Shopify at William Blair 2018 Growth Stock Conf

Listening to this now:


Shopify CTO (I believe) Notes:

About CMS/website builder platforms (Wix , GoDaddy, Square Space, etc)

  • They view commerce as a feature. Shopify views ecommerce as everything
  • Basically views those other platforms as “feeders” into the Shopify platform. They get people interested in starting blogs/businesses, but once people want to turn it into a real business, they switch to Shopify for all of their additional business related support (taxes, payments, shippng, security, support, etc)

Source of new merchants:
In order: Organic, marketing (Facebook/Google Ads), Partner network referrals.

  • Shopify Plus merchants are generally referred by bigger partner agencies
  • Shopify does not have a sales org for their classic offering, but they do have a sales org for Shopify plus due to size/scale.

They want to create the widest top funnel possible making Shopify the go to biz platform. Start with basic and progress to Plus (adding on more services Shipping, Payments, Capital, etc) as their business grows. Start at $0 grow to $1B+ without having to leave Shopify platform.

They look to add services in areas where they can make it cheaper for merchants, Shopify makes additional rev, and the intergration is seemless. Newest is Shopify Capital.

Shopify Capital:
Newest add-on service. $240million in advances in first 2 years. Great source of growth for merchants. Also great for Shopify - they have data on merchants to know risk and generally the funds are used for merchants to advertise or produce more inventory – both adding to GMV which is good for merchants and good for Shopify.

Innovator’s Dillema - get disrupted from the bottom. To avoid this, Shopify will continue to work to be the best place for people to start and grow their business. Incentivized with interests aligned w/merchants & partners. GMV growth is most important metric for Shopify which keeps them aligned w/merchants.

Partnerships: Shopify tries to treat partners and developers on their market place very well.
20% perpetual rev share to partners (competitors generally do a one time payment)
80% profit share to developers in marketplace (20% to Shopify) Most other marketplaces (i.e. Apple ApStore is the reverse, only 20% to devs)

Seeing incredible success and 90% penetration w/merchants. Gives awesome insights to customer data as well as enhanced security

  • Shopify is in a better position to negotiate rates w/credit companies than many other POS services or merchants

  • My question is… should we reassess Square? Is Shopify the future/eating their lunch or is there room for both?

On Adobe/Magento Acquisition:

  • did not seem concerned. With these types of acquistions in the past, innovation tends to stop. He’s not sure if that’s the case here, but he did not seem impressed by Magento. Said they had a great product, but made a huge mistake a while back when Magento created an in-house agency and began competing w/partners. Shopify saw this happening and went after Magento merchants, finding great success in getting them to move to Shopify.

General thoughts:
The internet is removing the middle-man in a lot of sales processes. Shopify is seeing great brands transition to B2C (whirlpool, celebrities, etc) because they want to own their relationship with the customer and not use a big retail chain or sales agency to be middle-man. Shopify is the go to plat form for this

** Really interesting piece about the Shopify Plus partners Shopify has said “no” to he cited “Wal-Mart” and “Sears” specifically. Stating that their massive, outdated models don’t fit Shopify’s strategy. This was probably my favorite part. Shows long term thinking. Very Amazonian.

All in all, this made me even more excited about Shopify. Making me consider moving Sq funds into Shopify, but maybe there is room for both.


- My question is… should we reassess Square? Is Shopify the future/eating their lunch or is there room for both?

Hi Austin, thanks for the write-up on the Shopify presentation. As for Square, I’ve wondered about that question too. However their rate of growth of revenue for the last five quarters has been: 39%, 41%, 45%, 47%, 51%. It doesn’t look like anyone is eating their lunch.




All in all, this made me even more excited about Shopify. Making me consider moving Sq funds into Shopify, but maybe there is room for both.

The business and financial results of these companies provide evidence that there is definitely room for both companies to grow fast…and are they growing fast!



Saul and Chris,

I agree with you guys. The way I’m sorta thinking about it is.

Shopify customers probably have no reason to use Square because of Shopify payments.

But many/most Square customers who don’t have Shopify stores don’t need to use Shopify Payments.

I guess the only risk would be Square customers becoming Shopify merchants and switching over. Or, Shopify offering payments independently and competing directly with Sq. No evidence of this happening, but it’s something I’ll watch for.

Thanks for your thoughts guys.