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Matt Stinchcomb EtsyHandmade marketplace Etsy was never a conventional tech company. Started in 2005 by a ragtag bunch of musicians, artists and makers who wanted somewhere to sell their own creations, by 2010 it was handling $400 million in sales and had yearly revenue of $40-$50 million. I talked to Matt Stinchcomb, Etsy’s European director and one of its first employees, about marketing, micro-enterprise and sheep.

Etsy started in Brooklyn, New York. CEO Rob Kalin had drifted through five different colleges before finally ending up at NYU and sharing an apartment with Stinchcomb. “He thought he wanted to be a philosophy major but he loved making furniture. He was one of those people who was annoyingly good at everything that he did,” said Stinchcomb. “He was just looking for a place to sell his own stuff and there really weren’t any good options. Rob was coming at it from the lens of someone who is a maker. He wasn’t coming at it from the point of view of ‘what’s the best business model?’ He wanted it to be cheap for creative people because they don’t have any money and he wanted to make it easy to use.”

Etsy’s products are mostly handmade. In 2010, it listed more than 6.7 million products of which the most popular categories were jewelry, art supplies and vintage. In contrast with marketplaces like eBay or Amazon, most Etsy products are sold by their makers. The market is built around “the idea of having a connection to the products in your life, products that aren’t anonymous. Knowing where they are coming from resonates on a human level.”

Etsy’s mainly female users tend to be very passionate about the site. I dropped into an Etsy meetup in Amsterdam last year. The atmosphere was halfway between an Alcoholics Anonymous meeting and a gospel revival. This was particularly unusual to see among the sober and level-headed Dutch. Each seller told the group what she sold on Etsy and why. People brought samples and presents for Stinchcomb (Etsy offices are partly furnished with gifts from sellers). One couple explained how their Etsy shop was now paying their mortgage.

Buyers are equally enthusiastic. Prolific Etsy shopper Jennifer Hicks told me, “I discovered Etsy about five years ago when I was looking  for a specific type of earrings. In fact, I remember the search terms to this day ‘Ottoman style earrings’. The first site that came up was Etsy. I did not know at the time what Etsy was and to be honest, didn’t understand how it could work, how someone could make for me exactly what I wanted, out of the material I desired and just ship it to me anywhere I was. Since then, I use Etsy for just about everything when it comes to jewelry and clothing.”

Etsy’s founders continued to plough their own unique furrow. “Rob hired me to do marketing and I have no experience in marketing,” admitted Stinchcomb. “But I actually think that was also really good for the company. At the time I was in a band (The French Kicks) and he said, ‘Well you made your band have an audience and be somewhat successful. Why don’t you do the same thing?'”

In fact, most of Etsy’s first employees had neither a technical or business background. Many early Etsy hires were sellers who had been successful on the site. “We took an unconventional approach from the beginning where we really focused on trying to build up the community around Etsy because 1) we didn’t have a big marketing budget and 2) the more I read marketing books the more convinced I became that direct marketing was just a waste of money,” said Matt.

The tech press never really “got” Etsy. A 2009 TechCrunch interview featured that site’s editor, Michael Arrington, asking questions like “Is it all really crappy handmade jewelry?”. In fact, Etsy’s ambitions are broader than those of most tech companies.

“When you get to several hundred million dollars in sales and realise that 96.5% of that is going back to individuals working from their homes you start to realise that this is a bigger idea than just a place to buy and sell stuff,” said Stinchcomb. “We think there is a more sustainable model which focuses on micro-enterprise and micro-economies.”

Etsy will run a conference on small businesses and sustainability in Berlin this year.

Stinchcomb hopes that in a couple of years from now, Etsy will not just be about handmade and vintage goods but also about agriculture, music, entertainment, services and even local currencies. Etsy could support community supported agriculture projects so you could invest in a local farm. According to Matt, “a farmer’s market is just an Etsy event offline.” Already, Etsy users can buy wool directly from a seller who has a flock of sheep.

“I would love to see Etsy connecting more with the real world where we could allow people to source materials locally and ship locally and allow people to filter searches by carbon footprint,” said Stinchcomb. “What gets really interesting locally is also the idea of local currencies. I would love to see an Etsy currency evolve. We could create a whole new economy of micro-economies.”

One criticism which as been leveled at Etsy is that it doesn’t have more male users because most sellers don’t make much money. Only 25 percent of Etsy sellers describe themselves as professional artisans. Matt told that part of the reason the site is more than 90 percent female is that the marketing was mainly word of mouth and women were the first users. The site is trying to encourage more male sellers and products for men. Etsy’s new focus on personalization may also help there.

That is in itself an interesting technical challenge. Many of the objects you can buy on the site defy categorization, making search difficult. Last year, Etsy acquired a company called Adtuitive to improve discovery and personalization. A new feature called the taste test, a sort of “Pandora for Etsy”, is being trialed. Social graph features, which tap connections between people from services like Facebook and Twitter to better understand users’ tastes, are also being rolled out.

Finally, I asked Stinchcomb what advice he would give to new tech entrepreneurs. His response: “Always be honest and do what you think is right, not what will make you the most money.”

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