Etsy’s CEO on AI, Controversy, and the Challenges of Staying True to Their Roots

Nearly two decades after its founding, Etsy has grown from a niche marketplace for handcrafted goods to a multi-billion-dollar e-commerce powerhouse, boasting over seven million sellers and more than 90 million buyers. Speaking at the Web Summit tech event in Lisbon, CEO Josh Silverman emphasized that artificial intelligence is now indispensable to the company’s operations.

Silverman noted that while eBay was Etsy’s primary rival in the early 2000s, competition now comes from all sides. In addition to major e-commerce players like Amazon, Temu, and Shein, traditional high-street furniture stores have also become contenders in the marketplace.

According to Silverman, AI is crucial for maintaining Etsy’s scale and efficiency, from monitoring the products listed for sale to ensuring relevant search results. He explained that a conventional search engine might struggle to distinguish between a wedding dress and a wedding dress hanger, but AI has the capacity to make that distinction, displaying only wedding dresses. This requires a nuanced understanding of language—something AI is uniquely equipped to handle.

Despite the advancements, not all Etsy sellers are pleased with the platform’s strategies to remain competitive. In 2022, Etsy increased its commission fee from five percent to 6.5 percent, a change that Silverman described as a reasonable adjustment. However, the decision triggered a protest, with thousands of sellers temporarily halting their activities to emphasize their importance to the platform. The protestors entered “vacation mode” to remind Etsy’s management that they were the foundation of the business.

Silverman observed that, unlike many other platforms where sellers are primarily profit-driven, Etsy’s sellers are predominantly artists and creators. He highlighted that most are more interested in their craft than in business, a distinction he believes sets Etsy apart. He also pointed out that 99.5 percent of sellers did not join the strike, suggesting that the protest was not as widespread as it might have appeared.

Etsy, established in 2005 as a marketplace for handmade goods, has long faced scrutiny over the authenticity of its offerings. After going public in 2015, a group of investors filed a lawsuit alleging that five percent of the items sold on Etsy were counterfeit or violated copyright. Concerns over authenticity resurfaced in 2022, with some sellers feeling that the platform was becoming more accepting of mass-produced items. This frustration was compounded by the rise of AI-generated products, prompting Etsy to introduce new guidelines for sellers to address the challenge. AI-generated content is still allowed on the platform, a decision that Silverman said followed a thorough internal debate.

Since taking the helm as CEO in 2017, amid boardroom turbulence and the aftermath of Etsy’s initial public offering, Silverman has navigated the company’s complex landscape with a mix of business acumen and a poetic sensibility. He describes buying gifts for others on Etsy as a “gifting experience” that creates joy and likens Etsy’s sellers to “blades of grass in a thunderstorm”—resilient amid adversity.

However, his penchant for metaphor has not always resonated with his executive responsibilities. In 2023, he faced criticism for using a maritime metaphor—describing Etsy as a ship weathering rough waters—while simultaneously announcing an 11 percent reduction in the workforce.

Despite these controversies, Silverman remains resolute in his belief that the interests of Etsy and its sellers are aligned, viewing their success as interconnected. With his background as a tech executive and venture capitalist, including stints as CEO of Skype and senior roles in other firms, he continues to lead Etsy as it balances its artistic roots with the demands of a rapidly evolving digital marketplace.

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