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Introducing a product supply tradition at Etsy

Etsy, a web-based 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 customers purchasing 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%) 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 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 capable of ship new and improved
performance, and {the marketplace} continued to supply a wonderful 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
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 Artwork of Scalability
and Scalability Guidelines.

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 shortly. It affected product groups’ agility as that they had
to plan far prematurely 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 shortly. After an evaluation, Mike and
his group selected the Google Cloud Platform (GCP) because the cloud accomplice 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 group. Mike recognized the product supply course of as being one other
potential scaling bottleneck. The autonomy afforded to product groups had
precipitated a problem: every group was delivering in several 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

Deciding on a accomplice

Etsy had by no means labored with a software program growth consultancy. To have the option
to scale product supply and herald 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 an in depth cultural match and deep alignment
concerning trendy software program growth.

Thoughtworks has an identical strategy to Agile as Etsy – being Agile
quite than doing Agile. Etsy’s group 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 comparable ideas
concerning worker care, range, open-source, and know-how

The Thoughtworks group 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 (web optimization), and a notification platform.
This enabled Thoughtworks to grasp how Etsy labored, created an instantaneous
affect on supply, and improved growth practices corresponding to automated

For Thoughtworks, Etsy was fairly totally 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 purchasers who interact 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
change of concepts drawn from totally different experiences.

Scaling Product Supply and Discovery

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

There have been 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 strategy. A code change sitting in a repository and never
    deployed to customers just isn’t 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 information: Product managers and information 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
    check, it’s not rolled out, and the code is eliminated.

The group additionally uncovered alternatives for enchancment:

  • Every group was doing supply in several methods, having disparate processes
    and rituals, making onboarding new workers 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 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 way of a transitional interval, with
    pivots in product technique and management modifications main some product
    managers to expres a want for higher possession over their product

Time to studying

The group created an enchancment program, based mostly on lean considering and the
concepts of Marty Cagan, who had lately introduced at Etsy. The management group was
studying his e book Impressed.

I promise you that at the least half the concepts
in your roadmap are usually not going to ship what you hope. (By the best way, the
actually good groups assume that at the least three quarters of the concepts received’t
carry out like they hope.)

Marty Cagan, Impressed (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 acquire a greater understanding of its worth. That they had a baseline of
50 days that they wished to scale back.

They have been additionally different metrics.

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

To affect the KPIs, they got here up with a lot of answer hypotheses:

Lightweight prototypes that incorporate extra direct person analysis

Etsy has sturdy 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 check it needed to be close to production-level high quality. It additionally had
to have sufficient information to indicate statistical relevance. A/B checks would run for
months in lesser-used elements of {the marketplace}.

To set your expectations, sturdy groups usually
check 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 just isn’t 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, Impressed (p27)

To cut back the Time to Studying metric, the PDC group utilized a lean UX
strategy. First, they began by shortly creating lo-fi prototypes and
instantly exhibiting them to customers. Second, the group elevated person suggestions
periods to each two weeks and decreased the extent of ceremony. Third, they
created a dual-track system, with a design and analysis group regularly
working forward of a supply group. The thought was to effectively acquire confidence
in an concept earlier than it qualifies for an A/B check. By decreasing the price of
experimentation, they might improve the variability 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 ideas and associated supply follow modifications. The
practices included: smaller extra targeted tales, redesigning story partitions to
higher match the group course of, utilizing spikes to scale 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 smart defaults that may be tailored and improved
for every group’s particular context.

The PDC group 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 group added to a information base and offered
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, despite the fact that there was
not clear proof of the initiative creating worth. That is the everyday sunk
value downside. To resolve this, the PDC group
recommended taking a lean strategy 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 simple to quickly bloat our merchandise with pointless
options—resulting in elevated complexity, increased upkeep prices, and
restricted means to vary. Options delivered are usually not a measure of success,
enterprise outcomes are. Our runway is a collection of questions that we have to
check to scale back uncertainty and enhance our understanding of progress

Humble et al, Lean Enterprise (p96)

As an alternative 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 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 attainable initiatives, every
product group created a two-page temporary summarizing the result, the measurable
affect, and the preliminary funding required.

The chief group prioritized the result statements, and every assertion
was considered as a “guess” amongst a portfolio. Impressed by the Lean Worth Tree
idea, the manager group would follow a daily cadence to find out if a
guess 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 part of person suggestions periods. The group examined
engineers becoming a member of the speculation technology and validation periods and
working intently with designers throughout design sprints. The outcomes of the check
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 strategy and shortly create prototypes to
show 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 suggests 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’d for a buyer product.

What was the affect 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 person analysis periods) pilot is that it lets us check 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
improve as a substitute delivered eleven million {dollars} in incremental worth utilizing
the PDC recommended enhancements. Following this pilot success, the group coached
the whole product growth group on the product supply strategy.

In keeping 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 kind. Nevertheless, 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 optimistic. We had improved our velocity by doing this
work, and we have been capable of produce in the end 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 purpose.”

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