Etsy’s Nick Daniel on building and scaling a marketplace

“My guess is that in the future, our marketplace is going to have an even bigger scale, but it will feel smaller to any individual because we'll be better at finding just those products that you're looking for and giving them to you when you need them.”

In this episode, I take a look at the building blocks of e-commerce marketplace Etsy with the company's chief product officer Nicholas Daniel. Etsy has nearly seven million sellers serving over 90 million customers and Nick has worked across every part of their portfolio. He has a number of useful insights on what it takes to build and scale such a unique, personalized business in a world of e-commerce otherwise dominated by the likes of Amazon. Nick also offers some candid wisdom about practicing humility and reframing career challenges.

Here are just a few of the key learnings I have from talking to Nick:

Decide who you’re building for first

“In the beginning we definitely were focused on building for the seller….you got to choose a primary customer and you got to build for that customer so you can build significant volume... but then once you have that mass, you can then bring the buyers in.”

Getting a marketplace off the ground, you need to strike a balance between sellers & sellers — supply & demand — but you can’t start by focusing on both at the same time. Etsy understood they must first build for the sellers, but also, importantly, once they had sufficient supply, they needed to activate a marketing playbook to bring buyers in. Nick details the various playbooks for how to jumpstart supply with existing demand and vice versa.

Know when to ignore industry norms

“We recognize that special takes time. So we're never going to try to compete with two-day shipping, for example. We know that's unrealistic.”

A big part of how Etsy differentiates itself from other marketplaces is by prioritizing its sellers as craftspeople. The time spent making an order is a feature, not a bug. Providing two-day shipping to compete with Amazon is wildly impractical for most of its sellers – it would fundamentally change their businesses in ways that would undermine Etsy’s sellers and its brand.

Understand the limits of performance metrics

“When you look at metrics in aggregate, everything can look great… but when you bring it down to the micro level, you really uncover where the opportunities are.”

While it’s important to showcase performance with a metric like gross merchandise sales (how many sales Etsy helped facilitate), total sales do not necessarily reflect whether buyers and sellers are having a good experience. It also doesn’t show whether all regions are performing equally well. You need to go deeper to understand cause and effect. 

Don’t get hung up on scope

“I don't get too hung up on titles or the box that needs to be ticked to get to the next level. We're here to build wonderful products, regardless of the scope that you have under your purview. And if you just focus on that, things will work out.”

This is perhaps the most important takeaway from my conversation with Nick. Change is a constant in growing companies, which inevitably impacts your role. Your scope may widen but it could also narrow. When it does, rather than seeing it as a demotion, look for the opportunities that a narrower scope can offer — such as focusing, going deeper and accomplishing more. In his many different positions at Etsy, Nick never got hung up on whether it was a step back but instead focused on what was in front of him. His path to success was far from a straight line. 

Can you recall a time where something that seemed like a career setback turned out positively? Let me know in the comments.

🎧 Check out the full episode of Building One for many more great insights. Listen, follow and rate the show on Spotify, Apple or wherever you listen to podcasts.