Inside Etsy's Stratospheric IPO: An Empire Built By Women

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When Emily McDowell, a 10-year veteran in the Los Angeles ad industry, started feeling unfulfilled at work, she turned to one of her childhood passions: Drawing. In 2011, hoping to make a little money on the side and foster her creativity, she began selling her whimsical designs on Etsy as a side gig. But when one of her Valentine’s Day cards went viral after an Etsy employee posted it on Facebook last year, everything changed: McDowell sold 1,700 cards in 10 days. She used the money to launch an entire card line, and today, she has her own studio in downtown L.A., two full-time employees, and nearly 300 stockists.

McDowell, and many people like her, are the reason why Etsy—which ended its first day on the stock market at $31 a share, nearly double its IPO price of $16—is now a multi-billion dollar company.

“They killed it today,” says Thornton McEnery, a senior editor at financial news site “Wall Street loves something new; people are really excited about this company. Maybe too excited. When a stock trades like that in one day, people overlook some of the company’s faults.” Like the fact that, as McEnery points out, Etsy lost $15 million last year—and has yet to make a profit.

But what really makes Etsy’s stratospheric IPO so interesting is that the company doesn’t actually produce anything: it’s built on the backs of everyday people—the vast majority of them women like McDowell and Guthrie, or Oklahoma-based Hailey Smedley, whose Etsy store, Ozetta, has allowed her the freedom to stay home and look after her young children.

According to an Etsy spokesperson, a whopping 88 percent of U.S. Etsy sellers are women, three times the number of women-owned businesses documented by the U.S. Census’s Survey of Business Owners (SBO), where just 28.7 percent of home-based businesses were female-owned. Etsy sellers also report higher levels of education than most Americans—yet, the average median income for Etsy sellers is just $44,900, 10 percent lower than the national average. Could it be a coincidence that the average Etsy seller is female and college-educated, yet is still grossly underpaid?

Probably not.

According to recent research from the White House, full-time working women currently earn just 77 percent of what their male counterparts earn. And as a study from the American Association of University Women (AAUW) shows, while education is an effective tool for increasing earnings, it’s not so effective against the gender pay gap. Women are also (paradoxically) less likely to enjoy flexible work hours than men, contributing to the large amount of women (43 percent, by some studies) who leave their jobs after having children. When considering these facts, it’s not at all surprising who Etsy’s average seller is. The online marketplace has become a creative and flexible tool for women to deal with pervasive income inequality.

“Historically, women have always had to do some work on the side in order to make ends meet, whether it’s offering to watch other folks’ kids, cleaning houses, or doing laundry on the side,” says Lisa Maatz, Vice President of Government Relations at AAUW. “Etsy is the 21st century, digital version of a marketplace that women have been participating in for ages.”

Indeed, it was the promise of a little extra cash that got Alicia Shaffer, founder of the now-wildly popular store ThreeBirdNest and mother of three, onto the platform. “I started the shop to earn a few more dollars to help support my family,” she says. Today, those extra dollars have grown to “between $55k-$65k in sales a month.”

“Crazy awesome, right?” she says. “It’s my more-than full-time job [now].”

It’s easy to see why the online marketplace, which counts flexibility and independence as keystones of its brand, is so appealing to working moms.

“There’s a lot of pressure put on women to be both a breadwinner and the main caretaker,” says Maatz. “It’s less typical for a man to look at a job and think about whether he’ll have enough time with his family; for women, this is often a top concern. However, women pay a price for that: Statistics show that women’s wages stagnate after having children, while men’s increase.”

Since women are clearly not being served by traditional entrepreneurial models—ones that might allow them more flexibility—Etsy is an attractive alternative.

“I’m able to stay at home with my kids, and I’m thinking about homeschooling, because I can stay home and do my job,” says Smedley. “I’m so thankful that I can have the income, and I can do everything that I want to do.”

It’s important to note that these women are the core of Etsy’s business, not the other way around. “Etsy relies on these people to make things,” says McEnery. “They’re ultimately a platform; if people stopped making things and selling them on Etsy, the whole business would collapse.”

While the company’s public offering has already made it millions, and contributed to a roughly $3.4 billion valuing, it remains to be seen how it will affect vendors like Smedley, Shaffer, and McDowell, who, unwittingly or not, helped make it such a success. Though there are fears that animosity is growing among its ranks, most of the sellers I spoke with felt positive about the IPO. One reason: With billions of dollars at stake, Etsy has more incentive than ever to help foster its vendors’ businesses. That support has already proved invaluable to some: When I asked Shaffer what her best advice is to someone hoping to make it big on Etsy, she says, simply, “Take advantage of Etsy’s help.”

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