Inside Etsy’s revolution
THE first time Josh Silverman addressed the staff of Etsy as their newly installed CEO, he tried to ingratiate himself with a work force known for its diversity, idealism and sincerity.
“Hello,” he said. “My name is Josh. I identify as male. My preferred pronouns are ‘him’ and ‘he’. Most people just call me Josh.”
It was May 3, and Silverman was speaking to traumatised employees. The day before, Etsy had fired 80 people, the first big layoffs at the online marketplace. Among those ousted was Etsy’s beloved chief executive of six years, Chad Dickerson.
Now, Silverman stood in the Etsytorium, trying to win over a hostile crowd. His introduction was an olive branch of sorts, an effort to signal that he was attuned to Etsy’s vibrant gay and transgender community, and would be respectful of the company’s distinctive culture. But to many in attendance, his remarks came off as tone deaf, and his inability to read the room foreshadowed sweeping changes that would soon transform Etsy.
The drama began last November, when Silverman joined the Etsy board and began asking tough questions of management. Soon after that, an activist investor took a stake in Etsy and called for the sale of the company. Then powerful private equity firms began buying shares, stoking fears of a takeover. The board was under pressure, and in early May abruptly fired Dickerson and installed Silverman.
On the same day as the chief executive changeover, the company announced its first layoffs. Silverman shut down several projects that had been in the works for months. Not long after that, he fired 140 more employees.
It was a series of events at a company that has long held itself up as a paragon of righteous business practices. Etsy’s founders believed its business model – helping mostly female entrepreneurs make a living online – was inherently just. Perks included generous paid parental leave and free organic food. Etsy was certified as a B Corp by a nonprofit called B Lab, denoting its particularly high social and environmental standards.
But once Etsy went public in 2015, it was evaluated just like any other company. By late last year, expenses were growing fast. Even as the company reported $88 million in revenue during the third quarter, it posted a net loss of $2.5 million. After a few quarters of tepid results, investors grew impatient and a classic clash of corporate governance came spilling into view – how would a company like Etsy balance the short-term demands of its shareholders with its long-term mission?
By some important metrics, Etsy appears to be improving under Silverman’s leadership. Revenue is up, as are the total value of goods being sold on Etsy. Its stock has risen about 50 percent in the six months since he took over.
By other measures, however, Etsy is barely recognisable. The “Values-Aligned Business” team, which oversaw the company’s social and environmental efforts, was dismantled. A new focus on profitability has sapped many employees of their enthusiasm. Etsy is no longer a B Corp.
Today, as Silverman continues to push for change and investors keep close watch on the stock, what’s frustrating to some observers of the company is that Etsy seems to have given up so much to gain so little.
“Etsy had the potential to be one of the truly great ones,” said Matt Stinchcomb, an early employee who now runs the Good Work Institute, which was originally an Etsy charitable foundation before being spun off. “But it looks like they are cutting anything that’s not essential to the business. This is a cautionary tale of capitalism.”