Slideshow: Scenes From Etsy’s Brooklyn Office »
The first item ever sold on Etsy was a coin purse in a tropical print. That was in 2005, and Etsy wasn’t much more than its founder’s dream: “an anarchist artist collective” that started when a guy who made wooden computers and fantasized about making everything right down to his very own underpants accidentally learned how to make websites, and accidentally made one where he and his fellow “makers” could sell their wares. It was that simple: Some people like to make things, other people like to buy things that others have made, and now, thanks to the internet, these people could be brought seamlessly together, to the benefit of all parties, including the host. It was, in its way, a very Web 1.0, bubble-era dream: disintermediation. The founder, Rob Kalin, named the whole thing Etsy because he wanted something without meaning so he could build its identity from scratch. Also, he’d just been watching Fellini’s 8 ½ and liked the way people said “E, sí?”
By 2008, Etsy had 650,000 members, and then the numbers began to explode: 5 million in 2010, 54 million in 2014. Kalin liked to think he was taking the philosophy of a beloved children’s book, Swimmy, and making it real: One ringleader fish rallies a bunch of his tiny friends together to defeat one big, bad fish. In Etsy’s case, you can call that fish “Walmart” or “Amazon.” Because Etsy has always wanted to do a whole lot more than sell pot holders: It wants to rewrite the idea of what it is to be corporate, all the while erasing the line between making money and doing good — going so far as to suggest that these two things are essentially the same.
One might have predicted the financial crisis would produce cynicism about the behavior of corporations and the power of the wealthy, and in some ways it did — there was Occupy, and the tea party, and Wall Street regulation, for starters. (And, yes, a socialist is actually running for president.)
But much more interesting was the way the opposite happened, too—the rise of a new faith in the transformative power of capitalism, especially among start-ups and in Greater Silicon Valley, where, in the aftermath of an economic disaster, venture capitalists and entrepreneurs often seemed the most optimistic people in the country. Etsy was founded in Brooklyn — was, in fact, drenched in a Pinterest-friendly idea of Brooklyn, all Mason jars and men who self-identify as feminists and dress like they’re prospecting for gold. But it might embody this new faith most of all — the hope that, in a country long soured on both big business and big government, a new kind of company could be not only a force for good in the world but possibly the greatest hope for good, and all of it would happen in these open-plan offices, micro-Scandinavias where crafty and buoyant flannel enthusiasts gleefully compost their lunch.
To begin with, Etsy is a peer-to-peer operation, meaning that, in connecting a hobbyist lithograph artist in Iowa City to a lithograph lover in Seattle or Dubuque, it is essentially creating a market where there wasn’t one before, which is just good business, in an Economics 101 kind of way. What makes it all work on the moral scale is that the transaction can empower people on all sides: For the seller, that empowerment takes the shape of providing a previously nonexistent marketplace. For the buyer, it means the opportunity to choose something truly unique and made by honest hands rather than under murky, unknowable conditions. And for Etsy, the opportunity to make money: 20 cents for each item listed on its marketplace and 3.5 percent of every transaction.
Second, Etsy’s 819 employees — not the sellers but the people keeping the Etsy servers up and running and everything else — work in something like an extremely cozy private welfare state. There is free lunch, there is on-site continuing education, there is someone with pink hair to reinflate the tires of the bike you were sweetly encouraged to ride to work. Every Etsy employee is given 40 paid hours off annually to devote to volunteer work; the company covers 100 percent of health-care premiums and for years made a point of paying American salaries at least 40 percent above the local living wage. Just last month, Etsy announced a near-unprecedented paid-parental-leave policy—26 weeks for men and women, applicable to birth, adoption, or surrogacy. Cynics say that tech companies swaddle their employees in order to tighten their claims on them, but it’s very hard to find an Etsy worker complaining about the free pottery workshops going on downstairs. The annual Halloween party is a jam-packed, till-the-early-hours kind of affair.
Third, and most radically, Etsy is not especially interested in profitability. The company is certified as a B Corp, which means that while it is a publicly traded company, it isn’t, like others, beholden entirely to its shareholders. The B Corp has a do-gooder cousin in the Benefit Corporation — which is a legal status, while the B Corp is merely an accreditation (handed out by a nonprofit called the B Lab). But the model is the same: A B Corp declares itself equally responsible to its community and to the environment as to its shareholders, which means, functionally, that the company’s founders (and its executives) get to establish priorities that the profit motive doesn’t automatically trump. In exchange, the company gets a seal of approval not unlike that little organic or fair trade stamp you find in the aisles at Whole Foods. And gets to send a clear signal about its priorities to investors, who can then be considered duly warned that the company may not try very hard to make them any money.
All of this draws on good liberal values, made especially appealing in an age of general economic insecurity and social-welfare retreat. And, as a marketplace, Etsy is thriving. Right now, even while challenged by Amazon’s rival, Handmade, there are on Etsy over 35 million items for sale by 1.6 million active sellers reaching out to 24 million active buyers. Last year, it sold $2.39 billion worth of block-printed whale posters, felted party banners, vintage Thonet dining chairs, and Liberty-print diaper covers hand-stitched by a grandmother just outside Bath.
But whether the company works as a business proposition is another question. At the end of trading the day of its IPO last April, Etsy was worth about $4 billion; today, it hovers around $1 billion, which means that while the company and angel investors reaped an initial windfall, the scrutiny of the market has cut the value of the company threefold in under a year. In this tech boom, Wall Street has tended to really like the sound of entrepreneurs hawking not just a new business but a new kind of business. Etsy’s post-capitalist tea-cozy utopia offered exactly that. But if nobody’s yet made any real money on that pitch, just how seriously should we take it?
Twice a week, the staff of Etsy gathers in its Dumbo offices for a great shared lunch. The program is called Eatsy, and like so many things at Etsy — the hand-knit sweaters that clothe the loft’s exposed ducts, for example, and the “live wall” of humid little houseplants that line the entrance — big effort has gone into the making of the thing, and every one of the people who work at a handmade, knotted-pine standing desk knows exactly how and where it was lumberjacked.
That principle pervades the workplace. Today’s lunch (grain bowls with organic chicken and spongy little mounds of kale) was catered by Nahvae Frost, who runs an organic, local, sustainable catering company out of a storefront in Crown Heights. Frost feeds the staff at Etsy at least twice a month. “The beauty of Eatsy, as I see it,” Frost says, “is that Eatsy is maintaining this very familial, shared experience where everyone is a participant. It’s all super-transparent. Everyone at the company knows where each piece of meat is coming from. The sourcing is there for everything, everyone is able to see everything and be a part of it, and they all eat together. It’s almost like there’s still just a few of them.” It all feels like you’ve wandered deep inside a romantic comedy or an episode of Portlandia. The conference rooms that line the interior of the office are named “Ace of Bouillabaise,” “Sushi and the Banshees,” “Rigatoni! Toni! Toné,” “Lil’ Kimchi.” There are plenty of vintage dresses and cat’s-eye glasses, and the woman in charge of Eatsy, Katie Rose Crosswhite, has the cozy warmth of Melissa McCarthy on Gilmore Girls. There is even a girl with long hair wearing a sweatshirt that says AVOCADO TOAST.
After lunch has been washed down with local apple juice and Greenpoint seltzer, the compostable plates and leftovers are smushed into bamboo receptacles, packed onto a big orange Dutch bike the staff calls Betsy, and brought over cobblestoned Washington Street and then along the riverside bike path all the way to Red Hook farms, where it is turned into fresh, steaming soil. Or was, in November. More recently, Etsy’s been producing more compost than that farm can handle, so it’s being turned over to another partner instead.
If you’re not in the mood for a bike ride, you can stick around the office and sign up for a course in “Etsy school,” which runs on a semester basis. Etsy school is colleagues teaching colleagues, and recent offerings have included jazz appreciation, earring-making, a guided tour of Central Park, and a female-only class taught by Vanessa Bertozzi — one of Etsy’s first employees and, given the demographics of the staff, definitely one of Etsy’s first employees to give birth — about all the gross things that happen to your body when you have a baby.
“I realized there was so much you learn firsthand that no one tells you. I found the experience really fascinating, and I wanted to share it with the other women. I think it’s kind of funny,” she says. “Now we’re having a little bit of a baby boom. Despite the fact that my Etsy class let it all hang out — with the blood and guts.”
“What we’re trying to do is bring about a shift in consciousness,” explains Matt Stinchcomb, who was Rob Kalin’s roommate when Etsy launched in 2005.
The origin story is this: Kalin was late with the rent on his Fort Greene share. He went across the street to talk to his landlord, who was also the owner of the Acme restaurant in Manhattan. On the landlord’s desk was a proposal for an Acme website. The cost was exactly twice Kalin’s rent. He said he’d be willing to do it for half. Next stop was a bookshop, where he bought a web-design manual. Soon the landlord had his website, and Kalin had opened a web-design company with the two engineers who’d answered his cry for help (he needed to know how to make animated flames) on an NYU message board.
Then, Kalin’s web-design company added its second, and final, client — Jean Railla, the wife of an NYU professor of Kalin’s, who was rebuilding a forum site called Get Crafty. Kalin was always into the idea of making things — at the time he started Etsy, he was making wooden computers in his bedroom — and he figured that, in those artisanal Brooklyn-meets-“maker”culture years, there were probably a lot of crafty people out there like him who could benefit from a place to sell their work. “It wasn’t like, Oh, we’ve identified a space in the craft and hobby sector,” Stinchcomb says. But in fact, they had. Stinchcomb soon quit touring with his band, the French Kicks, to become Etsy’s head of marketing, which both he and Kalin liked because he didn’t really have a clear understanding of what marketing was.
Kalin left Etsy in 2011 — the growth was faster than Kalin and his skeleton team could sustain, and his mind was on politics, ideals, and also on making things (he was, at heart, a woodworker). Stinchcomb stuck around until 2015, but today he is no longer involved with Etsy itself, instead devoting all of his time to a project endowed with Etsy stock. That’s etsy.org, the company’s nonprofit, postcapitalist business school. The program draws its philosophy, Stinchcomb tells me, from his personal, spiritual journey: from his pursuit of “Buddhism and perma culture” to something like a New Age corporate executive. “If you’d told me ten years ago that I’d be reading books on economics and thinking about all this stuff, I would not have believed you. I mean, I am literally wearing a three-piece suit right now!” (The suit was part of an Etsy Christmas pageant that involved the company’s current CEO, a bunch of ghosts, and a confetti explosion, but still.) “Business skills aren’t the most important stuff; personal relationships are,” he says. “As you grow big, the question is always, How do you stay small? We lost some of our wildness, sure, but we’ve deepened in ways that are probably more important.”
Etsy.org is Stinchcomb’s way of spreading that gospel to other entrepreneurs. One afternoon in January, I sit in on a revival meeting. In a nondescript conference room in the Brooklyn Navy Yard, about 20 entrepreneurs are introducing themselves from folding chairs that have been arranged in a circle. These are etsy.org’s first “cohort,” which is what the organization calls its first class. The entrepreneurs seem to me pretty Etsy-like already, but they are here to learn the Etsy way, to get support in growing their companies in ethical, environmentally sound ways. “I just wanted to find a way to get out of all the frat-boy tech stuff,” says a girl with blue hair and Doc Martens. There’s a discussion of the business of nontoxic underpants (are underpants toxic?). And one led by a bearded man with kind eyes and an Australian accent (topic: goat’s-milk lotion and soap). Today’s lesson is taught by an entrepreneur from some place in San Francisco inspired by Rudolf Steiner and once called the Rudolf Steiner Foundation (now just RSF Social Finance), which gives low-interest loans to socially responsible companies. He concedes that he may look the part of the Silicon Valley bro, but he assures this group he is something else and launches into an explanation of how his company helped a small Waldorf school outside Charlottesville.
Then there is a break, time for the “real hippie shit,” says Erica Dorn, which means stretching exercises led by a former member of the Oakland Ballet as well as a clothing manufacturer with a factory in the Bronx. Which all seems pretty appealing — so full of good vibes and intentions. If Etsy school is a luxe idea of in-house philanthropy, directing company resources to unleash the creativity of white-collar workers, etsy.org takes things a step further: lifestyle lessons from flush executives who’ve already made it and have found some really great ways to spend their time and money.
In 2008, a folksy, self-described “technologist” named Chad Dickerson was invited by one of Etsy’s original investors to visit the Brooklyn offices and have a look at this company that had become, it was apparent, like a child who’d too quickly outgrown his pants: thriving, healthy, and a little bit ungainly. Competitors were circling, and Etsy’s technological infrastructure was so precarious that it was, metaphorically, just one guy tripping over a cord from total disaster.
Dickerson, now Etsy’s CEO, was living in Berkeley and working at Yahoo at the time, but he is originally from North Carolina, and all of his grandparents were tobacco farmers. Especially for a second-generation executive and corporate grown-up type, there is something innately folksy about him. And earnest. His early career was spent in journalism: As a student, his entire plan for the future involved emulating Robert Redford, dashing through a newsroom telling the truth. He found work at a newspaper in Raleigh that, by chance, was among the first in the country to publish daily on the web. “I started asking questions,” he says, “and then I taught myself how to code. I became a technologist.” From the paper he moved to cnn.com, then Salon, where he worked with Caterina Fake, who went on to found the photo-sharing site Flickr. She brought Dickerson along when Yahoo acquired Flickr, but then she made an angel investment in a funny little Brooklyn company. As Dickerson remembers it, Fake said: “Etsy needs what you’ve got.” He flew out to Brooklyn and liked what he saw, called a broker back in Berkeley, and he has never looked back.
But to someone coming from Yahoo, Etsy did not look like a corporate utopia. Dickerson joined as chief technology officer. “I started on September 2, 2008, and in my first week in the job, the site went down for an hour,” he says now, sitting in his Dumbo office. His is the only office with doors and walls in the building, and even these doors are of the large, sliding, barn variety. On a stand near a leather couch is an acoustic guitar. “No one could tell what was going on, and that was kind of a taste of what was to come. The technology was a mess,” he says. “Coming into Etsy was like walking into a room full of ticking time bombs, and I had to defuse each one in the right order.” He recruited a supergroup of coders and programmers and quadrupled the engineering team in order to help the rest of the company do what it did more smoothly. And for those who may have worried about the arrival of an army of mercenary coders, he began posting regularly on the company’s blog, explaining that what he and his team were up to was a craft, too. When Kalin decided to leave Etsy for good (another CEO had run the company from mid-2008 to early 2010), Dickerson was installed as CEO. “Over a couple of years, I was able to go from a very fractured, splintered, messy system and team to a team that is really world class,” he says. But a few of Dickerson’s biggest changes were controversial, mostly to do with his desire to grow Etsy by making the sellers bigger.
From the start, everything for sale on Etsy was either a vintage discovery or made entirely by hand; you could be kicked off the site for violating the policy. But Dickerson introduced genuine manufacturing. In this vision, the seller of felt pillows who was receiving more orders than she could handle might find, via Etsy, a talented seamstress down the block, and together they could manage the orders. One of the most controversial moments in the history of Etsy concerned something called Ecologica Malibu, which claimed to sell handmade wooden furniture in a Brazilian style. Soon after Etsy published an interview with the owners on its blog, commenters alleged that the shop shared an address with a wholesaler that imported identical furniture from Malaysia — and started posting comments like “Etsy or Sweatsy?” The uproar was chronicled in an immensely popular blog called “Regretsy.” Etsy maintained that Ecologica was a “collective” and shut down the comment board. Soon after, Ecologica closed up shop.
It was a time of growing pains for the company. When Etsy’s manufacturing initiative was formally introduced via video chat, Heather Jassy, SVP of Members and Community, who led the conference, described it as “one of the most stressful days of my life.” Etsy may have lost some sellers over the move, but Jassy persuaded many of them it could be a tool for self-empowerment, especially when paired with Etsy’s wholesale initiative, which brought large companies like Macy’s and Land of Nod into Etsy headquarters to buy huge stockpiles of Etsy products in what the company called “golden purchase orders.”
Then Dickerson decided to take his little company public. Almost as a preemptive response to Etsy loyalists who might have felt betrayed, he framed the whole thing as a way for Etsy to be even more democratic, more transparent. “Before I was CEO, there had been five rounds of venture financing,” he was careful to tell me. “So in a sense, you already have a diverse group of shareholders — people invest to make a return. Public markets are more public, and there’s higher pressure, and more people can see how you’re performing, but that principle of transparency really won the day and outweighed our concerns about Wall Street pressures,” he says. Now, “for the first time, our shareholders include our customers, so when I’m on the earnings call, it’s not just investors on Wall Street, it’s sellers on the platform. It’s people who have an interest in Etsy. Being a public company is the simplest way for people to own a piece of this.”
Still, in order to preserve Etsy’s particular Etsy-ness — some of it, anyway — it would have to be a very particular kind of public company: a B Corp, like Patagonia, the Honest Company (which just had a $1.7 billion valuation), Love & Hummus, and Dr. Bronner’s (of the famous Magic Soap). “The structure that the B Corp enables is critical,” says Barry Schwartz, who studies the intersection of economics and psychology at Swarthmore. “What so often happens with brilliant companies is that they have a great idea, they implement it, they grow like crazy, and then they stop pursuing ideas and start pursuing profits. Some companies, like Google, put limits on the rights of shareholders, and it’s worked because they’re making so much money anyway that only a pig would complain. But sometimes, when a company matures, the profits get smaller and people do start to complain about these so-called foolish acts of whimsy. The B Corp has built into it an understanding that that’s not the only reason why we’re doing what we’re doing. It’s basically just a brilliant way to insulate yourself against the corrupting pressure of shareholder interests.”
Before they are certified, companies are evaluated for social responsibility across a number of platforms. Parental leave is a big one, as is diversity, as is transparency, as is environmental impact. When Etsy first underwent its certification process, in May 2012, it only eked by with a score of 80.2 out of 200. Eighty is considered passing, but Dickerson was not satisfied with a margin of only 0.2. His solution? The entire company went into hackathon brainstorm mode for what it could do better: increasing the number of female employees and female managers, tracking how many of their sellers came from low-income backgrounds, and formalizing volunteerism (the bikes, the compost, the talent shows, and the earring-making nights all went into it too). At its next certification process, in August 2013, Etsy scored 105. Two years later, it went public. In its initial filing, the company declared, “Fun should be part of everything we do.” And also: “We have a history of operating losses and we may not achieve or maintain profitability in the future.” It’s now been at least five years since Etsy last achieved it.
In a walk-up apartment somewhere between Park Slope and Boerum Hill, Aimée and Sara Schiwal are happily at work. The Schiwals are sisters and originally from Georgia. Their mother was a hard-core crafter, her need to be productive so intense that the girls remember her crocheting at traffic lights. In their apartment, there is a weak, dust-mote-y afternoon light filtering through the windows and across the rug, the kind of light that reminds you that the world and all its commerce is still cooking out those windows, down those streets, across those bridges. But here in the apartment, Sara’s 8-month-old has just gone down for a nap, and Aimée’s toddler has been sent to the park with her grandmother so that her mother can explain all the ways that Etsy has changed her life, made it possible for her to do the thing she loves, made her life unlike that of her mother, who ran out of people to outfit with all those afghans. “It’s unbelievable to me that I get to live this life,” Sara says. “That I get to see my sister every day, that I get to be with my child, that our children know their cousin … and it’s all because of Etsy.”
Eighty-six percent of Etsy’s sellers are women. Among other things, it promises the opportunity to earn an income with a flexible work schedule. That can look appealing to new mothers with some free time and perhaps a bit nefarious to those a little more worried about the collapse of the middle-class professional culture and the rise of a gigified economy populated by part-time workers without benefits.
“Philanthropy used to be almost like a guilt tax,” says Raj Sisodia, a Babson College professor and the author of Conscious Capitalism (co-written with Whole Foods’ John Mackey). “It was like: You’re making money, therefore you should give back in some way, and the idea of giving back only seems relevant when you’re taking what might feel like too much.” But Etsy was something different: The company is not just skimming a little profit to donate somewhere or other but sees the work of Etsy itself as fundamentally beneficent. And while there is a tangible cost to the workplace environment it’s engineered for employees, there’s also a plausible argument that, for certain companies, investing in worker loyalty is simply smart business. Ask an economist about that part of Etsy’s mission, and the answer is likely to be “What’s not to like? But can it scale?”
How good a model the company can be for other businesses where the product and the mission are less closely aligned is unproved, even unclear. Whole Foods, for instance, is working with farmers all over the world on questions of sustainability and organic practices. Is it expensive? Yes. But does it shore up supply networks? Absolutely. Does it work in sync with the company’s marketing? Again, yes. But when McDonald’s announced its plan to move to eggs from cage-free chickens, the costs went up and customers didn’t care. Just trying to imagine what a socially conscious version of ExxonMobil would look like could make your head explode. (Which is not to say Exxon doesn’t do “corporate social-responsibility,” of course it does. But the problems inherent in the selling of oil are more profound and complicated than empowering a young person who’s really good at making cardboard masks.)
That doesn’t discourage Dickerson, though. “My vision for Etsy is really building this human-centered economy that’s all about people,” he told me that day in his office. His guitar is sitting right there. When the cold winter of 2015 ended, he tells me, he assembled a band and they dressed up in yellow bodysuits and performed “Here Comes the Sun” for the entire staff, and everyone laughed and sang along. “Eventually, we want this way to be not an alternative economy,” he says. “We want it to be the economy.”
*This article appears in the April 4, 2016 issue of New York Magazine.
An earlier version of this story mischaracterized some details of the Etsy IPO, which brought the company to its peak valuation at the end of the first day of trading and did not involve shares owned by Etsy executives.