How Etsy Evolved Product Prioritization Through Growth

https://firstmark.medium.com/how-etsy-evolved-product-prioritization-through-growth-48af506db3fe

The Core Business: The Vital Few When a company experiences early growth, it’s easy to get into growth hacking mode — pursuing all the “worthwhile many” ways that could help the company grow even faster. However, leaning into growth too early can be a critical mistake, especially if your company hasn’t yet solidified its core business strategy. Instead, it’s important to focus early on the “vital few” initiatives that will move the needle of your business, and equally importantly, to decide what not to work on in service of the Vital Few.

Investing in Growth: Portfolio Theory From 2018 to 2019, Etsy was laser focused on strengthening its core business. By 2020, Etsy was ready to revisit new growth opportunities and innovate ways to expand the business. 2020 was also a transformative year for the company. As the COVID-19 pandemic proliferated, people flocked to Etsy to buy masks while traditional retailers struggled to keep up with demand, creating millions of new buyers for the company to manage.

As 2020 came to a close, Etsy was in a very different position than at the end of 2018. The core marketplace was a lot stronger because of the investments that the team had made over the previous year and a half, and the company now faced a new challenge of winning the loyalty of all the new customers who had discovered Etsy in 2020. The core business was mature and stable enough that Etsy was ready to rebalance its priorities and explore new opportunities to drive growth. After studying several tried and true models, Etsy’s management team developed the following portfolio framework:

They defined investments into three categories with different time horizons and different levels of certainty or uncertainty.

• Improvement: Optimizing existing experiences with the highest level of confidence in the near-term.
• Expansion: Building new products and experiences with lower certainty and a medium term impact horizon.
• New Business: Finding new business opportunities, which have a high potential impact but with many more unknowns and a longer term investment horizon.

Staying Focused: Focus Flywheel Once Etsy strengthened its core business and created an intentional framework for product prioritization, they codified an operating rhythm to maintain focus and accountability in the form of meetings that occur on a weekly, monthly, and quarterly basis.

• Weekly Experiment Review: The meeting is led by the Analytics team and is attended by senior Product and Engineering leaders. The focus of the weekly review is to discuss the learnings from the completed experiments from the previous week.
• CEO Monthly Metrics Meeting: The monthly metrics meeting serves as an accountability gut check across all functional areas of the business, and is attended by senior leaders across the company. At the meeting, the Product org shares progress towards goals across the full product portfolio as well as at a more granular initiative level.
• Quarterly Product Reflection: The goal of the Quarterly Product Reflection meeting is for the entire Product org to zoom out across the whole portfolio of priorities and discuss one key question: “Do we have more or less confidence in our ability to achieve the outcomes that we set out to accomplish at the end of the quarter versus at the beginning of the quarter?” The meeting allows the org to evaluate the effectiveness of their current strategy and decide whether to stay the course or pivot.

The benefits of this operating rhythm are two-fold. First, it gives Etsy’s leadership team visibility into the work that’s happening on the ground while maintaining decentralized decision making at the squad level. Second, this methodology creates a recurring accountability function in which the team must check progress against the “vital few” initiatives and assess any necessary tradeoffs.