Etsy, the pioneering online marketplace for creators, crafters and other makers, is the subject of a Bloomberg/Newsweek report exploring the publicly-traded company’s battle with a shareholder group challenging the company’s priorities and corporate structure. 

Leading the challenge is Seth Wunder, a hedge fund manager based in Los Angeles. According to Bloomberg, after the company went public and started to decline in value, Wunder saw Etsy as a business that was fundamentally sound. Moreover, it also has a similar business model to one that has worked well for EBay Inc., which has made money for 21 straight years According to the Bloomberg report, Wunder wondered, “Why is Etsy not making more money?” He saw the answer in the way the company was being run.


“Etsy’s general and administrative expenses amounted to 24 percent of total revenue. (EBay is about 10 percent of revenue on such expenses.) Etsy had been hiring like crazy, having increased its staff 55 percent since the end of 2014, and doling out all manner of perks: an elegant Brooklyn headquarters with Manhattan views, art installations, and a “breathing room,” along with salaries and benefits common at much, much more profitable tech companies.”

Wunder’s Black-and-White Capital began buying Etsy stock, eventually acquiring 2 percent of the company, enough to launch an activist campaign against the company, especially targeting its then CEO Chad Dickerson.

When the company went public, it had doubled in price, but soon dropped to one-half its IPO value. Then, last May, before what was going to be a lackluster shareholder’s report, Etsy announced that it was laying off 80 employees—about 8 percent of its staff—and that Dickerson had been fired also.

These changes increased revenue—Etsy brought in $365 million last year, on more than $2.8 billion in gross merchandise sales—but exacerbated tensions with sellers, who complained that the growth made it hard for truly distinctive merchandise to stand out.

Will Etsy return to a sales-based business model, rather than one which preferences seller services?”

Stay tuned.


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