Shopify

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The platform's own early signals for this company — hard-to-fake, and where one preceded a real raise, the measured lead.

• TLS certificate transparency 4 signals · latest 2019-09-23

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• bearish assessment Domm Holland

  And I think Shopify is their partner. I would presume that Shopify did that partnership through gritted teeth. I think that's who they're chewing into.

• bearish assessment Domm Holland

  So, I mean, to be honest, I think Facebook and Instagram here are competing against Shopify.

• mixed assessment Jason Lemkin

  And we can even squint at some of Shopify's numbers and see a deceleration in the sense that five years got pulled forward into, into two months. So that growth can't, you can't have about 200% of commerce be e-commerce, can you? I mean, there's a, there's a, there's a maximum, right? So this could be. But the brands are going to go forever.

• bullish fact_claim Jason Lemkin

  they went from 3 million to 13 million this year, um, because Shopify exploded.

• bullish fact_claim Andrew Wilkinson

  we had a business that was in a extremely hot space, you know, Shopify, e-commerce, SaaS, uh, and we had a consolidation play.

• bullish endorsement Andrew Wilkinson

  And we have a lot of trust and a lot of a lot of experience working with Toby and Harley. So we feel very comfortable being a part of that ecosystem.

• bullish assessment Andrew Wilkinson

  Well, it's very much a bet on the future of ecommerce and Shopify. And I think that ecommerce is such a massive market and Shopify is such a dominant player within it that that's a whale I'm very comfortable being a barnacle on.

• neutral fact_claim Andrew Wilkinson

  I met Harley from Shopify and Toby as well about 10 years ago at a conference. And at the time, Shopify was pretty small. I don't even think they'd raised their Series A yet, maybe 15 employees. And they had a problem, which was unless you were a developer, it was really hard to make your site look nice. And so they built a templating language and they basically wanted us to come in and be their

• neutral fact_claim Tobi Lutke

  I think this is, like Shopify, fundamentally, is an implementation of these ideas. And we want, like, we want to make sure that people could solve the problem that it was very, very hard to build software that helped small and medium businesses, right?

• neutral fact_claim Tobi Lutke

  I got a good pushback of, you know, do we really need to be lots of online stores? Isn't there going to just be sort of one of them? Or like, maybe there's like, like, let's say 10,000 or 40,000 or something. And I think 45 was a number that I got in one rejected rejection letter. Um, there was just no agreement that there was a value in, um, making all like, like making it easy for people to start stores because there was a limited term. And, um, I think that is actually, that was good pushback

• bullish endorsement Tobi Lutke

  what Shopify has attempted and, and with payments, especially, uh, it's just to remove all these barriers and, and, make, make ideally everything happen only once you need to, like once you have a bunch of sales and want to get the money paid out, we, you will then be able to tell us where to send it. And then we can do all the provisioning of the merchant accounts for you.

• bullish fact_claim Tobi Lutke

  what we've realized eventually the hypothesis we had is like, every time we make it simpler, what we actually get is just more consumption because the demand was very high, but the ability to overcome the friction along the way, it was, was simply not that well distributed

• bullish assessment Tobi Lutke

  I think the right idea is that, um, if you're direct to a consumer brand, you need a home base somewhere. Um, and ideally you do this on the open web. Why? Because it's the one place you can actually own like, uh, on the entire internet and the other surface you pay, uh, for the impression or, or you're renting it from someone.

• bullish assessment Chamath Palihapitiya

  companies with incredible momentum and is aws going to be able to compete on payments or for e-commerce platforms uh with stripe shopify and square probably not and what if those companies start adding other cloud services you know we're going to be in for a dog fight here

• bullish assessment Justin Kwong

  that's a great idea and that's definitely something i think we're going to move towards as we want to get more of those shopify brands and work closely with shopify um just because we have a lot of that product data on what they're what they want to make and you know what they're making it'd be interesting

• bullish endorsement Josh Reeves

  what i think is cool is that there's more and more companies out there like shopify and square and toast and you know uh obviously intuit is kind of the original one and us included now that like really

• bullish fact_claim Toby Lütke

  two quotes reflexive ai usage is now a baseline expectation at shopify and quote using ai effectively is now a fundamental expectation of everyone at shopify

• bullish fact_claim Toby Lütke

  the final item is before asking for more headcount and resources teams must demonstrate why they cannot get what they want done using ai what would this area look like if autonomous ai agents were already part of the team

• bullish fact_claim Toby Lütke

  point uh two is that ai must be part of your prototype phase the prototype phase of any project should be dominated by ai exploration prototypes are meant for learning and creating information and ai dramatically accelerates this process

• bullish endorsement Chamath Palihapitiya

  let's take a you know an example like a shopify 100 billion dollar market cap but by no means is it a trillion dollar market cap their success comes from enabling you know arming the rebels and so i'm a huge fan of these enabling this enabling layer for small businesses both offline and online

• bullish prediction Unattributed

  fancy way of saying a piece of the action. And so what we'll see over time is if the Shopify sellers keep selling more, the percentage that they make from SaaS versus these transactions could become more and more based on the transaction, they just get all that free money on top of it.

• neutral fact_claim Unattributed

  And if you look at Shopify, they had about a 3070 split between SaaS and transaction based revenue, their standard plan, I think Shopify, Shopify had a 3070 split between SaaS and transaction based revenue. So in q2 of 2021, Shopify had 334 million subscriptions, they get that every month, it's nice and predictable, it grows slightly when they get more subscribers, and they had 785 million in transaction based revenue, which they call merchant solutions revenue,

• bullish assessment Unattributed

  Shopify makes entrepreneurship easy on the internet, it makes it easy to start a store. Shopify makes it easy to start a store. It's Shopify makes it cheap and easy to start a store. Shopify makes it fast and cheap to start a store on the internet. Really, really simple problem being solved there, creating a store on the internet, what previously was expensive, and previously was time consuming.

• bullish endorsement David Friedberg

  Number one priority is, let's go build the best product we can possibly build. And then priority number two is, let's make some revenue so that we can do more of priority number one. And then actually priority number three is never mix one and two.

• bullish fact_claim Brian Armstrong

  Toby's experience as a founder and CEO scaling his business from a small niche online marketplace into what has become a critical backbone of global e-commerce will help guide Coinbase as we seek to bring crypto to more people and businesses around the world.

• bullish assessment Unattributed

  Never. Yeah, I would say it's things are going well. So pressure advantage. So if you're at the poker tournament, you're building up a big chip stack. And somebody raises preflop. You got so many chips, they're short stack. You've got a, you know, whatever 40% chance when they have a 60, you know, you might try to pressure them to fold two ways to win, you know, so it's like, I think he's just kind of pressing his advantage. Everybody knows he's, you know, world class CEO, everybody knows it's a

• mixed criticism Unattributed

  I guess what I don't understand is like, what is Shopify worried about? Like they're doing fine. Right? They're putting up great numbers. What what is the concern? Why not just pay Toby more? Like, I don't really understand why you then also have to create a new special super super voting class of shares to make sure that everything's okay, and nobody's going to come in and take them over.

• neutral fact_claim Unattributed

  John Phillips, one of Shopify's first investors and a mentor to Mr. Luque will be converting his class B shares class A, which will boost Mr. Luque's voting power to 40%.

• neutral fact_claim Unattributed

  Shopify's board is also proposing a founder share that would increase CEO Toby Luke's voting power from 34% to 40%.

• bullish assessment Unattributed

  but it's a high growth company. So anyway, just put some numbers on the board. It's a real business. It's a real business.

• bearish assessment Unattributed

  they're at price earnings is 27 times. That's pretty high price earnings,

• neutral fact_claim Unattributed

  just, you know, just over 2% of that, or 2.7%. To be precise, their net income was 2.9 billion in

• neutral fact_claim Unattributed

  the GMV in 2021 was 175 billion. That's the gross merchandise volume. So everything sold from the store is worth 175. But the revenue for Shopify, they get a percentage of sales and they get software fees was 4.6 billion.

• neutral fact_claim Unattributed

  shopify powers mostly small merchants that don't from reporting i've done that don't make a lot of money bulk of their revenue base actually comes from shopify plus for which they have the tens of thousands not millions of merchants right so they actually don't have a monopoly on that space ... shopify doesn't want its clients to use any checkout system outside of shop pay because that's the company's bread and butter

• bullish endorsement David Friedberg

  whatever Stripe makes or Shopify makes very small percentages selling software, great business

• bearish criticism Jason Lemkin

  look at Shopify today. Shopify's gross margins are only 50% because most of its revenue is not from software anymore. It's what it's called merchant services, which are payments. And that's great, but the margins are lower.

• neutral assessment Jason Lemkin

  when you look at what was happening with Shopify and zoom, you saw that COVID peaked really early the utilization, you can see it Shopify that the e-commerce penetration started to drop almost as soon as we get the hell out of the house. Right. It started to revert to the mean.

• bearish fact_claim Jason Calacanis

  I saw actually an honored somewhat related note. One of Shopify's biggest investors exited stock and concern over Amazon and overall market conditions. So if it's happening in public markets, I would imagine it'll start even

• bullish endorsement Jason Calacanis

  I don't think that's what he was doing. I think he's building for the long term.

• bearish assessment Deirdre Bosa

  the market changed before Spotify, excuse me, was able to turn into an Amazon. So it's spent it's trying to shift into or continue to be a fulfillment company, which requires so much capital expenditures, and the market turned on them. So they're gonna have a really hard time.

• neutral fact_claim Deirdre Bosa

  he just says straight up, he got it wrong.

• bullish endorsement Unattributed

  if you're looking to do the thing that i did with shopify you can basically look and see okay who's trading at a pretty low multiple right now and then you look over at their growth rate and if someone is still growing quickly and has high gross margins that's an interesting place to then start your research and dig deeper on the company read their financials and try to understand what are what's going on in this company that why is the market pricing it so low when at least at a very high level

• bullish endorsement Unattributed

  shopify was a really interesting buying opportunity right now or or in the last couple weeks and so i'm for the first time a shopify shareholder because i was kicking myself for the longest time that i wasn't i think massive secular tailwind with empowering people to be their own e-commerce merchants there will totally be an amazon that eats an enormous amount of e-commerce and then there will be the shopify merchants that that have a gigantic amount of the rest and i think that will continue fo

• bullish fact_claim Unattributed

  they're one of our favorite stores because they start on shopify and then public

• bullish fact_claim Unattributed

  we have a lot of shopify stores uh people who were on amazon and then they publicly got uh you know copied and um left there and i

• bullish assessment Unattributed

  you have a pure relationship you support people who want to sell stuff on the internet you they only work with you to the extent you help them

• mixed assessment Tobi Lutke

  in a company dynamics perspective it's just it would it would compromise the company we are in the way we are solving problems and so clearly the right decision

• bullish assessment Tobi Lutke

  we did not want to compromise product we see uh so for instance customer support as a product it's like again we meet people very early in my entrepreneurial journey they they often um they are courageous but like um their commitment waivers they they might actually call us to to to ask what's the next task um they uh like they um they they are not sophisticated yet uh like like like they are on the learning journey but they are there's a lot of new things to learn but after they start uh like t

• neutral fact_claim Tobi Lutke

  we more than doubled this was like up 6 000 people in two years or something

• neutral fact_claim Tobi Lutke

  we had to hire ahead a lot for um the e-commerce um uh explosion that we talked about earlier just like the servers right the the servers should have been had next year or maybe even two years capacity so you're hiring what for a year or two years from now

• bullish endorsement Unattributed

  so we're hiring with people who are like super signed up for this kind of thing we pay extremely well for like um um but we paid in an almost paternalistic way where we make all the decisions about what's good for you and so this was our opportunity to just switch over to something that's cohesive of a way we want to run the business

• bullish endorsement Unattributed

  actually like i happen to know we've been you know discussing you know from philosophy like sociology and first principles for like three years and like we like we built something completely different

• bullish endorsement Unattributed

  exactly what i'm going for you you're spot on i i did uh you you like my note on leadership i i wrote one on uh leaving well um which is like there's basically three things you can do in a company you can leave too early which sucks for you you can leave um uh too late which actually sucks for you and for the company um and and and you can leave right on time which works for everyone and and i think um the sort of retentive component of uh uh of stock options like the golden handcuffs very very

• neutral fact_claim Tobi Lutke

  we actually uh uh just moved everything to like here's your annual income like it's calculated based on um uh you know the grand value like we just like like figured out a heuristic by which we can convert the old system a new system and then everyone got an offer um to uh here is what the new system what your wallet size is and uh for everyone who opted in which was basically everyone now it's like something that every quarter you make a decision and you get the stock options that you choose an

• bullish fact_claim Tobi Lutke

  we're a product company we're good at this like all shop photos takes the insane complexity of a world of commerce and makes it usable by by people by hopefully everyone so this is the same problem let let's go build the ux now what do we want from this can can once we own the ux can we actually move agency over and so this is sort of went into this concept of can we just let people choose like because you know sometimes executives coming in said like hey i would actually like yes you're doing 5

• bearish prediction Tobi Lutke

  i was wrong about this i actually expected this to be a um very very uh long-term a stepping stone event for for e-commerce adoption

• bullish fact_claim Tobi Lutke

  for e-commerce and that created a massive massive leap forward in terms of uh you know gmv in in in for our emergence and business for a platform

• bullish assessment Tobi Lutke

  the company just keeps getting better i think it's best version of that shop ever existed by by by a mile

• bullish endorsement Tobi Lutke

  we build the best software we know how to build

• neutral fact_claim Jason Calacanis

  you have a very big competitor who is extremely good at what they do ... and they changed who's running the company and i think you know that means you got somebody who's super focused in there running the company maybe as somebody who wasn't as focused i'm talking of course about amazon

• bullish fact_claim Tobi Lutke

  this is one cool thing about shopify like the millions of entrepreneurs we get to speak to

• neutral fact_claim Jason Calacanis

  it was extraordinary during the pandemic my lord did the company grow and then you had a quick pullback

• bullish assessment Unattributed

  Then you have Shopify who's enabling it. And so they've done a lot of, you know, pretty interesting collaborations around token gated retail, a big one. They did at South by Southwest with, uh, doodles, which was, you know, pretty exciting.

• mixed assessment David Friedberg

  um the truth is uh coinbase and shopify i think you know both brian and toby said you know we're this is a business this is not the place for politics we you know we have like one mission you know uh cryptocurrency for the world to free the world and you know help people who want to build mom and pop shops like enough let's get focused and then i think what people are realizing is if you hire two years ahead well then you can cut half the staff or whatever it is and have uh more earnings while t

• bullish endorsement Jason Calacanis

  i love this yep quote from shopify's vpf product people join shopify to build to make cool ish ish to see the thing they had their hands on get released so they can say whoa i made that meetings are a bug along that journey

• bullish endorsement Molly Wood

  a hundred percent about figuring about editing yeah and he said you know it was quoted as saying the best thing founders can do is subtraction everybody knows that they have too many meetings especially at like at a big company at a big company there are so many stupid meetings where at least half the people who are in the meeting don't need to be there and it's just a time suck and to take that away means

• neutral assessment Chamath Palihapitiya

  as you said in the early part of the show when we're debating like 2023 like this is part of the we have to be more efficient we got to do more with less

• bearish criticism Unattributed

  if it's gray don't try to fudge it like that would be my advice to start shopify is tackle the privacy implications head on

• bearish criticism Unattributed

  what they're claiming is that according to the ft article that we read about it which doesn't mention a consumer opt-in or opt-out at all is that shopify is arguing that retailer data is first party as opposed to third party so they're trying to say if you came and shopped at a shopify store you shop on shopify the way that you would shop on amazon got it and so we are allowed as even though it's an aggregated network of retailers as opposed to like a direct service itself that also includes an

• bearish criticism Jason Calacanis

  that would be a very smart move that there is no sign of shopify making so far

• bullish endorsement Unattributed

  i think users will appreciate getting more targeted ads as a shareholder at shopify i'm all for this

• bullish endorsement Unattributed

  as a shopify shareholder my interpretation of this is brilliant

• bearish criticism Unattributed

  consumers who bought at one shopify store yeah did not expect no way opted in to having all of their data aggregated with every other store and uploaded to google and meta

• bullish endorsement Jason Calacanis

  they figured out a way to route around apple trying to obscure retargeting of customers by allowing one shopify seller to bundle their users and i guess share those users with other shopify users and do custom audiences very clever idea

• neutral fact_claim Rian Boitler

  we're seeing this return to retail and Shopify has signaled a return to retail. And so they have square in their store, but they have Shopify e-commerce, right. Solution. If you buy a gift card on square, you cannot use it on Shopify and vice versa.

• bearish criticism Rian Boitler

  the native gift card solution only allows the buyer to add the gift card to the cart. And that means that the buyer receives a gift card. The gift recipient never receives a gift card. So it's not really a gift experience at all. It's like this really disjointed, yucky experience.

• bullish endorsement Dan

  For example, they were on WooCommerce before, and then I told them we have to move to Shopify. We have to move to Shopify. I was like six years ago, we have to have to be on a, on a stack that just improves over time and it wasn't improving.

• bullish fact_claim Unattributed

  In fact, they're powering 10% of all e-commerce in the U.S.

• bullish endorsement David Sacks

  I think companies in startups are increasingly have to choose whether they want to be apple or whether they want to be um coinbase or shop 5 for that matter

• bullish endorsement Chamath Palihapitiya

  what toby had to say at shopify which is this is not a family this is a sports team you are here to perform we are here to perform for our customers the end

• mixed assessment Unattributed

  i got to give toby a huge round of applause because he is such a great ceo... last year in the middle of all of this wokeism he wrote this incredible memo... this time around he just owned it he's like you know i made a huge bet that all of this behavior change was going to be discontinuous and permanent and it turned out i was wrong i'm sorry for that and here's how we're gonna have to course correct... it's now clear that bet didn't pay off ultimately placing this bet was my call to make and i

• bearish fact_claim Unattributed

  shopify just laid off 10 of its workforce about a thousand people on tuesday their stock is down 10 past five days overall 70 year to date um and if you look at this chart and toby uh took blame for this he basically said listen we thought that this was going to be a uh you know fast forward into the future that people would adopt e-commerce in a major way and that would stick here's us e-commerce adoption growth rate massive spike when people were forced to buy all their goods online and now it

• neutral fact_claim Tobi Lutke

  I'm super pro grade meetings, but like once every couple, uh, year and a half or so, we randomly delete all recurring meetings.

• bullish endorsement Tobi Lutke

  I want Shopify to be a company that, um, is well, first of all, it's really, really, really good, great for crafters.

• bullish assessment Tobi Lutke

  what does the co-pilot do? It's like, it's, well, hopefully it helps you with courage.

• bullish assessment Tobi Lutke

  we as a business sit on the same side of the table as like the merchants, the partners, the best thing we can do for Shopify to, um, for our business model is actually make our customers more successful

• bullish fact_claim Tobi Lutke

  every single time we shipped something that reduced the friction by a meaningful amount, we actually had more successful business being built.

• bullish endorsement David Friedberg

  It's literally like anybody could become their own business person. It's really incredible.

• bullish assessment Tobi Lutke

  I think it would be very bad for my company. And I think a lot of my customers, if they would have to fire Shopify, just because their, their customers ask them to provide Amazon buy the prime services. And I just like, so, so it's much better to work with them.

• neutral assessment Tobi Lutke

  we bootstrapped it, but like, we can't run it in the end. So this is like, it went to Flexport because that's their main quest. And I think that's all totally okay.

• neutral fact_claim Tobi Lutke

  I don't want to do, uh, Shopify basics or something like this. That would be totally a side quest for us and I'm big on main quest. So I, I want to keep things.

• neutral assessment David Friedberg

  I actually think it's quite similar because if you talk to Bernard Arnault and you see the infrastructure of what they've built and the abstractions, you've done that. It's just, you're 40 years separated and they're much more procedural, but they do the same things, which they plug in these great businesses. They, they empower them to run, et cetera.

• bullish assessment Tobi Lutke

  Shopify prays at the altar of entrepreneurship, of people reaching for independence. And it's really causing entrepreneurship to be a more casual thing rather than this huge decision. Being able to be an entrepreneur in your lunch break, so that you can maybe escape, like a career which you chose for wrong reasons.

• mixed assessment Tobi Lutke

  the products sold on Shopify are the products people want, not the products people need. And I think this specifically shifts the landscape a little bit. And also the fun thing is it's really good for falsifying bad media narratives because, as always, it's like everyone puts up a chart and says this is the answer. And then we get to dig in one level deeper and actually see what are the constituent parts underneath the chart and everything, the story changes. So we definitely see people react. W

• bullish fact_claim Unattributed

  So for example, Shopify, their read through on GDP was actually pretty healthy. Harley was on, I think it was CNBC I saw this morning, basically saying he thinks consumer spending is still strong and it's still there.

• mixed assessment Thomas Laffont

  But let's look at these three, DoorDash, Block, and Shopify. Three incredible entrepreneurs, Tony from DoorDash, Jack from Block, and Toby from Shopify. You can see that these companies have incredible scale. If you just look at the GMV and the revenues, you can see that over this period of time, they got significantly more profitable. But you can see that on a PE basis, the multiple shrank significantly, and the growth just wasn't fast enough to kind of offset the lower multiple.