Advisor, Etsy
Chief Future Officer: Rachel Glaser, Etsy
Chief Financial Officers now play a critical role in shaping corporate strategy and positioning organizations to meet future challenges. This episode profiles Etsy CFO Rachel Glaser, who's keeping the e-commerce marketplace focused on growth as post-pandemic consumer spending tightens.
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About Rachel Glaser
Rachel Glaser, the chief financial officer of Etsy who plans to retire in 2025, discussed her strategic approach to the role and the company's positioning in a Bloomberg Television profile. Glaser described herself as a CFO focused on strategy and operations rather than technical accounting, emphasizing the need for a "strategic lens on what are the fewest things that matter to drive growth." She noted that Etsy's business model, which does not require investment in warehouses or inventory, generates free cash flow that the company has used for organic investment, mergers and acquisitions, and share repurchases to offset dilution from stock-based compensation. Glaser addressed several topics related to Etsy's strategy and values. She stated that the company's Super Bowl advertisement was intended as a product launch rather than a direct return-on-investment play. She contrasted Etsy with Temu, saying Etsy does not compete on price but on offering "special, unique, customizable" items. On artificial intelligence, Glaser said she does not believe AI is overhyped and that Etsy is "uniquely positioned to benefit" from a partnership between AI and humans. She also highlighted Etsy's climate efforts, including offsetting emissions from its entire ecosystem. Regarding her retirement, Glaser said she wanted to have time between working and pursuing other activities.
Transcript (63 segments)
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Narrator0:10
Consumers can fill online carts with just about anything they want and need. For everything else, there's Etsy. As the world consolidates more and more around a few big commoditized e-commerce players, the more they need an alternative to that. Etsy is a boutique among the supermarkets with its mission to keep commerce human and its inventory of unique and custom items. The Brooklyn based company has found firm footing as a destination for creative sellers and discerning buyers. Its annual revenue has tripled since 2019, and Etsy's stayed true to its roots thanks to a consistent and focused leadership team.
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Josh Silverman0:51
Josh and I started within two weeks of each other in 2017. We both were thrown into Etsy at roughly the same moment at a very turbulent time.
Strategic and operational rather than technical accounting. What we need is to have a good strategic lens on what are the fewest things that matter to drive growth for our business. And Rachel does a wonderful job at zoom out and zoom in. She's great at zooming out and looking at what is the strategic landscape and then zooming in and inspecting each of the projects underway to say, is it really driving value?
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Narrator1:38
The strategic landscape has shifted for Etsy since this duo joined forces.
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Rachel Glaser1:42
We had a lot of we called them watermelons on the floor because there was just so much low hanging fruit. And so we were able to make a lot of decisions that did kind of have immediate top line growth. And a lot of the metrics we looked at were very short term like conversion.
Those. We have to change our measurement techniques and we have to be able to say, well, what does that mean downstream for if we're measuring now engagement metrics, how what does that mean downstream for things like GMS revenue and EBITDA? Because we're still going to care about those things too.
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Narrator2:27
Rachel Glaser's strategic acumen has laid the groundwork for Etsy's financial future. During the next year, she'll hand the reins to a successor, having announced her intention to retire in June 2025. While she's ready for a new chapter, she's still full of enthusiasm for the job.
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Rachel Glaser2:44
It's highly creative and it's actually doing something for the world that feels good. You know, we are actually creating economic empowerment for creative entrepreneurs all over the world.
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Narrator3:10
How is the CFO role different in your...
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Rachel Glaser3:10
Person might actually be doing a forecast and reporting the numbers for SEC regulatory filings. And the other end of the spectrum, the CEO of the business or the GM of the business might be doing a product roadmap. But in the middle we do a lot of things together and, you know, very much hand in hand. We don't have to stick to our silo of what our role is. We're able to just know a lot about the business and contribute in lots of different ways.
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Narrator3:51
Shoppers flocked to Etsy during the first year of the COVID pandemic when the site became globally famous for its selection of handcrafted face masks.
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Rachel Glaser4:12
Headwinds. Back in 2020 and 2021, the government was literally shoveling money into people's pockets and forgiving student loans and giving people relief on their housing and business loans and things like that. And now all of that's gone. It's a very tough macro right now for consumers, no doubt. But our job is to build value in the company over the medium term.
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Josh Silverman4:35
Rachel is very long term minded. She always has been.
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Rachel Glaser4:39
People's balance sheets are starting to be depressed and we are at the discretionary end of a discretionary consumer product. And so we definitely feel it. But we also are a tiny piece of an enormous addressable market. So the opportunity for Etsy is quite vast. And I think our differentiation and our machine learning tools.
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Narrator5:10
Amazon's CapEx investment is estimated at around 70 billion for this year. Similarly with Google, it's 50 billion and for Meta it's 40 billion. So right there we are at almost 200 billion just between these three companies. A lot of that is going towards AI, not all of it but a lot of it. As a leader in technology for as long as you have been, do you think AI is just as landscape changing as everyone else seems to think it is?
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Rachel Glaser5:42
Sometimes things are overhyped. I don't think that AI is overhyped. I think Etsy is uniquely positioned to benefit from AI. Finding that needle in the haystack is tricky. That's part of what makes Etsy both delightful and frustrating to people.
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Narrator6:15
AI can help Etsy's customers personalize their searches and steer shoppers more directly to items they may want to buy. It's also helped the company improve reliability by predicting delivery times more precisely. But that doesn't solve a larger challenge: getting more consumers to think of Etsy more often, and ultimately become repeat buyers. To this end, Etsy invented Gift Mode.
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Rachel Glaser6:36
Getting in that top of mind consideration. When you're thinking, I have a gift, I'm going to go to Etsy. Just getting that to be more habitual. Gift Mode provides a perfect opportunity for that. We get to know the gifter, but we also get to know the recipient. So it's a way to sort of a more viral way to bring in more and introduce more.
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Narrator7:11
What to get. It's easy with Gift Mode. You took a big, bold, fast bet this year and went for a Super Bowl ad. How much is marketing part of the process? How important is that as a cost base?
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Rachel Glaser7:23
Yeah, I love marketing. I was told by another CEO that I worked for that I'm the most growth oriented CFO that he had ever worked with because I'm a big believer in spending that money to increase brand awareness. The big bet on the Super Bowl ad was never intended to be an ROI positive investment. It was really intended to be a launch of a new initiative, a product. We said a lot of times that it was a kick off and not the mic drop.
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Narrator7:53
Multiple gift occasions each year gives shoppers multiple reasons to visit Etsy.
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Rachel Glaser8:10
Those are buyers that come six or more times a year or spend $200 or more a year. We have more of them coming from the app because once you've got the app you've got a little bit more skin in the game and you find your way to a great product more easily.
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Narrator8:26
But while Etsy takes steps to raise its own game, it faces external threats as well. E-commerce sites like Temu and Shein have come on the scene, offering mass produced lookalike items at lower prices. These are Asian companies that have entered the US markets and they have seen a lot of growth. Temu was launched in 2022 and in a matter of a year they got 15 billion or so in GMV or total sales. That is a dramatic rise for a company. To a consumer, maybe when I'm looking at my budget Temu is more attractive just because of...
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Rachel Glaser9:12
And there's a role for that in life. You know, people need things that are really cheap. We are not trying to compete on price, that everything can be one dollar less expensive or can get to you two days faster. That's not our value proposition. Our value proposition is special, unique, customizable.
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Narrator9:32
Etsy has backed up that proposition with policy updates that more sharply define its standards and ensure that sellers fulfill its handmade promise.
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Rachel Glaser9:42
On one end of the spectrum, you've got things that are very clearly Etsy. They're handmade or they're vintage, and you can, you know, you can with your eyes closed, you can say, yes, that belongs on Etsy. And on the other end of the spectrum, you can say this clearly does not belong.
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Narrator10:12
Temu, but the more that succeeds, the more people will crave an alternative to that. And no one is better positioned than Etsy to be the alternative to that. Bolstering the strength of Etsy's positioning is its House of Brands approach. The company added peer to peer marketplaces for musical instruments and fashion, buying Reverb in 2019 and Depop in 2021. These purchases fit with Etsy's mission while broadening its reach.
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Rachel Glaser10:39
Depop is a super cool apparel brand. It fit really well with us in terms of apparel being one of our largest categories. It helped extend the demographics of Etsy that they are a much younger Gen-Z demographic. And Reverb by and large was in a category that we weren't in yet, so it helped extend our category and expand.
In marketing or things like the cloud. You can do M&A or you can return it to shareholders. And we've pretty much done all three because of the benefit of our business model. We don't have to invest in warehouses and distribution centers. We don't have to make billion dollar bets on inventory and hold it, and maybe it sells, maybe it doesn't. It all moves into free cash flow. So we have lots of choices with that capital. We've been doing a pretty robust share repurchase so that we offset the dilution created from the equity we grant to our employees in the form of stock based compensation.
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Narrator11:44
When Rachel Glaser retires in 2025, she'll have spent nearly two decades as a chief financial officer, including seven plus years at Etsy. Her path to the role was hardly by the...
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Rachel Glaser12:11
Father had done and thought I would study organizational behavior there, and maybe the career path would have been either an H.R. function or consulting. Glaser landed her first job out of business school as a financial analyst at Disney and found herself moving in a new direction. It was a brand I had loved all my life, and it started me on this path where I realized you could use finance from a leadership position where you can gather a lot of information and use that to make the best decisions for growing your business.
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Narrator12:43
Disney served as a springboard to senior finance roles at consumer facing tech companies, a speciality she's honed at Etsy.
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Rachel Glaser12:51
I've been in Internet businesses since 2005. I know a lot about Internet businesses. I know about running profitable...
And so I think that's worked really well, particularly in Etsy's environment where we're highly collaborative.
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Narrator13:21
Maintaining a collaborative culture while still giving employees flexibility has challenged companies in the wake of COVID. Rachel Glaser says it hasn't been a big issue for Etsy.
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Rachel Glaser13:29
Before the pandemic hit, a material part of our workforce was already remote, mostly in engineering. I'd say about a third of the company worked remotely. We really prepared for this potential pandemic coming. So we had switched over to Google Meet as our video conferencing platform and had practiced it like, I think literally one day before we decided we needed to close the office. So we were ready to be a virtual company.
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Narrator13:55
I mean, I know you love to measure stuff. How do you measure the productivity?
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Rachel Glaser14:12
We measure things like velocity, how fast we can get a product from an idea all the way into an experiment and into the market. So we can see those metrics and we can see that we've maintained or even improved our productivity.
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Narrator14:29
Productivity and creativity are both essential to Etsy's culture, from its location to its décor. The company's Brooklyn office reflects that stylish vibe. Hubs in Dublin and Mexico City also offer distinct advantages.
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Rachel Glaser14:41
Dublin has been with us since the beginning of the company as part of our legal entity structure, and a lot of my finance team is there actually as well, and we've got a lot of our payments organization there. Mexico City was again another way to expand our reach of engineering...
Demand is a little bit lighter and we get incredibly good, talented people to come work for the company.
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Narrator15:21
Another Etsy product that's made with care and purpose is its annual report. Each year since 2018, the company has published an integrated report combining environmental, social and governance metrics with financial metrics in a single document. That structure keeps sustainability commitments front and center.
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Rachel Glaser15:39
Internally, we measure our what we call our impact goals, which other companies might call ESG, but it's social goals, it's environmental goals, and it's governance goals. We work really hard just to keep, from a climate perspective, keep our footprint as minimal as possible, but we also...
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Narrator16:10
Seems to have swung the other direction.
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Rachel Glaser16:14
Yeah, we do hear some kerfuffle about that. But I think our margins are very strong. It's amazing how little you can spend to actually offset your entire carbon footprint. It's not economically a hindrance to us. And I think you can't fault us for our profitability. Our revenue per headcount is incredibly high. Our bottom line is very, very strong. And we're able to do all these things probably in part because we're such a good part of the planet and in investing for sustainability.
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Narrator16:48
As Etsy looks ahead to growth, the e-commerce company sees room to expand its marketplace globally. Most of its revenue currently comes from the U.S. and U.K.
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Rachel Glaser17:12
In Asia. Or in Latin America to boost the demand side of the equation. But we have a tremendous amount of really fantastic supply coming out of some of those markets. And what we have started to do is invest in fulfillment partners, because how can we treat Europe as if it's one market rather than every country being cross-border so that we can actually scale Europe as a whole? And so we're investing there in that strategy of cross-border removal of friction.
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Narrator17:42
Glazer has been a trailblazer for women in corporate finance, starting her career in an era when female CFOs were few and far between. Their ranks have doubled in the last decade. She's doing her part to keep the trend going.
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Rachel Glaser18:12
Mobility, I've got a rich playing field from which to move them up. So, you know, at Etsy, 50% of the company is female, our board is 50% female. And even in our technology organization, about one third are female. So we really work hard to have a diverse environment.
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Narrator18:30
What would be your piece of advice to someone who's a little bit jealous of that?
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Rachel Glaser18:37
You know, first of all, make it a real initiative. Don't just hope for the best and then ignore it. 80% of our sellers and about 80% of our buyers are women. So it's very important that we have strong female representation in this company. It's a business need that makes us better.
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Josh Silverman18:53
But certainly I think Rachel is a great role model and she's a wonderful leader who thinks a lot about talent.
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Narrator19:13
Rachel Glaser has built a foundation for Etsy's future success as she prepares to hand the reins to a successor. I asked her what she sees when she looks ahead. Why did you think now was the right time to retire?
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Rachel Glaser19:25
Some people just work and work and work all their life. My plan is I didn't want to work every day until I can no longer walk. I wanted to have some time between working and doing other things with my life. Etsy does a really superb job of succession planning and it feels like every once in a while you want to bring in some fresh blood or you want to give opportunity to the team underneath you. And to do that, some parts have to, you know, come unstuck. And so it feels like kind of the right thing to do, to give opportunity to others to come and try this fantastic role.
Just starting... I also feel tremendously proud of the team I've formed at Etsy, the finance organization. We all really work together as a team and that doesn't happen by accident. That happens by identifying the right talent and being able to tap each person for their individual unique skills. And I feel really proud of being able to leave the company with that legacy of a great finance organization behind me.
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Narrator20:36
Can you complete the sentence for me? The hardest thing about being a CFO is...?
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Rachel Glaser20:41
Oh, everybody that takes on a CFO role, or I shouldn't say everybody, but most people have come up through one or two branches of finance or another. Most people haven't done the whole job. The job is not just being the executive of the finance function. It's being an executive for the company amongst a group of other executives in...
Know where you're all coming from so that it doesn't become a friction point, that you're actually unlocking opportunities.
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Narrator21:15
The role of a CFO has evolved so much in recent years. What do you think some of the future skills are for people who are coming up wanting to eye your job in ten years time or so?
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Rachel Glaser21:25
I think in a world with everything's Gen AI, there's a tremendous amount of regulatory compliance, privacy risk. In Gen AI, there's a tremendous amount of opportunity for investment that could run away with you. I think being very caught up and current on technology and how that can be a lever for growth. It's probably even more important for CFOs to stay close to emerging technology trends than ever.
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Narrator22:14
Congratulations. What advice do you say for their day to day working in the office? Working with the people that you're going to have to say goodbye to?
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Rachel Glaser22:22
Get the best out of the people that we have. To me, that's our number one priority. A smooth transition. I'd say get close with your peers. Make sure you're walking in their shoes and you're understanding their points of view where they see the levers are and they understand yours and get close to the sellers, understand what they're doing in their business, why they're doing it, where we can add value for them or not. It's not just all about, you know, scraping profit for Etsy, but how we grow together. And... shop.
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Caroline Hyde22:55
I'm Caroline Hyde.