The Exchanges

Q to how you all think about growth. Uh, one of the most interesting things I've heard is that how you think about churn and retention. To most companies, the most important thing is to increase retention, reduce churn. My sense or my understanding is you guys are kind of the opposite. You one don't think tons about churn. You almost optimize for churn. Talk about that. How does that work?

A The way we think about churn is really going back to Shopify as a kind of our mission and what we want to do, which is to increase the amount of entrepreneurship on the, on the internet. And so, as a business, we want to make it as easy as possible to get started with, with your online store, with your business. But most businesses do, do ultimately fail. And so the way we, we look at it is, can we lower the barriers to getting started and get as many people in the door trying their hand at entrepreneurship? If we do that, again, many of those businesses, many of those folks will maybe on their first attempt not be as successful, but we're going to have a set of merchants who go on to become extremely big businesses, the Alberts of the world, FIGs, et cetera. And the way the Shopify business model works is we do charge a subscription, but most of our revenue comes from payments, which is tied to directly to a merchant's success. So in a given cohort of merchants, a lot of people will start Some of those people on their first attempt at entrepreneurship might not succeed, but the folks who do go on to be successful will kind of make that entire cohort of merchants who started something that makes Shopify as a business extremely successful. That's why we lower the barriers to get started. And help folks grow and those winners make the whole thing work.

AI assessment note: “most of our revenue comes from payments, which is tied to directly to a merchant's success”

Q Is there an example in that second bucket of what you mean when you say there's like a pocket of valuable merchants?

A Yeah, I think a lot of this has to do with, uh, We call monetary friction, right? So one of the, the hardest things to do with the business is when you're getting started is you might not have any revenue coming in, right? And, and you're kind of bootstrapping, which in Shopify's case might be 39 bucks a month, but it's still, it's a real expense. And so typically when you can lower the barriers to monetary friction in some form, that could be all sorts of monetary friction early. The common belief is that we'll usually get lower quality folks coming in the door, because usually discounts are associated with lower quality. If you think about in a business case, if I give you A little less, a little monetary boost and reduce that monetary friction. I can actually causally change your ability to become successful. Cause I've given you a little bit more time to try that idea a little bit longer. I've given you that opportunity to move your business over to Shopify. And so often in those types of experiments, you see that you've basically unlocked a class of people who might've given up. Without that monetary, reducing that monetary friction.

AI assessment note: “you've basically unlocked a class of people who might've given up”

Q random things I'm going to touch on. One is sales. So historically, Shopify has been very product-like growth, very organic. Go check it out, sign up, shop a store, start a store, grow. And you guys have layered on sales and a sales motion. That's an increasing part of your business. What have you learned about your team, the growth team working with sales and making that a successful relationship?

A Yeah, no, it has been great over the last couple of years as built out the sales order, it's added a whole new, Kind of motion to Shopify as Shopify's product got better. It wasn't, it can, it can serve the biggest companies in the world. It was like the natural evolution. Well, let's, we're going to do that for people to grow up on Shopify and to be the biggest companies, but we're also going to take folks, another platform, bring them over for growth and sales. I think the biggest learning from the kind of the R and D side, at least has been the scale is very different. With, with sales. And so it's really hard to use as much kind of quantitative data to make some growth, to make some of those decisions. And so a lot of it has been building a much more qualitative insights, working with merchant success sales about what the face, the challenges they're facing and onboarding a large customer. So how do we build import tools that work for them? How do we make sure they have the right guidance in the product for a very different set of use cases? So a lot of it has just been like, Very much empathy building with sales about what that merchant journey looks like, and quite frankly, challenging ourselves to think differently. It's been one thing. And then second, We kind of built two very distinct funnels for a, for a little bit. There's like a sales funnel. You come in, you conta…

AI assessment note: “the biggest learning from the kind of the R and D side, at least has been”

Q First question, what are two or three books that you recommended most to other people?

A So one, I love to go back to Marketers who wrote in like the 19 twenties. And so one that I, I love is scientific advertising by Claude Hopkins. So it's basically one of the first kind of direct marketers that came out and kind of innovated on some of the concepts of copywriting and just how you like sell a product around. Can't make this product. Can't sell the product. You tell the product will help Customer achieve their goals. And so it's really fun. I find it really fun to go back in time because there's a lot of really good first principles thinking that I think we've actually lost in more modern stuff where it's like personalization bandits, optimization, all this stuff, or it's like, no, like what, how do you actually write and sell things really effectively? So scientific advertising is, it's a great book.

AI assessment note: “one that I, I love is scientific advertising by Claude Hopkins.”

Q any examples of big wins that your team has shipped that might inspire people as they're thinking about launching experiments. I know there's probably some trade secret stuff you don't want competitors to know. And I know this is particular to Shopify and a platform and e-commerce, but I guess, is there anything that would be worth sharing of like, oh, here's a huge win that maybe we didn't expect?

A Going back, there's, there's always a lot of value in thinking through, um, kind of monetary friction, as I mentioned, like that's always going to be something to, to explore trial dynamics, different types of incentives. All of those things are, are very kind of impactful. I would say on things that are maybe more like practical and, and for everyone, there's an enormous amount, and we do see these with long-term effects, but just the nuts and bolts of sign up, Collecting the right information, and you usually want to collect more information than most people think you do in your signup flow. If you can then leverage that to personalize the guidance, and this is for a SaaS product, the guidance that someone can get when they onboard into Shopify. So whether you're coming on, Shopify is a very diverse product, in-person selling, online selling, different channels. There's the nuts and bolts of get more information from folks, build trust in there, give them right amount of guidance when they come out in a personalized way. And that may sound like, okay, that's kind of obvious, but the amount of impact by just nailing those flows has never ceased to, to amaze me and setting up that person for long-term success. Um, so kind of mantra friction and then just really good onboarding personalization. A well of, of opportunities there.

AI assessment note: “the nuts and bolts of sign up, Collecting the right information”