Investor letter, October 2018

The author is constructive on Etsy's move from a 3% to 5% commission rate, viewing the resulting ~8% take rate as compelling versus Amazon Made's 15%, with the value proposition of low listing fees and access to 20M+ buyers still intact.

“Etsy (ETSY) – As previously discussed, Etsy has announced a significant price increase to a commission rate of 5%; when combined with the payment processing fee of 3%, the net result is a take rate of approximately 8%. Fortunately, this pales in comparison to the current Amazon Made rate of 15%. The value proposition to sellers of being able to reach 20M + buyers for a listing fee of 20 cents and only paying the 8% upon a sale of an item remains very compelling.”

The author is constructive on Yelp as the transition to flexible, cancelable-at-any-time contracts has gone well, with record new advertisers added and management pleased with the shift, leaving room for improved monetization, operating leverage, and multiple expansion.

“Yelp (YELP) – We discussed Yelp in detail in Greenhaven’s Q2 letter. The initial indications are that the transition away from one-year contracts and toward more flexible, “cancelable at any time” commitments has gone well. As management said in their quarterly letter to shareholders (Link): “We are pleased with how the transition has gone. Clients have responded well to the increased flexibility and our salesforce has closed more new deals than ever before. We added a record number of advertisers in the quarter, and trial conversion and client retention were consistent with our expectations.””