12 ms·

Etsy is laying off 11% of its staff

188 points by Podgajski 3y ago

forbiddenvoid 3y ago
It's amazing how the "macro environment" is responsible for all the layoffs, but never responsible for any of the growth. Even companies aren't immune to fundamental attribution error.
- mjr00 3y ago
  > It's amazing how the "macro environment" is responsible for all the layoffs, but never responsible for any of the growth. Does anyone really question that growth over the past 10 years, particularly in the 2020-2021 COVID money printing era, wasn't due to the macro environment? Given how cheap/free money was for so long, it made total sense to hire and focus on growth and cornering markets without being concerned about margins or long-term profitability. Now that money isn't cheap, companies are concerned about those things and are making changes to their businesses. This is all intentional.
  - arunabha 3y ago
    > Does anyone really question that growth over the past 10 years You're right. People pretty much know that external circumstances are responsible for a large part of the growth of companies. I think the parent commenter was highlighting that execs routinely claim responsibility for growth(and collect outsized rewards) while attributing a majority of problems to external factors out of their control(also while escaping consequences by redirecting them to rank and file). It's a sweet gig if you can get it!
  - hotpotamus 3y ago
    > Does anyone really question that growth over the past 10 years How many people have increased their salaries significantly over that time? Do you think they put it down to their own achievement or do you think they believed that they were merely riding an economic wave?
  - tikhonj 3y ago
    Pretty much anybody involved in the product, growth and leadership teams at any of those companies?
boringuser2 3y ago
I just checked their YOY earnings and Etsy has increased from 100 million to 600 million in revenue over the past 5 years, with 100 million in revenue growth over the past year alone. Companies need to be shamed for potentially destroying people's lives while simultaneously reaping great rewards for their efforts.
- wintogreen74 3y ago
  the old joke about Amazon (which was never really true) was they lost pennies on every sale and made it up in volume. Anybody can grow revenue; the trick is to grow it faster than the cost of new revenue, and with a positive margin.
- passwordoops 3y ago
  I agree with your sentiment, but revenue isn't profit.
  - dukeyukey 3y ago
    Where the money is going I'm more confused by. Like, Etsy is based on a well-understood, popular business model - provide a digitasl storefront to sell physical goods. There are no hard or unique problems - their main advantage is name recognition in the indie-maker community. So where is that money going?
    - bbor 3y ago
      A/B tests and their results. The industries biggest mistake…
    - passwordoops 3y ago
      Probably two or three key places: - They have nearly 3000 employees, which seems like way too many - Marketing and ads to increase reach and presence - Acquisitions (h/t to ojbyrne in this thread) Remember Uber was losing $2 billion a quarter, much of it going to pay for those reasons. Also I'm not sure how stock buybacks are accounted for, but Etsy did $290M in September according to this one chart: https://ycharts.com/companies/ETSY/stock_buyback https://ycharts.com/companies/ETSY/stock_buyback
deleted 3y ago
[deleted]
60secs 3y ago
89% too low?
araes 3y ago
Hmm. Based on the Wikipedia article, I can kind of comprehend this. They're making $921,146.95 / employee, yet somehow losing $236,200.71 / employee every year. Don't know where all their money's going, yet something does not look viable. Apparently, Goodwill impairment, Cost of revenue, then marketing. From: https://www.sec.gov/ix?doc=/Archives/edgar/data/1370637/000137063723000017/etsy-20221231.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1370637/0001... Revenue: $2,566,111,000 Costs: $3,224,671,000 - Cost of revenue: $744,592,000 - Operating expenses: - Marketing: $710,399,000 - Product: development $412,398,000 - General and administrative: $312,260,000 - Goodwill impairment: $1,045,022,000
- selectodude 3y ago
  Etsy must have written down the entire purchase of Depop.
- fatnoah 3y ago
  Wow on that Goodwill impairment. If I'm reading correctly, it's from their previous acquisitions of depop and elo7. They paid about $1.9B for both of those, so the "impairment" means they effectively overpaid by $1B.
- jSully24 3y ago
  Goodwill impairment: https://www.investopedia.com/ask/answers/061715/when-and-why-does-goodwill-impairment-occur.asp https://www.investopedia.com/ask/answers/061715/when-and-why... “ If the goodwill asset becomes impaired by a decline in the value of the asset below the purchase price, the company would record a goodwill impairment. This is a signal that the value of the asset has fallen below the amount that the company originally paid for it.”
- kfk 3y ago
  I mean, they did an acquisition when money was cheap, now it all goes to goodwill impairment because they paid pre-interest hiked multiples. That is where the money is going. https://www.nytimes.com/2021/06/02/business/etsy-depop.html https://www.nytimes.com/2021/06/02/business/etsy-depop.html
- 3y ago
rightbyte 3y ago
I got this feeling most Etsy sellers nowadays are fronts for actual sweatshops or stuff sold on Alibaba. They killed the site to hunt metrics.
- freeplay 3y ago
  Absolutely. Esty is a shell of its "handmade goods" pitch that put them on the map. The legit boutique sellers still exist but they are buried in a sea of mass produced, private label junk you could find on Amazon or eBay.
  - giantg2 3y ago
    I guess it depends on what you're looking for. I've seen some of what you're talking about, but most of the type of stuff I'm looking for still has a good handmade selection.
    - JohnFen 3y ago
      I've learned that I can't reliably tell which sellers are real and which are just resellers.
      - freeplay 3y ago
        This is my problem as well. I try to use context clues from pictures and reviews but often I can only find out once the product is delivered and in my hands.
  - SV_BubbleTime 3y ago
    I went on to see if I could find a hand knit toddler sweater. Sure can! Easily. I just see the same ones on Amazon by OXIIK brand. I had, some grandmother in Canada in mind.
  - TealMyEal 3y ago
    Just wondering as someone who sells handmade things on etsy, Ive noticed my sales dipping the last 6 months. is there any websites you recommend to buy/sell handmade things?
lkbm 3y ago
> They’ll receive severance of 16 weeks of base pay, plus one week for each full year of service, along with other benefits like extended COBRA health insurance benefits and the ability to keep their company laptop. Getting laid off in December isn't fun (getting laid off any time isn't fun), but I appreciate that our industry has developed a norm of generous severance. Four months+ pay is four months+ more than I got working at a non-profit in education. If my work isn't paying for, whether due to "macro environment" or something else, it's better if I go do something where I am worth my pay, but not if I'm put in severe financial jeopardy during the switch. Providing several months of severance makes that transition, while still destabilizing and stressful, much, much easier. I wish more workers got this. Now I'm thinking that next time I'm applying for jobs, one of my questions for them will be about any past layoffs. No company that's been around for a while will be able to say "we've never laid anyone off", but if one says "we let them keep their five-year-old laptop" and another says "we gave them several months severance pay", that will be a factor in my decision.
- cableshaft 3y ago
  Most I've ever gotten for severance was 1 week pay (and I've been laid off 3 times). And that's even in tech (video game studio). My previous company (a large corporation) did 1 week per year you worked there, capped at 4 weeks (one person I know that was laid off was there for 17 years, only got the 4 weeks). They actually used to be more generous but made significant cuts to their severance benefits shortly before layoffs so they could save a bunch of money on it (they also took away 401k match later, reduced PTO days, eliminated bonuses, froze raises, made our health care benefits worse, let tons of people leave without authorizing filling in gaps so many departments became overworked skeleton crews, all sorts of crap to save money). So at least in that case, it wouldn't have mattered if I asked what their severance policies were while interviewing.
  - ska 3y ago
    There is a point in the company size (in some metric) vs. job responsibility curve where you can successfully make contract changes, within reason. One thing you should absolutely consider is pushing for a specific severance clause. This serves two purposes, an indication of their seriousness about your position, and some peace of mind (e.g. have 6/12 months or whatever in your pocket). That being said, there are scenarios where you won't see a penny of it. Also, depending on your jurisdiction and job tenure, you may have a very viable claim for more severance. Nobody is likely to offer you more than statutory (or whatever is in your contract) without asking, but it may be worth paying a lawyer hour or so to find out properly.
throwitaway222 3y ago
Don't they make a shit tone of money during the holidays?
dangrossman 3y ago
I think they're afraid of Temu. You won't find that in the reporting, but it's begun materially impacting Etsy, and other large marketplaces like Amazon and Wayfair. If you do a couple Google searches during the US evening hours for the kinds of products people often buy on Etsy, you may notice Temu shopping ads in all the top slots, outranking and outspending every US marketplace including Amazon and Etsy which would typically hold those first-page above-the-fold spots in the past. Late this summer, the places Etsy sellers congregate to chat started getting widespread reports of sales dropping off a cliff, to levels not seen in years, for new and veteran sellers alike. The plummet in Etsy traffic coincided with Temu beginning to replace Etsy in Google Shopping ads at the top of Google searches.
- reincarnate0x14 3y ago
  Interesting. Maybe my adblocker is getting a lot of that, what I noticed amongst my etsy-using friends was that Etsy itself was being flooded with the same sort of incredibly cheap "artisanal" as what Temu looks to be selling. It wouldn't surprise me if there was substantial overlap in the producers for all of that under the parade of shops that show up on Etsy, Amazon, etc.
debacle 3y ago
For a long time, how much staff you have at a company correlated with success. The industry seems to be moving in the other direction - how much can you cut and still maintain profit? Interestingly, this seems to have always been (sory of) Apple's model.
- LimaBearz 3y ago
  I've been noticing something similar in the gaming industry as well. What is the least amount of features in a game that we can ship while still maintaining profit? AND how few people can we milk in DLC with this shell of a game to maintain profitability. (I'm looking at you Activision/Blizzard!) It use to be build a great game with mass appeal and profit. Now its just how small can we make it and how much DLC can we sell to a small subset of people to equal profit.
zug_zug 3y ago
Cool so summarizing the comments here - they overpaid 1billion dollars in acquisitions (would have been profitable this year otherwise) and are now laying off staff to recoup losses?
symlinkk 3y ago
Remember a couple years ago you’d constantly hear that “everyone needs to learn how to code!” and “we should teach programming in high school!” Now that the layoffs have started I haven’t heard a peep from that crowd.
- JohnnyMarcone 3y ago
  From clues in the article I assumed these layoffs were in Marketing and HR. They consolidated HR and marketing leadership under the COO and a VP. Did you see evidence that the layoffs were in engineering?
ketchupdebugger 3y ago
I'm surprised they laid off executives as well.

188 points by Podgajski 3y ago

It's amazing how the "macro environment" is responsible for all the layoffs, but never responsible for any of the growth. Even companies aren't immune to fundamental attribution error.

mjr00 3y ago
> It's amazing how the "macro environment" is responsible for all the layoffs, but never responsible for any of the growth. Does anyone really question that growth over the past 10 years, particularly in the 2020-2021 COVID money printing era, wasn't due to the macro environment? Given how cheap/free money was for so long, it made total sense to hire and focus on growth and cornering markets without being concerned about margins or long-term profitability. Now that money isn't cheap, companies are concerned about those things and are making changes to their businesses. This is all intentional.
- arunabha 3y ago
  > Does anyone really question that growth over the past 10 years You're right. People pretty much know that external circumstances are responsible for a large part of the growth of companies. I think the parent commenter was highlighting that execs routinely claim responsibility for growth(and collect outsized rewards) while attributing a majority of problems to external factors out of their control(also while escaping consequences by redirecting them to rank and file). It's a sweet gig if you can get it!
- hotpotamus 3y ago
  > Does anyone really question that growth over the past 10 years How many people have increased their salaries significantly over that time? Do you think they put it down to their own achievement or do you think they believed that they were merely riding an economic wave?
- tikhonj 3y ago
  Pretty much anybody involved in the product, growth and leadership teams at any of those companies?

boringuser2 3y ago

I just checked their YOY earnings and Etsy has increased from 100 million to 600 million in revenue over the past 5 years, with 100 million in revenue growth over the past year alone. Companies need to be shamed for potentially destroying people's lives while simultaneously reaping great rewards for their efforts.

wintogreen74 3y ago
the old joke about Amazon (which was never really true) was they lost pennies on every sale and made it up in volume. Anybody can grow revenue; the trick is to grow it faster than the cost of new revenue, and with a positive margin.
passwordoops 3y ago
I agree with your sentiment, but revenue isn't profit.
- dukeyukey 3y ago
  Where the money is going I'm more confused by. Like, Etsy is based on a well-understood, popular business model - provide a digitasl storefront to sell physical goods. There are no hard or unique problems - their main advantage is name recognition in the indie-maker community. So where is that money going?
  - bbor 3y ago
    A/B tests and their results. The industries biggest mistake…
  - passwordoops 3y ago
    Probably two or three key places: - They have nearly 3000 employees, which seems like way too many - Marketing and ads to increase reach and presence - Acquisitions (h/t to ojbyrne in this thread) Remember Uber was losing $2 billion a quarter, much of it going to pay for those reasons. Also I'm not sure how stock buybacks are accounted for, but Etsy did $290M in September according to this one chart: https://ycharts.com/companies/ETSY/stock_buyback https://ycharts.com/companies/ETSY/stock_buyback

deleted 3y ago

[deleted]

60secs 3y ago

89% too low?

araes 3y ago

Hmm. Based on the Wikipedia article, I can kind of comprehend this. They're making $921,146.95 / employee, yet somehow losing $236,200.71 / employee every year. Don't know where all their money's going, yet something does not look viable. Apparently, Goodwill impairment, Cost of revenue, then marketing. From: https://www.sec.gov/ix?doc=/Archives/edgar/data/1370637/000137063723000017/etsy-20221231.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1370637/0001... Revenue: $2,566,111,000 Costs: $3,224,671,000 - Cost of revenue: $744,592,000 - Operating expenses: - Marketing: $710,399,000 - Product: development $412,398,000 - General and administrative: $312,260,000 - Goodwill impairment: $1,045,022,000

selectodude 3y ago
Etsy must have written down the entire purchase of Depop.
fatnoah 3y ago
Wow on that Goodwill impairment. If I'm reading correctly, it's from their previous acquisitions of depop and elo7. They paid about $1.9B for both of those, so the "impairment" means they effectively overpaid by $1B.
jSully24 3y ago
Goodwill impairment: https://www.investopedia.com/ask/answers/061715/when-and-why-does-goodwill-impairment-occur.asp https://www.investopedia.com/ask/answers/061715/when-and-why... “ If the goodwill asset becomes impaired by a decline in the value of the asset below the purchase price, the company would record a goodwill impairment. This is a signal that the value of the asset has fallen below the amount that the company originally paid for it.”
kfk 3y ago
I mean, they did an acquisition when money was cheap, now it all goes to goodwill impairment because they paid pre-interest hiked multiples. That is where the money is going. https://www.nytimes.com/2021/06/02/business/etsy-depop.html https://www.nytimes.com/2021/06/02/business/etsy-depop.html
3y ago

rightbyte 3y ago

I got this feeling most Etsy sellers nowadays are fronts for actual sweatshops or stuff sold on Alibaba. They killed the site to hunt metrics.

freeplay 3y ago
Absolutely. Esty is a shell of its "handmade goods" pitch that put them on the map. The legit boutique sellers still exist but they are buried in a sea of mass produced, private label junk you could find on Amazon or eBay.
- giantg2 3y ago
  I guess it depends on what you're looking for. I've seen some of what you're talking about, but most of the type of stuff I'm looking for still has a good handmade selection.
  - JohnFen 3y ago
    I've learned that I can't reliably tell which sellers are real and which are just resellers.
    - freeplay 3y ago
      This is my problem as well. I try to use context clues from pictures and reviews but often I can only find out once the product is delivered and in my hands.
- SV_BubbleTime 3y ago
  I went on to see if I could find a hand knit toddler sweater. Sure can! Easily. I just see the same ones on Amazon by OXIIK brand. I had, some grandmother in Canada in mind.
- TealMyEal 3y ago
  Just wondering as someone who sells handmade things on etsy, Ive noticed my sales dipping the last 6 months. is there any websites you recommend to buy/sell handmade things?

lkbm 3y ago

> They’ll receive severance of 16 weeks of base pay, plus one week for each full year of service, along with other benefits like extended COBRA health insurance benefits and the ability to keep their company laptop. Getting laid off in December isn't fun (getting laid off any time isn't fun), but I appreciate that our industry has developed a norm of generous severance. Four months+ pay is four months+ more than I got working at a non-profit in education. If my work isn't paying for, whether due to "macro environment" or something else, it's better if I go do something where I am worth my pay, but not if I'm put in severe financial jeopardy during the switch. Providing several months of severance makes that transition, while still destabilizing and stressful, much, much easier. I wish more workers got this. Now I'm thinking that next time I'm applying for jobs, one of my questions for them will be about any past layoffs. No company that's been around for a while will be able to say "we've never laid anyone off", but if one says "we let them keep their five-year-old laptop" and another says "we gave them several months severance pay", that will be a factor in my decision.

cableshaft 3y ago
Most I've ever gotten for severance was 1 week pay (and I've been laid off 3 times). And that's even in tech (video game studio). My previous company (a large corporation) did 1 week per year you worked there, capped at 4 weeks (one person I know that was laid off was there for 17 years, only got the 4 weeks). They actually used to be more generous but made significant cuts to their severance benefits shortly before layoffs so they could save a bunch of money on it (they also took away 401k match later, reduced PTO days, eliminated bonuses, froze raises, made our health care benefits worse, let tons of people leave without authorizing filling in gaps so many departments became overworked skeleton crews, all sorts of crap to save money). So at least in that case, it wouldn't have mattered if I asked what their severance policies were while interviewing.
- ska 3y ago
  There is a point in the company size (in some metric) vs. job responsibility curve where you can successfully make contract changes, within reason. One thing you should absolutely consider is pushing for a specific severance clause. This serves two purposes, an indication of their seriousness about your position, and some peace of mind (e.g. have 6/12 months or whatever in your pocket). That being said, there are scenarios where you won't see a penny of it. Also, depending on your jurisdiction and job tenure, you may have a very viable claim for more severance. Nobody is likely to offer you more than statutory (or whatever is in your contract) without asking, but it may be worth paying a lawyer hour or so to find out properly.

throwitaway222 3y ago

Don't they make a shit tone of money during the holidays?

dangrossman 3y ago

I think they're afraid of Temu. You won't find that in the reporting, but it's begun materially impacting Etsy, and other large marketplaces like Amazon and Wayfair. If you do a couple Google searches during the US evening hours for the kinds of products people often buy on Etsy, you may notice Temu shopping ads in all the top slots, outranking and outspending every US marketplace including Amazon and Etsy which would typically hold those first-page above-the-fold spots in the past. Late this summer, the places Etsy sellers congregate to chat started getting widespread reports of sales dropping off a cliff, to levels not seen in years, for new and veteran sellers alike. The plummet in Etsy traffic coincided with Temu beginning to replace Etsy in Google Shopping ads at the top of Google searches.

reincarnate0x14 3y ago
Interesting. Maybe my adblocker is getting a lot of that, what I noticed amongst my etsy-using friends was that Etsy itself was being flooded with the same sort of incredibly cheap "artisanal" as what Temu looks to be selling. It wouldn't surprise me if there was substantial overlap in the producers for all of that under the parade of shops that show up on Etsy, Amazon, etc.

debacle 3y ago

For a long time, how much staff you have at a company correlated with success. The industry seems to be moving in the other direction - how much can you cut and still maintain profit? Interestingly, this seems to have always been (sory of) Apple's model.

LimaBearz 3y ago
I've been noticing something similar in the gaming industry as well. What is the least amount of features in a game that we can ship while still maintaining profit? AND how few people can we milk in DLC with this shell of a game to maintain profitability. (I'm looking at you Activision/Blizzard!) It use to be build a great game with mass appeal and profit. Now its just how small can we make it and how much DLC can we sell to a small subset of people to equal profit.

zug_zug 3y ago

Cool so summarizing the comments here - they overpaid 1billion dollars in acquisitions (would have been profitable this year otherwise) and are now laying off staff to recoup losses?

symlinkk 3y ago

Remember a couple years ago you’d constantly hear that “everyone needs to learn how to code!” and “we should teach programming in high school!” Now that the layoffs have started I haven’t heard a peep from that crowd.

JohnnyMarcone 3y ago
From clues in the article I assumed these layoffs were in Marketing and HR. They consolidated HR and marketing leadership under the COO and a VP. Did you see evidence that the layoffs were in engineering?

ketchupdebugger 3y ago

I'm surprised they laid off executives as well.