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 buyers’ habits, resulting in extra customers purchasing on-line. As a
end result, the Etsy market grew from 45.7 million consumers on the finish of
2019 to 90.1 million consumers (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
visitors nearly 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 have been in a position to ship new and improved
performance, and {the marketplace} continued to supply 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 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 knowledge 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 information facilities have been
based mostly 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 associate and
began to plan a program to maneuver their
many methods 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
brought about a problem: 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 folks. As well as, they’d 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 improvement consultancy. To have the option
to scale product supply and herald some outdoors experience, they began
in search of a vendor. After an in depth search, they chose Thoughtworks,
primarily as a result of they perceived a detailed cultural match and deep alignment
concerning trendy software program improvement.

Thoughtworks has the same method to Agile as Etsy – being Agile
somewhat than doing Agile. Etsy’s workforce was not trying to undertake a
methodology that blindly follows strict rituals and practices, and needed
a associate that bases its method on agile rules and tradition.
Thoughtworks is understood 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 related rules
concerning worker care, variety, open-source, and expertise

The Thoughtworks workforce began by embedding into product groups, working with
each purchaser and vendor groups, on numerous essential initiatives comparable to cost
mannequin adjustments, Search Engine Optimization (search engine marketing), and a notification platform.
This enabled Thoughtworks to grasp how Etsy labored, created an instantaneous
influence on supply, and improved improvement practices comparable to automated

For Thoughtworks, Etsy was fairly totally different from the everyday consumer.
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 giant transformation to undertake, and no ingrained habits
that wanted a serious shift. What they have been in search of was outdoors perspective
and supplementive expertise, to assist them incrementally enhance and sort out
their urgent initiatives. The tradition and rules have been already very
aligned with Thoughtworks’ personal, so the partnership grew to become extra of an
trade of concepts drawn from totally different experiences.

Scaling Product Supply and Discovery

Thoughtworks and Etsy shaped a cross-functional Product Supply
Tradition (PDC) workforce to investigate the present product supply and discovery
course of. They analyzed the complete software program improvement worth stream,
trying carefully on the complaints of managers and workforce members. Chosen
occasions have been replayed to realize a deep understanding of “how” it occurred
rather than who?. The Thoughtworks
workforce, as a result of they hadn’t lived via the issues, have been in a position to deliver
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 will not be priceless, and successfully prices the corporate cash. Etsy
    deploys lots of of instances a day, with a 30-minute decide to manufacturing lead
  • Options are prioritized utilizing knowledge: Product managers and knowledge analysts
    collaborate to find out an anticipated worth, measured by KPI adjustments. 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 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 consumers.
  • Previous to 2018, Etsy had been via a transitional interval, with
    pivots in product technique and management adjustments main some product
    managers to expres a need for better possession over their product

Time to studying

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

I promise you that a minimum of half the concepts
in your roadmap should not 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 received’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 concept with a
buyer and acquire a greater understanding of its worth. That they had a baseline of
50 days that they needed to cut back.

They have been additionally taking a look at different metrics.

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

To influence the KPIs, they got here up with plenty of resolution 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
workforce noticed is that the suggestions cycle will be fairly sluggish. For an concept 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 knowledge to point out statistical relevance. A/B exams would run for
months in lesser-used components 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, sometimes run utilizing prototypes.
A prototype will not be 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 regularly
working forward of a supply workforce. The concept was to effectively acquire confidence
in an concept 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, along side product workforce leaders, got here up with a set of
product supply rules and associated supply apply adjustments. The
practices included: smaller extra centered tales, redesigning story partitions to
higher match the workforce course of, utilizing spikes to cut 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 apply adjustments on pilot product groups to
set up their effectiveness after which iterated. As soon as the apply
demonstrated an enchancment, the workforce added to a data base and offered
mild teaching to introduce the brand new practices to all product groups throughout

Lean Portfolio administration

Some giant initiatives have been nonetheless being carried out, though there was
not clear proof of the initiative creating worth. That is the everyday sunk
value drawback. To unravel this, the PDC workforce
prompt taking a lean method to portfolio administration.

Our runway must be a listing of hypotheses to check, not a listing of
necessities to construct. Once we reward our groups for his or her means to ship
necessities, it’s simple to quickly bloat our merchandise with pointless
options—resulting in elevated complexity, increased upkeep prices, and
restricted means to vary. Options delivered should not a measure of success,
enterprise outcomes are. Our runway is a sequence of questions that we have to
take a look at to cut back uncertainty and enhance our understanding of development

Humble et al, Lean Enterprise (p96)

As an alternative of making prolonged undertaking specs and plans, the PDC workforce
coached product groups to develop consequence statements for every initiative. With
consequence statements, beginning with a buyer or enterprise consequence permits the
workforce to experiment with many alternative concepts to attain the end 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 potential initiatives, every
product workforce created a two-page temporary summarizing the end result, the measurable
influence, and the preliminary funding required.

The manager workforce prioritized the end result statements, and every assertion
was seen as a “wager” amongst a portfolio. Impressed by the Lean Worth Tree
idea, the chief workforce would apply an everyday cadence to find out if a
wager 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 carefully with designers throughout design sprints. The outcomes of the take a look at
confirmed a number of advantages. Engineers improved their understanding of the
buyer, constructing empathy for his or her wants. They may present on-the-spot
suggestions on the feasibility of an method and shortly create prototypes to
exhibit 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 stage 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 might for a buyer product.

What was the influence of product supply tradition?

Testing with pilot groups indicated that the Time to Studying went from 50
days to five days. In the course of the pilot, one product supervisor stated, “What I like about
the [direct user research sessions] pilot is that it lets us take a look at 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
enhance as a substitute delivered eleven million {dollars} in incremental worth utilizing
the PDC prompt enhancements. Following this pilot success, the workforce coached
the complete product improvement group on the product supply method.

Based on Mike Fisher, “It is extremely arduous 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 kind. Nonetheless, we did take a look at excessive stage
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 consumers and
sellers – extra options, higher search, higher processes; the entire
market grew to become higher for consumers and sellers and that was the purpose.”