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Etsy is under pressure to start acting more like a conventional company (bloomberg.com)
241 points by marvinpinto on May 18, 2017 | hide | past | web | favorite | 226 comments



Etsy first started losing their appeal when they gave up even pretending to not allow Alibaba resellers, and lost the "hand-made" distinction that made their site unique.

Currently they're going through a round of "let's alienate all the small unique sellers that are still using our service" by changing their payment policies. Sellers are being required to accept Etsy's payment processing, where before accepting Paypal was sufficient. Signing up for Etsy's payment processing requires giving Etsy a whole bunch of private information that a lot of sellers (at least in the internet circles I run in) are not comfortable giving out to Etsy, especially sellers that do not live in the US.

Etsy is quickly losing the sellers that make their site worth visiting to Storenvy.


I had a look at Storenvy's store owner's agreement. There's several exclusions in there that would be problematic, such as:

> Any product containing any hazardous or dangerous material including mercury or any product whose use is regulated by any law in any jurisdiction.

I get what they're trying to do, but that's pretty broad

https://support.storenvy.com/customer/portal/articles/93987-...


By "internet circles I run in" I'm talking about the ball-jointed doll hobby, so probably 90% of the products we're talking about are handmade doll clothes and wigs. The dolls themselves are usually made of polyurethane resin, which I don't think could be considered harmful once it's cured.

Most of the other hand-crafted things I would consider checking Etsy for first are things like jewelry and pottery. Unless you're using lead-based glazes, I think those sellers are all pretty safe going to Storenvy.

I just know that a large percentage of the makers I follow on social media have been complaining about these new payment policies in the past few weeks, and many of them have already opened Storenvy shops.


> any product whose use is regulated by any law in any jurisdiction.

That doesn't mean say product which is banned in your jurisdiction.

It means any product that is regulated (as in, there is any law at all governing its use) in any jurisdiction.

Like for example plastic is normally pretty harmless, but maybe theres a law in Portugal saying there can't be a certain amount of plastic in soft drinks and now its restricted

IANAL but I thought this wording was interesting and took it to its logical extremes.


True, the wording is pretty vague. I assume it's a CYA-clause for Storenvy so they're not liable if someone sells something illegal somewhere. IANAL either though, so who knows.

It looks like Etsy's policy is a little more explicit about it being the seller's job to make sure whatever it is is legal wherever it is.

https://www.etsy.com/legal/prohibited

> Due to the potential harm caused by hazardous materials, as well as complex legal regulations surrounding such materials, including shipping restrictions, hazardous materials are prohibited on Etsy

Etsy doesn't define "hazardous materials" in their policy though, just provides a few examples.

> Our marketplaces provides a direct connection between buyers and sellers around the world. If you buy or sell an item from another country, or if you enter into a transaction with someone across international borders, you are responsible for complying with international trade restrictions, including restrictions put into place by the US Office of Foreign Assets Control (“OFAC”), regardless of your location.


>> any product whose use is regulated by any law in any jurisdiction > handmade doll clothes and wigs

Toy safety? For example, all the "toy" sections of 16 CFR Part 1500?[1]

[1] https://www.law.cornell.edu/cfr/text/16/part-1500 Found via a link on my (shameless plug) "A feel for: torque"[2], under 10^-1 Newton-meters. [2] http://www.clarifyscience.info/part/ZoomB?v=A&p=CK6Ji&m=torq...


Not toys, think more along the lines of art dolls. They aren't for kids, they cost anywhere from $$$ to $$$$ a piece.


I am very interested in the reason for this pricing, if you wouldn't mind enlightening me? I never understood why they are so expensive.


Well, mostly, it's because they're not mass-produced. The type that I collect are made from polyurethane resin, which has to be handcast in silicone rubber molds.

Each doll is made of 15+ individually cast pieces (at minimum - two feet, two calves, two thighs, two hands, two forearms, two upper arms, torso, head and headcap, and that is for a single-jointed doll with a one-piece torso, many dolls will also have extra knee, elbow, wrist, and ankle pieces, and the torso may be in two or three pieces instead of one).

Those pieces then have to be hand-finished (removal of extra flashing material, sometimes elastic channels drilled for the stringing if that was not already included in the mold, sometimes full seam sanding), and assembled with elastic and metal hooks.

The silicone molds are only good for about 10-20 castings before they start having enough wear and tear to reduce the quality of the resulting doll, so a lot of the material cost is actually in the silicone (platinum-cure silicone is much more expensive than resin). New molds then must be made off of the original master sculpture.

Then, if you bought the doll with a face up, an artist hand paints the doll's features with pastels and acrylic paints. And if you bought it blank, you will have to either paint the face yourself or commission someone to do so eventually, as blank dolls really don't have anything in the way of features - imagine a 3d model with no textures applied.

So that's just the incremental cost of each individual doll. On top of that you have to pay for artist development time of new sculpts, marketing and websites, translators if you want to be able to sell your dolls worldwide, all other other usual overhead costs of running any sort of business, etc.

Edit: Also, I don't know if most people really realize the size of some of these dolls. The ones I have that start broaching the $1k mark are anywhere from 65-72cm tall, and weigh as much as 10 lbs. One of mine is 80cm tall, meant to represent a 12ish year old girl in 1:2 scale. She's so big I buy her shoes from the toddler department, not a doll shop.


>I never understood why they are so expensive

In the past everything was expensive. The world of mass production hides from us how much it costs to make 1 of something. A few hundred years ago books were insanely expensive and almost nobody had them. A hundred years ago toys were hand made and expensive and a child might have one or two, most likely passed down from someone else.

We live in a world where the amount of cheap stuff has exploded beyond the imaginations of anyone from the past.


Would this include anything that would fall under California's Prop 65 warning labels? Because if so, that'd cut out a LOT of things you'd never worry about...

[1]http://www.latimes.com/health/la-he-pro-con2-2009nov02-story...


I have used Storenvy before to buy alpacasso plushes because my then-girlfriend liked them very much and I did too. But those plushes are not made by the sellers, they are just resellers because the plushes are only available in Japan. But the sellers I had business with often gave gifts and handwritten card/letter to thank me for the business. This is an important thing to note when comparing the products being sold on either site.


> “There is one and only one social responsibility of business,” the economist Milton Friedman famously wrote in 1962. And that is “to use its resources and engage in activities designed to increase its profits.”

It's strange to me that Friedman is viewed (at least by economists and "business" folk) as a paragon of logical reasoning and empiricism, all the while his views reek so strongly of ideology. There are tons of reasons why the quoted statement might be false whether you're a policy maker (negative externalities) or even the most cold-hearted capitalist (short-term incentives).

Perhaps relatedly, it's actually not true that corporate responsibility to profit is codified in the law. See e.g. https://en.wikipedia.org/wiki/Shlensky_v._Wrigley (discussed further in https://www.amazon.co.uk/Shareholder-Value-Myth-Shareholders...)


Friedman is of course right, whether lawmakers and jurists have tried to codify rules allowing directors to betray shareholder interests.

A single business is not responsible for externalities, any more than a single citizen is. We are ALL responsible for negative externalities like pollution and have to solve those problems together, using the political process and sharing the costs among everyone.

And his statement isn't specific to the short term. Increasing profits is maximizing total profits. Making of ton of profits today and none thereafter is in no way as good as making a ton more profits over time.

Imagine you can invest your life savings of $100,000 and a lot of sweat equity to build a business (including the opportunity cost of giving up your $100k a year job). You estimate it will fail half the time and you will lose your life savings. But the other half of the time you estimate will make $500k a year in profit, after paying all employee compensation, taxes and other costs.

Then you are told that if you succeed, you can't have the $500k a year. That half of that has to go to the employees who risked nothing and got market wages from you for helping build the business (and quit whenever they pleased for better compensation elsewhere). And another half has to go to the "community" to help support the arts, or some other noble cause that did nothing to help you start or grow your business.

You still want to risk your life savings?

Companies are owned by shareholders. Property rights are one of the most fundamental liberties we have. I don't go into your house and raid your fridge whenever I feel like it. Why should you be able to go into my business and tell me how I need to spend my money?


You're correct that ultimately, at the end of the day, the shareholders are the owners of the business, and should have ultimate control over how their resources are allocated or spent. That doesn't mean that the shareholders interests are necessarily for profit above all else. If your shareholders were perfectly happy with being ecologically conscious and providing an above-average place of business for employees irrespective of profit, wouldn't demanding focus on profit above all else be working against the shareholder's interests?

I think this is especially true in the case of Etsy, which as the article points out, is registered as a B corporation and so arguably has agreement from the shareholders that benefiting society is part of the mandate of the company.


> If your shareholders were perfectly happy with being ecologically conscious and providing an above-average place of business for employees irrespective of profit, wouldn't demanding focus on profit above all else be working against the shareholder's interests?

This argument of shareholders wanting to be ecologically conscious is such a privileged idea. The majority of money in the stock market doesn't come from the rich who can afford to be flippant with their stock returns. It comes from people relying on consistent equity appreciation so they can afford to retire.

We already know how to deal with negative externalities such as pollution. Evaluate how much it costs society and tax it accordingly.


>We already know how to deal with negative externalities such as pollution. Evaluate how much it costs society and tax it accordingly.

I don't understand this, can it not be the case that the companies can 'afford' to keep polluting, even if paying the tax? Especially if pollution "cost on society" is relatively constant or not increasing according to profit. How is this cost on society determined, and what if I think that the cost is too high, even for taxation to deal with it?

This seems like a band aid on one of the problems inherent with the profit motive.


If you are a shareholder and want to spend some of your profits on ecologically conscious activities, no one can stop you. But that doesn't mean you should force the other shareholders to do the same.

And Etsy isn't a B corporation. It's CEO tried to make it one and failed.


Etsy is currently a B corporation. They're likely to not remain one. The article clearly points this out, but it's easily verifiable as well:

- https://www.bcorporation.net/community/etsy

- https://blog.etsy.com/news/2012/etsy-joins-the-b-corporation...

- https://www.etsy.com/ca/mission


It's a process the CEO tried to start, never became binding because they are incorporated in Delaware which doesn't recognize B corps, and can't finish because he doesn't have buy-in from the owners of the company.

So it's temporary status doesn't belie the fact it's not going to be one and shouldn't be treated as one.


Delaware absolutely does incorporate Public Benefit Corporations. Kickstarter is one example.


This is way outside of my expertise or experience, but this thread got me curious.

Here's what 3 minutes of googling indicates:

* most states have b corps * most states that have b corps based them on the Model Benefit Act, drafted by B-Lab * Delaware has b corps, but they are not based on the Model Benefit Act * whether the Model Benefit Act was used affects all sorts of things (requirements, reporting, standards, decision makers, enforcement…)

So it seems fair to say that delaware has b corps, but they are not like the others.


How is that different than saying, "If you are a shareholder and you want to make as much money as possible regardless of social costs, no one can stop you. But that doesn't mean you should force the other shareholders to do the same"

If we go by your logic, then the only thing people are allowed to pool their money together for is to make the most money possible. Am I not allowed to incorporate a public company that has another purpose? A company is, and should be, controlled by the shareholders, since they are the owners. If those shareholders want to do something besides maximize their profits, they should be allowed to do that.


In theory, you can organize a public company around any principles you want.

And then, when other people buy a controlling interest in your company, they are just as free to change it. Public companies do what a majority of their shareholders want, and people who buy stock are overwhelmingly interested in profit.


Right, but that isn't what the person I was responding to was saying. They said shareholders had no right to demand anything besides maximum lifetime profit. I was simply saying that they were within their rights to ask for something different, if a majority of shareholders felt that way.


>And Etsy isn't a B corporation. It's CEO tried to make it one and failed.

Their website says Etsy has been a certified B Corp since 2012: https://www.bcorporation.net/community/etsy


It's headquartered in Delaware. It's B Corp status isn't binding there, and never will be, because they chose to IPO and sold much of the company to investors who don't want that.


Your post reads a bit contradictory. The only way we can all be responsible for negative externalities is if we each individually choose to be responsible, or if lawmakers force us all to be responsible. I honestly don't know what your view on this subject is, because you seem to be deriding any possible solution to the problem of negative externalities.


Well, one example would be if you are CEO of a car manufacturer. Your engineers design two catalytic converters, one that meets all government regulations/requirements, and another that does substantially better, but reduces horsepower and drivability significantly.

If you are environmentally conscious and decide to standardize all your cars on the cleaner catalytic converter, and consumers react poorly and sales suffer, you aren't serving your shareholders. It's not a problem your company can or should solve, you are part of a shared organizations and your ownership doesn't trump your shareholders.

Instead you should take your share of the profits and your massive paycheck and work to get cleaner and more intelligent exhaust standards put into law, so that all new cleaner catalytic converters are as clean as you think they should be. Or find alternative and better ways to reduce emissions.

But you can't steal profits from your shareholders to fit your own agenda.


But in practice, what we get is VW.

It is "contra-survival" to poison the air. You cannot breath profits.

The world is bubble-shaped, and we are all trapped together sandwiched between hard vacuum and molten rock.

Poisoning in the short-term to make money to make laws to stop poisoning in the long-term is a poor strategy, and I think we as sentient human beings can do better.

"Never let ideological purity interfere with effective action."


VW's approach clearly wasn't business optimal, given it almost bankrupted them.


I'm suggesting that overemphasis on the "profit motive" affected the strategic judgement of the VW corporation as a whole.

Whether your metric for this disaster is cash or clean air I think the proximate cause was profit-seeking to the exclusion of other values.


It is a beautiful example of dogma. It has some meaning but can be bent and molded to fit almost any argument.

The obvious argument, especially in Etsy's case is 'well, this works for the short term but can mean no profits in the long term as you commoditize your business and what makes a company like Etsy, Etsy fades into market oblivion.'

To which the next statement is 'Oh. Well, Friedman meant all expected profits even into the long term.' which may even be true, but the statement is used to justify all sorts of business behavior that is not in keeping with that idea.


Yea, if you twist Friedmans meaning you can make all sorts of nonsensical arguments. Value is profits extending into the long run forever, he spoke and wrote clearly enough that he doesn't have to spell that out for you.

In Etsy's case, paying above market wages and benefits does nothing for the company and it's shareholders, it's just a gift from the CEO to workers, paid for out of shareholder accounts. Etsy didn't get the best web site or software out from it, they got rampant entitlement and sub-par work.


>paying above market wages and benefits does nothing for the company and it's shareholders

Again, we can use Friedman on both sides of the argument (which was my original point as to the meaningless of the statement if not in original intent then in popular application).

I could argue under the same statement that such a move would do plenty for the company in establishing itself as a very good place to work making it likely to attract and retain top talent. It could also make individuals 'hand crafting' items to sell, who are more likely to be a conscientious lot, feel good about continuing to do business with Etsy. These factors could lead to a more solid niche in the market, longer company survival, and more consistent profits over time.

I'm not saying that's what I believe but let's assume it is true.

Since long term profit projections get hazy, the safer bet almost always is to follow a short term profit argument and take surer profits as soon as possible even though, in perfect hindsight, a long term approach would have yielded greater overall profits.

I'd bet this happens a lot and this idea that everything is subservient to profits paradoxically hurts value more than it helps.


> paying above market wages and benefits does nothing for the company and it's shareholders, it's just a gift from the CEO to workers

The real problem in compensation is executive pay, which reaches extraordinary levels, explicitly rewards failure (Yahoo passim) and tends to be a gift from the CEO to themselves.


>he spoke and wrote clearly enough that he doesn't have to spell that out for you.

Death of the author. Most people who read, and quote, Friedman's quote, haven't read Friedman's other writings or watched his speeches. People can't apply context that they don't have.


"I could argue under the same statement that such a move would do plenty for the company in establishing itself as a very good place to work making it likely to attract and retain top talent. "

Market value means that your turnover should already be low, your employees can't leave for better paying jobs. Obviously there is more to retainment than just wages, there is managerial competency and how you treat people. Bad workplaces have to pay more than market to retain people, good workplaces shouldn't.

But again, it's a silly argument that paying substantially more than market is going to benefit shareholders in some obtuse way. There are as many disadvantages as advantages, such building a complacent, insular underperforming culture just like that Etsy appears to have.

And another is using excess comp to build a "cult of personality" so the CEO can be worshipped, and those are terrible for business/shareholders.

"It could also make individuals 'hand crafting' items to sell, who are more likely to be a conscientious lot, feel good about continuing to do business with Etsy. These factors could lead to a more solid niche in the market, longer company survival, and more consistent profits over time. I'm not saying that's what I believe but let's assume it is true."

Do you really think those people are going to leave Etsy because it no longer has the CEO's cult cheerleader squad decorating the offices?

"Since long term profit projections get hazy, the safer bet almost always is to follow a short term profit argument and take surer profits as soon as possible even though, in perfect hindsight, a long term approach would have yielded greater overall profits."

Do you really think Etsy's massive admin spending, far higher than similar companies, is really translating into long term value and higher profits? This is money not spent on partners or customers or brand, but internally.

"I'd bet this happens a lot and this idea that everything is subservient to profits paradoxically hurts value more than it helps."

The easiest response is to ask you to read some Warren Buffett. All his shareholder letters are free to read going back to the 1970s on Berkshirehathway.com. Long term value in a business is created by building a unique and defensible product offering, a brand, a technology, etc.

It's not from throwing more employee parties and increasing employee compensation. Employees can walk out the door at any time, even the CEO. One of Warren's favorite quotes is you want a business any fool can run, because sooner or later a fool will be running it.

In Etsy's case, it needs to be the best source/destination for it's unique crafts. To do that it needs to provide a viable market place to it's partners. Otherwise it's entire business will just dissipate to Amazon and Ebay and the Kum ba yah nirvana will disappear anyways.

Paying engineers $200k a year when they would be content if they made $150k a year is simply wasting $50k each on something that doesn't add value to the business. That excess comp would be far better spent hiring more people to build more and better competitive advantages, or marketing campaigns to get more partners and better build Etsy's brand, or kept in the bank to safeguard against rainy days, or returned to the shareholders as dividends and better support the value of it's stock.


>Market value means that your turnover should already be low, your employees can't leave for better paying jobs.

The curve isn't flat.

>Do you really think those people are going to leave Etsy because it no longer has the CEO's cult cheerleader squad decorating the offices?

I think people that spend their time learning a craft then peddling hand crafted objects for, let's face it, love over money, will not want to work for anything approaching a Wal-Mart or other 'soulless corporation'. Speaking generally, of course.


>The easiest response is to ask you to read some Warren Buffett.

I've read plenty of Buffet, Munger, Graham, Dodd and the rest. Pretty common knowledge.

What you are missing in your analysis is that Buffet et. al. invest in very well understood businesses (hell, they didn't even touch Amazon). Very well understood businesses tend to have very well understood systems (including the people and their roles and contribution to those systems. They have settled to a point where they /are/ interchangeable. They also tend to be boring and have well understood moats like huge capital or regulatory requirements. They can thrive in the fat part of the curve (or even a bit below it if they have stellar management).

Etsy is none of those things. They are carving out a new niche (or an very old niche with very new scope) with new technology in a constantly changing landscape that, really, anyone with a laptop and some free time could monkey. They will die if they try to live with average, interchangeable parts. No doubt about it.


If Etsy's management didn't understand their business, they shouldn't have been it's management.

But truth is, their business isn't from Mars, it's easy to understand, even if it's not easy to optimize. And if they truly need special custom development, why are they so poor at doing it? Where are the benefits of all that admin spending?

And BTW, I can't think of one Berkshire business that has any significant moat from "like huge capital or regulatory requirements". In Insurance their real moat is either the direct cost model (GEICO), or their underwriting discipline and long term thinking.

Etsy should know what makes it special to customers. Why isn't it more efficient at delivering that?


>Etsy should know what makes it special to customers. Why isn't it more efficient at delivering that?

It is a Very Hard Problem and I don't envy them at all.

Verification of authenticity. I honestly wouldn't know where to begin. Spot check with live people? Expensive and begging for errors. Have sellers document their process? Easy to fake and expensive to check. Have a hair trigger for banning people that are clearly breaking the rules?

They also have the structural problem that Painstakingly Crafted generally takes time. That means less throughput.

And all of that is on top of the general problems of running an internet retailer with global reach.

Because of all of the pressures of throughput and the cost of verification they decided to ignore all of that and just give up, for the most part. And now it is a race to find a new 'quirky stuff that looks crafty' niche like an online Hobby Lobby to live in or lose their brand completely. I don't think it will work in the long term and I think we are witnessing a slow motion Pets.com.

Probably, what they'd need to do is split what they are doing.

One side would be how most of Esty is right now: a bunch of Hobby Lobby level quality crafty looking things that aren't actually hand crafted in any meaningful sense. It would be the place to go to get cheap, somewhat unusual gifts.

On the other side would be high end items. Hand crafted $2000 rocking chairs, for example. Something that can be marked up significantly and that it is worth it to go the extra mile by Etsy and sellers to verify is handcrafted. Maybe video walkthroughs of the process, spot checks, samples sent in to Etsy to be examined by experts etc.

Sellers can exist in both areas or one. The Verified Crafted side would buttress the Crafty but not Crafted side brand wise and the Crafty side would have a larger, more predictable income stream to make sure Verified Crafted can tackle the sticky problems it faces.


> But truth is, their business isn't from Mars, it's easy to understand, even if it's not easy to optimize. And if they truly need special custom development, why are they so poor at doing it? Where are the benefits of all that admin spending?

Speaking of Buffet, this sounds a little bit like his explanation of the "Institutional Imperative" http://www.berkshirehathaway.com/letters/1989.html (just above the 'miscellaneous' section at the bottom)


The curve isn't flat, but the benefits are massively disproportionately expensive the farther up it you go.

This isn't an argument about making the company "soulless". You can still have a great and fun work environment without spending 25% of sales on admin. And much of what makes work enjoyable isn't benefits, but leadership. Having management that is competent, humble, approachable, and driven to empower employees can change a lot.


No argument here but what do you mean by 'admin'?


"Etsy’s general and administrative expenses amounted to 24 percent of total revenue. (EBay and MercadoLibre.com, the Latin American online marketplace, each spend about 10 percent of revenue on such expenses.) "

I should have said G&A (general and administrative expenses). Essentially the cost of your workforce, the offices, benefits, etc. Etsy's is huge compared to any reasonable comp, and nowhere has anyone explained why it must be so.

Ebay has bigger economies of scale, so maybe Etsy can't really get to 10% with their smaller sales, but it should be in the 10-20% range. If it's "correct" number for G&A is 14%, they are essentially taking 10% of every sales dollar to spend on a party for the employees.

It also means their total compensation per employee might be as much as 70% higher than market. Total comp is pay, payroll taxes, benefits such as medical/dental/parking/mass transit/etc. Probably not, since it also includes office expense such as the cost of the CEO's merry band of office decorators. But it's not hard to imagine that they might be 40-50% over market in employee comp, plus spend way too much on office costs.


Interesting.

So you are talking about executive management, finance, and other overhead staff not developers or product development.

I asked because you mentioned developer salaries earlier in the thread.

24% does seem awfully high.


"Brand" is the key thing here. There's obviously an upper level where increased pay / perks becomes excessive, but for the type of customers / sellers that Etsy wants to attract the line is FAR above "as little as possible to make employees not leave". Etsy has to, more than most other companies, maintain an image of not being a soulless corporation as much as humanly possible.


I disagree. Friedman's statement isn't a justification for decisions and it doesn't determine which specific decisions are right or wrong. It determines which justifications are right or wrong.

"We made this decision because it improves environmental sustainability" may or may not be a prudent decision depending on whether the justification of environmental sustainability correlates positively or negatively with financial success.

Clearly running your business into the ground through over-spending, even if it generates modest short-term results, is a poor application of Friedman's idea.


I'd disagree with the generalization that Friedman is viewed as the paragon of logical reasoning and empiricism by economists.

This might be a case of where there's a vocal minority who like to quote Friedman when it's convenient for their political position, so I do understand why it is hard to avoid the impression you have.

His academic contributions to the field are recognized when they've held up, but his views and who he sided with is not without criticism.


> It's strange to me that Friedman is viewed (at least by economists and "business" folk) as a paragon of logical reasoning and empiricism, all the while his views reek so strongly of ideology.

In the U.K. at least his views, along with Hayek's, tend to be associated indelibly with Margaret Thatcher. If there's someone who is seen as a paragon of reason whilst being actually quite ideologically biased, it's Adam Smith.


> paragon of logical reasoning and empiricism, all the while his views reek so strongly of ideology

Motivated reasoning is a very powerful force. Of course people with the same ideology are going to hold up someone who supports them as a paragon of reason, and use him as protective camoflage for policies harmful to the rest of us.


I don't get how it's compatible with the idea that corporations are people. If people act like dicks there is one and only on social responsibility for the other people around it, and that is to call them out and make them stop. But obviously we expect every one to behave, and generally people do.

I don't know exactly what it'd look like if a man on the street started acting like Shell is acting in the Arctic, but I'm quite sure there would be severe and immediate consequences.


You did cut off half the sentence, it concludes, " so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." But beyond that, that one sentence doesn't come close to summarizing his view which is nuanced, and more about corporate governance. If you can suffer through the bad OCR, this old NY Times Magazine article covers it.

http://www.nytimes.com/1970/09/13/archives/a-friedman-doctri...


This applies to any job: work where what you do is the core discipline. At a law firm, be a lawyer. At a medical practice, be a doctor. As a software engineer, work at a company where software is the product. Don’t write software at an insurance company and expect job satisfaction. At such companies software engineers are seen as replaceable.

Another option: work where what you do is largely represented by upper management. They make the decisions and if they worked in your discipline they will empathize with you, defend you, and promote you.


I up-voted you because there is a lot of truth to what you wrote. But you also have to realize that today many businesses that don't understand how to develop software but still need to have effective software development processes. That's a huge personal opportunity if you are an effective communicator who can emphasize with managers from disparate backgrounds. They need someone who not only can implement and manage a successful software development process, but communicate to them what is possible, what is risky, and what the best trade-offs there are to develop software to meet the company's goals.


That's very true but it's not much fun.


Define fun. If rewarded, taking a team with shitty development processes, poor software, etc and taking it to the next level can be a great fun. But only if it is reward, i.e. is considered valuable.


Actually, I quite like writing software in companies where software isn't the core discipline. But I'm writing it in support of the core discipline. Admittedly I consult/freelance now, but writing software to support FMCGs, Loss Adjusters, Hospitality, Airlines, etc.... it's all cool stuff and really enjoyable.


> As a software engineer, work at a company where software is the product. Don’t write software at an insurance company and expect job satisfaction. At such companies software engineers are seen as replaceable.

Speak for yourself. My non-tech employer (small manufacturer) treats me very well and despite being anything but an exceptional developer my experience is that developers are closer to being regarded as magicians in these environments.

That's of course a very anecdotal impression, but so is yours.


I would imagine that small businesses where most of the employees have the opportunity to interact with the owner(s) is quite different than a large company where a dev's salary is a line-item under liabilities.

Typically with a smaller & medium-sized businesses (<200 employees), the owner is generally and acutely aware of each individuals impact to the company and would hopefully treat and compensate people commensurate to their value and impact.

There's still a lot of people who view tech folks as wizards of black magic. All they know in their tenure in the business is that some process used to take 5 people 3 work-days to build a widget, while now, the software by the dev + some new fangled machine allows 1 person to build the widget in half a day.

When I did consulting work for a small print-shop during my college days, they were always very appreciative of the work I did and had no problem paying for my work.


They made a deal with the devil (went public) that made many of the employees and shareholders wealthy, and now the price is being paid. The rules have changed and the primary goal now is maximum profit above everything else, no matter how many speeches about "social responsibility" they may deliver internally or externally. The opening quote by Friedman tells you everything you need to know.


They agreed to pursue profits back in 2006 when they raised a Series A and then affirmed this when they raised Series B, C, D, E, and F rounds. It's unfair to pin this on going public. Profit and growth has been the name of the game since they first raised outside capital from VCs. If employees didn't want to be part of capitalism, they probably should have picked a non-profit or a private company that didn't raise >$100M in VC funding.


Opportunities created by Etsy's shortcomings:

1) Create an Etsy review site/blog/mailing list that points to the "good" merchants.

2) IndieHackers for Etsy. Do some interviews with legit Etsy owners who sell quality stuff and make a living on Etsy.

3) Independent review company that rates etsy sellers.

4) Hard mode: compete directly with Etsy and have some sort of verification process that you're not drop-shipping crap from China.


All but number 4 is completely reliant upon Etsy not getting their act together.

I would say the safest is actually #4 without taking VC or going public. Etsy already validated the hand crafted market, but imho it isn't a devour the world market. The desire for ever expanding growth has increasingly forced Etsy to effectively abandon this market, leaving a hole for you to step into.


I did say opportunity not viable long term businesses :)


As someone who has been here for >= 6 months, I welcome this change. There's an incredible amount of bloat here, including the datacenter we run to the managers we have. I'm hoping these top level changes can help bring a more accountable culture. Btw, people make fun of #blameless internally now because it literally means you can be sloppy and get away with it.


Black-and-white Capital's press releasing calling for changes at Etsy is at http://www.businesswire.com/news/home/20170502005999/en/blac...

To me it's fascinating how deep in the technical weeds it is. For example, suggesting changes to their search ranking algorithms.

Some of it strikes me as likely inaccurate. E.G.

"It is black-and-white’s understanding that more than 50% of the approximately 450 people on the R&D team focus on maintaining the Company’s costly internal infrastructure. A shift to the public cloud would provide long-term cost savings while also establishing a more flexible infrastructure to support future growth."

I doubt that Etsy can significantly reduce headcount by moving their servers from on-prem to public cloud.


This is kind of interesting:

>It is black-and-white’s understanding that Etsy’s current search algorithm is scored to favor new sellers and other factors instead of trying to deliver the listings that are most likely to convert, leaving its marketplace drastically under-monetized. This is in stark contrast to other comparable online marketplace practices.

There's a delicate balance to be struck on a platform like Etsy between highlighting new sellers and concentrating sales into a smaller number of high volume sellers.

Etsy surely has a very long tail of inexperienced new sellers. Some will blossom into successful online businesses and some will falter and drop off, but the first step of that process is to get them hooked on the platform. An early sale goes a long way towards encouraging new people to keep working on their products.

Rejiggering their search algorithm to bury new sellers underneath all the existing, high-converting popular products feels like something that will slowly have negative long term effects on the breadth of their seller base and the kinds of products that you might find.


Excellent point. In fact, that's the sort of short-term thinking that would elicit a scolding from Milton Friedman's ghost.


I've lost count now of how many companies have started unconventional and then migrated to just being another regular old corporation with all the usual corporate problems.

Investors are regular people and like regular people they like being around the devil they know vs the one they don't.


It's called going public. Never go public unless you're exiting.


A business is always a business.

The profits from it are owed to the owners, not the suppliers, nor the employees. If you want to do something different with those profits, then you should not invite other investors in as partners, then use some of their share of the profits to fund your own CEO cult.


It gets fuzzy when it comes to B-Corps. "In the United States, a benefit corporation is a type of for-profit corporate entity, authorized by 30 U.S. states and the District of Columbia[1] that includes positive impact on society, workers, the community and the environment in addition to profit as its legally defined goals. Benefit corporations differ from traditional C corporations in purpose, accountability, and transparency, but not in taxation. "

When investors put their money into a B-Corp they have decided to invest in a company that has declared that profit is not their only motive. I was working for the first B-Corp to become publicly traded. At that point the leadership was forced to test their idealist goals vs the pressures of forecastable quarter after quarter growth.

https://en.wikipedia.org/wiki/Benefit_corporation


I'm not disagreeing. My point is that I've seen this pattern enough times now to know you can't escape it. It will happen whether you like it or not.


I can't help but think that the buyer appeal just isn't there. Looking back at the last couple of years I've bought a handful of items off of etsy. Come to think of it I probably buy more from EBay that from etsy, which is totally weird because I hate buying things on ebay.


My wife sells through Etsy and has been for a while. The biggest transition she has seen is buyers moving from purchasing items, to making items themselves. While the larger, successful shops are declining, there has been a steady increase in small, beginner shops. Based on that, she moved to selling more patterns and teaching craft workshops. In my opinion, Etsy should harness that. If they provided a way for crafters to showcase how they make their products, they could start selling that. It would have several benefits. It fits a simple subscription/learning model which is very popular right now. It also encourages the handmade community that they are trying to support.


Completely anecdotal, but I worked for a company that was a vendor to Etsy and working with them was really difficult due to internal organizational problems. The teams I interacted with were somewhat dysfunctional, with lots competing interests and directions. Definitely got the vibe that they didn't have a good sense of company direction.

My guess is Etsy hit it big on the niche craft market but didn't know where to go from there.


Why is ETSY stock soaring? I don't get it. Are they doing something to get rid of crap on their site?

Edit: sorry, I meant soaring this week.


TPG invested in a pretty significant stake. They are "change-oriented" management / investors. Active.

If there's money to be made in the model, they're pretty well established as experts finding it.

I heard the investment news via David Johnson on KRLD, he's worth following.


Don't forget: If you think ETSY is going to die, then short it, for FREE MONEY. Free except the risk that you're wrong, that is. So not really free at all.


Soaring is charitable, because it's still under the IPO price, but Wall St is happy the board fired the founding CEO and CTO.


sorry to be pedantic, but Rob Kalin founded Etsy. pretty sure the departing CEO and CTO weren't founders.


it's down over 50% since the IPO.


Not actually? It's trading at $12.97 at the time of this writing. Its IPO price was $16.


You are right, I was referring to it's peak price on IPO day. It did sell it's shares for $16 in the IPO. But either way it's performance has been horrid, 3 years of a -20% is bad enough but it actually slipped to $7 at one point and has only recovered to $12.97 because the CEO got canned and a private equity firm is trying to restructure the entire business.


There is no logic that justifies attempting to be "not another public company" if you are a public company.

Laws. Culture. Press. These things stand in the way of trying to be public while saying you won't act like a public company (by being a b-corp for example).

Public companies have functionally modular governance, which means if I don't like you (manager) and your ideas, my friends and I can buy enough governance units until you have to listen to us. It's not quite that straightforward but it's pretty much how it works.

In a way, it's similar to venture—you can try to escape the gravity of venture norms but to do that you need viral + network effect growth.

In the Market, you can try to escape the gravity of public company norms but to do that you need Amazon level revenue growth and the temerity of Jeff Bezos. Even then its an outside bet.

Rabois says startups should go public and I suspect his approach to the problem is he believes (im armchairing here) that the problem of founders hiding mistakes / making intellectually lazy decisions / not serving the financial goals / creating weird preference structures trying to raise money at scale from funds >> public market shareholders killing a geese for next quarters egg.


I thought Etsy already sold out? Everything I hear from people who sell on there is that it is loaded with Chinese mass produced crap?

I am not sure if people see the contradiction of the platform, create a massive global online market place for handmade, unique expensive items. I mean, how could those two things every come into conflict with each other?


It's entirely possible, but I don't think it can be done in a "sell premade goods" way.

The seller needs to show that their items are unique by making them to order at a customer's spec. Keep prices down by not starting each item from scratch, but customizing a base product.

You make rings? Have a bunch of nice rings that you resell. Maybe even import them from China and sell on your store. But build your reputation by providing customized versions of those rings. Not by simply printing the buyer's name on them, but changing the type or number of stones, the metal, thickness, how the wiring is knotted, etc. Those are all ways to stand out from the high-volume crap and still keep the price reasonable.


I'd like to pre-order "Don't' Quit Your Day Job, the Rise & Fall of Etsy" if someone with inside knowledge is ready to write it.

I'm not an insider by any means but I've heard some fascinating stories over the years about how the company has coped (and failed to cope) with the trappings of success.


Fascinating - why does a strongly worded letter from a 2% shareholder prompt layoffs and major changes within hours? Like if the board believes they are doing OK, or that perhaps it will take a longer time for their current plan to payoff and reflect in revenues, can they not communicate that and continue? 2% isn't enough to force any decision.


I am wondering if, indeed, there are only a few real unicorns: Google, Microsoft, Amazon, and Facebook. Other companies are having a hard time: Twitter, Zynga (remember it?), Etsy, etc.


If you go public, you have to obey to the rules of the market you join. That why I don't get why some companies even go public.


Because they took money from VCs who want an exit.


Well, VC have already the word "capitalists" in their name. They don't care for anything but the ROI. While a company has to care about its customers too.


Indeed, the catch-22 is surviving and moving forward as a company when there are potentially little sources of revenue; will the service or product exist at all without VC funding? I don't personally love the idea of feeding into the VC ecosystem either, it all depends on your position and ability to leverage though as to whether it will be a more positive situation or not.


Bizarre. I've only tried to use Etsy once, figuring it'd be a great place to get some sort of unique jewellery as a gift. It's filled with junk, both of the super-manufactured kind and of the "modern art" kind (someone glues 2 pieces of crap together and wants $500.) I haven't gone back, though I did enjoy the Regretsy blog while it was up.

>Etsy’s insistence on running its own servers rather than using cloud-based services and software offered by companies such as Google and Amazon—an emphasis that was known, under Dickerson, as “code as craft”

That reminds me of the silly StackOverflow "if you are a real <hacker/programmer/developer/whatever> you must setup your own servers". There are certain benefits of cloud or not, but this kind of thinking confuses me. Why stop there? Do they build their own Ethernet cables? Racks? Make their own distros, compilers, etc.? Build their own network -- after all, your network is critical in delivering pages to your users, why outsource this to XO and Cogent and so on?

Edit: Yes, I understand the pricing differences of cloud. So just say "it's cheaper to run our own stuff", don't pretend its due to some desire for "craft".

>food scraps were packed onto a Dutch cargo bike, which an “office ecologist” would pedal several miles to a Brooklyn farm

It's like they want to parody themselves?

>Senior Engineer..."I’m just allergic to capitalism"

But presumably not allergic to using capitalists money to hire people to bike your leftovers around town.


There's still plenty of incredible hand-made and vintage furniture and interior design objects on Etsy.

The problem, as ever, is about filtering. For every quality piece there 50 amateurish things cobbled together from steel pipes and reclaimed wood (or worse: distressed "shabby chic" furniture made to look like something you'd find in an old B&B on the French Riviera). With all the AI being thrown around, can't someone build a "tastefulness" filter?


You're right about great furniture and objects. We've tried putting a local focus on some of their selection (as well as the selection from additional non-etsy sellers), by selecting/curating furniture dealers from the DC and Baltimore areas so that would-be buyers can have a look in person:

https://attic-dc.com

Especially in regards to furniture, buying online, sight unseen still isn't a great proposition. We don't expect it will ever be.


Perhaps with AR or VR but it's still hard to imagine supplanting the experience without an actual tactile connection. Furniture isn't something you buy everyday or even year typically. If I am going to spend any amount of money on a couch or chair or whatever I'd like to sit in it atleast once before I do (though perhaps that's just me others may be different).

Perhaps though online could be a great first step filtering process. Find a bunch of stuff that fits the rough parameters of what you are looking for and looks good in your space then go someplace to try them out with a well kept appointment and ready to go same day follow you home delivery should you decide to buy something.

Maybe this already exists? I haven't had to buy any furniture is several years so not sure what the current state of the markets is.


Cool. Would love something like this for NYC.


> With all the AI being thrown around, can't someone build a "tastefulness" filter

I've long wanted an extension for Google Image Search, eBay, Etsy, etc. that simply filtered out all listings with images of items with pure white backgrounds. That would go a long ways toward a "tastefulness filter".

Huge indicator of handmade / vintage / used items sold by an individual seller vs. a new item being dropshipped from Amazon or China.


Sadly, they sort of figured that out already: http://www.storenvy.com/shop/category/home-furniture/. (Yes, that's their furniture category. Who knew ugly, amateurishly made dolls were considered furniture?)


Are the hands fake too?!


I like the idea, but this would also be easy to game.


These guys are using deep learning/convolutional neural networks to train their models to detect beautiful/thoughtful photographic images.

https://www.eyeem.com/

They talk about their curation algorithms here:

https://devblogs.nvidia.com/parallelforall/understanding-aes...


> With all the AI being thrown around, can't someone build a "tastefulness" filter?

It turns out taste varies.


I would argue (somewhat tongue in cheek) that people who don't have a taste [1] don't need a filter. The filter is for people who want to climb above the trash, not for those who willingly submerge themselves.

[1] https://www.etsy.com/shop/GrainyDayCreations, https://www.etsy.com/shop/PurpleHeartUK, https://www.etsy.com/shop/BigSwigDesign, https://www.etsy.com/shop/CraftyMamaGifts, etc.


Right. I wouldn't use that; while I can totally understand why you linked the shops you did, they also aren't qualitatively much different than the shops I do appreciate. So I'd rather not automate away my taste until, you know, it's my taste.


Based on those links, I think you may have confused "taste" with "irony". :)


Still sounds like an interesting problem.

Perhaps a set of AI filters could be built, and Netlix or Pandora style whichever one a person agrees with more often is selected and more results from it are presented to them.

Or perhaps a Convolution Network trained to filter per person or something equally wasteful if the allocations of Etsy's budget actually match the article. But of course those GPUs would be locally sourced and powered by renewable hamster wheels and 100% organic hamsters.


Which just means that taste is a function of a person. Or, approximately, a function of all the data you have on them.


> Edit: Yes, I understand the pricing differences of cloud. So just say "it's cheaper to run our own stuff", don't pretend its due to some desire for "craft".

I think your criticism would make sense if the article was accurate. But I don't think this quote

> Etsy’s insistence on running its own servers rather than using cloud-based services and software offered by companies such as Google and Amazon—an emphasis that was known, under Dickerson, as “code as craft”

is accurate. AFAIK no one at Etsy has said that they run their own servers because it's more authentic, part of their "craft" in a way that using cloud servers could not be, etc.

There's some actual information on their thinking behind running their own servers at https://www.nextplatform.com/2015/04/07/etsy-shows-how-to-be... , which boils down to three points

1) Etsy has been around longer than EC2 2) Etsy does not have a spikey workload that would benefit from scaling up/down 3) Etsy thinks they can run more efficiently on bare metal


>"AFAIK no one at Etsy has said that they run their own servers because it's more authentic, part of their "craft", etc."

I'm not sure I would agree with that based on a recent-ish post on “code as craft” the Etsy engineering blog:

"At Etsy, the vast majority of our computing happens on physical servers that live in our own data centers. Since we don’t do much in the cloud, we’ve developed tools to automate away some of the most tedious aspects of managing physical infrastructure. This tooling helps us take new hardware from initial power on to being production-ready in a manner of minutes, saving time and energy for both data center technicians racking hardware and engineers who need to bring up new servers. It was only recently, however, that this toolset started getting the love and attention that really exemplifies the idea of code as craft."

Source: https://codeascraft.com/2016/02/22/putting-the-dev-in-devops...

Tangentially related to the hardware discussion - a bit of dated hardware post:

https://codeascraft.com/2012/08/31/what-hardware-powers-etsy...


Only reviewing from your excerpt -

Just because someone sees the work that is done as part of a more cost effective solution as 'craft', doesn't mean it is actually done solely for that reason..

automated cloud deploy pipelines likely would also fit the bill and could be blogged about just in the same way, as one small example...


Well that makes sense. I keep forgetting how articles incorrectly portray people, especially when it fits a narrative. I guess I was only too ready to believe that a company that bikes around leftovers would actually believe in craft-servers.


"Code as Craft" was the name of their engineering blog. I suspect the author found a post about Etsy running their own servers there and decided this juxtaposition fit the narrative they were building.


It looks (from the outside) like Etsy's core eng team, early, had its culture come from all of the ex-Flickr people working there.

Flickr's other direct descendant, culturally, is Slack. Those are nerdy, charming, funny cultures. "Code as Craft" is a cute pun. Taking it entirely literally is a really big point-miss.


1) Etsy has been around longer than EC2

This is a good point. My company is on cloud servers, but not EC2 since EC2 didn't exist when we moved to the cloud.


It's not a great point. Many companies have been around since before EC2, and many of them have moved to EC2.

Not saying EC2 is right for everyone, just that this particular point is bad.


The cloud is very, very expensive. If you want low cost, you do your own servers for anything under 20 nodes. Which, given the power of modern machines and with unmethered bandwidth, will take you to the millions of user easily.

I have setup a streaming website with 500k/d visitors, and it runs on 7 servers for 2000$ a month give or take.

That's very, very cheap compared to GAE or AWS.


I think there's a couple sweet spots:

At stage one, with <1000 visitors per day, I can get by on a $5/mo Digital Ocean node or $20 Linode. Just the fact that they're even numbers means I'm leaving something on the table, but just the cost per hour for talking about buying, building, and colocating my own machines is more expensive than this.

Stage two is a sweet spot where running your own 5-25 machines makes sense for stable, medium-sized, medium traffic businesses.

After that, though, stage 3 is when gets to be too much for one combination programmer/devops employee to manage in their spare time, and it makes sense to go back to the cloud and have someone else manage all of that for you. A lot of startups focused on rapid growth like to skip step 2 and go straight to this stage. When you outgrow the "do whatever's cheapest" stage of hosting, it can become untenable to explain to your investors that a few thousand in server hardware will probably be adequate for the next few years, and they'll see a nice return of a fraction of an employee per month on hosting if it's done most efficiently.

Somewhere in the stratosphere, stage 4 is when it again becomes more reasonable to hire an internal team to assemble and maintain your computing resources. Perhaps you can instead convince your investors that this is your target? After all, Facebook, Amazon, Google, and Microsoft are on their own hardware...


There has to be something very wrong when an article about the problems with a company that facilities an online marketplace is talking about the details of how their servers are run and paid for..

By this I mean that in such a business the issues surrounding servers and even software should be very minor compared to the bread and butter of helping people sell stuff so money is made. The costs of said servers and software should also be minimal vs things like sales and marketing costs.


Except traditional "cloud" hosting is wicked expensive in comparison. Ideally you should shoot for a hybrid model where excess capacity spills into AWS/GCE/Azure.

For example: A dedicated m4.16xLarge EC2 instance in AWS is $3987/month. You could build that same server for $15,000 through Dell, lease it at $400/month (OpEx), and colo it with a 1GB/s connection for $150/month.


Except then you're stuck with a $15K server, and you had to spend all 15K up front. What happens when a component prematurely fails? Better buy two. What about the person-hours you spend with ISPs, CoLo provider, etc? You want network redundancy? Big ISP bills.

Yes, cost per compute measurable (memory, CPU, etc) is higher in the cloud. But what's never mentioned when people complain about the cloud being expensive:

a) ISP and CoLo costs

b) Redundancy/Multiple AZs

c) Backups

d) Failure recovery/cutover

e) Support

f) Monitoring/Health statistics

g) The other goodies that come along with being in the cloud(Lambda, CloudFront, Route53, SQS, etc)

I feel like we're at a point where people should have to justify why they are running their own data centers vs. having to justify why they're running in the cloud. There's obviously many very good reasons to do either, or both, but if you don't already have a data center, you better have some damn good reasons for starting one up.


That $15,000 server is leased across 36 months becoming an OpEx expenditure. On the accounting side this is no different than AWS. So let's say you buy two for failover.

A) Colo is $50-150/U with blended top tier bandwidth, 99th% billing and usually includes remote hands time.

B) Even with 100% redundancy you're still ahead by $3000/month. Please understand Amazon offers absolutely no redundancy built in and nodes go down regularly. It is up to you as a developer to build redundancy around the tools they offer.

C) Amazon doesn't take backups for you. You have to pay for this either way.

D) Again Amazon doesn't handle this for you. You have to pay either way. Buying an exact replica of the hardware I've mentioned and cololocating it elsewhere still puts you ahead by $3000/month.

E) What support do you need? Dell offers same day or even 4 hour parts replacement with the appropriate warranty service. Most Colos offer remote hands for free up to a certain hourly.

F) Lots of ways to handle this. You can use IPMI, built in OS tools, etc. There isn't much exclusive to AWS you can't easily replicate elsewhere.

G) I never said not to use Amazon for anything. In fact you should be building your applications for scaleability INTO the cloud. This is part of the idea behind the whole microservices movement.


  > Except then you're stuck with a $15K server, and you had to spend all 15K up front
I think you missed the part where the parent said "lease it at $400/month (OpEx)"


Cloud doesn't automatically come with that stuff - you need to set up your own failovers, backups and monitoring. Also you still need to administer those servers.

Also, tying yourself exclusively to AWS services is not a good long term strategy because then you have vendor lock-in that's worse than being stuck with some old hardware.

If you don't need the scaling abilities of cloud, then it just doesn't justify the added expense because no matter what you say, you still need people to manage systems.


Yes you do need to know your shit. But that's true for all kinds of products and services any business buys. Someone has to understand the deep weeds Health Insurance at any company (in the USA).


You left out the paying multiple people >$10k/month that can replace a hardware failure immediately (and somehow with 0 downtime), the redundant hardware, etc.


Oh, preachin' to the choir with that : my company's SaaS service is deployed across 10 or so tin boxes that I personally screwed together from Supermicro parts; humming in a faceless DC in Santa Clara with a backhoe sat in the far corner of the parking lot..

What I mean is : if you make a list of "shit that's wrong with my crafted good selling business", "how the servers are made" wouldn't be in the top 10 things to worry about. The fact that they're arguing that said servers should be sourced in a very cost-inefficient way makes it even more odd.

Consider for example this : http://www.zdnet.com/article/snapchat-spending-2-billion-ove... which, other than here, nobody seemed to question as strange.


On the other hand, a reserved m4.Large instance is $45/month. After a year of that, you're just $550 into hosting, barely enough to select and order the case and power supply for your server. It would be 30 years before you paid the cost of that Dell, so unless you actually need that power and your time is free, it's easier to let this be a tiny fraction of Amazon's expenses and workload than a big part of yours.


The $15,000 Dell being discussed is equivalent to a m4.16xlarge with 64 threads and 256 gigs of RAM. The m4.large you're referencing at $45/mo only has 2 CPUs and 8 gigs of RAM.


Not all instances are the same. You can't run a database on an m4.large, not any database you plan on running queries on.

So you need that m4.16xlarge to handle the load, and honestly, there's no single instance available on Amazon that I've found that can come anywhere near the performance of physical hardware when it comes to handling database loads. Right now I am running ten r4.16xlarge instances to do the job of two Dell R710s, at considerably reduced performance even still.


I guess our use cases are just different. Mind sharing some examples of your use case that demands that much compute power?

I do run a database on my server (which isn't even a Large) for an e-commerce site. It fits handily in half a gig of ram. The hundreds of products we offer have associated images, but we just store the filenames in the database and they load from disk (or, more likely, Cloudflare cache). Honestly, it could be a static site but the database is a convenient way to edit the content and control the presentation.

You have 640 CPUs running at multiple gigahertz and trillions of bytes of RAM. What kind of workload requires that insane amount of compute power?


We have billions of rows of data and very complicated CTEs doing joins on a dozen tables matching based on GEOS radius data, and it's the primary query for our application. We're running PostgreSQL 9.5 and need to have all the data in memory for the fastest results.

Part of the problem is that the network disk that EC2 provides as EBS is 100x slower than local disk, so keeping all the indexes and data in memory is the only way to replicate physical hardware performance.

If anyone knows of a better EC2 setup for PostgreSQL, I'm all ears.


> Part of the problem is that the network disk that EC2 provides as EBS is 100x slower than local disk, so keeping all the indexes and data in memory is the only way to replicate physical hardware performance.

> If anyone knows of a better EC2 setup for PostgreSQL, I'm all ears.

Have a proper replication & archiving setup, and use instance storage. If you have configured streaming replication to 1-2 other servers, and archive your WAL to s3 (using wal-e or such), you're already above EBS's guarantees (99.9% durability IIRC?).


Instance storage is much more limited and is heavily tied to the specific instance types you pick.


Indeed. I didn't want to say it's a panacea, just that you can sometimes get a lot better performance for your money. E.g. larger i3's both have decent IO performance and sizes.

Still doesn't even remotely compete with what you can get with "normal" hardware.


This is why I claim a hybrid model is the way to go. Your baseline/mean load should be on redundant dedicated hardware with spill-over into a cloud provider.


> For example: A dedicated m4.16xLarge EC2 instance in AWS is $3987/month. You could build that same server for $15,000 through Dell, lease it at $400/month (OpEx), and colo it with a 1GB/s connection for $150/month.

If this is all you see when it comes getting servers or working with Cloud servers/services, then you don't know what you are talking about.

You don't build for one massive single server, you build for a bunch of small ones that spin up and down as needed. It's micro services or you are wasting your time and money.


> If you want low cost, you do your own servers for anything under 20 nodes.

This seems unlikely to be true unless your software engineers love doing ops (and the needs of the business don't need those on software.)

The salaries of having Operations that can replace failed hardware 24/7 (and w/ vacations) alone is more expensive than a company like Etsy should have in ops. Then there is the cost of the pipe, power, and redundancies. Even higher up, managing all of the depreciation in accounting is going to have costs compared to a expense line item.


Here is the dirty little secret: most business run fine without high availibility. Your customer will not leave if your service is crashing for a few hours during the year if you are small.


On top of that, Amazon's single region EC2 SLA kicks in at 99.95%. So unless you are using multiple regions in AWS, going by their SLA you're already in the range of a few hours of downtime per year.


Don't believe the lie that you don't need ops people in cloud. You're still running servers. So since you have the staff anyway, why not save 3-4x the cost?

Hardware failures are far less common than you believe. I lost one hard drive in 10 years and because it was a RAID array it didn't even fail.


You still need software ops, yes, but not hardware ops.

> Hardware failures are far less common than you believe.

Your experience may vary; I once rented metal from Softlayer (running ~15 shards, about 60 boxes), we had a number of drives* fail, a couple of the rack controllers, some raid controllers, and one time a power supply over a 3 year period. On the worst RAID failure, we sent one of our employees across country to manage the recovery directly.

*Some hard drive failures related to 2012 Seagate 3TB drive issue. One failed within a week of being replaced.

Softlayer had a team monitoring our servers and working through issues with us; Other than supplier issues I blame them for nothing.

In that worst scenario; we ran off our geo redundant slave for the better part of a week.


I think you overstate the overhead for hardware operations. I had a team of five that managed over 1,000 physical servers in four global locations and they had to visit a datacentre maybe twice in three years. Other than for hardware installs which were always easily planned out.


I'd love to pick your brain about that--what's a good way of getting a hold of you?


Try desmoulinmichel on gmail. But honestly I don't do anything special. varnish + redis + nginx + celery + postgres can take you a long way.


Because AWS is pretty insanely expensive compared to leasing/renting, let's say from Leaseweb. And unless you have gone completely serverless and kubernetes and [magic datastore that's easy to run], you need engineers that will eventually figure, that they can run a Ceph cluster, and a Cassandra cluster, and a Kafka cluster and Galera clusters.

AWS is great for prototyping, for scaling into new territories (you need a Point of presence in Tokyo for your new startup? great, AWS), but not for running a boring e-commerce site (buy cheap shit in 2 DCs, run replication to keep things in sync, pay someone for BGP + DNS failover, call it a day).


>There are certain benefits of cloud or not, but this kind of thinking confuses me. Why stop there?

Because using EC2/GCE infrastructure is an incredible waste of money if you have any reasonable-sized base-load and bandwidth utilization.


Most of the larger shops I've worked at have started moving away from hosted providers to save money.

When you're starting out, hosted solutions will save you a lot of time. Running your own servers is a high cost and you need a dedicated team. But once you're pulling in that revenue and can afford it, running your own can save you some money and add a lot of flexibility.

If you're starting out, I highly recommend not tightly coupling yourself to a single service (using AMIs or any really specific AWS stuff) but write your provisioning scripts in such a way as you can plug in different services or deploy locally. Things like Terraform + a provisioner (Ansible/Puppet/etc) can make it easy to move your system to another provider or host your own and more easily measure costs.


I completely see how it's theoretically desirable to not be tied to a particular cloud/VPS provider, but I'm not entirely convinced Terraform alone is the answer. In my experience, Terraform does not let you declare VPS resources in a "provider neutral" way - you would still have to completely rewrite your Terraform files if you say, switch from AWS to Azure. Then there's the wider issue that whole concepts in one VPS provider that you used in Terraform don't necessarily exist in another, or require a completely different approach. A great example is just look at the documentation for Terraform's DigitalOcean Support, vs their AWS support. The AWS documentation is many times larger! Once your stack reaches a certain degree of complexity this is a non-trivial task. I should make clear this isn't a knock against Terraform - it's a great tool, but it isn't going to magically make it easy to leave AWS for lots of people.

Amazon aren't stupid, and to really realise the full value/potential of their cloud offering you kind of have to design for the proprietary features of their stack, which of course is the whole point - driving you to be locked in as much as they can. Treat them as just a bunch of generic compute boxes in the cloud and you will end up driving your costs up, not to mention often markedly increasing the complexity of your deployment.


You touch on what I think is a bigger concern, as somebody who spends a lot of time on this sort of work: Terraform doesn't actually solve any problem that I encounter. You aren't "provider neutral" when using it, as you say, and moving from one nontrivial provider (AWS, GCE, Azure) to another is a full rewrite. I disagree--and rather strongly at that--that it's a lock-in thing, unless you are aggressively climbing all over the proprietary offerings from each cloud. Even the basics of the stack are different in ways that are pretty annoying to deal with (just trying to port simple autoscaling groups and load balancers is work--not hard work, but work, and work for which you must write code that must be tested). Attempts to encapsulate general functionality (and I've been suckered into this myself) fail because the abstractions are super leaky. It's not worth the fight.

We have a lot of clients who say they want to be multi-cloud, they say they're afraid of being locked into AWS or GCE, and in practice nobody except the supermassive companies out there ever actually do move between them. To that end, we pretty much standardized on using the platform-specific options: CloudFormation, Azure Resource Manager, and Google Cloud Deployment Manager.

(There is a small argument to some of the ancillary services that Terraform can wire up, but to be honest I rarely find a compelling reason to put up with Terraform and its lovely habit of fragging my state in order to wire those up declaratively rather than using a little imperative glue within Auster[0] to do it.)

[0] - https://github.com/eropple/auster


I think Terraform does solve some problems, for some teams. For us it's really the process it provides - by moving VPS infrastructure definition to code, rather than management UIs, we can apply our existing code review processes we have to our hardware infrastructure before promoting through staging environments, not just the product code. This is vastly preferable to letting individual engineers run wild at the AWS management console, and allows for rollback of breaking changes much more easily etc. This arguably the real value in Terraform, which i think earlier posts about using it to somehow become cloud neutral missed.


Sure. I feel very strongly that Terraform is strictly inferior to CloudFormation in doing this. Terraform breaks its own promises (JSON support was broken for a long time, I'm not even sure it's fully there now), has demonstrated regressions in releases (going so far as to break existing states by doing so), and has enough of a habit of horking existing states that multiple clients separately coined the term "terrafucked" for having their states trashed and necessitating manual intervention.

CloudFormation isn't perfect--but it isn't a hand grenade.


Agreed. Or stay flexible and negotiate between clouds. Even Netflix's legendary AWS relationship doesn't stop them from building their own custom hardware (Open Connect) and building what is essentially their own custom CDN.

People used to ask us when we started Userify (SSH Key management, https://userify.com)... what happens when AWS clones you?

Well.. that was five years ago, and they haven't cloned us yet. But even if they ever did, they have a vested interest in ensuring lock-in to AWS, so they will always choose to make things work with things that only they offer (such as IAM) instead of making it cross-cloud. That makes things a lot more challenging for large enterprises, especially when you're talking about users that may have to log in to servers hosted in multiple clouds. Having multiple sources of truth doesn't work at scale.

Most large organizations are at least on AWS, GCP, and/or Azure already, so I don't really think Userify's SSH key management (or any other cross-cloud tools like ansible/pupet/terraform/etc) are going away anytime soon.


Looking at Terraform 3-4 months ago it really only supported AWS if you were doing anything "interesting", for some value of "interesting" which I can't pull off the top of my head at the moment.

Has that changed since?


As I said, there are benefits to not using cloud, sure. But don't pitch it as because anyone that loves programming should build their own servers.


Build their own? Probably not, unless they are doing it at massive scale and the cost of replacing parts beats out buying a server with a 3/5/7 year warranty.

If you have static usage, or at least a base load owning your own hardware to support it does make sense though, colo space is cheap, the biggest disadvantage from a financial perspective to owning your own gear is you have a depreciating CapEx instead of a 100% deductible OpEx.


Real investors care about cash flow, which means the difference between purchasing/depreciating and leasing/renting(OpEx) is negligible. Whats far more important is the business benefits of the best approach for your business.


I don't know what the current state of things is, but 5 years ago they were doing a mix of buying off the shelf and building their own supermicro-based systems.

https://codeascraft.com/2012/08/31/what-hardware-powers-etsy...


Etsy has pay and benefits far outstripping the competition. They should have the best engineers and developers.

So why then can't they build and maintain the best infrastructure? Why does it suck so?


> That reminds me of the silly StackOverflow "if you are a real <hacker/programmer/developer/whatever> you must setup your own servers". There are certain benefits of cloud or not, but this kind of thinking confuses me. Why stop there? Do they build their own Ethernet cables? Racks? Make their own distros, compilers, etc.? Build their own network -- after all, your network is critical in delivering pages to your users, why outsource this to XO and Cogent and so on?

Ehm, no. But if you outsource your servers, you’ve got an entirely different set of issues.

I’m currently renting dedicated servers, paying around 20$ a month, for something that would cost me 900$ a month with Google Cloud Platform, or around 60'000$ a month with Firebase. Outsourcing servers – unless you have highly variable load – is always literally burning money.

Remember that Google, Amazon, etc have to pay their devs Silicon Valley wages, while you can operate elsewhere, and pay half that, and save money with hardware, too.


That's insanely cheap. Can you share where you're renting this and what plan? A cheap DigitalOcean plan is around $20 a month, and since you said "server(s)" (plural) I'm assuming you get more than one for that $20?


I’m personally using Online.net, although you might also want to try out scaleway.

You can check out https://gist.github.com/justjanne/205cc548148829078d4bf2fd39...

I’m personally actually paying 30€ now, for several Dediboxes from Online, running kubernetes.

The big issues of Google, AWS, etc is the cost for bandwidth and performance – I can transfer 180TB in one month on one server, and pay no extra fee, and don’t get throttled – while a startup using Firebase might end up paying 7000% more (or worse).


The cure when I start getting tempted to "roll my own" is watching that Ted talk about the guy who tried (failed) to build a toaster from raw materials to match the 5 quid discount store equivalent.


That failure wasn't due to skill, it was due to demand. That discount store has a high volume low skill patronage that needs toasters, if 100 engineers collectively wanted to make 100 of their own toasters for less than 5 dollars a unit, they could probably do that, or other things, much better.


Reminds one of Friedman's pencil.


>Etsy’s insistence on running its own servers rather than using cloud-based services and software offered by companies such as Google and Amazon—an emphasis that was known, under Dickerson, as “code as craft”

So many times people fail to look at problems in terms of trade-offs instead of right/wrong or fashionable/faus pax

Running your own infra vs public cloud has so many considerations beyond a simple price tag. Massive scale companies on AWS have hadoop clusters just to work out their goddamn bill. But there are considerations you have to make about the number of people to maintain something and how that affects your org on just a cultural/sustainability level, what the velocity of SaaS allows you, etc.

Running your own infra doesn't have to be full of cruft. And maybe the rolling-your-own approach to certain things is paradigmatic to the way your business works, maybe it isn't. You have to figure out the trade-offs.

Newer, fashionable tech is often decorated with tag lines of "faster, cheaper, better". That's actually not what I care about. Instead, sell me on "recoverable", "debuggable", and "sustainable".


Yup, everytime I hear someone complain about capitalism I eyeroll because they clearly aren't "woke" enough to realize that capitalism is the reason they can remain blissfully ignorant of how capitalism supports their blissful ignorance.

Capitalism isn't without its bugaboos, but the wholesale rejection I hear people making can only come from a place of ignorance.


I directly benefit from capitalism in my current occupation.

Yet I'm also aware that it dehumanizes anyone who can't produce value within that model.

Therefore I support attempts to make it inclusive of all human beings, even if that means making the model "less ideal" or "less pure". I find it strange that we somehow have come to value assets over humans. Yes, that means I will loose out on some of the value I earn and I'm ok with that.


Yes, and "our implementation of capitalism sorely needs improvement" is different from "I'm allergic to capitalism".


Not sure I understand your point. Are you asserting that anyone who argues against capitalism as a system must be doing so from a position of ignorance?


They're asserting that someone aggressively arguing against capitalism while freely and wholeheartedly participating in capitalism has some dissonance to reconcile.

I've got a hard time taking an "I'm allergic to capitalism" tweet seriously coming from someone who 1) lists all the ways they participate in capitalism in their profile and 2) makes this statement in the context of their job which depends completely on capitalism functioning.


What argument did that person make? They merely said they are "allergic" to capitalism, which sounds more like hyperbole than thoughtful criticism.


Public healthcare, social safety nets, public infrastructure/libraries/parks/schools, government regulation on products that can harm citizens, etc and about a boatload of other things that are considered good/valuable/moral/ are about as anti-capitalist as you can get. Capitalism promotes exploitation (of people, resources, information), socialism levels the playing field. In some cases, the exploitation leads to progress.

>but the wholesale rejection I hear people making can only come from a place of ignorance.

You went from "complaining about capitalism" to "wholesale rejection of capitalism". We call that shifting-of-goal-posts-ism. :P


Capitalism promotes improvements in productivity that creates the abundance that makes all of those public programs possible in the first place.

Capitalism > productivity > abundance > social welfare


I don't entirely disagree, because in the end, these are just tools we created to serve us. We're free to use them in whichever way we feel makes the most sense to us.

The /it depends/its complicated/its a grey area/ way of thinking is an essential analysis tool, but the average person can't be motivated towards an ideology (political, economic or social) using that. To me, the most progress is made by adopting a zealous attitude at the beginning and then making major course corrections, rather than pissing about with optimizing via micro adjustments from the start. e.g. Give people unfettered capitalism, and then when you get 13 year old kids in coal mines, you give them unfettered welfare/workers comp for a bit, etc. That way both the negative and positive impact from policies is permanently etched in history.


200 years ago:

> Yup, everytime I hear someone complain about feudalism I eyeroll because they clearly aren't "woke" enough to realize that feudalism is the reason they can remain blissfully ignorant of how feudalism supports their blissful ignorance.

> Feudalism isn't without its bugaboos, but the wholesale rejection I hear people making can only come from a place of ignorance.


To be frank this supports the parent's argument.

> So now that we aren't avoiding that we live in and understand our feudalistic society let's be realist and figure out things in perspective.


This concern for the survival of a particular corporation is just as arbitrary as your questioning where they drew their arbitrary lines around DIY operations.

80% of the Fortune 500 list in the 1960s is gone. Survival is not guaranteed of any of company. So why get so worried about it?

You know why they do it that way? Because the people there decided to.

What's more self-parodying? People on here grousing about the issues of our society, only to lean into more capitalism and VC/startup life?

Or people deciding to bike their food "several miles" for their own reasons?


I think there's a special hypocrisy involved in getting paid a six figure salary supported by some combination of venture capital and running an open market, and criticizing the system that pays you to do that, all the while spending money on luxurious shit like hand delivered food (which the vast majority of the world only does out of necessity, or otherwise cannot afford to do).

Capitalism has issues, society has issues, the modern phenomenon of worshipping the wealthy and "self made" has issues. I think it's possible to see those issues and want to address them without decrying the idea or system as a whole as this guy does.


Etsy’s insistence on running its own servers rather than using cloud-based services and software offered by companies such as Google and Amazon—an emphasis that was known, under Dickerson, as “code as craft”

Yup, this is definitely something only a non-technical person would say (or more specifically: something a business analyst cut-and-pasting snippets of advice fed to him by the various tech-oriented randos he happens to know very likely would say).


> various tech-oriented randos he happens to know

or whom he has investments or partnerships with...


> "if you are a real <hacker/programmer/developer/whatever> you must setup your own servers"

Someone forgot to remind this guy that Developers suck at running servers. Been a heavy line Unix admin for 16 years now and never have run across a server(s) built/operated/maintained by a developer that was not a steaming pile of garbage.


> It's filled with junk

Not just Etsy, go pick any online marketplace right now, they all are filled with cheap Chinese junk.


Wait, are you saying using your own servers is somehow comparable to building your own ethernet cables?


My understanding is that eBay runs their own servers. It kind of sounds similar to me.


i'll take the opportunity to plug my wife's hand-fabricated jewelry :) https://www.etsy.com/shop/PhetteplaceStudio


The entitled employee comments at the bottom made me literally groan. Everyone bemoaning facts of life, it's not like what they did was a surprise or unjust. If your job title is "Senior internal paper waste management analysis director" then you shouldn't be surprised when you get canned.


I've seen the work entitled applied to employees many times, but never to an investor. Curious, that.


Because investors are entitled in a literal sense, not a figurative one.


The only comments I saw were one from an unnamed staffer, at the end, and two from software engineers. What about these comments (from people who've just lost their jobs, bear in mind) seems entitled to you? I just see people who agreed with the principles and ideology of the company they worked for.

> Jason Wong, a former engineer, urged his ex-colleagues to “fight” for “all the sellers who rely on you, for the values that Etsy stands for, for all the things you love about working there.”

> “I’m not crying,” wrote Katherine Daniels, a senior engineer. “I’m just allergic to capitalism.”


Well for one, the part about "fighting" anything... just appreciate your job experience the company gave you and move on.

"For all the things you love about working there"... so basically fight for your overly cushy job where you were overpaid to organize paperclips, because of untracked spending. I'm being somewhat facetious but you get the point. I also have no problems with cushy or overly cushy, more power to you if you find something like that, it's awesome... just don't be an entitled goomba when things end.

"Allergic to capitalism". This is just stupid. You're allergic for a company to cut their spending to not-insane levels?


I don't think the guy is telling his former colleagues to fight for the nice perks, but more for the culture. It's clear from the article that the company's values are shifting to be more profit-oriented.

He personally finds this shift questionable because those might not have been the core values that motivated him (and perhaps his colleagues). I'm not sure if that makes him an "entitled goomba."

I do agree that the second quote is purely stupid. You work(ed) at a online marketplace, of all things and _now_ you're allergic to capitalism?


"The entitled employee comments at the bottom made me literally groan."

What comments? All I see is an eternally-extending page, typical of news sites that tack every story on to the end of the prior one. In fact, when I scroll to the bottom of the story, the URL itself in my URL/search bar changes to match the title of the story.


Sorry, I just now realized that. I thought that was the end of the article because I was distracted and saw the big image.


I used to have this title at one of my first jobs. It meant that I emptied the paper bins on Friday afternoon.


Etsy anecdote from someone generally outside of their main market:

I have ordered something off of Etsy 3 times. 2 of those times, there was a minor "customer service" level issue. Once, I accidentally put in the wrong zip code and, after the package was returned to the seller, I was refused any refund (it was "my fault" -- too bad). Another time, I was shipped the wrong item and the back-and-forth between the seller to replace the item ended up taking more time than I was willing to spend on said $15 item and I gave up.

In the first case, I did reach out to Etsy, and was told to resolve the issue with the seller. After much back-and-forth, with the seller insisting it was my fault for typoing the zip code and there was nothing they could do short of re-ordering (and re-paying) entirely, I ended up convincing them to let me directly Paypal them shipping costs for the second attempt at shipping, which went fine.

This process took entirely too much time (especially when one thinks of experiences with Amazon -- where they resend stuff in orders-gone-awry right away, without any question, or significant delay).

My main impression of Etsy is: there are some cool items in its unique/niche marketplace and I would like to buy stuff off of Etsy more often in general, but the site is largely irrelevant to me as a "place to shop" because of the lack of an empowered Etsy customer service level between the buyer and seller -- protecting and advocating for both parties. Of course, not all sellers are at fault here, and I'm sure many Etsy sellers (probably the majority?) facilitate minor order issues brilliantly. This is just my personal experience.

I would feel a lot better about Etsy if I knew I had someone with the power (at Etsy) to help when something unexpectedly went wrong with an order, regardless of where the fault lies. I kind of felt like it was a cop-out by Etsy to place all customer service expectations on the buyer and seller directly.

Anyway, I like the concept of Etsy a lot (I helped my 67 year old mother open an account to sell her embroidery!), but I can't spend 10+ emails worth of time over 2 weeks trying to fix minor order issues, which, in my personal anecdotal experience, has been the case exactly 66.6% of the time.

If Etsy promoted a strong customer-positive service vibe -- as the empowered middle-person between the seller/maker and buyer -- I'd feel a lot better about trying again to buy stuff via it.

And this isn't an entirely buyer-sided argument. I would hope that Etsy sees customer service as a boon to both seller and buyer, and would make life easy on the seller as well as the buyer when these small "consumer snafus" show up. For example, not wasting the sellers time, or charging them fees, or being stingy about refunding fees, when minor things like this happen. It seems self-evident that a protected seller -- one who doesn't have to worry about Etsy putting them through the ringer over a minor order mistake -- would make a happier seller. Which seems like it would naturally trickle down to happier buyers as well.


To bad they don't sell hand made, home grown artist stuff anymore. The Chinese knock-off Gucci "authentic" syndication machine took over under many names / masks / illusions. It's more the Walmart Hobby Lobby .. where it all looks good on the way or on your back (shirt/whatever) .. it's still most likely made in China. #fact. The revenue is more about the fees and clear profit machine that is required to run a profitable business on their side. The problem? The sellers - the "real" ones like myself and my wife. We sell authenticate stuff with pottery and photography made locally here in Buffalo. However, I find more and more #buffalo search related material are major hub outlets of people I don't know. I've been doing this for almost 7 years now - I know people here and the artists specifically OF Buffalo. It's the trend that then started to go up in margin % and no return. Only recently have I seen an overhaul to the interface for the Store, but it runs like a sweatshop with minimal tools that any of us were accustomed to online. I wish it was better, but we are leaving and concentrating on real world sales.


Personally, if the goods quality is high, I don't think the designers or Brandee's ought to capture the majority of the value.

The "credit" (my money) goes to the people that made and got the product to me.

I think the appropriate level of discussion is "at what level is art conodditised" to which I would say "I have no idea, but somewhere before it's printed on clothing and sold to me".

Other people who value different aspects of fashion are likely to disagree, but in general I don't highly value the creativity in clothing


Second constructive comment I hope - but welcome to the online Strip Mall 2.0


The focus on eternally positive second derivatives is the cancer of American capitalism.


I'm not agreeing or disagreeing, since you have an interesting opinion, but in this case Etsy decided to play the game. They could have stayed private and done whatever they wanted without worrying about 'shareholder value'. They chose to IPO, they are now owned by the market. If you can't play the shareholder game then don't go public.


At the same time, if you disagree with what a company is doing, don't buy that company.

One of the things that angers me the most about people like Carl Ichan is that he believe that, just because he has money, he has the right to tell companies how to run themselves. Often times he buys shares in companies just for this purpose. Nobody forced him to buy those shares.


Yet this is the predicament that public companies know they are getting into once they go public. It's a tradeoff and the same applies to getting VC money (but at least you get to choose who your investors are). They've invested in YOUR company and if it's a significant amount of money, they ARE entitled to having some sort of say in things going forward because their money is on the line.


Destroying a profitable, growing or mature company in pursuit of greater second derivatives isn't pro-shareholder -- it's pro a particular kind of investment strategy which views returns through a particular lens. I believe it's deeply myopic.

It's a Wall St myth that quarterly returns are the best thing to optimize for generating shareholder value or that executives are obligated to do so.

It's the kind of capitalism that tells you the most efficient way to heat your house is to set it on fire.


If that profitable growing company constantly takes millions of dollars out of it's accounts and sets them afire, stopping it from doing so isn't going "destroy it".

And it's not a wall street myth that quarterly returns are the best thing, more a CNN/Stock Trader myth. There are a huge number of investors like Warren Buffett who know that is entirely wrong.

But it's a common misconception that cutting spending is bad for business. In this case they are cutting a deluded CEO who had his own personality cult and a massive team of paid cheerleaders. Overpaying employees isn't "investing", paying closer to market isn't going to hurt the business. On the contrary, it can focus it and unleash greater growth.

When Steve Jobs came back to Apple he cut the Newton, dozens of Mac hardware projects, and almost all advanced R&D. He focused the Mac team on four market segments and only four computers. He focused remaining research on areas that could lead to products they understood, mainly touchpads. It took them nearly 10 years of careful iteration, (they designed the iPad first and Steve refused to launch it) before they built the iPhone.

But if Steve hadn't focused on getting Apple's quarterly burn down, they never would have made it. If he hadn't focused their efforts, they likely never would have made great products. If he had thrown money at every half baked idea, they would have died.


The strategy indeed may not have been adding external shareholder value. In fact that is probably not the point of most IPOs (the point is usually to raise money to grow the business and/or increase wealth of the owners). I doubt the intent was to destroy the company, because that results in people losing money.

I certainly agree that the boost-short-term-profit-to-get-rich-then-bail is deeply unethical (and sometimes illegal).

However, "doing it right", and using the added wealth to grow the business in the long term will benefit everyone (founders, shareholders, consumers, and the economy), and is one of the BEST parts of capitalism.


Who is "they"? At the time of the IPO, more than half of the shares were held by external investors.


Whenever founders sell part of the business to other parties - either through VC investment or IPO, they (the founders) are now bound to the agreement of returning on that investment and providing value as a (the) core focus of doing business.

If you don't want to be beholden to third parties, then don't sell part of your business.


Didn't have to be. They didn't have to sell stock privately either.


They had to if they wanted to spend someone else's money...


There's always loans. You don't have to take VC money.


This party wasn't going to pay for itself!


> A similar model had worked spectacularly well for EBay Inc., which had made money for 21 straight years...How, Wunder asked, was Etsy not making more money?

Because EBAY was already in that market! It's really no wonder Etsy has tanked as a community, sellers fleeing in droves, as the company works hard to destroy what it was, something unique, successful (even if it wasn't eating the world) and highly responsive to user's needs, into YET ANOTHER EBAY CLONE full of sweatshop manufactured crap.

Hooray for Capitalism! Race to the bottom!

/rant


If you want your company to be a special snowflake, don't get greedy, don't sell a bunch of stock to outside investors and don't go public. The CEO betrayed his entire vision when he did that, you can't siphon off profits to give to other stakeholders (such as for egregious employee benefits) when you don't own and control the business.

And for all the good those excess benefits did in attracting top talent, why is Etsy's software so crappy?


At the same time,

> Sellers who developed successful products were prohibited by Etsy policy from hiring employees to help them expand

Isn't that cruel? Your XYZ craft is amazing and people love it, but you can hire someone to help you make more. Then, the demand is just absorbed by copycats.


> Isn't that cruel? Your XYZ craft is amazing and people love it, but you can hire someone to help you make more.

Not at all, that's inherent to the whole idea of handmade. Your product probably won't be the same if you get someone helping you with it; certainly the handmadiness that people are paying you for won't be there any more. If your product is good enough to stand on its own merits then you can sell it conventionally.

> Then, the demand is just absorbed by copycats.

Any copycat presumably has to stand on their own and earn their own reputation. If you've got positive reviews for the product you handmade, that shouldn't transfer over to someone else making it, even if that someone else is employed by you.


I don't consider being handmade to mean being personally created by the inventory only. If you hire others who are skilled in the crafts required to create your product then I have no qualms still considering the item to be hand crafted. Many of the outdoor items I purchase are hand made by small companies, I am not sure it matters who in the company makes it as long as the quality and service remain high.


Traditional crafts often had apprentices/journeyman doing the bulk of the work with a master doing the critical portions. So, a policy that says the seller must do something to each piece could be reasonable, but essentially saying you can buy components from someone else, but you can't have assistants is silly.


I know someone in Tennessee who has started listing on Amazon Homemade or whatever it's called, she says they're LESS demanding than Etsy and that's just psychotically sad.


I couldn't agree more. I've never been a customer, but my girlfriend won't even go to the site anymore. Perfect example of a company that should have stayed private, and been happy with what they had.


Like the other commenter says, maybe they should have stayed private if remaining committed to their ideals was such a high priority.


Agree completely. That was the beginning of the end, as it is for most innovative companies.




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