Thursday, November 18th, 2010

Etsy: The “eBay of Handmade Goods” Worth $258 Million?

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I was on an interesting conference call by Arcstone Equity Research & SharesPost in which they walked through the Web business Etsy.

New York-based Etsy is clearly a company on the move.

What Is Etsy?

The gist of Etsy’s business is that they’re a marketplace of hand-made goods (sort of eBay but primarily hand-made)…here’s a screen shot showing you some of the types of things they sell.

Disclaimers: The #s I mention are not from Etsy (they are all estimates based on Arcstone Equity Research & SharesPost)

Special thanks to Arcstone & SharesPost for all the graphs below:

Etsy’s Growing As Fast As Alibaba (But Not As Fast As eBay)

Etsy Business Model

• Taking 3.5% of every sale and $.20 per item for a listing fee
• Selling advertising (where they make about half their money)

Etsy Revenues, Profits, etc.

• Estimated Valuation: $258 Million
• Estimated Revenue
  • $16M in 2009 ($180 million in gross transaction values)
  • $30M in 2010 (on $335 million in gross transaction values)
  • Around $54M is projected in 2011
• Profitable
• 120 employees

Etsy’s Team

Top Officers

• Robert Kalin
• Chad Dickson (Yahoo)
• Alan Freed (Google)

Outside Board Members

• Jim Breyer
• Fred Wilson
• Caterina Fake

Etsy Competition

Some sites like Etsy are:

• eBay (both through its own service and through acquisition of World of Good)
• ArtFire
• DaWanda (in England, France & Germany)
• 1000 Markets
• Bonanzle

Etsy Financing To Date

Other Etsy Highlights

• 4.4 Million members
• Hired a new COO (Alan Freed) from Google last year who has an emphasis on International
• 2 million of 5 million products are Jewelry

Etsy’s Valuation

• $258 Million (10X Annual Revenues (discounted 15% for lack of marketability))

My Take On Etsy

Fascinating Internet business on the move…a real niche dominator.

My best guess as to what will happen with Etsy: They will go public or be acquired by Amazon (Amazon loves to take out companies when they’re in the $100 million to $500 million per year revenue and if they own a niche).

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