If Kalin seems like a knot of contradictions, so does the company he created. Etsy promises to bring entrepreneurial success through arts and crafts. "Anyone here—if you're in school or out of school, or if you're any age—can start a business from home," he told the audience of The Martha Stewart Show in early 2008. This message—with its echoes of the "eBay millionaire" dream of years ago—has been extremely effective as a marketing strategy, attracting some 400,000 tiny companies to Etsy and helping create one of the largest, most chaotic flea markets the world has ever known. In 2010, Etsy sellers moved $314 million worth of merchandise—cuff links made from 19th-century shotgun shells ($50), knives forged by a master blacksmith in Albuquerque ($150), sweaters knit by a grandmother in Portugal ($225)—a 74 percent increase over the previous year. There is so much weird stuff on Etsy, in fact, that it has spawned a fan site, Regretsy.com (tag line: "Where DIY meets WTF").
Three hundred and fourteen million dollars is an impressive sum, but it amounts to about $785 per seller after commissions—and before taxes. It seems fair to assume, using statistics the company has released, that there are fewer than 1,000 sellers who make $30,000 a year or more, and a mere handful who make more than $100,000. As one of the site's top sellers wrote in a blog post in 2009: "Your odds of making $10,000 per year [on Etsy] are better than winning $10,000 through the Powerball, though not by a ton." The only Etsy millionaires, it turns out, are Etsy shareholders.
Etsy requires that all new products listed on the site be made by the people selling them—the use of mass production, that wonderful innovation of modern capitalism, is verboten. "Etsy has made it possible for a lot of small businesses to get off the ground," says Dale Dougherty, co-founder of O'Reilly Media and the publisher of Make magazine, which covers the do-it-yourself economy. "But even the most successful crafters run up against the limits of their own labor. Handmade can be a limited idea."
In other words, the very qualities that make Etsy so attractive to new sellers put the most successful Etsy sellers in an awkward position: They must stay small or abandon Etsy. For Kalin and his investors, the questions are even tougher: Can a site dedicated to DIY scale? Or is Etsy, despite Kalin's ambition and grandiosity, just a small idea?
In January 2008, two and a half years after founding Etsy, Kalin posted a video on the company's blog of himself reading a children's book. The book, Swimmy, by Leo Lionni, which Kalin read with the careful intonation of an elementary school teacher, is about a small fish that bands together with other fish to scare away a hungry tuna. "We do not want Etsy itself to be a big tuna fish," he wrote. "Those tuna are the big companies that all us small businesses are teaming up against."
Us small businesses. It was a strange formulation, given that the occasion for the reading was Etsy's acceptance of a $27 million investment led by Jim Breyer, a venture capitalist with Accel Partners who sits on the boards of Facebook, Dell, and, to the consternation of the Etsy faithful, Walmart. At the time, the company had monthly sales of about $4.3 million and monthly Web traffic of about 230 million page views. "This means that we now have the resources...to enable so many more people to make a living making things," Kalin wrote. "Our goal is for Etsy to be an independent, publicly traded company, focused on all things handmade."
