Highly Valued Website for Handmade Goods Goes Abroad

THE WALL STREET JOURNAL

By EMILY GLAZER

Etsy.com, an online crafts marketplace, believes there is more money to be made in handmade goods.

The company, which launched six years ago, has more than 11 million registered users in 150 countries and more than 10 million listed items for sale. It sold more than 2.3 million items in September, including handmade and vintage goods as well as crafts.

It costs nothing for sellers to sign up, and they pay 20 cents to list an item for four months. Etsy then gets a 3.5% commission on each sale. Prices range from 20 cents for a glass bead to $100,000 for a sculpture.

Chief Executive Chad Dickerson, who took over from former CEO and Etsy founder Robert Kalin in July, has been trying to expand the company's international reach. Etsy put its first stake in the ground in Europe last month, launching its Berlin-based, German-language website.

At the closely held company's headquarters in the New York borough of Brooklyn, the 39-year-old Mr. Dickerson, a former Yahoo Inc. senior products director, discussed plans to expand the company, and whether its nearly $300 million valuation is justified. Excerpts:

WSJ: A new CEO is often brought in to accomplish a specific task or set of goals. Why did the board choose you?

Mr. Dickerson: My task is really to scale Etsy to be a much more powerful force in the world. That means making Etsy a global brand: moving into other countries as we have been doing, and other languages. Bringing Etsy to other platforms. We're investing a lot with mobile [Etsy on mobile devices like smartphones] right now.

WSJ: Since you took over as CEO, how have you responded to problems like a clunky search engine and it being too time-consuming to merchandize goods?

Mr. Dickerson: We changed our search algorithm in a really fundamental way, from sort by most recently listed to relevancy. That's helping buyers find things more easily. We launched something we're calling Search Ads. It has given sellers a way to promote their items on the site [by buying key words to appear in search results]. We launched some merchandising hubs around three themes: fashion, kids and home [with curated content and category-based searches].

WSJ: Etsy was most recently valued at about $300 million [in its latest round of funding, led by Index Ventures in August 2010], nearly 10 times last years' sales. Do you think Etsy is overvalued?

Mr. Dickerson: Of course not. What we're doing here is building a long-term global business. To some degree in the same way that employees of a public company shouldn't be worried about the stock price every day, as a private company we're the same way. And while it's important that Etsy has a healthy valuation for a variety of reasons, it's not something that we really think about, we're more focused on building.

WSJ: Etsy Labs are physical workspaces in Brooklyn and—most recently—Berlin where the public can gather, educate and create. Why start one in Berlin?

Mr. Dickerson: Our general approach is to build the community [lab] first before building the website. We had people in Germany [working in these labs] for almost a year and a half before launching the Etsy website in German. There was already an endemic community around craft fairs. We're just repeating that in other places.

WSJ: Are there other places you're thinking of building a community?

Mr. Dickerson: We're going to focus on Western Europe. A lot of what we're doing right now—since we just launched [in Berlin] a few weeks ago—is learning from this experience. We have [communities of sellers and buyers in] Singapore, in Tokyo, to some degree we have a foothold everywhere in the world. My goal is by the end of next year to deliver Etsy in the languages of the countries where Etsy has the most promising communities.

WSJ: Some fear the company's growth could be hampered by Etsy's rule that sellers can only sell something they make themselves. Will that continue in the future?

Mr. Dickerson: Etsy is known and has been known as a handmade marketplace. That's really an anchor but not the whole story. Etsy has a large business selling vintage items and also supplies. Those businesses have been with Etsy since the very beginning.

WSJ: Etsy raised $20 million in a Series E round last August. What's next?

Mr. Dickerson: The business is doing well, we actually don't need to raise money, we don't need to be acquired, we don't want to be acquired and don't have plans to go public right now. We have a lot of room to grow and we're just not ready for any of those things.