How Josh Silverman Refocused Etsy for Growth

TL;DR

Etsy’s turnaround began by defining its purpose as keeping commerce human, choosing gross merchandise sales as its single priority metric, and concentrating resources on a small number of high-impact projects. Josh Silverman argued that Etsy’s opportunity was not a narrow handmade market, but helping buyers find special products while enabling creative sellers to build global businesses.

Transcript

at etsy when i joined it was about handmade and i don't think anybody i don't think there's a market for handmade i don't think anybody wakes up in the morning and says i want to buy something handmade and anything will do today on the show we have josh silverman has been ceo of etsy for since 2017 ses many you know is a very innovative online mark... Read More

Key Insights

• Etsy’s core market is not handmade goods in isolation, because buyers generally begin with a specific need such as finding a gift or improving a living space. Its differentiation comes from making ordinary purchasing occasions feel special through distinctive products created or personalized by independent sellers.
• Keeping commerce human is Etsy’s three-word mission, reflecting an alternative to commerce that Silverman described as increasingly commoditized, disposable, and concentrated among fewer sellers. Etsy aims to connect joyful, personally meaningful purchases with direct support for makers and creators.
• Creativity is presented as resistant to automation, making it a potential foundation for independent work. Etsy enables creators to apply their creative energy to products and operate global businesses from their living rooms, linking the marketplace’s customer proposition with an economic opportunity for sellers.
• Decelerating growth does not necessarily mean a market is exhausted. When Etsy’s sales growth fell for about eight consecutive quarters and reached 11 percent year over year, Silverman believed the primary causes were insufficient focus and execution, rather than the handmade market having reached its natural limit.
• Diversification can weaken a company when it redirects resources into areas where the business lacks a natural advantage. Etsy had begun making venture-like bets outside its core after concluding that its original market was mature, but Silverman believed these efforts forced the company to start over instead of strengthening its distinctive marketplace.
• A single primary metric can impose sharper discipline than a collection of equally weighted measures. Silverman selected gross merchandise sales because it represented customer success on both sides of Etsy’s marketplace: buyers finding products they loved and sellers successfully making sales.
• Good ideas are only candidates for investment, not automatic priorities. Silverman distinguished the worthwhile many, projects aligned with strategy and capable of producing positive returns, from the vital few, the limited set of initiatives important enough to receive immediate organizational attention and resources.
• Etsy’s restructuring was rapid and extensive after Silverman became CEO. Within his fifth week, the company stopped about 60 percent of its projects, laid off roughly 22 percent of its staff, and assigned new jobs to an estimated 80 to 90 percent of the employees who remained.

Questions & Answers

Q: How did Josh Silverman redefine Etsy’s market?

Josh Silverman rejected the idea that Etsy’s opportunity should be defined simply as a market for handmade goods. He argued that shoppers begin with practical or emotional goals, such as buying a gift for a partner or finding something for a living room. Etsy’s opportunity was to make these otherwise commoditized purchases feel special through products made or selected for an individual buyer.

Q: What does Etsy’s mission to keep commerce human mean?

Keeping commerce human means offering an alternative to purchasing that is increasingly cheap, fast, commoditized, and disposable. Silverman described Etsy as a place where buyers can obtain something made specifically for them, bring more joy into everyday life, and support a maker or creator through the transaction. The mission connects differentiated buyer experiences with meaningful opportunities for creative sellers.

Q: Why did Josh Silverman think Etsy could become larger?

Silverman believed Etsy was still at an early stage because its distinctive purpose remained valuable in a world of increasingly standardized commerce. He saw the marketplace as an antidote to larger platforms and disposable products. He also believed creativity could not be automated, which strengthened Etsy’s role in helping people turn creative energy into global businesses operated from their living rooms.

Q: Why was Etsy’s growth slowing before its turnaround?

Etsy’s sales growth had decelerated for approximately eight consecutive quarters, reaching 11 percent year over year in the quarter when Silverman joined as CEO. The existing interpretation was that the handmade market had matured. Silverman offered a different diagnosis: Etsy suffered from insufficient focus and execution, while diversification into unrelated areas was distracting resources from the company’s larger core opportunity.

Q: How did Etsy choose which projects to prioritize?

Etsy asked what the fewest things were that the company needed to do well to succeed. Silverman first defined success through gross merchandise sales, then required a proposed project to have the potential to produce at least $10 million of incremental GMS within the next 24 months before it would even be considered. Passing that threshold did not guarantee selection because Etsy still chose only a vital few initiatives.

Q: Why did Etsy use gross merchandise sales as its main metric?

Gross merchandise sales measures the total volume of sales completed on Etsy’s platform. Silverman chose it as the company’s primary metric because it represented customer success on both sides of the marketplace. Growth in GMS indicated that buyers were finding products they loved and that sellers were making sales, allowing teams to evaluate projects against one shared commercial outcome.

Q: What is the difference between the worthwhile many and the vital few?

The worthwhile many are projects that appear strategically aligned, offer a positive return, and could be credibly defended before a board. Silverman argued that completing every such project would still leave an organization unable to progress effectively. The vital few are the much smaller set selected for immediate priority after leaders compare good ideas and decide which ones are most necessary for success now.

Q: What organizational changes did Etsy make under Josh Silverman?

Within Silverman’s fifth week as CEO, Etsy stopped about 60 percent of the projects underway across the company. It also laid off roughly 22 percent of its staff, while an estimated 80 to 90 percent of the remaining employees received new jobs. Silverman characterized the changes as enormously tumultuous and difficult, but said dramatic action was necessary to signal real change and protect Etsy’s future.

Summary & Key Takeaways

• Josh Silverman evaluated Etsy by asking what distinctive and meaningful role it played for customers. He concluded that shoppers were not seeking handmade products as an abstract category. They wanted gifts, home items, and other purchases to feel special, personal, and less commoditized, leading Etsy to adopt the mission of keeping commerce human.

• When Silverman joined Etsy as CEO in 2017, sales growth had decelerated for roughly eight consecutive quarters and reached 11 percent year over year. The company interpreted this as evidence of a mature handmade market and diversified into other areas, while Silverman diagnosed insufficient focus and execution as the more important problems.

• Silverman made gross merchandise sales the company’s primary metric because it reflected whether buyers found products they loved and sellers completed sales. Projects needed the potential to generate at least $10 million in incremental GMS within 24 months to receive consideration. Etsy stopped about 60 percent of its projects and substantially reorganized its workforce.