Like many entrepreneurs, Etsy CEO Rob Kalin likes to build things. The son of an architect, Kalin grew up believing that if you need something, you make it. So it was after Kalin built what he describes as a “couture computer,” a computer surrounded by a wooden case, that he faced a dilemma — where to sell it. After researching and finding limited options online to market his creation, he took matters into his own hands. The result was Etsy, an online marketplace of handmade and vintage products.

“‘Handmade’ is more of a type of conversation between two people than it is a means of production,” said the 29-year-old Kalin. “It’s about human-to-human transaction. Once you have that connection, things become a lot more meaningful.”

Helping craftspeople become entrepreneurs

Launched in 2005 and based in the New York City borough of Brooklyn, Etsy provides consumers a destination to buy items directly from the people who make or discover what they’re selling. Currently, 6 million items are listed, and buyers can purchase everything from handmade jewelry to vintage clothing to shoes to ceramics, and much more. The company primarily earns revenue by charging sellers minimal listing and transaction fees. In 2009, gross merchandise sales generated $180 million.

Etsy defines itself as a “community and a company.” In just five years, the company has created an online community of over 5 million members and 400,000 sellers. Along the way, it has also created a new breed of business owner.

“We’re empowering hundreds of thousands of entrepreneurs around the world to start and run their own businesses,” said Kalin. “These people who are selling on Etsy are not just selling to make money. They’re selling because that’s part of defining who they are.”

‘Keep it human’
A privately owned company with less than 150 employees, Etsy takes a unique approach to business. The company’s mantra is “keep it human.” To that end, Kalin said Etsy places strong emphasis on values and community rather than spreadsheets.

“There’s a big difference between making profit and maximizing profit,” Kalin said. “I definitely don’t want to maximize profit. I want to maximize our impact on the world.”

This focus on value and handmade goods has distinguished Etsy from online juggernauts like Amazon.com and eBay. “Everything that Amazon is really good at,” Kalin said, referencing Etsy’s handmade focus, “I have no interest in having on Etsy.”

He took it a step further with eBay. “EBay really took a turn for the worse when they started letting big-box retailers liquidate overstock on their marketplace and actually gave them lower fees,” said Kalin. “Etsy is about empowering the very, very small businesses of the world. And that’s going to mean putting up fence posts that keep out those larger businesses.”

Buyers find value in meaning
Etsy empowers and supports its community with extensive customer service tools, including online forums and instructional videos, and by doing what it does best — connecting people to people. Kalin said Etsy’s commitment to community and its values paid off in a poor economy.

“When there’s an economic downturn, people shift their values,” said Kalin. “When you’re shopping on Etsy, you’re shopping with this understanding of value that isn’t so tied to price. It’s more of the story of the item and the meaning it’s going to have in your life.”

Five years removed from trying to sell his couture computer, Kalin believes Etsy is just getting started. “Etsy is still much smaller now than I ever envisioned,” said Kalin. “Facebook has 500 million monthly active users. Etsy has about 1 million. We have a long, long way to go.”

Antonio Neves is an award-winning journalist, host of Business on Main’s Web series, “Cool Runnings,” and a correspondent for NBC NextMedia. Find out more at www.antonioneves.net.

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