55. beCommerce with Philipp Barthold

Markus Lorenz

Welcome to a new episode of the beCommerce podcast today we have a special guest with us. Please welcome Philip Barthold, the actual CTO of mytheresa.com. Mytheresa is one of the leading global luxury fashion ecommerce platforms which is located in Munich and it’s famous for their story starting with a local boutique in Munich transforming their business 15 years ago towards ecommerce. But Phillip, please introduce yourself.

Philipp Barthold

Hi, Marcus, thank you for having me. I joined mytheresa as a CTO about four years ago. My background is such that I was born and raised in Germany. And after some studies, I moved to work for PayPal in London to build up Risk Management for Europe. It was a lot about product development in the Fraud Prevention area. And then in the big eBay empire. PayPal was a part of that time, so was Magento. I switched to Magento and Magento had a Development Center in Spain in Barcelona. And I joined the product development team that was very much focused on payment integration, again, fraud prevention, and auto management solutions. Then yeah, four years ago, I got a call from mytheresa to join them as their CTO.

Markus Lorenz

Yeah, super cool. The numbers from our materials are absolutely impressive. So you achieved 30% growth just from July to December in 2020. You did the IPO in the US as a Munich based company, you have a strong international focus. And as far as I know from the latest number, you increased the net sales for over 36% year over year for the financial year 2021 to about 612.1 million and also you managed for the financial year 2020. The guardians for gross merchandise volume at 750 till 770 million euros and adjusted your EBIT margin in the upper half of the long term range of 7 to 9% which is absolutely impressive. But today we're talking a little bit more about tech and IT, so not going too deep into the numbers. And I would like to discuss what challenges you have to tackle and to survive on a day to day business to keep constantly growing on such numbers. So let's jump in: Philip, you're almost four years at MyTheresa. So maybe let's start with some numbers and figures as we can answer them for the tech team. So how many people do you actually have in the IT ecommerce sector? Which departments do you have? Meaning do you run data engineering front end back end development and so on so far? And maybe you can also give us a glimpse about some traffic figures so that the audience gets a better understanding of the environment?

Philipp Barthold

Yeah, happy to do so. So we talked about other people in technology at mighty results and broke it down to three main main departments, one is really the E commerce stack. So this is about more than half of the number of total people broken down into business domains. And then looking after the webstore, the mobile app development, all of these teams are supported by a product organization with the respective product owners working with the teams, and group of QA s and site reliability engineers. The other two groups: one is we do all our ERP development in house. And the ERP is in many, many of the processes we do the core of, of the system. So anything from inbound products to all the processes in our own warehouse, is all done in that team. And that's about 20 people. And then the rest of technology. So anything of our internal infrastructure, client, client applications and services, and cybersecurity, which is about another 20. Supercool in terms of the figures, I mean, roughly speaking, we have constantly on site about 60,000 products, plus their respective variants, the platform needs to be able to handle easily high hundreds of orders per hour. And if you look at something like you know, varnish requests, they would talk about a couple of millions per hour, which the site just needs to be able to support the business is quite International, a large part is actually outside of Europe. So it's very diverse in the latency challenges, which we constantly face in strong growth in Asia, obviously, you need to take care of the setup in that direction.

Markus Lorenz

Now, there are also impressive numbers from the tech perspective and from the team perspective. And I would be interested in the organizational development of the company and also on the tech department, of course, so meaning maybe you can tell us a little bit more of the challenges you faced in terms of growing the team by reflecting different angels so maybe like processes, people and technologies that the audience get a glimpse of what's going on on your side.

Philipp Barthold

Sure, so my theory is as you alluded to, in the beginning, it has its roots in actual fashion retail, so it's a fashion retailer, which started then its online business and technology came if you look at all the different operations relatively late into the mix for a mighty reason. So initially, cloud services were outsourced right the company started you work predominantly with SI’s to start to operate, build and run a web store, but technology was introduced at a slightly later stage into thi. And today we define ourselves as mighty resistance at the crossroads between luxury fashion and technology. And these, these are quite different worlds in many regards. So if you look at the organization also processes the fashion side, as many of the listeners will know is tuned towards seasons. So you have two big seasons per year where products come out and all the campaigns are prepared for these different seasons or the content is produced for this, where on the technology side, you're obviously more into, you know, an agile approach and more short term things. So certainly one one challenge tried to align these different worlds and also the different processes of different departments. We run a version two when we normally talk about ecommerce development, this adapted version of the Scaled Agile Framework in which we try to use the various interactions with the stakeholders and with the business and feed this into the technology teams.

Markus Lorenz

Yeah, super cool. So I will be personally interested in your approach towards those channels. And just because back in the days, I had quite several good exchanges with you personally about how to scale engineering teams and so on and so far. And for me, it was always helpful to have a kind of peer or mentor. So what would be your recipe to tackle those question questions on a day to day business? Meaning how you're dealing with those challenges and how you're choosing the right answer to the question in the end.

Philipp Barthold

Obviously, a daily challenge would need to change daily adjustments. So I personally like to work with coaches to discuss my own professional approaches, things I can learn and how I can get better and be open to that feedback. Generally speaking, I think, looking at the vast variety of challenges and difficulties, I think the first thing that helps me is just to admit, you need to be open to a lot of feedback and external expertise, because there's just no way to be the one giving the guidance in all the different areas. And that comes down along with having a, you know, extremely strong team of trusted people where you say, you know, I trust the expertise, other people in the team have and completely rely on their good ideas. And in order to make that successful, this team of trustees need to have an aligned goal. So if you then have to build a strong team, and you're very clear on your mission and what you want to achieve, then I think this is a very good foundation to tackle a vast variety of different challenges.

Markus Lorenz 

Yeah, I absolutely agree. And also, with that vision mission statement, we heard that also from other industry and tech leaders a lot that this is definitely building in the end Northstar where the team is heading for. And if you're then not consider yourself to be the smartest guy in the room and you're open for advisors from other ones, and just come up with a mutual idea. It definitely brings value to the table. Cool, super cool. So let's switch maybe to the tech part of mytheresa and I would be super interested in what is important for you was scaling my theory. So tech wise, meaning how was your infrastructure and the ecommerce environment designed, and what are the most crucial architectural patterns for you to constantly grow at this pace where the company.

Philipp Barthold

You're hitting, they're the single most important topic, and this is growth and the scale. So we need to bear the scale constantly in mind. And to start off with, obviously, any chord and anything we produce needs to be extremely maintainable. So it needs to be readable. It's, you always need to bear in mind that other people will touch that very, very soon. And therefore the code quality is at the core of it. In terms of frameworks and architectural patterns, of course, you know, looking into it, microservices of call costs, have a very strong API layer to support various front ends. But I like this approach to say, we try to make a composition of the best of breeds in for different services and different products, because that often enough makes it much easier to migrate or to upgrade, because we constantly need to upgrade and change things. So there is a balance to say yes, we want to identify what is really core to our business. And they are over-investing in a way to say okay, we need to gain and build this expertise. But then also keep it at a level that it is upgradable in different parts and not necessarily in one big step. good practices in software development are core to it, and code maintainability is clearly one of them. So to have a clean code and which is readable. Because it's very unlikely that there's one group of engineers who are only looking after one, one part of the system. So half that easily learnable for others is, I think, at the core of it. And when it comes down to the different frameworks, I mean, of course we're looking into When do we want to set up microservices for this, of course, we are working on the various headless approaches with a very strong API layer, the infrastructure runs in a Kubernetes cluster in order to scale also on the infrastructure side. But I like this, the general approach is to say we want to have a good mix of the best of breed solutions, which are tailored to our business needs. So being very well aware of where we want to have our solution can replace our business special in a way or in other other circumstances, take off the shelf services and solutions and integrate those.

Markus Lorenz ‍

Yeah, that makes totally sense for me. Adapting composable commerce and setting the best of breed architecture that is definitely state of the art I would say and also holding the company back from getting to that end and not transforming the infrastructure to serve and the and the client needs. Maybe I asked this question where e-commerce pure players should set the focus because today we're observing that people and especially young and wild developers try to build everything on their own. So in case of mytheresa, do you have more capabilities than normal pure players? I would say, but what is your strategy on build worlds is by how you're approaching that on my theories?

Philipp Barthold

Great question. And obviously, if I had the single answer, that would be awesome. I think it goes down to understanding well, and to define well for you, what makes your business special. And that have that clearly defined and then be absolutely open to invest into that area versus other areas, which may be less interesting to take as an example and mytheresa campaign and campaign management is somewhat unique and somewhat special. So there, we built a lot of our own solutions, because it's what, you know, drives this business to a large degree. I don't know about other areas where it's about an integration into a payment service provider or into some other external service, you know, maybe you just buy those kinds of integrations, or even outsource them, to some extent. So to me, one of the key challenges is our key gene helping points on buy versus build is what is unique to your business, and then try to try to factor that.

Markus Lorenz 

Yeah, totally agree because then you're a force on the client side and serve really the client needs. Absolutely. But also, I see a kind of downside to this approach, because in the end, you might end up in technical depth, or maybe you're built up also, technical diversity, let's call it like that. And from observations also crucial to deal with technical depth, in consciousness. And one of my old architects said very wisely, the decisions from today are the legacies from tomorrow, I really like that tougher, so to say and constantly adding new tools or programming languages to the infrastructure might be hot at the moment, but will definitely raise the complexity and increase the maintenance work. So how you are achieving a conscious treatment of legacies also aligned with the business stakeholders.

Philipp Barthold

The core point again, is to factor scale into your decisions. And to me  with the current growth we are proud of and we are enjoying, it's like everything doubles in three years, or triples in five years. And everything is that number of customers and number of transactions and number of packages, we need to send the size of the team. So everything kind of doubles in three years. And therefore you have to factor in your refactoring work or architectural work. And so we just have a certain bucket of backlog items in that sector. And we prioritize it alongside all the other features we are building. Of course, there's never the easiest of all discussions of course, business is desperate for new functionality. But in order to avoid that, you run into this dead end road you are describing to say okay, now, we are having created this monster, which is unmaintainable it is I think important to to break this down and have not the one big thing you ecommerce stack which you need to completely update. But back to the composable commerce approach you try to look into various components of it, which are constantly in need to upgrade or migrate.

Markus Lorenz 

Yeah, I absolutely agree with that. Now, we talked a lot about technical things and maybe we're switching to the second also super important dimension, which is the organization itself because from my point of view, having the right organization and the right people or firsthand the right people in the right organizational structure is definitely key for me. So, as a model, you can observe that you have cross functional delivery teams, that enables the end to end responsibilities for the teams to deliver faster customer volume in my opinion, otherwise, you will just lose speed while waiting for decisions internally alignments meetings, meetings after meetings and so on. How you on mytheresa are structuring the organization is that the organization is still capable of delivering fast customer value.

Philipp Barthold

It needs to be cross functional, I mean, I think any other concept is doomed to fail. The challenge is cross functionality within technology. This is much more straightforward to realize but where do you draw the line with stakeholders so how big do you make a specific team and as I was describing, we are at this crossroad of fashion and luxury fashion. And that world and, and the development and technology on the other side. So it is to build a cross functional team, but then also have a lot of alignment sessions, which are always it's like a summary where we need to, sometimes okay, we take something, we work on program increments, that means that we usually go into into a delivery cycle of something like four sprints, two months, and then we surface that afterwards. And then we involve larger groups. So we compose cross functional teams for a period of about eight weeks, and then we come back up and then we decide on the next program increment and that makes them change the number of stakeholders involved directly with the teams.

Markus Lorenz 

Yeah, that makes total sense. And I guess you guys are actually tech wise also doing it in more or less the same way if I remember right? And what key roles and ceremonies or processes are mandatory for you to keep this delivery pace high? Is there any crucial recipe for you?

Philipp Barthold

You know, I don't want to necessarily single out a single ceremony because I think they're all extremely valuable for a successful and speedy delivery. On heightens the sessions I enjoy the most is this this big solution design sessions you have directly with the stakeholders because sometimes you run into this challenge that one side necessarily doesn't understand well, the other side and when you get the right engineers and the right business stakeholders into into one room with a lot of open mind, then some some magic can happen. So those solution finding sessions and crafting sessions, I enjoy the most.

Markus Lorenz 

Super cool, yeah, I also like that creativity in the room. There's also one question which I’m always asked by clients, so clients especially are starting their ecommerce business. Meaning if you can design a kind of e-commerce organizational structure from scratch, which capabilities you should have and why and maybe also with which capabilities you should start.

Philipp Barthold

Obviously, they may differ very much by the use case and where you set up with which goal you set up a technology team. But to me personally, the duality between engineering and product is key. Because often you try to find maybe the super tech savvy product person or the very business minded engineer. And I think it's a good approach to just say, No, we need more than one head or one side, we need to bring together these two sides. So we'll always start with a strong foundation of a product which works super well with engineering on the other side, and make sure that they stop understanding each other from trying to find a jack of all trades.

Markus Lorenz 

Yeah, absolutely agree. I mean, there's also this wording of T shaped employees on it, as far as I remember, meaning your understanding tech and business or businesses and tech, depending on their angle, you're looking on. I would be interested how your role was changing over the last years because growing the company at that scale is absolutely impressive, no doubt about it, but how was your role evolving? And what were the tasks when you start back in the days and how it looks like now,

Philipp Barthold

I think what comes with growth and scale is the specialization right? So, you know, in the past year for two site reliability engineers that they could do everything now, you break into further specialties in each of the teams. And that kind of specialization is also mentioned earlier, it's like okay, it is impossible to be on top of each of these specialties. So I feel my role is much more related to building these teams and the culture of trust. That was a challenge of the pandemic where we have people more dispersed and not together. I feel this is my focus right now to try to create a team and culture in which these specialties can bloom and continue to grow.

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