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Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon Feb 6 2012 21:05:57

An IPO Could Put Etsy Idealism in Jeopardy

By: Ina Steiner
Sponsored Link
Etsy CEO Chad Dickerson said last week he wants to take Etsy public, though he is not in a hurry to do so. There are several compelling reasons for an IPO - the venture capitalists who invested in Etsy expect a return, and going public boosts company name recognition.

Another reason is to help attract talent to a company. Facebook's IPO filing last week is a case in point - about 1,000 employees could become instant millionaires on paper with the initial stock sale, and 600 current and 300 former Facebook employees could get seven-figure paydays, according to an article in the San Francisco Chronicle. Dickerson was previously Etsy's Chief Technology Officer and understand the need to lure programmers and engineers, as well as top managers now that he's Chief Executive.

But going public changes a company, even one that has an idealistic vision like Etsy. One only has to look at eBay to see that is true. No one was more idealistic than eBay founder Pierre Omidyar, who made employees carry around a card with eBay's core values that began with, "We believe people are basically good."

Omidyar wrote to the eBay community after its 1998 IPO filing, "our core beliefs and vision won't change." But over the years, they did change, finally coming to a head in 2008 when the "level playing field" for sellers was once and for all debunked.

Dickerson is repeating the same idealistic vision for Etsy that eBay's management espoused. Empowering the individual, even the concept of offering group health insurance to sellers. (eBay said it would do that too, though it failed.)

Dickerson told Gigaom about new plans for Etsy - he sees the company expanding by helping merchants set up offline stores and offering services to beyond that of a marketplace, and said he's on the lookout for acquisitions and partnerships.

It's easy to see why Etsy needs to look beyond the Etsy.com marketplace - growth and the potential for growth are essential in attracting Wall Street to pull off a successful IPO.

Are there lessons Etsy could learn from studying eBay's history? Omidyar created eBay to empower individuals, yet now the company is targeting large enterprises and favoring big businesses. If Etsy follows in eBay's footsteps and becomes a public company, will it be able to retain its "handmade ethos"?

Update: Just published in USA Today, a piece about Pierre Omidyar.



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Readers Comments

Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
by: DrStrangegoods This user has validated their user name.
       
Tue Feb 7 00:12:11 2012
The obvious concern is the danger of Etsy becoming just another Amazon want-to-be like eBay. One would hope they would realize that market is saturated and keep true to their original business mission.

Putting that concern aside, Etsy is in an excellent position for growth. Many small vintage sellers are disgruntled with eBay and looking for a viable alternative. Vintage sales are starting to get some traction on Etsy and if Etsy plays their cards correctly they can take a large share of eBay's small sellers. First though, Etsy has a number of issues which should be addressed before they even consider an IPO:

- Lack of proper categories for most vintage items
- No shipping calculator
- No mechanism for management of larger inventories
- No blocked buyer list
- Insufficient store sections for vintage items
- Limited number of pictures per item
- Overall lack of exposure for site
- Too many items listed which violate copyright, or are just plain illegal to sell
- Too many resellers with Chinese made products posing as hand crafts
- Strange search behavior
- Lack of alternatives to Paypal for payments
- Heavy emphasis on handmade tends to neglect needs of vintage sellers
- Etsy front page does not have a coherent message

I am sure I could think of more but this would be good for starters.


Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
by: BetterThingsToDo This user has validated their user name.
       
Tue Feb 7 05:57:45 2012
People you are living in a dream world. If Etsy goes to an IPO of course they will start charging for a range of services.

Since when does business do anything for free??? Do you really think that any department or grocery store doesn't get charged for selling things.

They pay interest, upkeep, gas, electric etc. All you people must think this stuff is free.

The days of the free rides are coming to a close as these companies need to start making money and the sellers are going to start paying more, like it or not its going to happen.
Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
This user has validated their user name. by: Nan
       Web Site
Tue Feb 7 08:59:46 2012
@Better: Listing on Etsy is not free.  There is an insertion fee and a FVF.  And of course the PP fee when something sells.

But if they go public, I can see the fees going up.  They are fairly low.  

Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
by: Digmen1 This user has validated their user name.
       Web Site
Tue Feb 7 12:41:51 2012
According to the charts that Ina publishes once a month from etsy, they are enjoying very good growth in members and sales.

So why would they want to risk that by making major changes. "Just so that they can employee some new talent" - Come on.
Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
This user has validated their user name. by: Ming the Merciless
       
Tue Feb 7 15:20:11 2012
To either delay or eliminate the possibility of Etsy eventually becoming another ebay for vintage goods, sellers should hold them accountable the first time unfavorable changes begin to occur.

Etsy can't recruit the big boxes so when the anti seller, pro Wall Street changes start happening, stop selling. Do it the first time, the second time, the third time and so on until these arrogant, greedy jerks get the message that their little marketplace will fail unless it works hand in hand with its customers, the SELLERS.

Sellers hold the key to their Etsy post IPO success. Use the leverage you have becuase, if you don't, all you have to do is to look at ebay to see what your fate will be.
Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
This user has validated their user name. by: Stockmiser
       
Tue Feb 7 15:57:46 2012
But Ming, they won't care.  After the IPO, all the owners and investors will be so filthy rich that they won't need to care.

Do you think Omidyar cared after he cashed in all those BILLIONS?   No, he went and hired ole Meg whos sole purpose was to pump up the company so her stock options would make her BILLIONS.  Then she cashed out.  Now we have Donahue....poor John.  No billions for him.  Milked that cow one time too many.

It's hard to keep your online service "ideals" when you become so unfathomably wealthy that you can do things that might actually help the world at large.  

My guess is they IPO, and get a board and a new CEO dedicated to squeezing every last dollar out of the biz so they can cash in those stock options.

Dickerson will still blog about his ideals from his yacht on the way to  some charity event...
Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
by: mindelec This user has validated their user name.
       
Tue Feb 7 18:14:51 2012
i don't sell there, but one only needs to look at ebay to see what will happen.  after a company goes public their entire focus changes from pleasing their customers (i.e. sellers and buyers) to pleasing their stockholders.  stockholders are only pleased by financial growth, which isn't always the best thing for the original customers of the company.

ebay's start downhill was when the founders cashed out in the IPO.
Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
This user has validated their user name. by: Ming the Merciless
       
Tue Feb 7 21:01:22 2012
Initially, a few select people will indeed be quite rich.

But if Etsy can't sustain their seller base, the stock eventually goes down.

Stock options are the only reason Donahoe still has his job. Ebay, ebay execs, and members of their BoD control a huge percentage of the stock and don't care whether they receive dividends because they're all about the cash in price and what The Ho can do to increase it.

In 2002 when Meg began initiating anti seller policies, had most sellers really understood what she was doing and taken appropriate action, ebay could be a very different place today.

Corporations are typically organized entities while sellers aren't. Etsy has competitors; list on them.

You could even organize a day or week to boycott Etsy before the IPO to demonstrate the result.

We sellers could control these marketplaces if we recognize evil when it begin and if we would only understand how to wield the power properly.

It does NOT have to be all about stock price and satisfying the Wall Street vultures. Spend a few minutes and read the highly successful Southwest Airlines and Costco business models.
Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
by: Patricia This user has validated their user name.
       
Tue Feb 7 21:06:24 2012
Losing Etsy would be no big thing for me.  At this point I can take or leave it.
Perminate Link for An IPO Could Put Etsy Idealism in Jeopardy   An IPO Could Put Etsy Idealism in Jeopardy
by: Digmen1 This user has validated their user name.
       Web Site
Wed Feb 8 04:39:22 2012
If someone found out how to organise a decent boycott, then they would be a hero.

Its never going to happen, cos you don't have everyones email address, and people like/need to keep selling and making money.



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