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Handmade Millionaire: How Etsy’s Founder Struggled to Make Commerce Human

The story of ‘accidental business person’ Rob Kalin — and his anti-capitalist vision of doing good for makers.

Acton Capital
Acton Capital
Published in
8 min readSep 29, 2020

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Etsy founder Rob Kalin

With its focus on unique and bespoke items, Etsy found its creative niche next to Amazon and eBay. Annually, merchandise worth more than $5 billion changes hands and Etsy was just added to the exclusive club of companies in the S&P 500 Index.

But the commercial success story of Etsy is that of Rob Kalin, the company’s eccentric founder and his idealistic approach to make commerce more human.

Although he stepped down twice from his role as CEO, without his pioneering vision, dedication, and unorthodox business approach the company would have never become what it is today: the leading global peer-to-peer marketplace for craft, vintage, and artisan goods.

A ‘self made entrepreneur’ and his handmade project

Rob Kalin loves making things. Although he is best known as the young self-made millionaire who founded Etsy, he prefers to think of himself as an artist and creator. “I see the company itself as a handmade project,” he once said, “and we’ll continue to build it this way.”

At the age of 16, Rob left home and moved into an artists’ squat in Boston to pursue his dream of becoming a photographer. After eventually graduating from high school, he attended five different colleges, worked numerous jobs, and in 2004 received his Bachelor of Arts degree from NYU’s Gallatin School of Individualized Studies. “I worked many jobs: cashier at a Marshalls department store, stock boy at a camera shop, freelance carpenter, lowest rung on the ladder at a demolition company, minimum wage floor help at the Strand book store (saving up to go back to college), amanuensis for an eighty-year-old philosopher from Vienna,” he wrote on Etsy’s blog. “All of these jobs prepared me for being an entrepreneur and starting a company.”

In early 2005, Rob and two friends, Haim Schoppik and Chris Maguire, worked on a design project for getcrafty.com, an online bulletin board for crafters run by the wife of an NYU professor. Kalin observed that crafters and artisans longed for a place to sell their products — and disliked eBay (over the years, the auction giant had raised its fees substantially). Within 10 weeks, the trio designed and coded a modest e-commerce website in Rob’s Brooklyn apartment. In June 2005, Etsy went online. “The industrial revolution and consolidation of corporations are making it hard for independent artisans to distribute their goods,” 25-year-old Rob Kalin stated in an interview with Readers’ Digest (via FrangiaEcochic) shortly after Etsy’s launch. “We want to change this.”

And they did. Sellers registered instantly, telling other crafters and spreading the word in online forums.

The early days: gaining trust by building things

“Rob’s idea was almost anti-commercial and idealistic,” one of Etsy’s early investors Christoph Braun, from Acton Capital recaps. “However, he made some commercially profound and pioneering decisions early on. Firstly, he regarded real conversations as his most important KPI, sellers and buyers communicating about materials, the crafting process, the story behind the goods. That was a new approach back then,” Christoph explains. “Secondly, Etsy chose innovative terms of fee structure: to get listed and upload products, the seller had to pay a small basic fee, and another transaction fee only upon each purchase. Prior to Etsy’s go-live it was either one or the other.”

“Rob’s idea was idealistic, almost anti-commercial.”

From the outset, Rob and his co-founders catered to their seller’s needs, constantly adding new tools to the site to help them gain exposure. They were funded by three angel investors from Brooklyn: a restorer and two local real estate developers that Rob had done carpentry work for.

“I gained their trust by building things for them. Building up your personal relationships, especially in the beginning, is hugely important,” he later said. “In my experience, in the seed and angel round, people are going to invest in people and products, not the business plan. Most entrepreneurs focus on the plan first, and they have it backwards in my opinion.”

Establishing “a global community of like-minded people”

By the time Christoph and Rob first met, Etsy had already become a force to be reckoned with. “I got to know him at the DLD Conference early 2007 in Munich,” Christoph remembers. “We had an inspiring mutual exchange of ideas and philosophies.” Rob Kalin from Brooklyn, NYC was aware of Munich icon Aenne Burda, not only as one of the most impressive postwar examples of female entrepreneurship, but also of her passion and legacy in the history of the Burda media house as one of the biggest worldwide distributors of sewing patterns and crafting publications.

Shortly after the talk with Christoph, the principled Etsy founder reached out for a potential investment from Munich. “Having already received funding by Fred Wilson and Albert Wenger [of Union Square Ventures], Rob could have easily teamed up with other big US investors,” says Christoph. “But he chose us, due to our ties to the ‘crafting world’. We loved his vision of establishing a worldwide ‘handmade movement‘, providing a platform for creatives from anywhere in the US, but also from places like Peru, Tanzania or the Black Forest that would otherwise never get the chance to present their unique goods to a global community of like-minded people.” Again, the magic of making things and shared values brought together vision and capital and everything seemed to be coming together nicely.

“We loved his vision of a worldwide platform for creatives from Peru, Tanzania or the Black Forest.”

“Keeping commerce human” and stepping down as CEO

To Etsy, interacting and communicating with its community has always been intrinsic — almost a decade before “conversational commerce” permeated retailers and start-ups worldwide. “Etsy stood out,” remembers Christoph, “by not only bringing street market goods online, but the whole aura and the stories that buyers of handmade products truly love.”

By January 2008, Etsy had 650,000 users in 127 different countries. But the creative energy of the founders had turned into creative chaos on the management side. Etsy had grown so rapidly that even Rob himself began to wonder if he was the best person to lead the company. Finally, in June 2008, he demoted himself to Chief Creative Officer, and Etsy’s former COO Maria Thomas became the new CEO. “Maria has the skills and experience required to lead Etsy through the upcoming years, and that is what she’s here to do,” his press statement reads. ”I’m a hands-on guy, I need to be building things to feel like I’m making a meaningful contribution.” Soon, the D.I.Y. evangelist was devoting all his energy to a non-profit organization that helped Etsy sellers to build a business.

While real-time customer communication through various messenger applications and bots is today a priority for the world’s biggest companies like Facebook, Shopify, or Google, Etsy has always made a point of “keeping commerce human.” Unusual? Sure. Successful? Definitely.

Commercial success and struggle for authenticity

In late 2009, however, Rob was forced to turn his attention back to Etsy: under Maria Thomas as CEO, the company had doubled gross merchandise value (GMV) and reached profitability but failed to address continual complaints from sellers regarding customer support and the site’s performance. Rob complained that the company had lost its way and, in pursuit of growth, wandered away from its core values. ”I’m here to restore a sense of wonder, a sense of poetry, and a sense of foolishness to Etsy,” he told his employees as he returned to Etsy.

Soon, he had doubled the staff and added new features — including a social media function similar to those of Facebook — as a way of intensifying Etsy’s mission that goes beyond commerce. “On Facebook, you’re not going to connect with people who have different religious views, different political views, different tastes,” Rob Kalin explained. ”Etsy adds a whole other layer on top of that: if a person who has different religious or political views is making me a custom sweater, I’m going to have this long conversation that I would have never had. To me, that’s a beautiful thing.”

“I’m here to restore a sense of wonder, a sense of poetry, and a sense of foolishness to Etsy.”

When Rob, aged 30, left Etsy in the summer of 2011, he had already been honored as a “technology pioneer” by the grandees at the World Economic Forum’s annual meeting in Davos. Given the circumstances, Chad Dickerson — who had been hired by Rob as Etsy’s CTO three years prior — became CEO.

7bn market cap

The company was a venture capital favorite with over $40 million in revenues, nine million members who sold 10 million handmade and vintage items, and more than 800,000 active online shops. In 2015, when Etsy went public in a $100 million IPO, the community had grown to nearly 60 million members, and nearly $2 billion GMV, and about $200 million in revenue (according to Statista Inc.). Four years later, the company had a market capitalization of more than $7 billion.

Photo by Morning Brew on Unsplash

Eternal quest to balance doing well and doing good

While it is unclear what turn of events the company would have experienced with Rob as CEO, what’s certain is that none of this would have happened without the young idealist, who valued his crafting community more than money. Rob, the accidental business person, and “more of an artist than an entrepreneur,” as Etsy’s early investor Fred Wilson once described him in the The New York Times, always thought that trying to maximize shareholder value was ”ridiculous” and stated

”I couldn’t run a company where you had to use that as an excuse for why it was doing things.

Today, the soft-spoken visionary is back doing what he loves most, in a former mill in Catskill, New York with a small community of artisans. Here, Rob makes his own wooden furniture, has built his own cob oven to bake his own bread, sews his own underwear, manufactures high-end horn speakers, and colors self-made unisex tunics with a carmine dye, yielded by insects that live in cacti.

”I speak to people in the business world and the technology world, but I don’t admire them,” he once said in an early interview with inc. magazine. “I admire the makers of the world.”

And while its founder returned to his crafty roots, Etsy — meanwhile run by former Skype CEO Josh Silverman — still follows Rob’s early tracks with its mission of “keeping commerce human” in the eternal quest to balance doing well as a public company with doing good for the creative makers of the world.

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Acton Capital
Acton Capital

Writing about tech-enabled business models, ready to scale & built to last.