Last year was brutal for Etsy.
Looking to cut costs and quell investor complaints, the specialty online retailer known for handmade soaps and Audrey Hepburn-shaped pins brooches went through its first major round of layoffs in May and the board of six years. The new CEO was Josh Silverman, an Etsy board member, who instituted another round of layoffs a few weeks later.
After all that tumult, Silverman seems to have helped the business find its footing. Etsy's revenue is up. Its previously crumbling stock price is way up. And gross merchandise sales -- or GMS -- the value of goods sold by the 1.9 million sellers on the site, is on the rise, too. To keep things going, the company on Thursday will launch The World of Etsy Sales Event, its own weeklong version of Amazon's Prime Day.
I met Silverman on Tuesday evening at Etsy's Brooklyn headquarters, just ahead of the sales announcement, where the office includes walls filled with greenery, a mannequin being attacked by what looked like a papier-mache octopus, meeting rooms called "Tuna Turner" and "Slayer Cake," a "dry lab" filled with colorful yarns, jars stuffed with pompoms and tools for stained glass projects.
Before taking the Etsy's corner office, Silverman was CEO of Skype an exec at American Express and fellow e-retailer eBay. He's 49, bald with a salt-and-pepper beard, and came off as soft-spoken, laidback and thoughtful, not unlike a university librarian.
Silverman talked about his plans for the company, how to survive against Amazon, and how he'd like to someday use virtual reality for shopping on the site. He also mentioned that Handmade at Amazon, the, hasn't hurt Etsy's business.
The following is an edited transcript of our interview:
Q: What's your vision for Etsy this year?
Silverman: It's not a one-year vision, but Etsy is the place you go when you want something to feel or be special. There are times when you want to buy something that has a story, that's personalized or customized to you, when you have a real interaction with the person who made it. I think that the opportunity for it is greater that ever, more relevant than ever. The world has becomes more commoditized. So in 2018 we need to make substantial progress on making it even more obvious, all the moments when you can inject special into your life.
Tell me about the new sale.
Silverman: Sixty percent of our buyers come reliably once a year. What you're seeing is us finding opportunities to remind our more than 30 million buyers that we're relevant for them more often. When you're buying socks, or batteries, or diapers there's a couple of mega logistics companies that you can go to to buy from. But sometimes you're gonna say I want this to feel special. And in those moments we want Etsy to be the habit. So the sale is a starting point to doing something like that.
What have you done to improve things at Etsy?
Silverman: When joining the company, I observed that we had a bunch of different metrics we were tracking and a lot of different projects that were going on. If it was a good idea, we'd do it. That's much too low a bar. So when I arrived, I said, "Look, accelerating GMS is the thing that matters. What are the fewest things we need to do well in order to accelerate GMS?" And we decided we were just gonna do those. And by stopping doing a lot of things and focusing on only a very few things, those few things are getting done much faster and much better and we are seeing the results.
What are those few things you're targeting?
Silverman: We decided there were four things. There was a search and discovery, trust and reliability, marketing capabilities, and seller tools. With trust and reliability, we sell 50 million unbranded items from 1.9 million unbranded sellers. So we need to create trust and reliability in Etsy that gives buyers the confidence to purchase.
Do you anticipate more layoffs this year?
Silverman: I do not. When I came, first, I defined success, which is accelerating GMS. And then asked the team what are the fewest things we need to do. Well, we came to these four things. I then said what are the fewest people with the fewest layers in order to accomplish that objective well? And so I had the team pull out a clean sheet of paper and draw that org chart on a sheet of paper. The result of that org chart was that it ended up with about 200 fewer names on it than we had currently employed. But I did not come with a target, this is the number of headcount and everyone needs to cut headcount. As a result, we have two and a half times as many product launches. Decision making is happening a lot faster because accountability is a lot clear, because it's clear on what we are solving for.
What about the criticism that Etsy has overly generous salaries and too many perks, including a "breathing room" for meditation?
Silverman: First and foremost, we have 1.9 million sellers. Eighty-seven percent of whom are women who wake up everyday counting on us to do a great job. And it's critical that we are accountable to them. We also want to be thoughtful about our cost structure because the money we spend comes out of the pockets of our sellers. And they need to know that we're investing it wisely. A very wise investment in my opinion is to be able to attract and retain great talent. I think our benefits and our pay right now are fair and appropriate to the market. And I wouldn't expect significant changes.
Will you maintain Etsy's past commitment has to diversity and to corporate social responsibility?
Silverman: The best of Etsy has always been our commitment to social responsibility. It was our execution that was letting us down. And I think we were at risk of confusing those two. So, we continue to hold to our commitment to the broader community. But when you're a socially responsible company, you've got to hold yourself to a higher bar on execution. We've defined three areas in particular where we believe we're especially well positioned to have impact on our community: economic empowerment [for sellers], diversity [of our workforce] and environmental impact.
How does a commerce company survive with Amazon out there?
Silverman: Well, don't play their game. You gotta have something different, which we do. So if you're trying to sell the same brand, the same products as everybody else, I think it's a pretty hard world out there, and ultimately I think it's a race to the bottom. I think we're gonna be ever more relevant as the world consolidates to ever fewer logistics players that you go to for all the commodities.
What about Handmade at Amazon?
Silverman: We haven't noticed an impact on Etsy. Amazon at large sets expectations for buyers around what a good search experience looks like, what a return policy looks like, what shipping transparency looks like. Amazon Handmade specifically, it's not obvious to me that that is as impactful as the table stakes that Amazon sets for expectations.
You're on the board of Shake Shack. What are your thoughts on In-N-Out Burger?
Silverman: I love Shake Shack and I love the passion for the product. I love the passion that the customers have for the brand, and Randy [Garutti] is a wonderful CEO. And it's so fun to get to watch Randy work.
Do you get free burgers?
Silverman: Everybody ask me that, it's like six bucks for a burger. My kids say the same thing, I'm like you know what, six bucks, I think I can step up and buy one.
Do you do any arts and crafts?
Silverman: I personally am not a great maker. I am where I am in life because I have lots of heart and so little talent. I actually wanted to be a theater major in college, and I just wasn't a very good actor. And so I ended up finding myself in business. My wife makes jewelry and she's been studying goldsmithing techniques that have been around for several thousand years. She buys raw ingots, melts them, alloys them, pulls them into threads and then weaves them or molds them.
Would you bring augmented reality or virtual reality shopping to Etsy?
Silverman: I would not expect them in our roadmap anytime in the near future but that doesn't mean I'm not excited about them. If you think about walking into a big department store, your eye is really good at scanning and saying, "Ah, I'm interested in In that." If you think about the amount of data you just processed, that's really hard to do for machines, that's really hard to do on a flat screen. We could someday take these 50 million items and create an opportunity for you to explore and get lost in them, in a good way, in a really fun way.
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