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Etsy completes its IPO, valuing the craft marketplace at over $3.5 billion

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A sensible public offering to match that warm sweater

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After 10 years in business, Etsy went public today, raising over $287 million and giving the company a value of more than $3.5 billion. The stock was priced at $16 a share but immediately jumped to $32 when it opened.

While it's not yet profitable, Etsy has seen its revenue surge over the last three years. The company has benefited from extraordinary network effects, word-of-mouth marketing, and customer loyalty that stems from its focus on empowering the creators of handmade goods.

How do you define hand made?

How exactly to define what belongs on Etsy has become a contentious issue. Some successful sellers have been accused of stocking their stores with pre-fab items purchased from Alibaba. Even the CEO has mistakenly endorsed mass produced products. But its brand continues to hold weight with consumers. An analysis of its financials shows that for every $100 of sales that occurred on Etsy’s platform, it spent just $1-2 on marketing, performance its peers in ecommerce would kill for.

The company has also sought to differentiate itself by becoming a "B Corp", making clear to investors that it values its community and the environment as highly as it does profits. And it set aside a portion of its pre-IPO shares for sellers, allowing them to participate in the potential wealth creation of taking the company public.

A stark contrast to the Silicon Valley startup bubble

Despite the company's impressive revenues, its market value it dwarfed by many still private Silicon Valley companies like Pinterest and Snapchat that have little or no revenue to speak of. Recently many tech investors have been warning that these enormous private valuations may leave some companies underwater when they go public, as happened with Box, which was worth less after its IPO than it was after its last funding round.

slack valuation

Etsy has always played the game differently. Its CEO, Chad Dickerson, believes that allows it to attract top talent who are burnt out on the culture of Silicon Valley and the relentless pursuit of the most money. "Part one of Etsy’s values is ‘keeping it real,’" noted Mike Grishaver, who left Pandora to become Etsy's head of product. "They tend to have people who are pretty humble despite the growth."

Correction: This article originally referred to Etsy's head of product as Eric Grishaver; his name is Mike Grishaver. We regret the error.