Etsy’s IPO begins trading tomorrow, Thursday, April 16th. The online craft marketplace will be the largest B Corp to go public.
Etsy’s stated mission — “To reimagine commerce in ways that build a more fulfilling and lasting world” — is bold and decidedly social. Founder Rob Kalin launched the company in 2005 after struggling to find a place to sell his carpentry and artwork. He has been quoted as saying he started Etsy with sustainability and entrepreneurs, like himself, in mind, and that the enterprise would not become a ‘faceless corporation’ such as eBay or other online marketplaces.
By enabling small vendors to sell to a global audience, Etsy soon became the darling of artisanal commerce. But now, 10 years later, the media is buzzing about how the company that built a handmade, homegrown aesthetic can maintain its values with an influx of new shareholders. “Can Etsy blow up and keep its soul?” asked Grist. Too late, Wired concluded; the company already lost it.
Critics point to Etsy’s 2013 vendor policy changes as a harbinger of its departure from ideals. Suddenly shop owners could hire help, use shipping services, and partner with outside manufacturers — as long as they explained how a product was produced. Some sellers felt betrayed. And Etsy readily admitted that it struggled to define clear policy on what constituted a “handmade” product.
Etsy’s IPO is a case study in the growing pains of a socially minded business. At the same time vendors are accusing Etsy of selling out, the Wall Street Journal gibes that its offering is quaintly artisanal; the company is focusing on fewer big investors and actively courting individuals that share its sustainability ethos. In reality, a relatively small portion of shares (15 percent) is set aside for these small investors, with 5 percent dedicated to Etsy vendors. The majority will be sold to large institutional investors.
Etsy maintains it will continue to empower artists and designers. The “Etsy Economy,” explained on its website, is a place for creatives to find meaningful work, selling their goods to “thoughtful consumers.” The company’s SEC filing includes a diagram of the “Etsy Empowerment Loop,” connecting crafters to buyers in meaningful relationships. Etsy has also been a certified B Corp since 2012 and scores above average on the B Corp impact assessments.
Skepticism about Etsy maintaining this performance begs the question: Is a public offering compatible with its promise to empower small-business vendors?
It’s easy to group Etsy in with other ‘micro-gig’ companies (the TaskRabbits, the Ubers) that fuel the “1099 economy” — in which everyone’s got jobs but few make a living. Of course these companies want to grow, and indeed they are rapidly doing so.
But Etsy’s raison d’être has historically been different from these other examples. I don’t take Ubers for a ‘unique’ experience; I ride because they’re cheap. In my nostalgic mind, Etsy’s value proposition was something different than efficiency; it offered distinctive products and a relationship with a vendor.
Some would argue that Etsy fans such as myself have being fooled by “The Quaint Economy” marketers, in which companies reflect back their audiences’ values with compelling stories. That respect Etsy had for everything vintage, and homemade, and small-scale? Just a manufactured aesthetic; a narrative sold to me by a business with conventional capitalistic aims.
Early on in Etsy’s history, Kalin shared his vision for growth in a 2008 company blog post. Kalin records himself reading a children’s story in which a small fish, Swimmy, stands up to hungry tunas by organizing his scrawny counterparts to work together. Swimming in formation the small fishes can appear as one bigger fish, with Swimmy serving as the eye. Kalin writes:
“So our vision is to be the eye — to be a kind of organizing principle. We do not want Etsy itself to be a big tuna fish. Those tuna are the big companies that all us small businesses are teaming up against.”
Does an expected $1.8 billion valuation count as a big tuna fish? Kalin no longer leads Etsy, so perhaps his Swimmy vision is a moot point, even if it was genuine. Still, might it be possible that Etsy becomes a ‘good’ big tuna?
Here’s the issue: ‘good’ is relative; big doesn’t necessarily mean bad, and small doesn’t mean better. Companies are malleable assemblages of people and they don’t have souls. They can have ideals, missions and defined values, but the path to fulfilling them remains a subjective art.
B corps agree to consider stakeholder interests as integral to their corporate responsibilities. After Etsy goes public, it will have many more stakeholders to accommodate; the shareholders who don’t care that a product is handcrafted or organic will now have a say. But it doesn’t mean they’ll choose badly, or that Etsy will abandon its small vendors. If Etsy wants to keep the majority of its customer base, it would be wise to embolden vendors with sustainable products and transparent processes.
Current Etsy CEO, Chad Dickerson, recently wrote: “In an Etsy Economy, people come first.” The question will be, which people?