Inside Etsy’s product, growth, and marketplace evolution | Tim Holley (VP of Product)

1. 0:00 – 4:23

   Tim’s background

   1. THTim Holley0:00

      When the CDC mandated face masks in early April 2020, that's when essentially we went to sleep one day with our typical April traffic, typical April sales, and then it was Black Friday overnight. And in part because nobody knew where to find face masks. Our sellers are incredibly astute businesspeople, and, you know, if you had been making wedding dresses, and you know how to sew and you've got material and you've got a bit of time, making a mask is, is quite a simple task. And so we just saw this huge surge of, of demand, and then supply rising to meet it. And we, we did something that as far as I know we've never done in Etsy's past which is, we put out a call to our sellers to say, "Now's the time. Now's the time to make face masks if you can." And so it felt like this is our time to shine, to really help sellers continue to make sales, to help buyers find this critical item that they were looking for. And then from there, things kept going. And, and we really worked hard to make sure that the story was not just about face masks for our buyers, that they understood that Etsy's a place for so many different categories and so many different items.

   2. LRLenny Rachitsky1:10

      (instrumental music) Welcome to Lenny's Podcast, where I interview world-class product leaders and growth experts to learn from their hard won experiences building and growing today's most successful products. Today my guest is Tim Hawley. Tim is VP of Product at Etsy, where he's been for over 10 years, and has helped grow Etsy from around 500 million in GMV to over 13 billion in GMV. This episode is for anyone working on marketplace or looking for ideas to increase growth, or looking for advice on how to change your internal culture. We get into the big cultural transition that Etsy went through that took them to the next level, lots of examples of product changes that helped them with conversion, acquisition and retention, plus how Etsy organizes their teams, things about supply versus demand dynamics, how Etsy got started with growing their initial supply and also their initial demand, plus a bunch of frameworks and hiring advice, and so much more. Enjoy this episode with Tim Hawley after a short word from our sponsors. This episode is brought to you by ProductRoadmap.ai and Ignition. ProductRoadmap.ai is the first AI roadmapping suite. It helps ensure roadmaps drive revenue by instantly aligning product with your sales and marketing teams to capture upsell opportunities. Built by early leaders from Rippling and Craft, it automatically identifies feature gaps from your CRM data, and your customer conversations, adds them to shareable roadmaps easily prioritized by revenue impact, and then seamlessly closes the loop with sales reps via targeted notifications when feature gaps are closed. As part of Ignition's broader go-to-market operating system, ProductRoadmap.ai can also help create better handoffs and collaboration with product marketing teams by giving both teams the tools to research, plan, orchestrate, and measure the process of building products and going to market. Packed with integrations, AI automation, and communication tools, it's truly a one-stop shop for product and marketing to bring things from concept to launch. To sign up, go to ProductRoadmap.ai and use promo code Lenny to get 75% off your first year. This episode is brought to you by Eppo. Eppo is a next generation A/B testing platform built by Airbnb alums for modern growth teams. Companies like DraftKings, Zapier, ClickUp, Twitch, and Cameo rely on Eppo to power their experiments. Wherever you work, running experiments is increasingly essential. But there are no commercial tools that integrate with a modern growth team stack. This leads to wasted time building internal tools, or trying to run your own experiments through a clunky marketing tool. When I was at Airbnb, one of the things that I loved most about working there was our experimentation platform, where I was able to slice and dice data by device types, country, user stage. Eppo does all that and more, delivering results quickly, avoiding annoying prolonged analytic cycles, and helping you easily get to the root cause of any issue you discover. Eppo lets you go beyond basic click-through metrics, and instead use your North Star metrics like activation, retention, subscription, and payments. Eppo supports tests on the front end, on the back end, email marketing, even machine learning claims. Check out Eppo at GetE-P-P-O.com. That's GetEppo.com and 10X your experiment velocity. (instrumental music)

2. 4:23 – 6:34

   Tim’s time away at SoulCycle and what led him back to Etsy

   1. LRLenny Rachitsky4:23

      Tim, thank you so much for being here. Welcome to the podcast.

   2. THTim Holley4:27

      Thank you for having me on, Lenny. Really appreciate it. Looking forward to it.

   3. LRLenny Rachitsky4:30

      I'm looking forward to it even more. So you've been at Etsy for I think over 10 years, although I did notice that you left for a year and ended up leading product at SoulCycle. So first of all, just what is, what is that about? What happened there?

   4. THTim Holley4:43

      Yeah. At the time I'd been at Etsy for over six years, and I just had the itch, you know? I wanted to go, go work on a different product, build different things, experience different industry. I've long had a, a theory that working on kind of the proactive side of healthcare, meaning fitness and wellness, is how you achieve better outcomes. And, and it felt like SoulCycle was a really interesting way to do that. Pretty well-known brand, you know, high street presence in, in many cities. Could you effect change through that? Ultimately realized it wasn't a place that I wanted to spend a ton of time and energy, and so, you know, through a lot of soul-searching, groan, I know, uh, I, I found my way back to Etsy really kind of anchoring on, on three things. Uh, one, working on a product that you care about that adds value to other people's lives. And so, you know, what, what we do every day at Etsy is we help our sellers make sales. And, and that's really meaningful for, for the vast majority of them. You know, it's reaching an audience that they wouldn't be able to reach and, and so that feels like a really great thing to get up every morning and, and work on. And so that's maybe the, kind of the business and the product side, and the other side is people. Uh, might sound a little twee, but just working with people who you can learn from and who you respect, and ultimately can have fun working with, it matters a ton. You know, we spend a lot of time of our days and our lives at work, and so doing it with people who you really value-... it's, it's awesome. Uh, I, I have one, one memory that we used to have an engineer who used to be a standup comedian. And so that really, like, pushed the boundaries of what a standup meant, uh, every day. And it was always, you know, a little fun, a little exciting. Uh, you never quite knew what you were gonna get. And so just little things like that, you know, they make, they make work life really, really great.

   5. LRLenny Rachitsky6:25

      That's hilarious. I never thought of it that way. I feel like every standup needs a standup comedian in their standup.

   6. THTim Holley6:30

      (laughs) .

   7. LRLenny Rachitsky6:30

      Sounds like a... That should be part of Agile. They should, we need to change the, the manifesto.

3. 6:34 – 12:15

   Lessons from the 2017 culture shift at Etsy

   1. LRLenny Rachitsky6:35

      So I've always seen the Etsy journey from the outside, and so there's a few things that I've always wanted to dig into. One is, uh, I just remember this New York Times story back in the day when your current CEO Josh Silverman joined. And it felt like a huge moment in the s- history of Etsy where it feels like it just kind of transitioned from this touchy-feely everyone loves each other moment to just like, "Hey guys, we gotta build a real business here that's sustainable." And it feels like many startups have to go through that transition where it's like, "Oh, well, nothing's ever gonna change. It's gonna be a... So we're all family here." To just like, "Oh, sh- things have to change. This isn't working."

   2. THTim Holley7:12

      Yeah.

   3. LRLenny Rachitsky7:12

      I'm curious just what that was like living through that.

   4. THTim Holley7:15

      Yeah. I mean, the first thing I'll say is i- it was a hard transition. And, uh, I was personally fortunate in the sense that, uh, the, the transition you're speaking of in, in 2017 also happened to coincide with, with rounds of layoffs and I was super fortunate that I didn't lose my job, so I don't wanna presuppose that my version of hard is the same as another person's version of hard. But I think a lot of us and, and myself included, we had a lot of our identity tied up in, in Etsy and what we're doing. You know, a really deep passion for, for the mission of the business, um, and what we're trying to achieve. You know, I just mentioned helping small independent sellers. And, and that... Just to be clear, that, that hasn't gone away. I, I think that that's something we've been really successful at pulling through as a, as a line that was true, you know, 10 years ago and is still true today. Um, but it was, it was a, a time when we were really forced to rethink a lot of how, how we worked and what we worked on. Just to use a small example, we had had a pretty, um, entrenched consensus-based culture where we would really debate a lot of decisions and a lot of features. And I, on the one hand, I, I think that that does lead to good outcomes, right? Thoughtful products that have a lot of viewpoints really baked into the, the core of the thinking. On the other hand, not fast. When you have your identity tied up in, in, in the company and what you do and then you're, you're kind of being, being asked or, or you realize that you need to, to change how you're working, it can feel pretty existential, right? That it's, it's really cutting to the, the, the core of, of who you are and, and things that you hold really true. The reality is it's a business and we needed to get faster at launching features, improving experience, and ultimately having our... having a predictable way to drive GMS, gross merchandise sales, which is kind of our North Star KPI. And so, you know, it took, definitely took some time to work through that, but, uh, we, we got to a good place and, and, you know, the, the results over the last few years kind of to some degree speak for themselves. But it was, um, yeah, it was a, it was a testing and trying time for sure.

   5. LRLenny Rachitsky9:19

      I'm always curious how these, uh, changes play out and what works in making change. Is there something that you remember that Josh did well or that leaders did well to help that transition?

   6. THTim Holley9:29

      One thing that, that is, is just such a standout is having... And I mentioned GMS as our North Star KPI. Just having that being absolutely front and center, being the drumbeat that we talk about in every meeting, the, the measuring stick that we measure the success of, of launches against. And it... You know, maybe it, it's a bit surprising but we didn't have that type of clarity in the past. And so rallying everyone around that and you might not pay into it directly, you might pay into it through one or two levels of abstraction, but you're still clearly aligned with what the company's trying to achieve. And that was something that was a really stark difference. Um, and, and I think that helped really, uh... It helped the prioritization discussion a lot. You know, if, if you can't really articulate why this thing matters to driving GMS in the type of timeframe that we're talking about, be it, you know, a quarter or 12 months out, and, and different projects will contribute in different ways, but that, that was just one huge standout. And that's been a drumbeat over the years that let's get... let's continue to stay focused, um, on that as a, as a metric. The other thing to me is bringing an outside in perspective. You know, really benchmarking against your competitors and your competitive set. Don't get me wrong, I think Etsy is a unique marketplace, right? Our, our sellers are independent sellers. They sell unique items. The reality though is that our buyers are shopping all over the internet. They're shopping on High Street, they're shopping in different places and so we have to be aware of, of the broader context that, you know, of where they're spending their dollars helps us make better decisions over time. And so on the one hand, there is no one-to-one direct competitor to Etsy, but there are other businesses and other brands that are competing for, you know, eyeballs or, or, or wallets that we, we need to be aware of and that, bringing that into the discussion was, was a really helpful one that helped ground us in kind of the, the overall dynamics of, of what buyers are doing, where they're spending their money, and how they think about us.

   7. LRLenny Rachitsky11:28

      Is there anything else you took away as a leader from watching that shift that you bring to making change, transitioning people to working in a different way?

   8. THTim Holley11:36

      You know, definitely focus on, on a, on a clear KPI that, that, that the teams can rally around. That's one. The other is... And I, I respect Josh immensely on his ability to tell a really clear narrative and, and use that consistently over time. You know the old adage of you need to say something three times before people understand it? I would wager you need to say it another three times before they internalize it. And having that be part of the day-to-day conversation, it seems like such a small thing-But it adds up to having, having clarity on goal, the KPI point, and then clarity on why the narrative point. If you can marry those two things, I think that's an incredibly powerful combination.

4. 12:15 – 13:32

   Etsy’s guiding principles

   1. THTim Holley12:15

   2. LRLenny Rachitsky12:15

      While we're on this topic, I'm curious what Etsy's values are. I imagine you've codified a few, uh, we call them core values at Airbnbs, or something like that at Etsy. And if so, I'm curious what they are.

   3. THTim Holley12:26

      We, we call them guiding principles at Etsy. Um, we have a few of them, and I, I won't, I won't go through all of them, but just to give you a flavor, one of them is around digging deeper. And that really speaks to aiming to, to really understand the why behind a change, to really push on the insights that we're, that we're learning through qual or quant research or, or other inputs that we might be looking at in order to make the best decision possible with, with the information we have at the time. Another example of, of a, of a principle is minimizing waste. It aligns with how we think about product development, which is we wanna know is the work we're doing adding value to the customer and the business? And so, you know, something that isn't working out, a lot of times in product development, you know, we're, we're wrong. And so being able to say, "No, this is no longer valuable. We need to move on to the next thing," has been, has been something that served us really well. Ultimately, we are quite a small team, right? There's oh, just over 2,000 people in the business, uh, and, and if you then scale back to, to engineering and product, we're not, we're not big. And so we have to be really diligent about how we're investing our time and our resources, um, in order to be successful.

   4. LRLenny Rachitsky13:31

      Awesome.

5. 13:32 – 16:38

   How Etsy adapted to increased demand during the early days of mask mandates

   1. LRLenny Rachitsky13:32

      Okay. So another big moment as an outsider that it feels like Etsy went through is, is during COVID. There's this huge transition to e-commerce, and I think Etsy was a big beneficiary of that. People wanting to buy more stuff online, go to stores less, and it feels like it was a huge accelerant for the business. I'm curious just what that experience was like leading the product team through that.

   2. THTim Holley13:51

      It was quite wild. I'll say that. Um, and, and to be more specific, we, you know, as, as many or all of us did in, in probably the world of tech at least, uh, you know, we went home not knowing what, what the next weeks or weeks as we thought would bring, uh, turns out years, but when the, the CDC mandated face masks in, I think it was early April 2020, that's when essentially we went to sleep one day with our typical April traffic, typical April sales, and then it was Black Friday overnight. And in part because nobody knew where to find face masks. Our sellers are incredibly astute business people, and, you know, if you had been making wedding dresses and you know how to sew and you've got material and you've got a bit of time, making a mask is, is quite a simple task. And so we just saw this huge surge of demand, and then supply rising to meet it, and we, we did something that as far as I know, we'd never done in Etsy's past, which is we put out a call to our sellers to say, "Now's the time. Now's the time to make face masks if you can." And so it felt like this is our time to shine, uh, to really help sellers continue to make sales, to help buyers find this critical item that they were looking for. So it was, it was a very, very exciting couple of weeks while we were kind of adapting to that change, and we were, we were just really, you know, every day there would be stand-ups. "What's, what's happening? What do we need to change?" I, I remember distinctly we were worried about certain sellers not being able to meet the demand, uh, that they were seeing, and so, you know, we did the old-fashioned thing of, uh, I, I'm not personally, but we called them. And we said, you know, "How are you guys doing? What can we do to help?" And some people said, "We've got this. Don't worry. You know, this is, this is squarely in our wheelhouse. We can absolutely meet the supply." And others said, "You know, actually we need a little bit of help. We need to take a pause for a moment while we catch up with all these orders, and then we can kind of come back to, to taking more." And so just getting back to good old-fashioned, you know, know your customer, what do, what do they need from you at that moment was, was just a really kind of, uh, powerful, powerful thing that I, I took away from that time. And then from there, things kept going, and, and we really worked hard to make sure that the story was not just about face masks for our buyers, that they understood that, you know, Etsy's a place for so many different categories and so many different items, and that was, that was then kind of the next phase of the challenge. We got h- a huge influx of, of new or reactivated buyers. How do we keep them around? How do we make sure that, you know, the product does a little bit more work to retain them and, and can really, you know, have hooks that bring them back time and again? And so that was kind of the journey that we then went on, you know, mid-2020 to, to probably the, the subsequent 18 months or so.

6. 16:38 – 18:46

   What Tim learned about managing stress with his team during the pandemic

   1. THTim Holley16:38

   2. LRLenny Rachitsky16:39

      Is there anything you learned as a leader working and leading teams through that time? It must've been a pretty surreal experience, a lot of stress, people worrying about their own health.

   3. THTim Holley16:46

      I was one of the fortunate ones. Back then, no kids, worked in an industry that was, was clearly, you know, critical at the time, so, uh, I, I am in awe of how parents worked through that time. So stressful, yes, but not to the extent that other people experienced the, the stress of COVID. Um, we just tried a lot of stuff. I remember early on, I think we had maybe even daily, but at least three times a week coffee chats with the team, just like, "How are you guys doing? What's going on?" And at a certain point, we realized all we're talking about is exactly the same things. Nobody wants to be on more calls and, and more video, video chats, and so we just kind of continued to evolve and really tried to keep a pulse on, on what, what the team, what the team needs in that. Like I said, given, you know, context of being parents or whatever differed pretty dramatically person to person, so definitely wasn't a one-size-fits-all solution. That, that's more on, on the people side. I think on the, on the product side, we, as I mentioned, we were really starting to get focused on driving retention, or, or maybe said slightly differently, driving frequency, and that, that was a newer topic for us. We've, we've long at Etsy been a really, and, and maybe rose-tinted glasses speaking a little bit, but a, a really great experiment, AB testing driven culture, and so when you think about things like retention, you can absolutely test, of course. I'm not saying you can't.But you're looking at a different time horizon. Instead of someone making a purchase in that visit or in, in a week, you're, you're looking at do they come back in 30 days, in 60 days, in 90 days? And so that forced us out of our comfort zone to some degree in terms of how we understand, how we measure change, how long we're willing to wait to see it show up. Back to the incrementality point on minimizing waste, like is this actually adding value to the business? And so those were, those were great challenges to tackle, of course, on a pretty heightened, uh, degree of, of intensity and, and kind of focus from the business. But yeah, that was, that was an exciting

7. 18:46 – 21:47

   Lessons from building a thriving marketplace

   1. THTim Holley18:46

      time.

   2. LRLenny Rachitsky18:46

      Okay, so speaking of that, uh, I wanna chat about the marketplace and the marketplace you've built and things you've learned from building. I think it's one of the, I don't know, maybe top 10 marketplace businesses in the world, somewhere in there. And first of all, I'm curious just broadly, what have you learned is really important to just building a really successful thriving marketplace? And then I'll dig in, into more details, but just broadly, is there anything that comes to mind?

   3. THTim Holley19:09

      This narrative is still there, but I think we, we really focused heavily on the seller side, so the supply side of the business early on. And we, we really immersed ourselves in who sellers are, what they need, and how what they need maybe differs from what the solutions that they can find elsewhere. Back in the day, we were doing studio visits with sellers. We were going to their workshops, we were going to their homes. We were seeing how they make items. We were seeing how they package and ship them out. We were bringing them into the office when we were running hack weeks to say like, "Hey, we've got this crazy idea. Is, is this interesting?" Um, so trying to involve them in the product development process to the extent that it was, it was reasonable or feasible. And so I think that, that served us really well, right? We, we have a very deep and, and, and rich understanding of, of our sellers. And then the, the next phase was really and, and the more recent phase has been, how do we create a world-class buyer experience that ultimately drive sales for our sellers? Because when you have, you know, over 100 million items all of which are unique, you've got a different challenge than when you have, you know, 10,000 SKUs that you could kind of find anywhere or on, on many retailers. And so, you know, topics like structured data, topics like how do we help you gain confidence, buyer, that this thing will meet your needs from a seller who you may never have heard of. You know, they don't have a brand that you're, you've ever encountered before. And so we, we have some kind of somewhat unique challenges on that front where we need to lean into themes that other, other marketplaces absolutely touch on, you know. For example, uh, customer reviews play a big role in our experience. Uh, but they play a heightened role given the things I mentioned, right? Unique, unique inventory from a seller that, you know, i- is maybe a, an independent person who, who is, is a single, uh, you know, single entrepreneur. It's, it's one person.

   4. LRLenny Rachitsky21:04

      So you mentioned that initially the focus was on sellers which is really interesting 'cause a lot of marketplaces first of all need to figure out which side do we focus on, who do we cater to most. And the way you described it is initially it was how do we make sure the sellers that are joining Etsy are most well-served? And then later on, it became more of a focus on the buyer side?

   5. THTim Holley21:22

      Yeah, I, I guess that ... I'm, I'm painting it as a, as a linear approach.

   6. LRLenny Rachitsky21:25

      Mm-hmm.

   7. THTim Holley21:25

      It certainly was not. Um, you know, because if you've got supply without demand, then you don't really have a marketplace. If you've got demand and no supply to meet it, then you also don't have a marketplace.

   8. LRLenny Rachitsky21:34

      Yeah.

   9. THTim Holley21:34

      So there's this flip-flop between, you know, do, do you have enough to, enough supply to satiate the demand you have? And kind of playing that out, um, is certainly I feel like art, not necessarily strictly science.

8. 21:47 – 24:37

   Prioritization at Etsy

   1. THTim Holley21:48

   2. LRLenny Rachitsky21:48

      Yeah, so I'm curious how you all think about that actually. So at Airbnb, there's always this, this thinking of who do we prioritize if we have to make a decision? Is it host or guest? And it's shifted over the years at Airbnb. How do you all think about that? Is there kind of a here's who we're gonna prioritize if we really have to make a decision?

   3. THTim Holley22:05

      Yeah, and, and, and maybe to your point, that, that's also evolved at, at Etsy. And the, the place we're in at the moment is the job of a marketplace, even, you know, pre-, pre-the technology definition of a marketplace is a seller will go there to make sales. And if they're not making sales, they probably won't go to that marketplace. And so we really see it as paramount that we have a qualified set of buyers who are looking for the items, the type of items our sellers are selling and that we can, we can help them make a purchase decision, and therefore a seller make a sale. That doesn't mean that every single team is working on building features for buyers 'cause that, it doesn't work. Not least because you have a limited piece of real estate, marketplace and if you have too many teams working on it at one time, you'll end up getting in each other's way, and you won't be that productive. And so we, of course, we have a team that's laser focused on, on improving the seller experience. How do they, you know, list their inventory? How do they manage their sales? How do they fulfill their items as one example. But really back to the, the GMS as the north star. GMS represents a buyer buying from a seller, so it doesn't necessarily say build only for one of your audiences or one of your customers, but it says that that's really the job to be done here is, is helping, um, facilitate that transaction.

   4. LRLenny Rachitsky23:24

      That's exactly the same transition Airbnb went through. Initially it was focus on hosts, make sure hosts are the happiest people and do everything we need to make them happy, and then eventually realize like the business is the customers buying the product, and you have to make sure that they're the, the happy people. And sometimes they have to push hosts to do things they're not as excited to do for the good of the guest side.

   5. THTim Holley23:47

      And I think it's also the fact that, you know, we, we as the marketplace, I'm curious if this was true at Airbnb as well, but we have the insight into information, into data that an individual seller won't. And so we can help them make hopefully better decisions that lead to sales leveraging the insights that we have, you know. If you, if you put an item on sale during this time period, chances are it's gonna resonate with buyers, and you might make an incremental or you might get an incremental sale. And so trying to...... be really data-driven in how we help and guide sellers to take actions that we really believe will be valuable for, for them and their business. Because they, they simply, you know, they're, they're either a small business owner and so they don't have time to do that level of digging, or it's simply not accessible to them because, because they have the, the world view of their business and we're looking at, you know, the entirety of the marketplace.

9. 24:37 – 28:43

   Supply constraint vs. demand constraint

   1. THTim Holley24:37

   2. LRLenny Rachitsky24:37

      Maybe on this thread going a little nerdier, how do you think about supply constrain versus demand constrain? Is that something that comes up? I imagine maybe it's per category.

   3. THTim Holley24:45

      At the high level, you know, we have, we have 100 million items. So if you take that number, uh, at face value, you would think we do not have a supply constraint. We have largely, you know... We, we wanna drive buyers to that supply. When you dig in at, or maybe a more category, subcategory, sub subcategory level, that's where we do start to see pockets where, you know, maybe we wanna increase the type and the amount of inventory we have in, you know, wall décor, seeing, seeing something behind you. That might not be the, the right example. Um, but, but that's where we, we then start to focus and say, you know, are there areas where we wanna, we wanna lean in? Ultimately, really thinking about how do we help buyers choose? Because that, that's a, when you have 100 million items and even in a sub subcategory or for a specific search query, you still generally have a lot of results to choose from. How do you distinguish one item or one seller from another based on the needs that you have? When is it gonna arrive? How much does it cost? You know, is it this size or that size? So really trying to lean into, to those types of things. And again, to some degree that's E-comm 101, but given the scale we're at, it is a pretty unique challenge.

   4. LRLenny Rachitsky25:55

      What are ways you encourage your sellers to offer the things that you think you're lacking?

   5. THTim Holley26:01

      Back to that data-driven point, right? If we can clearly articulate that if you show more photos, you will help buyers understand your item in new ways, in deeper ways, and you're more likely to make a sale. Uh, that's a maybe a somewhat reductive example. Um, but those are the types of things where we, we, we generally know either through the data that we observe based on activity on the marketplace and/or through the, the research we're doing that this will be valuable. The, the challenge is often we have so many things that we want our sellers to do. What's the most-

   6. LRLenny Rachitsky26:34

      Yeah.

   7. THTim Holley26:34

      ... important thing for them to do right now? And that maybe changes somewhat seasonally, right? We're, we're, we're slowly starting to get towards the holiday season, and that just has a heightened purchase. It's a heightened time of purchasing. And contrast that with, you know, when it's around Mother's Day, maybe different type of inventory works really well. And so we need, we need different, uh, inputs from our sellers because ultimately they're, they're businesspeople. They have limited time in the day and they wanna spend time making. So how can we make sure that the time they spend on Etsy managing their inventory, you know, offering customer support is as valuable as possible?

   8. LRLenny Rachitsky27:09

      Yep. So essentially in-product messaging and recommendations and that you're showing to the sellers is the way you communicate to them?

   9. THTim Holley27:16

      Yeah. And, and to some degree we, we use the buyer experience to kind of signal what matters, right? When, when we're clearly highlighting photos, then that's, that's obviously a, a, a very-

   10. LRLenny Rachitsky27:28

       I see.

   11. THTim Holley27:28

       ... overly simple example. But what we're saying-

   12. LRLenny Rachitsky27:29

       Sellers just notice, "Here's what the search experience is highlighting."

   13. THTim Holley27:33

       As an example, yeah.

   14. LRLenny Rachitsky27:34

       Yeah. Yeah.

   15. THTim Holley27:34

       And then really thinking about, you know, some of the, um, the kind of signals or the snippets of information that we highlight, you know, what goes into that. We know that great customer service, a seller will be providing, they'll be responding to, to... We call them convos, but messages on our platform. They'll be responding really quickly and, and that's something that we then highlight in the experience and that, you know, if you're meeting that criteria, then, then we can start to signal to a buyer that, "Yes, this person offers really excellent customer service and, and you should..." We can set your expectations accordingly.

   16. LRLenny Rachitsky28:06

       Awesome. Yeah. We saw the same thing at Airbnb. One of the things that I worked on that was one of the bigger shifts in the marketplace was shifting Airbnb to an instant buying experience. And many hosts didn't want that because they really wanted to vet the guest and make sure they are happy with them, but it ended up being so important to conversion that we just encouraged them to turn that on. And one of the ways that worked best is exactly what you shared where in the search experience when someone came and searched, we just defaulted the search results to only show you instantly bookable listings. And hosts started to realize, "Oh shit, this is where things are going. I think I gotta really take this seriously."

   17. THTim Holley28:40

       Yeah.

   18. LRLenny Rachitsky28:41

       And that worked really well.

   19. THTim Holley28:42

       Yeah, interesting.

10. 28:43 – 33:27

    Conversion wins

    1. THTim Holley28:43

    2. LRLenny Rachitsky28:43

       Pulling that thread a little bit more, I'm curious what you've seen as some of the bigger conversion wins on the buyer's side in terms of experiments you've run that have had some of the bigger impact.

    3. THTim Holley28:53

       I won't say we're consistently, 'cause that suggests that we don't know what we're doing. We do. We are often surprised by what works, uh, in an outsized way and what we think is gonna be a knock it out of the park success ends up being of minimal value. But, but coming back to kinda maybe some of the themes I, I alluded to earlier, reviews have long been really important. And when you're reviewing an item, like I said, that's unique, that's from an independent seller, the type of information that another buyer is looking for is maybe a little different than other marketplaces that they... Or even, you know, platforms that they might be shopping on. And so really trying to lean into, well, what does it look like in a buyer's hand, in a buyer's home? Uh, maybe that gives the, the next purchaser a bit more confidence that it's the right size, it's the right color, whatever it might be. And so that's, that's long been a track that has been very fruitful for us and continues to be something that we, we iterate on, that we focus on.

    4. LRLenny Rachitsky29:47

       Just so I understand that essentially it's recommending to sellers, here's the photos you should have on your listing page.

    5. THTim Holley29:52

       Rather... No, collecting from buyers. So a seller will give us the-

    6. LRLenny Rachitsky29:56

       Oh, got it.

    7. THTim Holley29:56

       ... the, the, the photos that they're, that they're gonna, they're gonna take and then we can augment those with the, you know, we call them buyer, buyer review photos. But ultimately the, the experience the purchaser is having, either through photo or video is super, super valuable.

    8. LRLenny Rachitsky30:12

       Great. Okay, cool. So, um, adding specific photos that you find help buyers convert.

    9. THTim Holley30:17

       Yeah.

    10. LRLenny Rachitsky30:17

        Keep going.

    11. THTim Holley30:18

        And then the other side is, is really leaning in to maybe more, the quote-unquote, behavioral economic tactics of just helping buyers make decisions. You know, signals and nudges, is, is how you'll see it referred to in literature. And, and we've seen great success in, in elevating little snippets of information that, you know, really help a, a buyer understand, "Oh, there is actually only one of these. Well, that's, that's good information to know." It's something that then, you know, fits into their, their decision-making process, that might have otherwise been buried. And so really the... yeah, leaning into the, the quick summaries, the easy glanceable information that enables a buyer to gain enough confidence to say, "Yeah, this is... out of these 100 million items," or, "The, the, the results for this search query, this is the one that I feel best about buying." Um, we've seen lots of success on, on that track as well.

    12. LRLenny Rachitsky31:10

        That was a track at Airbnb as well. One of the ways they did this is they called it a Rare Gem, which is something that's available right now that's very popular. And they created this kind of iconography for it, and, uh, engineers on the team ended up for Halloween dressing up as a Rare Gem, became like a whole thing at the company. And what's funny about Airbnb is every home is a one of a kind. Like there's only one left always.

    13. THTim Holley31:30

        Right. Yep.

    14. LRLenny Rachitsky31:30

        And there's always jokes about, "We should always be like one left. You better book now." (laughs)

    15. THTim Holley31:34

        We had a great, uh, uh... I, I believe it was introduced... I don't believe. I know it was in- introduced, uh, as, as a, as a issue or a bug, but we ended up showing four stars, and the, and the fifth star when it was a half star got rendered as a horse emoji.

    16. LRLenny Rachitsky31:53

        (laughs)

    17. THTim Holley31:53

        Um, and so for, for a second there, on Etsy, we had four stars and a horse showing up for some of our review ratings.

    18. LRLenny Rachitsky32:00

        Mm-hmm.

    19. THTim Holley32:01

        And that spawned a huge amount of, of internal, uh, fun, and then back to the, your point around Halloween. We had, we had a few teams being, you know, four stars and a horse. It was, it was, uh-

    20. LRLenny Rachitsky32:13

        Amazing.

    21. THTim Holley32:14

        ... pretty, pretty interesting.

    22. LRLenny Rachitsky32:15

        Was it like five people, where four people were a star and there was a horse person? (laughs)

    23. THTim Holley32:18

        Yeah, exactly.

    24. LRLenny Rachitsky32:19

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11. 33:27 – 37:58

    Experimentation at Etsy

    1. LRLenny Rachitsky33:27

       So going down this track a little bit more, one of the biggest wins for Airbnb's search experience was this very small idea of just, what if you open each listing in the search results in a new tab? And that ended up converting like 1%, like increasing conversion by 1%. Is there anything like that, that you, you remember that you've done and just like, "Holy moly, that was so simple but such a big win"?

    2. THTim Holley33:47

       Yeah. We, we, we have similar, uh, learnings around that, that exact example. Oftentimes, you know, I think about kind of effort and reward. So, it might be a smallish GMS win or conversion rate win, but it was a one-line text change. And we've seen those, where we add a small snippet of a... maybe we feel like it's, it's almost marketing copy, and it ends up having an outsized impact. You know, we had one example where we added, added some text to the, to the cart experience, and, uh, we just saw huge uplift that we really, really didn't expect. Um, it was more us communicating our values as a business, and, and it was something that really seemed to resonate with our buyers. And so that, that drove conversion. We've got examples where it's, you know, a one-line copy change, and it's, it's quite, quite shocking the impact that that can have.

    3. LRLenny Rachitsky34:36

       I'm curious what that change actually was, the text change that had that much impact, if you can recall.

    4. THTim Holley34:42

       We- we've long and continue to invest in sustainability. And the, the text change was in our cart where, uh, we call out, "Etsy offsets carbon emissions from every delivery." And just adding that simple line of text was something that, like I said, really resonated with our buyers and the type of customer that comes to Etsy. And, and really, yeah, drove, drove conversion.

    5. LRLenny Rachitsky35:03

       I had Rodney Kohavi on the podcast, who's one of the lead experts on experimentation. And he had the stat that 80% of experiments fail across, at each company on average. Does that sound about right in terms of how you guys find experiments working out?

    6. THTim Holley35:17

       Yeah. Yeah.

    7. LRLenny Rachitsky35:18

       Awesome. Okay. What is your just general philosophy on experimentation? Does everything run as an experiment? Do things sometimes not run an experiment? How do you think about that at Etsy?

    8. THTim Holley35:28

       Right now, the vast majority of our changes do. And to be perfectly candid, I think that's one of our growth edges as a, as a product org and maybe even as a company, is, is bringing in different ways to validate changes. 'Cause to some degree, or, or maybe the way I think about experimentation, that's the highest bar. That proves with near absolute certainty that there's a causal relationship between the change you made and the KPI that you want to move. But I think that that is... it maybe misses the point in some, uh, some changes or some areas where you, you're working towards a bigger net new thing, or this specific change won't really be indicative of the greater whole you're building towards. So, so we've, we've... like I said, I mentioned earlier, we've long been a very A/B testing driven organization, not least because, you know, Etsy's...... kind of background and history has deep, deep roots in, in an incredible engineering culture. And so that's, that's kind of really tried and true. Uh, so the vast majority of things are tested in that way. We're expanding how we think about looking at cohorts over time. I mentioned retention earlier. That, to some degree, ne- necessitates a different type of test. When we look at our SEO work, you know, it's, it's... You, you can't think about it in, in exactly the same ways. But the through line is, is the change that we're making adding value? And that's what we want to try to understand. A/B testing's a great way to do that. There are others, some of which we're starting to employ, others that, you know, we'll, we'll continue to, to investigate and, and think about how we can leverage.

    9. LRLenny Rachitsky37:02

       Is there an example of anything, and if there's not, that's totally cool, of something that you've shipped that was maybe, uh, negative on the r- on an experiment results or you just didn't want to run as, as, as an experiment?

    10. THTim Holley37:12

        When, when we're collecting inputs from sellers, we just simply don't feel it's appropriate to not either, uh, show or honor, right? Like we, we talk about a tried and true practice of sales and, and discounting. If a seller offers something on sale, then we need to show that. We're really curious about how that actually drives buyer behavior, and there's ways that we can kind of construct pre/post analyses and things like that to try to understand the impact. But ultimately, tho- those are the kind of areas where we, we err on the side of, of looking at our data in different ways. And so we have maybe a slightly different degree of confidence in the value, but we're still confident that it does, does help the marketplace as a whole.

    11. LRLenny Rachitsky37:55

        That's a great example. Yeah, I'm not sure what I'd do there. That is tricky.

12. 37:58 – 39:44

    Acquisition and top-of-funnel tactics

    1. LRLenny Rachitsky37:58

       So we've been talking about conversion. I'm curious, in terms of acquisition, what you've seen work. And just generally, how do people find Etsy? How do you drive top of funnel for Etsy?

    2. THTim Holley38:06

       I guess there's two sides to Etsy, right? There's the seller and the buyer. Getting in the Wayback Machine, we would... O- on the seller side, we would be at craft fairs like, uh, Renegade and, and other places where our sellers were selling in person, and really letting them know that, that Etsy exists. And so that was very, you know, boots on the ground, let's, let's get out and, and try to acquire, acquire sellers into the marketplace. Some of that predates me to some degree. Um, we were probably doing it, uh, on the tail end when I joined. And, and then we have a lot of great word of mouth through our sellers, right? A seller probably knows other people who are similarly inclined to be incredible craftspeople, uh, who want to sell their items. And so we've seen s- some success with our... We have a teams platform where sellers can come together, ask each other questions, and, and kind of the word of mouth type of growth through that. On the buyer side, we really leverage the fact that we have a ton of inventory. And to some degree, uh, it ends up being quite a long tail of inventory, where we can meet really niche and specific needs. And so that lends itself really well to thinking about SEO, lends itself really well to thinking about Google Shopping, where someone you know is not on Etsy but is often looking for something either somewhat or very specific. And we can really meet their needs in a, in a really meaningful way by showing them not only just a single item, but maybe that and then other options that they might find that are of a similar vein, in a similar sub-sub-subcategories (laughs) in some cases. And so, so those have been, you know, long tried and true areas that we've, we've invested in and we've seen really great success in driving, in driving new buyers to

13. 39:44 – 40:33

    The seller referral program

    1. THTim Holley39:44

       Etsy.

    2. LRLenny Rachitsky39:44

       I researched and written about that story of how Etsy started with sellers and craft fairs, and so that's a really classic story. And I think there's also an element of the early sellers drove the early buyers, 'cause they're just like advertising their listing page, "Here's where you could go buy," which is a really unfair, rare opportunity to kind of grow the marketplace by just focusing on sellers.

    3. THTim Holley40:04

       I mean, yes, and a seller is a buyer-

    4. LRLenny Rachitsky40:07

       Right.

    5. THTim Holley40:08

       ... right? And so if, if they're making something that they poured their heart into, chances are they, they will value that exact same behavior in someone else. And so if they're, uh, selling an item, they're looking for other things in, maybe not their exact category, but in adjacent categories, and they, they become buyers. So it is, it is a nice dynamic when, when that starts to work.

    6. LRLenny Rachitsky40:29

       Yeah. So many natural advantages to getting this marketplace off the ground. How cool is that?

14. 40:33 – 44:11

    Etsy’s habit loop framework

    1. LRLenny Rachitsky40:33

       You mentioned word of mouth is a big part of how Etsy started spreading. And I imagine even today, there's a lot of just, "Hey, you should check out Etsy." Is there anything you've done that accelerates word of mouth or builds on word of mouth? Referrals comes to mind. Is there anything along those lines?

    2. THTim Holley40:46

       Yeah, we've... We dabbled with referral programs a while ago, eh, probably eight some years ago. What we saw... It was a different time, and so I think we, we maybe didn't value a new buyer, for example, in the way we do today. 'Cause to some degree, right, you're unlocking future value. They, they make a single purchase, and then the bet is over time, they'll go on to make subsequent purchases. We didn't necessarily have that as deep an understanding then as we do now. So our buyer referral program ultimately wasn't a huge success. But on the seller side, this was back in the days of, of Dropbox referral program being, you know, a huge, huge driver of their growth, and the whole like give/get, uh, concept that, that was, was really prevalent back then. And, but on the seller side, one of the, the, the things that we really leaned into was... On, on Etsy, for those who aren't familiar, it costs 20 cents to list an item. And that may seem like a very small financial outlay to get started, but it's a little bit of a barrier. And the more we can do, uh, to remove those, you know, the, the, the higher chance that someone will either, you know, become a, become a seller or, or list more items. So we real- re- really leaned into that as the currency for the seller referral program. And coming back to what I said around teams, that was a really great way to kind of supercharge some of that activity that was, was either happening but could be... The, the... More of it could happen, or really like helping a seller understand like, "Oh yeah, there is a hook here." You know, "If I offer this person, uh," you know, "if r- if I refer them, they'll get some listing credits. It'll be easier for them to open their shop. And then when I need to list more items, I also have credits that I can apply." So that, that was one small area. I wouldn't say it was a, a huge driver of growth. But in certain markets, in certain pockets, we saw it work pretty well.

    3. LRLenny Rachitsky42:27

       Awesome. That also helps with fraud, which is a huge problem with referral programs where the money isn't... Like, the credit is just, you can list on Etsy. It's not like you can, uh, steal all that money away from the business. So, that's clever.

    4. THTim Holley42:39

       Yeah.

    5. LRLenny Rachitsky42:40

       Okay. I wanna talk about one other part of the funnel. Retention. Is there anything you've learned that has been really effective to help with the retention?

    6. THTim Holley42:46

       We have long had features that are kind of retentive in their nature. Things like, we, we, on, uh, Etsy we call them favorites. You know, that might be liking or, or a similar action on, on other places. But how do we think about the habit loop of, if you take an action, what's the trigger and then what's the reward? And so using a favorite as, as an example, you favorite an item, that's a pretty strong-ish, of course adding it to your cart or, or maybe d- and purchasing it. That's the strongest of signals. But you've shown intent. So what can we do with that information? We can then say, "The seller put it on sale. You should come back and check it out. This is selling out. There's only one of this item left. You know, you showed some intent. You might wanna come back and get it." And that's, that's just one example of trying to, like, close those loops. And that's where we've, we've worked on things like we call it the updates feed. Potentially a feed of activity that you've taken that we're demonstrating how it's changed, what's new. And then pulling in, you know, the, the tried and true tactic of push notifications to make you aware of that such that, you know, you're, you're using your phone all the time, you see that show up. That's a pretty great notification to get, right? "The thing that I really liked is now on sale. I wanna check that out." And so tho- those are examples where really leaning into that, that habit loop framework has, has helped us understand we, we've got a lot of this activity, how do we close the loop? How do we make it really valuable for our buyers?

15. 44:11 – 51:23

    How they set themselves apart from other marketplaces

    1. LRLenny Rachitsky44:11

       Zooming out a little bit, it's kind of wild that Etsy can exist in a world of eBay and Amazon. And I'm just curious what it is that you think the founders and the team did early on to carve out the space of like, I know you could buy things from people, you can buy things on Amazon really quickly, to create a world where Etsy builds this massive business that continues to thrive. What do you think was, was done so well to carve out the space?

    2. THTim Holley44:36

       I think the, to some degree resolves down to, and maybe that's little too extreme, but a key component is the brand. The brand stands for something in people's minds. And that helps understand, you know, you're not gonna get the same inventory on Etsy. You shouldn't expect the same inventory on Etsy as you might be looking for on eBay. It just doesn't, it doesn't make sense to our buyers. They, they're, you know, the, the items that our sellers sell are unique. And so I think that that is kind of the core nugget combined with, you know, how we think about, about policies and, and our way to, to some degree maintain the integrity of the marketplace. Those two things combined do set us apart. And, and, you know, the, any... I think if you ask many people certainly here in the US what they think of Etsy, a very specific image will be conjured up. That may be one that we wanna evolve and, and build on, but it, it feels quite distinct and it's not the same as eBay and it's not the same as Amazon. And I think there's real deep value in that. And that all... I think I wasn't here at the very beginning, but it's certainly, you know, something that was there at the very beginning of Etsy that is still kind of like a through line to where we are today.

    3. LRLenny Rachitsky45:53

       That makes absolute sense to me. On the other hand, I also don't know how that happens. Is there anything that you think about of how the team did that and then how they built that brand? Like, what are some of the important elements? Is it like a specific aesthetic? Is it a certain type of supply that you stuck to? What do you think was so important to building that brand?

    4. THTim Holley46:12

       I think it is, it is the supply. If you think about the, the marketplace, the vast majority of content is maybe what you, we might consider UGC. It's either the, the item is from the seller or as I was mentioning before, the buyer review is, is from the buyer. And so just being really clear about what, what i- what's okay to sell and what's not okay, I think does, does really differentiate us. Um, I, I also think o- over the years, you know, our, our brand and our aesthetic and how we position ourselves has evolved, will continue to evolve as it should. But it, you know, to the point where we are now, our, the, the statement we have is keep commerce human. And that feels really simple, super pithy, easy to remember, but has, has lineage when you go all the way back to kind of where we started in terms of really valuing, valuing the unique, valuing the handmade. And so that, that does permeate kind of decision-making, how we show up, the type of features we work on, the things we would prioritize. You know, maybe never say never, but like, you know, an item getting dropped off by a drone and a person never touches it. Like, that doesn't, that doesn't feel very Etsy. That, that's not something that we might, we might lean into.

    5. LRLenny Rachitsky47:22

       It's interesting how many parallels Etsy has to Airbnb, because Airbnb is the same general idea. It's, uh, it's people's homes.

    6. THTim Holley47:29

       Right.

    7. LRLenny Rachitsky47:29

       People making things. And then also, I think the tagline for Airbnb early on was travel like a human. So it's actually a really similar concept-

    8. THTim Holley47:36

       Yeah.

    9. LRLenny Rachitsky47:36

       ... which touches on a question I wanted to talk about, which is many marketplaces as they grow become supply constrained and then there's this pressure to add different types of supply. Like in ex- in Airbnb's case it was, "We should add hotels. We should add property management, vacation rental companies on here. We should have everything people wanna book 'cause we're losing business. They can book anything here." They should be able to, but the, the tension is then we become like everyone else and then what's, what is Airbnb anyway? I- what is Airbnb in that case? And I think Etsy went through that experience where there was like a lot of cheap products from overseas and it's kind of being flooded. Is that true, I guess? And then just how do you think about that limit and where, where do you draw that line?

    10. THTim Holley48:17

        Yeah. I, I think it does, it, it does come back to some degree to the, the brand and the policy point from, from just before. And, and we take, we take our enforcing our policies really seriously. It's not an easy job at our scale, you know. Th- and that means we need to continue to invest and continue to make sure that only the best items, the most relevant items are on Etsy. Uh, that job is never done. The team that does that works super, super hard and is always kind of looking for, for new signals to understand, you know, what maybe doesn't meet...... our, our criteria. Generally speaking, supply is something that we, we have in, in spades for the most part, back to the, the point we, we talked about earlier. One of the things that we, we grappled with was around how can we help sellers scale? Right? They sell great inventory but maybe they just don't have enough of it or they can't meet the demand because they're, they're making everything by hand. And so one of the things that, that was an evolution was leaning into what today we call production assistance. And the way I think about that is you still need to understand the provenance of your item, right? If you're saying, "I have this design, I'm just gonna throw it over the fence to a manufacturer that I've never met, that I don't know, I don't understand their processes, I may not agree with them," that doesn't meet our criteria. You need to understand how it's being made, who is making it, uh, have a relationship with the, the person who's helping you scale your business. But that's something that we saw from, from people who were maybe more, would gravitate more towards being designers than being able to actually make the thing. They have this excellent idea, they just can't see it come to life and so they need some help. And, and that was something we leaned into to be able to, like I said, help, help sellers that maybe weren't able to, to make a thing, make a thing and sell it on Etsy, or for sellers who were reaching the limits of what they could supply, really, really take it to the next level and, and, you know, make more items such that they could make more sales.

    11. LRLenny Rachitsky50:10

        So it sounds like there's essentially this just, like, evolving definition of what supplies allowed on Etsy, a team that stays on top of that. I imagine there was just, like, a hard decision at one point of just, "We will limit supply and here's what supply that we want on the platform. Everything else, we're gonna take off."

    12. THTim Holley50:25

        We would limit the, the type of items-

    13. LRLenny Rachitsky50:27

        Yeah.

    14. THTim Holley50:27

        ... the supply, the number of those items that as, as, you know, we talked about, there's still a lot of them-

    15. LRLenny Rachitsky50:32

        Yeah.

    16. THTim Holley50:32

        ... um, but really having that clear definition. In some cases it's, it's easy, right? Some things are just, they're, they violate legal-

    17. LRLenny Rachitsky50:40

        Yeah.

    18. THTim Holley50:40

        ... uh, definitions.

    19. LRLenny Rachitsky50:41

        Right.

    20. THTim Holley50:41

        And those things are, are, are, that's the easy stuff to think about.

    21. LRLenny Rachitsky50:44

        Yeah.

    22. THTim Holley50:44

        It's where it's a little more gray that, then it gets a little trickier.

    23. LRLenny Rachitsky50:47

        That reminds me, so my wife is actually a designer and she produces these hilarious charts about life stuff and people take her designs and just sell them on every platform, on Zazzle and probably Etsy but everywhere and it's, it's a, she's always trying to hunt them down and get them to take 'em off, but it's such a pain for like, her small designer. And I, I think, it's not a Etsy problem, it's just a general internet problem.

    24. THTim Holley51:08

        Yeah. And, uh, and, and back to the, you know, we have teams hard at work, we have teams hard at work thinking about IP and how to, how to police it, how to enforce it.

    25. LRLenny Rachitsky51:15

        It's tough.

    26. THTim Holley51:16

        Um, not a, not a domain I will suggest I'm an expert in. Really, really tricky stuff. But we've, we've got to be beyond

16. 51:23 – 53:23

    Retaining sellers

    1. THTim Holley51:23

       that.

    2. LRLenny Rachitsky51:23

       Yeah. Another, I think problem that's sort of unique to Etsy, something that I think people call the graduation problem which is where you join Etsy, things start to grow, you become really successful and then you're like, "Why am I paying Etsy all these fees? Why don't I just make, make my own website and just sell it directly and not pay any fees?" And I think you guys went through that.

    3. THTim Holley51:43

       Yeah.

    4. LRLenny Rachitsky51:43

       And so if that's true, is there anything you've learned about just how to avoid getting people to want to leave?

    5. THTim Holley51:48

       I think the, the, the core thought there is our fees are generally low and highly competitive so from that perspective, there's, there's reason to stay on Etsy. What we've seen and what we know, you know, our sellers are really smart businesspeople and so if they can distribute their products through another channel, that might be their own website, another marketplace, in person, probably gonna try to do that, right? They, they want to make more sales. Many, many of them, not all, but many of them are wired to want to grow their business and so really understanding the role that we play in that kind of construct of, of distribution channels to make it a little reductive is really helpful to understand. And, and to some degree we want to be the place that not only they, they, they make sales on but they love to sell on because our tools are really catered to the needs that they have. So there is some degree of stickiness. I mentioned teams earlier. There are places where sellers go to kind of congregate and share ideas, share, uh, grievances in some cases, but ultimately support each other and so there are reasons to kind of stick around. I'm sure there are certainly sellers who scale out of Etsy or who realize, "I wanna, I wanna build my own website," to the example you cited. The reality is, that's neither cheap nor fast. It's hard work, it's hard work to build, hard work to maintain, expensive to drive traffic to, and so that, that may be a part of their kind of the way they want to take their business, but oftentimes Etsy still does play a role in, in how they're thinking about, about where they make sales and, and,

17. 53:23 – 55:18

    The defunct Etsy studio

    1. THTim Holley53:23

       and ultimately where they're gonna see growth from.

    2. LRLenny Rachitsky53:25

       A cool thing that I saw online about you is that you built a marketplace essentially within Etsy called Etsy Studio.

    3. THTim Holley53:33

       Yes.

    4. LRLenny Rachitsky53:33

       And I'm not sure if that's around anymore but I'm curious just what the story there was and what you learned from that experience and what-

    5. THTim Holley53:38

       Yeah.

    6. LRLenny Rachitsky53:39

       ... and what's its current status.

    7. THTim Holley53:40

       Yeah. Uh, well researched, um, because no-

    8. LRLenny Rachitsky53:43

       (laughs)

    9. THTim Holley53:43

       ... it is, it is no longer around.

    10. LRLenny Rachitsky53:44

        Mm.

    11. THTim Holley53:45

        The white space we saw with Studio was essentially saying on the one hand you've got Pinterest fails, right? You've got all these great inspiring items or, or, or projects on Pinterest and then you have people who have no idea how to make them and they get so frustrated. And then on the other hand, you've got a marketplace like Michaels or, or these other places where you might go for craft supplies. They're, they have stuff but they don't necessarily have inspiration and how can we play in that intersection of, of, of the idea and the items to, the items and the tutorials to see that idea come to life? So that was kind of the genesis of the idea, felt from a brand perspective super aligned. You know, we stand for creativity, we stand for makers and so we, we saw it as a, as a big opportunity. The launch happened to coincide with the, the kind of pivot in 2017 uh, to, to really focusing on the core marketplace, or refocusing on the core marketplace maybe I should say and so it became clear that, you know, when, when we laid out what we're optimizing for which is driving sales in the short term,... marketing dollars being as ROI positive as possible, you know, having teams focused on the core marketplace. It didn't check any of those boxes and so really, really tough decision and, and hard to manage through. But that was ultimately the right call for the business to say, you know, this doesn't, this no longer makes sense given the new constraints that we're operating in, given the new goals that we have.

    12. LRLenny Rachitsky55:10

        Makes sense. Also something that happened to Airbnb a lot, trying new things that they didn't work out.

    13. THTim Holley55:14

        Yeah, totally.

    14. LRLenny Rachitsky55:14

        They had to move on.

    15. THTim Holley55:15

        Yep. Yeah.

    16. LRLenny Rachitsky55:16

        That's how it goes.

    17. THTim Holley55:16

        Yeah, yep.

18. 55:18 – 57:20

    Running the product team

    1. THTim Holley55:18

    2. LRLenny Rachitsky55:18

       Shifting a little bit to just product leadership and running the product team, and just a few more questions. What's something that you've found to be really important to having a productive, well-run, while executing product team?

    3. THTim Holley55:31

       Yeah. One of the things that's, that's certainly not completely novel but I think we have a pretty unique interpretation of is how we collaborate between functions. You'll often hear, you know, the three legs of the stool where you've got product and engine design and we've, we've evolved that to five legs of the stool. And I, I fully recognize that a five-legged stool probably is not a very stable thing, but, like-

    4. LRLenny Rachitsky55:54

       Really?

    5. THTim Holley55:54

       ... go with the analogy for a second.

    6. LRLenny Rachitsky55:55

       I think it'd be even more stable, right? Is that the most stable stool or is it less stable with five legs? That's-

    7. THTim Holley56:00

       You know, you probably need a really flat surface.

    8. LRLenny Rachitsky56:02

       Confusing. Right, makes sense.

    9. THTim Holley56:03

       That's, that's maybe... Regardless, (laughs) is you know of course we've got product eng design and we've got our insights partners, so research and analytics, and we've got our marketing partners really working in, in, in a tight team to build the best products possible. And so I think that, you know, we can continue to get better absolutely at how we make decisions and how we bring the, the various viewpoints together. So to some degree it's not like... It's not the easiest path, but it's the best path, I think, where you're, you're really incorporating different viewpoints, different constraints, different considerations into the features and the products that we're building. And treating that as kind of the core leadership team I think is, is, is really valuable. And, and maybe that's partly because generally we don't, we don't subscribe to this idea of PM as the mini CEO. You know, you're up there directing from on high that we're gonna build that feature and we're gonna do that, and, and that's just not, not the type of culture that we have. And, and generally speaking from what I've seen doesn't lead to good, good decisions or, or the best features or product being built. And so collaboration is something that we, we really value and that we try to live through how we structure our teams, how we make our decisions. Um, is it perfect? Like I said, absolutely not, but I think it's, it's the, the way that we've found being really successful building

19. 57:20 – 1:01:20

    Who the decision maker is

    1. THTim Holley57:20

       product.

    2. LRLenny Rachitsky57:21

       Do you give the PM like just a little more say in decision-making and ask, because with five people in a leadership team, you talked about how back in the day it was like too consensus-driven maybe. And I wonder how you navigate that with five decision-makers.

    3. THTim Holley57:35

       Yeah. Uh, the... We're always looking to clarify or reclarify or restate how, who ultimately is accountable. And in many cases it is the PM, right? You are the one who is, um, who... Nick, our, our CPO likes to say, "You don't have to have the best ideas, but you have to choose the best ideas." And so really figuring out how you're selecting what you're gonna build and then living with the consequences. Of course ideally successful, in many cases back to your 80% stat that experiments, 80% of experiments don't work.

    4. LRLenny Rachitsky58:06

       Mm-hmm.

    5. THTim Holley58:06

       Owning what's next, right? Okay, did we learn from that? If we did, what are we gonna do about it? That definitely does fall to the PM. It doesn't give you the permission to ignore other viewpoints or make decisions in a vacuum. It's certainly not that. But ultimately when, when we need to move forward, it is the PM that, that is on the hook for those things.

    6. LRLenny Rachitsky58:25

       Awesome. So essentially the PM can make the call if there's like a unclear consensus.

    7. THTim Holley58:31

       And, and given we're so... And, and many places are, but we're so heavily led by the insights, either qual or quant, the decision in many instances is clear. Uh, when it's not, that's when, you know, we need, we need the product person to, to step forward and say, "We're going in this direction. Don't know if it's gonna work out, but we'll certainly learn and we'll move forward."

    8. LRLenny Rachitsky58:50

       Awesome. And then just to go on this topic a little bit more. Your teams are cross-functional, dedicated teams I imagine. It sounds like there's these five leads for each team. Is that roughly how you organize?

    9. THTim Holley59:01

       Yeah. And, and I, I... The, the fifth leg, if you will, uh, of marketing, that might be product marketing, in some cases that might be brand marketing in others. And so there's kind of different flavors that we, of marketing that we pull in based on, on the specific needs of the project. But that's generally speaking how we try to, try to structure our teams from kind of the, the group level all the way down to the, to the individual squad. We all... Can't always have, you know, a, a dedicated research and a dedicated analyst and a dedicated product marketer to every single team. So, you know, it's, it's certainly not perfect, but that's what we tr- we aspire to having at least coverage on those roles.

    10. LRLenny Rachitsky59:37

        Got it. So most teams have a dedicated marketing person or a product marketing person. That's crazy. That's really rare, but interesting.

    11. THTim Holley59:42

        Some, some teams. Some teams.

    12. LRLenny Rachitsky59:44

        Some teams that-

    13. THTim Holley59:44

        Yeah.

    14. LRLenny Rachitsky59:45

        ... I imagine are most in need of marketing support.

    15. THTim Holley59:48

        Yeah.

    16. LRLenny Rachitsky59:48

        Got it. Are you able to just paint a rough picture kind of the way the teams are laid out at Etsy? Just like imagine there's a buyer side and a seller side. How does that look-

    17. THTim Holley59:57

        Yeah.

    18. LRLenny Rachitsky59:57

        ... for people to get a sense?

    19. THTim Holley59:57

        Yeah. The, the way that we, we think about the structure right now and, you know, the, the org design should ideally follow strategy. And if your strategy is always evolving, then your org design is always evolving. We, we call it the product stack. And so at the... We've, we've got our core customer teams who are unsurprisingly thinking about buyers and sellers, and so they're, they're the ones on the front lines with, with the seller, with the, the customers. Then we have our, we call them our, our partner teams. And so they are working directly with the end customer. So think an organization like payments where they have clearly a way to capture payment from a buyer, to remit funds to a seller. So they're really on the front lines with the customer, but they also have other constraints working with the, the payment networks and card providers and things like that. So they just have a, a slightly different model. So core customer...... partner teams, enablement teams that are really in service of helping deliver the best possible experience. That might be through our recommender systems or through our design system in order to make, you know, developing just that little bit easier, a little bit faster, a little bit more standardized in some cases. And then the- the- the kind of the foundation of it all sits with infrastructure and- and the teams that you might expect that are much more technical in nature, that really without that, (laughs) you know, we wouldn't have a website.

20. 1:01:20 – 1:03:03

    What Tim looks for when hiring PMs

    1. THTim Holley1:01:20

    2. LRLenny Rachitsky1:01:20

       When you're hiring product managers, is there anything that you've found to be really important, or- or interesting, or maybe like a unique insight into hiring PMs?

    3. THTim Holley1:01:28

       The three things that- that I come back to time and again is one, the collaboration piece that we talked about earlier. Not only a willingness, but a real excitement to do that. It- it's not- it's not everyone's bag. I get that. Some people just want to be in a, you know, make fast decisions and- and move forward place. We aim to make fast decisions, but you need to consult. So that's one. Two is being decisive. We have tons of data, but it's not always clear exactly what to do with that. Or we're using a new input maybe back to the point mentioned earlier of looking at competitive insights, you know, let's- let's make a decision, let's move forward. Let's ideally learn even if we're not making progress against our goals, we're at a minimum learning. And then the- the third point is just curiosity. Because we're a relatively small organization with, and I'm, you know, everyone says, "Ah, if only we had more people." But we are quite small and so there is a lot of change, there's a lot of new priorities that crop up and tha- that means there's a lot of opportunity for the right folks, right? If they're, "I wanna be in this space and only this space and this is my specific domain and I just wanna be in it forevermore." That might be a little more challenging because you might be asked to work on something net new. And so just having that curiosity mindset of saying, or maybe said differently, growth mindset of, "Okay, there's- there's something to learn from the thing I'm being asked to do. Let me really like lean into that." And to some degree I'm not describing anything that's atypical of- of great product people overall, but I think we have, we have either a slightly different flavor or we need it in a slightly different way here at Etsy.

    4. LRLenny Rachitsky1:02:59

       Awesome. Last question before we get to our very exciting lightning round.

21. 1:03:03 – 1:05:08

    A reflection exercise Tim does with his teams

    1. LRLenny Rachitsky1:03:03

       Is there a- a framework or a process that you find really useful, that you find yourself coming back to, that you think listeners would potentially find really valuable?

    2. THTim Holley1:03:11

       I won't pretend to know whether listeners find it valuable, but uh, the thing that I do a lot that we do as a, as- as my team, that others do to some degree is a simple exercise of weekly focus. What are you focused on this week? And then reflecting on did you get done the things you were focused on last week? Seems super simple, but just the exercise of thinking about what matters, writing it down and having a little bit of social proof or like articulating it out to others creates some degree of accountability, is something that- that is- is- is very, very easy and simple to do. Uh, and if you do it consistently, you start to see some really great patterns of like those types of focus areas take me longer than I think, I should budget more time. Or these are the type of things that crop up at this time of year, I might need to start thinking about making some space for them. So I've just found that to be really, really, really helpful in the day-to-day.

    3. LRLenny Rachitsky1:04:06

       I love that. How do you operationalize that? Is there like a Slack channel people post these in? Is it a doc-

    4. THTim Holley1:04:11

       Yeah, like in our- in our buyer experience product channel, uh, on Mondays we e- everyone's kind of sharing what they're focused on. Ho- how last week panned out, you know, was it done? Is it still in progress? Things like that. It's- it's very, very lo-fi, um-

    5. LRLenny Rachitsky1:04:24

       Right.

    6. THTim Holley1:04:24

       ... but it- but it works pretty well.

    7. LRLenny Rachitsky1:04:25

       So it's kind of like a standup that happens once a week and it's higher level essentially is what it sounds like.

    8. THTim Holley1:04:30

       Exactly, exactly. Trying to think about the priorities and not tasks. And that is a blurry line, I fully recognize that. But anchoring in those I think is f- certainly for me personally more, more helpful.

    9. LRLenny Rachitsky1:04:41

       And is the comedian person in these and sharing funny things?

    10. THTim Holley1:04:45

        (laughs)

    11. LRLenny Rachitsky1:04:45

        In the standup-

    12. THTim Holley1:04:46

        No.

    13. LRLenny Rachitsky1:04:46

        ... standard standup?

    14. THTim Holley1:04:46

        No, unfortunately well, or- or fortunately he is now actually a comedian, um-

    15. LRLenny Rachitsky1:04:51

        Are you serious?

    16. THTim Holley1:04:52

        ... he's- he's doing his thing.

    17. LRLenny Rachitsky1:04:52

        He became a full-time comedian. That's amazing. And with that we've reached our very exciting lightning round. Are you ready?

    18. THTim Holley1:04:58

        Hit me.

    19. LRLenny Rachitsky1:04:59

        What are two or three books that you've recommended most to other people?

    20. THTim Holley1:05:03

        Couple that come to mind, uh, Team of Teams by

22. 1:05:08 – 1:11:56

    Lightning round

    1. THTim Holley1:05:08

       Stanley McChrystal has been, I think is just A, a really fascinating read and B, uh, helped me think a lot about how you trust teams and how you think about kind of disseminating decision-making to the right folks, you know, tech language, push decisions to the edges. But thinking about it in the context that he describes there is- is really fascinating and- and it just shows that it can work even, you know, in the- the most kind of egregious world of- of military, uh, which you think is top down command and control, uh, shows that like there's a different way to approach problems.

    2. LRLenny Rachitsky1:05:42

       That was actually a fan favorite at, uh, Airbnb also.

    3. THTim Holley1:05:45

       Oh, cool. Uh, other is back all the way to the top, to what I love to do surfing and being outdoors, Let My People Go Surfing by Yvon Chouinard, the Patagonia founder. Incredibly fascinating read of- of someone who just had a pa- deep, deep passion, turned it into a business, struggled, iterated, came out the other side, you know, really successful. So the business side, but also just how they think about treating their employees and the culture that they've built, uh, I think is- is to me personally really inspiring. There's a theme here around trust and- and kind of, uh, how you- how you, uh, engage with- with people to make their- their day-to-day work lives just really- really fulfilling. Um, so that's- that's another- another favorite. And then in a super different direction, Power Broker by Robert Caro. That is an absolute tome. It is huge, it took me probably an entire year to read 'cause I'm an extremely slow reader and/or I fell asleep a lot. But it is so fascinating, especially living in New York of how one human had such an incredibly outsized and probably terrible impact on the city. Access to waterfronts, really thinking about communities and- and tearing them apart, just such a fascinating read.

    4. LRLenny Rachitsky1:06:56

       I have that book and I've never read it. It's very long-

    5. THTim Holley1:06:58

       (laughs)

    6. LRLenny Rachitsky1:06:59

       ... and intimidating. I think it might be back there, maybe in a different room.

    7. THTim Holley1:07:01

       I would chunk it out. Do, do like, you know, a couple of chapters, uh, at a time.

    8. LRLenny Rachitsky1:07:05

       Hmm.

    9. THTim Holley1:07:05

       Otherwise, it feels insurmountable.

    10. LRLenny Rachitsky1:07:07

        It's like Infinite Jest where you just (laughs) never... You're intimidated. Amazing.

    11. THTim Holley1:07:11

        Yeah.

    12. LRLenny Rachitsky1:07:11

        Okay, next question. Favorite recent movie or TV show?

    13. THTim Holley1:07:15

        So my, my wife and I talk about this a lot. I think we're Western-philes, if that's a thing. Uh, I'm, I'm from Europe and so it's a whole new world, different world for me. We've loved Yellowstone and all of the, I guess their prequels.

    14. LRLenny Rachitsky1:07:29

        Mm-hmm.

    15. THTim Holley1:07:29

        They've been, yeah, just really, really fun, fun to watch for s- people who are like curious about that culture and that world.

    16. LRLenny Rachitsky1:07:35

        Awesome. Yellowstone's a bit hard to, like, find where to even watch it. It's like on the weirdest channels.

    17. THTim Holley1:07:40

        You have...

    18. LRLenny Rachitsky1:07:40

        Weird.

    19. THTim Holley1:07:40

        It's one of those where, you know, the, the old world of we cut all our cords and we only needed Netflix, suddenly you need all these really random, you know, providers of content that you're like, "I have to subscribe to that now to watch this show?"

    20. LRLenny Rachitsky1:07:51

        "I don't understand where this even is. Just take my money."

    21. THTim Holley1:07:53

        Yeah.

    22. LRLenny Rachitsky1:07:55

        Uh, favorite interview question you like to ask candidates?

    23. THTim Holley1:07:58

        I'm a big fan of case studies, live case studies. Um, I think you learn a whole boatload about how someone thinks on the fly, how they react to constraints. So we use those. I've used those a ton. We've, we use them pretty heavily in, in product interviews. So I, I love those modulated for like the type of business you're in, you know, what you're actually trying to, trying to understand. The other one I like to ask is, is around something that people have taught themselves, uh, try to get at a growth mindset. I think Julia, who was on the podcast a while ago, said something similar. But you, you get a ton of insight into someone, ideally you get a bit of passion, and you often get somebody to go research because like, "I don't know anything about that topic. I wanna, I wanna learn a little more."

    24. LRLenny Rachitsky1:08:40

        What is a favorite product that you've recently discovered that you love?

    25. THTim Holley1:08:44

        You as a, as a, as a new parent-

    26. LRLenny Rachitsky1:08:47

        Mm-hmm.

    27. THTim Holley1:08:47

        ... may- maybe resonates when-

    28. LRLenny Rachitsky1:08:49

        Mm-hmm.

    29. THTim Holley1:08:49

        So it's not new 'cause our kid's two, but, uh, when I was looking, you know, being, being in product, of course you want to track data, uh, and so I was looking for apps that would be good at doing that.

    30. LRLenny Rachitsky1:09:00

        Mm-hmm.

Episode duration: 1:11:56