The digital landscape is changing, and customers are changing along with it. We sat down with Linda Kozlowski, the COO of Etsy and former COO of Evernote, who told us that for many companies, going global is no longer a choice, but rather a basic expectation.
You started off working in communications and journalism. How did you come to be the COO of Etsy?
I’ve always had a passion for media and communications. I used to joke that as long as there’s more than one person in the room, there’s always going to be a misunderstanding, which has proven to be true throughout my life! I started off as a journalist and moved into communications because I loved the interaction between media and business.
As I became more senior in my communications career, I felt this pull to be closer to the business and involved in strategy. Marketing and business in general have evolved to be a two-way conversation. You’re constantly in contact with your customers and they’re giving you direct feedback about everything that you’re doing and how the product should evolve. So I thought about how to use my expertise in that two-way dialogue with customers to think about how to improve and drive business models.
I first made the transition into marketing and operations at Alibaba, and then at Evernote as well. I found the communications background to be directly helpful not only working on the business strategy but thinking critically about what we should do next and how we grow and develop our products to meet those customer needs.
It culminated in the COO role I had at Evernote and now at Etsy, where I focus on how to connect all aspects of the customer experience to make sure that regardless of how customers interact with us, they have a consistent experience – whether it’s the product itself, our marketing campaigns, partnerships or customer support line. They should always feel the same high level of service through Etsy.
Throughout your career, as you moved further into international and operations-focused roles, what were the biggest or more interesting differences between the companies you worked for?
In each of my roles, I’ve focused on international and connecting global markets together into something that provides the right scale for the business and also an advantage to the customer. As the world becomes more connected, an interesting challenge is to create these leadership roles that are focused on a holistic customer around the world as customers are evolving and becoming more global themselves.
“As the world becomes more connected… customers are evolving and becoming more global themselves.”
What’s unique about Etsy is that our business model is very aligned with the success of our customers, so we only make money if our sellers make money. It’s wonderful to be in a values-aligned business – a place where your values align with your mission which aligns with your revenue model. Our mission is to re-imagine e-commerce in ways that build a more fulfilling and lasting world. We’re never making decisions based on our needs alone. We’re always making decisions based on what’s best for the customer.
While all of the companies I’ve worked for have been mission and values-aligned, the business models have had a variety of aspects to them that don’t always lead to the same type of decision-making and leadership that are as aligned with the customer. The best thing about Etsy is being able to use this as a decision-making structure. It allows for faster decision-making as an organization, and also a lot of “heart and soul” in knowing the decisions we’re making are aligned with our customers.
Etsy runs a Marketplace with a community of buyers and sellers. How do you balance the needs of both sides of your Marketplace?
Something that’s very different at Etsy versus a lot of other marketplaces is that we are a seller-aligned model. A lot of retailers are focused on the buyer and that produces a lot of price pressure on the sellers, driving margins down as much as possible. We believe that if you support sellers and their passions for creating unique products, then customers looking for unique ítems will be willing to pay a fair price and a fair wage for that product. A lot of our prices are reasonable because there’s less overhead with small sellers. Prices are mainly driven by the costs and labor involved in producing the ítem and not necessarily external pressure.
We think of the seller, that is the entrepreneur making unique goods, as our customer. Our job is to bring them high-quality buyers. On the buyer side, our job is giving them a great experience in finding unique products they can use in their lives, with a story behind them, where you can talk to the seller about that story and have a more human approach to e-commerce. The great experience comes from buyers wanting and being able to directly interact with the sellers that have chosen to make their creative passion the product of their life.
How do you think about creating a consistent global experience? For example, in Asia the pre- and post-purchase experience is very different than in the US, with most customer support needs taking place pre-purchase. Do you see a difference in the way the sellers expect the platform to behave and respond in different parts of the world?
Our goal is to make an amazing product experience that works globally because we have sellers all over the world. We want a consistent experience no matter where you are in the world, but that can adapt and meet all the needs of different cultures around the world. We cover multiple layers of support to offer the best experience. We offer the ability to communicate with the seller before you buy, with a built-in communications platform that handles customization or questions up front, and then we have post-sale support with the seller, plus customer support.
In marketing, we look at how we can use marketing in local communities so we can enhance the local version of the experience. We have over 12,000 Seller Teams around the world of sellers that have voluntarily pulled together to provide support for each other, helping improve their business. We also have forums and other tools, but we encourage sellers to use what makes sense for where they are in the world
You’ve been in senior leadership roles at three well-known companies with different business models. Any lessons and mistakes learned along the way that you would share with people in international-focused roles at large companies as well as startups going global?
One of the biggest mistakes I’ve seen is separating domestic strategy from international strategy. You’ll come into a company and notice they have a domestic/US strategy team and then an international team. If you separate strategy you will never have a consistent experience, and it will be a challenge to grow your international market.
“Thinking about product with your global customers in mind… will also provide opportunities to create a richer experience for all your customers, including the ones in the US.”
Strategic and product decisions need to be made with a global mindset, instead of thinking that this is a US product that will be extended in the future. You risk ending up with a patchwork of decisions and extensions and even technical debt. You’ll also end up with the international team getting frustrated with the US local teams because they need specific things and “the US team doesn’t get it.” Thinking about product with your global customers in mind will save a significant amount of time but also provide opportunities to create a richer experience for all your customers, including the ones in the US.
How do you think in terms of organizing global operations? Some companies will have certain local marketing teams reporting to local Country Managers while other companies will have them reporting to centralized marketing back in the home office.
I believe strongly in a Country Manager structure where teams in a country report to that CM but with a strong functional line back to HQ. In particular, goals and KPIs at HQ should reflect the potential and growth of the international offices. That part is key – you have to make KPIs and incentives for the HQ teams really aligned. Otherwise it’s hard to have remote teams. I’m an advocate for having international teams that report functionally back to HQ for every role, HQ teams with KPIs that reflect international goals, and then letting local teams really own their individual markets.
HQ teams need to be in really in touch with what those markets need. They should get feedback from them on a daily and weekly basis to inform product development and strategy. HQ teams should be very clear about the strategy, leverage people on the front lines, and give them autonomy to build things in a way that works for their market.
Clear strategy from above, and then local autonomy sound great in theory – where do you think this mostly goes wrong?
This is most likely to fail when strategy isn’t clear. When you see companies fail, it’s not just because their global strategy has failed but because their local strategy has failed too. They haven’t fully articulated their strategy in a clear and actionable way that all teams can understand and get behind. So you should focus on making sure your teams are dedicated to doing the things with the most impact. There are other failure points like not having the right structure or difficulties working across time zones, but the most important is not coming together with the right strategy.
When is the right time to go international? As you mentioned, your strategy and business model need to be clear because otherwise you shouldn’t expend efforts on going global. Assuming you’ve figured out your strategy, when should you take those first steps or even double down on international expansion?
Today, it’s fairly easy for customers to find you even if you don’t intend on being global yet. I recommend that even start-ups think about it early on and build infrastructure to eventually scale, even if they don’t actually go global very fast.
There are two different views on what it means to go global. One is that people outside your home country are using your product. The other is when you set up an office in another country. With digital products, it’s highly possible for people around the world to be using your products before you have offices abroad. This gives you a much more scalable way to think about international expansion.
“With digital products, it’s highly possible for people around the world to be using your products before you have offices abroad.”
What has proven best in all companies I’ve worked for is to follow the data. At Evernote, we noticed a lot of usage from Japan early on when the product was still in English and nothing had been done in Japan. But it worked very well in the Japanese market, so it took off, and we worked with partners to help with localization, translation and distribution, and it wound up being a dominant player in the Japanese market. In that process, we followed the data; we already knew there was customer demand before we formally entered and therefore had a good idea of the potential for growth once it was translated. Similarly at Etsy, we have buyers and sellers all over the world so it’s very easy to see where there’s interest in buying and selling on the platform.
How can operations teams (and COOs) lead the charge and drive change in organizations?
Operations is defined in different ways depending on the needs of each company and the skills of the executive teams. Some COOs are finance-focused, some operations teams are focused on logistics, some are even technically focused. The way that I’ve evolved my career as a COO is in complementing the rest of the executive team by focusing on how to drive and grow the business itself. My role is really about business strategy and managing the day-to-day parts of the business that drive revenue.
From my perspective, the way operations can lead organizations is by connecting all touch points and aspects of the customer experience across the company and all over the world. It’s different in every organization but it’s becoming more common these days for many companies to combine product and strategy into something that feels more natural for the customer. I think that’s where you’ll see the most successful leadership.