When Etsy was young: the early years

Etsy went live two months after being founded, made one million sales in its first two years

Our when they were young series is a look back at the modest days of startups, what traction they had in their first few years, and how they evolved. In the end, we hope to provide a glimpse into what great startups looked like in their first three years.

Stories like these are always well received because it reminds us that anyone, regardless of pedigree and environment, can rise above the noise and have great influence. They show us the value of being resilient, persistent, and committed. If we can follow their footsteps, maybe we too can have similar success.

This segment is on Etsy.

— Etsy's First Year —

Founders: Robert Kalin, Chris Maguire, Haim Schoppik, Jared Tarbell

Founded: In 2004, Kalin, Maguire, Schoppik and Tarbell are hired to remake the website for arts and crafts forum GetCrafty, which exposes them to the world of handmade goods. 

"The wife of an NYU professor, named Jean Railla, said, 'Ok, I need this website called GetCrafty redone, could you do it? So, we did it. I tried to do all the programming myself but figured out I can't program, so I did all the design side and hooked up with this guy named Chris, who was kind of a legend at NYU, through their bulletin boards, for just being a hacker," Kalin says in a 2007 interview.

"Pretty much every day Chris would come over at 10 o'clock in the morning and I would tell him what I had thought of the previous night over some drinks, looking out my window in the dark and just coming up with ideas for things we could build. And it ranged from collaborative desktop software to a stock ticker monitoring application to a marketplace for handmade goods." 

Work on Etsy begins in April 2005, with Railla as a consultant. 

"In early April of 2005, I sat in an orange chair facing an open window. It was nighttime and the lights were off. I was back in Brooklyn after a brief residence in Paris, and I was about to sketch the initial ideas that would become Etsy. Working with three friends – Chris, Haim and Jared – Etsy went from these ideas to a site live on the Web in about two months," Kalin writes in a blog post in 2008.

Initial company description: The company is created to give creators a platform to sell their goods online.

"When we started Etsy, we found it incredible that e-commerce had seen so few innovations since the early '90s," Maguire tells the Philadelphia Inquirer in 2007. "The only real ways you could shop online had remained the same. . . . Our aim was to shake things up and show people that there are 'other' ways to shop online."

The name "Esty" comes from a phrase Kalin hears while watching the movie 8½.

"I wanted a nonsense word because I wanted to build the brand from scratch. I was watching Fellini’s 8½ and writing down what I was hearing. In Italian, you say 'etsi' a lot. It means 'oh, yes.' And in Latin, it means 'and if,'" Kalin tells Reader's Digest in 2010. 

Launch, at two months from founding: Etsy launches on June 18, 2005, just two and a half months after being founded. Two people join the first night, three items are listed on the second day and it takes four days for the first item to sell.First funding, at two months from founding: In June 2005, Etsy raises a $400,000 angel round from Spencer Ain, Sean Meenan and Judson Ain. 

Press coverage, at seven months from founding, five months from launch: In November 2005, Etsy is written up in TechCrunch, where the company is compared to eBay.

"A relatively new company called Etsy has recently captured my attention. Etsy  is a P2P ecommerce company (like ebay) that currently limits sales to handmade items. It’s smart to focus on a niche to iron things out…and Etsy could easily expand into other categories as well," writes Michael Arrington.

"Etsy does lots of things like ebay – They charge sellers a listing fee and final sale percentage (although at $.10 and 3.5% they are way below what ebay charges), there is an ebay-like feedback system (side note: there is a huge market waiting out there if someone would create an independent third party feedback system with open data and APIs), and they have integrated paypal as a payment option.

Unlike ebay, Etsy has architected the buyer experience from the ground up using web 2.0 priciples."

Traction, at 11 months from founding, nine months from launch: In March 2006, Etsy members sell $170,000 worth of goods.

 

— Etsy's Second Year —

Second funding, at one year and two months from founding, one year from launch: In June 2006, Etsy raises funding from Caterina Fake and Stewart Butterfield, the founders of Flickr; Joshua Schachter, the founder of del.icio.us; Albert Wenger, the former President of Delicious; Payman Pouladdej; and Union Square Ventures. Fake, along with Fred Wilson of Union Square, joins the company's board of directors. 

"Caterina and Stewart, the founders of Flickr, were definitely celebrities in the world that I lived in but it was also just the design of Flickr itself, I think, set the bar so high for what a website should look like. I just essentially sent Stewart a fan letter/love letter, saying, 'I love what you did, here's what I did, if you would take a look at it I'd be honored.' He looked at it and they invited me out to San Francisco to come meet with them and so I really just showed them what I had and was who I was and it connected," Kalin says in a 2008 interview. 

"When it comes to online commerce, we are big fans of community and marketplaces. In the age of “search for the lowest price” retailing, there are few differentiating features that can deliver a sustainable advantage in online commerce," Fred Wilson of Union Square Ventures writes in a blog post. 

"We have not found anything in the online commerce area that has interested us until earlier this year when we met Rob Kalin and his co-founders."

Traction, at one year and two months from founding, one year from launch: In June 2006, Etsy has over 10,000 artists on the platform, and 40,000 buyers. It has over 100,000 listings, with over 70,000 items sold.

Third funding, at one year and nine months from founding, one year and seven months from launch: In January 2007, Etsy raises an undisclosed amount of Series B funding from Union Square Ventures and Mosaic Ventures.

Product, at one year and nine months from founding, one year and seven months from launch: In January 2007, Etsy reveals Etsy Labs in Brooklyn, which it calls "a communal creative space where we could offer resources, support, and classes to our users and the DIY community at large."

"It will be home to parties, trunk shows, seminars, workshops, a lending library, and all other sorts of fantastic things. It will have a silkscreen press, a letterpress, film, music, and video production facilities, jewelry making stations, sewing machines, sergers, and so, so much more. We will call it the Etsy Labs, and beginning with a small opening party on February 1st, its doors will be open to you."Traction, at one year and 11 months from founding, one year and nine months from launch: In March 2007, Etsy members sell $1.7 million worth of goods.

Product, at one year and 11 months from founding, one year and nine months from launch: In March 2007, Etsy unveils Etsy Mini, a customizable widget that lets creators post  Etsy item images onto their own Web pages.

"The Etsy Mini can show either items from your shop (for sellers) or your favorites (for everyone). The Etsy Mini automatically updates your own Etsy shop or Hearts list updates. Think of it as an outpost of your Etsy shop or a visual wish list of your favorite items, trailblazing out there in the big wide world of the Internet," the company writes. 

 

— Etsy's Third Year —

Fourth funding, at two years and two months from founding, two years from launch: In June 2007, Etsy raises $3.3 million in Series C funding from Union Square Ventures and Manatt Venture Fund. 

Traction, at two years and two months from founding, two years from launch: In June 2007, Etsy has more than 325,000 registered users, 50,000 of them sellers.

Traction, at two years and three months from founding, two years and one month from launch: On July 28 2007, Etsy registers its one-millionth sale.

"It is very important to me that Etsy keeps it core values of community and being human even as we grow. It’s certainly more of a challenge, and we’re conducting our education in public. There is a lot to balance, from engineering tasks to budgeting to making sure people do their dishes in the Labs," Kalin writes in a blog post. 

Product, at two years and five months from founding, two years and three months from launch: In September 2007, Etsy launches the Storque blog, allowing the Etsy community to contribute.

"The Etsy admin will be producing content for The Storque, but the Etsy community and friends will now be able to contribute stories, photo essays, videos and audio podcasts. There’s a pitch form integrated into The Storque; you can send us your fleshed out pitch or simply tip us off to something you think we might like to cover," Etsy writes.Traction, at two years and seven months from founding, two years and five months from launch: In November 2007, Etsy sells 300,000 items for $4.3 million, a 43 percent month-to-month increase.

Accolades, at two years and eight months from founding, two years and six months from launch: In December 2007, Kalin is ranked at #50 on Silicon Alley Insider's list of the Top 100 most influential people in digital business in New York City.Esty also receives the Jim Henson Honor for Community, alongside Richard Branson, Neil Gaiman and REAL D 3D. 

"The Community Honor acknowledges an individual, organization or product who/which has increased goodwill or made a positive impact in a specific community or around the world. Etsy provides a worldwide community that enables people to make a living making things, celebrating and appreciating the art of all things handmade and connecting these artists with buyers," the Jim Henson company writes. 

Traction, at two years and eight months from founding, two years and six months from launch: In December 8, 2007, Etsy sells its two millionth item, a chicken made by BossyFeltworks. For the 2008 holiday season, it sells about 820,000 goods for $12.9 million. It adds about 165,000 new accounts and sees 411 million page views for the month.

By the end of 2007, Etsy has nearly 446,000 members from 127 countries

Product, at two years and nine months from founding, two years and seven months from launch: In January 2008, Etsy launches Virtual Labs, allowing the Etsy community to participate in labs without needing to go to a physical location. 

"We created the Virtual Labs in an effort to bridge the gap between the physical Etsy Labs and the greater Etsy community. The Virtual Labs will allow us (and guest hosts) to chat with you, the community, in real time! The cool thing is – we do all the techie work, you just click into a room and hang out with us virtually," the company writes.Fifth funding, at two years and nine months from founding, two years and seven months from launch: In January 2008, Etsy raises $27 million from Union Square Ventures and Hubert Burda Media, and Jim Breyer at Accel Partners. Breyer joins Etsy's board, alongside Fake and Wilson.

"This means that we now have the resources to extend Etsy’s reach in this world, to enable so many more people to make a living making things. We want Etsy to exist for hundreds of years. Our goal is for Etsy to be an independent, publicly traded company, focused on all things handmade," Kalin writes in a blog post.

"Throughout Etsy’s growth, we have been very careful when raising money. We run the company as a democracy, meaning no one party has the power to act unilaterally. This new investment preserves these values, and adds to what we can do."

Traction, at two years and nine months from founding, two years and seven months from launch: In January 2008, Etsy has over 650,000 members, and over 120,000 sellers. On January 22, the site sees its biggest day yet with 8.6 million page views. 

Media, at two years and 10 months from founding, two years and eight months from launch: In February 2008, Kalin appears on Martha Stewart Living.

Product, at two years and 11 months from founding, two years and nine months from launch: In March 2008, Etsy launches Alchemy, "a tool on Etsy where buyers can post requests for custom items." The feature had been part of Etsy in its early days, but was shut down before being revived. It receives 300 requests in its first day.

"Alchemy lets people make something from nothing, seeing their ideas fabricated by artisans from all over the world," says Kalin.

Traction, at two years and 11 months from founding, two years and nine months from launch: In March 2008, Etsy reaches 10,000 sellers. 

  

— Etsy's Fourth Year —

Traction, at three years from founding, two years and 10 months from launch: In April 2008, Etsy sells over $6 million worth of goods in a single month for the first time, with April 30th being Etsy’s biggest day so far, with 16,580 items sold, representing $256,000.

The company adds 710,000 new items, sells 427,000 items and adds over 65,000 new buyers.

Personnel, at three years and one month from founding, two years and 11 months from launch: In May 2008, Maria Thomas is hired as COO from NPR.

Traction, at three years and two months from founding, three years from launch: In June 2008, Etsy adds its one millionth registration, a seller named dorothywyn out of Hong Kong.

"Etsy is attracting more and more international members like dorothywyn.  We have begun  thinking longer-term about how to create a truly international marketplace to serve makers and buyers.   At some stage, we hope to call upon our "early-adopters” outside the U.S. for their input," the company writes. 

The company also sees 300 million page views for the first time. 

Leadership, at three years and three months from founding, three years and one month from launch: In July 2008, Kalin steps down as CEO, with Thomas taking over.

"Etsy Inc. has new leadership. I have been working with Maria Thomas since she joined Etsy six weeks ago. We’ve been taking a clear look at what works and what doesn’t work right now, and planning what we need to move forward. Maria brings heaps of experience with her, and her arrival marks a change in how Etsy is run as a company," writes Kalin.

"What do I bring with me to Etsy? Nearly ten years of experience operating consumer-oriented Web-based businesses at Amazon.com and NPR.org.  I have learned that building a great company requires more than just a great idea. It requires an organization that knows what it wants to achieve, and is staffed properly to reach those goals.  It requires a relentless, detailed focus on execution informed by constantly listening to customers," writes Thomas. 

Personnel, at three years and four months from founding, three years and two months from launch: In August 2008, Maguire and Schoppik both leave the company.

"The last three years have undoubtedly been the longest and most eventful of our lives. We'd like to thank each and every one of you for enabling us to build Etsy into what it is today. Through many sleepless nights your kind words and commitment to the marketplace kept us going gladly forward. The cookies didn't hurt, either," they write in a blog post.

"With a heavy heart now we move onto other ventures. We hope to stay in touch with many of you, and we wish the best of luck to our fellow Etsy employees."

Personnel, at three years and five months from founding, three years and three months from launch: In September 2008, Chad Dickerson is hired as CTO. 

"I just completed my second week at Etsy, and I wanted to give you an update from the technology trenches. As Etsy’s first CTO, I realize that it might not be entirely clear what a CTO does, so explaining my perspective on this new role at Etsy might be helpful," Dickerson writes.

"The CTO role is not simply about technology, but the relationships among people, process and technology. Success for a CTO goes far beyond choosing the best technologies. In many ways, the people and process parts of the equation are more important than the technology used. The people part is obvious, but process might seem opaque. Process is all about how you build services, test them, roll them out, monitor them and communicate internally and to the community, whether it’s a feature rollout or a bug. Above all, it’s about communicating well, which is why I am writing this now, sitting on the floor of my new apartment in Brooklyn among stacks of boxes that just arrived on Sunday from the West Coast."

 

— Etsy's Fifth Year —

Community, at four years from founding, three years and 10 months from launch: On April 24, 2009, the Etsy community celebrates Etsy Day, which is suggested by Etsy artist Susan Schumann.

Traction, at four years from founding, three years and 10 months from launch: By April 2009, Etsy is seeing about 8 million unique visitors per month and around 500 million page views per month. 

First acquisition, at four years and eight months from founding, four years and six months from launch: In December 2009, Etsy acquires Aduitive, a New York-based advertising startup. 

"Etsy bought Adtuitive, the company, but ultimately companies are made up of people.  This team of crafty coders – with their deep knowledge, experience of working together, and fit with the Etsy culture – will help us to more quickly and successfully serve our sellers and delight our buyers. They will work on key initiatives for 2010: improving Etsy’s search algorithms and expanding Etsy’s Showcase advertising system with an eye to improving the overall user experience on the site," the company writes.

Leadership, at four years and eight months from founding, four years and six months from launch: In December 2009, Thomas steps down as CEO, with Kalin taking the job back.

"Maria joined Etsy in the middle of 2008 and led Etsy through an important foundational phase. We are a profitable company now, and Maria helped us reach this major milestone. She worked day and night, weekday and weekend; she traveled around the globe meeting up with hundreds of Etsy folks. Her long experience and business skills were hugely helpful," Kalin writes. 

 

— Etsy Today — 

Kalin is fired from Etsy in July 2011, and is replaced by Dickerson.

Etsy goes public in April 2015, raising $287 million, and seeing its valuation jump up to $3.5 billion, up from $1.8 billion before trading, making it the biggest venture capital backed tech exit to come out of New York City.

It now has over 2.1 million sellers and over 39.4 million buyers. 

(Note: this article has been updated to reflect that the Aduitive acquisition occurred while Maria Thomas was CEO)