With Etsy already an addiction for millions of shoppers, the online marketplace is hoping to extend that home-spun appeal to a new customer base: shareholders.
The decade-old business filed for an initial stock sale on Wednesday with a $100 million placeholder, which could change as the company approaches the stock sale. With its registration filing, the company has lifted a hand-knitted veil from its financials and business outlook, providing would-be investors with a detailed view into its operations.
The bottom line: Etsy is a quirky business that depends on millions of calligraphers, knitters, photographers and jewelry makers, along with a mass of customers with a taste for artisanal products and crafts. Its CEO, Chad Dickerson, isn't content with merely helping home-crafters sell their vases; he also wants to spark a creative economy that frees workers from their 9-to-5 jobs.
While there are some downsides to Etsy's business model (profits, anyone?), the business has a lot of momentum. Its attractive site is clearly addictive, with more than three-quarters of its purchases last year stemming from returning customers.
Read on to find out more about Etsy.
It started with a wooden computer
Etsy got its start in 2005, when woodworker Rob Kalin grew frustrated with his efforts to sell a wood-encased computer. Kalin, a graduate of New York University's self-directed Gallatin School of Individualized Study, realized other crafters were having the same problem in selling their goods.
Kalin joined with two friends from Gallatin, Chris Macguire and Haim Schoppik, to work on creating a craft marketplace. After several months of work in a Brooklyn apartment, they emerged with Etsy. According to New York University, the site attracted backing "phenomenally fast," pulling in noted venture capitalists such as Accel Partners' Jim Breyer and Union Square Ventures' Fred Wilson.
Its name comes from a Fellini movie
A common question regarding Etsy is over the origin of its name. According to a 2010 interview Kalin gave to Reader's Digest, he was looking for a "nonsensical word because I wanted to build the brand from scratch."
He happened to watch the movie "8 1/2," by famed director Federico Fellini, and heard the actors uttering a phrase that he thought was "et si." He noted, "It means 'oh, yes.' And in Latin, it means 'and if,'" he told the publication. In truth, Kalin misheard the actors, given that "and yes" in Italian is "e si," which can still sound like "Etsy" to non-Italian speakers.
The name has a cutesy sound in English, given that it resembles words like "eensy" and, of course, "cutesy."
The Etsy economy
CEO Chad Dickerson laid down his manifesto in the company's IPO registration, writing about his belief that Etsy is creating a new type of economy: the "Etsy economy."
"Etsy has the long-term potential to transform the world economy into one that is more people-centered and community-focused -- one that values and honors designers and makers and one that creates stronger connections among people who make, sell and buy goods," he wrote in the letter. "Building the Etsy Economy matters more than ever."
That economy, according to the company's credo, envisions a world where workers don't need to rely on a 9-to-5 job to make ends meet and where artfulness, design and high quality is valued over mass-produced merchandise.
Whatever one thinks of Dickerson's vision, Etsy has benefited from some societal changes, such as the growth of freelancers, with more Americans turning to self-employment for reasons ranging from economic necessity to preference. Many of those freelancers have creative skills that lend themselves to becoming Etsy sellers.
The desk-decorating stipend
Every new Etsy employee is given a stipend to help them decorate their desks, according to Business Insider, which took a tour of its headquarters. While the publication didn't disclose how much employees are given, it's clear that decorating and self-expression is encouraged at the Brooklyn-based company.
Its offices include a "breathing room" filled with meditation cushions, while rooms are marked with hand-crafted plaques that display their humorous names, which combine foods with popular bands, such as "Soy Division" and "Li'l Kimchi."
It’s deep in the red
Not as in the color, but as in its accounting status. Over the last three years, Etsy has lost about $18.4 million, according to its IPO filing. While the company is losing bundles, it's also seeing enormous sales growth, with revenue more than doubling in the same period.
Dot-coms are notorious for losing money, and Etsy warns in its registration that it might never become profitable. The online marketplace also expects to hire more employees, add to its marketing efforts, and expand its operations, which could lead to prolonged losses.
Employees get schooled
Working at Etsy comes with perks beyond a desk-decorating stipend. The company also offers classes to its staff through "Etsy School."
What's on the curriculum? The company notes that subjects range from crafting techniques such as screen printing to computer programming, for the more technologically focused employees.
Diversity? Not really
Even though the majority of its customers are women, Etsy still suffers from the same lack of gender balance in its tech and engineering roles common at other dot-coms. About 28 percent of its technical, engineering and production staff is comprised of women, according to its registration statement.
That's better than Silicon Valley giant Google (GOOG), which recently disclosed that its tech staff is only 17 percent women. Still, Etsy noted that 46 percent of its managers are women, and has created a nonprofit called Etsy.org that will focus on educating women and other under-represented populations in businesses.