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An IPO Could Put Etsy Idealism in Jeopardy

Posted on February 6, 2012 by  Ina Steiner

Former CEO and Founder Rob Kalin has been quoted “I admire the makers of the world.” He also thinks that trying to maximize shareholder value is “ridiculous,” adding, “I couldn’t run a company where you had to use that as an excuse for why it was doing things.”

Etsy CEO Chad Dickerson said last week he wants to take Etsy public, though he is not in a hurry to do so. There are several compelling reasons for an IPO – the venture capitalists who invested in Etsy expect a return, and going public boosts company name recognition.

Another reason is to help attract talent to a company. Facebook’s IPO filing last week is a case in point – about 1,000 employees could become instant millionaires on paper with the initial stock sale, and 600 current and 300 former Facebook employees could get seven-figure paydays, according to an article in the San Francisco Chronicle. Dickerson was previously Etsy’s Chief Technology Officer and understand the need to lure programmers and engineers, as well as top managers now that he’s Chief Executive.

But going public changes a company, even one that has an idealistic vision like Etsy. One only has to look at eBay to see that is true. No one was more idealistic than eBay founder Pierre Omidyar, who made employees carry around a card with eBay’s core values that began with, “We believe people are basically good.”

Omidyar wrote to the eBay community after its 1998 IPO filing, “our core beliefs and vision won’t change.” But over the years, they did change, finally coming to a head in 2008 when the “level playing field” for sellers was once and for all debunked.

Dickerson is repeating the same idealistic vision for Etsy that eBay’s management espoused. Empowering the individual, even the concept of offering group health insurance to sellers. (eBay said it would do that too, though it failed.)

Dickerson told Gigaom about new plans for Etsy – he sees the company expanding by helping merchants set up offline stores and offering services to beyond that of a marketplace, and said he’s on the lookout for acquisitions and partnerships.

It’s easy to see why Etsy needs to look beyond the Etsy.com marketplace – growth and the potential for growth are essential in attracting Wall Street to pull off a successful IPO.

Are there lessons Etsy could learn from studying eBay’s history? Omidyar created eBay to empower individuals, yet now the company is targeting large enterprises and favoring big businesses. If Etsy follows in eBay’s footsteps and becomes a public company, will it be able to retain its “handmade ethos”?




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