6 ms·

Sometimes I don't understand this world. "Though Etsy has become a significant business, with sales jumping 56 percent last year from the previous year to $195

by xienze 12y ago

Sometimes I don't understand this world. "Though Etsy has become a significant business, with sales jumping 56 percent last year from the previous year to $195.6 million, it still booked a loss of $15 million." How in the hell do you spend $210 million dollars running a marketplace website? "Etsy shares opened Thursday morning at $31 a share, almost twice their initial public offering price" Why in the hell are people snapping up these shares when the company admitted they may NEVER make a profit? What is going on with the tech industry?

deleted 12y ago
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wcummings 12y ago
>How in the hell do you spend $210 million dollars running a marketplace website? Salaries. They have a few hundred employees, who are from the sounds of it pretty well paid (they're located in NYC, too).
- xienze 12y ago
  Perhaps I should rephrase the question. WHY do you need hundreds of employees to run a marketplace website? And if it's truly only a couple hundred they are EXTREMELY well paid.
  - Aco- 12y ago
    Etsy has over 150 engineers, all living and working in NYC; of course they are 'EXTREMELY' well paid.
    - epc 12y ago
      Engineers, UX, support staff. There's an entirely separate office in Hudson, NY for security and telephone support for buyers/sellers. Plus rent in Brooklyn isn't cheap (they likely have a fantastic deal for their early office space but DUMBO is an overleased market at this point and they are fitting out new space in "DUMBO Heights"). All the jurisdictions Etsy operates in require various forms of compliance, which you could waste engineer time on or hire dedicated employees to handle. And by going public they've likely had to hire 15-20 people to support their CFO and run compliance.
      - fennecfoxen 12y ago
        "DUMBO Heights"?? I thought we were supposed to call that RAMBO (Right Above the Manhattan Bridge Overpass). Real estate naming. Go figure.
        epc 12y ago
        Yeah, that's the regrettable name the real estate developers came up with. I suspect BQE Heights didn't have the same melodious ring.
      - epc 12y ago
        For the non-NYC people: "DUMBO Heights" is a cluster of buildings just South of DUMBO, Brooklyn on the other side of the Brooklyn–Queens Expressway (BQE) which were owned by the Watchtower / Jehovah's Witnesses until I believe 2012. See http://dumboheights.com/ http://dumboheights.com/ (warning: real estate developer site). * edited: directions in DUMBO are easy to confuse. What you think is north-south is east-west and vice/versa.
jbooth 12y ago
Presumably, sales != revenue -- they're making a much smaller % of sales as commission. As for the price:earnings ratio being a negative number -- etsy's sexy, more profitable businesses may not be.
s73v3r 12y ago
"Why in the hell are people snapping up these shares when the company admitted they may NEVER make a profit? What is going on with the tech industry?" I wouldn't necessarily care if they make a profit. I would care that there's a greater fool coming behind me that I could sell the shares to.
jsnathan 12y ago
There's a breakdown of their spending in their S-1 filing [1], under Consolidated Statements of Operations. According to this, they could be profitable if they wanted to be, but they are using their profits and re-investing in growth. E.g. they more than doubled their spending on marketing from $17.8m to $39.6m from 2013 to 2014. [1]: http://www.sec.gov/Archives/edgar/data/1370637/000119312515077045/d806992ds1.htm#toc http://www.sec.gov/Archives/edgar/data/1370637/0001193125150...
- mason55 12y ago
  > According to this, they could be profitable if they wanted to be, but they are using their profits and re-investing in growth Which is one of the things that differentiates a startup from a lifestyle business. It's the whole point of taking funding and trying to accelerate growth.
  - aries1980 12y ago
    For Lifestyle businesses growth is also a priority. But margins like -715.90%(!!!) (Hortonworks) or -54.87% (New Relic) shows massive immaturity as a business. Post-IPO businesses in such early-stage has a big threat to the tech industry. If they fail (there is a big chance to bankrupt within a year without funding, according to their financial metrics), they make more hard to float for other companies later.
- deleted 12y ago
  [deleted]

by xienze 12y ago

deleted 12y ago

[deleted]

wcummings 12y ago

>How in the hell do you spend $210 million dollars running a marketplace website? Salaries. They have a few hundred employees, who are from the sounds of it pretty well paid (they're located in NYC, too).

xienze 12y ago
Perhaps I should rephrase the question. WHY do you need hundreds of employees to run a marketplace website? And if it's truly only a couple hundred they are EXTREMELY well paid.
- Aco- 12y ago
  Etsy has over 150 engineers, all living and working in NYC; of course they are 'EXTREMELY' well paid.
  - epc 12y ago
    Engineers, UX, support staff. There's an entirely separate office in Hudson, NY for security and telephone support for buyers/sellers. Plus rent in Brooklyn isn't cheap (they likely have a fantastic deal for their early office space but DUMBO is an overleased market at this point and they are fitting out new space in "DUMBO Heights"). All the jurisdictions Etsy operates in require various forms of compliance, which you could waste engineer time on or hire dedicated employees to handle. And by going public they've likely had to hire 15-20 people to support their CFO and run compliance.
    - fennecfoxen 12y ago
      "DUMBO Heights"?? I thought we were supposed to call that RAMBO (Right Above the Manhattan Bridge Overpass). Real estate naming. Go figure.
      - epc 12y ago
        Yeah, that's the regrettable name the real estate developers came up with. I suspect BQE Heights didn't have the same melodious ring.
    - epc 12y ago
      For the non-NYC people: "DUMBO Heights" is a cluster of buildings just South of DUMBO, Brooklyn on the other side of the Brooklyn–Queens Expressway (BQE) which were owned by the Watchtower / Jehovah's Witnesses until I believe 2012. See http://dumboheights.com/ http://dumboheights.com/ (warning: real estate developer site). * edited: directions in DUMBO are easy to confuse. What you think is north-south is east-west and vice/versa.

jbooth 12y ago

Presumably, sales != revenue -- they're making a much smaller % of sales as commission. As for the price:earnings ratio being a negative number -- etsy's sexy, more profitable businesses may not be.

s73v3r 12y ago

"Why in the hell are people snapping up these shares when the company admitted they may NEVER make a profit? What is going on with the tech industry?" I wouldn't necessarily care if they make a profit. I would care that there's a greater fool coming behind me that I could sell the shares to.

jsnathan 12y ago

There's a breakdown of their spending in their S-1 filing [1], under Consolidated Statements of Operations. According to this, they could be profitable if they wanted to be, but they are using their profits and re-investing in growth. E.g. they more than doubled their spending on marketing from $17.8m to $39.6m from 2013 to 2014. [1]: http://www.sec.gov/Archives/edgar/data/1370637/000119312515077045/d806992ds1.htm#toc http://www.sec.gov/Archives/edgar/data/1370637/0001193125150...

mason55 12y ago
> According to this, they could be profitable if they wanted to be, but they are using their profits and re-investing in growth Which is one of the things that differentiates a startup from a lifestyle business. It's the whole point of taking funding and trying to accelerate growth.
- aries1980 12y ago
  For Lifestyle businesses growth is also a priority. But margins like -715.90%(!!!) (Hortonworks) or -54.87% (New Relic) shows massive immaturity as a business. Post-IPO businesses in such early-stage has a big threat to the tech industry. If they fail (there is a big chance to bankrupt within a year without funding, according to their financial metrics), they make more hard to float for other companies later.
deleted 12y ago
[deleted]