Crafting a Business

Rob Kalin turned the idea of an online craft fair for "the little guy" into a business that rakes in millions of dollars every year.

By Donna Fenn From Reader's Digest USA, December/January 2010

Rob Kalin learned the secret to success while he was still in his crib. As a toddler, the Boston-born teacher’s son dragged around a stuffed bunny rabbit that had been lovingly stitched together by one of his mother’s students. True, one of the ears was sewn on backward, but that just added to its magic. “It always had an aura,” Kalin remembers of his first handmade craft.

Kalin’s appreciation for the simple and the simply eccentric inspired him to create Etsy, an online crafts fair that may well be the largest market for handmade goods in the world. Last year, 350,000 quilters, woodworkers, and other artisans sold their one-of-a-kind merchandise on the four-year-old site. “People ask you what you want to be when you grow up,” muses the 29-year-old Brooklynite. “I’ve always stood up for the little guy.”

These “little guys” sell everything from hand-knit sleeves for Macbooks ($32) to myrtle-wood electric guitars ($3,200). And in an age of chain stores and strip malls, it seems there’s still a big market for the unique: custom-made rainbow tutus, hand-painted porcelain tea sets, bookcases crafted from canoes. More than three million consumers in 150 countries purchased about $87.5 million worth of merchandise on Etsy last year. That’s up from just $26 million in 2007. Kalin says Etsy has already sold $100 million worth of goods this year.
Emily Worden, the founder of Elemental Threads, a custom handbag and jewelry company in Cambridge, Massachusetts, signed up with Etsy when she started her company two years ago, and it’s now central to her business strategy. She pays Etsy a 20-cent standard fee for each item she lists on the site, plus a 3.5 percent commission on everything sold. Etsy allows her to track the number of times customers click on a particular item to view it. “We can see that our bracelets are a popularly viewed item and which colors and sizes get the most views,” she says. “That guides us in evolving our product lines.”

Championing the cause of the solitary artisan comes naturally to Kalin, a boyishly ambitious nonconformist who wouldn’t look out of place at the local skate park. Kalin’s father was a carpenter and taught him early on how to use his hands. Indeed, in high school, Kalin was so hands-on with photography that he cut classes to shoot and develop photos 18 hours a day. He graduated with a D-minus average but won admission to a studio program at Boston’s Museum of Fine Arts. When Kalin learned that graduate students in his program were allowed to take design classes at nearby MIT, he put his creative skills to work—and handcrafted a fake graduate ID so he could attend.

Eventually, Kalin ended up at New York University, studying classics and working as a carpenter. One night, his Brooklyn landlord challenged him to build a website for his restaurant, Acme Bar and Grill. “I didn’t know anything about websites, but I learned HTML, and I built the basic site in four weeks,” Kalin recalls.

Kalin recognized a need for Etsy after working on another crafts site that provided “advice and a lot of hand-holding” for artisans but no marketplace for their goods. Teaming up with friend Jared Tarbell and fellow NYU students Chris Maguire and Haim Schoppik, he dashed off a fan letter to Stewart Butterfield and Caterina Fake, the cofounders of Flickr. The two had sold their highly popular photo-sharing website to Yahoo! and, it turned out, were impressed enough by Kalin’s letter to take a look at his start-up. They invited the Etsy team to San Francisco for a month in 2006, mentored Kalin, and helped him raise $615,000 in financing.
Today, Etsy’s staff has ballooned to 70 employees, and the company reportedly grosses more than $12 million a year. In January 2008, Kalin sold approximately 20 percent of the company for $27 million. Investors now value the firm at $100 million.

Etsy’s value to vendors extends beyond what can be measured in dollars. For many, it’s a way to stay connected to the crafts community. Chuck Domitrovich, a jewelry maker from Seattle, networks on the site with local artisans who work in the same medium, trading tips on technical issues like enameling. He has also connected with brick-and-mortar retail outlets through Etsy.

Heather Dehaas of Leila & Ben, a Canadian company that sells handmade sewing and crochet patterns for children’s clothes, says she stays in touch with customers through the site. “The conversation feature allows people to contact us for any help they may need while working on their projects,” she says. “Etsy gives people the option for a more personal experience.”
Of course, Etsy has its detractors too. When the site began to take off, “we were in over our heads,” Kalin says. Some Etsy merchants and shoppers complained about buggy technology, poor customer service, and unreasonable treatment of sellers. Rival sites with names like iCraft and ArtFire have sprung up to pick off the disgruntled. Last year, Kalin hired help: Maria Thomas, former head of digital media at National Public Radio, as chief executive officer along with Chad Dickerson, a former Yahoo! executive, as chief technology officer. Kalin recently stepped away from the day-to-day operation of Etsy. He is still a major shareholder and is chairman of the board.

Now it’s on to the next project for the peripatetic Kalin. His new venture is a business incubator called Parachutes. It’s a 9,000-square-foot warehouse space where Kalin has gathered nine of his favorite Etsy sellers to help them grow their tiny crafts operations into bona fide small businesses.

In his own corner of the warehouse, Kalin is turning IKEA kitchen countertops into stereo speakers and reclaimed wood into desks.
He has also started sewing some of his own clothes. “I have to make something physical at least once a month,” says the cyberspace entrepreneur, “or I go crazy.”

Getting Ahead with Rob Kalin

What’s the origin of the name?
I wanted a nonsense word because I wanted to build the brand from scratch. I was watching Fellini’s 8½ and writing down what I was hearing. In Italian, you say etsi a lot. It means “oh, yes.” And in Latin, it means “and if.”

What’s the best piece of business advice you’ve ever gotten?

If you’re headed down the wrong road, turn around. It was from Caterina Fake [the cofounder of Flickr]. Early on, we were looking to hire a CEO and had made an informal commitment to someone, but it didn’t feel right to me. Caterina said, “If you don’t feel that it’s right, be honest. Don’t do it and then tell yourself it will be better in six months.” There’s a lot that goes into making a successful business that you can’t quantify, like your gut and your hunches. I didn’t hire the person.

What’s the mission behind your new venture?
The focus is education and community. When you’re one independent craftsperson working alone, making $15,000 to $20,000 a year, there’s a glass ceiling. You’re always reinventing the wheel with all this stuff like accounting, taxes, shipping, and insurance. What if an accountant comes in and teaches them all about bookkeeping, or we help find apprentices for them, or arrange for a textiles factory to bring their end bolts here? You need centralization to make that work. We’re building a system to teach people how to start a really small business. There is a lightness in starting something new.


Get more tips on saving money and building your career when you sign up for our weekly newsletters.

Published in : Home & Garden » Money
Find more about: online | entreprenuer | etsy |
No votes yet

Recent Features

  • 5 Low-Cost Ways to Celebrate Valentine's Day>>

    You don’t have to choose between your bank account and your love on Valentine’s Day. Here are low-cost but meaningful ways to celebrate.>>

  • 13 Things Rich People Won't Tell You>>

    Most of them weren't always rolling in it. Here's how to make your money matter.>>

  • 13 Things You Should Know Before Choosing a Daycare>>

    As your little ones grow up (or if you're expecting your first), you'll want to consider signing them up for daycare. Here are 13 points to keep in mind when making your big decision.>>

  • 5 Secrets to an Exceptional Holiday on a Shoestring Budget>>

    ’Tis the season to overspend. Each year, we promise ourselves that we’re not going to go overboard with holiday spending. Each year, it seems it’s difficult to pay the bills in January and beyond. But you can be festive and save money. Here's how.>>

  • How To Pick The Best Credit Card for You>>

    With so many credit card options, it can be hard to know which is best for you. Here's a guide to help you pick your plastic.>>

  • 7 Tips For Aspiring Home-Buyers>>

    Whether it’s your first home or your fifth,
 here’s what to consider when shopping for shelter.>>

  • 7 Tips For Successful House Hunting>>

    Three registered home inspectors share their expert advice on when to relax, when to worry and when to walk away.  >>

  • How to Save Money on Home Renovations>>

    Thinking of doing some home renovations? Read on to discover the best places to splurge and save on the jobs you need done. >>

  • 9 Ways To Save Money On a Wedding>>

    Flowers, music, dinner and drinks are just a few of the costs associated with planning your wedding. But fear not, bride and grooms to be! We’ve rounded up the best ways to cut costs and help you save money on your wedding.>>

  • 10 Ways To Sell on eBay>>

    EBay is a cheap, safe way to generate cash quickly. Here are 10 tips guaranteed to provide the best return when you sell your stuff on eBay.>>

  • 7 Ways To Sell on Craigslist>>

    Want proven tricks for how to sell your things on Craigslist? Try these tips from the experts.>>

  • 10 Ways To Squeeze More Out of Your Money>>

    These days it seems everybody is looking for ways to squeeze more out of less. Learn how to get more out of your time, money and energy, with this fun and surprising look at the easy ways to make a big difference on a day-to-day basis.>>

  • The 10 Worst Job Interview Mistakes>>

    A job interview can be a nerve-racking experience. And if you're not properly prepared, it can be a frustrating one. You'll be more likely to get the job you want if you avoid these common mistakes. >>

  • Computer Specs, Explained>>

    In today's technocentric day and age, even the computer-savvy who surf the web for hours a day need to know about basic computer specifications; especially if they're buing a new computer. Here are the top computer specs you need to be aware of before your next purchase.>>

  • 8 Ways to Save Money>>

    Let's face it: These days, everyone's trying to save. But a thrifty outlook needn't mean a dull lifestyle. Here are easy ways you can save $100 or more this year.>>

Your Comments