It seems like the biggest issue Etsy had was a lack of strong engineering leadership. They relied on an outside consultant to rewrite their application in a fundamentally flawed way. The lack of eng leadership resulted in both poor technical decisions being made and bad engineering processes for how the app was developed.
Etsy's biggest technical mistake building an application using a framework that no one understood. This led to the predictable result that when they deployed the application to production, it didn't work. Even if the application had worked, Etsy still would have needed to maintain the Twisted application indefinitely. Maintaining an application written in a framework no one understands sounds like a recipe for a disaster. Sooner or later you are going to run into issues that no one will know how to fix.
Process wise, Etsy made the mistake of not properly derisking the Twisted application. They only found out that it didn't work when they were deploying it to production. They made the same issue a second time when they tried to deploy the replacement. When I'm building a new service, the first bit of code I write is to test that the fundamental design of the new service would work. Usually this only takes a few days instead of the months it takes to implement the full service. It sounds like Etsy could have setup a simple Twisted app that did a fraction of what the final version did. If so, they would have found a number of fundamental flaws in the design before having spent a ton of time building out the service.
To be honest, this story shows how a business can succeed even with a bad engineering team. It would be one thing if this sort of incident killed off Etsy. Instead Etsy has gone on to become the $5 Billion company it is today. I'm not saying engineering doesn't matter. All I'm saying is you can build a pretty successful business even with a bad engineering team.