Floral high hells from the ’50s and a concrete flower bowl don’t seem like the makings of a blockbuster Web business. But they have been for Etsy, an online emporium mainly serving women, which has grown explosively since it was founded six years ago by a Gallatin undergraduate, Haim Schoppik, and two of his Gallatin friends who had recently graduated. Etsy resembles Amazon or eBay, except its vendors offer only unique, vintage, and handmade goods. Today, this DUMBO, Brooklyn-based virtual crafts fair employs 175 people and sellers in 125 countries. Management has also said publicly that an IPO is in its sights.
Etsy’s reported $300 million in annual sales is derived from the 3.5% of every sale it takes, plus a 20-cent fee for each item listed. Along with crafts, there is fine-art photography, bath and beauty products, edibles, and crafting supplies.
The venture began with a problem: Co-founder Robert Kalin, a Gallatin grad and woodworker, had created a wood-encased computer he couldn’t sell. With Chris Macguire, a friend who also had recently left Gallatin, they began trying to start an online crafting community. Quickly, they learned from handicrafters that this lack of a market was everyone’s else’s biggest problem, too. In 2005 they brought in Schoppik, then a Gallatin student and a self-taught computer whiz who’d built complex networks, honing his skills before NYU at a telecom and then Goldman Sachs. The three cofounders holed up in a Brooklyn apartment and, with backing from a few friends, worked a several-month marathon to launch Etsy.
Schoppik says his Gallatin classes had gotten him interested in exploring online communities. Before the launch, he’d built a virtual community for Gallatin students as an independent study, which had discussion forums and a space to review professors. When the Etsy prelaunch marathon began, he says, Gallatin offered fertile ground for working out his thoughts and issues. “I’d be sitting in classes and ideas would come up and I’d realize, ‘This can instantly go into practice,’ ” Schoppik says. His adviser, Gallatin Associate Professor Stephen Duncombe, was an influence at the time.
Once launched, the startup attracted star funders, including Caterina Fake of flickr, Union Square Ventures, Hubert Burda Media, and Jim Breyer at Accel Partners. Its growth, with their backing, was phenomenally fast.
Schoppik left in 2008; today he and Macguire lead Postling, another Web startup offering small businesses a simple platform to publish to the social web. Etsy continues to grow, adding popular features such as a “shop local” option (letting buyers transact with sellers nearby, cutting long-distance shipping emissions).
Etsy’s founders’ NYU experience was an important influence, Schoppik says, helping them understand the value and power of virtual community. Today Etsy reportedly boasts seven million “member” users, dubbed “a fervent following” by Newsweek. “I had technical knowledge and skills. What I got at NYU was everything else you need in a startup: How are you going to manage community? Deal with irate customers? Forge the emotional connection you need?”