A lot of people scratched their heads when Etsy raised $27 million. What on earth? Handmade goods, that’s about as low tech as you can get!
Then Umair Haque, a well respected blogger and strategist - albeit one who is known for being a bit “out there” - asked Is Etsy the next Google? Maybe Umair was just saying that this is big. One of his commenters pointed out: “not Google, but maybe the next eBay”.
That makes sense. When eBay came out, the first reaction was “huh, Pez Dispensers and junk from garage/attic?”. eBay was an online garage sale and Etsy is an online street fair.
The bloom has gone off the eBay rose recently, so it is interesting to think about what went wrong at what was almost the perfect start-up success. Many people critiqued eBay for buying Skype at too high a valuation, but that seems like a tactical error only. The big issue is that they lost sight of what made eBay special when they started selling mass-produced stuff. There is something about being a public company, with investor pressure for endless hyper growth well beyond the natural growth constraints of the market, that seems to drive this kind of brand-destroying diversification.
Selling off inventory from big companies (eBay’s diversification) may be a great business, but it was not what made eBay magical. Garage sales, antique shops, auctions….these all have a bit of magic and romance. It is about finding something unique and special.
Handmade goods have the same appeal.
The reason it is so hard for most technologists to see the power of services such as eBay and Etsy when they first come out is that we tend to look at the world through the prism of big companies and consumers. What is so powerful about eBay is that around 750,000 people see eBay as their primary source of income and double that‚ 1.5 million‚ see it as a significant contribution. Etsy can have the same income-generation impact for lots of people globally. Where do all these millions of people fit in the big company/consumer model?
According to a 2005 survey, close to sixty percent of Americans reported that they dreamed of starting their own business.
Etsy is part of a much broader economic shift. So is the Blog Networks challenge to MSM and the smaller rounds of financing for start-ups in the programmable web.
Read more.
Photo by Etsy.
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