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.

Why No One Company Will Ever Monopolize the Internet

Jonathan Rick is a social media strategist in Arlington, VA. You can follow him on Twitter @jrick and read his blog atJonathanRick.com.

The pace and power of web-fueled innovation is stunning. One day we’re swearing by Outlook, the next, we can’t live without Gmail. These changes exemplify the beauty of the Internet — the possibility that greener pastures are but a click away.

On the other hand, the list of tech innovations that could have been is quite long. Before we get into those, a few caveats:

• Some of the companies below may not have missed the boat so much as skipped the ride. Oftentimes, these businesses simply chose to perfect their core businesses instead of tacking on new features.
• None of these companies has been “MySpaced.” To the contrary, each remains well-regarded and innovative in its own right.

So, how did tech companies miss the boat?

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1. Google Docs missed the SlideShare boat. Sure, Google Docs can display PDFs and PPTs, but documents are slow to load, maximized by default, and can’t easily be shared or embedded. By contrast, SlideShare is known as “YouTube for documents” because it’s fast, user-friendly and social.

2. Google Docs missed the Dropbox boat. The search giant passed on adding synchronization to Google Docs (or GDrive). Meanwhile, Dropbox pioneered this feature, for which it’s now the gold standard. And, in an ironic twist, during a five-day, company-wide hackathon, Dropbox developed the ability to sync its accounts with Google Docs. (Although Google may soon unleash a Dropbox killer.)

3. Microsoft Office missed the Google Docs boat. Only after companies, governments and non-profits had “gone Google” did Redmond release a cloud-based, collaborative version of its cash cow, Office (along with a few videos that contrast Office with Docs).

4. iTunes missed the Spotify boat. Apple cornered the digital music market years ago, but besides the all-important $0.99 per song price tag, Cupertino never really innovated with iTunes. Specifically, the software’s lack of social and streaming services created massive opportunities that Spotify — and Pandora, Amazon,Google, and Facebook — pounced on. Apple now is playing catch-up with Ping (pathetic) and iCloud (promising).

5. Mapquest missed the Google Maps boat. When I was in college, “Mapquest” was so popular that we used it as a verb. Today, it seems the only people who use this site are those who still have an AOL email address. The reason: thanks to relentless innovation (mash-ups, Street View, GPS-enabled mobile apps), Google Maps has presented itself everywhere you want to travel.

6. Google Latitude missed the Foursquare boat. Ironically, the founder of Foursquare was a former Googler who left because Mountain View wouldn’t allocate enough resources to his team, “leaving us to watch as other startups got to innovate in the mobile + social space.” Google still hasn’t made it with Latitude, whereas Foursquare’s points system, partnership with American Express, and merchant features have generated growth of a million users per month. (Perhaps this is why Google may want to buy Foursquare instead of compete with it.)

7. Facebook missed the LinkedIn boat. When I learned of LinkedIn, I thought, can’t you already do this with Facebook? Well, yes, but not without some hassle. Reed Hoffman, LinkedIn’s founder, recognized that, while we want to be hip in our personal lives, we strive to be practical and maybe even a little boring in our careers. This is why we use one email address for pleasure and one for business, and why we use Facebook to socialize with friends and LinkedIn to network with colleagues. Recognizing this, Facebook continues to hype its business pages, while such professional credibility comes naturally to LinkedIn.

8. Facebook missed the Twitter boat. When I learned of Twitter, I thought, can’t you already do this with Facebook? Indeed, at its core, Twitter is merely the Facebook status update. Yet Facebook lacked Twitter’s simplicity and pith, a void that ascetic Twitter founder, Jack Dorsey, was keen to fill. Apparently, 100 million people agree.

9. Blogger and WordPress missed the Tumblr boat. Finally, when I learned of Tumblr, I thought, can’t you already do this with Blogger or WordPress? Just write shorter. Again, you could, but not with Tumblr’s base-bones simplicity, dynamic community and effective reblogging feature. Microblogging, it turns out, is different from blogging. (No doubt, this is why Blogger just announced Dynamic Views.)

10. Yelp missed the Foodspotting boat. Even though Yelp remains the top social network for restaurant reviews, it overlooked an essential facet of the dining experience: pictures. Foodspotting seized this opening, made it mobile, and now is expanding its focus beyond foodies.

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So why do these examples matter?

The beauty of the web is that it dramatically lowers the traditional barriers to entry, so an entrepreneur can penetrate an already saturated market. For instance, despite heavy competition from the likes of LinkedIn, Yahoo, Facebook, Google-owned Aardvark, and Answers.com, Quora plunged into the Q&A fray. In short order, it carved out and capitalized on a niche.

Examine the above list and you arrive at an under-appreciated conclusion: Internet innovation is so fierce and constant that it undermines the notion of zero-sum market share. Instead of vying for a piece of the same fixed and static pie, webtrepreneurs bake whole new pies. Not for nothing does Jeff Bezos insist that the Kindle comprises a “different product category” than the iPad. Just because a company maintains a seeming monopoly on a market doesn’t mean the market is devoid of opportunities. When there’s an innovator, there’s a way. With the web, Goliath is always vulnerable.

Sure, tech giants are somewhat limited. Just reference the lawsuit from the Justice Department, theinvestigation from the Federal Trade Commission or the hearing from Congress.

Internet innovation comes in tidal waves, big and bold. By contrast, when’s the last time your microwave got a radical upgrade? Or your shower head? And how’s that electric car coming along?

In the end, the web’s rising tides lift the only ship that matters: the user’s.

Image courtesy of iStockphoto, aluxum

Interessante questo studio della McKinsey

Il governo dovrebbe tenerne conto

M AY 2 0 11

Measuring the Net’s growth dividend

New McKinsey research finds that the Internet now accounts

for a significant share of global GDP and plays an increasingly

important role in economic growth.

m c k i n s e y g l o b a l i n s t i t u t e

2

The Internet is a vast mosaic of economic activity, ranging from millions

of daily online transactions and communications to smartphone downloads of TV

shows. Little is known, however, about how the Net in its entirety contributes to global

growth, productivity, and employment. New McKinsey research examined the Internet

economies of the G8 nations (Canada, France, Germany, Italy, Japan, Russia, the United

Kingdom, and the United States), as well as Brazil, China, India, South Korea, and

Sweden. It found that the Internet accounts for a significant and growing portion of

global GDP.

An extensive study by the McKinsey Global Institute (MGI)—Internet matters:

The Net’s sweeping impact on growth, jobs, and prosperity—includes these findings:

• The Internet accounts for 3.4 percent of overall GDP in the 13 nations studied. More

than half of that impact arises from private consumption, primarily online purchases

and advertising. An additional 29 percent flows from investments by private-sector

companies in servers, software, and communications equipment. The Internet

economy, now larger than that of Spain, surpasses global industry sectors such as

agriculture and energy.

• The Internet is a critical element of economic progress, pushing a significant portion

of economic growth. Both our macroeconomic approach and our statistical approach

show that in the mature countries we studied, the Internet accounted for 10 percent of

GDP over the 15-year period from 1995 to 2009, and its influence is expanding. Over

the last five years of that period, its contribution to GDP growth in these countries

doubled, to 21 percent. If we look at the 13 countries in our scope, the Internet

contributed 7 percent of growth from 1995 to 2009 and 11 percent from 2004 to

2009 (exhibit). In the global Net’s growing ecosystem of suppliers, US companies play

leading roles in key sectors. China and India rank among the fast-growing players in

the Internet’s global supply chain.

• Most of the economic value the Internet creates falls outside of the technology

sector: companies in more traditional industries capture 75 percent of the benefits.

The Internet is also a catalyst for generating jobs. Among 4,800 small and midsize

enterprises surveyed, it created 2.6 of them for each lost to technology-related

efficiencies.