Co-Founder, Etsy Inc
TechCrunch Interview With Etsy Founder Robert Kalin
Interview
About Robert Kalin
In a 2017 interview on the podcast *How I Built This*, Etsy co-founder Rob Kalin discussed the company's early growth and his departure. Kalin stated that Etsy generated $1 million in sales during its first year, and he described the initial challenge of building a two-sided marketplace as a "classic chicken and egg problem." He also recalled being fired in 2011 by investor Fred Wilson during a lunch meeting, saying Wilson told him "We have to do this" without providing a reason, a process Kalin compared to a "Kafka novel." Kalin also reflected on the tension that arose after Etsy brought in a professional COO who later became CEO. He said that when a CEO is brought in and the founder retains power, "it almost never works out" and "creates a lot of conflict." Kalin, who founded Etsy in 2005 to help makers sell handmade goods, said he returned to a quieter life as a maker after being fired.
Transcript (16 segments)
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Robert Kalin0:10
Scoble just won't stop by without us, and we are officially in the hallway, which means we can be on record. Yeah, which is great.
So I wanted to talk to you a little bit about Etsy, because I've been actually writing about the company since I think 2005. Yeah, you're very early, but we never met, and you've had a lot of success since then.
Yeah, you're the very first person to write about it. When was that? When did you launch?
I launched in June of 2005.
How old were you guys?
So I age into your increment, a portrait in the attic that ages for me. So you're 20 years old? No, no, now I'm 25. I launched at 28, now I'm 28. Okay.
And what's happened? What is Etsy?
Etsy is the standard pitch: an online marketplace for handmade goods. There's also art and supplies, so it's basically a P2P marketplace. That's it.
I know a hundred million dollars worth of goods were sold on Etsy in 2008. A little bit less than that, but yeah. Okay, so that's the general size. What if we can? A lot of people buy things. My favorite categories are music, but the most popular stuff on the site, because it's 97% women user base, so jewelry is the number one selling category. Behind that, there's also really vibrant, beautiful, really crappy handmade. Truly? Oh, come on. Crappy and handmade are, in my mind, oxymoronic, because in any class of goods, the most expensive stuff... I'm learning a great interviewing technique here: just slam the interviewee. Is all happy, right? Like suits. What are the most expensive suits? Handmade. See? So just because it's handmade jewelry, it's nice. Now anyone, I can't make your shadow. It is slice across them. I created speeds.
You know, I'm actually trying to curate my entire life pretty much just handmade stuff. No, I just bought really one of the things I was waiting for. Is everything you're wearing bought on Etsy? Anything you learn? A lot of it is. I mean, the shirt, the shirt, the stuff you can't see. Any good jacket? First store, okay. Yeah, similar steady. Now when I started, I was waiting for a luthier to show up because I want to buy a guitar on it. And so, lo and behold, about a year after I started the site, Adam Armor Guitars, James in Springfield, an hour above Nashville, Tennessee. And actually, we have a feature called Alchemy where you can just make a request for people to make things for you. So I requested that he make me a guitar. I went down and visited him while he was making the guitar. But you know, the scope of what is handmade is huge, I think, and especially in times like this, we just had record revenue.
Because we have three different revenue sources. Okay, we don't disclose the exact amount, but yes. What are those? There's a 20 cent listing fee, 3.5% sales fee, and then we run our own in-house advertising. We're able to showcase polka. So those two things constitute the total revenue stream.
And you raised, you said, $35 million? Yeah, we had angel money from Caterina and Stewart, nationally Joshua Schachter, and our advisors. It's kind of right after they had sold their companies, which really helped me. They invested in Etsy. And the first VC round after that was led by Union Square Ventures, with Fred Wilson joining the board. And then, you know, I always want to do things in stages. So we built a solid business off that, went to kind of view the standard Sand Hill Road show out there, and ended up with Accel, which I might actually work with. Yeah, so Jim Breyer.
Had to look over disabled toys. I think he's a little bit more of a keen observer than that. He's never gotten us confused, for sure. So what does he may think about this whole thing? We have pretty friendly relations with him. You know, even early on, we've been asking them for advice. And some of the people say that a lot of the spirit even had early on, they see you really evident in what else he's doing now. How many of your 60 employees used to work at eBay? I don't think any. No, let me see. We kind of benefit from being an East Coast company up against were hired to these different talent. Yeah, we actually did. We had one guy who came in as VP of Engineering, and he lasted three months. He said he was going back to work at eBay because I think companies don't think you're autocratic management. Sorry.
Yeah, they buy two crappy pieces of jewelry at one time. Oh, come on, Mr. Arrington. No, I honestly have been on the site since I wrote about it the last time, and I'm going to go on. What would you like to buy? What do you value in life? Fine cheeses, fine suits, fine wines, cars. I'm not that much of a material guy. I value friendship. But by friendship on the site? Yes, that's a big part of shopping.
Like, haha. Oh, how much of the $15? How much do you get to keep? There's a 3.5% sales fee on that side. So our goal there was to prohibit flow, especially below in Vegas when you're watching, you're competing with them and reselling them in a crazy way. But if you search for jewelry on Etsy now, there's about ten times as much.
Interview why? Because I have the camera. Hope that doesn't matter very much. Your time, I appreciate it. Except for that one thing that will cut out and people won't have any idea what I was just talking about.