People have already talked about mass customization and emergent business networks in relation to Etsy so I won’t go there. My perspective is somewhat simpler (and has less syllables too!) – Connection.
We live in a dichotomous society. On the one hand we are connected like never before – able to communicate globally 24/7 and obtain whatever our desires want (and wallets can cope with). On the other hand we are, individually, becoming more isolated, these mass connections have removed somewhat our day to day connections, the “discussions around the water well” type things.
So how does this anthropological assessment relate to Etsy? Well…. Etsy recreates the connections of days gone by, instead of sitting around a craft group physically knitting, spinning and weaving. Communities of people have the ability to meet, chat, create and learn in a virtual environment. The business model of Etsy is, to my thinking, an aside, a very desirable, yet somewhat collateral result of community building.
The creators of Etsy have first and foremost created a community, and thereafter given the members the ability to perform what is a natural extension of their community activities within the community itself.
Etsy therefore has created both horizontal and vertical models of interaction. On the horizontal plane, craftspeople and people interested and crafts can utilise a wide and varied number of functionalities to inform, advise and entertain. On the vertical plane individuals can perform their entire experience from informing to seeking to assessing to choosing to purchasing all in one place.
So – winning Diversity tip for startups is to think both horizontalisation and veticalization contemporaneously when creating an offering.