How ‘getting off the internet’ helped Etsy become a US$6.05 billion online marketplace

As Danielle Maveal, who is Etsy’s brand and community hacker, explains, Etsy “did something that works and is often overlooked. We got off the Internet.”

Photo credit: Business Insider

The following is an edited excerpt from Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success by Morgan Brown and Sean Ellis. The excerpt was provided by Virgin Digital Publishing. You can buy a copy here.

Now that Etsy has had a successful IPO, in which it raised more than $287 million, and is valued at more than $1 billion, the founders’ idea to create a site for the buying and selling of handcrafted products by individuals or small, artisanal firms seems to have filled an obvious need. But that need wasn’t always so apparent. In fact, the early growth of the company was fueled largely by a great deal of legwork.

As Danielle Maveal, who is Etsy’s brand and community hacker, explains, Etsy “did something that works and is often overlooked. We got off the Internet.”

By sending a team of people out to attend craft fairs all around the country and meet with prospective sellers to bring onto the site and with their customers, Etsy discovered the network power of “Stitch ’n Bitch” groups, comprised of feminist crafters who were a key force in the growth of the craft movement.

Etsy smartly singled out influential artists, crafters, and vintage collectors and actually took them to lunch to understand their motivations, i.e., what aspect of the selling experience they considered most important, and what kind of aha moment it would require to convince them to shift that experience to Etsy.

Not only did Etsy convince many of these crafters to open stores on the site, but it facilitated the creation of community that those same influencers had expressed as being of critical importance. Upon learning that many groups of crafters had coalesced around publications, like the feminist magazine Bust, as well as a host of blogs, Etsy decided to host online message boards that contributed to community building.

Etsy’s community forums not only acted as a place for sellers to get tips on how to improve sales, they acted as recruiting boards for new sellers and as hubs of discourse around the feminist crafting movement. This early “boots on the ground” market development not only was vital to Etsy in discovering how to become must-have, it also led the way to the strategies they would subsequently use to fuel growth, which was driven primarily by promoting organic, word-of-mouth and online community building, rather than big traditional (i.e., expensive) marketing campaigns.

Guided by this early adopter feedback, the team spent their time building tools and resources to make sellers successful, such as the aforementioned forums, the Seller Handbook blog, and developing tools and partnerships to help sellers with customer communication, order management, and more. They also ensured that their seller stores and item pages were laden with social sharing hooks to make it easy for the sellers and potential customers to share their bespoke wares on their Facebook pages, blogs, and Pinterest boards.

The result was that, as one analyst wrote, the company spent “next to nothing” on customer acquisition to achieve the growth that brought it to its IPO, and that even in recent years, organic channels, such as social media, email marketing, and organic search traffic, have represented 87 to 91 percent of Etsy’s traffic, while paid ads have been responsible for between just 2 and 7 percent of traffic.18 All of this “getting out of the building” worked: at the end of 2014, just prior to their IPO, Etsy had grown to over 54 million members and $1.93 billion in sales.

Why go analog

As Steve Blank, one of the leading innovators in the field of customer development, stresses, no matter what business you’re in, you need to get out of the building to find out what your customers really want from you and your product.

Many resources for conducting customer interviews are available online. Whichever you choose, the most important principle to remember when conducting them is to be dispassionate about your product. The feedback will be worthless if you’ve spent the whole time selling. You’ve got to be listening and observing, not pitching. Also important is the principle that actions speak louder than words. The best practice is to take the product, or a prototype, out into “the wild” so that you can actually see exactly how prospective users respond to it.

This may reveal that features you think you’ve designed to be a breeze are actually too complicated or just of no interest, or make you aware of a problem users need solved that you hadn’t at all anticipated. Users may even point to invaluable ideas for changes to the product you and your team would never think of. Such was the case for the online marketplace Etsy.