Gabby Jones for Forbes
On April 2, 2020, during the chaotic early days of the pandemic, Etsy CEO Josh Silverman awoke to a sales shock.
Every four hours, the company’s data-junkie boss received an update on the volume of personalized pillows, hand-sewn stuffed animals, vintage Victorian lockets and millions of other one-off items sold through the digital marketplace. Silverman had been rushing to cut Etsy’s marketing spending to prepare for a Covid-induced slump. But the latest report showed a surge.
The source: face masks. The press was reporting that the federal Centers for Disease Control was soon to recommend face coverings for all Americans. With inventory already difficult for first responders to find, civilians were flocking to Etsy’s ragtag community of hobbyists for their pandemic protection. “Until that day, if you searched Etsy for ‘mask’ you’d see Halloween costumes or face cream,” says Silverman, sitting cross-legged on a handmade modern wingback chair in Etsy’s still-deserted Brooklyn headquarters. “We had an emergency meeting to decide whether to double down on masks.”
The team was split. Some saw the face mask market as a fad. To others, it offered a chance for Etsy to show off the power and flexibility of its decentralized, nearly 3 million–strong seller community. “This was our Dunkirk, where we could mobilize cottage industry to come to the rescue,” says Silverman, who is 52. “The world’s supply chains had locked up. You couldn’t get face masks. Yet Etsy’s supply chain was just two hands making.”
Etsy rallied its sellers, emailing them info on mask materials and designs. Programmers retooled the site toward selling the PPE; the marketing team peppered the web and social media with ads. Within a day, an army of 10,000 independent crafters were hawking masks on Etsy. Within two weeks, 100,000 sellers were. By the end of 2020, Etsy had moved more than $740 million worth of masks—accounting for 7% of its $10.3 billion in gross sales (the value of everything sold on the site; Etsy takes a cut of each sale). It turned out to be perfectly positioned for the pandemic: Sellers had more time to craft furniture, art and toys, and quarantined customers were looking to buy it all. Etsy’s annual revenue increased 111%, to $1.7 billion; net income was up 264%.
“Home suddenly became your office, playground and day-care center,” says Jefferies analyst John Colantuoni. “That drove demand for unique and handmade products.”
Since Covid’s March 2020 lows, Etsy shares are up some 600%, torching the Nasdaq (up 115%), eBay (175%), Walmart (35%) and Amazon (100%). The 16-year-old company is worth just shy of $30 billion. Active buyers and sellers on Etsy have doubled to 90 million and 5 million, respectively. As with most digital retailers, growth has slowed in the second half of 2021 as the economy has reopened, but analysts are betting Etsy will hit a 30% sales increase in 2021.
This was our Dunkirk, where we could mobilize cottage industry to come to the rescue.
Let Amazon, Walmart and Target battle to deliver mass-produced items as cheaply and quickly as possible. Etsy has empowered an eclectic (and mostly female) community of crafters with the same cutting-edge AI, data science and marketing tools that the retail giants use. In doing so, Etsy, a member of Forbes’ Just 100 list of the top corporate citizens, has provided millions of moonlighters with crucial income—and purpose—in a time of unprecedented layoffs, lockdowns and dislocations. Says Silverman, “Our mission is to keep commerce human.”
Etsy has always been the crunchy kid at the country club. Founded by Brooklyn artisan Rob Kalin, it churned through CEOs before going public in 2015 as a Certified B Corporation beholden to strict environmental and community standards. Wall Street hated its do-gooder stance—and red ink. In 2016, Etsy’s net losses grew 45%, to $54 million. The next year, investors Black-And-White Capital, TPG and Dragoneer bought up shares, hoping to force Etsy to sell itself. Etsy pushed back. The board scrambled for a CEO to balance its mission-based employees and its money-obsessed investors. Silverman, who had joined the board in 2016, seemed a good fit.
Raised in Ann Arbor, Michigan, Silverman got a BA in public policy at Brown in 1991, worked for progressive New Jersey Senator Bill Bradley and later earned a Stanford MBA. In 1998 he cofounded Evite, the online invitation manager, before spending five years leading eBay marketplaces abroad. He turned around a struggling Skype in 2008 and later ran American Express’s credit-card business from 2011 to 2015.
With a maniacal focus on upping Etsy’s gross sales, he quickly slashed staff, departed most international regions and cut projects that wouldn’t create at least $10 million in gross sales. That included Etsy Studios, a craft supply website that 150 people, about 15% of Etsy’s total staff, had spent 18 months building. “It was as painful as it sounds, a real gut punch,” Silverman says. “We encouraged people who were motivated and believed to stay, and those skeptical to leave.”
He improved Etsy’s search tools, scrapped in-house servers for the cloud and invested in customer service. By 2019, Etsy’s market cap had risen 300%, to $5 billion. In all, since Silverman took the helm, shares have returned some 1,800%. “Prior to the pandemic, Josh did a great job focusing on the things that moved the needle on gross sales,” says Citi analyst Nicholas Jones. “It positioned Etsy to benefit from the demand surge.”
One challenge: enabling customers to find a one-of-a-kind product on Etsy as easily as they can a commodity on Amazon. To improve search and product recommendations, it’s building AI-powered computer vision tools to identify, tag and create structured data for its millions of unique items.
Notorious for slow deliveries, Etsy is also raising expectations for sellers. Crafters are being pushed to provide transparent timelines and improve customer communication. A new dashboard will show vendors how they rate for customer service and satisfaction. Overachievers will get higher visibility on the site. “We need to do what our sellers need, not want,” Silverman says. “To serve the sellers, you need to obsess over the buyer experience.”
I lead the Forbes CEO Network and cover leadership, technology, startups, entrepreneurs, investing, and finance. Write the Forbes CEO Newsletter. Former Editor of the
I lead the Forbes CEO Network and cover leadership, technology, startups, entrepreneurs, investing, and finance. Write the Forbes CEO Newsletter. Former Editor of the Forbes Under 30 and Podcast Host of the Forbes Interview. Founder of the Forbes Opportunity Zones Summit.