Growth Hacks: How Etsy CEO Structure Teams to Optimize for Experimentation and Agility

Growth Hacks: How Etsy CEO Structure Teams to Optimize for Experimentation and Agility

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How Etsy CEO Structure Teams to Optimize for Experimentation and Agility

How Etsy CEO Structures Teams to Optimize for Experimentation and Agility

I recently listened to a new episode of 20 Minutes VC, in which Harry Stebbings, the host, interviewed Etsy CEO, Josh Silverman. Putting aside all the brilliance and simplicity (aka. excellence) from both of them, throughout the entire interview, I wanted to focus on one of the most practical topics of their conversation: How Etsy CEO Structure Teams to Optimize for Experimentation and Agility.

John Silverman has an impressive and successful tracking record on his career, either as CEO of Skype or President of American Express, which is to say that he has gone through different team structures, sizes, industries, and processes. So, the framework he’s using nowadays has been bullet-proofed and could also be described as a way that maximizes the outcome as opposed to optimizing the input.

> Delegation is not Abdication

At one point during the interview, he goes through the very clear but not-as-recognized fact that you can’t really manage what you don’t know. It doesn’t mean you should go out trying to do everything, but instead, as a manager, you should allow and incentivize experts to solve problems the way they believe is the best (input), while you focus on the result (output).

> Proof of the future today.

Figuring out Milestones along the way, the proof of the future (of the vision you’ve).

“Skype had a real aversion to metric or tracking things. There was a strong element of privacy at Skype but that also meant we could not get data on what our customers do or value. We gotta wire Skype in a way that allows us to understand anonymously our customer’s usage patterns and then we will ship multiple pre-releases to early populations to get evidence whether the great ideas that you all have as a leadership team are actually taking roots so when the time comes, we’ve de-risked the notion”

> Team Structure and Management.

Their teams are organized into squads. A squad is a team of 10 people: 6 engineers, a designer, a product manager, and an analyst. Each squad receives a problem to fix and one metric of success.

For example, Customers don’t know when packages are going to arrive, your job is to make customers have confidence in when their packages are going to arrive.
TIMELINE: 12 months
KPI: $50M of TMS

Experiments by GrowthHackers
This is an example of how squad-organized and experimentation-oriented teams can use Experiments, our growth management platform, to manage their operations — check it out!

Every month, the CEO and his leadership team seat down with each of the squads for a progress update. Typically a squad will ship 2 or 3 experiments a month, at least. It’s not unusual to see that every experiment of that month failed. But some months they have great success.

> Cost of Success

“(…) at any given month, a few squads have had a great month, a few squads have had a not so great month but, over the balance of the squads, we generally do quite well.

And we support each other publicly, which allows us all to take risks. Because we made the cost of failure fairly low, and if a squad goes 4/5/6 months and has not had success, we start to ask ourselves: maybe this path is not that fruitful, maybe this customer problem is not as important as some other customer’s problem — and it’s not unusual to make some pivots and changes so those squads can focus on different problem”

Setting up a system where failure is affordable and picking when you can fail are two important things. If you will embrace failure, you gotta have those two things in place.

> Agile (or growth) process

“Setting up a system where failure is affordable and picking when you can fail are two important things. If you will embrace failure, you gotta have those two things in place.”

“At Etsy, we do have a very agile software development system where, in general, we can go from conception to live in a couple of weeks, then we test in 50% of the population where 50% sees the new version, 50% sees the old version and if doesn’t work we roll it back. So the opportunity cost of failure is quite low.”

“(…) We run 10s of experiments a week and, for every experiment that failed, we ask ourselves, could we have learned this faster and cheaper?”

On our 2020 The State of Growth research, we found out something that supports John’s statement quite well: Successful growth teams are the ones who failed the most!

> Our two cents

Regardless of how you call it, growth hacking, agile management, growth marketing, experimentation framework, it all comes down to the fact that there is no one-size-fits-all answer to growth. In a reality where competition is strong and global (check out the Martech Landscape 2020), each company has to figure out its own path to success and, there’s no better way of doing that than giving autonomy for your employees to test things out, encouraging them to take different approaches and embrace controlled failure (the cornerstones of a growth strategy).

Etsy Growth Study
Check out Etsy growth-study


How Etsy CEO Structure Teams to Optimize for Experimentation and Agility was originally published in Growth Hackers on Medium, where people are continuing the conversation by highlighting and responding to this story.

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