Thread
1. Shopify stock is down 50% over the past 12 months. Its mission may be to "arm the rebels," but it is giving us muskets in a war that is increasingly being fought with machine guns.
👇👇👇
👇👇👇
2. Let me start by saying I own a lot of Shopify stock. I love the brand and want it to do better. Native Deodorant is on Shopify, as are other brands I own. I’m down 6 figures on today’s announcement alone. And I own more Shopify outside this account, so I'm probably down $200K 
3. Everyone in e-commerce glorifies Shopify. They should because it is amazing. But it can also be sooo much better. Here is how:
4. Shopify has benefited from two tailwinds over the past few years:
A. Outrageously cheap facebook ads that have made merchants more successful, and
B. The growth of ecommerce (mobile, Amazon, COVID, etc.).
A. Outrageously cheap facebook ads that have made merchants more successful, and
B. The growth of ecommerce (mobile, Amazon, COVID, etc.).
5. It has capitalized on that opportunity!
So many brands built businesses on Shopify as a result of cheap facebook ads. Shopify took advantage of that by building so much infrastructure that it is *THE* place to start a new ecommerce company.
So many brands built businesses on Shopify as a result of cheap facebook ads. Shopify took advantage of that by building so much infrastructure that it is *THE* place to start a new ecommerce company.
6. Shopify is cheap, reliable, and easy to use. Pretty awesome!
That tailwind (cheap fb ads) is coming to an end however.
Shopify is still benefiting from the growth of e-commerce, but that growth is now slowing too.
That tailwind (cheap fb ads) is coming to an end however.
Shopify is still benefiting from the growth of e-commerce, but that growth is now slowing too.
7. However, it has had 5 years to arm its rebels with more than muskets, and has failed to do so. Here’s what I mean:
8.1 Shopify Analytics suck.
You can’t even do cohort analysis on Shopify. Can you believe that? So many brands try to raise money and say 30% of our customers repeat, when they mean that 30% of this month’s revenue came from returning customers.
You can’t even do cohort analysis on Shopify. Can you believe that? So many brands try to raise money and say 30% of our customers repeat, when they mean that 30% of this month’s revenue came from returning customers.
8.2 Shopify Analytics suck.
Why is this important? Cohorts helps merchants understand LTV. This will help merchants market more, and spend more wisely (and probably spend more on marketing overall) on facebook and other platforms. It should take an hour to build. WTF?
Why is this important? Cohorts helps merchants understand LTV. This will help merchants market more, and spend more wisely (and probably spend more on marketing overall) on facebook and other platforms. It should take an hour to build. WTF?
9.1 Shopify Subscriptions
Shopify Subscriptions doesn’t exist. As a result, you have to deal with Recharge. Recharge is like driving on the autobahn in a Soviet-made car next to a bunch of ferraris. Recharge is overpriced and has awful support. It also has no analytics.
Shopify Subscriptions doesn’t exist. As a result, you have to deal with Recharge. Recharge is like driving on the autobahn in a Soviet-made car next to a bunch of ferraris. Recharge is overpriced and has awful support. It also has no analytics.
9.2 Shopify Subscriptions
So many e-commerce businesses have subscription components. Why did Shopify get into logistics (physically shipping boxes out) instead of the most obvious opportunity in front of it that is software based?
So many e-commerce businesses have subscription components. Why did Shopify get into logistics (physically shipping boxes out) instead of the most obvious opportunity in front of it that is software based?
9.3 Shopify Subscriptions
Why is this important? Shopify subscription option would be much cheaper than ReCharge. It would also be better integrated and with better analytics, could help merchants grow a ton.
Why is this important? Shopify subscription option would be much cheaper than ReCharge. It would also be better integrated and with better analytics, could help merchants grow a ton.
10.1 Audience Sharing
Shopify could create an audience sharing system that would allow you to opt-in to a system where your store shares its customers via a facebook audience (so it is anonymous) with non-competing brands. This could reduce marketing costs for all Shopify brands
Shopify could create an audience sharing system that would allow you to opt-in to a system where your store shares its customers via a facebook audience (so it is anonymous) with non-competing brands. This could reduce marketing costs for all Shopify brands
10.2 Audience Sharing
Why is this important? This is like arming me with a nuclear weapon instead of a musket.
Why is this important? This is like arming me with a nuclear weapon instead of a musket.
11.1 Scaling
As you grow your brand, Shopify isn’t the solution it used to be. Instead, Shopify becomes the technical debt that you can’t get out of. Simply put, Shopify is awful for larger brands. And that is a major problem for SHOP, because those brands spend $$ on tech.
As you grow your brand, Shopify isn’t the solution it used to be. Instead, Shopify becomes the technical debt that you can’t get out of. Simply put, Shopify is awful for larger brands. And that is a major problem for SHOP, because those brands spend $$ on tech.
11.2 Scaling
Shopify Plus was supposed to be the option for brands as they grew to scale. Instead, it is a joke. What does it get you? An account manager? More API calls? Hundreds if not thousands of e-commerce brands are outgrowing Shopify Plus.
Shopify Plus was supposed to be the option for brands as they grew to scale. Instead, it is a joke. What does it get you? An account manager? More API calls? Hundreds if not thousands of e-commerce brands are outgrowing Shopify Plus.
11.3 Scaling
This is why so many brands like Away Travel, Ritual, MVMT, and Manscaped have left Shopify. They need better solutions to get past $50, $100, or even $200M in sales.
No doubt that FIGS has also thought about leaving.
This is why so many brands like Away Travel, Ritual, MVMT, and Manscaped have left Shopify. They need better solutions to get past $50, $100, or even $200M in sales.
No doubt that FIGS has also thought about leaving.
11.4 Scaling
Shopify should create a $10K/month subscription for larger brands and come up with real solutions. Subscriptions with great cancellation flows. Integrations with FB, Pinterest, Snap Ads. Analytics that match those that you can do with other platforms for years.
Shopify should create a $10K/month subscription for larger brands and come up with real solutions. Subscriptions with great cancellation flows. Integrations with FB, Pinterest, Snap Ads. Analytics that match those that you can do with other platforms for years.
12.1 Product Conclusion
Shopify is squandering an opportunity to build a platform that empowers merchants of all sizes.
As the tailwinds that filled its sails fade, it needs to improve by building out more and better products.
Shopify is squandering an opportunity to build a platform that empowers merchants of all sizes.
As the tailwinds that filled its sails fade, it needs to improve by building out more and better products.
12.2 Product Conclusion
Shopify is in a unique spot - it can grow its own business by empowering its merchants, and giving them better tools and data to grow their own stores.
But in order to do this, it requires foresight and a genuine understanding of what merchants needs.
Shopify is in a unique spot - it can grow its own business by empowering its merchants, and giving them better tools and data to grow their own stores.
But in order to do this, it requires foresight and a genuine understanding of what merchants needs.
12.3 Product Conclusion
I think it may also require a change in culture to be even more software focused (ironic since it is led by a developer).
I think it may also require a change in culture to be even more software focused (ironic since it is led by a developer).
13.1 Shopify as a Business
In any case, I think Shopify is a great business.
If it fails to do what I recommend, it can just increase prices and grow its top line, since there aren't any other solutions right now.
In any case, I think Shopify is a great business.
If it fails to do what I recommend, it can just increase prices and grow its top line, since there aren't any other solutions right now.
13.2 Shopify as a Business
One thing to note: I believe Shopify’s PE ratio isn’t 30X. It’s more than 100X. The 30X is a result of one-time investments like Affirm, Stripe.
One thing to note: I believe Shopify’s PE ratio isn’t 30X. It’s more than 100X. The 30X is a result of one-time investments like Affirm, Stripe.
14. If you liked this thread, please:
A. Retweet the first tweet in this thread
B. Follow me!
I started a deodorant company called Native, and sold it to P&G. I'm an investor in 50 startups and love to tweet about the industry.
However, I am wrong a lot.
A. Retweet the first tweet in this thread
B. Follow me!
I started a deodorant company called Native, and sold it to P&G. I'm an investor in 50 startups and love to tweet about the industry.
However, I am wrong a lot.
