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Etsy is a small company in Brooklyn competing against West Coast giants Amazon and eBay. So if you’re not a buyer or seller of crafts products, you’d be forgiven for not knowing it had fallen on hard times and then, as of last week, shown early signs of a remarkable recovery.
The little company’s stock spiked 20% after reporting dramatically improved financial results. Etsy moved $1 billion worth of merchandise in the fourth quarter, a 15% year-over-year increase. Its own revenues—the cut it takes from those “gross merchandise sales,” or GMS—was up 21% to $136 million. It made money after losses the year before.
The day after it reported earnings I had coffee in San Francisco with new Etsy CEO Josh Silverman, whom I’ve known since well before he was a big shot at eBay and American Express. Silverman was a board member at Etsy when he took over as CEO last year. His story of the first phase of Etsy’s turnaround is fascinating and impressive. It also reveals textbook tactics for improving a well-loved but underperforming business.
The first thing he did was get the company to focus on what matters—and stop focusing on what didn’t. “I observed that [gross merchandise sales] is the one metric that matters,” says Silverman. Before the company was measuring 15 or so metrics, which justified a lot of projects that may or may not have been worthwhile. In fact, he asked his new team to “stack rank” the 800 product initiatives in Etsy’s pipeline, all with an eye to what could goose GMS quickly.
The result: About half weren’t meaningful. Thirty-two—including seemingly trivial things like clearly explaining to buyers that Etsy didn’t share credit-card information with sellers—were deemed priorities. Others were discarded quickly, including a just-launched Etsy Studios product.
Silverman says the effect was to make Etsy faster. Yes, there were layoffs. But he says they were about focusing on needle-moving projects more than lowering headcount. He made it clear who was in charge of every important project, and he signaled that nothing could get in the way of the 32 fast-moving projects, called “ambulances,” that he deemed critical.
We spent about 30 seconds discussing Amazon and eBay, which Silverman brushes off by noting they “map to a catalog,” unlike Etsy, which sells unique wares.
Saying no to even good ideas, transparency with customers, clarity in management and strategy, a dramatically improved stock price. Little Etsy, now worth more than $3 billion, is off to a pretty good (re)-start.
Two weekend reading items: The annual Consumer Electronics Show in Las Vegas is so powerful now and such a magnet for car makers that the Detroit Auto Show, held just after it in January, is moving to later in the year … The San Francisco Chronicle went deep on the local political influence of investor Ron Conway. It’s a worthwhile read for its accuracy of tone and fact and its insight.
The Shape of Water. The digital currency markets have been volatile this year, but the industry itself is still booming. And that’s led to a hiring boom at some of the most popular cryptocurrency exchanges, including Coinbase, Kraken, and Circle, Business Insider reports. “There is a significant shortage of people who have expertise and acumen in this space,” Mike Poutre, CEO of The Crypto Company, tells the site.
Three Billboards Outside Ebbing, Missouri. Apparently, new Uber CEO Dara Khosrowshahi’s nice guy persona has some limits. Khosrowshahi has spent much of his six-month tenure apologizing for mistakes made by hyper-aggressive former CEO Travis Kalanick. But there were no apologies or kind words from Khosrowshahi when MIT published a study claiming Uber drivers were making only $3.37 per hour. “MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing),” he tweeted.
I, Tonya. The consumer-unfriendly war between Google and Amazon took another nasty twist. Amazon has decided to stop selling Google’s Nest line of smart home devices. Meanwhile, Amazon is in talks with banks including J.P. Morgan about partnering on a checking account-like product that would appeal to young people, the Wall Street Journal reports. “Depending on the perqs, I’m tempted to open one of these accounts and link a Target REDCard to it,” IDC analyst James Wester joked on Twitter. “Might as well get discounts all the way around.”
Icarus. Shareholders of Qualcomm will not be voting on a slate of possible directors from would-be acquirer Broadcom this week, after all. The vote has been delayed at least one month so that the government’s Committee on Foreign Investment in the United States can review the possible deal. It’s a weird development. The committee is meant to protect U.S. security interests by preventing, say, a Russian government front company from taking control of a key technology for defense. Broadcom was a U.S.-based company until two years ago when it re-domiciled to Singapore to save on taxes (with key operations staying put in the U.S.) but has announced it’s re-domiciling back to the U.S. within months.
Phantom Thread. Two encrypted messaging services, Signal and Telegram, suffered outages on Monday. Signal stopped working in Europe, the United States, Asia, and Australia. Telegram went down in Europe, the Middle East, and North Africa. Neither compared to the Amazon Web Services outage on Friday that took down digital assistant Alexa for a few hours.
A Fantastic Women. Some juicy Apple hardware rumors emerged over the weekend. KGI analyst Ming-Chi Kuo says Apple will issue a cheaper MacBook Air soon and updated AirPods in the second half of the year. Apple is also developing over-the-ear headphones with a noise canceling feature, Bloomberg reports. But the tech giant may need to do a little work on its own brand new headquarters–The San Francisco Chronicle reports on 911 calls about employees injured by running into the glass walls.
FOOD FOR THOUGHT
The arrival of faster 5G wireless networks requires the deployment of a vast amount of new network equipment. The new smaller radio stations, dubbed small cells, won’t go on big towers but have to be placed and distributed throughout neighborhoods. Big carriers want to all but eliminate the approval process from local governments. And that’s rubbing some ordinary citizens the wrong way, as Allan Holmes reports for non-profit investigative journalism site The Center for Public Integrity. The story starts with Marc King, a resident of Germantown, Maryland:
IN CASE YOU MISSED IT
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BEFORE YOU GO
Roger Deakins, the ace Hollywood cinematographer, had been nominated for an Oscar 13 previous times, for films including The Shawshank Redemption and Sicario, but never won. Never say never. On Sunday night, Deakins finally got his statue, winning for the moody, noir-ish look of Blade Runner 2049.