Introducing a product supply tradition at Etsy

Etsy, an internet market for distinctive, handmade, and classic gadgets, has
seen excessive progress during the last 5 years. Then the pandemic dramatically
modified buyers’ habits, resulting in extra shoppers 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
site visitors virtually 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 had been in a position to ship new and improved
performance, and {the marketplace} continued to offer a wonderful 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
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 knowledge facilities, presenting a number of
scaling challenges. With their anticipated progress, it was obvious that the
prices would ramp up shortly. It affected product groups’ agility as they’d
to plan far prematurely for capability. As well as, the info facilities had been
primarily based 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 accomplice and
began to plan a program to maneuver their
many methods 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
prompted 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
processes.

Choosing a accomplice

Etsy had by no means labored with a software program improvement consultancy. To have the ability
to scale product supply and usher in some outdoors experience, they began
searching 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
relating to fashionable software program improvement.

Thoughtworks has the same strategy to Agile as Etsy – being Agile
reasonably than doing Agile. Etsy’s workforce was not trying to undertake a
methodology that blindly follows strict rituals and practices, and wished
a accomplice that bases its strategy 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 firms shared related ideas
relating to worker care, variety, open-source, and know-how
sustainability.

The Thoughtworks workforce began by embedding into product groups, working with
each purchaser and vendor groups, on numerous important initiatives comparable 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 improvement practices comparable to automated
testing.

For Thoughtworks, Etsy was fairly completely 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 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 deal with
their urgent initiatives. The tradition and ideas had been already very
aligned with Thoughtworks’ personal, so the partnership grew to become extra of an
alternate 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 research the present product supply and discovery
course of. They analyzed the complete software program improvement worth stream,
wanting carefully on the complaints of managers and workforce members. Chosen
occasions had been replayed to achieve a deep understanding of “how” it occurred
rather than who?. The Thoughtworks
workforce, as a result of they hadn’t lived by the issues, had been in a position to carry
an goal outsider perspective.

There have been a variety 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 strategy. 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 bunch of instances a day, with a 30-minute decide to manufacturing lead
    time.
  • Options are prioritized utilizing knowledge: Product managers and knowledge 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
    take a look at, it’s not 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 staff 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 a variety 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 by 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
    selections.

Time to studying

The workforce created an enchancment program, primarily based on lean considering and the
concepts of Marty Cagan, who had just lately introduced 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 best way, 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 referred to as Time
to Studying – the time it took for a product workforce to validate an thought with a
buyer and acquire a greater understanding of its worth. That they had a baseline of
50 days that they wished to cut back.

They had been additionally different metrics.

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

To influence the KPIs, they got here up with a variety 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
workforce noticed is that the suggestions cycle could 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 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
wish 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, Inspired (p27)

To cut back the Time to Studying metric, the PDC workforce utilized a lean UX
strategy. First, they began by shortly creating lo-fi prototypes and
instantly displaying them to customers. Second, the workforce elevated consumer suggestions
periods to each two weeks and diminished 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 thought was to effectively acquire confidence
in an thought earlier than it qualifies for an A/B take a look at. By lowering 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, together with product workforce leaders, got here up with a set of
product supply ideas and associated supply observe 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 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 workforce’s particular context.

The PDC workforce 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 workforce added to a information base and offered
mild teaching to introduce the brand new practices to all product groups throughout
Etsy.

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
value downside. To unravel this, the PDC workforce
advised taking a lean strategy to portfolio administration.

Our runway must be an inventory of hypotheses to check, not an inventory of
necessities to construct. After 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 vary. Options delivered should not 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
alternatives.

Humble et al, Lean Enterprise (p96)

As a substitute 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 various concepts to realize the 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 getting ready for doable initiatives, every
product workforce created a two-page transient summarizing the result, the measurable
influence, and the preliminary funding required.

The chief workforce prioritized the result statements, and every assertion
was seen as a “wager” amongst a portfolio. Impressed by the Lean Worth Tree
idea, the manager workforce 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 consumer suggestions periods. The workforce examined
engineers becoming a member of the speculation technology and validation periods and
working carefully with designers throughout design sprints. The outcomes of the take a look at
confirmed an a variety of benefits. 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 strategy and shortly create prototypes to
display concepts to customers. Cross-functional engagement allowed engineers to
contribute a variety 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 the usage of 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 really 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 advised enhancements. Following this pilot success, the workforce coached
the complete product improvement group on the product supply strategy.

Based on Mike Fisher, “It is extremely laborious 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. Nevertheless, we did have a look at excessive degree
productiveness metrics after having PDC applied for over 2 years, and all of
our metrics had been very constructive. We had improved our velocity by doing this
work, and we had 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.”