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Wed Apr 6 2011 18:08:05

Can Etsy Founder Manage a Maturing Company?

By: Ina Steiner

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Inc Magazine wrote an article about Etsy that raises an old question about whether founders are suited to run their companies beyond the start-up stage. Founders' eccentricities are often indulged, but Kalin's image took a step over "quirky" this week, as noted in the Inc piece:

"Today, Kalin is socially awkward, reticent, and given to eccentricities that can seem downright crazy. "I speak to people in the business world and the technology world, but I don't admire them," he says, pointing an 8-inch combat knife at me for emphasis."

Kalin was not pleased with Inc Magazine's portrayal, posting on Twitter, "A good lesson from that Inc. piece. Mediocre journalism makes for sensationalist cringe-worthy copy, a handful of misquotes, and no wisdom." He later deleted the tweet.

Pascal-Emmanuel Gobry called the Inc Magazine article "brutal" and wrote a summary of some troubling points that came out in the article in this Business Insider post. Among them: Kalin said the idea of creating shareholder value was ridiculous, his cofounders did not have kind things to say; and after Kalin started a non-profit called Parachute to help Etsy sellers run their businesses better, only one business stayed with the program.

To compound the image problem of its founder, Etsy's growth rate is slowing despite its international expansion efforts, as documented on the chart in this AuctionBytes article.

Etsy's management history is a typical story. Just as eBay founder Pierre Omidyar handed the reigns to Meg Whitman, and Larry Page and Sergey Brin handed Google's reigns to Eric Schmidt, Etsy founder Rob Kalin handed the reigns of the company to Maria Thomas in 2008, and she brought the company to profitability.

But unlike those Silicon Valley success stories, New York-based Etsy is different - Kalin ousted Thomas in late 2009 and took back control of the company.

When Thomas stepped down in late 2009, no reason was given. But according to the Inc story, Kalin urged the board to dismiss Thomas and reinstate him as CEO. "He argued that Etsy had strayed from its core values in pursuit of growth and that it needed to focus more on the success of its sellers."

It's hard to imagine Whitman or Schmidt pointing a knife in an interview (or responding to a critical article with a tweet), but if Etsy's users were united behind Kalin, his quirky behavior probably wouldn't matter. But since his return as CEO, Kalin has launched a number of missteps, from the way the company handled the rape card controversy to changes that raised concerns about privacy.

Being a successful founder/CEO is not unheard of. Jeff Bezos survived much early criticism in his direction of the company, yet has guided Amazon.com to the top of ecommerce and continues to grow the company ahead of ecommerce growth rates. Apple's co-founder Steve Jobs had tumultuous relationship with the company's board of directors in the early 1980s, ultimately resigning, then returning in 1996, becoming CEO and putting a new polish on Apple. Eric Schmidt recently stepped down as CEO of Google and co-founder Larry Page has stepped into his shoes.

Time will tell whether Etsy's Board was correct in bringing back the founder, and whether Kalin will be able to pull a "Steve Jobs" in running Etsy.




Comments (30) | Permalink

Readers Comments

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Peggy

Wed Apr 6 19:41:45 2011

I've been on Etsy nearly 3 years, and the changes over that time have been disheartening. I wish they would go back to their "roots" and serve their customers, rather than spend all this time with social networking features that nobody really wants.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: anyone out there

Wed Apr 6 19:49:02 2011

Oh gee don't worry.

Some high arrogant company will absorb them for a giant wad of money and then put another HO HO in charge.

Etsy is only a danger to itself. No competition to Fleecebay at all.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Rich

Wed Apr 6 19:52:20 2011

Hard to manage a maturing company if you lack maturity.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

This user has validated their user name. by: Ina

Wed Apr 6 20:00:28 2011

Now that I think about it, Mark Zuckerberg, Facebook cofounder and CEO, was also called "socially awkward, reticent, and given to eccentricities." Sheryl Sandberg is credited with mentoring him and keeping the company on track.

Parallels?

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Pulloverthecar
Web Site

Wed Apr 6 20:41:27 2011

Interesting to read the business side of corporate Etsy.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Money

Wed Apr 6 22:01:34 2011

Ina - Those "parallels" are the remarkable exceptions of truly brilliant creators, but they are not the rule.

Etsy isn't that unique, it's concept not that clever, and it's customer base is not that loyal.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: earthegy
Web Site

Wed Apr 6 22:15:15 2011

I sold on etsy for 6 months, then switched to artfire when the craziness at etsy got beyond absurd.  And in the first month I tripled my sales and they keep climbing.  I still have listings on etsy, but they're just doing their time until they expire.  I much prefer working with a venue that makes sound, logical business sense in the way they do things.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Patricia This user has validated their user name.

Wed Apr 6 23:07:41 2011

They need to spend time on perfecting a search so that customers can find us.  I always feel like I'm stumbling over things there - no solid search no real direction.  I put things there and if something sells....I'm shocked!

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Watching the Wheels

Thu Apr 7 07:15:16 2011

Kalin's Tweet has been retracted, officially. Here's his tweet copied from another blog dealing with Etsy's latest and greatest:


Rob's reponse to the article? He just spoke out on Twitter.
@Rokali: ''A good lesson from that Inc. piece. Mediocre journalism makes for sensationalist cringe-worthy copy, a handful of misquotes, and no wisdom.''



Read more: http://www.businessinsider.com/etsy-rob-kalin-2011-4#comment-4d9d99734
bd7c8000f150000#ixzz1IpnIuuor

@Ina,
Jim Breyer and Accel are major investor's in both Facebook and Etsy.

Kalin's blurb concerning Maria is NOT accurate. It's the ''official'' story.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Mitzi
Web Site

Thu Apr 7 09:12:23 2011

I see two essential things that need to be fixed for Etsy to have a better chance:

Search and Category Structure - Etsy doesn't really do all that well at the basics of ecommerce. They tend to put most of their energy towards "fun" rather than "functional", and their below standard search and category structure is the direct result of this.

Seller Tools - Even with a few recent changes that they have rolled out (ex., copy item listing), Etsy is still very behind as far seller tools go. If a seller wants to maintain a large shop on Etsy, they find many roadblocks - a limit of 10 shop categories (with no option for subcategories) and no shipping calculator being the two worst. Most sellers get around this by keeping multiple shops, which is not an ideal solution.

If you look at Craftcount, the top sellers on Etsy are all supply sellers. The #1 supply seller has 128,346 sales, the #1 handmade seller has 35,827 sales and the #1 vintage seller has 13,383 sales. This mirrors what happens on other ecommerce sites - sellers of mass produced items that can be bought and sold in large quantities have the upper hand. Handmade sellers, who have to actually create what they sell, and vintage sellers, who have to spend hours every week finding unique items to sell, are rarely able to "scale" up to the kind of numbers that folks in the business world love to see.

I think on some level Etsy knows this - that is why they work so hard selling the Quit Your Day job dream to sellers, rather than working on the tools that actually help people on Etsy buy and sell. They count on having more sellers, not more sales. But they are a niche site - there are only so many people out there who craft, or sell vintage, or even craft supplies...

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: ang

Thu Apr 7 11:50:42 2011

I sell vintage and I'm pretty happy with Etsy. Maybe it's just because I compare it to Ebay but my sales are steady and I'm doing pretty well. I have no problem with a founder of a company fiddling around trying to figure out what works. All that's okay with me because the alternative is worse. I do not want some suit running a company without care towards sellers and no regard for the original intent of the site. Where every decision is all about money. You guys want that? Stick with Ebay because that is what a corporate hack eaten up with greed ruining a once good site looks like. So an eccentric person runs Etsy and so there have been some missteps. I have to ask myself, would I rather deal with Crazy McCrazyson or John Donahoe? Sign me up for that crazy. I'll take the train straight to crazytown

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: HJ
Web Site

Thu Apr 7 13:58:36 2011

I have sold on Etsy for over three years. Watched it grow and change and think it will continue to grow despite the bad press and bashing that goes on.
I have also compared him to Zuckerberg. It's his company, his rules.
I'm hopping on the Crazytrain with you Ang.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

This user has validated their user name. by: Ming the Merciless

Thu Apr 7 15:03:07 2011

I'm not fan of Rob Kalin, but one thing he alluded is true.

Small seller profitability and shareholder "value" are often incompatible concepts as ebay has proven in the last three years.

Wall Street no longer believes that customer health has any importance. That may have been true in bubble 90s when sellers were easily and quickly replaced, but it's no longer true today.

If The Ho had simply put his Diamonds in ebay express and left the core aloan improved ne (no illegally manipulated search algorithms), it's mind boggling to think how much higher ebay stock would be today. But Wall Street no longer has vision beyond their hip pockets except to devise ways of creating more wealth at the expense of the middle class.

It doesn't have to be this way, of course, but when testosterone, greed, and sociopathy are the principal drivers of upper management and its BoD, then what you have is today's ebay.

And frankly I can see Meg Whitman with her infamous temper pointing a knife at someone had one been handy.

The issue here, IMO, is whether Kalin will go the way of ebay's disgusting corporate business model or successfully develop his own that makes both sellers and etsy money.

The Ho wasn't smart enough. Is Kalin?

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Peter Wright

Thu Apr 7 17:05:21 2011

If your stuff dosnt sell on Etsy then it says more about your stuff than it does about Etsy.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Patricia This user has validated their user name.

Thu Apr 7 18:30:40 2011

@Peter - If your stuff sells elsewhere but not on Etsy...what then?

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Joe Average

Thu Apr 7 20:18:20 2011

Perhaps Regretsy's growth will be limited because of its own moniker. That is, it promotes it self as a place to buy & sell vintage and handmade.

Small sellers are crying out for any sort of viable alternative to eBay, but nobody wants to provide it. Damn Hipsters.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Wolf
Web Site

Thu Apr 7 20:29:51 2011

To tell the truth - the biggest truth in the article was related to the math regarding total sales v. how many sellers.  This clashes with Peter's post....and my experiance.  Poor customer service, a worthless search engine, favoring internal traffic over external and not allowing external links.  These are not small business friendly - I left because of all of the above.

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: just an Etsy seller

Thu Apr 7 23:11:39 2011

Kalin says:

''I speak to people in the business world and the technology world, but I don't admire them.''

...the idea of creating shareholder value is ''ridiculous.''
_______________________________

Etsy sellers: this guy is our friend. Seriously -- he is. I'm 100% with the above commentors HJ and ang. Ming is right that ''small seller profitability and shareholder ''value'' are often incompatible concepts.''  

So he's a dreamer. Is that bad? I see Kalin as trying to keep Etsy from becoming Ebay, and trying to create something that's never been created before. He might fail: the Donahoe clones on Etsy's BOD could win. He's just a kid, and he's up against some serious and dirty opposition.

That said, there's been plenty of mistakes and misplaced priorities, but I'm still in favor of anything that keeps Etsy different from Ebay, and Kalin is one of those things. If we see Etsy continue to nurture handmade artisan goods and make an effort (please!) to kick out resellers, then we'll know we've got a friend. If we see Ebay-style advertising, commercials, and ugly banners selling refi's and insurance, then we'll know we don't.



Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Fruity This user has validated their user name.

Fri Apr 8 02:30:14 2011

I thought the founders at Etsy already gave up when they sold their soul to paypal express checkout.

Same with Bonanzle

I think they all should just get out of dodge instead of pretending to be competitive vs making small seller be your uncompensated labor to build up a content network/catalog so you can bring in various brands

Can Etsy Founder Manage a Maturing Company?   Can Etsy Founder Manage a Maturing Company?

by: Fruity This user has validated their user name.

Fri Apr 8 02:37:51 2011

I'm sorry but we all believed Ebay was our friend and what did they do, they threw us under the bus.

I can't blame em though. If I had a cool million waving under my nose, I'd sell you all out! But they should be generating the value by bringing in the traffic instead of encouraging their own sellers to pimp for them. That's a sure sign they're running an uncompensated labor camp!

and ETSY, you should of integrated Google Checkout when your sellers and buyers begged you. You live with that. None of you have an excuse to block GCO. If you were independent thinkers you would know that offering shoppers choices is the right way to operate.

Bonanzle, you just disgust me what you did. I wont even bother typing my anger towards you

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