(2011-04-05) Etsy Profile

Interesting profile of Etsy and Rob Kalin.

In the fall of 2007, some hoodies and other items made by Jones and Sherman landed on Etsy's homepage; their clothing now generates sales of $1,000 to $2,000 a month. That may not sound like much, but the income allowed the partners, neither of whom has formal training, to bootstrap their business as they taught themselves how to design, sew, and sell. Being on Etsy also exposed their work to independent retailers and fashion writers, who regularly turn to the site to suss out new styles. And it was Etsy's mercurial founder, Rob Kalin, who contacted the pair out of the blue, inviting them to leave Seattle and come to New York, where he would give them a free workspace.

As one of the site's top sellers wrote in a blog post in 2009: "Your odds of making $10,000 per year [on Etsy] are better than winning $10,000 through the Powerball, though not by a ton." The only Etsy millionaires, it turns out, are Etsy shareholders.

Etsy requires that all new products listed on the site be made by the people selling them—the use of Mass Production, that wonderful innovation of modern capitalism, is verboten. "Etsy has made it possible for a lot of small businesses to get off the ground," says Dale Dougherty, co-founder of O'Reilly Media and the publisher of Make Mag, which covers the do-it-yourself economy. "But even the most successful crafters run up against the limits of their own labor. Handmade can be a limited idea." In other words, the very qualities that make Etsy so attractive to new sellers put the most successful Etsy sellers in an awkward position: They must stay small or abandon Etsy. For Kalin and his investors, the questions are even tougher: Can a site dedicated to DIY scale? Or is Etsy, despite Kalin's ambition and grandiosity, just a small idea?

He founded a nonprofit called Parachutes and invited half a dozen Etsy companies, including Ruffeo Hearts Lil Snotty, into his personal workshop. He offered them free office space and led weekly workshops on how to build a business. "There's this really interesting shift that happens when you're running an Etsy business, where you have to change your approach from 'I make clothing' to 'I'm making a living making a business that makes clothing,' " Kalin says. "A lot of people either can't or don't want to make the shift, because it means seeing things in a different light."

The vast majority of Etsy sellers are hobbyists who aren't in it for the money and, consequently, end up charging rates for their labor that would make even a Walmart buyer blush. I met seller after seller who told me, with a kind of resignation, that they figured to be paying themselves minimum wage or worse. For instance, Diana Chin of Red Lotus Designz told me glowingly about how materials for her $15 crocheted dolls cost only $4, leaving $11 in profit. When I asked her how long it took to make one, she said, matter-of-factly, "Two or three hours."

Tepper, an Etsy member since 2005, told me that most of the sellers she knows are disappointed by the company's latest Social Networking initiatives. "A lot of users are angry," she says. "They want Etsy to be a venue to sell things; they don't want it to be Facebook."