Future Technology

Introducing a product supply tradition at Etsy

10 min read

Etsy, a web-based 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 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{94544a45adb742a0c45c4c472061b284f356c284581e129b68f9fd9e6686d9cb}) on the finish of 2021 and from 2.5 to five.3
million (112{94544a45adb742a0c45c4c472061b284f356c284581e129b68f9fd9e6686d9cb}) 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 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 capable of ship new and improved
performance, and {the marketplace} continued to supply a wonderful 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 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 they’d
to plan far upfront for capability. As well as, the information facilities have been
primarily based 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 companion and
began to plan a program to maneuver their
many programs 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
brought on 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 folks. 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

Choosing a companion

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

Thoughtworks has an analogous method to Agile as Etsy – being Agile
fairly than doing Agile. Etsy’s crew was not trying 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 corporations shared related ideas
concerning worker care, variety, 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 cost
mannequin modifications, Search Engine Optimization (search engine optimisation), and a notification platform.
This enabled Thoughtworks to know how Etsy labored, created a direct
influence on supply, and improved growth practices corresponding 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. 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 research the present product supply and discovery
course of. They analyzed all the software program growth worth stream,
trying carefully on the complaints of managers and crew members. Chosen
occasions have been replayed to achieve a deep understanding of “how” it occurred
rather than who?. The Thoughtworks
crew, as a result of they hadn’t lived via the issues, have been capable of convey
an goal outsider perspective.

There have been a lot of 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
    observe of their method. A code change sitting in a repository and never
    deployed to customers will not be useful, and successfully prices the corporate cash. Etsy
    deploys a whole bunch 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
    characteristic doesn’t ship sufficient worth versus its value, as evidenced by an A/B
    check, it isn’t 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 workers and altering groups tough. Some
    groups have been utilizing a course of like Scrum, whereas others didn’t use any formal
    course of.
  • There have been a lot of 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 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 crew created an enchancment program, primarily based on lean pondering and the
concepts of Marty Cagan, who had just lately introduced at Etsy. The management crew was
studying his e book Impressed.

I promise you that at the least 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 at the least three quarters of the concepts received’t
carry out like they hope.)

Marty Cagan, Inspired (p19)

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

They have been additionally 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 a lot of answer hypotheses:

Lightweight prototypes that incorporate extra direct person analysis

Etsy has robust 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 gradual. For an thought 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 point out statistical relevance. A/B exams would run for
months in lesser-used components of {the marketplace}.

To set your expectations, robust 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 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 cut 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
classes to each two weeks and decreased 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 thought was to effectively acquire confidence
in an thought earlier than it qualifies for an A/B check. By decreasing the price of
experimentation, they might 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 with product crew leaders, got here up with a set of
product supply ideas and associated supply observe modifications. The
practices included: smaller extra centered tales, redesigning story partitions to
higher match the crew course of, utilizing spikes to cut back technical uncertainty, and
higher methods of managing tech debt. They didn’t wish 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 crew’s particular context.

The PDC crew first examined the observe modifications on pilot product groups to
set up their effectiveness after which iterated. As soon as the observe
demonstrated an enchancment, the crew added to a data 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, regardless that there was
not clear proof of the initiative creating worth. That is the everyday sunk
value drawback. To resolve this, the PDC crew
advised 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 potential to ship
necessities, it’s simple to quickly bloat our merchandise with pointless
options—resulting in elevated complexity, larger upkeep prices, and
restricted potential to alter. Options delivered aren’t a measure of success,
enterprise outcomes are. Our runway is a sequence of questions that we have to
check to cut back uncertainty and enhance our understanding of development

Humble et al, Lean Enterprise (p96)

As an alternative of making prolonged venture specs and plans, the PDC crew
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
crew to experiment with many alternative concepts to realize the end result by tying
them to measurable KPIs. The much less exact an final result is, together with its KPIs,
the more durable it’s to specify. When making ready for attainable initiatives, every
product crew created a two-page temporary summarizing the end result, the measurable
influence, and the preliminary funding required.

The chief crew prioritized the end result statements, and every assertion
was seen as a “wager” amongst a portfolio. Impressed by the Lean Worth Tree
idea, the manager crew would observe 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 crew examined
engineers becoming a member of the speculation era and validation classes and
working carefully with designers throughout design sprints. The outcomes of the check
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 rapidly create prototypes to
reveal concepts to customers. Cross-functional engagement allowed engineers to
contribute a lot 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 implies they’re capable of 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. Throughout the pilot, one product supervisor stated, “What I really like about
the [direct user research sessions] pilot is that it lets us check 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 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 advised enhancements. Following this pilot success, the crew coached
all the product growth group on the product supply method.

In line with Mike Fisher, “It is extremely arduous 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 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 have been very constructive. We had improved our velocity by doing this
work, and we have been capable of 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 objective.”

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