How Etsy justified their DevEx investment

Today, many organizations aiming to improve developer productivity are finding that focusing on developer experience (DevEx) unlocks valuable improvements. According to a recent Gartner study, 78% of organizations have a formal developer experience initiative established or planned.

One common challenge organizations face is determining the optimal level of investment in developer experience. Some leaders, such as former Shopify and Atlassian CTO Jean-Michel Lemieux, have suggested investing 50% of R&D headcount towards this type of work, while others are more conservative.

To gain insight into the process for headcount decisions for DevEx investments, we interviewed Mike Fisher, former CTO of Etsy. Etsy dedicated 20% of their engineering headcount toward a long-term DevEx initiative. This article describes the rationale and process behind their headcount investment decision. 

How Etsy justified their investment       

Etsy’s DevEx journey started when the company saw historic growth during the pandemic. Leadership put in place an aggressive hiring plan to keep pace with demand, but also recognized the importance of reducing friction for developers to maintain engineering velocity.  

Several factors influenced Etsy‘s decision to invest 20% of their capacity towards the initiative: 

They saw the need to invest in DevEx improvements in order to scale

“No matter where you’re scaling from — from five to 50, 50 to 500, or 500 to 5,000 — you’re going to have scaling challenges,” explains Fisher, who started and led Etsy’s DevEx initiative while CTO. “If you just add more engineers, you’ll be paying for more engineers but they’re not going to be as productive. So really, the thought was that if we don’t do this work, hiring developers is not a good investment for the business.” 

Companies tend to see productivity slow after hiring more engineers when they don’t take into account how their processes and technology need to scale to support the growing organization. At Etsy, leadership understood the need to evaluate how people, process, and technology would scale together: scaling one without the others would result in waste. 

They examined the ROI of DevEx improvements

Engineering leadership effectively presented the ROI of select projects they intended to focus on as part of the DevEx initiative, including the opportunity of improving deployment times as well as reducing disrupted pages for on-call developers. 

In general, when discussing engineering projects with business partners, Fisher recommends framing the conversation around incremental revenue or reduced costs. He says, “Instead of explaining that you want to change the way you deploy code using packages, tell the CEO that the work will save 50% of engineering hours spent waiting for deployment, translating to 500 hours of saved engineering time or roughly a quarter of a full-time engineer.”

They understood the impact of DevEx improvements on developer satisfaction

Etsy’s mission is to “keep commerce human,” and internally they’ve always cared about supporting and helping humans. The DevEx initiative was a natural fit for their culture and how the company approaches problems. 

Fisher adds, “One of my colleagues used to say, ‘developers are happy when they’re shipping product.’ We decided that if we can make sure people are able to ship things, we’re not only making them more productive but we’re also making their lives better, which helps them feel more engaged and committed as well.” 

As for focusing on engagement, attrition was also a factor that influenced Etsy’s decision to invest in the DevEx initiative. By focusing on reducing toil and providing an environment where developers can be highly productive, the company reduces attrition risk. “If the industry average is 10% attrition per year, and we can cut that number in half, we save many months of productivity that would otherwise go into hiring and ramping up new engineers,” Fisher says. “These numbers really start to matter as you have a large engineering organization.”  

They reduced risk of a substantial investment by committing to frequent check-ins

With any major engineering initiative, executives will naturally be concerned that engineering will go heads-down and then surface right at the end of the project with an update. To alleviate that concern, Etsy’s engineering leadership committed to showing progress twice a quarter. These progress updates started out as status emails and meetings, and were shared even when the progress was simply “lessons learned.” Eventually, they also started sharing progress with the entire engineering organization during their all hands meetings. 

How Etsy defined success for their investment in DevEx

Measuring the success of DevEx initiatives can be a challenge, but it’s still important to try. Etsy’s leadership recognized this and spent considerable time initially brainstorming and debating the right engineering metrics to gauge success. They opted to use multiple metrics, including deploy times and an NPS-like developer score. 

Another core measurement Fisher monitored was experimentation velocity, which represented the number of experiments launched per team per time period (usually a month). “Maintaining the same velocity as your team grows should be viewed as a success, considering the increased communication channels needed for coordination,” Fisher adds, referring to the book Mythical Man Month. “Another indicator of success is when an initiative like Developer Experience becomes ‘evergreen’ or simply part of the organization’s standard workflow.”

Organizations seeking to establish developer experience initiatives or teams will need to determine an appropriate level of investment. Etsy’s headcount investment and their reasoning may serve as a helpful benchmark for other organizations planning their own investments.