"..luck brought the sudden, coincidental appearance of a new framework for using Ruby, called “Ruby on Rails,” devised by Danish programmer David Heinemeier Hansson. ..because Ruby on Rails was so new, Lütke’s work gained notice. He began sharing some of the software components he was creating with the Rails community (a way to process credit cards, for example), and quickly became one of a select group of core Rails developers.
..Lütke took the burden of this stress entirely on himself. He told no one at the company. “I was sitting in meetings,” he remembers, “talking with my peers about building things that would take us a year, when I knew we didn’t have four weeks of money left. And I could not let anyone know that.” He knew the minute he did, their focus would naturally shift to the short-term, to work on things for immediate benefit. For Shopify to succeed, he needed them to keep thinking long-term."
Interesting. In Ben Horowitz's book The Hard Thing about Hard Things, he recalled doing the opposite at Opsware/Loudcloud. He made sure that all his employees knew that they were in trouble.
For six months, Loudcloud employees worked long hours and were under constant stress, but were able to stay afloat on less money (keeping them alive longer). I think transparency trumps secrecy in most cases. Bad news spreads quickly and good news spreads slowly.
Not the sexiest stock but as someone who has built their company off Shopify I cant say I have worked with a better product/ company in my life. The way they handle third party developers, designers, and stores is exceptional. They really get what it takes to build a platform. I have no doubt thats Tobi vision of building the platform for all commerce will come true. As a developer building off Shopify excited to see what they do next.
I had a different experience. I played with Shopify, and canceled my account.
They kept charging me for years. I eventually noticed, and asked for a refund on the completely empty, completely unused account which was being charged to an expired and canceled card (something I didn't even know was possible until this incident).
Support said no, and offered a discount if I wanted to use Shopify in the future. I said I'd have to resort to a chargeback and I'd let my credit card company see if they agreed with my interpretation of the situation or not. The head of support literally yelled at me the moment I used the word chargeback, revoked his previous offer, and said they had no need to return my money, even though they hadn't earned it.
I wound up in touch with their VP Revenue who agreed that he didn't want to take any money they hadn't earned. But instead of refunding my money, he just dropped contact with me and never responded again.
If they were to respond to this publicly, they'd say I was angry with them. And that's true. I became angry after their head of support yelled at me. I still can't believe that happened, it was the worst customer service experience of my life. My blood pressure goes up a little just remembering how I was treated.
So basically, I'm glad you're happy with them, but they stole a couple hundred bucks from me and lied about their intention to give it back. My experience makes me believe that anybody who had good experiences is, almost certainly, just lucky. That or I'm in the .001% of supremely bad luck.
If I'm truly in the .001%, their vp revenue can circle back and give me the money he promised (I'd be easy to identify on their side, since if they never yell at customers, and never lie to customers, then it should be super-easy to remember a time that they yelled at and then lied to a customer).
I don't believe so. I think I found out that chargebacks can only go back 60 or 90 days, and I also found out that (shockingly) it's not illegal to charge an expired and cancelled credit card on a recurring basis, and I decided to devote my energy to something more useful.
I'm aware that they are going through an overhaul of their customer service systems, process and probably the people. Its tough to grow as fast as they are, especially in this area. It is exceptionally hard to find great people, maintain culture and values while still providing great support. I'm not making excuses for them, except to say that I am certain they are aware of the issues they have had had in this area and are working on getting better.
I'm simply sharing my experience, which involved their head of customer service yelling at me, and their vp of revenue flat out lying to me.
If I'm truly an outlier, I'd welcome outreach from them (in the form of the refund they promised me long ago). But I don't expect it.
Running a startup is crazy hard... but establishing cultural norms like 'don't yell at customers' and 'don't lie to customers' isn't hard. That's easy. And either I had a wicked outlier experience, or they failed to do that.
This wasn't a transfer game. There were bidirectional emails and phone calls. (e.g. vp of revenue calling me in response to an email sent directly to his email.)
The whole situation made me wonder how much revenue would Shopify lose if they stopped charging expired credit cards. It must be material if they're willing to engage in a billing practice that essentially no upstanding SaaS company engages in. Or at least it must've been material at the time.
Yes you are. If the OP story is true, you just don't yell at your customer. It doesn't make me want to try Shopify if they really use these kind of practices. Only shady pornsites do that stuff.
Have you ever actually worked as a customer service agent? Getting low-paid employees to consistently be courteous to angry customers is actually really hard to get right.
You probably aren't; but lots of customers are assholes. Lots of people become utilitarians when they're dealing with customer support: when they want an outcome all means to that end become justified. I can't tell you how many insults I've had hurled at me during my few years as a support rep.
And as far as this customer is concerned; my guess is that he never got the chance to speak to the 'head of customer support.' He got pissed off at one employee; asked for the supervisor and was transferred to the support rep sitting next to him.
That shit happens all the time; heck I've been the 'supervisor' several times and had it work. Call it a 'social hack' support reps often use.
Now the guy should never have yelled and the VP should've followed up on his promise but downvoting someone who politely advocates cutting Spotify some slack based on a single report isn't fair either.
I've used Shopify for my clients a bunch of times, and now I primarily and almost exclusively use Squarespace, which I would say is the largest Shopify competitor that no one ever mentions. I'm a Squarespace power user and one of the biggest designer/developer advocates outside the company. I can say without a doubt that Shopify has one of the most amazing developer communities and initiatives that I've ever seen. I could only wish that other products/services, including Squarespace, would do something similar.
So I agree wholeheartedly that Shopify simply gets it. The way they promote designer and developer usage is off the charts. I could go on and on. They nail it on all levels.
I've been a Shopify customer for about 5 years. What impresses me most is how much they've ramped up product development in the past 18 months. They're building new features at an aggressive pace and continuing to maintain a high degree of polish and ease of use.
I know nothing about the investment world, but find this government-driven investment interesting. Last week the Canadian Pension Plan Investment Board, in participation with Permira, agreed to take Informatica private [0]. Two large tech investments by Canadian pension funds, and likely many more to which I'm unaware. Is this a proactive move to mitigate future pension crises [1], or just the way most governments operate? I suppose I'm not accustomed to thinking of governments investing in this manner.
CPPIB and OMERS are at arms-length from the government. They have a free hand to invest in anything that meets their objectives and at least for CPPIB, any implication that the government had meddled in investment decisions for political reasons would be a huge scandal. Until recently, the Ontario Teachers' Pension Plan owned the Toronto Maple Leafs, one of the most profitable pro sports teams in the world.
In Canada, if it makes money, the pension plans are in on it. It's not political - just business.
This particular fund might be acting a bit more aggressively than some others, but big pension funds are huge investors. Calpers (the California state pension fund) has over $300 billion in assets, and often acts to try to improve the performance of the companies that they own.
Glad to see a Canadian tech company going public, but has an investor, I'm not thrilled by the following:
"Its total revenues have doubled from $23.7 million in 2012, to $50.3 million in 2013 and to $105 million in 2014. However, it experienced net losses each year, losing $22.3 million in 2014"
I looked in the F-1 form and saw:
"We had net losses of $1.2 million in 2012, $4.8 million in 2013, $22.3 million in 2014"
The losses quadrupled in 2012-2013, while revenue doubled, and increased almost fivefold in 2013-2014, while revenues only doubled.
This is straight from the prospectus. The first bullet alone makes me want to buy shares.
Culture and Employees
If you have ambitious goals, you need an equally ambitious team. Shopify is composed of hundreds of highly talented, deeply caring individuals all working on making commerce better for everyone. Our culture is continuously being redefined with every person that joins our company, but, at our core, we value people who:
• Get shit done
• Build for the long-term
• Focus on simple solutions
• Act like owners
• Thrive on change
Here is a nice article written by Lütke himself about how he got into computers and how his then boss Jürgen was probably the most important thing that happened to him in his professional life.
I looked at their pricing page and it looks like their $29 offering does have unlimited products now. I could have sworn it was much more limited about 2 years ago.
I keep looking for an inexpensive shopping cart solution for a friend who owns a handmade crafts retail store and not finding a good one. Meanwhile he keeps paying $50 a month for a proprietary shopping cart and gets maybe 20 online sales a year.
Get them onto Shopify, the untold story of Shopify is the ease a layperson can work with the back-end. He can adjust all sorts of things, upload pictures, and edit text without having to contact you.
I like Shopify, they are going to have customer service growing pains as they ramp up to handle customer loads, but going public means it is sink or swim time.
A friend of mine pointed out: 68% growth in # of merchants using the service last year, yet losses doubled. Could this mean their VCs actually want some money back?
Aside: I have used Shopify to develop e-commerce sites and its lack of local development frustrated me a huge amount. Saying that, I also appreciate what they are trying to do and have a lot of respect for them as a company.
As a one-time Shopify user, I'd think so. The default model is recurring billing and Shopify's features are super bare bones with the "there's an app for that" fallback that keeps the platform viable. The apps on offer are very hit or miss and many are simply poorly designed or thought out, and there seems to be room (in conjunction with some marketing) to carve out a good space there for quality interoperable apps.
I had built a couple of Shopify apps early on that ended up generating about ~4k/month, and I ended up selling them for seed money for my next adventure.
It's a nice way to make passive income, but I wouldn't try to make a business out of it. Remember you are still on somebody else's platform, playing by their rules. It's fairly easy to have the rug pulled out from under you, so don't put all your eggs in that basket.
I have a Shopify app that makes ~$400/month gross revenue. Do your research first to make sure that you're filling the right niche, and you can definitely do alright.
In the hosted eCommerce space BigCommerce, Volusion, SquareSpace and Miva are some of the biggest competitors. Magento Go is/has been shut down, but other downloadable carts are now moving to a hosted model like PrestaShop and LemonStand. Self-hosted options also abound, many of them free (and open source), like WooCommerce, OpenCart and Magento.
Shopify's POS is more of an add-on for an online store, competing with the likes of Square, Lightspeed and Shopkeep.
I believe Vend just launched their online POS yesterday to compete more directly with Shopify. Previously, they were doing well with bricks and mortar stores.
I'm not a financial expert so I'm really not sure, but I'm extremely distrustful of this JOBS Act and "IPO-Lites." Not Shopify specifically, but it's going to open the door to a lot of smaller companies that have a lot less scrutiny on them to IPO and I worry that it will allow VCs to dump their weaker companies on the public, and turn a potential private equity bubble into something bigger.
I worked for a startup that I know is in shaky grounds. While I hope they recover and do great, they also suddenly have freelance "journalists" writing positive things about them in the press, and I'm 99% sure it's paid PR via VC connections (especially given that I know for a fact the publication - TheStreet.com - has ties to the NYC VC community). Meanwhile, because it's not a super well known company, there's not a lot of opinions out there one way or the other on it so when you Google its name you just read these few very positive pieces about it. Now, this may be just paranoia, but we as an industry should be vigilant that VCs don't try to run pump-and-dumps on their weaker holdings. It will benefit nobody but bad VCs and will harm the public and the industry's reputation, and due to lockups it's unlikely it will benefit the typical employee with common shares anyway.
I read an article about these mini-IPOs in the WSJ and it's saying "Democrats like it because it empowers the little guy, Republicans like it because it removes regulation." They also tried to spin it as "VCs HATE this! Average investors can take over instead now!" I don't trust Wall Street and I don't trust the SEC's ability to regulate them, so when the rules change I assume that Wall St is getting their way rather than the reverse. If the Republicans, Democrats, and Wall St all love a new piece of regulation, I assume the public's about to get screwed.
It is actually quite common in Canada for small companies to IPO with total market caps of just tens of millions of dollars. Canada doesn't have nearly as many private company investors as the USA, so companies (especially resource based companies) just go public when they are small in order to raise money.
All these small company IPOs are on a separate exchange (the TSX Venture exchange), and if the company gets big enough, they 'graduate' to the main exchange. This works because the regulatory overhead of being public is a lot less in Canada on the TSX Venture exchange - No Sarbanes Oxley!
London has something similar with the AIM.
I think it is a better system than the US model, because it allows anyone to invest in the small companies, not just venture capitalists or people who participate in specialist schemes to buy private company shares.
"We qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:"
And yes the advantage is that you open up emerging companies to retail investors. The problem is the tech industry's history with small companies and retail investors is not so great, I would say the danger outweights the benefits.
I am not talking about Shopify specifically, the reason it's relevant is because they are IPOing using a new set of rules based on the JOBS act. This IPO would not have been possible even two months ago. Read the filing and read more about the JOBS act and "IPO-lites." Even if Shopify is not a bad investment, the point stands that smaller companies under less scrutiny being sold to the public opens up big avenues for fraud and pump-and-dumps.
As a techie in Ottawa, I'd add that they've also contributed significantly to the local entrepreneurship ecosystem in a variety of ways. Good on them for that!
Except that its a Canadian company, its a regular IPO. $100m in software revs reasonably supports a $1b valuation. The company has been working hard for nearly 10 years with relatively limited VC involvement. I don't really understand your post in this context.
These investors include VC firms like First Mark Capital, which are NYC based - and oh yeah, the exact same VC firm that was the biggest investor in the startup I worked at that I said is in freefall but now getting positive financial press. It's not about whether the VCs are running operations, it's about whether the VCs are worried they won't get their money back without an IPO, which seems like a genuine concern for an operation that's losing money.
As to your second point of confusion, your pointing out its a Canadian company as if what I'm saying doesn't apply:
"We qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:"
They are IPOing on the NYSE so they are still regulated by the SEC, and if you actually read the filing you will note that they are using the new JOBS act in order to IPO. What I'm saying is not unrelated to anything, Shopify is one of the first companies to take advantage of these new changes in regulation. Maybe Shopify specifically isn't a shaky company, but I do think the doors have been opened for shaky companies without much scrutiny to be sold to a public that has been misled by PR.
Yeah, but they bootstrapped for 5 years and the same 3 funds anchored each round. They were fairly successful before taking any money.
My bad. You gave the impression (to me, at least) that this was some sort of shaky, small situation when it was anything, but. If anything, there are way too few IPOs these days. The only people making money on new company creation are venture investors.
Also, something like 85% of the IPOs in the last 2 years have used the new JOBS rules, so it's not really "one of the first". The threshold is $1b in revenues, after all, quite a rarity at the IPO stage.
Absolutely. $100m in revs is basically the magic number for $1b IPO. And a growth company should be "losing" money. Otherwise it's run out of ideas on how to make money which is a red flag.
I clearly need to abandon my profitable and steadily growing SaaS business and launch a startup which sells dollar bills for 75 cents each. IPO here I come!
Sure, but for smaller companies you will ONLY see the paid PR , whereas big companies have a lot more critics since they are better known, have more employees, etc.
"..luck brought the sudden, coincidental appearance of a new framework for using Ruby, called “Ruby on Rails,” devised by Danish programmer David Heinemeier Hansson. ..because Ruby on Rails was so new, Lütke’s work gained notice. He began sharing some of the software components he was creating with the Rails community (a way to process credit cards, for example), and quickly became one of a select group of core Rails developers.
..Lütke took the burden of this stress entirely on himself. He told no one at the company. “I was sitting in meetings,” he remembers, “talking with my peers about building things that would take us a year, when I knew we didn’t have four weeks of money left. And I could not let anyone know that.” He knew the minute he did, their focus would naturally shift to the short-term, to work on things for immediate benefit. For Shopify to succeed, he needed them to keep thinking long-term."