Introducing a product supply tradition at Etsy

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Etsy, a web-based market for distinctive, handmade, and classic objects, has
seen excessive progress 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 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 virtually 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 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
progress. 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 progress, it was obvious that the
prices would ramp up rapidly. It affected product groups’ agility as that they had
to plan far upfront for capability. As well as, the info facilities have 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 group selected the Google Cloud Platform (GCP) because the cloud companion and
began to plan a program to move their
many systems onto the cloud

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

Choosing a companion

Etsy had by no means labored with a software program improvement consultancy. To give you the chance
to scale product supply and usher in 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
concerning trendy software program improvement.

Thoughtworks has an identical method to Agile as Etsy – being Agile
somewhat than doing Agile. Etsy’s group was not seeking to undertake a
methodology that blindly follows strict rituals and practices, and needed
a companion 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 know-how

The Thoughtworks group began by embedding into product groups, working with
each purchaser and vendor groups, on numerous important initiatives resembling cost
mannequin adjustments, Search Engine Optimization (search engine optimisation), and a notification platform.
This enabled Thoughtworks to grasp how Etsy labored, created a direct
influence on supply, and improved improvement practices resembling 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. In contrast to most shoppers who have interaction Thoughtworks,
Etsy had no massive transformation to undertake, and no ingrained habits
that wanted a serious shift. What they have been looking for was exterior 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 turned extra of an
change of concepts drawn from completely different experiences.

Scaling Product Supply and Discovery

Thoughtworks and Etsy shaped a cross-functional Product Supply Tradition
(PDC) group to investigate the present product supply course of. They seemed throughout
all the software program improvement worth stream and did a root trigger evaluation
into the complaints of managers and group members.

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

There have been quite a lot 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
    follow 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 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 adjustments. If the
    function 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 group additionally uncovered alternatives for enchancment:

  • Every group was doing supply in numerous methods, having disparate processes
    and rituals, making onboarding new staff 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 quite a lot 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 means of 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 group created an enchancment program, based mostly on lean pondering and the
concepts of Marty Cagan, who had just lately offered at Etsy. The management group was
studying his ebook Impressed.

I promise you that a minimum of half the concepts
in your roadmap will not be 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 group got here up with a metric they known as Time
to Studying – the time it took for a product group to validate an concept with a
buyer and achieve a greater understanding of its worth. They’d 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 quite a lot of answer hypotheses:

Lightweight prototypes that incorporate extra direct consumer analysis

Etsy has robust experimentation infrastructure and analytics capabilities.
They run many concurrent A/B checks on {the marketplace}. The issue the PDC
group 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 information to point out statistical relevance. A/B checks 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 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 group utilized a lean UX
method. First, they began by rapidly creating lo-fi prototypes and
instantly exhibiting them to customers. Second, the group elevated consumer suggestions
classes to each two weeks and diminished the extent of ceremony. Third, they
created a dual-track system, with a design and analysis group frequently
working forward of a supply group. The concept was to effectively achieve confidence
in an concept earlier than it qualifies for an A/B take a look at. By decreasing the price of
experimentation, they might improve 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 group leaders, got here up with a set of
product supply rules and associated supply follow adjustments. The
practices included: smaller extra targeted tales, redesigning story partitions to
higher match the group 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 wise defaults that may be tailored and improved
for every group’s particular context.

The PDC group first examined the follow adjustments on pilot product groups to
set up their effectiveness after which iterated. As soon as the follow
demonstrated an enchancment, the group 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 have been nonetheless being carried out, regardless that there was
not clear proof of the initiative creating worth. That is the standard sunk
price drawback. To resolve this, the PDC group
instructed taking a lean method to portfolio administration.

Our runway ought to be an inventory of hypotheses to check, not an inventory of
necessities to construct. Once 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, greater upkeep prices, and
restricted capability to vary. Options delivered will not be a measure of success,
enterprise outcomes are. Our runway is a collection of questions that we have to
take a look at to cut back uncertainty and enhance our understanding of progress

Humble et al, Lean Enterprise (p96)

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

The manager group 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 group would follow 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 consumer suggestions classes. The group 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 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
reveal concepts to customers. Cross-functional engagement allowed engineers to
contribute quite 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 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 influence 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 mentioned, “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 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 an alternative delivered eleven million {dollars} in incremental worth utilizing
the PDC instructed enhancements. Following this pilot success, the group coached
all the product improvement group on the product supply method.

In response to Mike Fisher, “It is vitally 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 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 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 purpose.”

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