Is Etsy the biggest, best, and oldest startup company that many people have yet to hear of? Or, it could be just me.
Quick context: My interests center around customer acquisition - how buyers and sellers connect online. Most of I write about, call it the 80%, focuses on monetization and arbitrage, i.e., how is that company/network able to spend so much money buying ads. Call it tactics used by some of the biggest spenders be it fake blogs (if the site is still live) to companies like Groupon. The 20% covers companies that are doing something interesting in customer acquisition but whose businesses don't necessarily rely on spending money to make money. These are companies that are inserting themselves into massive verticals. It can be everything from for-profit-education to this posts company, Etsy.
I'm sure there is some rule, let's call it the Rule of Three, that describes how a company becomes one you start to pay attention to - three different connections - could be all personal or a mix of personal and professional. It doesn't have to be three, especially if someone really close to you says pay attention to this company or you use them. For me and Etsy, though, we needed three. Their core business - the place to buy and sell handmade or vintage - is not something I use. I still might not use them, but I'm in love with them as a business. My three were:
- Professional - Fred Wilson's blog, as he is an investor, and other tech/internet industry news who have mentioned their growth and success in fund raising. Fred, I know you don't do "lead gen" investments, but you sure do know how to pick companies that change the customer acquisition landscape.
- Personal - My ex-girlfriend started to sell things on Etsy. She's all about vintage, handmade, and creativity. Prior to Etsy there wasn't a good commercial outlet for her creations.
- Personal - My fiancee (or depending upon when this is read, my wife). This is what I heard yesterday, "I can't tell you how many things I bought off Etsy today." These weren't just-becuase purchases. These were wedding related, one of the biggest verticals. It was also number three, so instead of "That's nice, Dear," I took out a piece of paper and started to take notes.
My fiancee is not an early adopter. She's not on Twitter. Uses Facebook often but with high privacy settings. She even goes to Google first in order to get to any site. She's not going to know about GroupMe any time soon, but, she's something that every successful business needs - a spender. Why is Zynga doing so well? It's not the young demographic. It's the QVC demographic. Why does Hautelook do so well or Zulily? Women like my wife to be. While she might not be an early adopter, if she and her peers use a site heavily, there must be something to it. I didn't learn of Gilt, RueLala, or Hautelook from her, but she was on them.
When it came to Etsy, I did what most conversion minded people would do. I asked about the flow, the user experience, and their design. She's used eBay, so I wanted to know what made Etsy different and intuitive. Just one look and you know that there is a certain essence captured in the shopping experience. There is a visual distinction, but the answers I received weren't about that visual cues .They were the essence.
- Collaborative - You aren't just buying a product. You are working with the person selling to get something just the way you want it.
- Community - Not in the traditional sense of social networking, but interacting on Etsy feels like spending time with like minded people. They are simply a nicer, more helpful group of sellers.
- Passion - Because so much of what is sold is handmade / handcrafted, you aren't just buying a SKU; you are buying something with someone's passion. You are getting to buy products before they become brands, before they become SKU's. I don't think Etsy needs to stay Collaborative to succeed. But, if it starts to become a place for middle men and stores, it will lose that appeal which has made so many people feel good about buying there.
- No Bidding - For once, there is a startup that doesn't talk about game mechanics. EBay is the originator of game mechanics online, and Etsy takes a welcome departure from that. It's all about discovery (another big thing with startups today).
- No Brands - No SKU's and no brands (or at least not an emphasis on it) also means no counterfeit hassles, no debating whether a price is too good to be true, no scouring for reviews of the product or the site.
Etsy is truly a home run. Yes, its investors will do extremely well. More importantly, though, the people using it are benefiting as much.
