This seems unlikely to be true unless your software engineers love doing ops (and the needs of the business don't need those on software.)
The salaries of having Operations that can replace failed hardware 24/7 (and w/ vacations) alone is more expensive than a company like Etsy should have in ops. Then there is the cost of the pipe, power, and redundancies. Even higher up, managing all of the depreciation in accounting is going to have costs compared to a expense line item.
Hardware failures are far less common than you believe. I lost one hard drive in 10 years and because it was a RAID array it didn't even fail.
> Hardware failures are far less common than you believe.
Your experience may vary; I once rented metal from Softlayer (running ~15 shards, about 60 boxes), we had a number of drives* fail, a couple of the rack controllers, some raid controllers, and one time a power supply over a 3 year period. On the worst RAID failure, we sent one of our employees across country to manage the recovery directly.
*Some hard drive failures related to 2012 Seagate 3TB drive issue. One failed within a week of being replaced.
Softlayer had a team monitoring our servers and working through issues with us; Other than supplier issues I blame them for nothing.
In that worst scenario; we ran off our geo redundant slave for the better part of a week.