to Chief Creative Officer. While CCO Kalin started a non-profit called Parachute to help Etsy sellers run their businesses better, with a program setting them up in Etsy’s offices. At the end of the program, only one business stayed.
- Here’s Etsy’s biggest business problem: because the site is limited to handmade items, you can never become truly successful there. If you’re making dresses and they sell well on Etsy, you’re going to want to get a factory to make more, but that means you won’t be able to sell on Etsy anymore.
- Ryan McAbery, an entrepreneur once featured by Etsy as one of their success stories, has left the site. She was doing well with $96,000 in yearly revenues but working 100 hours a week for it, even though she’d started selling crafts on the web to spend more time with her children. She sold her business line on Etsy (where else?) for just $7,000. Now she has a new crafts business, but she sells through craft fairs and not just Etsy.
- The harsh reality is that in most cases if you’re making crafts you’re going to make a lousy hourly wage. A seller of crochet items said they sold for $15 and cost only $4 to make — plus several hours, amounting to less than minimum wage. That’s fine if it’s a hobby, but you can’t build a business on that, and businesses are what Etsy needs to grow really big.
- Another problem is sellers from Asia knocking off items on Etsy and undercutting the sellers.
- Now Kalin is back as CEO and focusing on customer service. Kalin wants to treat Etsy sellers as well as Zappos treats customers. He also has added social networking features to the site.
- When Kalin spoke to the company upon coming back as CEO he recited a Yeats poem in a thick Irish accent and smashed a coffee mug.
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