Introducing a product supply tradition at Etsy

Etsy, a web based market for distinctive, handmade, and classic gadgets, has
seen excessive development during the last 5 years. Then the pandemic dramatically
modified consumers’ habits, resulting in extra shoppers buying on-line. As a
end result, the Etsy market grew from 45.7 million patrons on the finish of
2019 to 90.1 million patrons (97{4e9bd3d34b1f8161cc696d5b6f67388d47e45a261bd06c3425276ee6bf64a204}) on the finish of 2021 and from 2.5 to five.3
million (112{4e9bd3d34b1f8161cc696d5b6f67388d47e45a261bd06c3425276ee6bf64a204}) sellers in the identical interval.

The expansion massively elevated demand on the technical platform, scaling
visitors virtually 3X in a single day. And Etsy had signifcantly extra clients for
whom it wanted to proceed delivering nice experiences. To maintain up with
that demand, they needed to scale up infrastructure, product supply, and
expertise drastically. Whereas the expansion challenged groups, the enterprise was by no means
bottlenecked. Etsy’s groups had been in a position to ship new and improved
performance, and {the marketplace} continued to offer a glorious buyer
expertise. This text and the following type the story of Etsy’s scaling technique.

Etsy’s foundational scaling work had began lengthy earlier than the pandemic. In
2017, Mike Fisher joined as CTO. Josh Silverman had just lately joined as Etsy’s
CEO, and was establishing institutional self-discipline to usher in a interval of
development. Mike has a background in scaling high-growth firms, and alongside
with Martin Abbott wrote a number of books on the subject, together with The Art of Scalability
and Scalability Rules.

Etsy relied on bodily {hardware} in two information facilities, presenting a number of
scaling challenges. With their anticipated development, it was obvious that the
prices would ramp up shortly. It affected product groups’ agility as they’d
to plan far upfront for capability. As well as, the info facilities had been
primarily based in a single state, which represented an availability danger. It was clear
they wanted to maneuver onto the cloud shortly. After an evaluation, Mike and
his workforce selected the Google Cloud Platform (GCP) because the cloud accomplice and
began to plan a program to maneuver their
many techniques onto the cloud.

Whereas the cloud migration was occurring, Etsy was rising its enterprise and
its workforce. Mike recognized the product supply course of as being one other
potential scaling bottleneck. The autonomy afforded to product groups had
induced a difficulty: every workforce was delivering in numerous methods. Becoming a member of a workforce
meant studying a brand new set of practices, which was problematic as Etsy was
hiring many new individuals. As well as, they’d observed a number of product
initiatives that didn’t repay as anticipated. These indicators led management
to re-evaluate the effectiveness of their product planning and supply

Deciding on a accomplice

Etsy had by no means labored with a software program growth consultancy. To have the option
to scale product supply and usher in some outdoors experience, they began
in search of a vendor. After an intensive search, they chose Thoughtworks,
primarily as a result of they perceived a detailed cultural match and deep alignment
concerning trendy software program growth.

Thoughtworks has an identical method to Agile as Etsy – being Agile
reasonably than doing Agile. Etsy’s workforce was not trying to undertake a
methodology that blindly follows strict rituals and practices, and needed
a accomplice that bases its method on agile rules and tradition.
Thoughtworks is thought for technical excellence and management in DevOps,
Steady Integration, and Steady Supply, all of which Etsy depends
on closely. As well as, the 2 firms shared comparable rules
concerning worker care, range, open-source, and know-how

The Thoughtworks workforce began by embedding into product groups, working with
each purchaser and vendor groups, on varied crucial initiatives reminiscent of fee
mannequin modifications, Search Engine Optimization (website positioning), and a notification platform.
This enabled Thoughtworks to grasp how Etsy labored, created an instantaneous
impression on supply, and improved growth practices reminiscent of automated

For Thoughtworks, Etsy was fairly completely different from the standard shopper.
They’re a completely digital firm, and their technical course of and product
practises are very mature. Not like most purchasers who interact Thoughtworks,
Etsy had no massive transformation to undertake, and no ingrained habits
that wanted a significant shift. What they had been in search of was outdoors perspective
and supplementive abilities, to assist them incrementally enhance and sort out
their urgent initiatives. The tradition and rules had been already very
aligned with Thoughtworks’ personal, so the partnership turned extra of an
change of concepts drawn from completely different experiences.

Scaling Product Supply and Discovery

Thoughtworks and Etsy fashioned a cross-functional Product Supply
Tradition (PDC) workforce to investigate the present product supply and discovery
course of. They analyzed all the software program growth worth stream,
trying intently on the complaints of managers and workforce members. Chosen
occasions had been replayed to achieve a deep understanding of “how” it occurred
rather than who?. The Thoughtworks
workforce, as a result of they hadn’t lived via the issues, had been in a position to carry
an goal outsider perspective.

There have been quite a few issues Etsy was doing rather well:

  • Cross-functional groups: They structured their groups round “4 desk legs”:
    Product, Design, Engineering, and Analytics. All planning and supply practices
    occur with collaboration among the many teams.
  • Incremental supply of worth to customers: Steady supply is the core
    follow of their method. A code change sitting in a repository and never
    deployed to customers isn’t useful, and successfully prices the corporate cash. Etsy
    deploys tons of of instances a day, with a 30-minute decide to manufacturing lead
  • Options are prioritized utilizing information: Product managers and information analysts
    collaborate to find out an anticipated worth, measured by KPI modifications. If the
    function doesn’t ship sufficient worth versus its value, as evidenced by an A/B
    take a look at, it isn’t rolled out, and the code is eliminated.

The workforce additionally uncovered alternatives for enchancment:

  • Every workforce was doing supply in numerous methods, having disparate processes
    and rituals, making onboarding new workers and altering groups troublesome. Some
    groups had been utilizing a course of like Scrum, whereas others didn’t use any formal
    course of.
  • There have been quite a few initiatives that had not created worth as
    they anticipated. For instance, Etsy tried a present wrap function that had
    decrease than anticipated adoption charges by sellers and patrons.
  • Previous to 2018, Etsy had been via a transitional interval, with
    pivots in product technique and management modifications main some product
    managers to expres a need for better possession over their product

Time to studying

The workforce created an enchancment program, primarily based on lean considering and the
concepts of Marty Cagan, who had just lately offered at Etsy. The management workforce was
studying his ebook Impressed.

I promise you that a minimum of half the concepts
in your roadmap aren’t going to ship what you hope. (By the way in which, the
actually good groups assume that a minimum of three quarters of the concepts gained’t
carry out like they hope.)

Marty Cagan, Inspired (p19)

After some preliminary analysis the workforce got here up with a metric they known as Time
to Studying – the time it took for a product workforce to validate an thought with a
buyer and achieve a greater understanding of its worth. That they had a baseline of
50 days that they needed to scale back.

They had been additionally taking a look at different metrics.

  • Enhancing the time to market
  • Enhancing the effectiveness of merchandise (e.g. income, buyer
  • Worker happiness

To impression the KPIs, they got here up with quite a few answer hypotheses:

Lightweight prototypes that incorporate extra direct person analysis

Etsy has sturdy experimentation infrastructure and analytics capabilities.
They run many concurrent A/B checks on {the marketplace}. The issue the PDC
workforce noticed is that the suggestions cycle may be fairly sluggish. For an thought to be
prepared for an A/B take a look at it needed to be close to production-level high quality. It additionally had
to have sufficient information to point out statistical relevance. A/B checks would run for
months in lesser-used elements of {the marketplace}.

To set your expectations, sturdy groups usually
take a look at many product concepts every week—on the order of 10 to twenty or extra per week. I
need to emphasize that these are experiments, usually run utilizing prototypes.
A prototype isn’t one thing that’s prepared for prime time and definitely not
one thing your organization would attempt to promote and stand behind. However they’re
immensely helpful, as they’re all about studying quick and low-cost.

Marty Cagan, Inspired (p27)

To scale back the Time to Studying metric, the PDC workforce utilized a lean UX
method. First, they began by shortly creating lo-fi prototypes and
instantly exhibiting them to customers. Second, the workforce elevated person suggestions
classes to each two weeks and lowered the extent of ceremony. Third, they
created a dual-track system, with a design and analysis workforce frequently
working forward of a supply workforce. The concept was to effectively achieve confidence
in an thought earlier than it qualifies for an A/B take a look at. By decreasing the price of
experimentation, they may enhance the range and amount of experiments,
discovering concepts that confirmed extra worth.

Determine 1: Experiment validation course of

Blueprint for product supply

The PDC, at the side of product workforce leaders, got here up with a set of
product supply rules and associated supply follow modifications. The
practices included: smaller extra centered tales, redesigning story partitions to
higher match the workforce course of, utilizing spikes to scale back technical uncertainty, and
higher methods of managing tech debt. They didn’t need to take away the autonomy of
groups. Steady enchancment is an enormous a part of Etsy tradition. These practices
are supposed to be handled as wise defaults that may be tailored and improved
for every workforce’s particular context.

The PDC workforce first examined the follow modifications on pilot product groups to
set up their effectiveness after which iterated. As soon as the follow
demonstrated an enchancment, the workforce added to a data base and supplied
mild teaching to introduce the brand new practices to all product groups throughout

Lean Portfolio administration

Some massive initiatives had been nonetheless being carried out, despite the fact that there was
not clear proof of the initiative creating worth. That is the standard sunk
value drawback. To unravel this, the PDC workforce
steered taking a lean method to portfolio administration.

Our runway needs to be an inventory of hypotheses to check, not an inventory of
necessities to construct. Once we reward our groups for his or her skill to ship
necessities, it’s straightforward to quickly bloat our merchandise with pointless
options—resulting in elevated complexity, increased upkeep prices, and
restricted skill to alter. Options delivered aren’t a measure of success,
enterprise outcomes are. Our runway is a collection of questions that we have to
take a look at to scale back uncertainty and enhance our understanding of development

Humble et al, Lean Enterprise (p96)

As a substitute of making prolonged venture specs and plans, the PDC workforce
coached product groups to develop end result statements for every initiative. With
end result statements, beginning with a buyer or enterprise end result permits the
workforce to experiment with many various concepts to realize the result by tying
them to measurable KPIs. The much less exact an end result is, together with its KPIs,
the more durable it’s to specify. When making ready for potential initiatives, every
product workforce created a two-page transient summarizing the result, the measurable
impression, and the preliminary funding required.

The manager workforce prioritized the result statements, and every assertion
was seen as a “guess” amongst a portfolio. Impressed by the Lean Worth Tree
idea, the manager workforce would follow an everyday cadence to find out if a
guess was paying off, giving them the chance to pivot early.

Determine 2: An instance initiative assertion

Stronger product & engineering collaboration

One other enchancment was to incorporate engineers early within the product ideation
course of and to have them be a part of person suggestions classes. The workforce examined
engineers becoming a member of the speculation era and validation classes and
working intently with designers throughout design sprints. The outcomes of the take a look at
confirmed an a variety of benefits. Engineers improved their understanding of the
buyer, constructing empathy for his or her wants. They might present on-the-spot
suggestions on the feasibility of an method and shortly create prototypes to
show concepts to customers. Cross-functional engagement allowed engineers to
contribute quite a few nice concepts that made it to the product.

After the preliminary PDC initiative Etsy continued to strengthen the
collaboration between teams. At each degree of the group, product and
engineering are companions, which implies they’re in a position to have wholesome trade-off
discussions. The platform group expanded using product managers for
infrastructure and developer tooling groups – encouraging groups to consider
technical capabilities as merchandise and end-users being Etsy engineers. The
technical product managers do analysis and prioritization actions, simply as
they’d for a buyer product.

What was the impression of product supply tradition?

Testing with pilot groups indicated that the Time to Studying went from 50
days to five days. Through the pilot, one product supervisor stated, “What I really like about
the [direct user research sessions] pilot is that it lets us take a look at our concepts
quicker, it was very nice to not spend as a lot time diving deep into
one thing that we didn’t even know we had been going to make use of.” An initiative on
stock high quality that was predicted to ship a seven million greenback income
enhance as an alternative delivered eleven million {dollars} in incremental worth utilizing
the PDC steered enhancements. Following this pilot success, the workforce coached
all the product growth group on the product supply method.

In accordance with Mike Fisher, “It is rather exhausting to isolate the advantages of a
course of change on a company of a number of hundred engineers since we don’t
run A/B experiments of this sort. Nonetheless, we did have a look at excessive degree
productiveness metrics after having PDC carried out for over 2 years, and all of
our metrics had been very optimistic. We had improved our velocity by doing this
work, and we had been in a position to produce in the end extra advantages for the patrons and
sellers – extra options, higher search, higher processes; the entire
market turned higher for patrons and sellers and that was the aim.”