Profit and heart: Etsy co-founder to talk business with a conscience in Grand Rapids

Etsy, like most startups, struggled to balance the company's values and outlook with that of venture capital investors’ desire for rapid growth. Co-founder Mathew Stinchcomb stops by Grand Rapids to talk about how the power of B Corps can transform our businesses -- and communities. 
Over the decades since moving to Grand Rapids from Flint in 1981, I have observed and learned from our community’s leaders and firms as they team up, creating some very impressive relationships from which positive change can happen for our region. 

Because I have been able to watch this evolution of solution-building practices emerge here, when Local First president Elissa Hillary shared that West Michigan is home to 12 of the 14 Michigan certified Benefit Corporations (B Corps), I remarked without a beat, “I’m not surprised.”

After all, that means these companies are much like our area’s movers and shakers: to become B-Corp certified, they must show they’re using the power of business to creatively solve social and environmental problems. In other words, a B Corp certification is to business what the Fair Trade certification is to coffee or the USDA Organic certification is to milk: it lets the public, both customers and employees, know what kind of business they’re supporting. So, for example, B Corps in our area will do everything from give employees time off to volunteer in their communities to focus on using materials purchased locally.

But how each of our area B Corps got to where they are today is just as unique as their offerings to our region. 

For anyone who has been curious as to why B Corps continue to inspire so many corporations around the nation to shift their mission, you are in luck because on Monday, Feb. 6 at noon Matt Stinchcomb, co-founder of Etsy, the global online crafters’ marketplace, and executive director of Etsy’s newly launched Good Work Institute, will be in Grand Rapids to present to the Economic Club of Grand Rapids. Later that day, he will be at a smaller gathering at Lafontsee Galleries.

Stinchcomb and I talked via the phone the other day about some of Etsy's history as a B Corp and the process leading up to the designation.

FrenchkicksFor starters, Stinchcomb -- a graduate of Oberlin College and a member of the post-punk garage band French Kicks -- after moving from Washington, D.C. and on his first night in Brooklyn, stumbled upon a woman from his high school who just so happened to be dating the man who would co-found Etsy with him, Rob Kalin. 

Accelerating through the storyline from this first chance meeting to Etsy’s launch in June 2005, Kalin, Stinchcomb and others would go on to create something new -- a fresh selling platform where a maker’s ability to build a relationship with a customer was valued over those sites, like Ebay, that are cold space for listing items for sale. 

Etsy over time would go on to welcome 55 million users who are registered members of the site, where they can encounter 35 million items offered for sale from its platform made up of more than 1.6 million active sellers connecting to 24 million active buyers with a gross merchandise sales of about $2.39 billion.

Matt StinchcombBut in the middle of the explosive growth, Stinchcomb shared that this smallish firm would, like most startups, struggle to find methods to continue to align its values and outlook with that of venture capital investors’ desire for rapid growth. 

Over the years, Etsy would make the decision to become a B Corp and grow to become an international firm with offices around the world. 

But with such swift expansion, concerns over how does one impart the Etsy values began to worry members of the site’s leadership.

As Etsy moved through the process, it re-wrote its mission to make it clearer. 

“We evolved as a company …and then began to ask how do we start to use our firm to create impact in the world,” says Stinchcomb. “From this point in time Etsy’s mission became, ‘to reimagine commerce in ways that build a more fulfilling and lasting world, and we're committed to using the power of business to strengthen communities and empower people.’”

For Stinchcomb, becoming a B Corp had two important and attractive points. 

“One, (we asked) are we putting our money where our mouth is? Can we show the world this is not greenwashing? That this is who we are,” says Stinchcomb, “And two, it was forcing a function to get us to measure its impact and enable us to do what we said we wanted to do.”

For in order to become a B Corp, a firm is not just evaluated at the start for certification, but in order to remain one they will continue to be assessed to ensure that they are measuring up. (Local First has an easy assessment tool on its site to assist a firm looking to dip its toes in the pursuit of  becoming a B Corp.)

Stinchcomb went on to ensure these benchmarks were being met with a values and impact team at Etsy. This intentionality ensured that everyone in the company was equipped with the tools and, most importantly, the desire to make the mission, vision and values align with the company’s decisions.

Now, if you are like me at this point, I was pinching myself because what he was sharing wasn’t sounding like traditional business language. In short, not bad for a guy whose former job before cofounding Etsy was to be in a traveling band as a budding musician. This guy shows how bootstrapping can produce amazing results. 

The day after Stinchcomb left Etsy, he would begin work as the executive director of the newly formed charitable arm of the company, which was renamed Good Work Institute in 2016.

A hallmark of the mission of the Good Work Institute is to create an organization where they reimagine traditional business education by placing a high value on compassion, wisdom and ethical integrity, instead of limitless growth, competition and profit maximization.

This new venture was manifested from the knowledge he gained through reaching out to leaders within the B Corp movement. 

This led to him meeting many familiar names, like Judy Wicks, founder of Business Alliance for Local Living Economies (BALLE). In addition, Etsy corporate’s in-house company-wide book club helped Stinchcomb as the company explored topical books from names like “Ben & Jerry’s Double Dip” to Bill McKibben’s “Deep Economy: The Wealth of Communities and the Durable Future” to R. Buckminster Fuller’s “Critical Path.” (Fuller believes you bring change not through engagement against the old guard but rather you work to build it alongside it, eventually rendering the other obsolete.) 

Etsy even offered company-wide B Corp hack-a-thons, at which employees ceased work for a day (and then later for a week) so that all could contribute as they ideate for a solution to a company problem and how they will implement it. One of Stinchcomb’s favorite hacks was their ability to calculate the carbon footprint of their shipping. 

Through all these years of observation, research and from being on the road to meet with makers whose lives were being changed via the Etsy platform, new ways of looking at and doing business began to emerge for Stinchcomb. His business education was one informed through life and the study of alternative ways of doing things.

These ideas would become the basis of his work at Good Work Institute -- a new kind of business school where focus and value is placed on the development of “the whole person behind each enterprise to develop the capacity to take actions that honor all the people and places they impact.”

In keeping true to the mission of loving the beautiful small businesses that make up our nation, Good Work Institute focused its mission on its communities of business leaders who are living and working in and around the Hudson River Watershed. What is exported out into the region, and eventually the world, is something those who are close to the B Corp movement say has the power to change our communities for the better

For under the corporate structure -- the one most often taught in business schools -- being true to the fiduciary duties meant that a board is bound to work on maximizing profit to the benefit of the shareholders. 

But under a B Corp, success is measured differently as value is shared across many headers and not just “profit.”

Places like Etsy and its Good Work Institute enable firms to make a profit while creating positive impact for good in our world. It places a high value on hitting that triple bottom line of social, environmental (or ecological) and financial focus.

Just because Etsy made this decision to become a B Corp, it still had to assert flexibility as the company explored emerging concepts that could help deepen the firm’s mission.

Being a public company you have rules; you can only be so flexible. Within these rules is where the creative mind often seeks to determine exception. When Etsy formed its B Corp, it was an emerging economic platform. But Stinchcomb, ever the pursuer of boundary breaking ideas, has other thoughts on this now.

“If I were to go back in time and employ hindsight, being 20/20, then Etsy should be a cooperative owned by its community,”  Stinchcomb says as he laughs. (A co-op is a great  example of another emerging economic model not talked about enough in business schools. In  2012, the United Nations celebrated the Year of the Cooperatives.)

Stinchcomb reminds us that the path to success in this world in not just a one-way bridge because so many new forms of doing business are emerging all the time to challenge the dominant culture of traditional corporations. If you have met any of our local B Corps (such as Brewery Vivant, Essence Restaurant Group, The Image Shoppe, and 616 Lofts, among others) then you know there is something different about these businesses.

“When you have a beginner’s mind, it is wonderful. You don’t have it all figured out, so you will try new and creative things,”  Stinchcomb says, “However, the flip side is that you also get a lot of fear. Trying new things is risky.”

But as Stinchcomb reminded me in our time together, when you don’t accept that it does not have to be business as usual, then you get to be more creative and build something new.  Here’s hoping through Stinchcomb’s time spent in Grand Rapids, a few minds will be sparked past the gatekeeper of the impossible. It is possible. We have 12 local firms as proof.

Matt Stinchcomb will address the Economic Club of Grand Rapids at the J.W. Marriott in downtown Grand Rapids on Monday, Feb. 6 at 12pm. For more information and to purchase tickets, please go here. Stinchcomb will also be speaking at Lafontsee Galleries at 5:30pm the same day. For more information, you can go here.

The Future Needs All of Us

Tommy Allen  
Rapid Growth
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