The 5 things Etsy did right for sustainable growth

Disclosure: The author of this post is not affiliated to any of the organisations mentioned in the article below.

Photo credit: Business Insider

92 percent of high growth startups fail within three years, premature scaling being a major cause of failure. Even with funding, it’s not a sure road to success either — some investors over-invest despite indicators that show a much lower probability of success.

Mark Zuckerberg once said,

“Move fast and break things. Unless you are breaking stuff, you are not moving fast enough.”

It became a mantra for most, if not all, startup founders. Their constant fear and motivation: different companies can have similar ideas, but what determines success could be the speed of execution and first mover advantages.

Rapid expansion and a large user base are indicators of success, but they are shallow indicators. Friendster had a large user base, and so did Napster. More important than rapid growth, startups need to grow sustainably without creating significant problems for the long run. It spells disaster when there is clearly a trade-off between rapid growth today and the startup’s ability to sustain itself for the future.

While many startups aim to accelerate growth and are — in the words of Matthew Stinchcomb, Etsy.org’s executive director and the company’s former sustainability chief — “just growing to grow,” Etsy is taking a more cautious approach with regard to scaling its online marketplace. Etsy recently celebrated 11 years of being a creative marketplace. How does it advocate fast growth but still emerge on top?

1. Having an uncompromising vision

Etsy knows exactly why it exists, and its decisions are not driven by trends or competition. Etsy CEO Chad Dickerson states, “Etsy was built to serve our community and we will continue to operate this way, no matter our size, status, or certifications.”

Photo credit: Etsy

Etsy’s commitment, as stated in its website, is to create lasting change in the world. The company views its “social, environmental and business goals as inseparable.” It became a certified B Corp — a for-profit entity that meets rigorous standards of social and environmental performance, accountability, and transparency, as certified by the nonprofit B Lab — in 2012.

When the leading ecommerce platform for handmade goods just started, it guaranteed that items listed on its marketplace were either vintage or handmade by individual sellers. Shoppers started pouring in and now, it currently offers 35 million listings for handmade home goods, jewelry and other crafts. Etsy went on to file for an IPO in March 2015, even announcing that “it intends to keep its original principles even under pressure from shareholders to cut costs or deliver profit.” Its gross merchandise sales hit $2.39 billion in 2015.

2. Enabling the community to do more

3. Giving back to the world

4. A company culture that drives change

5. Strive for thoughtful growth