HBR On Leadership

How Etsy Became Profitable — Without Sacrificing Its Purpose

Feb 28, 2024

Harvard Business School professor Ranjay Gulati, an expert in leadership and strategy, discusses Etsy's journey towards profitability without losing its core values. He shares insights on how new CEO Josh Silverman initiated a purpose-driven turnaround, facing tough decisions like layoffs to rebuild trust. The conversation highlights the balance Etsy maintains between social responsibility and financial success, the importance of enhancing buyer experience, and how a genuine organizational purpose can drive both employee engagement and customer loyalty.

28:38

Episode guests

Ranjay Gulati

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Episode notes

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Quick takeaways

CEO Josh Silverman's purpose-driven strategy helped Etsy become profitable by focusing on social and environmental sustainability.

Businesses are urged to prioritize societal leadership, with CEOs evolving to emphasize social and environmental responsibilities alongside financial success.

Deep dives

Challenges Faced by Etsy in Profitability

Etsy, initially founded as an alternative to mass-produced products, struggled with profitability despite substantial growth. Stakeholders demanded financial returns and accountability, leading to cost containment challenges. Upon the arrival of a new CEO, Josh Silverman, a purpose-driven turnaround strategy focused on social and environmental impacts helped Etsy become profitable.

Intro

3min

Reimagining Leadership at Etsy

8min

The Evolution of Etsy: Balancing Seller Ideals and Buyer Experience

2min

Etsy's Leadership Transition: Balancing Profit and Purpose

11min

The Transformative Power of Purpose in Business

3min

Redefining Work: The Quest for Coherence and Fulfillment

2min

Etsy, the online seller of handmade and vintage goods, was founded as an alternative to mass-manufactured products. The company grew substantially in its first decade but remained unprofitable.

When Etsy went public, stakeholders demanded a new level of financial returns and accountability. But the company continued to struggle to contain costs—until a new CEO arrived with a plan for a purpose-driven turnaround.

In this episode, Harvard Business School professor Ranjay Gulati discusses his case, “Etsy: Crafting a Turnaround to Save the Business and Its Soul,” which explores how CEO Josh Silverman made Etsy profitable by rediscovering the company’s commitment to social and environmental sustainability.

Gulati discusses the difficult choices Silverman made in the early days of his tenure, like laying off employees for the first time ever at Etsy, and how he worked to regain trust with employees. He also explains why Silverman prioritized improving the user experience for buyers on Etsy’s website.

Gulati is the author of the book Deep Purpose: The Heart and Soul of High-Performance Companies.

Key episode topics include: leadership, change management, organizational culture, organizational transformation, strategy, retail and consumer goods, online retail, purpose, sustainability.

HBR On Leadership curates the best case studies and conversations with the world’s top business and management experts, to help you unlock the best in those around you. New episodes every week.

· Listen to the original Cold Call episode: How Etsy Found Its Purpose and Crafted a Turnaround (2022)

· Find more episodes of Cold Call

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