Blog Post

Etsy Nabs $27M to Get Crafty

Etsy, an online craft marketplace based out of Brooklyn, N.Y., may not be familiar to the West Coast tech set, but for the last three years (in the last year especially) middle America’s been using the Flash-heavy site to buy and sell handmade wares. And now that it’s scored $27 million in a round led by Accel Partners and added Jim Breyer, the same guy who fished Facebook out of Boston, to its board, Etsy may finally start to get the attention it deserves in the tech world.

And it deserves some attention. I think Etsy has the ability to emerge as one of the winners from the frenzy surrounding Web 2.0 and social networks. The site is beautiful (which was one of the reasons Caterina Fake, one of the Flickr founders, invested) and it provides much more that a straight-laced online marketplace. Crafty people can go to the site to see workshops streamed live from Etsy headquarters, for example; they can also connect with one another on various forums. It has a passionate user base, and much like the recently funded Automattic, flirts with profitability on a regular basis.

Most of Etsy’s sellers make a decidedly nontechnical product. In fact, the company’s success so far (it has 650,000 users and lists almost 1 million items) is testament to how the current generation of entrepreneurs is using technology to build something that has little to do with tech. It’s like a Web 2.0-inspired eBay or However the challenge will be to convince those same entrepreneurs that technology is still important when it comes to keeping online users happy.

Etsy CEO and co-founder Rob Kalin, who faked his way into MIT and the New School and figured out how to build a web site only after getting hired by his landlord to do so, doesn’t profess to be a business or technical genius, but he’s using this funding to focus on features that will improve the site, such as a better check-out system and search function.

In his blog post announcing the funding, he notes Etsy’s plans to grow internationally as well as deeper into the U.S. market. To do that, Kalin, who has taken in less than $5 million in funding for Etsy since its founding three years ago, recognizes the need for infrastructure:

“Given our current rate of growth — with how many images we store and how much traffic we serve — we estimate that we’ll need to spend $5 million on hardware and hosting in the next two years. This is not only to keep up with what we have now, but to support new features and expansion. “

Having written about Kalin in the past, and discussed his ambiguous feelings about running a business, more than anything I’ll be curious to see if he stays on as CEO. Both the company and the site are very much a function of Kalin’s views on the world, which has so far made Etsy genuine and led to its success. However, with big money and big plans, Kalin’s attitude may not scale.

10 Responses to “Etsy Nabs $27M to Get Crafty”

  1. I’m a converted eBay seller and artisan who is extremely grateful to be part of the Etsy community. While at times it may seem the company is more college term project than full-fledged business, I find that refreshing and have no complaints.

    Etsy has given thousands of crafters both small and large a community that is supportive, open and beautiful. I foresee plenty of positive changes in the future and will be sticking around to see how they unfold.

  2. Jane says: it’s over-staffed (many of whom offer no value to the vast majority of customers), much of the technology aside from the Flash toys is poorly designed and built, and the business is run in a way that seems highly unprofessional and even spiteful towards many customers.

    Bitter much?

    Etsy does in fact listen to the sellers through countless forum exchanges, Storque articles and comments, and email correspondence to Etsy admin. themselves. They might not be able to implement things in the time frame you might envision but you can’t possibly know what goes on behind the scenes. (And no, the UEN isn’t a great way of finding out the skinny….)

    As for stores being closed and what not I think it’s a kin to the high school gym locker room where no one really knows what really happened since no one ever hears both sides. For those not directly involved it should be treated as such.

    Look, Etsy has laid out a plan for the next 2.5 years and now have quite a bit of capital to attain both their own goals and the goals of the community as a whole. I say put a little bit more faith in them.

    But that’s just the opinion of another Etsy seller….

  3. I hope Rob Kalin does leave and that an experienced CEO comes on board very soon – and that he or she will clear the decks of those not up to their jobs.

    Etsy is a great idea, but is currently a lot less than great in practice. As many experienced sellers on the site know, it’s very badly managed, new projects are almost always poorly thought through, it’s over-staffed (many of whom offer no value to the vast majority of customers), much of the technology aside from the Flash toys is poorly designed and built, and the business is run in a way that seems highly unprofessional and even spiteful towards many customers.

    For the sake of the thousands of people who now rely on the services Etsy provides, I hope radical changes to this sad state of affairs happen very soon.

  4. While the blog post that Rob made talks about ~some~ things that are wrong with Etsy and needs fixing, he does not come close to discussing everything.

    I’m not holding my breath on these huge changes. They’ve already banned 5 people permanently from the forums (Etsy 5), and have started closing stores with an iron fist lately. If they were trying to clean Etsy up for the investors, well guys, you have your money.

  5. I am a part of the Etsy community – have been there for more than a year now. I love Etsy and all the different facets it offers – from allowing me to sell my creations, to finding some amazing handmade gifts, to the great community of fellow creators!

    I hope that this huge step only furthers the best things about Etsy and that the site as an entity is able to maintain and enhance it’s uniqueness and commitment to being all about “everything handmade.”