Etsy: Rob Kalin

Rob Kalin founded Etsy for people like him: makers and hobbyists. In 2005, he was kicking around New York trying to find buyers for his hand-made furniture, when he noticed that other craftspeople had the same need. So he and a few friends built a website where makers could sell a wide range of goods. Rob named it after an Italian phrase he heard in a Fellini film, and within three years, Etsy passed $10 million in sales. But as a young founder, Rob struggled to manage the rapidly-growing company; and in 2011, after being fired without warning, he returned to a quieter life as a maker and small-businessman. Meanwhile, Etsy has become one of the most popular online marketplaces in the world, with $2.5 billion in revenue. This episode was produced by Kerry Thompson with music by Ramtin Arablouei. Edited by Neva Grant, with research from Sam Paulson. Our engineers were Gilly Moon and Maggie Luther. You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected]. This episode is brought to you in part by Canva, the easy-to-use online design platform for presentations, social posts, videos, websites, and more. Start designing today at Canva https://urldefense.com/v3/__https:/www.canva.com/for-teams/features/brand/?utm_medium=display&utm_source=audio&utm_campaign=us_en_all_free_bra_consideration_2023wwydth2_na&utm_term=Wondery&utm_content=Broad__;!! Iwwt! QqxHLNtUdpIIxw_krrv7MGmnfzwbBOrZD_G9svhEPDTxFavPcc1bbAOKSfMgNFRuyum5kSUDDOm6HzG0$ – the home for every brand. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2 a.m. kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one hard question. How do we make sure AI goes well for people? So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan,

• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

  Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems. But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands, on the table in rewards you never earned, money that could have gone back into the business. Path B, you pause and get the US Bank Triple Cash Rewards Visa Business Card. Now, you're earning 3% cash back

• 2:16Guy Raz?

  on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever,

• 3:00Guy Raz?

  new Delta SkyMiles Reserve American Express Card members can earn two Delta Comfort Round Trip flights for travel within the 48 contiguous US states, Puerto Rico, or the US Virgin Islands. Plus, you can earn 50,000 bonus miles towards your next getaway. And who doesn't appreciate an elevated airport experience? Delta SkyMiles Reserve Card members get access to the Delta Sky Club, your pre-flight oasis to recharge, with 15 visits and four one-time guest passes each medallion year when flying Delta together. That's up to $950 in annual value. Value estimate based on $50 per visit rate to purchase additional visits

• 3:45Guy Raz?

  or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the car that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in, filling up, and getting on with my day. And it reminds me a little bit of the founders I talked to on this show, because the best

• 4:27Guy Raz?

  ones obsess over things their customers will never see. Tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port fuel-injected engines. Actual results may vary. Visit mobilefuels.com for details.

• 5:12Speaker 01

  I had a bi-weekly lunch with Fred, you know, one of the investors.

• 5:18Guy Raz?

  Fred Wilson.

• 5:18Speaker 01

  Yeah, Fred Wilson. I thought I was just going to lunch to chat about Etsy and went to their office and met him. And he told me that I was fired, but he didn't tell me why. He just said, "We have to do this." And I remember saying, like, "You don't have to do this. Like, you're choosing to do this." And the whole process felt like it was something straight out of a Kafka novel.

• 5:51Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:02Guy Raz?

  I'm Guy Raz, and on the show today, how Rob Kalin followed his passion for making things by creating Etsy, one of the biggest and best-known online marketplaces in the world.

• 6:17Guy Raz?

  Let me tell you a little bit about what Rob Kalin, the founder of Etsy, is up to these days. He left the company more than a decade ago, and today, he lives and works in a small town in upstate New York, in the Catskills. Rob rebuilt his entire house from the ground up. He even built the furniture for it. It's actually beautiful stuff, super spare and minimalist wooden tables and chairs. He started another business not too long ago, making handcrafted, high-fidelity speakers. Don't bother looking for them at Best Buy, they are custom-made and very expensive. Someone is actually selling a pair of them online for close to $50,000.

• 6:58Guy Raz?

  Soon, Rob plans to launch yet another business, a learning tool for kids that blends technology with old-school, hands-on toys. Now, the point of all this is to explain, if it's not already clear, is that Rob is very much a maker. He is exactly the kind of person he had in mind when he created Etsy. Back in 2005, when the website went live, Rob and his co-founders wanted to create a marketplace for makers who could sell their stuff and be part of a community. Today, Etsy is one of the biggest online marketplaces in the world, close to 100 million active buyers, and about $2.5 billion in annual revenue.

• 7:42Guy Raz?

  But a lot of that growth, it actually happened after Rob left the company. Like many of the stories we've told here on the show, founders, even the most creative and passionate and visionary founders, aren't always the best leaders. Or they might be great leaders at first, but not necessarily the right people to grow and scale a company. And that's OK. There's nothing wrong with that. But this is exactly the challenge Rob faced. Back in 2011, he didn't exactly leave Etsy to sail off into the sunset. Rob was fired, suddenly and without warning. And for Rob, it was a huge, personal blow. He was 31, and Etsy was his life's work.

• 8:26Guy Raz?

  For a few years, he brooded over what happened, but eventually, Rob recovered and settled into a life as a maker. It didn't hurt that Etsy's growth and Rob's stake in the company also made him a wealthy man. So this is a story of triumph and loss, wild success and failure, and everything in between. But we'll get to all of that. What you need to know for now is that Rob Kalin grew up in the 80s and 90s, just outside Boston. His mom was a teacher, and his dad was an architect. Rob describes himself as the kind of kid who had trouble sitting still. And as he got older, school got a lot harder, to the point where he just decided to leave.

• 9:10Speaker 01

  When I hit my junior year of high school, I just stopped going to school. I did not tell my parents I stopped going to school. I would leave in the morning and pretend like I was walking to school, and I would go into Boston. I was really into photography. I was taking pictures, built a darkroom in the basement. Eventually, I got a job at a camera store near Boston, and I would just walk by school and go to work, and felt like that was a much better use of my time.

• 9:35Guy Raz?

  So you would just, you just wouldn't, I mean, didn't that catch up with you? I mean, didn't eventually, like, your grades start to suffer and your parents start to sort of ask you, what's going on?

• 9:45Speaker 01

  Oh, yeah. The ruse was up when the first report card got mailed home. And what's interesting was, I didn't have bad grades. I had incompletes, which I think was the letter N. And my brothers and sisters' report cards were on the fridge with their high marks. And I remember... Opening my own report card, highlighting all of the ends and then putting it on the fridge and then just kind of going to my room and forgetting about it. And when my dad got back from work that day, my door got forcibly opened. And it was, you know, it was an interesting moment because there's this really strong equation between do well in school and then be successful after

• 10:30Speaker 01

  school. And it definitely wasn't an equation that I was subscribing to even at that point. And so fixed my door and that was my introduction to carpentry. And then from that point on, had a pretty strong sense of, okay, I need to figure out what I want to do. And, you know, I think in some ways, that's one of the most valuable skills I learned going through that public schooling system was just like how to carve out my own path or how to walk away from something and then turn towards who I am and what I want to be doing.

• 11:04Guy Raz?

  So you did manage to graduate from high school, I think. And fair to say, kind of barely?

• 11:10Speaker 01

  Yeah, so I stopped going to high school for my junior year. And then at the end of that year, most of the advice being given to me was just go take your GED and then we'll figure out where you can go after that. And I was a hundred percent in my like, you know, rebellious phase. So I graduated with a 1.4 GPA. I mean, I was walking a very fine line to try and figure out, you know, exactly how much effort I had to put in, in order to graduate, all the while still focusing on, you know, the photography. And I remember during the latter half of my junior year, my mom just dropped me off on the main street in town and said, don't come home until you have a job. And so at age 16, I started working as a cashier at Marshalls.

• 11:54Speaker 01

  And again, like very valuable experience, not an easy place to work and making less than, I don't know, eight dollars an hour at that point. So it would have been 1996. And working through the holiday season with, you know, I was probably the only person under the age of 50 working there.

• 12:14Guy Raz?

  I guess you spent a little bit of time at art school in Boston.

• 12:21Guy Raz?

  After high school, but you you eventually made your way down to New York.

• 12:25Speaker 01

  Yeah, so when you're in art school, the idea of making it as an artist in Boston just doesn't even count. You have to get to New York City. And so I went to New York City and I remember interviewing at the Strand Bookstore and getting that job for, again, under $8 an hour and just living pretty close to the bone for my first first year in New York City and started doing construction work at night. So trying to just get a little bit more money saved up so I could go back to school.

• 12:56Guy Raz?

  And what kind of construction work were you doing in New York?

• 12:59Speaker 01

  I started out with just simple two by four framing of things and then ended up taking a full time job at a construction company that was renovating a beautiful brownstone on the Upper East Side. And I remember waking up at 5 o'clock in the morning and getting on a super packed subway and just doing a very physically demanding job during the day. They were in the kind of demolition phase of the renovation and you're the lowest rung on the ladder. I was essentially just carrying barrels full of plaster lath down four flights of stairs for most of the day. But for sure, being able to watch the other people on the job. And it's not even just the work that they're doing and the skills

• 13:40Speaker 01

  that are required. It's it's who they are and how they show up and what their personality is and this kind of community and camaraderie that gets built on on a job site full of people doing pretty difficult work. And that really stuck with me even outside of that environment.

• 13:59Guy Raz?

  And I guess when when you were in New York, you also kind of went back to school. I mean, not kind of, you did. I think you took some classes at the New School and like Greek and Latin and then you transferred to NYU, the Gallatin School there, and you studied Classics there as well, which which seems like kind of a departure from what you were doing like with photography and and the arts.

• 14:24Guy Raz?

  So after you you graduated, what kinds of things were you thinking about doing?

• 14:29Speaker 01

  Yeah, so there was always this momentum pointing me towards the arts. And so, you know, I ended up graduating college midyear and I had a full year's worth of student loans. And a friend called me and told me that his roommate moved out. He was living in Paris. And so I went and lived in Paris for for a season. And then coming back to New York City after that, as luck would have it, you know, I ended up dropping a rent check off one day and my landlord was talking on the phone and reading a piece of paper. And I jokingly handed him my rent check, knowing that he'd have a free hand and with this little pantomime where he couldn't accept it unless he handed me what he was

• 15:12Speaker 01

  holding. And so I took what he was holding and I read it. And it was a proposal to make a website for this restaurant that he owned called Acme Bar and Grill on Great Jones Street. And he said, covering up the mouthpiece of the receiver, can you beat that price? And I, again, jokingly, just kind of said, I'll do it for half. And he goes, OK, great. And he kind of shooes me out of his office. And I leave his office, holding this piece of paper that was someone else's proposal to make a website for this restaurant and was like, all right, I guess I'm doing this. You know, I remember the proposal was for 1,600 bucks. And I was like, I guess I'm doing this for $800.

• 15:49Guy Raz?

  And did you know how to make a website?

• 15:51Speaker 01

  Absolutely no idea. I didn't even know how when you type something into a web browser, it went and found the files. I thought maybe the files had to be on your computer somewhere. And, you know, this whole concept of, you know, what I now have a pretty good understanding of, wasn't present for me at all. But the challenge of, you know, how do you populate this website with content? So I had to go talk to people. I had to go take pictures. I remember learning Dreamweaver and put all of these things together that I didn't really know and made what I'm sure is, by all means, a completely mediocre website. But the process was fascinating to me. And, you know, I remember being in art school and I was learning anatomy and old master painting at that point. And I would go down

• 16:35Speaker 01

  to the computer lab once a day to check my email. And I would see all these people hard at work staring at computers. And I would think like, that is definitely not for me. But lo and behold, you know, the piece that we think Is not what we're going to be is what becomes the cornerstone of what we're going to build next.

• 16:55Guy Raz?

  So basically, it was an opportunity to build a website. And that's kind of, just by default, you kind of start to like, figure out how to do this. So that kind of became a little business.

• 17:07Speaker 01

  So I made that first website. And because this is, I don't know, 2003, I got known as, oh, this guy can make a website. And the wife of one of my NYU professors, Jean Rayla, was running a website called Get Crafty. And she needed that website rebuilt.

• 17:28Guy Raz?

  What was Get Crafty?

• 17:30Speaker 01

  Get Crafty was a community site, really like a forum with people sharing what they were working on and talking about life. And, you know, one of those beautiful early examples on the web of these kind of like watering holes where people just kind of gathered and talked. And there wasn't all of, you know, there were no algorithms manipulating people's attention. There weren't even really any ads being served up on this. And so she was just like, hey, I need this rebuilt. I hear you make websites. Can you help me?

• 18:05Guy Raz?

  And this was not a commercial website. It was just like a community board for people to like, I guess, post photos of what they were work, like the crafts that they were working on.

• 18:15Speaker 01

  Exactly. And there was a dynamic element to it that I didn't know because I was just doing the front end work and didn't know how to do any back end work. And at Gallatin, there was someone known for writing code, and I reached out to him. So Chris and I built Get Crafty, I imagine, in a couple of months.

• 18:37Guy Raz?

  And when you say Chris, you're talking about Chris McGuire, the guy you met at NYU, who would go on to found Etsy with you?

• 18:43Speaker 01

  Yeah, so the idea was, let's start a little web dev shop and we'll go look for more clients and we'll do bigger work. And we were able to parlay building Get Crafty into a couple other projects. You know, a lot of times we didn't have any say on the design side. And after several months of that, I remember telling Chris, I just want to build something that's our own, that we can kind of steer the direction of. And I set up a wood shop in my bedroom in Brooklyn and got to making furniture. And when I was looking to actually try and sell the furniture, you know, all of the storefronts where you could sell it are taking a large commission and aren't really looking for mediocre furniture made in a bedroom in Brooklyn.

• 19:27Guy Raz?

  Yeah. By the way, what kind of furniture were you making?

• 19:30Speaker 01

  At that point, mainly desks. And I was specifically trying to make desks with a computer built into the desk. And I was also just studying the history of furniture and getting a sense of like different styles, different cultures, and trying to think like, what's like a Brooklyn vernacular for a furniture aesthetic in the early 2000s?

• 19:50Guy Raz?

  Were your desks, I mean, really good? Were you good at woodworking?

• 19:55Speaker 01

  Compared to, so I've been woodworking more or less continuously for the past 20 years or so. So, I mean, compared to what I can make now versus what I was making then, no, I would not say they were very good.

• 20:10Guy Raz?

  Right.

• 20:10Speaker 01

  You know, again, they were a very good attempt at expressing something and exploring something. And so, running up against this challenge of, well, how do I sell it? And not really having access to any storefronts. And I was like, okay, you know, I'll try and sell this online. And, you know, there really isn't much infrastructure for doing this at this point in the world. You know, this is 2004. And the only option for selling it online was eBay at that point. And really had no interest in doing that. So, built a website to sell my own furniture.

• 20:46Guy Raz?

  Right.

• 20:47Speaker 01

  After doing that, one of my friends who also made furniture said, hey, I need a website. Can you make me one so that I can sell my own furniture? And, you know, it wasn't a big leap.

• 20:59Guy Raz?

  And this is like 2000, this is like 2005.

• 21:02Speaker 01

  Yeah, this is, yeah, this is probably early, early 2005. And, you know, I'd made Get Crafty and I'd seen the power of all of these people sharing a space together and communicating about what they were making. And then, you know, my friend is like, can you make me a website? And so I said, instead of making you your own standalone website, why don't I just kind of create a place where we can both sell what we're making? And I remember going to Jean, who was running Get Crafty, and saying, you know, could we add a tab on here for a marketplace so people could actually sell some of this stuff? And, you know, she's very thoughtful and decided against it because, you know, that

• 21:45Speaker 01

  energy of commerce really wasn't a part of the community at that point. And so I asked for her blessing to kind of just go off and try and build this thing on my own. And lo and behold, that was the seed of what eventually became Etsy.

• 22:03Guy Raz?

  And so when you, and by the way, the name that you picked for this website, Etsy, where did that come from?

• 22:10Speaker 01

  Yeah, the naming process, there's something quite ineffable about that, where it has to feel right. And I was looking for something that could just have this emotional connotation of no baggage plus here's something new. And ended up, you know, mishearing something in a Fellini film and looking up the dot com for that. And by some very strange stroke of providence and luck, the four-letter domain for etsy.com was available.

• 22:45Guy Raz?

  And you'd heard this, you thought that you heard somebody say Etsy in a Fellini film?

• 22:50Speaker 01

  Yeah, I think in Italian it means and if or something like that, etsi, etsi. And so I was specifically plumbing the depths of my, you know, Latin and Greek language learning to try and come up with a word that

• 23:05Guy Raz?

  Right.

• 23:06Speaker 01

  wouldn't mean one specific thing. And, I mean, I remember my Greek professor, companies would contact him all the time, usually pharmaceutical companies, to help him create names for, for different kinds of, you know, drugs that they were creating.

• 23:20Guy Raz?

  Right.

• 23:21Speaker 01

  And I also, I think even at that early stage, had a sense that I wanted it to be a global brand. And so if it was just two English words stuck together. I felt like it would be more difficult. So I wanted to create a kind of playful, nonsensical word that had no branding baggage attached to it.

• 23:37Guy Raz?

  So you said you were thinking about a global brand. So I mean, it sounds like from the get-go, you had ambitions about this. It wasn't just, let me just build this thing and sell my woodworking stuff. It was more like, let's see what we can do. Let's see how big we can make this.

• 23:52Speaker 01

  Yeah, so there was this moment where I was sitting in a chair by my window in my apartment on South Elliott Place in Brooklyn, just starting to sketch out the causal chain of what Etsy could be if we started from these principles with these values in this community. And it just became so clear to me, even at that moment, how big it could be and where it needed to go. And there was absolutely this sense of inevitability, pretty much from that moment on.

• 24:26Guy Raz?

  Let me come back in just a moment. How Rob and his partners launch Etsy, move from an apartment into an office, which they soon discover is not an easy place to pull an all-nighter. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, small business leaders. On How I Built This, we hear all about how founders have built their companies from the ground up. Today's sponsor, Justworks, makes it easier for you to start, run, and grow a business. Let me tell you how Justworks can help your business.

• 25:08Guy Raz?

  Whether you're looking for help with payroll, benefits, HR tools, or compliance, Justworks has you covered. And Justworks makes it simple to hire and manage remote employees across all 50 states. Its cloud-based platform enables managers and employees alike to quickly and securely access benefits, payroll, and other HR functionality from anywhere, anytime.

• 25:31Guy Raz?

  Justworks also believes that it's your right as a customer to have a phenomenal service experience every time. Whether you have a question about setting up benefits, paychecks, or anything else, their team of experts is standing by 24/7, ready to guide you. Learn more about Justworks and how they can help you get more done by visiting justworks.com/podcast. That's justworks.com/podcast.

• 26:01Guy Raz?

  Hey, it's Guy here, and I've got a quick request for all of you. Name a public figure who's really inspired you. Just let me know on the How I Built This community Miro board. Go to miro.com/built and add your thoughts. That's M-I-R-O dot com slash built. It's that easy. Miro is actually sponsoring this episode, and if you haven't heard of it, it's this incredible online workspace. Our team relies on Miro for a lot of our own brainstorms and processes. And I think it's super useful to try out if you want to build something great with your team. While you're leaving your answers, feel free to play around on Miro's platform. You can pick from plenty of templates to get started,

• 26:42Guy Raz?

  like a quick brainstorm, or icebreaker, or a flowchart. I cannot wait to hear from you on our Miro board. Maybe, who knows, you'll inspire me to reach out to some of your suggestions to have them on the show. Go to miro.com/built to leave your answers with sticky notes, comments, and reactions. Miro dot com slash B-U-I-L-T. Miro dot com slash built.

• 27:09Guy Raz?

  One more thing before we get back to the show. Every time I run into a How I Built This fan, the first thing they want to do is tell me about their favorite episode, which is so awesome. So now, I want to share your favorite episode with the millions of people who listen to this show. Episodes they might not have heard or might want to hear again. So here's what I want you to do. Grab your smartphone and record a short memo, short, like, less than 30 seconds, and tell us your name, where you live, and which episode is your favorite, and why you loved it. So, for example, I might say, Hey, it's Guy Raz here in San Francisco. And my favorite episode of the show is the one about Hamdi, Lakaya, and Chobani,

• 27:50Guy Raz?

  because I learned so much about how to just push through when nothing seems to be working out. And it gave me a whole new perspective on being resilient. So that's it, something like that, you know? And by the way, that's not my favorite episode. I love them all equally. Anyway, once you're done with the recording, email or message it to us at [email protected]. And we'll share your favorites right here in the ad breaks in future episodes. Thanks so much. You guys are the best.

• 28:27Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2005, and Rob, his friend Chris McGuire, and another guy from college, Haim Shopik, decide to devote their full attention to building the website that will become Etsy.

• 28:43Speaker 01

  That was the kind of seed getting planted of like, OK, let's build our own thing. I now had to go out and do some fundraising. And obviously, like, I've never done fundraising before. And I was actually finishing up building a bar in the apartment of what became Etsy's first investor, Spencer Ayn, along with his brother Judson. And when I was done building his bar, we were just kind of chatting. And I was like, hey, you know, here's this other project I'm thinking of doing. Do you have any interest in it? And he kind of looked at the bar, and he looked back at me. And he's like, if you can build that, and he really liked the bar, then I'm sure you can do a good job building this.

• 29:25Speaker 01

  And he's like, you know, come back tomorrow and I'll have a check for you. And, you know, I still remember that experience. He lived near NYU's Stern, like their business school. And went back the next day, picked up a check, Etsy's first money in, for $50,000, and walked by Stern and was like, you know, I did it. Went to the bank. That seemed like a kingly sum of money to me. I was like, this is enough money to run Etsy for, you know, as long as we need to until it gets profitable.

• 29:57Guy Raz?

  Yeah. Tell me, and how much did you, did you need to raise or did you raise initially?

• 30:03Speaker 01

  So at this point, I didn't even know that startups were a thing and didn't have a sense of like, oh, okay, there's a difference between an angel investor and institutional investors. So I went to my grandfather and I told him what my intentions were. He was the kind of, you know, businessman in the family and he worked at IBM back in the 50s and 60s and just said, hey, like, here's what I'm thinking of doing. So there was this sense of like, okay, he'll know what to do. And I remember telling him, all right, you know, here's my idea for the business and here's the capital that I've raised. What do I do next? And he's like, well, you need to spend this amount of time doing this amount of market research

• 30:47Speaker 01

  and you need to do this and you need to do that and I need to meet with Spencer. So Spencer, and now with his brother, put in a bit more money and a third investor joined in, Sean Minin, who's a restaurateur who had a restaurant across the street.

• 31:02Guy Raz?

  But at that time, help me understand what you needed the money for. I mean, presumably, at the time, it was just more expensive to build a website and to, you know, to get servers. Is that, is that why you needed to raise money? Today, if you were going to start a business, you would just, you and some friends would just go start building a website and you wouldn't need much money to do it. But in 2005, I guess you needed the money to actually to buy the services that you needed to buy to make the site.

• 31:32Speaker 01

  Yeah. So in 2005, there's no infrastructure, there's no cloud computing and

• 31:38Speaker 01

  Apart from hosted servers, which are very expensive, and we're doing our best to build the website at that point. The software is by no means as efficient as it could be, and we're compensating for that by bulking up on the hardware side. And so, all of the fundraising in those early days, because we were not making much money in terms of what we were paying ourselves, was going towards hardware. And I remember just kind of like countless hours spent ordering from Newegg and then the hardware showing up in my apartment and, you know, these big pizza box, one U rack servers on the floor and assembling them and then driving over to Secaucus, New Jersey and installing them in the data center. I remember Christmas Eve, crimping RJ45 plugs

• 32:22Speaker 01

  onto patch cables, setting all of this stuff up. So, yeah, those were the good old days. We were just doing the best we could with what we had.

• 32:32Guy Raz?

  All right, so the three of you, Chris, you and Hyam, are basically starting to build out this site. And before you even made it, you know, launched it and went live, what was your business model going to be? Like, when you went to Spencer, the guy whose bar you built and who was your investor, and he was like, okay, how are you going to make money? What did you, how did you explain it to him, even before you went live?

• 32:58Speaker 01

  Mm-hmm. The business model, thankfully, was very straightforward, even from those early days. Obviously, we could point to a website that already existed, like eBay, and say, all right, there's going to be a per-item listing fee and then there'll be a sales fee associated, you know, when something sells. So, that piece of it was more straightforward. And it actually felt really nice because the other websites of the day, you know, watching kind of Facebook's rise and then Twitter, were based on ad revenue. And, you know, we were kind of able to take this pseudo-moral high ground and say like, we're not going to be reliant upon third-party advertisers that we'll have to kind of cater to. We're just gonna, like, the business model felt like it was baked into the

• 33:42Speaker 01

  the website from the beginning.

• 33:44Guy Raz?

  And when people asked you, well, how is this different from eBay? Your answer was, well, this is not eBay at all. We're not selling everything. We're only selling handmade items, things that people make.

• 33:57Speaker 01

  Yeah, so this sense of the overcoming inertia in the early stages of a marketplace is incredibly difficult. It's almost impossible, which is why, you know, there were so many eBay clones that never went anywhere. And, you know, you need to be able to tell a compelling story and you need to build up a community and the community needs to organically overcome that inertia in the early stages of the marketplace and start get the flywheel going.

• 34:28Guy Raz?

  Hmm.

• 34:29Speaker 01

  And one interesting thing is you can't fake that, right? We knew that we had to be that community and from working with Gene on Get Crafty and really seeing what it looked like to participate in an online community in those days, you know, had a good sense of that.

• 34:48Guy Raz?

  All right. I guess from what I read, it took you guys just two and a half months to build this website and you launched it in June of 2005 at C.com. And then what happened? Like you hit the go button, you know, it's out there in the world, but this is like still early days on the internet. And what happened? Did anything happen? Did people start to find it immediately or not really?

• 35:18Speaker 01

  Yeah, what happened was we hit the go button and then went for dinner. And I think when we'd come back for dinner, you know, we're checking the web traffic and a couple of people had noticed it. We posted on Get Crafty and there was another, you know, kind of handmade community called Craftster. And we posted about it in those forums and people started noticing it. There's this beautiful D.H. Lawrence quote that has always resonated with me, "Slow like growth."

• 35:51Speaker 01

  And Etsy very much embodied that. And I think that's actually a really healthy thing because it ends up becoming something that has a lot of momentum behind it and which means, you know, it's it's got a lot of staying power. And you see the inverse of this with companies like Groupon, which I think was, you know, fastest ever to go from zero to a billion dollars in revenue. So with Etsy, it was this kind of long, slow, organic growth. That said, you know, in the first year of business, we did a million dollars in sales and that seemed like quite a lot. And this was all being driven by the more organic traffic of the early web, you know, being written up on blogs like Boing Boing.

• 36:36Guy Raz?

  So basically, people started to discover it from blogs and from other, you know, being pointed to it from other places. And what were the kinds of things that people started to, I mean, what kind of, yeah, what were people selling on it initially?

• 36:51Speaker 01

  So the sellers were predominantly women and the categories were actually laid out by Leah from Craftster. And, you know, they span in some ways, all of the obvious things that you would expect, you know, everything from houseware and accessories to clothing to stuffed animals. There was a B to B side from the beginning where there was a supplies category and we relaxed or basically let go of our requirement that something had to be handmade if it was considered a supply. And there was also a vintage category. And a lot of people in the community, they would make things, but they'd also buy from other people who make things.

• 37:31Guy Raz?

  Yeah. But, but again, I mean, other sites at the time were doing that kind of thing, too. So how did you distinguish yourself from, from like eBay or other places that sold the same types of things?

• 37:44Speaker 01

  Yeah. So when Chris and I am and I were building Etsy, I knew that we needed To have something in our visual identity that really proclaimed that like we were different, we weren't eBay. And there was a digital artist who I had enormous amount of admiration for named Jared Tarbell. And he was doing these kind of generative artworks where pixels would imitate life. And I remember while we were building Etsy, just emailing him and saying like, hey, we're building this. I'd love for you to create some visualization tools for the items that get listed in the marketplace as new ways to discover what's for sale. And there'll be all of these ways that we can shop online that you just could

• 38:25Speaker 01

  never do offline, like arranging everything by color, or that you could zoom through a three dimensional helix, showing you all of the items that were listed in a particular category through time. The pitch to Jared was this will be a kind of laboratory where we'll give you a really interesting set of data and you can kind of work your magic on it. And while we were building Etsy, Jared was a little bit on the fence, you know, before any items were listed. And as soon as some items were listed, he was like, all right, I'm in.

• 38:58Guy Raz?

  And Jared would go on to become like your fourth founder. So it would be you and Chris, Heim and Jared. And I think he really contributed to the early look and feel of the site, right?

• 39:12Speaker 01

  Yeah. So even just the first things that he was creating, when I was going to the investors and when people would talk about Etsy, they would say, oh, that's the website where you can shop by color. And Jared's work played a big role in that. So understanding, again, it all comes back to that storytelling piece of being able to wrap it up in a big flag that you can wave and say like, look, this isn't what you think it is. This isn't the ordinary stuff. This is something special. And, you know, there was a bit of being more philosophical about it and saying, why would we just try to reprise offline shopping experiences online? This is a new medium. So you shouldn't just, you know, take a newspaper, put it online and make it a digital newspaper. We're not just

• 39:56Speaker 01

  trying to take an offline marketplace and make it, you know, and put it online. We should be creating these genuinely new ways to shop.

• 40:04Guy Raz?

  I guess, like, pretty soon after you you launched it, you started to think about, I mean, obviously, this is going to take more money and if it was going to become something bigger. And I guess you got in touch with the founders of Flickr, Katerina Fake and Stuart Butterfield, who were married at the time, or a couple. And you wrote to them, because I guess you liked Flickr and you sort of asked for their advice. What, tell me the story.

• 40:33Speaker 01

  Yeah, so, again, early days of the web, and they were absolute royalty. I mean, Flickr was one of the first websites to really like, even the design language, really take a stand and say like, here's what we're about. And so I remember just writing to them, pretty simple, you know, two-sentence email, just saying, hey, you know, I really admire what you made. Here's something that we built over here, and any advice? And I forget who replied first, but they were basically like, yeah, let's meet up. And I was like, well, I'm not, I'm not in California. And there really wasn't a New York tech scene back then anyways. And so, pretty early on in the company,

• 41:18Speaker 01

  we were like, well, let's go out to California and see if maybe we want to relocate there.

• 41:23Guy Raz?

  So you went out there to meet Katerina and Stuart, obviously, of course, when I found Slack. It was on this show many years ago. You went out there to meet them, and what happened?

• 41:40Speaker 01

  Yeah, so I still remember the first time meeting them. They definitely kind of took us under their wing, mainly on like, product design and fundraising were the two big pieces. You know, this was probably two years into building Etsy, maybe not quite that far in. And Katerina was the one who kind of, you know, she could, at that point, just kind of pick up the phone, make one call and get a meeting with different investors. Those meetings were kind of all over the place. That was definitely my introduction to the world of venture capital. A lot of those meetings, I just remember leaving them being like, I don't understand how that person would want to invest in this, or I wouldn't want their

• 42:25Speaker 01

  money investing in this. So she did a little bit of filtering upfront and then kind of worked with me to figure out who we wanted to raise money from in the end.

• 42:38Guy Raz?

  And you were, I mean, I guess the attraction at that point was that you were, you had, like, people were set up accounts and they had storefronts and the more accounts they set up, the more essentially users you had. And so, and you mentioned that in year one, they sold like a million dollars worth of things on Etsy, right? So the artist sold about a million dollars worth of products. Is that, is that right? Is that your memory?

• 43:08Speaker 01

  Yeah. So year one, and again, this is the kind of inertial momentum getting built up in the very beginning of a marketplace, the like classic chicken and egg problem. Year one did a million dollars in sales, which looking back on it now is far more than I remembered. And I'm pretty proud of that. I think that's one of the hardest pieces in a marketplace is to just like get the flywheel going.

• 43:33Guy Raz?

  And a million, I mean, a million dollars in sales is great, but you guys only got 3%, 4% of that. So your revenue is still fairly small, but obviously you were showing a trajectory of growth, of significant growth.

• 43:49Speaker 01

  Yeah. So at that stage, any investor is more concerned about, you know, total addressable market and how big is this opportunity? Not, you know, there's that other piece of how much we'd already captured. And when you're talking with these institutional investors, you know, this was in some ways, the best piece of business advice I ever got from Sean. It's a little bit crass in his Brooklyn way, but he's like, you're the drug dealer, they're the drug addict, where he's like, you have what they want and maybe you'll let them invest. And obviously, right, that's very haughty and got a lot of swagger to it. But it was definitely helpful to feel like there was some kind of safety net there

• 44:34Speaker 01

  in the beginning.

• 44:35Guy Raz?

  So, all right, so you, I guess, on a trip, or maybe this first trip to San Francisco, going back to that trip, when you met with Katerina and Stuart, they introduced you to some potential investors. And because the idea was you wanted to raise, I guess, from what I read, you wanted to raise about a quarter of a million dollars at that point.

• 44:57Speaker 01

  Yeah, so that was the beginning of this process that has been a kind of long and storied journey. And we ended up raising, yeah, very modest, I think this would have been called our Series B, just to show how much times have changed. We probably raised like 250 grand on a 1.5 million dollar valuation, something in there. And from that point on, most of the fundraising was primarily driven by needing to buy hardware and then just headcount. You know, we weren't spending any money on advertising or anything like that.

• 45:35Guy Raz?

  So when you, I mean, when you guys were really, you know, now in the thick of it, you know, you launched in the middle of 2005, and you're growing organically, how, I mean, tell me a little bit about, what do you remember about just the work environment? First of all, did you guys, initially, you were doing this out of your apartment, but at what point did you actually get like an office to work out of together?

• 46:03Speaker 01

  Yeah, so for the first two years, we didn't have an office. And I remember just traveling around the world, bumming around Europe. And when we came back from traveling in, you know, late 2006, the community was growing enough that we needed to hire more people to support it. And we're like, well, let's get a small office. And so we started looking and ended up finding a place near the Brooklyn Bridge, and we were just going to get part of this floor. And we ended up renting the whole floor. And I was literally for a period of time, living there and it was, you know,

• 46:46Speaker 01

  an office building, so they didn't heat it outside of nine to five. And that first winter, I remember I'm, you know, sleeping on a little blow up camping pad and I'm freezing and I'm working blissfully, you know, 18 hours a day on, on this project. And then, you know, the rest of the people would, would come in in the morning.

• 47:07Guy Raz?

  And, and I, I may have missed this, so let me, let me ask about this. You were traveling in the first, a lot in the first year of Etsy's launch. Why? Where were you going? What were you doing?

• 47:20Speaker 01

  So part of it was to just kind of go visit all of these different craft fairs. And I would walk around the craft fair handing out these little postcards that said what Etsy was. And a hundred percent of the people had never heard of it and didn't know how to pronounce it. And so part of it was just kind of traveling to start connecting with the community. But just this sense of like, oh, our community is online, we're spanning different time zones and we can kind of check in and work from wherever we want. I guess that was a glorious glimpse of remote work way back in like 2006.

• 47:56Guy Raz?

  How were you, I mean, you know, when you would go to craft fairs outside the US, how were you accommodating those sellers? I mean, were you able to, because today it's easier, obviously, to, you know, just the infrastructure there on Shopify or whatever you want to use. But how did you have like somebody in, I don't know, Germany selling pottery sell to somebody in the US and then also accept dollars? And how, how did, how did you guys make that happen? Was that, I mean, it must've been really hard.

• 48:29Speaker 01

  So as much as we disdained eBay, we were definitely standing on their shoulders in a couple of different ways. And one of them was our exclusive method of payment was PayPal. And so PayPal worked in that location, then we were able to just ride those rails. Another piece of it, which I think could have ended up making things a lot more complicated, but didn't, was that Pierre Midiar decided not to patent all of the basic mechanisms of e-commerce at that point. And so, you know, we were able to learn a lot from how eBay did things and make ample use of one of their services. And so Etsy was definitely kind of built on the shoulders of eBay in that way.

• 49:12Guy Raz?

  And PayPal was owned by eBay by that point.

• 49:14Speaker 01

  Yeah, exactly.

• 49:16Guy Raz?

  And I'm also curious, in those early days, in that sort of first year and a half, when it was really, presumably even once you opened Etsy Labs, it was still a pretty, probably a pretty small team. How were you dealing with like, when things went wrong, right? Because I have to assume that, you know, there were probably, you know, more than a few examples of people getting things they didn't like, or, you know, not being happy with the products, or not feeling like they get their money's worth, and they were complaining to you guys about it. How did you guys handle that?

• 49:51Speaker 01

  Yeah, so lots of different ways things can go wrong, especially when you're building a marketplace like this. I was just rereading a lot of our early blog posts, and most of the ways things were going wrong was the website itself wasn't functioning. And because the scale and the growth of the marketplace was a gentle enough slope, we could learn the hardest lessons when the stakes were lower. And I really like that kind of crawl, walk, run approach to building a business in general. On the seller's side, again, we were able to leverage PayPal. PayPal had different kinds of dispute resolution procedures. And so I'm not proud that we did this, but we would basically just kind

• 50:35Speaker 01

  of kick people to PayPal's customer support and say, look, you know, if you want a refund, you have to take it up with them. And that insulated us from a certain amount of that. But that said, if we became a place where it was just, oh, this is scammers and shoddy goods, then it would have really hurt the brand. Again, I think the slow, like, growth approach to this helped us there because we didn't really have to deal with high levels of fraud until, you know, significantly later.

• 51:09Guy Raz?

  Yeah, this is when the internet was still innocent.

• 51:13Speaker 01

  I know, I miss those days.

• 51:14Guy Raz?

  Or more, yeah. Yeah, because it probably was really earnest community of makers, right? And so you probably didn't have to worry too much about people just being jerks because that would come later. And so, and in terms of like curating, I mean, did you guys have any standards for what was allowed? Like, you know, did you have rules about what you could and could not sell? Obviously, it had to be initially, I think, had to be handmade. But, I mean, could people sell, you know, for example, like handmade glass tubes to smoke pot out of, you know? Did you have any rules?

• 51:55Speaker 01

  So in the beginning, it was more, here's our list of categories. And if it doesn't fit into one of these categories, it shouldn't be on the site. And obviously, you can get a bit creative with that. My general view on that stuff was, again, just like, celebrate the diversity of it. One of the funny jokes that we had was we defined the vintage category as something more than 20 years old. And when people were challenging what that was, and we were trying to clarify the terms of service, there are plenty of VHS like players that were 20 years old. And so it's like, under our rules, you could list a VHS player on Etsy, and it just felt so wrong. Like, someone listed a Ferrari on Etsy once, and I was just like, and not even in the vintage category.

• 52:39Speaker 01

  It's like, well, what's interesting is, you know, you, it's like, the marketplace itself develops this kind of immune system. And so when they list that, hundreds of people flag it. It's just this beautiful expression of of humanity and all of our foibles and imperfections. And I think ultimately, we tend to love things for their imperfections.

• 53:01Guy Raz?

  I know that that pretty, you know, early in the early days, some of your co-founders left. But how did you guys, I mean, how did just the sort of interpersonal relationships? You know, how, how did you guys get along? Because it's stressful, right? Building something together, especially when there, you start to get investors behind you.

• 53:24Guy Raz?

  How was the relationship?

• 53:25Speaker 01

  Yeah, in the beginning, there was just this sense of incredible sense of camaraderie, and we're all in this together. It doesn't mean to say there wasn't plenty of arguing. There were just so many things we were doing that it was the first time everyone at the company had done it, and we would be making these first-timer mistakes. And Jared was recently sharing a story with me where when we were in Noe Valley and walking to get lunch, one of the other guys was just berating me about something. And Jared thought he was witnessing the dissolution of the company. And after lunch, I was like, no, that's just normal.

• 54:01Guy Raz?

  When we come back in just a moment, Rob confronts a new normal that he did not see coming. He gets fired. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 54:21Guy Raz?

  It's so important to give children gifts that inspire them to learn more about topics they love. And that's why I love KiwiCo. With super fun science, technology, and art projects, KiwiCo is perfect for inspiring creative confidence and a lifelong love of learning. I've used KiwiCo with my kids for many, many years now, and it's been amazing to see how they've built these really sophisticated engineering projects that have been designed specifically for their age ranges. KiwiCo projects are designed by a team of educators, makers, engineers, and rocket scientists who brainstorm hundreds of ideas to create the most exciting, age-appropriate, and educational projects. And the projects are

• 55:05Guy Raz?

  tested and approved by kids. No crate leaves without their thumbs up. Discover hands-on fun with KiwiCo. Get your first month free on any crate line at kiwico.com/built. That's your first month free at K-I-W-I-C-O dot com slash built.

• 55:29Guy Raz?

  Whether you're a small business owner growing your team or an HR director hiring hundreds of people across the nation, you have one of the toughest jobs there is. But what if I were to tell you that there's something that can make your whole hiring process faster and easier? It's ZipRecruiter. And right now, you can try it for free at ziprecruiter.com/built. Instead of you doing all the hiring work, ZipRecruiter works for you. Once you post your job on ZipRecruiter, it sends it to more than 100 job sites so you can reach more of the right people. Its powerful technology scans thousands of resumes to identify people whose skills and experience match your job. Hiring heroes? Let ZipRecruiter help make your job easier.

• 56:14Guy Raz?

  Four out of five employers who post on ZipRecruiter get a quality candidate within the first day. See for yourself. Go to this exclusive web address to try ZipRecruiter for free. ziprecruiter.com/built. Again, that's ziprecruiter.com/built. ZipRecruiter, the smartest way to hire.

• 56:42Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2008, and Rob is starting to realize that as the CEO of Etsy, he's kind of in over his head. So he eventually decides he needs to bring on someone else to help grow and focus the business.

• 57:01Speaker 01

  You know, again, I'm, at this point, 28, and I don't know how to interview someone for this level of job. And so I started interviewing someone with more experience for a COO role and ended up hiring Maria Thomas from NPR. That was a really interesting...

• 57:26Speaker 01

  Cross current in this office full of, you know, younger folks and who are just kind of very earnestly going all in and are very much part of the community that they're serving. And then Maria entered and just brought with her a very different culture. You know, I still remember the first all hands meeting we had where I introduced her in her opening speech. She kind of said, the most important thing for us to do is execute, execute, execute. And I could just kind of see the air go out of the room. Like, that's such a strange word to focus on. And I tried to kind of make it into a joke. And she had her way of doing it. And I wasn't about to assume that like, oh, this is wrong

• 58:11Speaker 01

  for Etsy. And so watching her work and giving her the space she needed to run operations, I definitely learned a lot. And it reached a point where I was like, look, you know, the way that you're doing this is so different from the way I'm doing it. I think you should just do it. So you should be the CEO. And looking back on it, it's quite easy to see like, you know, that culture piece was too important to be a mismatch at that phase of Etsy's growth. And so she ended up not being the right fit in that role. But I initially transitioned to being chief creative officer and then just a board member.

• 58:50Guy Raz?

  Right. Yeah, I should mention, I haven't seen Maria Thompson at least a decade, but I knew her a little bit when both of us worked at National Public Radio. She had been the head of digital media there. And so she came on initially as COO and then essentially became CEO. But you said that it wasn't the right fit. What, why? I mean, you wanted a professional to come in. And you know, make this company stronger. So, you know, first of all, what was it about her? I mean, clearly you you had felt that she was the right fit for for an operational role. So you must have liked her. You must have thought that, you know, that you must have gotten along.

• 59:31Speaker 01

  Yeah, we got along. I I definitely enjoyed the early discussions. The the culture piece becomes evident in a couple of key ways. And remember that Etsy's commerce is very much kind of standing on the shoulders of the community side of Etsy. And so that community, especially the community of sellers, she just wasn't a part of that. And at that particular point, there were just too many consequences that fell out of that, where she didn't see Etsy for what it was and what it needed to be.

• 1:00:10Guy Raz?

  I mean, in, you know, from what I understand, what I've read about the company, I mean, during that period, I mean, it was a it was a potentially tough period because this was the recession, the financial crisis. But remarkably, Etsy actually really benefited from people not going to traditional retailers and looking at Etsy for maybe ways to save money. So actually, it turned out to be a pretty good time from a financial perspective and a growth perspective for Etsy.

• 1:00:39Speaker 01

  Yeah, I always did my best to insulate the majority of the company from any kind of financial concerns, even in their early days, working with engineers. They would tell me how much money we needed for hardware and I would go out and raise the money. So there really wasn't much of any financial pressure on the business, building it through the recession. And it was approaching profitability at this point. Again, you know, we're a marketplace, this business model is kind of baked into how we run. And this interesting shift happened, probably starting with Maria, where this sense that like, who's your primary customer? And for me, Etsy's primary customer was always the sellers because they were the ones that we were generating, you know, collecting our revenue from.

• 1:01:22Speaker 01

  And the buyers were our sellers' primary customer. And so our role as a company was to support our sellers as best we could. And you look at a marketplace like I would say Etsy now or eBay, and the primary customer is clearly the buyer, where the whole experience is optimized on the buying side to the point where, you know, I pay a listing fee and here's my item, but the website is going to place other items on that page that are similar because it's catering to the buyer now. It's not really there to support the seller.

• 1:01:56Guy Raz?

  And that really started under Maria, that where she was like, we need to focus on the end buyer, the person going to the website.

• 1:02:03Speaker 01

  Yeah, I think that shift started happening then. And is that wrong? I don't think so.

• 1:02:10Guy Raz?

  No, I mean, it sounds like there was a, the tension came from, I mean, you were the founder and then you brought in a professional COO who becomes a CEO, but you're still there. And in some ways, I think you would even admit this. It almost never works out because when a CEO is brought in and the founder still has power, it creates a lot of conflict. I mean, usually it works out when the founder leaves and a new CEO is brought in. But when they're both there, because the people in the company don't know who to go to. I'm sure half the people, maybe lots of people in the company were going to you and they were like, hey, I'm not really happy with this decision that our new CEO is taking.

• 1:02:54Guy Raz?

  And you were like, yeah, well, let me see what I can do. I mean, is that fair? Was that happening?

• 1:02:59Speaker 01

  I'd like to think that wasn't happening, even just at the most practical level. I didn't stay in the CCO role for very long. I completely removed myself from the day to day operations of the company. And I didn't want to do anything that was gonna.

• 1:03:18Speaker 01

  Underpin the authority of this person that I just suggested to run the company. I cared deeply about the company more than anything else.

• 1:03:27Guy Raz?

  So she eventually steps down and you are brought back in to become CEO in 2010. And did you feel like, you know, I mean, oftentimes, you know, that that could have been a great opportunity for you. Two years to watch a professional run the company and to learn things and maybe gain more experience and come back in with a sort of a renewed vigor. And so when you came back in, in 2010, you know, back to running the company, did you feel like, okay, I got this?

• 1:04:02Speaker 01

  Yeah, so that was a really interesting time for me because I'd spent a year being immersed on the community side of Etsy again and just making things. And when I was asked to return, I was like, if I go back and do this, it needs to be in a much more mindful manner, not this kind of ad hoc, let's just do my best and everything's going 100 miles an hour. So I remember really thinking about that. And then when I rejoined, Etsy was in a new office. You know, they totally moved offices. The office was concrete floor and fluorescent lights. And I was just like, oh, man, that didn't feel right.

• 1:04:44Speaker 01

  So we put a wood floor in and put, you know, warmer bulbs in the fluorescent lights. It sounds so trivial saying it now, but like, the office didn't reflect the ethos of the company. And then she'd hired a lot of senior people where I think taste is one of the most ineffable things about the human condition, like what gives someone some kind of taste and not another. And so, you know, her, whatever was guiding her hires for people to run things like marketing and customer support or anywhere else, just also didn't fit. So rejoining was a bit of kind of getting it back on the rails. And that part felt good, so.

• 1:05:28Speaker 01

  I wanted something to kind of show when I was returning that we're going to make some changes. So I remember like throwing a coffee mug up into the air and this look on everyone's face when it's just in the air before it drops, like that look of expectation and excitement. And then, you know, then it smashed. But I was like, that feeling is what we need to have here as we're, as we're building Etsy.

• 1:05:51Guy Raz?

  You were basically 30 years old when you were brought back and, you know, but, but you had started, you know, you started the company five years earlier. So there was, there was a lot of, even in the trenches with a lot of people. And I imagine it was probably people were excited. But there were also, I mean, and I'm sure you remember this well, while you were CEO, there was an article that came out and I think in Ink Magazine is critical. And it was a, you had some quotes in there that were a little bit, shall I say, unfortunate. You said, you know, I speak to people in the business

• 1:06:32Guy Raz?

  world and technology world, but admire them. You were quoted saying, you know, I think trying to maximize shareholder value is ridiculous. Even if you did believe those things and felt that way, sometimes you kind of, you know, want to not say that.

• 1:06:46Speaker 01

  Oh, yeah. And you need to learn the lesson to not say those things. So at that point, I didn't, I was used to, well, first, right, taken out of context and contextualizing those things with what comes before or after them helps make more sense of them. That's one piece. Another for sure, still learning. I didn't even know that if a reporter was recording you, they don't have to run any of the quotes by you before publishing them. And yeah, that was very humbling. Like lots of lessons to be learned from that experience.

• 1:07:22Guy Raz?

  I don't, I hope this is not like piling on, but this is important because we're talking about, you know, now more than 10 years ago, but, and what you've learned from it, and obviously how you've grown, we'll get to today, but, you know, one of the things in the article, and again, I'm sure there are people who could say, you know, things about anybody, anybody listening, me, anybody, but somebody in the article said, "Working at Etsy was like being in an abusive relationship," in that same article. Do you, you were kind of described as being erratic, and, you know, you have, you know, 20, 30 ideas a day, and, you know, change course, and you weren't a great manager.

• 1:08:05Guy Raz?

  Do you think that, I'm sure some of it, maybe a lot of it, was unfair, but was there some of it that was accurate?

• 1:08:13Speaker 01

  Oh, I'm sure, and no worry, no worry about piling stuff on, I am amazingly self-critical. I can't walk by a stick without picking it up and finding some way to hit myself with it. So, these were things where, like, what's your, let's see, I think everyone's frame of reference for these things is, is different, and I was trying to get a better sense of, you know, how to manage and all of these things. I don't ever remember once yelling, I just don't raise my voice at all. And then, you know, you read these biographies of Jeff Bezos or Steve Jobs, and they're screaming at people that they're morons in front of the whole company, and, and all this stuff.

• 1:08:56Speaker 01

  And I'm just like, is that what being a, like, you know, in an abusive relationship looks like? Or is it something a lot quieter and a lot softer? And, you know, one of the things I did that I remember bothered a lot of people was... We were, you know, we had these conference rooms with lots of glass on them so you can see in, and there were these meetings where very clearly to me at least, you know, half the people in the meeting were just like, they shipped in over half an hour ago and like it's just dragging on. And so I was working late one night, I don't know, probably eight or nine PM. Some people in customer support are still there. And I was like, let's just remove the chairs from the meeting room because if it's not worth standing up for, you shouldn't be having a meeting.

• 1:09:41Guy Raz?

  Yeah.

• 1:09:41Speaker 01

  You know, to me, this is just something that's a bit cheeky. And, you know, lo and behold, like, the next day, the engineers are doing some kind of like, long triage of something that happened. And there's no chairs in the room. And, you know, eventually they just end up bringing the chairs back in. And so I'm sure that, and I doubt I even understand all of the different ways that I, you know, to frame it positively, needed to improve. I did really feel like I was on the path to learning that. And, you know, again, I'd stepped aside once. I was not holding on to that position with tight hands. Like, I was coming back to it and saying, like, let me do a better job here. So I got

• 1:10:26Speaker 01

  in a CEO coach, and eventually hired another COO, Adam Freed. Again, in the back of my mind, there was a piece of me that's just like, the culture needs to change. And that's the direction that it needs to go in.

• 1:10:41Guy Raz?

  So, all right, so you're, you know, you're working on your leadership and this article comes out, which obviously wasn't a great article on Inklings. And I guess a couple months later, you were fired by Etsy's board. And this, this came as a real shock to you. You did not see it coming at all. Tell me about, about that. I mean, is that the case? Did you not have any inkling or indication that that was on the horizon?

• 1:11:15Speaker 01

  Yeah, absolutely. No idea that it was even within the realm of possibility that would happen. And again, this is one of those situations where, looking back, it's much easier to see things. So Adam had joined as COO, and pretty early on in that relationship, you know, we started Trying to figure out what that dynamic was and not just amongst ourselves, going to kind of executive coach, working stuff out. And I think we both felt that there was a bit of that culture mismatch. And I definitely didn't support him the way that I should have.

• 1:12:00Speaker 01

  You know, I remember this meeting where we had to reclassify all of the customer support workers from being like full-time salaried to having to keep track of their hours. And it's ostensibly for labor laws to protect them. But it also created this whole like second class of worker inside the company. And it sucked like having to do that. But Adam was kind of leading that that process. And I remember this meeting where it was being communicated and I was standing in the audience and he was standing up front with the head of HR. And they were trying to pitch it to the customer support team.

• 1:12:38Speaker 01

  They were dressing it up as this like, this is an improvement and you know, just not Etsy's culture. And I was standing in the audience and I had the same reaction to it that they did. And I obviously like hadn't been involved enough in preparing what the presentation should have been, all of that stuff. And you know, I remember talking about that with Adam afterwards. And I was like, look, the way to do that is like slide one says this sucks and slide two says this really sucks. We don't want to do it. And he just like talked to him like, don't wrap it up like that. And I'm not even saying my way is like, quote, the right way to do it. It's just like knowing the people in the room. So that was one piece was like my relationship with with Adam wasn't great.

• 1:13:23Speaker 01

  The investors were checking in with him.

• 1:13:26Speaker 01

  And I had a bi-weekly lunch with Fred, you know, one of the investors. Fred Wilson. Yeah, Fred Wilson. I thought I was just going to lunch to chat about Etsy and and went to their office and met him and he told me that I was fired. But he didn't tell me why. And he just said, we have to do this. And I remember saying, like, you don't have to do this. Like, you're choosing to do this. And the whole process felt like it was something straight out of a Kafka novel.

• 1:13:59Guy Raz?

  Yeah.

• 1:14:00Speaker 01

  And I'd already stepped aside once. So I mean, I remember when Fred was like, you need to go. And the strangest part of that experience to me was, you know, he's like, do you want to, do you want to resign? And I'm like, what would that look like? And he said, well, you would stand in front of the company and, you know, tell everyone that you've decided to leave. And I'm just like, who would believe that?

• 1:14:21Guy Raz?

  But Rob, I mean, at the time, didn't anyone sit you down and clearly explain to you why you were being fired? I mean, I mean, this was 12 years ago now, right? And I don't, I don't know, maybe, maybe you've had a chance to get more insight into it by now. But, but looking back, did you have any idea? Were you pretty much in the dark?

• 1:14:42Speaker 01

  So, you know, I've tried to reverse engineer why I was fired so suddenly. And it hasn't been easy. But I did reach out to one of the investors in advance of this interview to try and learn more about what actually happened. And he did shine a little bit of light on the situation. And, you know, the feedback that he gave me, sometimes I was too involved. Sometimes I wasn't involved enough. And sometimes I was a bit unkind. And, you know, fair enough, I would have greatly appreciated that kind of feedback at the time.

• 1:15:19Guy Raz?

  Yeah. So you were, you were out. And I imagine, and it obviously came as a shock to you. And I imagine it was also just emotionally very challenging. Cause it's, it's like, it's like a death.

• 1:15:34Speaker 01

  Yeah, I was wrecked for quite a while. I mean, I'd obviously like built up a lot of my sense of self-worth around like, here's what I do, my identity wrapped up in it, my friends, where I lived. I mean, I remember this moment, you know, before this happened, where I was living in Red Hook, Brooklyn, and I would ride my bike everywhere. And I'm just riding to work and it's foggy and Manhattan's to my left. And I'm just looking at Manhattan and biking to work. And, you know, my fiance was at home and I was like, wow, I figured it out, you know, I made it. And this like feeling of accomplishment and stability.

• 1:16:18Speaker 01

  And then it's just like, nope, you know, everything we think is solid can just kind of crumble in that sense. And yeah, it makes it hard, but I've also come to peace with it. The anger is gone. It's just sadness that lingers.

• 1:16:34Guy Raz?

  You left presumably still with a significant amount of equity in Etsy, right? So you had that, I have to imagine.

• 1:16:42Speaker 01

  Yep.

• 1:16:42Guy Raz?

  And which, you know, isn't, obviously doesn't entirely mitigate the pain, but certainly helps a little bit. And did you feel like, just from your own, I don't know, for your own mental health, did you feel like you just, there has to be a cut, a clean break? And you just, you know, it was like a breakup with a partner where you just stopped any kind of communication or following it, or just, you just tried to put it out of your life in any way possible?

• 1:17:16Speaker 01

  Yeah. So those two different things are connected that you said. So, you know, I had some equity. I didn't have a huge amount, you know, and the company went public. I didn't even make the threshold of shareholders with over 5% that you have to disclose. So, you know, I had some equity in the company. I couldn't do anything with the equity. You know, I couldn't sell shares. And then once Etsy went public, my shares were locked up for a year anyways, while the share price was falling. And I was trying to communicate with people at the company to kind of arrange some kind of secondary sale. So that was interesting. Like, you know, now I have to talk with Fred. Trying to sell some of my shares. And you know, Fred was very professional about all of that. Yeah, I think that has to do with my own personal coping mechanisms, too.

• 1:18:01Speaker 01

  Like, compartmentalization was there a bit. I had geographical compartmentalization really helped. So just getting out of Brooklyn was really helpful.

• 1:18:10Guy Raz?

  You, when you moved up to upstate New York to the, in the Catskills, you got it really involved in the community. Like, and, and I, I mean, I know, for example, like, you helped build a preschool. Like, you, I guess, probably was a, to solve a problem you had, which was your children, and you wanted a good preschool.

• 1:18:27Speaker 01

  Yeah, so what was interesting was that whole piece of my identity that was built around, I work at a tech company, has no cachet in Catskill, New York. And that was great. And worked with a group of moms to start a preschool and then eventually start the Catskill Montessori School, which has over 100 families at it. I've also been doing some work in the local, with the local public school. And yeah, reconnecting with this sense of place and sense of purpose outside of, I live in a big city and I'm working at a tech startup.

• 1:19:05Guy Raz?

  So I guess you, in our conversations before this interview, you mentioned that you're working on something at the intersection of technology and humanity. You'd mentioned it's still a secret. Is it still a secret? Is, can you talk about this? Because it sounds like this is your, really your biggest endeavor, you know, in a, in a big way, since you left Etsy.

• 1:19:28Speaker 01

  Yeah, this is what I hope one day to come back on this podcast and talk about and show all of the lessons that I've learned.

• 1:19:37Speaker 01

  Yeah, the new endeavor, I'm working with a pair of absolutely brilliant engineers, one of them a close friend from, from Etsy. And it's at the intersection of early childhood development and, and technology. The general thinking is, there's this famous story where this journalist asked the Wright brothers, why did you succeed in building the world's first flying machine when thousands of people have been trying? Why you? There's nothing special about you guys. And they think for a minute and they say, well, no, there is something quite special about us. As children, we had access to our father's workshop and we encountered these tools. And if we didn't have that as experience as children, we wouldn't have gone on to do

• 1:20:21Speaker 01

  what we did, which is what led us here. And you know, there's this long history of making beautiful hardware for children in order to kind of calibrate their senses and learn about the world around them. You have frabled GIFs and monosauri sensorial materials, but no one's updated that hardware. So I'm trying to, I think there's a whole continent of computing in between the blocks that children play with and the way technology currently lands in their lap, which is just phones and tablets and reduces them to poking at pictures under glass. So we're exploring this continent of computing and don't have anything specific to share yet.

• 1:21:00Speaker 01

  We're starting to work with the school up the road now, but hopefully you'll be hearing about that shortly.

• 1:21:10Guy Raz?

  Going back to the Wright Brothers thing, there was no reason why, you know, why, why those guys were the ones to make it, except for what they said, right? They started out playing around in their dad's tool shed. Similar, there's no reason why Etsy was going to make it. I mean, there probably were 10,000 reasons why it should have failed or could have failed because it just, it was too early and the, the business model wouldn't have worked. But today it's a powerhouse. I mean, it is a, you know, it is a publicly traded company with a, you know, its market cap is at $8 billion as we speak today.

• 1:21:49Guy Raz?

  And, you know, you were raising it at one, one and a half million dollars. So you're certainly, your investors did very well. You're certainly early investors it extremely well. I mean, it's, it's a powerhouse. I don't know. What do you, what do you make of it when you look at it today?

• 1:22:06Speaker 01

  Yeah, there's this kind of air of inevitability to it. With the 10,000 ways it could have gone wrong, it almost seems like it's the inversion of that, where we did 10,000 things that could have pushed it off the rails and it didn't go off the rails, you know, including, you know, management stuff and my own shenanigans. So how did it persist? And I think ultimately, the heroes of all of that are the sellers. And that, you know, in many ways, that's who we should all tip our hats to. So here's this publicly traded company and the people who are running it, I'm guessing, are not part of that community of sellers that they're serving.

• 1:22:50Speaker 01

  And I would also venture to guess that, you know, Etsy's primary customer right now isn't the sellers, it's the buyers. And so it's going to keep optimizing along those lines. So it's just different. It's obviously put a huge financial cushion under me. You know, I come from peasant Ukrainian stock and now have more wealth than the prior 50 generations of my family or whatever. And one thing that I really enjoy is the fact that, you know, there's a secret that this word that I made up is on the lips of so many people. Just the stark contrast of going to those craft fairs in 2006 and handing out these flyers and nobody knowing about it,

• 1:23:35Speaker 01

  to now being at a concert and knowing that, like, anyone I walked up to say like, "Hey, do you know about this thing?" They'll have heard it.

• 1:23:46Guy Raz?

  When you think about the journey you've taken and what it's enabled you to do, despite the, you know, the very traumatic exit, how much of your success and where you are today do you attribute to your work and your intelligence? And how much do you think has to do with the luck that you, that, you know, broke your way?

• 1:24:10Speaker 01

  Yeah, such a great question. How much of it is under my control, which is my own hard work? And how much of it is out of my control, which is luck? And the older I get, the more it feels like there's at least one other force in play, the kind of karmic force or providence or whatever. So without all of these different forms of luck, of being born in the United States, of being born in a, you know, middle-class family, of this really strange path that I took through school, of literally handing my rent check to my landlord when he happened

• 1:24:53Speaker 01

  to be holding a piece of paper to make a proposal for a website. Like, how can you look at that and not think it's both luck and some form of providence? So I think that's the prerequisite. And then all the hard work is what follows. And you get to lean into both.

• 1:25:13Guy Raz?

  That's Rob Kalin, co-founder of Etsy. By the way, when you guys were at Etsy, what was like the weirdest thing that you saw somebody put on there? Like, and you were like, I don't know if you should allow this thing to go on sale at the site.

• 1:25:33Speaker 01

  There was one class of items that took off that I didn't even know was something that existed, and that is penis cozies. And they are hand crocheted cozies for male genitalia. And generally, the community was totally supportive of that. And I thought it was a rather lovely expression of all of the different values and cross-currents at play in the Etsy marketplace.

• 1:26:08Guy Raz?

  I don't even want to imagine what somebody needs that for. Wow.

• 1:26:14Guy Raz?

  Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. This episode was produced by Kerry Thompson with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Sam Paulson. Our production staff also includes J.C. Howard, Casey Herman, John Isabella, Chris Messina, Carla Estevez, and Malia Agudelo. Our engineers are Gilly Moon and Patrick Murray. I'm Guy Raz, and you've been listening to How I Built This.