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Etsy has distinguished itself from both Amazon and EBay as a “hipster styled” e-commerce site. Etsy sells everything from home décor to clothing, always hand-made or vintage. Through their embrace of individual producers and small batch items, Etsy has established itself in a rapidly expanding niche market. Etsy is truly able to capture the sentiment of the growing hipster trend of individualism and rejection of mainstream entities. This success led Etsy to go public with an IPO on April 16th, 2015, making Etsy the largest B-corp to ever go through the IPO process. Now valued at more than 2.4 billion dollars (with no earnings to date), there is no arguing the investor sentiment on the future of Etsy. But everything that glitters is not gold. Etsy faces a slow-moving crisis of culture that has the potential to derail the entire company.
Much like when Steve Jobs was unceremoniously ousted from Apple, Etsy’s founder Rob Kalin was fired in July of 2011. Shortly thereafter Chad Dickerson, former Chief Technology Officer at Yahoo!, took over as CEO. While Mr. Dickerson has publicly touted Etsy’s B-corp status, he has already made small concessions in its operational model. Etsy once maintained a stringent commitment to individual businesses producing handmade or vintage goods. But in 2013, Etsy changed its policy to now allow the hiring of employees and even small scale manufacturers to aid individual businesses in production. This perhaps signals Etsy’s recognition of the ceiling imposed upon them by their own business model. This shift in company policy, although small in nature, could represent the beginning of a much larger change in the internal dynamics of Etsy.
With the original CEO and founder out of the company, Etsy has now found itself in a situation reminiscent of many idealistic companies. Now having to face immense pressure from Wall Street for short term results (regardless of methodology), Etsy has little recourse in continuing its commitment to its B-corp values. Wall Street does not care in the slightest about how Etsy impacts society or the environment; all they care about is the dollars and cents of the company. It is quite possible that in the near future Etsy will find itself locked into battles with activist shareholders whom demand a relaxing of its rules for sellers in order to increase revenue and earnings.
The scalability is simply not there for a company like Etsy who built their business upon a commitment to “small”. Sooner or later, crumbling under the weight of its own IPO, Etsy will be taken private again at a much discounted price; like many fledgling tech companies before it. While what’s done is done, Etsy’s future was sealed the day of its IPO. Even the return of Rob Kalin may not be enough to save Etsy. The slow-moving crisis developing within Etsy will eventually reach a tipping point; the only question that remains is when.
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