Etsy filed its first prospectus for an initial public offering on Wednesday, disclosing a preliminary fund-raising target of $100 million. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.  Photo Advertisement Continue reading the main story 
 
 
 
 
 
 
 
 Etsy was born in 2005 in a Brooklyn loft as a way for one of its co-founders to sell his handmade wooden goods. Our business model is based on shared success: we make money when Etsy sellers make money. In 2014, we generated a net loss of $15.2 million and Adjusted EBITDA of $23.1 million compared to a net loss of $0.8 million and Adjusted EBITDA of $16.9 million in 2013. We want to build a company that lasts, and we plan to measure our success in years and decades. I prefer to sell my wares (and buy my presents) at local indie craft markets and in curated bricks-and-mortar shops that reflect the flavor of their communities and encourage real relationships between makers and buyers. The Etsy effect on craft trends is striking. Etsy doesn't disclose its finances, but it facilitated $1.35 billion in sales in 2013, which adds up to more than $47 million in transaction fees, not counting listing or payment processing fees. We deepen connections among our members through our direct communication tools, seller stories on our website and our in-person events, making a personal relationship central to the member experience. Successful Businesses Leave Etsy 
 
 The biggest secret is this: Makers who have what it takes to succeed—good product, a good marketing plan, a pricing structure that compensates everyone in their supply chain fairly—don't really need Etsy for long. We have acquired a number of other businesses in the past and may acquire additional businesses or technologies in the future. Although we do not create or take possession of the items listed in our marketplace by Etsy sellers, we frequently receive communications alleging that items listed in our marketplace infringe third-party copyrights, trademarks, patents or other intellectual property rights. It reported $195.6 million in sales last year, up 56 percent from the previous year. Adjusted EBITDA 
 
 Adjusted EBITDA represents our net (loss) income before interest expense, net, (benefit) provision for income taxes and depreciation and amortization, adjusted to eliminate stock-based compensation expense, net unrealized loss on warrant and other liabilities, foreign exchange loss and acquisition-related expenses. Etsy Has Homogenized Indie Craft 
 
 From the beginning, Etsy has pushed the "quit your day job" storyline. (For those who aren't up to date on their fabric prices, the materials to make a wedding dress alone would cost at least $65.) Other Expense, net 
 
 Other expense, net consists of interest expense, interest income, foreign exchange loss and net unrealized loss on warrant and other liabilities. Net cash provided by operating activities in each period presented has been influenced by changes in accounts receivable, funds receivable and customer accounts, prepaid expenses and other current assets, accounts payable and accrued liabilities, and funds payable and amounts due to customers. (Its name, Mr. Kalin has said, arose from a misunderstanding of the Italian phrase “eh, sì” from the movie “8 1/2.”) 
 
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 “Since inception, Etsy has challenged conventional ways of thinking about commerce, business, individuals and communities,” Chad Dickerson, the company’s chief executive, wrote in a letter included in the prospectus. “I intend to keep our unconventional operating philosophy as we become a public company, and I welcome new investors into our community.” 
 
 But its path to an initial offering has been rocky at times. Most of the people who joined Etsy in those first few years were like me—independent crafters who were already at least somewhat established IRL—and the quality of the goods on the site was generally high. In practical terms, scaling the handmade economy is an impossibility. At the San Francisco edition of the Renegade Craft Fair in November, I was struck at how most things look like the homepage of Etsy, pinnable, pretty things. In his letter, Mr. Dickerson said that the company would not give quarterly or annual earnings guidance, numbers used by many public companies to steer analysts’ expectations. If you want to make it big on Etsy, you don't necessarily want to make things that fulfill your creative dreams; you just want it to get onto the front page and sell like hand-felted hotcakes. Etsy, for instance, said that it had 19.8 million “active buyers” at the end of 2014.  Our active sellers and active buyers also log into Etsy frequently. I see the recent policy changes Etsy has made—allowing third-party manufacturing partners, entering the wholesale space—as last-ditch efforts to keep super-successful sellers using the site. A friend and I recently discovered we both always sort results by highest price when we're searching on Etsy to see only the serious sellers. The Marketplace Integrity, Trust & Safety team—which has the unenviable task of policing sellers for adherence to Etsy rules—is unable or unwilling to weed out sellers of mass-manufactured goods. I'm not pessimistic about handmade culture at large: Maker culture is thriving independently of Etsy, and it's easier than ever for crafters to run independent online stores. And as of Dec. 31, it had 685 employees, most of whom are still based in the Dumbo neighborhood of Brooklyn. 114 
 
 Etsy.org 
 
 In January 2015, we formed Etsy.org, a Delaware non-profit organization, to focus on building innovative educational programs that reimagine how and to whom business is taught. And the company has been criticized for failing to adequately clamp down on the sale of counterfeit goods as well as for letting vendors sell products that come from factories instead of vintage finds or goods solely from artisanal workshops. We also expect our contractors, consultants, suppliers and agents to follow our code of conduct in connection with their work for us. Chad Dickerson 
 
 In August 2011, we entered into an employment letter agreement with Mr. Dickerson in connection with his promotion to chief executive officer. 2006 Stock Plan 
 
 Our board of directors adopted our 2006 Stock Plan in May 2006, and our stockholders approved it in June 2006. Together, the three control more than half of the company. Each of Accel Partners, Index Ventures and Union Square Ventures Opportunity Fund, L.P., together with its respective affiliated entities, is a beneficial holder of more than 5% of our outstanding capital stock. The Series C warrant expires on November 14, 2017. Following this offering, we will have outstanding shares of our common stock, based on the number of shares outstanding as of December 31, 2014. The company intends to apply to list the common stock on the Nasdaq Global Select Market under the symbol ETSY. 
 
 In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. For example, affiliates of Goldman, Sachs & Co. and Morgan Stanley & Co. LLC are lenders under our Credit Agreement. As part of the offering, Etsy plans to take about $300,000 of its proceeds from the I.P.O. For the years ended December 31, 2012, 2013 and 2014, the accompanying consolidated statement of operations includes charges of approximately $0.4 million, $0.2 million and $0.4 million for interest expense, respectively, related to the equipment leased using the TriplePoint Line and ePlus Lines. Total rent expense for the years ended December 31, 2012, 2013 and 2014 was $1.7 million, $2.4 million and $3.6 million, respectively. But if acquisition and foreign exchange costs were included, growth would have been only 6 percent. Emphasis of matter 
 
 Accounting principles generally accepted in France vary in certain significant respects from accounting principles generally accepted in the United States of America. The only requirement is to have made one purchase in the previous 12 months, according to the filing. There were no changes in the presentation of the financial statements during the course of the financial year. EBay trades at about 14 times its Ebitda for 2014. But it lost $15 million according to standard accounting principles. Advertisement Continue reading the main story 
 
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 If those two items are included in the calculation, Etsy’s underlying earnings growth would slow considerably. Other items in the filing may give investors pause.
– When customers order an heirloom pet teepee, Charles Manson necklace, or vinyl Gorillaz wall clock from Etsy, they expect it to be lovingly handmade or authentically vintage, perhaps even customized and made from ecologically sound materials. But critics of the site are claiming that sellers are increasingly taking to mass production or even reselling cheap items from overseas—a move that many see as undermining the crafts giant's authenticity and credibility, the New York Times reports. And although execs from the online marketplace didn't grant interviews with the Times ahead of its potential IPO, Etsy CEO Chad Dickerson notes in the IPO prospectus that there have been complaints about sellers working with outside manufacturers and "diluting our handmade ethos," he notes. "After all, Etsy has always served as an antidote to mass manufacturing. We still do." Etsy used to ban sellers from outsourcing manufacturing or hiring employees to keep up with demand, the Times notes—until Dickerson relaxed the rules in 2013, as long as certain criteria were met. Alicia Shaffer's Etsy shop has been featured on Yahoo and in Fast Company as one of Etsy's biggest success stories; she tells the Times that while she understands why people are skeptical about her high-volume output, she follows all of Etsy's guidelines, hiring a couple dozen local seamstresses to help her out. But Grace Dobush, an ex-Etsy seller, tells the Times that "as Etsy has gotten bigger, it’s gotten more like eBay." In an essay last month for Wired, Dobush notes the "pages of crap" shoppers have to filter through and a seeming disinterest on Etsy's part to purge resellers. "At its outset … we were a bunch of Davids, fighting back against the big-box Goliaths with artisanal slingshots. … In the past few years it's become apparent that Etsy is the Goliath." (Click to read about Etsy's "haunted doll" market.)