Introducing a product supply tradition at Etsy


Etsy, an internet market for distinctive, handmade, and classic objects, has
seen excessive development during the last 5 years. Then the pandemic dramatically
modified customers’ habits, resulting in extra shoppers procuring 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
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 had been in a position to ship new and improved
performance, and {the marketplace} continued to supply a glorious buyer
expertise. This text and the following 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 firms, and alongside
with Martin Abbott wrote a number of books on the subject, together with The Artwork of Scalability
and Scalability Guidelines.

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 rapidly. It affected product groups’ agility as they’d
to plan far upfront for capability. As well as, the info facilities had been
based mostly in a single state, which represented an availability threat. It was clear
they wanted to maneuver onto the cloud rapidly. After an evaluation, Mike and
his workforce selected the Google Cloud Platform (GCP) because the cloud companion 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 workforce. Mike recognized the product supply course of as being one other
potential scaling bottleneck. The autonomy afforded to product groups had
induced a problem: every workforce was delivering in several 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

Choosing a companion

Etsy had by no means labored with a software program growth consultancy. To have the ability
to scale product supply and usher in some outdoors experience, they began
searching for 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 analogous method to Agile as Etsy – being Agile
relatively than doing Agile. Etsy’s workforce was not seeking to undertake a
methodology that blindly follows strict rituals and practices, and wished
a companion that bases its method on agile ideas 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 ideas
concerning worker care, range, open-source, and expertise

The Thoughtworks workforce began by embedding into product groups, working with
each purchaser and vendor groups, on varied crucial initiatives comparable to cost
mannequin modifications, Search Engine Optimization (web optimization), and a notification platform.
This enabled Thoughtworks to know how Etsy labored, created a direct
influence on supply, and improved growth practices comparable to automated

For Thoughtworks, Etsy was fairly completely different from the everyday consumer.
They’re a totally digital firm, and their technical course of and product
practises are very mature. Not like most shoppers who interact Thoughtworks,
Etsy had no giant 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 ideas had been already very
aligned with Thoughtworks’ personal, so the partnership grew to become extra of an
trade 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 course of. They seemed throughout
your entire software program growth worth stream and did a root trigger evaluation
into the complaints of managers and workforce members.

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

There have been numerous 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 shouldn’t be useful, and successfully prices the corporate cash. Etsy
    deploys a whole lot 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 modifications. If the
    characteristic doesn’t ship sufficient worth versus its price, 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 several 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 numerous initiatives that had not created worth as
    they anticipated. For instance, Etsy tried a present wrap characteristic that had
    decrease than anticipated adoption charges by sellers and consumers.
  • Previous to 2018, Etsy had been by way of a transitional interval, with
    pivots in product technique and management modifications main some product
    managers to expres a want for larger 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 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 usually are 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 gained’t
carry out like they hope.)

Marty Cagan, Impressed (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 wished to cut 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 influence the KPIs, they got here up with numerous resolution hypotheses:

Lightweight prototypes that incorporate extra direct person analysis

Etsy has robust experimentation infrastructure and analytics capabilities.
They run many concurrent A/B assessments on {the marketplace}. The issue the PDC
workforce noticed is that the suggestions cycle might be fairly gradual. 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 knowledge to indicate statistical relevance. A/B assessments would run for
months in lesser-used components of {the marketplace}.

To set your expectations, robust 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 shouldn’t be 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, Impressed (p27)

To cut back the Time to Studying metric, the PDC workforce utilized a lean UX
method. First, they began by rapidly creating lo-fi prototypes and
instantly displaying them to customers. Second, the workforce elevated person suggestions
classes to each two weeks and decreased 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 thought was to effectively achieve confidence
in an thought earlier than it qualifies for an A/B take a look at. By lowering the price of
experimentation, they may enhance the variability 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 ideas and associated supply follow modifications. The
practices included: smaller extra targeted 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 a giant a part of Etsy tradition. These practices
are supposed to be handled as smart 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
gentle teaching to introduce the brand new practices to all product groups throughout

Lean Portfolio administration

Some giant initiatives had been nonetheless being carried out, although there was
not clear proof of the initiative creating worth. That is the everyday sunk
price drawback. To unravel this, the PDC workforce
recommended 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 means to ship
necessities, it’s straightforward to quickly bloat our merchandise with pointless
options—resulting in elevated complexity, larger upkeep prices, and
restricted means to alter. Options delivered usually are 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 mission specs and plans, the PDC workforce
coached product groups to develop final result statements for every initiative. With
final result statements, beginning with a buyer or enterprise final 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 final result is, together with its KPIs,
the tougher it’s to specify. When getting ready for doable initiatives, every
product workforce created a two-page temporary summarizing the result, the measurable
influence, and the preliminary funding required.

The manager workforce prioritized the result statements, and every assertion
was considered as a “wager” amongst a portfolio. Impressed by the Lean Worth Tree
idea, the chief workforce would follow a daily 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 technology and validation classes and
working intently 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 rapidly create prototypes to
display concepts to customers. Cross-functional engagement allowed engineers to
contribute numerous 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 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’d 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. Throughout the pilot, one product supervisor mentioned, “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 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 a substitute delivered eleven million {dollars} in incremental worth utilizing
the PDC recommended enhancements. Following this pilot success, the workforce coached
your entire product growth group on the product supply method.

In line with Mike Fisher, “It is extremely exhausting to isolate the advantages of a
course of change on a corporation of a number of hundred engineers since we don’t
run A/B experiments of this kind. Nonetheless, we did have a look at excessive stage
productiveness metrics after having PDC applied 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 consumers and
sellers – extra options, higher search, higher processes; the entire
market grew to become higher for consumers and sellers and that was the objective.”


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