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 customers’ habits, resulting in extra shoppers buying on-line. As a
consequence, the Etsy market grew from 45.7 million patrons on the finish of
2019 to 90.1 million patrons (97%) on the finish of 2021 and from 2.5 to five.3
million (112%) sellers in the identical interval.

The expansion massively elevated demand on the technical platform, scaling
site visitors nearly 3X in a single day. And Etsy had signifcantly extra prospects 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 have been in a position to ship new and improved
performance, and {the marketplace} continued to offer a glorious buyer
expertise. This text and the subsequent kind 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 corporations, 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 rapidly. It affected product groups’ agility as that they had
to plan far prematurely for capability. As well as, the info facilities have been
based mostly in a single state, which represented an availability danger. It was clear
they wanted to maneuver onto the cloud rapidly. After an evaluation, Mike and
his crew selected the Google Cloud Platform (GCP) because the cloud associate and
began to plan a program to maneuver their
many techniques onto the cloud.

Whereas the cloud migration was taking place, Etsy was rising its enterprise and
its crew. Mike recognized the product supply course of as being one other
potential scaling bottleneck. The autonomy afforded to product groups had
prompted a difficulty: every crew was delivering in numerous methods. Becoming a member of a crew
meant studying a brand new set of practices, which was problematic as Etsy was
hiring many new individuals. As well as, that they had seen 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 associate

Etsy had by no means labored with a software program growth consultancy. To give you the chance
to scale product supply and herald some exterior experience, they began
on the lookout for a vendor. After an intensive search, they chose Thoughtworks,
primarily as a result of they perceived a detailed cultural match and deep alignment
relating to trendy software program growth.

Thoughtworks has the same method to Agile as Etsy – being Agile
slightly than doing Agile. Etsy’s crew was not trying to undertake a
methodology that blindly follows strict rituals and practices, and wished
a associate that bases its method on agile ideas 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 corporations shared related ideas
relating to worker care, range, open-source, and know-how

The Thoughtworks crew began by embedding into product groups, working with
each purchaser and vendor groups, on varied important initiatives corresponding to fee
mannequin modifications, Search Engine Optimization (website positioning), and a notification platform.
This enabled Thoughtworks to grasp how Etsy labored, created a direct
affect on supply, and improved growth practices corresponding to automated

For Thoughtworks, Etsy was fairly totally different from the standard shopper.
They’re a completely digital firm, and their technical course of and product
practises are very mature. In contrast to most purchasers who have interaction Thoughtworks,
Etsy had no massive transformation to undertake, and no ingrained habits
that wanted a serious shift. What they have been in search of was exterior perspective
and supplementive expertise, to assist them incrementally enhance and sort out
their urgent initiatives. The tradition and ideas have been already very
aligned with Thoughtworks’ personal, so the partnership grew to become extra of an
alternate of concepts drawn from totally different experiences.

Scaling Product Supply and Discovery

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

There have been plenty of issues Etsy was doing very 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
    apply of their method. A code change sitting in a repository and never
    deployed to customers isn’t helpful, and successfully prices the corporate cash. Etsy
    deploys tons of of occasions 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
    check, it’s not rolled out, and the code is eliminated.

The crew additionally uncovered alternatives for enchancment:

  • Every crew was doing supply in numerous methods, having disparate processes
    and rituals, making onboarding new staff and altering groups troublesome. Some
    groups have been utilizing a course of like Scrum, whereas others didn’t use any formal
    course of.
  • There have been plenty of 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 by a transitional interval, with
    pivots in product technique and management modifications main some product
    managers to expres a need for larger possession over their product

Time to studying

The crew created an enchancment program, based mostly on lean pondering and the
concepts of Marty Cagan, who had just lately offered at Etsy. The management crew was
studying his e-book Impressed.

I promise you that no less than half the concepts
in your roadmap aren’t going to ship what you hope. (By the best way, the
actually good groups assume that no less than three quarters of the concepts gained’t
carry out like they hope.)

Marty Cagan, Inspired (p19)

After some preliminary analysis the crew got here up with a metric they known as Time
to Studying – the time it took for a product crew to validate an concept with a
buyer and achieve a greater understanding of its worth. They’d a baseline of
50 days that they wished to scale back.

They have been additionally different metrics.

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

To affect the KPIs, they got here up with plenty of answer hypotheses:

Lightweight prototypes that incorporate extra direct person analysis

Etsy has sturdy experimentation infrastructure and analytics capabilities.
They run many concurrent A/B exams on {the marketplace}. The issue the PDC
crew noticed is that the suggestions cycle could be fairly sluggish. For an concept to be
prepared for an A/B check it needed to be close to production-level high quality. It additionally had
to have sufficient information to indicate statistical relevance. A/B exams would run for
months in lesser-used elements of {the marketplace}.

To set your expectations, sturdy groups usually
check many product concepts every week—on the order of 10 to twenty or extra per week. I
wish to emphasize that these are experiments, sometimes run utilizing prototypes.
A prototype isn’t one thing that’s prepared for prime time and positively 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 crew utilized a lean UX
method. First, they began by rapidly creating lo-fi prototypes and
instantly displaying them to customers. Second, the crew elevated person suggestions
periods to each two weeks and lowered the extent of ceremony. Third, they
created a dual-track system, with a design and analysis crew frequently
working forward of a supply crew. The concept was to effectively achieve confidence
in an concept earlier than it qualifies for an A/B check. By lowering the price of
experimentation, they might improve the variability 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 crew leaders, got here up with a set of
product supply ideas and associated supply apply modifications. The
practices included: smaller extra targeted tales, redesigning story partitions to
higher match the crew course of, utilizing spikes to scale back technical uncertainty, and
higher methods of managing tech debt. They didn’t wish to take away the autonomy of
groups. Steady enchancment is a giant a part of Etsy tradition. These practices
are supposed to be handled as wise defaults that may be tailored and improved
for every crew’s particular context.

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

Lean Portfolio administration

Some massive initiatives have been nonetheless being carried out, although there was
not clear proof of the initiative creating worth. That is the standard sunk
value drawback. To resolve this, the PDC crew
urged taking a lean method to portfolio administration.

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

Humble et al, Lean Enterprise (p96)

As a substitute of making prolonged challenge specs and plans, the PDC crew
coached product groups to develop consequence statements for every initiative. With
consequence statements, beginning with a buyer or enterprise consequence permits the
crew to experiment with many various concepts to realize the result by tying
them to measurable KPIs. The much less exact an consequence is, together with its KPIs,
the tougher it’s to specify. When getting ready for attainable initiatives, every
product crew created a two-page temporary summarizing the result, the measurable
affect, and the preliminary funding required.

The chief crew prioritized the result statements, and every assertion
was considered as a “guess” amongst a portfolio. Impressed by the Lean Worth Tree
idea, the chief crew would apply a daily 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 part of person suggestions periods. The crew examined
engineers becoming a member of the speculation era and validation periods and
working intently with designers throughout design sprints. The outcomes of the check
confirmed a number of advantages. 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 rapidly create prototypes to
display concepts to customers. Cross-functional engagement allowed engineers to
contribute plenty of 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 suggests 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 might for a buyer product.

What was the affect of product supply tradition?

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

In line with Mike Fisher, “It is vitally onerous 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 take a look at excessive degree
productiveness metrics after having PDC carried out for over 2 years, and all of
our metrics have been very constructive. We had improved our velocity by doing this
work, and we have been in a position to produce finally extra advantages for the patrons and
sellers – extra options, higher search, higher processes; the entire
market grew to become higher for patrons and sellers and that was the aim.”