Every time someone says I bought it on Etsy it's always the beginning of the Conversation I bought it on Etsy and we Had some guess over uh the other night And they were admiring our plates and I Was like oh we bought these plates from A seller in Ukraine and in fact we Bought them from the seller in Ukraine Before the war broke out and then of Course once the war broke out we went Back to say can we support you and we we Bought some more it turns out a lot more People are doing that there's about 30,000 sellers in Ukraine selling about $200 million worth of goods to the Etsy Community that's a lot of hard currency Going into Ukraine when the war broke Out we had all these people come to Etsy And just start searching for Ukrainian Sellers because they wanted a way to to Connect and they wanted a way to support People it's it's those kinds of stories That are happening every day on Etsy That would never happen anywhere else This weekend startups is brought to you By Kota Kota empowers your startup by Bringing words tables and teams together Strategize plan and track goals Effectively with all your valuable data In one place go to coda.io twist to get Started for free and get six free months Of the team plan intercom intercoms AI First service is the best thing to Happen to your customers since you twist
Listeners can get 90% off intercoms Platform at intercom.com Twist and micro one micro micro 1 is an AI recruitment engine to hire worldclass Engineers fast visit micro one. a/ twist To open a talent search and get a two-e Free trial per hire all right everybody Welcome back to this week in stard UPS Hey Allstar summer has started and I am Super excited today to talk to you about E-commerce now Amazon's Prime day just Happened and you've been hearing about Teu and Sheen or shine or whatever the Stuff is you know like this fashion you Can throw away fastpack Everybody's going in Commerce for cheap Mass-produced schlocky stuff but today We get to talk to the CEO of etsy where They're trying to do the exact opposite Uh Josh Silverman helped build Evite Back in the day he's on the board of sha Shack which is in my top two burgers uh Going back and forth between number one And number two all the time and he Became the CEO of etsy in 2017 spent Some time at Venture Capital firms and Today I want to talk to Josh about being At scale we talk a lot on this program About marketplaces such a great business Model and you're always trying to hit Scale you're trying to get the flywheel Going well Etsy has had that flywheel Going and Josh I understand during covid The business doubled in size uh in a
Year or so is that correct am I am I Broad Strokes correct there yeah it more Than doubled in fact it doubled in one Day and then grew from there there so on April 2nd of 2020 I uh had to check my scorecards cuz Everything doubled and then just kept Growing from there and we've maintained All of that growth or virtually all of That growth since the pandemic the the Challenge for us now is growing over What are just truly extraordinary comps But I'd say we've been you know facing Down the doubters when I joined Etsy in 2017 Etsy was doing about $2 billion of Gross merchandise sales and sales were Decelerating and growth was almost flat And many people were saying ET is as big As it can be at two billion and you know We proved the doubters wrong and and Grew quite a bit um before the pandemic And and then during the pandemic and and Now you know over the last 12 months our Sellers have sold about 12 billion Dollar of product so we've seen quite a Lot of growth and I think we still have A lot of scale ahead of us and to just Level set with the audience which is Founders and investors and angels and on The margins people who are obsessed with Technology the marketplace uh business Model is you bring Supply uh and demand Together and they uh transact I've Bought many things on Etsy over the
Years and been very delighted by it Mainly for costume Parties which is I think like if you Want to do a costume party and go as a You know one of your favorite characters Or something there's just or you know Some genre Samurai I went to a samurai Party got like a full samurai outfit it Was absolutely amazing as an experience I so delighted um but you know and you Get to take a take rate the take rate Here you guys charge what 10% 15% of Every transaction ballpark what does it Wind up being it's 20 cents to list an Item and then we charge 6 and half% uh Commission got it there's about a 3% fee For processing payments as well and then We have optional Services you can buy Like advertising and and things like That fantastic now the challenge becomes Etsy was always about the human inside The marketplace when you hit scale of Course people try to hack any system That hits scale doesn't matter if you're PayPal and my friend David Sachs you Know and Rule off when they work there Were responsible from keeping that Company from going belly up uh eBay Deals with a lot of issues Uber and Airbnb when I had my house on Airbnb or Like my old house uh somebody through a Party there you know after 17 Confirmations they wouldn't do it There's always going to be bad actors in
Any kind of open system or platform the Vector of attack for you I think is People who want to hack you can correct Me if I'm wrong here the human crafted And human curated aspects of you know This beautiful Marketplace this bizarre With schlocky garbage you know that they Didn't actually make or Source am I Correct that that's the natural tension You've been having to deal with as a CEO Of this mean Etsy is a really unique Marketplace what we say is there's a Human behind every item so you're buying From the person who made it themselves With their own two hands or who designed It themselves with their unique design And then produced it in partnership with The production partner so it's it's a Very unique promise to buyers that's Very different than any other Marketplace and it requires different Kinds of Technologies to monitor that And enforce that and during the pandemic You know we added about 5050 million Items in a period of months and there's Sort of no Army you could hire uh quick Enough so we've really had to use Technology to help us to make sure that We can monitor and enforce those Policies the other piece of it is making Sure that people understand our policies And understand there's many items that Comply with our Policy the buyer doesn't always
Understand why and which one so we're Doing a we're doing a lot right now to Center the sellers role in making this Item so it's very clear to the buyer did The did the seller make it themselves Did they design it and use a production Partner is it a vintage item Etc and this really has to do with the Ux of the website how you present Information so how do you educate the Users that this person like on a Tactical basis yeah is actually the Person who made it or the person who Sourced it and or designed it like this Is a very nuanced discuss And I can tell you I had this Frustration I was walking around my Hometown and I was walking around Manhattan and I was in Little Italy and You know people are selling really Schlocky stuff and I was like you know What this kind of kills the vibe I don't Want to buy socks you know when I'm in Little itally I want to buy a canoli or Something more charming and targeted so Explain to us on a ux level UI level how You go about this and then how do you Enforce it because those people who are The sellers I'm sure in their mind They're like I am the most unique person In the world who went on T bought 10,000 Items and then put a tag on it that says You know jcal production so let's take Those you take those two questions
Either way you want you know how do you Manage the sellers who are you know Inauthentic and then how do you Communicate through ux yeah well let me Start with you're right that every Seller is the hero of Their Own Story You know every person is the hero of Their Own Story and so every seller has A good reason to think that they should Be on the Etsy Marketplace we need to Create a promise what sellers hire us For is they hire us to bring them buyers So our sellers can only succeed if we Have a promise to buyers that we can Deliver on right and so we always work Backwards from if we're delivering for Our buyers then we're delivering for our Sellers right our job is to create this Brand called Etsy that means something In the minds of buyers 92 million buyers Who come and Shop on Etsy and they come And Shop on Etsy because they want want To find something made by a real person Because they want to find something That's unique because they want to find Something that expresses that buyer's Own sense of self-expression because They're coming to Etsy for that reason The sellers on Etsy have a chance to Succeed the people that sell on Etsy Also sell on Amazon also sell on eBay But on Amazon all I get is a thumbnail a Few characters of text in a price and in A search result where you know 29 out of
The 30 items are all Mass produced Overseas at super cheap prices that Handmade artisanal product almost never Wins so while our sellers Market Themselves on other platforms what they Tell us is the vast majority of their Sales come from Etsy so it's really Important that we stay true to that Promise we're making to the buyers in Order to deliver for our sellers so We've got to do a few things one we've Got to enforce those policies first We've got to describe those policies Really clearly and for you know Etsy Like most companies that you know every All the founders and entrepreneurs that Are listening to this podcast you know As you grow in scale you will evolve Things as you go and then maybe you'll Get to a point where it's hard for Everyone to understand Clearly what your policies are because They've they've evolved over a period of Time there's always new Innovations in The market so for example we recently Have been grappling with does gen AI art Count as art on Etsy right oh my Goodness what counts as a tool when we First started Etsy when when I wasn't There but when Etsy first started we had Sellers who raised the sheep and shared The wool and used it to knit a sweater And if you bought store-bought wool you Were not handmade in their eyes so from
Roughly the second or third day it's Existed we were dealing with you know What does it mean to be handmade and we Decided that using tools is okay um if You're a carpenter you can use a table Saw and so that leads to what is the Definition of a tool and that is always Evolving and a human can partner with a Computer we've decided to create art and That will still count as art and the the Coral are that was important to me was Actually thinking about music and Actually the most popular music in the World I think right now is electronic Dance music which is actually just a Human partnering with a synthesizer to Create absolutely and clip libraries Let's be honest like there are these Huge businesses in clip libraries that Help them you know and they say Hey you Know I I don't want to do the drum beat You know my foray is in the you know the Hook and so I want to work on the piano The Hook and the and you know whatever The lyrics and the drum be To Me is Easy And then it might be the opposite for Somebody else so again you're you're You're pointing out the obvious but or I'm pointing out the obvious it's in the Eyes of the you know you the P every Person is the hero of Their Own Story And they believe they are okay Founders You're wondering how am I able to do all These podcasts run adventure Capital
Fund have an accelerator or found a University all at the same time it's Pretty straightforward we use an Incredible tool called Koda Coda it's a Collaborative workspace that combines The best of documents and spreadsheets As well as apps and databases it's super Easy to learn and you know what it's a Lot of fun to think about your workflow And processes and then make them faster And better using Koda without having to Hire Engineers without having to have Product managers no just teach your team How to use Koda they've got great online Resources and you know we run all of Founder University on this plus our new Twist 500 project is also built on coded We go to twist 500.com we've got our Team adding all those new private Companies including Kota uh into that Database so you can sort it and keep Track of what we think are the top 500 Private companies in the world it can Handle data it handles notes it can Handle your okrs and there are templates For everything so here's your call to Action Koda empowers your startup to Strategize plan and track goals Effectively so take advantage of this Limited time offer just for startups go To Coda.io twist toay and get 6 months free Of the team plan that's Coda.io twist to get started for free
And get six free months of the team plan Coda.io twist now what about somebody Who just slaps a tag on something that They buy how do you police that that Seems inred count right and so anything That's mass produced shouldn't be sold On Etsy with the exception of craft Supplies uh which we've always allowed Craft supplies and party supplies to be Sold on Etsy even though they're mass– Produced um but if you take just let's Say a mass-produced mask and then you Slap a decal on it that shouldn't count And so we've created what we call our Creativity standards for what is and is Not allowed in Etsy and they lay out Very clearly our policy everything needs To be made by the seller sourced by the Seller designed by the seller or Handpicked by the seller we talk a Little bit more about each of those four If we if we want and then with each of Those we've given um an example of what Counts and what doesn't count but just Simply buying a mass-produced item and Altering it in a way that's not Important to the buyer does not count on Etsy now there are ways you can buy Three or four mass-produced items and Assemble them into something totally Unique that's actually really compelling Yeah for people and warha would agree Exactly you know much of our art is is Built that way and so that's where you
Know we use definitions like it needs to Be meaningfully altered in a way that's Important to the buyer and requires Craftsmanship if anyone look at Tomato Soup cans that Andy Warhol did or Marilyn row is had some Source material But really did make it unique in the Composure the coloring and the medium Exactly and so we've laid out these Policies in a way that I think is is is Very easy now for people to Understand and then the next step is Enforcement your next question and Artificial intelligence is helping us a Lot there but we we use the term Superhuman inside Etsy which means the Partnership between Ai and humans it's Still really important for most of the Work that we do that there's a human in The loop so we can use some automated Monitoring that's pretty effective for Example if we see an item on Etsy that The exact same item is listed on Alibaba Or Shen or Tibu we automatically remove It we assume that's a easy breezy yeah You just if people are going to take This mask or this hat and just steal it AI is perfectly suited to at least Highlight that Y and allow you to I Wonder if you do this but to just fire Off an email to the seller is this where You sourced it and they can just say yes Or no and you can just give them the Explanation do people have to apply to
Be a um a seller is it an application Process or can I just put stuff up live And this speaks to this natural tension In a growing business of you know you Want to grow and so you remove friction Like part of the genius of Zuckerberg or Uber was removing friction at every step Of the way to sharing content or getting A ride but if you remove too much Friction well then somebody could write A script that just pops up 100 store so What's the approval process like to Become a seller so we uh recently added A to your point we recently added a $15 Fee to become a new seller on Etsy and That was really designed to stop very Low effort shops Bots or just people who Don't really have the skill or the will To contribute to our Marketplace in a Meaningful way if you're not willing to Spend $15 to open a shop you probably Lack either the skill or the will to um To participate in the marketplace and I'm not trying to disparage people for Whom they have very little means in fact A lot of people who start their shop on Etsy do so as a result of economic Hardship maybe they've been laid off and Etsy is often the very first place that People go to sell things and they you Know their own their own artwork and Then they go on to create offline stores And other things we're very proud of Being a really low barrier onramp for
People to become artists but we did feel Like $15 was manageable enough that if You have any real serious intent even Someone who's pretty financially Stressed um could find a way to afford That and it's $15 is going and doing one Door dash run right so let's be honest Here you know I always find that so Insincere when people are like but what About poor people and I'm just like okay Let's be honest here you know we and We've had this with startups we fund and Oh my God we need to fly somebody to California to take a meeting with us and Like what if they can't afford a flight I'm like you know what if you can't if You don't have the desire and The Hoot Spa and the resiliency to figure out how To get a $299 ticket dollar ticket to Whatever City to go to some founder Event which equals 20 hours of driving Uber lift or door Dash then you're not Ready you're just not ready let's be Honest yeah and and times are hard for a Lot of people out there and I want to Acknowledge that but we do feel like we Provide a lot of value and we think it's Worth it for $15 and and to the point You started with having some friction we Think is actually helpful to make sure That the marketplace is really clean and Well lighted but other than that there Isn't an application process we really Rely on our search algorithms to
Identify the best of Etsy and to elevate The best of Betsy so we use a bunch of Ever more sophisticated machine learning To identify things that look like they Might be inauthentic or at least not Unique um and we also have the benefit Of a community of tens of millions of People who are flagging items for us Buyers flag items and sellers flag items And you know as you can imagine sellers Are quite diligent about policing their Own categories so when they that makes Total sense CU they're competing if Somebody does you know I don't know a a Handcrafted diaper bag and it's not Handcrafted and they're charging 150 Bucks with a gorgeous handcrafted diaper Bag and then they got to compete with Somebody making a $15 one that they Didn't make that's infuriating so that's Great that they police their own Block It's like a local business policing you Know somebody putting the socks out in The middle of you know Little Italy yeah Like and ruining the experience and and You can imagine that some people flag All their competitors so so now you got To deal deal with that Too combination of humans and algorithms That work together to create a trusted Marketplace and and you know the the the Vast majority of items on Etsy comply With our policy and the vast majority of Buyers on Etsy are really happy with the
Products that they buy and that's what's Fueled our success you know we have 92 Million active buyers now and although Tens of millions of them came to us During the pandemic because they had Really no other choice they've stuck With us now years later because they Love what they're actually buying and And that's what's so important is that When you come and visit Etsy we really Deliver on the promise that you're going To actually be interacting with the Person who made or designed the item Themselves and you're going to have a Real human connection with that person Do you have like a designation like Super hosts or you know Uber's been Doing some very subtle things around the Number of rides a driver has done and Then we have this Uber one I say we like I'm work at the company um this what When you're the third investor um you we Have Uber one which has millions of Members now and you know you basically Whoever's done the most rides you know You get pair with the Uber one and it Kind of makes your experience even Better so and then you obviously have Airbnb super hosts who hit certain notes And and Brian is uh you know really sort Of diligent about that what's the Equivalent on Etsy do do you have ways Of saying we're going to create unique Photos videos or the review use hitting
Some Mark that equal Transcendence and You know the top 1% of the sellers or Something we have something called the Star seller uny and the way you earn Star seller status is you sell a a Certain amount um every quarter and we Don't make that number too high because We're not trying to be about mass Produced items but you sell enough Quantity that we actually can measure Your service quality over time and you Respond to customer conversations Quickly you reliably ship on time and You always get five star or you know Virtually always get five star reviews Meaning you you you do what you say Really consistently um we are actually Working on um a another update that's Going to be even more transparent about What quality signals we look for from a Seller that allow them to rank high in Search so if you if you go and you Google like how can I be successful at Etsy you'll see thousands of YouTube Videos and blogs that all talk about Basically seing Etsy how can I keyword Stuff the title so that I rank higher That serves no one right it doesn't make The buying experience any better it's a Waste of time for the seller we want the Way to rank higher in Etsy to be Consistently ship on time consistently Get five star reviews Del light the Buyer and earn your way to the top
Through delivering really a great Experience shipping really unique items And we think that that you know that Incentive of that's how you uh that's How you get higher in search is very Motivating for sellers but it also gives A real sense of agency sellers wake up Every day wanting to know what can I do To be the captain of my own destiny and The more we can give them very clear Feedback around here's the two or three Things you can improve that will help Improve your ranking in search the more I think they'll feel in charge one of The I mean every Marketplace has its own Eccentricities and Etsy certainly no Different we don't necessarily want to Exclusively reward scale I can see why For Uber and Airbnb scale would make a Lot of sense but actually to some extent Scale can can be countered to uniqueness On Etsy that's the Paradox of etsy you Know if you were doing this handcrafted You know I'm going to bring up the Backpack again the diaper bag whatever Your jam is you know the handcrafted Laptop bag you want it to be one of x One of a thousand one of 500 you're on Etsy because you want to not have the Bag when you show up at your event Whatever it is you're in business class Or you're you know at the park with the Other moms and dads you want yours to be The one that people say oh wow where'd
You get it how did you get it oh it's Handcrafted I got it from an artisian You know and the world wants more Artisanal items and they want to know The story behind them that's my my Belief now that Everything is Mass-produced Everything has become so Cheap that people are now looking for The opposite am I correct in what Elite Buyers want I think you really Understand us um and I really appreciate That and I hope it's not just Elite Buyers I hope it's everyone look we all Need cheap junk sometimes I buy toilet Paper I buy socks and I just want it to Arrive fast and be affordable but many Things I buy I want to have some sense Of meaning I want to express my Uniqueness and so I think look there's Always going to be a role for Teemu or Amazon or Walmart let let those people Have their race to the bottom and who Can sell they're all selling the exact Same product who can sell it two cents Cheaper or ship it two hours faster they Will fight it out on that the more they Succeed the more I think people will Desperately crave an alternative to that And I think there's no one better Position than Etsy to be that Alternative and just as you said I want To walk into the party saying You know I'm the only one where my my Friends walk up to me and say I love
That you know and you you know you're The only one who's wearing it or they Walk into your apartment what a great Throw pillow and you say oh I bought This from the seller and turkey and her Family's been making it for three Generations and let me tell you about The let me tell you about the fabric the Story is so important isn't it I find That every time someone says I bought it On Etsy it's always the beginning of the Conversation I bought it on Etsy and Whereas anything else I bought it on Amazon I bought it on timu that's always The end of the story there's no an um You know in fact um we had some guests Over uh the other night and they were uh Admiring our plates and I was like oh we Bought these plates from a seller in Ukraine and in fact we bought them from The seller in Ukraine before the war Broke out and then of course once the War broke out we went back to say can we Support you and we we bought some more It turns out a lot more people are doing That there's about 30 ,000 sellers in Ukraine selling about $200 million worth Of goods to the Etsy Community that's a Lot of hard currency going into Ukraine And when the war broke out we had all These people come to Etsy and just start Searching for Ukrainian sellers because They wanted a way to to connect and they Wanted a way to support people it's
Those kinds of stories that are Happening every day on Etsy that would Never happen anywhere else hey startups You've probably heard the same better Faster cheaper pick any two well AI has Changed that equation and intercom is All in on AI intercom built its first AI Customer service platform so that no Company has to compromise when it comes To caring for their customers or saving Money and controlling costs these things Are important intercoms AI tools are so Smart that 50% of their customers have Their issues resolved in just seconds That's thanks to Finn an AI co-pilot yes Intercom has an AI co-pilot it's called Finn think of it as like a personal AI Assistant for each of your customer Support agents so they get really really Good at their jobs it makes them so much More effective Finn is a big deal it's Going to boost your agent efficiency by 31% or more and managers of customer Support teams that use fin are reporting Happier customers and very very Productive teams all while staying on Budget that means when it comes to Faster cheaper and better customer Support you can pick all three no Sacrifices and that's all thanks to Intercoms AI first software so if you're An early stage startup if you're a high Growth startup you're going to get Access to intercom at a massive 90%
Discount that's right 90% off because Intercom and the team over there love Startups and Innovation as much as we do So go to intercom.com twist to apply or If you prefer you can just do an email At startups Intercom.io one thing I have gotten into Later in life is the opposite of Disposable which is things I could give To my kids someday or that will last me More than 10 years um I I always give The example here of my boots I love this Brand called Danner boots uh and then I Have another brand I like Crockett and Jones these are the shoes that uh James Bond wears or at least Daniel Craigs James Bond there over a hundredy old Seller wow they're both of these brands Are a little more expensive you know my My my my boots are 600 bucks and these Shoes you know uh probably a th right so You know they are triple probably what You could buy a reasonable comparable The the main difference is I've now had These shoes for a decade they look as Sharp and as perfect as they did 10 Years ago with a good shine and both of These Brands very unique they have Warranties and they stand behind these Products with this concept of just send It to us we will either do it for free Or we will charge you the minimum amount Possible to refurbish your shoes and I'm Curious if warranty and standing behind
Product I I noticed that's not part of Your uh criteria so you know I love to Do Jam sessions here with Founders uh or You know CEOs yeah I'm wondering why you Don't give credit for warranty why you Don't give that extra credit for hey We'll stand by this when that pillow or This plate breaks or whatever it is if It chips we got this warranty for you Here's the replacement cost here's how We'll refurbish and talk to me about That well great point and and I love the Jam session idea so each seller has Allowed her own refund policy for her Shops but we are we've done a lot to Standardize there's really only a few Things you can do it's either I take Refunds and I pay for shipping I take Refunds and you pay for shipping or I Don't take refunds and in search when we Talk about being more transparent about How we determine a seller's service Quality rewarding ing sellers who do Take refunds is something that you know We we think is appropriate many times But not all of the time and and and the Uh exclusion I'll I'll point out here is Things that are personalized and Customized it is often the case that a Seller many things on Etsy they made to Your specifications so they personalize And they can't resell and that's where Again Etsy is a little you know it's its Own it's its own unique place um and
We're sympathetic to the idea then that That in that case a seller might say all Sales are final um but we want that Seller to consistently getting five be Getting five star reviews I think you Got to you got to double click on this Warranty concept I'll give you another Brand that does this that I am super Loyal to Briggs uh and Riley is a Luggage brand sure it costs you've heard Of it oh yeah it C have you have you Ever bought one or I have yeah have you Ever sent one back no okay my wife and I Are obsessed we I I think we own eight Of these things oh wow and we have had Handles come off I travel a lot you know And I travel commercial because my PJs I'm getting the rug redone for the last Eight years so it's it's not a service But when I am flying commercial um fly Commercial you know they destroy these Things they throw them whatever things Break yeah I've had maybe three things Break in maybe 15 years of being in love With this product and when we go to send It back they have this like work with You warranty where they're just like Okay it's you know we'll fix it we'll Send the shipping what ever or by the Way and that thing's like 14 years old It's a little ratty yeah here's a 35% Discount here's a 40% discount on a new One that has the four wheels and you got The two whe one you got a tilt yeah and
I'm like I love you guys and I'm this Brand loyalty that comes from what I'm Going to call the work with you warranty Will work with you warranty all W's this Concept is so amazing to me where it's Like we're working together to preserve The life of this and our relationship You know bad things happen but we'll Just work together on it yeah that to me Is so beautiful and I'm just obsessed With Brands like this La is it La crus Who makes those yep slow cookers the Cookwares yeah the cookware now a lot Cruset what is the large oval one that Everybody uses to make stuff got the Name of it ah but you know the one I'm Talking about ionic like every French Person Cooks the I make M streets my Wife makes the the um vodka sauce from Uh what's the favorite place in New York Anyway they make that amazing vodka pan Whatever you know and this thing gets Ratty and and whatever but if you if the Enamel comes off you can bring it to Them and they'll redo the enamel so you Don't have to throw it in the garbage I Think this is so appealing to Modern Consumers anyway yeah I mean your point About branding return policy like that Is is a great one and you know we're Working on getting more standardized but The nice thing about Etsy is you're Always buying from a real human a real Seller you've got our email address and
And what we find is our sellers bend Over backwards to have people be Delighted even years later the fact that It's a real human relationship I mean You're trading dog photos you're you Know like and our cellers care so much They're entrepreneurs they're Scrappy They're not faceless companies and so They care so much about the fact that You're happy uh we find they'll Typically bend over backwards and I mean The other thing is they're selling their Own art you know whether they made their Own shoes or suitcases or or plates or Whatever like they view this as their Art and the fact that someone else is Willing to pay money to buy it from them Means a lot to them it's very personal So we know that the vast majority of the Time people have great experiences on Etsy of course something goes wrong Every now and then and we're there to Step in and help and make sure that Everyone both the seller and buyer feel Supported um but that's really the magic Of of etsy um the other things we've Been talking about a lot of very High-end products here but Um you know where things that are Mass-produced are made in lots of 100,000 and and that has economies of Scale obviously there's also multiple Markups between the factory and you on Etsy the person makes it and ships
Directly to you with no markup and so It's not necessarily the case that Things are are more expensive on Etsy Depending on what you're comparing it to And what product it it is they may or May not be but for example I bought some Glass blown straws I like to have a iced Coffee every morning Ur that I'm buying These plastic straws yeah like you know Like I don't need all the plastic but Also like there's this glass blower in Wisconsin who blows these beautiful Straw it's the most random thing the Only reason I'm pointing it out is I Think it was $8 for a set of three They've lasted me now three or four Years much cheaper than if I'd been Buying plastic but how does it make you Feel I love it I think about the person Who blew those glass every day yeah and There's something nice about having Something that's not a commodity and Being thoughtful about the details as Steve Jobs you know talked about Painting the inside of the Apple t or The backside of the fence like as Important as anything else and you know That that's what gets me you know super Excited about your business Carbone by The way it's the restaurant thinking About Carbone yes Carbone famous vodka Sauce I'm one of the Millions who've Never succeeded in getting a reservation Very simple you want to get a
Reservation Carbone go to Vegas and you Will get a reservation and if you happen To play in you know some higher Stakes Table they will pay for everything which Some of my friends do so we get Reservations in 15 minutes magically There you go everybody's talking about How hard it is to find great developers And you know listen you want to hire the Best but you got to find them you got to Vet them interviews onboarding it takes Forever and hey maybe you find somebody Great and then I don't know they retire They find a new opportunity they start Their own company well micro one has Solved the problem and that's why I Invested in the company micro one built An AI engine that interviews 20,000 Engineers every single month think about That then they handpick the top 1% once They found the best they help you hire Them and micro one handles all the legal And compliance work this means startups Like yours can hire top talent very Easily without spending all your time on Recruiting hiring recruiters you don't Want to build a giant HR team have them Complaining to you asking for raises Asking for more resources no micro one Will do it all for you so they're going To help you find and hire that top Talent in 48 hours sometimes they do it In less so visit micro one. a/ twist to Instantly connect with top engineers and
You'll get a two we free trial per hire Once again micro the number one. AWI to instantly connect with top Engineers you know what I wanted to talk To you about as well is running a Company in uh through uh this Incredible you know pullback we had During uh the pandemic which you were One of the few companies that got a Pandemic push like Paton but then There's also this age of efficiency and You know what Elon did at Twitter going Down 80 85% in the staff size what Zuckerberg did getting rid of you know 20,000 product managers mid-level people Even some high people who maybe weren't We're slowing things down yeah Uber has The same number of employees yet they Grow 30% year-over year 20% Year-over-year every quarter same number Of people this is a very strange concept For you and I you know uh Executives of A certain age the idea was Revenue went Up headcount went up yeah you've been Focused on Revenue per employee yeah Talk to me about how you manage talent In today's global environment and with a Different expectation from public Markets about efficiency and running as My friend Brad gersner says a fit Company yeah well first you know the Sort of cultures are built on formative Moments and my entry into Etsy was a Pretty formative moment in 2017 it felt
Quite existential I mean we' gone public It was going very badly growth tell me The worst of it yeah what the biggest Challenges we were a break even company Doing about 200 200 what we're doing $2 Billion of GMS and I think maybe 200 Million of Revenue with growth Decelerating we were one quarter away From having no growth we had activists We had um takeover offers that were Going to buy the company for pennies on The dollar and it looked like the Company was going to get sold for next To nothing and it would have been an Indictment on the company and and I Think a lot of people would have thought That the company was getting bought for Pennies on the dollar because it tried To be a good citizen and in addition to Being uh you know a business and that Wasn't it we just were executing very Badly you know I laid off a lot of People and uh pulled out a clean sheet Of paper and Drew an newor chart from Scratch and very focused on one of the Fewest things we need to do to Succeed and what is the leanest team That can accomplish each of those goals And this iser to as zerob based Budgeting I think in some quarters and It's reminiscent of what Steve Jobs did Did when he came back to Apple the Second time and just said business Personal portable you know desktop and
Just said four boxes one in each please Exactly obviously me legendary what he Was able to accomplish there I'm not Going to try to compare us to that but We we did see a lot of success from that Not only did headcount go down by about 25% but actually we started shipping Four times as much every month what do You attribute that to because this is Non obious And it's important I think for Founders To just really take this to heart so why Can you get four times as much done with 25% less what's the secret what's the Magic Mission Clarity and empowerment Every Squad so the unit of work at Etsy As a squad a squad's eight or 10 people And it's going to be six or so six to Seven Engineers a product manager a Designer and an analyst or part of an Analyst and that Squad is given One Customer problem to fix one kpi to Measure success by and a timeline Usually you've got one year so you've Got one year to cut shipping times by One day in a way that unlocks an extra $25 million of GMS or $50 million GMS Would be a very um typical example of What we would assign a squad and that Squad has the power to go anywhere they Want in the Etsy customer experience They can change something on the seller Side they can change something on the Buyer side they can they can work in any
Part of the code they want um and They're singularly focused on fixing One Customer problem in a way that delivers A real outcome that's measurable to make The business bigger so there's nothing Performative there's nothing to please The CEO or management or whatever it's Just these are the most acute problems Fix them yes this is the outcome we're Looking for and that makes your job as CEO so much easier right because either The squad does it or they don't and They're not asking for permission and There aren't a lot of layers of Management that they have to go through That are kind of second guessing or hand Ringing so the job then of leadership is Have we clearly defined what success Looks like and if we clearly defined What constraints are and do we make sure We've got the right people in the right Place if you do those three things and The first two I borrow from Ken Chanel To I worked for at American Express the Job of a leader is to define success and Define Constraints uh I will add then make sure You got the right people in the right Roles you do those things um which says Easy does hard it actually takes I think A fair amount of contemplation and then Conviction to really crisply articulate What that looks like but I think if you Do that well you can have a team that's
Highly empowered to go figure out you Guys tell me what's the best solution to Do that I'm you know you're going to Know better than I will and don't ask For permission just go do it and tell me How it worked the other thing it does is It allows us to really measure Productivity and really Know that our teams were highly Productive during the pandemic you know We know that we're seeing a lot of Effort that's making the pie bigger for Everyone and that's really what matters When our Business exploded uh during the pandemic We grew our headcount but at nothing Like the rate of Revenue growth it was Never our thought that just because Revenue is growing we're going to grow Headcount to your point we really looked At what are the fewest things we need to Do and what headcount is required to do Those things so every year has been a Year of efficiency I I have to admit I Find it a little weird the sort of year Of efficiency like when is it ever not Supposed to be a year of efficiency or a Quarter that doesn't make any sense to Me I don't find that adding a lot of Resource necessarily makes things go Better I mean if if you look at Mark's Journey at at Oculus giving them a Limitless budget was probably not that Work out yeah not helpful I've never
Seen that be helpful I think constraints Are a beautiful thing for a team so you Know look there's a certain amount of Keep the lights on activity that's Always necessary to run a platform and As the platform gets bigger there's more Payments to process there's more Customer support queries that come in There's more data to process those sort Of ktlo activities get bigger but we Have for Etsy which has 7 million Sellers 92 million buyers $ 12 billion Dollar of Commerce and the cor Etsy Business there's 1,800 people who work There were just a little leaner than Twitter um after the 80% reduction and You know in terms of Revenue per head Count we're much leaner than anyone our Size and scale and we're we're proud of That minimiz Revenue per per head count Revenue per head count we do um we do And you know minimizing waste we think Is always it's one of our core values we Think it's super important let me ask You about running a company at scaling Globalization and all this Talent around The world you know and then frankly here In the US you know in a developed Market Or in a developed region you know Certain parts of Europe and the EU you Know people have become in inedibly Successful maybe the work ethic is Slightly different than in emerging or Frontier markets as they're referred to
Today previously third world second World Frontier and emerging in the Proper terms for those people listening Who want to be politically correct I've Found now that talent and you know this Because you have plates from Ukraine and Straws from the middle of America is Talent everywhere yeah so talk to me About this new uh Playbook that Ian are Doing where it's like you know what if We have too many entitled people in the US or it's hard to get people to come to An office in this country or you know There's other regions where people are Thrilled to be part of an American Leading company and and be part of that Excitement and you can skim the cream in Portugal or S Paulo or Manila where are You finding centers of excellence and How do you think about the global Workforce well first our us Workforce I Think is amazing and super passionate And I do think the opportunity to work For a company that you think is bigger Than yourself is really important There's as I said less than 2,000 people Who work for Etsy and there's 7 million Sellers who wake up every day hoping That the Etsy team is bringing their Aame I think we feel a lot of Responsibility everyone at Etsy feels a Lot of responsibility we don't have Enough people to have any hobby projects Like nobody works on stuff that's not
Central to the mission of helping our Sellers sell more stuff and support Their families so I think everyone wakes Up with a with a strong sense of urgency Around that we also are pretty focused On measuring like what's the what are The outcomes we are achieving we're not Measuring hours we're not measuring Keystrokes we're measuring every Squad What have they accomplished that's made Our customers better in a way that's Made the marketplace bigger and I think That's um been very helpful and very Focusing for people and we do have a Development Center in Mexico and we have A Development Center in Ireland and They've been great and they' have helped Us to bring you know more Talent onto to Etsy at a time when hiring was was tough And and talent is scarce um and there is A lot of talent in the world and we want Diverse perspectives we want to be able To follow the sun you know Ireland's Been very helpful for us as you know we Have sellers in many different markets Uh for example and thoughtful people Actually as an as an Irishman myself Middle name is m people don't know that But you're talking about people who Actually have great pride and very Thoughtful and also great storytellers I Know this sounds you know silly in some Ways but you know having people who Really care you know your Irish
Grandmother is like that's a theme for a Reason like they're going to make sure That your breakfast is proper and that You are happy with your breakfast um do You believe in remote work and you know We talked about this Arbitrage globally I'm sure the folks in you know Mexico And in Ireland are a good deal compared To people in silon Valley or New York it Might get two for one 3 for one terms of Head count and it gives you the you know The Sun never sets on the Etsy Empire Concept um but let's talk about remote Work you all of us were forced to be Remote where do you stand now with Hybrid return to office do you believe That great work can be done or the most Elite level of work can be done with Remote teams or do you think you need to Have some FaceTime and collisions before Pandemic happened about 20% of etsy's Engineering Workforce was permanently Work from home they were located you Know not near an office and when I first Joined Etsy I asked for research on that Tell me how that's gone and what we Found was it was not great for early Career um people in their first two or Three years of work in engineering uh Was not great and it was not great for Managers who' never worked at Headquarters but for engineers later in Their career not even that late in their Career but Engineers who spent at Le
They got 10 years under their belt Something like that right yeah younger Even than that I would say Engineers Who've had you know let's say at least Four or five years of real like writing Production code in a high quality Environment where they know how to and Managers who either worked at Headquarters and then moved or managers Who were later in their career actually We saw really good productivity we were Measuring productivity we were measuring Performance reviews we're measuring Promotion engagement scores attrition it Was it was pretty good during the Pandemic two happened one we had a Tremendous need to hire a lot of you Know people quickly because we were Scaling at such an extraordinary rate And two coming out of the pandemic we Closed some of our remote offices Because attendance was low and as a Result we find ourselves now with about 50% of our employees don't work within a 100 miles of an Office so I couldn't ask everyone to Come back to the office even if I wanted To we that is a conundrum yeah and and So we are leaning into how do we make Sure that we get the best out of roomat Work and for people who live within a 60-minute commute of one of our offices Which about half of our staff we asked Them to come in two days a week and I'll
Be the first to say for some of those People you can argue that the two hours You lose on the commute is not worth it For your productivity and you're very Productive at home and I stipulate fine But our benefit as a community to be Together is I think important and I Think worth it And so I'm not going to argue that You're not productive at home I'm going To say that we benefit to have a Vibrant Community particularly for people that Are earlier in their careers I know I've Got a 19-year-old daughter and I'm Recommending to her that when she Graduates from college she should go Work for some place where they're in the Office at least a few days a week and She can get mentorship it's going to be Very important we need to be that kind Of place as well so we're using a lot of Technology and tooling that makes our Remote Workforce I I don't just think I Know very productive we're seeing that They are shipping great product coming Up with great product engagement scores Are good um so we know that we can have A very successful remote Workforce but I Also think it's important that we create An office culture in some of our Hub Locations and I I think doing both Hybrid is is the future uh and we're Going to be great at it rather than sort Of being nostalgic for the past when
Everyone came into an office we're Really leaning into being great at Leveraging Technologies to be able to be Great at hybrid let me just wrap here With this concept of the static team Size are you Seeing with AI The Increased Efficiency of each Individual then makes it not necessary To add more headcount I am seeing in Many of our early stage startups Individuals I would say getting 10% more Efficient per month or quarter now you Put that into the rule of 72 means People are twice as efficient every year Or so certainly every two years it feels Like people are getting twice as Efficient every two years if you just Put that there it's kind of like your 1800 person team in two years would be The equivalent of having a 3600 person Team so are we going to live in a Permanent static head account situation What what does your gut tell you having Been at this for a couple the decades Well one I I certainly hope we're going To keep seeing the productivity gains That we we all think we are and I think Experimenting within every part of our Business I'm sure all of your startups Are and not just in in our engineering Teams where it's helping with not just Writing code but Qing code and and and
Commenting code and all the that where The the gains are the best or customer Support early early gains well customer Support is an area where we're starting To see gains we're piloting some new AI Tools that can be tuned specifically to Our customer support use case that I Think is going to be better the frankly The very generic gen tools we use that We're not tuned our use cases weren't Big productivity improv building those Inhouse or you got to partner we're Partnering we're partnering but Partnering with some folks who can tune It specifically to our content I'm very Optimistic it's going to be very helpful Um you know we realize that our Engineers spend only part of their Day Writing code they have to spend part of Their day understanding how the code They write is going to affect other Parts of the code actually geni is Really helping you to understand what The downstream effects of code you write And commenting code and test so it's Going to add a lot of productivity in a Lot of areas uh without without King out Too much on it it's touching every part Of our business and yes I think that it Is going to make us much more productive I also think it's going to allow us to Do things we just couldn't do before and That's what I'm even more excited about So for example we have well over 100
Million things for sale on Etsy and Everyone is a snowflake everyone is Different understanding what is this Thing on Etsy and what else is it Related to and how should I organize it In a way that humans can understand is a Really hard task for Etsy and it's Something gen is really great at I need To buy a gift for my mother give me 10 Ideas J I would be really good at tell Me let tell me a little bit more about Your mother and I'll give you 10 ideas And then oh for this idea here's the Five best products on Etsy for that idea We're 50,000 yeah like that so we just Launched something called gift mode Really leaning into that and and that Idea this is where not only is it going To make make our existing team more Productive which I'm super excited about But it's going to allow us to do stuff We couldn't do before and I think Has on this one you know when you when You have a great idea it just makes my My neurons fire this is such a good idea This gift mode what if I could give you The social media accounts of the Target So I take their Instagram I take their Twitter I take their LinkedIn I take Their blog whatever it is their YouTube Channel I put them in y and I say hey What do you think this person might like And they're like they're they're buying A lot of hats they wear a lot of trucker
Hats they wear a lot of like logo hats And I noticed that they cook and they Take pictures of a lot of sushi here's a Hat with like I Dream Of jro on it and Hey that tickles both of those like Themes on their Instagram this would be Like gifts by Graham like gifts by Social oh I love it and we've looked at That and you know the what we're going To make sure we navigate carefully is The Privacy implications of it's public Data everyone but to the extent that They made their accounts public yeah you Know absolutely um so all of that I Think is is a huge opportunity for us to Do a better job finding gifts for for Other people is hard um and I I think Etsy is uniquely well positioned to help All right final question here um this is End of SEO theme that's going on in the World you know with chat GPT kind of Taking some searches away from Google or Google's own search results that are Generated you know or answers generated By it you've done pretty well on organic Um you get a lot of your traffic from Organic what's what are the Strategies and I I don't know if there's An easy answer or any hacks here other Than having a really unique product in The world but and you get a lot of Organic direct traffic what's the Secret well I I would start with um we Do have a lot of content on Etsy there's
Well over a 100 million listings on Etsy Each of those listings is you know Unique and different in some special way We partner a lot with Google to help Them index that um and because the Content is generated by a real person And has a lot of metadata around it They've put up a unique photo they've Put up a lot of their own content about It that's very helpful uh for indexing Um but on the organic side you you do so Well yeah yeah people typey in I agree That over time we should expect look Google is pushing organic search lower And lower on the page forget below the Fold it's like below below the fold now You can't find an organic search result On Google without right you got to Scroll through multiple pages and and Even the paid stuff now you know gen is Taking a pride of place in that so we're Very focused on being a destination That's not Downstream of anyone so we've Been investing in brand marketing Investing in building traffic to our app You know I think that ultimately there's Only a few brands that can really Survive and thrive in e-commerce because The human brain can only remember a few Brands you can't remember yeah right Seven right yeah and everything else You're going to need to go to Google or Facebook or you're going to be need to Be Downstream of someone and whoever
You're Downstream of they take all the Economics you never want to be holding To anyone if you've got room for seven Brands in your brain every one of those Brands needs to do something really Different and really important that you Need a lot and I think one or two of Those brands are going to be where do I Go for the cheapest version and I think People are going to Crave the Alternative and I think Etsy is super Well positioned to be one of those seven Brands I think that's an incredibly Valuable place to be all right listen Josh Silverman CEO of etsy everybody go To Etsy and buy your next uh Christmas Presents birthday presents and report Back how you did it is the greatest Place to get something unique and not Give people a gift card or something Thoughtless support Artisanal artists around the world go to Etsy.com it is such a beautiful amazing Uh gift to the world I I you know my Wife wife and I are both such super fans Of the site you know for me she does a Lot of gifting on it I do a lot of Costume stuff on it and it it's just Wonderful um how do you deal with people Um this IP issue comes up a bit I think How do you police that like if I wanted A Jedi robe uh you know I can't buy a Luke Skywalker robe but I could buy a Jedi robe how does that work like how
Does Disney look at you do they look at You as like a a potential partner do They look at you and do they call you And say like hey this person selling a Jedi robe and they got a picture of Anakin that's no bueno but you could do Like a Jedi night robe it's cool you This I'm just picking we have a we have A a good relationship with with rights Holders we invest a lot in it so that we Have a special portal for all the big Rights holders like the ones you named Where they can go and just um list Anything that they see that's violating We immediately take it down um and then We also have flagging so any other Customer can take it down we also build Our own automated tools where we Proactively look and take down things That we think are highly likely to be Violating the proactive one's tricky Because it's hard for us to know for Example uh it might be an original uh You know piece sold by the original Rights holder which is now vintage um And right so uh I'm a big fan of Blade Runner I found some Blade Runner Memorabilia um and then some people make Deckards jacket from Blade Runner my Favorite film um and so yeah it's a very Unique thing like uh a cyber Punk is not Owned by Blade Runners so a cyber Punk Jacket like really Scott got that from Other people so like the the origin of
It so I guess if people are making you Know there's Indiana Jones but then There's also you know somebody who is an Adventurer like you don't get to own the Adventure hat so how do you deal with The area actually cyber Punk is really Popular and steampunk also very popular Uh on on uh there we've got so much cool Stuff stuff in that so that's where we Partner with rights holders and that's Where there needs I know there's a lot Of conversation around section 230 and There needs to be a lot of conversations Around section 230 but I will say it is Critical that we have a true partnership With rights holders we care a lot about Only allowing things onsy that are Allowed to be sold you know where where The the rights are okay but we couldn't Possibly arbitrate what is and isn't Violating without a strong partnership With the right holder yeah I think you Know YouTube does such a good job of Just saying like hey um this if you feel This is yours here are your four choices You can slam the person and you know Take it down and they get to claim its Fair use and you go through that process Or you can just take the revenue and if That person's cool with it there's that Option they did they ever come up with Like a hey these artisanal people can Make their own versions and pay a Percentage did you ever try that with
Somebody like JK Rowling of like this Artist wants to make wizard outfits and You don't own Wizards and Gandalf Existed before you Wizard and there were A thousand Wizards in public domain uh You know stories so you don't get to own Wizard but do you think you want to like Anoint this person to make wands we've Actually had rights holders approach us And say look we have licensed gear in The following four categories and here's 50 categories where we don't have any Licensed gear and we'd love to open that Up to all your sellers and sweet we just Haven't it sounds great and then you get Into the legal complexities of Who Police how you and you know one of the Things about every year being a year of Efficiency and a very lean team is we're Always looking at one of the fewest Things we need to do to succeed this Year and we are blessed to have a lot of Great ideas that we call them the Worthwhile many not the vital few yeah Yeah the worthwhile many but not the Vital few is just the one the a Founder Once told me like this is such a great Idea Jal let's put it on the not right Now list and I was like so not that good Of an idea it's like no this idea is so Unique that we're going to put it on This list we don't forget it's a good You know we talk a lot a good idea is Table stakes and of those we're going to
Take the top 5% you know uh so what are The three or four maybe five things We've capacity to do this year and Acknowledge the fact that there's a very Long list of ideas that are Strategically aligned you'd be proud to Talk to your board about it has a Positive MPV and you're not going to do It I mean th Meeting those tests is just Table it would be so interesting though For a podcast like Allin that's very Popular to say something to the effect Of hey um we're going to do this uh Merch drop right and just bring us your Top 100 people who opt in uh from Etsy Give us 10% of whatever sold and we're Just doing it as a marketing thing and We're going to do it just in January Drop make whatever you want sell Whatever you want you know just here's The brand guidelines don't say anything About this this and this topic whatever The brand guidelines are and uh yeah Just go for it like a very interesting Marketing Concept like the one I don't Know if you saw what Brian did with Airbnb and they built um the X-Men house Or you know they had these themes houses So yeah it's it was very very cool Concept and that's all my daughters can Talk about is going to the X-Men house Now so it's really interesting this IP Thing but yeah we'll put it on the not Right now list uh amazing guest uh would
You come back in a year can we do this Like every year because I just love Talking to you is it possible sounds Great I look forward to it all right We'll see you all next time on week in Stars bye-bye
