The Exchanges

Q So you would just, you just wouldn't, I mean, um, I mean, didn't that catch up with you? I mean, Didn't eventually, like, your grades start to suffer, and your parents start to sort of ask you what, what's going on?

A Oh yeah, the ruse was up when the first report card got mailed home, and what's interesting was, I didn't have bad grades, I had incompletes, which I think was the letter N, and my brothers and sisters' report cards were on the fridge with their high marks, and I remember opening my own report card, highlighting all of the Ends, and then putting it on the fridge, and then just kind of going to my room and forgetting about it, and when my dad got back from work that day, my door got forcibly opened, and it was, you know, it was an interesting moment, because there's this really strong equation between do well in school, and then be successful after school, and it definitely wasn't An equation that I was subscribing to even at that point. And so fixed my door and that was my introduction to carpentry. And then from that point on had a pretty strong sense of, okay, I need to figure out what I want to do. And, you know, I think in some ways that's one of the most valuable skills I learned going through that public schooling system was just like how to carve out my own path or how to walk away from something and then turn towards who I am and what I want to be doing.

AI assessment note: “Oh yeah, the ruse was up when the first report card got mailed home”

Q And when you say Chris, you're talking about Chris McGuire, the guy you met at, at NYU, who would go on to, to found Etsy with you?

A Yeah, so, um, the idea was, let's start a little web dev shop, and we'll go look for more clients, and we'll do bigger work. And We were able to parlay building Get Crafty into a couple other projects. You know, a lot of times we didn't have any say on the design side. And after several months of that, I remember telling Chris, I just want to build something that's our own that we can kind of steer the direction of. And I set up a woodshop in my bedroom in Brooklyn and got to making furniture. And when I was looking to actually try and sell the furniture, you know, all of the storefronts where you could sell it Are taking a large commission and aren't really looking for mediocre furniture made in a bedroom in Brooklyn.

AI assessment note: “Yeah, so, um, the idea was, let's start a little web dev shop”

Q And what kind of construction work were you doing in New York?

A I started out with just simple two-by-four framing of things, and then ended up taking a full-time job at a construction company that was renovating a beautiful brownstone on the Upper East Side, and I remember waking up at five o'clock in the morning, and getting on a super packed subway, and just doing a very physically demanding job during the day. They were in the kind of demolition phase of the renovation, and you're the lowest rung on the ladder. I was essentially just carrying Barrels full of plaster lath down four flights of stairs for most of the day. But, for sure, being able to watch the other people on the job. And it's not even just the work that they're doing and the skills that are required. It's, it's who they are and how They show up, and what their personality is, and this kind of community and camaraderie that gets built on, on a job site full of people doing pretty difficult work, and that really stuck with me, even outside of that environment.

AI assessment note: “I started out with just simple two-by-four framing of things”

Q to build out this site, and before you even made it, you know, launched it and went live, how did, what was your business model gonna be? Like, when you went to, to Spencer, the guy whose bar you built, and who was your investor, And he was like, okay, how are you gonna make money? What did you, how'd you explain it to him, even before you went live?

A The business model, thankfully, was very straightforward, even from those early days. Obviously, we could point to a website that already existed, like eBay, and say, all right, there's gonna be a per item listing fee, and then there'll be a sales fee associated, you know, when something sells. So that piece of it was more straightforward, and it actually felt really nice, because the other websites of the day, you know, watching kind of Facebook's rise, And then Twitter were based on ad revenue, and, you know, we were kind of able to take this pseudo moral high ground and say, like, we're not going to be reliant upon third-party advertisers that we'll have to kind of cater to. We're just gonna, like, the business model felt like it was baked into the, the website from the beginning.

AI assessment note: “there's gonna be a per item listing fee, and then there'll be a sales fee”

Q guys just two and a half months to build this website, and you launched it, um, in June of 2005 at c.com, and then what happened? Like, you hit the go button, you know, it's, it's, it's out there in the world, but this is like still early days on the internet, and what happened? Did anything happen? Did, did people start to find it immediately or, or not really?

A Yeah, what happened was we hit the go button and then went for dinner, and I think when we'd come back for dinner, um, you know, we're checking the web traffic, and a couple people had noticed it. We posted on Get Crafty, and there was another, um, you know, kind of handmade community called Craftster, and we posted about it in those forums, and people started noticing it. There's this beautiful D.H. Lawrence quote that has always resonated with me, Slow like growth. And Etsy very much embodied that. And I think that's actually a really healthy thing because it ends up becoming something that has a lot of momentum behind it. And which means, you know, it's, it's got a lot of, of staying power. And you see the inverse of this with companies like Groupon, which I think was, you know, fastest ever to go from zero to a billion dollars in revenue. So with Etsy, it was this kind of long, slow, organic growth. That said, you know, in the first year of business, we did a million dollars in sales, and that seemed like quite a lot, and this was all being driven by the more organic traffic of the early web, you know, being written up on blogs like Boing Boing.

AI assessment note: “what happened was we hit the go button and then went for dinner”

Q the thick of it, you know, you launched in, in the Um, and you're growing organically. How, I mean, tell me a little bit about what, what do you remember about just the work environment? Did you, first of all, did you guys, initially you were doing this out of your apartment, but at what point did you actually get like an office to work, to work out of together?

A Yeah, so for the first two years, we didn't have an office, and I remember just traveling around the world, bumming around Europe, and when we came back from traveling in, um, you know, late 2006, The community was growing enough that we needed to hire more people to support it, and we're like, well, let's get a small office, and so we started looking and ended up finding a place near the Brooklyn Bridge, and we were just going to get part of this floor, and we ended up renting the whole floor, and I was literally for a period of time living there, and it was, you know, an office building, so they didn't heat it outside of nine to five, and that first winter, I remember I'm, you know, sleeping on a little blow-up camping pad, and I'm freezing, and I'm working blissfully, you know, 18 hours a day on, on this project, and then, you know, the rest of the people would, would come in in the morning.

AI assessment note: “for the first two years, we didn't have an office, and I remember”

Q So, so you went out there to meet, meet Kettering and Stuart and Stuart, obviously, of course, went on found out. Slack. Um, it was on, on, on this show many years ago. Um, you went out there to meet them, and what, what happened?

A Yeah, so I still remember the first time meeting them. They definitely kind of took us under their wing, mainly on, like, product design and fundraising were the two big pieces. Um, you know, this was probably two years into, um, Building Etsy, maybe not quite that far in, and Katerina was the one who kind of, you know, she could at that point just kind of pick up the phone, make one call, and get a meeting with different investors. Those meetings were kind of all over the place. That was definitely my introduction to the world of venture capital, and a lot of those meetings, I just remember leaving them being like, I don't understand how that person would want to invest in this, um, or I wouldn't want their money investing in this. So, She did a little bit of filtering up front, and then kind of worked with me to figure out who we wanted to raise money from in the end.

AI assessment note: “They definitely kind of took us under their wing, mainly on, like, product design”

Q know, it, you know, its market cap is at eight billion dollars as we speak today. Um, and you know, you were raising it at one, one half million dollars. So the, your, certainly your investors did very well. Um, you're certainly early investors extremely well. I mean, it's, it's a powerhouse. I don't know. What do you, what do you make of it when you look at it today?

A Yeah, there's this kind of air of inevitability to it. With the 10,000 ways it could have gone wrong, it almost seems like it's the inversion of that, where we did 10,000 things that could have pushed it off the rails, and it didn't go off the rails, you know, including, you know, management stuff and my own shenanigans. So how did it persist? And I think ultimately, you The, the heroes of all of that are, are the sellers. And that, you know, in many ways, that's who we should, we should all tip our hats to. So here's this publicly traded company, and the people who are running it, I'm guessing, are not part of that community of sellers that they're serving. And I would also venture to guess that, you know, Etsy's primary customer right now isn't the sellers. It's, it's the buyers. And so it's going to keep optimizing along those lines. So it's just different. It's obviously put a huge financial cushion under me. You know, I come from peasant Ukrainian stock and now have more wealth than the prior 50 generations of my family or whatever. And one thing that I really enjoy is the fact that, you know, there's a secret that this word that I made up Is on the lips of so many people. Just the stark contrast of going to those craft fairs in 2006 and handing out these flyers and nobody knowing about it to now being at a concert and knowing that like anyone I walked up to say like, hey,…

AI assessment note: “there's this kind of air of inevitability to it.”

Q And did you know how to make a website?

A Absolutely no idea. I didn't even know how when you type something into a web browser, it went and found the files. I thought maybe the files had to be on your computer somewhere. And, you know, this whole concept of, you know, what I now have a pretty good understanding of wasn't present for me at all. But the challenge of, you know, how do you populate this website with content? So I had to go talk to people. I had to go take pictures. I remember learning Dreamweaver. And put all of these things together that I didn't really know and made what I'm sure is by all means a completely mediocre website. But the process was fascinating to me. And, you know, I remember being in art school, and I was learning anatomy and old master painting at that point. And I would go down to the computer lab once a day to check my email, and I would see all these people hard at work staring at computers. And I would think like, that is definitely not for me. But lo and behold, you know, the piece that we think is not what we're going to be is what becomes the cornerstone of what we're going to build next.

AI assessment note: “Absolutely no idea. I didn't even know how”

Q So, it, it, it would be you and Chris Haim and Jared, and he, I think he really contributed to the early look and feel of the site, right?

A Yeah, so even just the first things that he was creating when I was going to the investors, and when people would talk about Etsy, they would say, oh, that's the website where you can shop by color, and Jared's work played a big role in that. So understanding, again, it all comes back to that storytelling piece of being able to wrap it up In a big flag that you can wave and say, like, look, this isn't what you think it is. This isn't the ordinary stuff. This is something special. And, you know, there was a bit of being more philosophical about it and saying, why would we just try to reprise offline shopping experiences online? This is a new medium. So you shouldn't just, you know, take a newspaper, put it online and make it a digital newspaper. We're not just trying to take an offline marketplace and make it, you know, and put it online. We should be creating these genuinely new ways to shop.

AI assessment note: “Jared's work played a big role in that.”

Q which obviously wasn't a great article, um, in ink, and I guess a couple months later, um, you, you are fired by, by Etsy's board, and this, this came as a real shock to you. You, you did not see it coming at all. Tell me about About that. I mean, is, is that the case? Did you not have any inkling or indication that that was on the horizon?

A Yeah, absolutely. No idea that it was even within the realm of possibility that would happen. And again, this is one of those situations where looking back, it's much easier to see things. So Adam had joined as COO and pretty early on in that relationship, um, you know, we started, um, Trying to figure out what that dynamic was, and not just amongst ourselves, you know, going to a kind of executive coach, working stuff out, and I think we both felt that there was a bit of that culture mismatch, and I definitely, um, didn't support him the way that I should have. You know, I remember This meeting where we had to reclassify all of the customer support workers from being like full-time salaried to having to keep track of their hours, and it's ostensibly for labor laws to protect them, but it also created this whole, like, second class of worker inside the company, and it sucked, like, having to do that, but Adam was kind of leading that, that process, and I remember this meeting where it was being communicated, and I was standing in the audience, and he was standing up Front with the head of HR, and they were trying to pitch it to the customer support team. They were dressing it up as this, like, this is an improvement, and you know, just not Etsy's culture. And I was standing in the audience, and I had the same reaction to it that they did, and I obviously, like, hadn't been invo…

AI assessment note: “Yeah, absolutely. No idea that it was even within the realm of possibility”

Q mean, did, did you guys have any standards for what was allowed? Like, you know, did you have rules about what you could and could not sell? Obviously it had to be, initially I think it had to be handmade, but I mean, could people sell, you know, uh, you know, for example, like handmade glass tubes to smoke pot out of, you know, could, did you have any rules?

A So in the beginning, it was more, here's our list of categories, and if it doesn't fit into one of these categories, it shouldn't be on the site, and obviously you can get a bit creative with that. My general view on that stuff was, again, just like, celebrate the diversity of it. One of the funny jokes that we had was we defined the vintage category as something more than 20 years old, and when people were challenging what that was, and we were trying to clarify the terms of service, there were plenty of VHS, like, players that were 20 years old, and so it's like, under our rules, you could list a VHS player on Etsy, and it just felt so wrong. Like, someone listed a Ferrari on Etsy once, and I was just like, and not even in the vintage category. It's like, well, what's interesting is, you know, you, it's like the marketplace itself develops this kind of immune system, and so when they list that, hundreds of people flag it. It's just this beautiful expression of Of humanity and all of our foibles and imperfections, and I think ultimately we tend to love things for their imperfections.

AI assessment note: “here's our list of categories, and if it doesn't fit into one of these”

Q Were your desks, I mean, were they good? Were you good at woodworking?

A Compared to, so I've been woodworking more or less continuously for the past 20 years or so. So, I mean, compared to what I can make now versus what I was making then, no, I would not say they were very good. Um, you know, again, they were a very good attempt at expressing something and exploring something, and so running up against this challenge of, well, how do I sell it? And not really having access to any storefronts. And I was like, okay, you know, I'll try and sell this online. And, you know, there really isn't much infrastructure for doing this at this point in the world. You know, this is 2004. And the only option for selling it online was eBay at that point, and really had no interest in doing that. So built a website to sell my own furniture.

AI assessment note: “compared to what I can make now versus what I was making then, no”

Q Um, how were you dealing with, like, When things went wrong, right? Because I have to assume that, you know, there were probably, you know, more than a few examples of people getting things they didn't like, or, you know, not being happy with the product or not feeling like they get their money's worth and they would complain to you guys about it. How did you guys handle that?

A Yeah, so lots of different ways things can go wrong, especially when you're building a marketplace like this. I was just rereading a lot of our early blog posts, and most of the ways things were going wrong was the website itself wasn't functioning. And because the scale and the growth of the marketplace was a gentle enough slope, we could learn the hardest lessons when the stakes were lower. And I really like that kind of crawl, walk, run approach. To building a business in general. On the seller side, again, we were able to leverage PayPal. PayPal had different kinds of dispute resolution procedures. And so I'm not proud that we did this, but we would basically just kind of kick people to PayPal's customer support and say, look, you know, if you want a refund, you have to take it up with them. And that insulated us from a certain amount of that. But that said, If we became a place where it was just, oh, this is scammers and shoddy goods, then it would have really hurt the brand. Again, I think the, the slow-like growth approach to this helped us there, because we didn't really have to deal with high levels of fraud until, you know, significantly later.

AI assessment note: “we would basically just kind of kick people to PayPal's customer support”

Q you know, I mean, oftentimes, you know, that, that could have been a great opportunity for you two years to watch a professional run the company and to learn things and maybe gain more experience and come back in With a sort of a renewed vigor. And so when you came back in, in 2010, you know, back to running the company, did you feel like, ok, I got this?

A Yeah, so that was a really interesting time for me, because I'd spent a year being immersed on the community side of Etsy again, and just making things, and when I was asked to return, I was like, if I go back and do this, it needs to be in a much more mindful manner, not this kind of ad hoc, let's just do my best, and everything's going a hundred miles an hour. So I remember really thinking about that, and then when I rejoined, Etsy was in a new office, you know, they totally moved offices. The office was concrete floor and fluorescent lights, and I was just like, oh man, that didn't feel right, so we put a wood floor in and put, you know, warmer bulbs in the fluorescent lights. It sounds so trivial saying it now, but like, the office didn't reflect the ethos of the company, and then she'd hired a lot of senior people where, I think taste is one of the most ineffable things about the human condition. Like what gives someone some kind of taste and not another. And so, you know, her, whatever was guiding her hires for people to run things like marketing and customer support or anywhere else, um, just also didn't fit. So rejoining was a bit of kind of getting it back on the rails and that part felt good. So, um, I wanted something to kind of show when I was returning that we're going to make some changes. So I remember like throwing a coffee mug up into the air and this look on e…

AI assessment note: “rejoining was a bit of kind of getting it back on the rails and that part felt good”