Generative NYC: How Etsy uses AI to keep commerce human

Josh Silverman is not only the CEO of Etsy, one of the world’s most beloved companies, he was also a co-founder of Evite and has over two decades of leadership experience growing consumer technology companies and scaling global marketplaces.

At Lightspeed’s most recent #GenNYC event, Partner Michael Mignano and Josh Silverman discussed the future impact of AI on creativity, marketplaces and SMBs, and how companies today have much to learn from the technological shifts of the past.

Below are some of the evening’s main takeaways. Comments have been edited for clarity.

People are always skeptical at first.

Reflecting on his early days building Evite, which he began working on in 1998, Silverman recalled, “there was this thing called the internet that some of us thought was going to change everything and most people thought, ‘That’s just a bunch of hoo-ha from Silicon Valley.’”

Most consumers need time to learn how to use new technologies.

In the beginning, Evite was only used by nerds who didn’t care how their invitations looked, recalled Silverman, laughing, because “that’s who was using the internet” back then.

Moving out of that niche was hard. “So many people you wanted to invite didn’t have email,” Silverman recalled, musing on the challenges of wide adoption for Evite. “Most people didn’t have broadband internet access, which caused the experience to be pretty inferior. And so a lot of people threw up their hands and said, ‘See, I told you this can’t be done.’ Those were obviously very solvable problems, and the world would come around.”

“Where I’m going with this,” Silverman said, acknowledging the technophilic crowd, “is obviously a lot of you probably are very passionate and you meet skeptics everywhere who say, ‘This whole AI thing is a bunch of nonsense that’s going to amount to nothing. And the reason is, I used it yesterday and here’s the reason it failed.’

I do think that [AI] is a massive platform shift. I do think it will change the world in some very powerful ways.” However, he cautioned, such shifts take time, describing “consumer adoption and consumer readiness” as “the laggingest thing.”

“The technology gets there a lot faster than consumers know how to use and adopt the technology. That’s what we’re finding at Etsy with Gen AI. There’s so many wonderful ways to use it, but when we just put a chatbot in front of a customer and say, ‘Here’s a way to search Etsy in a really interactive, really context rich way,’ they’re kind of like, ‘Ah, I don’t know how to do that.’

Silverman noted that, even though Etsy’s experiments with Gen AI chatbots aren’t resonating with shoppers at this very moment, “it’s important that we keep doing it because we’ve got to learn. I know customer adoption is going to get there. Customers are going to learn how to use it and we’re going to learn how to present it to them in the right way and in the right place.”

Machines can help your company be more sensitive to consumers’ individuality.

“So to give some sense of scale, we have about 7 million sellers on Etsy and right now about a hundred million things for sale, serving about 92 million buyers. And every one of these hundred million things for sale on Etsy is a snowflake. It doesn’t map to a catalog. And so we have to understand what is this thing, and then we have to understand you.

What are you looking for? What is your sense of style and taste and that kind of much, much higher-level abstraction of, what is this thing, what style does it represent, what preferences do you have. Literally impossible years ago.

It’s only because of these machines that we can keep commerce human.”

AI and machine learning are revolutionizing search.

“Understanding what you meant, not what you said, has been a very big part of our journey. And so when I write ‘cocktail attire for men,’ our search engine in 2016 and 2017 would’ve looked for listings that include the words ‘cocktail attire’ and ‘men,’ and ‘sport coat’ has none of those, right? So we would’ve done a terrible job.”

AI can help protect creatives.

We want to reward people that were the first innovators. And I think Gen AI is going to help us to, at scale, identify what’s original and what’s just a copycat. It also, I think, can help us to come to a better point of view around quality. Is this actually handcrafted or is it not? Across a hundred million items, there’s no number of humans you could reasonably hire to do that. But with modern machine learning techniques, we’re getting better at it.  For example, does this same item exist for sale on Alibaba or Amazon or Temu? And [if so], we can presume it’s probably not handmade, and we take it down automatically. Even three or four years ago, that would’ve been a hard problem. Now it’s not that hard. The world’s getting better.

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