By TERI EVANS
An artisan at heart, Rob Kalin, now 29 years old, attended five different colleges before he finally earned a bachelor's degree in the classics. But he ended up bypassing the traditional job route to instead focus on his woodworking talents. He created a unique item—a computer encased in wood —but couldn't find a marketplace for it. So he built one. Along with two co-founders who served as engineers, Mr. Kalin officially launched Etsy, an online marketplace for crafts, where "hobbypreneurs" meet in an online community and connect with shoppers looking for homemade items. Since its founding in 2005, the Brooklyn, N.Y., company has managed to raise some $31.6 million from investors. Today, Etsy is a profitable private business that is valued at about $100 million; earns between $15 and $20 million in annual revenues; and plans to go public, though not until at least next year, Mr. Kalin says. On any given day, Etsy's five million members sell creations that range from a simple button for $1 to eclectic clothing and fine art that runs in the tens of thousands of dollars.
Edited interview excerpts follow.
Q: How did you launch Etsy so quickly?
A. It actually wasn't going quite fast enough, so [co-founders Chris Maguire and Haim Schoppik] ended up basically moving into my apartment and we spent a solid six weeks working on it day and night. The last 10% it takes to launch something takes as much energy as the first 90%. The closer you get to it, the finish line keeps moving further and further. It takes a lot of effort to cross the line. I keep learning that over and over again. And it's happening now as we look to ship new features on our site, like improving the way checkout works.
Q. How did you initially raise money from investors?
A. Etsy's first investors were two local real estate developers that I had done some carpentry work for, and a restaurateur who I had set up an Internet café for. I had the first $50,000 check before I even launched anything and another $100,000 within six months after the launch. I gained their trust by building things for them. Building up your personal relationships, especially in the beginning, is hugely important. In my experience, in the seed and angel round, people are going to invest in people and products, not the business plan. [Entrepreneurs] focus on the plan first, and they have it backwards in my opinion.
Q. What has been your toughest challenge?
A. Technical glitches. I wasn't really aware of the issues with scalability early on. Of course, I'm keenly aware of them now. Figuring that stuff out is pretty painful sometimes. We're going through that now with [creating a phone system for] customer support. It takes about 3 days to get a response [via email] and I want to get it down to 2 minutes, where you can just pick up a phone and call Etsy.
Q. That sounds like a tall order. How will you do that?
A. Better software and more people — more people being the key. We have 15 now [in customer support]; by the end of this year, we'll probably have close to 30 people. In the third quarter, we'll be offering our first official number that you can call — and we'll try to pick up on the first ring.
Q. With millions of members to support, you must also face criticism. How do you handle it?
A. Be honest. I've said in public that I feel like we're not doing a good enough job [with customer support] right now. People, in general, are understanding when you acknowledge what your mistakes are.
Q. What's your vision for Etsy?
A. Instead of having an economy dictate the behavior of communities, to empower communities to influence the behavior of economies. I've spoken at many universities, and there's this huge entrepreneurial spirit in students in school now. In my mind, Etsy's ecosystem is about empowering and supporting these very small businesses. That goes well beyond just a marketplace.
Q. Why do you think Etsy has been able to grow so fast?
A. It's always been important to me that Etsy the company is part of Etsy the community. If you can keep that direct connection to your community, that's vital to success. I actually dislike the word 'users.' I don't see people in the community as those who 'use' us, and we're not trying to 'use' them either.
Q. How do you keep the company engaged in the community?
A. I'm in the forums, people are sending me [conversation threads] and I'm replying to them. Every Monday night we have craft night, where anywhere between 50 to 80 people come to our offices in Brooklyn and make stuff together. We also have employee craft night and hold town hall meetings [online] where I speak to the community that way.
Q. 'Keep it human' is one of your rallying cries, what does that mean?
A. It means growing big, while staying small. Etsy itself is hundreds of thousands of very small businesses and I want to be able to keep that intimacy within our own company, even as we grow and the number of people we need to support grows. It means always keeping a human face on what we're doing. I don't want to hide behind a corporate firewall and start speaking with some third-person voice. I want to always speak with a human voice.
Q. What advice do you have for entrepreneurs?
A. Make sure that you stay directly involved, even as things get bigger. If you're disconnected from the real work that's being done, it's easy to be impatient. So really get down in the trenches. Be ready to do a hundred different things really well, and in a short period of time.
Q. How do you do that and stay sane?
Part of staying sane is enjoying it. It's kind of like the conductor of an orchestra, listening to lots of different instruments, taking in the feedback and making adjustments. It's not passive though, because part of being a successful entrepreneur is being an inspiring leader. You have to get up in front of people, set the vision and inspire them to give it their best.