"What are the fewest things you can do?" How Etsy found success in single-minded focus

"The main thing is keeping the main thing the main thing," says CEO Josh Silverman.

When it comes to e-commerce, there’s increasingly just one name in town. But the rise of Amazon has given Etsy, an online marketplace for handcrafted and vintage goods, its raison d’être: “The more the world has a default, the more it craves the antidote,” says CEO Josh Silverman. If Amazon is the suburban megamall, Etsy is the quirky downtown boutique. Silverman, who took the helm in May 2017, sees the company as an answer to our modern anxieties, connecting makers and consumers and empowering businesses of one. “At this time when automation is changing the nature of work, Etsy's never been more relevant,” he argues. “Creativity can't be automated.” This is our conversation, edited and excerpted for length and clarity. 

You became CEO at a time when the company was struggling but also picking up from a pretty popular CEO, Chad Dickerson. What was your strategy going in?

It's always hard to follow a very popular, well-liked and capable leader. What I think I brought to Etsy more than anything is focus. The main thing is keeping the main thing the main thing. We have had a singular focus on the core Etsy marketplace and in particular on one metric: gross merchandise sales. That's really the size of the pie, it's “how much did our sellers sell?” 

Previously, there were a host of metrics that we looked at as a company. The challenge there is, if you have an idea and you can show how it makes one of those metrics better, that can give you permission to move forward. In other words: if it's a good idea, you can do it. That's far too low a bar. What we asked ourselves was not, "Is it a good idea?" but, "What are the fewest number of things we need to do well in order to succeed?" That leads to an entirely different conversation, where we stopped more than half the activity in the company and did the remaining work with far greater focus — and, as a result, far better execution.

So you were more focused on what you needed to stop doing as a company.

Stopping bad ideas is easy, but I talk to the team a lot about the vital few versus the worthwhile many. There's a very long list of good ideas. They're strategically aligned, you'd be proud to talk to your customers or your board of directors about them. And if you try to do all of them you'll get absolutely nowhere. So the trick is to say no to most of them in service of the fewest most important.

That requires some courage and conviction. It was tough on the team, but I think everyone's felt the fruits of that. 

How do you rally people around that, when it means giving up projects they might have put a lot of their heart in? 

Grounding people in the mission has been incredibly important. There are 2.1 million sellers who wake up every day counting on Etsy. Life's not that easy for them and they have to make pretty difficult choices. They often do it without the benefit of a beautiful office, great pension plans, health benefits and all the other things that come with working for a leading company like ours. So we owe it to them to have the courage and conviction to do the tough things and dig deep to serve them well.

How do you make sure your team keeps them front of mind? 

It'd probably be a rare day that someone at Etsy is not meeting with sellers. One of the things we started doing as soon as I got here was every All Hands starts with a video of a seller telling her story — what she does, why she does what she does. 

We did it at Skype; that's where I learned that. When I came into Skype, it was incredibly messy. The brand of the company was “the company that Meg Whitman had overpaid for.” I was shocked to see all of these people hanging their heads low, feeling bad about something that doesn't matter. When you’d talk to Skype users, again and again we'd hear these incredibly heartwarming stories of how we'd kept families together. We started bringing those stories into the room to remind people why we do what we do. It was a great learning for me at Skype that translated super well at Etsy.

E-commerce has changed dramatically in the 13 years Etsy’s been around. How do you survive and differentiate yourself when Amazon is eating the world?

The world is collapsing around one or two default distribution centers that do commoditize all of our purchases. In many ways consumers benefit from that: there's lots of disposable commodity products you need every day. You just want them cheap and you just want them fast. 

Etsy is where you go when you want to buy something that expresses your sense of style or identity, that shows that you care for someone else, that comes with a story. When you want it to have meaning, Etsy's the place to go. I think the more the world collapses around these few mass retailers, the more relevant Etsy becomes as an alternative.

That's really dependent on your sellers, right? And it’s interesting to me that they’re mostly women, creating opportunities for themselves by selling to other women. Talk to me about them. 

Exactly. There's about 2.1 million sellers, 87% of them are women, well over 90% of them work from home, mostly in businesses of one. They're able to run a global business from their living room or their garage and do it on their own terms. Almost half of them report that they started their Etsy shop as a response to a financial need in their family. Just over half say that the first thing they ever sold was on Etsy. We're really a path to entrepreneurship and a path to independence for a great many people all around the world. 

You also have more women working at Etsy than in most tech companies. What have you done that could inspire the rest of Silicon Valley?

It's been an important component of our success: more diversity leads to better decision-making, leads to better outcomes. Much of commerce is disproportionately female, so I think many companies would be well served to be disproportionately women-led. Half of our board of directors are women, the majority of the executive staff are women. In fact, over a third of our engineers are women. We're roughly double the statistics in other best-of-breed tech companies. 

It's been a sustained effort over a long period of time, there's not a silver bullet. You need to hire great people and have a real lens on making sure that you're attracting people from different backgrounds in your candidate pool. And then you need to create an environment where people from different backgrounds can succeed, can grow their careers, learn and bring their whole selves to work. 

Social responsibility has been core to Etsy from the start but a couple years ago, you let your B-corp certification expire. How do you think about your responsibility as a business today?

We are one of the first companies to publish what's called an integrated report, meaning that together with our financial results, we also publish our social impact results. We are a substantially more diverse company than we were two years ago and we have substantially reduced our carbon footprint. In fact, we became the first e-commerce company of any scale to become completely carbon neutral. We now offset all of the carbon from shipping.

The B-Corp required that as a public company we get a 75% vote of our shareholders to re-certify. That was just not practical. I think we've done a tremendous job in the past two years to disprove that notion, that somehow being a C-Corp keeps us from being a good citizen. I'm certain that's not true and in fact, I think that message is a really damaging message for the world. If companies cannot be good citizens and be good businesses, where are we?

A shorter version of this interview is published in the July 2019 issue of Delta Sky magazine. #5MinutesWith

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