ETSY INDEPTH

IT Strategy

If you were interested in one of a kind crafts made by local artists then you would have to
go to a farmers market, craft fair or some combination to get your hands on one of a kind
treasures. Due to high costs of setting up a booth and other set up costs quite a few home grown
artisans never made it. Alternatively, these fair were few and far between. Some were in out the
way places that made attendance hard for some people. Alternatively, if you were in the market
for vintage furniture, clothing or any other time worn item then you would have to make your
way to an antique shop, second hand shop or garage sale. All of which again are great if you
have easy access as a buyer and have a garage if you are a seller or some other space to sell your
heirlooms. However, this too was not always the case. Ebay made it possible for people to sell
their old collectibles online yet due to their auction algorithm, people who could afford to pay
higher prices won out. Enter Etsy a place for crafters to sell their one of a kind creations and
those with whole closets filled with vintage items to find a platform to make good use of their
old items by selling them to collectors. Also, as the prices are set by the sellers there, anyone
who is interested in a product can purchase it and there is no bidding involved. If you like an
item and it is within you budget, its yours. Crafters no longer had to pay to reserve a booth at a
craft fair to sell their crafts. And those who were not able to hold garage sales now had a
platform on which to sell their vintage items.

IT Impact and Strategic Alignment

Etsy is an online marketplace where you can buy unique artistic creations from artisans or
you can buy vintage products. It was founded by Rob Kalin, Chris Maguire, Jared Tarbell and
Haim Schoppik. Etsy started out by visiting craft shows across the country and offering artisans
with an online platform. This generated the first tier of artisans that set up shop on their
platform. This was followed by a second tier and so on. Today Etsy has many artisans and nonartisans selling on their site. They generate revenue by charging sellers a price to list their
products and also make a certain profit as part of the sale of each product. It creates a platform
for artisans to sell their crafts, as instead of working individually and not having anyone know
about their products through Etsy they have a platform from which other people can connect and
know about their products. They provide sellers with a sellers platform. This teaches artisans
what would work best to sell their product on the Etsy platform. Etsy charges sellers .20 to list
each item for 4 months (regardless of the price) it then gets a portion of the sales 3.5%.
Assessment of Future Needs for new IT Capabilities
Etsy has a platform business model. A platform business model is a holistic model that
generates profits by bringing together consumers and sellers. Platform business models are not
new. The general idea of a platform is providing a place where sellers and buyers can congregate.
It is the same idea as a marketplace. Over the years this idea has evolved to include malls and
auction houses. Today as more and more people are buying and selling online, the brick and
mortar or physical place for buyers and sellers to congregate has turned into an online platform.
The first online platform that gained popularity was Ebay. However, if you were to compare
eBay and Etsy you would see that Etsy has taken a completely different than eBay. In many
ways it has improved on areas where eBay was lacking. It is a completely different model.

While eBay originally focused primarily on people selling merchandise they no longer used akin
to an online garage sale. Etsy has created a space for artists and creatives to sell their wares. It
has a space for people to sell used products which it refers to as Vintage. The top three
categories for Etsy are Art, Jewelry and Vintage.
New Capacities in Relation to Organizational Structure and Company Mission
It is built on open source technology, the platform is based on PHP, MySQL, Hadoop and
Scalding, and Solr/Lucerne/ElasticSearch. PHP is the scripting language the server side is built
upon, the database that stores site data is written in MySQL. The analytics are powered by
Hadoop and Scalding. The search capabilities are provided by Solr/Lucene and Elastic Search.
The data pipeline is managed by Apache Kafka that manages its data pipeline. It has also built a
machine learning framework Conjecture. It is used to estimate click rates of items. It uses
online learning where the model processes instances individually and makes updates to the
predictive model based on what it has learned from each instance. In order to perform these
predictive calculations it uses linear regression and large margin classification. Parallelization
occurs as instead of the system performing calculations sequentially it is performing them in
parallel. Instead of working problem at a time, it is breaking down problems into smaller
components that can be solved independently with less computing resources. Using an open
source approach to their platform has greatly reduced set up costs for Etsy. Etsys platform is
based on a few set of tools that it has invested in and works at mastering at every level. Their
platform is built for continuous updates and adaptability at a rapid level to sustain long term
operability and performance. The outlook for Etsy is good. It has increased competition from
Amazon which has launched its Handmade Store. An area that Etsy hopes for differentiation is
by letting sellers and buyers learn from each other and become better entrepreneurs and better

crafters by joining with others. Also, buyers could collaborate with one another and form
networks to become better collectors.

SWOT Analysis

Strengths
- A loyal group of sellers and buyers who buy
and sell on the platform.
- Relative ease of entry for crafters to set up
shop sell their goods online
- Ease of use for buyers looking for unique and
vintage goods
- Continuously updating, adapting and learning
infrastructure and flexible platform business
model
Opportunities
- Any seller who would like his/her store
featured more on Etsy can pay for advertising
on the platform. In addition to advertising on
the site, sellers and the Etsy site folks can opt
to advertise in other locations such as FB,
Twitter, and Pinterest etc. There is some
mention on these sites about Etsy but there
could be a lot more if Etsy oriented itself in
line with a broader social media campaign
getting its sellers and buyers involved

Weaknesses
- According to some the selling and buying of
crafts and vintage items represents a niche
market which leaves out a huge segment of the
population

Threats
- Ebay is a competitor as people are able to buy
and sell their vintage items on eBay.
- Amazon is another rival as they too enable
sellers to set up shop and sell their products on
the site albeit with higher listing prices than
Etsy. They have also launched a new
Handmade Store where sellers can sell more
Etsy like one of kind creations.

In conclusion, Etsy has differentiated itself in the online marketplace of goods and
services by creating a dynamic, adaptable platform that is well liked among buyers and sellers of
crafts and vintage items. Low costs of entry, a continuously adapting and improving platform
make it a choice option for sellers. Collectors like that there is no bidding involved and that
there is a huge selection of crafts and vintage items. There are areas of improvement for instance
if they were to employ a broader social media strategy encouraging buyers and sellers alike to
spread the word along social media outlets they could attract more buyers and sellers. Some view

their focus on solely crafts and vintage as a niche market and find it limiting enough that they
dont see them gaining too much traction along other markets. If they decided to branch out into
other areas there is potential for them to expand their market. Finally, there increased
competition from similar sites like eBay and Amazon. Yet due to their strength in their niche
area it is unlikely that buyers/sellers would prefer the other competitors over Etsy.

Figure 1: The four pillars of Etsys IT Strategy

Integration and Differentiation

The degree to which business is aligned with IT at a company indicates how well the two
are working together towards common goals. Alignment is very important as it leads to both IT
and business teams working in a complementary fashion to achieve different parts of the same
goals. The organizational structure of an organization can be in various formations. The most
common types are functional, divisional, flattarchy, and matrix. A functional structure has

various departments such as marketing, advertising, and finance. Divisional structure is created
when there is company that has many different product lines but they are all under one umbrella.
For example, GAP has Old Navy, Express and Gap Stores and they are all under the GAP
umbrella. A matrix is when you have a standard organizational structure with different
departments and also have additional specialized projects where the project leads and department
heads are both leading the departments in various areas. This can be challenging at times if there
are conflicting directions. Finally, a flattarchy which has become more common lately where
the attempt is to remove the power within the organization from the hands of a few on top and
spread it across the organization in a sense flattening the hierarchy.
According to one definition Etsy is defined as a P2P site or Peer to Peer as such it is
collaborative by nature. It is created to provide a platform for artists and vintage collectors to be
able to gain attention and also sell their creations. In an organic way it creates a crafters
community a gives them an online marketplace where they can sell their wares and also
collaborate with one another. I searched the Etsy site for the word teams and teams are formed
along many lines. For example, there are teams of potters, there are also teams based along
geographic location, or product themes etc. (see Figure 2). Etsy was founded in 2005. It has 979
employees, 40 million items for sale, 1.7 active sellers and 27.1 active buyers. It made $2.39
billion in annual merchandise sales on 2015. It is headquartered in Brooklyn, NY. It has another
location in NY and another in SF, CA. Internationally it has offices in Germany, Ireland, UK,
Australia, France, Japan and Canada. Etsy is headed by Chad Dickerson (Chairman and CEO),
Kristina Salen (CFO), John Allspaw (CTO) and Linda Finley Kozlowski (COO)
Etsy started in 2005 and had their IPO in April 2015. Despite being a household name
and gaining popularity pretty quickly, it was termed one of the poorest IPOs of 2015. Today the

company is doing well. There are many reasons why Etsy is a still standing and in many ways
unique. Some could argue that Etsy is a spin of Ebay and Amazon. Yet there is a lot there is that
very different going on with Etsy. Its main mission is to bring people together to participate in
what it terms as the Etsy Economy. Etsys mission is to reimagine commerce in ways that build
a more fulfilling and lasting world. Among their values are to be humane, transparent and
mindful, find value in every creative endeavor, to make fun a part of everything they do, to keep
an eye on long term feasibility and to keep it real, always. In building the Etsy economy they
aim to provide creatives with work in local and international markets and enable relationship
building between crafters and collectors.
In keeping with their mission and values, the company is filed as a B corporation. A B
corporation is a new kind of corporation. Typically there have been C and S corporations. C
corporations are the typical kind of corporation when you think of MNCs or multinational
corporations they are mostly C Corporations. They can have as many shareholders as needed
and there are no requirements that owners need to meet. An S Corporation is different from a C
Corporation in that there cant be more than 100 shareholders and also an owners must be US
Citizens or Permanent Resident. A C Corporation enables more flexibility. Both types of
corporations have limited liability in which the owners cannot be held personally responsible for
company debts. Etsy instead of taking the tried and true path of becoming a C or S corporation
instead opted to become a B Corporation.
A B Corporation or Benefit Corporation has different rules that they need to work
under. A B corporation is required to consider their employees, the environment and the
community. They have to score 80 out of 200 points in order to meet the certification
requirements. Companies can get points for having eco-friendly interiors, being transparent,

having employee benefit programs, investing in social programs, partnering with community
organizations and more ways to earn more points. In addition to the survey there is a phone
interview, required to provide supporting documentation to prove how they are meeting their
social, environmental and employee obligations and reworking their corporate bylaws to detail in
what ways they are making a good impact. There is a re-assessment every two years. There is
an early online assessment that companies can take to attract share minded investors if
companies take advantage of doing the assessment before raising capital.
In conclusion, Etsy values making a positive impact. Their mission and company goals
are in keeping with this agenda. Their corporate structure has their IT and Business goals well
aligned. The CTO is now CEO. Etsy is popular, and with the high volume in transactions and net
profits they are clearly a successful enterprise. People could assume that Etsy is another eBay or
Amazon but there are striking differences. It was created to bring together crafters and
collectors. It also has concrete employee, environment and community empowerment goals.
According to the progress report, they have invested in improving the environment by reducing
their carbon footprint, recycling, using ecofriendly lighting, not allowing any goods on their
website that were from endangered species, lobbying for their crafters and a whole host of other
ways they have been working towards their social impact goals.

Figure 2: Teams of Etsy sellers based around a common material (leather) region (Birmingham,
AL) or a theme (the Avengers)

Network Economy Project Management

In the network economy value is added to products and services through social
networks. This has led to the creation of companies that are steeped in collaboration. One such
company is Etsy, where crafters and collectors come together to sell and buy one of kind

creations. Looking back at the evolution of technology, the eminent role of social networks was
not always apparent.
Any information technology professional today can attest to the fact that IT is known for
rapid changes and the challenge for many organizations is to keep up with the constant
innovations and newer standards that come about. The image below shows the evolution of
technology. When Information Technology started to gain prominence in the 60s and 70s it low
impact, it was used in highly specialized environments such as academia and/or government. Yet
gradually over the 80s and 90s with the advent of the personal computer, IT was not in
everyones homes and people all over were using it. The world wide web became an extension
of the personal computer and made it possible for people to communicate and also conduct
transactions online thus giving way to ecommerce. By the 2000s every organization either had
already taken their business online or was in the process of doing so. Physical stores were now a
thing of the past and more and more people conducted their business online whether it was
renting dvds, shopping etc. This led to wide scale transformations of businesses that were not
ready for this change. Bookstores that were used to having customers come out to their physical
locations to purchase books were being replaced with e-readers where books were available for
download. Making books and bookstores along with it obsolete. Today technology has become
intimately intertwined in the lives of most people on this planet. This has led to an unprecedented
level of technological innovations. Innovations that in the past were the domain of technical
experts are now being engineered by people from all sectors and from all age groups. Due to the
rapidly transforming tech scape organizations have had to handle more in less time. If in the past
they would take on one or two major projects at a time now they are taking on 50 to a 100.

Technology has helped processes with better hardware/software/networking yet the approach
used by an organization is key to ultimate success.

Portfolio Approach to Project Management

Three key factors impact project risk project size, type of technology and
project structure. The bigger the project the riskier as there is more initial investment and it has a
wider scope and takes longer to implement. If the type of technology is new, so new that most IT
personnel even are not very familiar than there is increased risk as less familiarity translates to
the potential for more errors in application. If the outputs of a project are predetermined then it
is said to have high structure. For example, a company that automates is price list. As the list
stays pretty constant over time, the end of the project all stakeholders know what the outcome
will look like. However, in the case where a company was quoting customers per project it
would be hard to come to systemic approach to making this an automatic process. The
stakeholders may come to an agreement initially but may also vary from project to project. This
leads to a less structured project. In the portfolio approach, projects are ordered along lines of
risk and are worked on accordingly to how much risk they entail. The higher the risk the more
checks and balances in place. The lower the risk the more autonomy for governance over the
project.

Software Development

Etsys approach to projects is as follows: they have split up their development

department into teams of developers (up to 7 engineers per team). Each team has a product
manager and designer. There is some lateral movement across teams. The key emphasis is for
developers and operations to work closely together. When an idea is brought up they use a Wiki
to discuss it and share ideas in addition all employees also communicate via Internet Relay Chat.
Once there is consensus on turning the idea into a project they use confluence (team
collaboration software to work together on projects) to work on it. Project plans are built along a
60 day timeframe with 2 week marks set as due dates for deliverables. Upon the completion of
the 60 days the projects go through review and goals are set, CEO Rob Kalin (formerly CTO)
takes part in these reviews and checks in with the engineering and project teams till project
completion.
A key emphasis at Etsy for their engineers is continuous deployment. They are
constantly making small changes to the site. All new engineers are encourage to make a change
within their first day, as they would like them to be comfortable with being part of doing things
that effect the site in real time. Another key aspect that is stressed at Etsy is collaboration among
its Developers and Operations. According to their blog Code as Craft Our deployment
environment requires a lot of trust, transparency, communication, coordination, and discipline
across the team. They also have invested in functional testing and have a team that is solely
focused on it, along with their automated unit, tooling for deployment, metrics and monitoring.
In order to track everything, key business level and system level metrics are projected on screens
in the office. They use Ganglia (an Amazon open source project used to monitor clusters and

grids to generate reports and view performance, Hadoop and Spark metrics can also be
visualized using Ganglia) and Graphite (an enterprise scale monitoring tool, it can store numeric
time-series data to render graphs on demand). At times when they roll out new features they do
so only to a percentage of users and then based on that experience they make the new features
available to all, modify or discontinue them. There is a very open collaborative spirit as when
mistakes are made groups come together to do blameless post-mortems and assign resolution
items to relevant team members. There is also a blog where engineers will post issues and
provide status updates (http://www.etsystatus.com/)
In conclusion, `the portfolio approach to projects creates an order for the projects
based on their level of risk.

Etsy is based on collaboration and focused on continuous

deployment. They have created an open environment for people to work together to come up
with innovative solutions. We dont yet know what the future of all this technical embeddedness
will result in, people feel more and more that technology will increasingly become a part of
people as in having chips implanted perhaps the next progression of smart wear. But whatever is
to come, on thing is clear that technology will increasingly keep progressing at an ever faster
pace.

References

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Etsy.com