Benner on Tech: Etsy Could Laugh Last
People are Talking About…
Who would have thought the unglamorous Etsy, the online marketplace for arts and crafts, would put the New York tech scene back on the map?
One of the city’s more polished e-commerce players -- a purveyor of classy, cool clothing and accessories like Fab.com, Gilt Groupe or Warby Parker -- was supposed to put some sparkle back into New York City’s public offering prospects. But then people stopped shopping at Fab. Gilt Groupe hit a rough patch. And Warby Parker decided to explore a huge late stage round, valuing itself on the private markets at about $1 billion.
Etsy beat them all to the punch yesterday when it filed for an IPO, and reports said that it was seeking to raise $300 million. Forget sparkle. The Brooklyn-based company is more likely to knit, glue gun and bedazzle its way into investors’ hearts during its upcoming roadshow.
The IPO will likely herald a big change for Etsy that will make it look less like an eccentric flea market and more like a regular old e-commerce platform. My Bloomberg News colleague Leslie Picker notes that “Etsy changed its policies in October 2013 to allow sellers to outsource manufacturing and fulfillment services.” This has allowed huge, more commercial sellers to flourish, and their success probably contributed to Etsy’s 56 percent sales growth last year to $196 million. While those sorts of big merchants might upset the universe of smaller sellers whose eccentric products made Etsy famous, investors who like growth will probably want evidence that the big sellers will become the norm on the site.
Twitter lit up with jokes and fears about Etsy’s ability to deliver a successful IPO, much less be a successful public company. Visions of Groupon -- which had a blockbuster public offering then crashed -- flashed through people’s heads. But if Etsy’s bid is successful, it will gain access to a lot of money and publicly traded stock that it can use to do deals and pay employees. And it will in some ways be easier for Etsy to make the transition to more mass market products under the glare of the public market spotlight. As Fortune’s Dan Primack points out, Groupon’s IPO “is arguably the reason it remains in business. As venture capitalist Bill Gurley noted, it is much easier to survive a valuation decline as a public company than as a private one.”
** Nominally related: Fortune says that Warby Parker is not only raising a huge late stage round, but one of its co-founders, Andy Hunt, is launching a growth equity investment firm.
Ellen Pao v. Kleiner Perkins: Kleiner partner John Doerr used his second day of testimony to excoriate the venture industry for employing so few women, Re/code reports. It was also revealed in testimony that investing in nerdy white guys was somewhat of a no-brainer in the past, says USA Today.
AlchemyAPI, an artificial intelligence startup, was bought by IBM to improve the company’s Watson analytics software, Bloomberg reports.
Farfetch, a British e-commerce company, joined the unicorn club when it raised $86 million at a $1 billion valuation, Mashable reports. Fortune has a Q&A with early investor Danny Rimer about the online retailer (one of my faves) and the state of the e-commerce space.
Kik, a chat app, has added video, reports TechCrunch.
Lyft drivers who were hoping for $1,000 referral bonuses may be in for a disappointment, reports GigaOm.
Pinterest is testing animated pins for advertisers that move along with users as they scroll down the page, AdAge reports.
Shyp, the startup that mails your packages, now takes care of merchandise returns, reports the Verge.
People and Personnel Moves
A group of female Twitter employees and alums have started an investment group called #Angels, including Jana Messerschmidt, Jessica Verrilli, Katie Stanton, Vijaya Gadde, April Underwood and Chloe Sladden.
The #MobileGameChangers list, composed of executives that are reshaping the global mobile industry, was revealed by the executive search firm Russell Reynolds.
The company is opening a data center in Silicon Valley to offer enterprise cloud services, the New York Times reports.
Larger iPads have been put on hold, according to Bloomberg. Apple TV might be one of the launch partners for HBO’s streaming service, which is supposed to debut next month, reports the International Business Times.
Instagram introduced “carousel ads,” which let users swipe left to see more images and link to the brand’s website. Investor Gary Vaynerchuk has some ideas about why this is more bad news for the magazine industry. Publishers are having a hard time with WhatsApp, according to Digiday.
Xbox games will come to the HoloLens headset, reports the Verge.
There will be a consumer version of the Samsung Gear VR by the end of the year, Re/code reports.
The U.S. air traffic control system is vulnerable to hackers, reports Ars Technica.
Hillary Clinton’s private e-mail server was never safe from hackers, but it did keep her correspondence from being revealed in public records requests, my Bloomberg View colleague Leonid Bershidsky points out. Her system was built for privacy, including the ability to erase messages completely, reports Bloomberg. The New York Times says that having a clintonemail.com address was considered a badge of honor. Clinton’s aides are pushing back on the story, noting that any e-mails she sent to colleagues would have been logged on government servers, no matter where she sent them from, reports Bloomberg.
The Associated Press is using software to write some of its college sports stories, reports Poynter.
A former DailyMail.com staffer wrote a tell-all to expose the publication’s venal underbelly. The website that’s been described as a template for online journalism depended on “dishonesty, theft of copyrighted material, and sensationalism so absurd that it crosses into fabrication,” according to former employee James King.
News and Notes
A federal judge tentatively approved a $415 million settlement paid by Apple, Google and other tech giants who were accused of cutting illegal deals to cap worker salaries, reports the AP.
The EU may be less aggressive on net neutrality than the U.S., the Wall Street Journal reports.
You can access AT&T’s home security service in your car, reports CNET.
PayPal will be open to partnerships after it splits from eBay, Bloomberg reports.
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