Letting go of your business: Etsy founder steps back

Etsy founder Rob Kalin is climbing out of the CEO’s chair. The online craft market has grown from four to 63 employees in three years, raised some $31 million from investors, and built an online community 1 million users strong. How to manage rapid growth is a great problem for a start-up to have, but it’s still a problem. Kalin described it on Etsy’s blog a few weeks ago:

When you have teams inside a company, you have to be careful that silos don't develop. People tend to work heads down on what their immediate tasks are. When you have team leads, you need to setup a reporting structure. As new employees come on, they are oriented inside the company. This may all sound obvious, but when you're in the trenches at a startup, without someone who has done this before, you learn as you go. We have certainly done a fair share of what Oscar Wilde would call "conducting our education in public.”

Managing the issues Kalin describes above requires different skills than the creativity and hands-on technical knowledge that founders often bring to the table. Some founders make that transition. If they don’t, investors may decide to replace them.

Etsy promoted recently hired COO Maria Thomas to lead the company. Kalin will step back into a new role called chief creative officer, and work on a nonprofit branch to help educate craftmakers on "how to make a living making things." The company is also adding a CTO to the top management team.

For a founder, stepping back can’t be easy. I imagine it’s like sending your first child to college. It’s probably even harder at Etsy, which has a deeply engaged community – the team isn’t anonymous. But it could be the best thing for the business.

Before it's here, it's on the Bloomberg Terminal.