Tim Cook visited SHOP

https://twitter.com/tobi/status/955521423174496267

Don’t know what to make out of it but it is more of a good sign than bad.

Cheers,
nomb
Long SHOP/AAPL

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Maybe AAPL will buy SHOP in the future?

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Maybe AAPL will buy SHOP in the future?

That was my initial thought, but then I couldn’t figure out Why? How would Shopify fit into Apple? Acquiring doesn’t make sense.

Perhaps though some form of integration into Apple’s operating systems might be mutually beneficial. (I’m not sure how, but I doubt that Tim Cook just decided to drop in out of curiosity).

Thanks for finding that

Saul

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I don’t think Tim Cook goes anywhere without a reason. He also has a big pile of cash from overseas that needs to be spent.

If he buys we would likely see a nice pop in price, but lose out on great future returns from SHOP. Not sure how I feel about this. Great companies get purchased.

If he partners in some way that would be very good.

David

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Perhaps though some form of integration into Apple’s operating systems might be mutually beneficial. (I’m not sure how, but I doubt that Tim Cook just decided to drop in out of curiosity).

Agree Saul…we do know that Apple has been interested in integrating Apply Pay into web sites and ecommerce so perhaps this is indicative of their interest in a mutually beneficial financial per purchase arrangement. It certainly was a nice complement that Cook takes the time to meet with Tobi for sure.

That said, there has been speculation for some time that Apple needs to find the next “thing” or risk going the way of Palm Pilot or BlackBerry.

Rumors/suggestions that they should buy TSLA to move into autonomous cars, etc…so many armchair CEO’s :slight_smile:

But for sure, AAPL will need to one day reinvent itself because there are only so many new IPhone users or those needing to upgrade that would generate growth in sales rather than a dividend based company.

Anyway…I would guess digital commerce would be a HUGE initiative especially since more and more purchasing is done via mobile…hence the interest in SHOP.

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So we have to start with the notion that the visit was both purposeful and prearranged. That doesn’t tell us a whole lot, but both these CEOs are busy guys, they don’t just drop by because they were in the neighborhood.

I’m not going to speculate, I’ll leave that to the “armchair CEOs” as someone else posted. But I’ll venture that it was not simply a social visit. There was obviously something of substance related to some business association under consideration. It most likely was very exploratory and may or may not lead to something substantive.

But here’s something to consider. China is estimated to currently have about 16% penetration ecommerce retail. The number is expected to grow to over 30% next year. Most of those transactions are from mobile devices. Apple iPhone is a status symbol in China and the device to have, of course, Android devices have greater total sales, but everyone wants to own an iPhone or even two or more (sitting in the airport in Guangzhou I observed a smartly dressed young man who was actively engaged with two gold iPhones).

While China is probably leading the way with eCommerce India and the Americas are both going in that direction as well. I’m not sure about EMEA and Australia, but my guess the same trend holds true, we can argue about adoption rates, but probably not about whether it’s a trend.

Shop provides the premier eCommerce platform and Apple provides the premier mobile device. Make of that what you will. How would that play out in some kind of business arrangement? I’ve not a clue, but my guess is Tim and Tobi have some ideas.

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Very interesting to consider some of the implications here.

If Apple bought, how would they fold into the company?
Could Apple move to a TenCent model?

I own both Apple and Shopify, and would like to see both succeed short and long term, obviously.

A Peasant

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If you’re one of the FAANG technology giants, you aren’t only seeking new markets, you’re also seeking new markets that could diminish the strengths of your competing technology giants.

This week Tim Cook said he has advised his nephew against using social networks, and he visited Shopify. Maybe one last attempt at connecting with Netflix is next.

Whether the re-patriated $200B+ is going to acquisitions or just aggressive partnerships (obviously, more likely it’s both), this is promising news for Shopify’s future. We can all agree SHOP leadership would’ve traveled to Cupertino, so… that’s pretty telling. I, for one, would dread seeing the company acquired now – and I don’t suspect that’s what’s up.

Tom

PS Or maybe the Apple CEO just traveled to Ottawa to confirm the really thoughtful short case that was made in 2017. :wink:

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I think the idea of it being payments related makes some decent logical sense.

This little meeting lessens my thoughts of selling any further portion of either company (both top-6 holdings for me). I had shed a portion of my Apple position in late-2017, but the repatriation with the tax bill has caused me to stop thinking too much about selling anymore.

Tinker’s “merchant quality concerns” had me thinking a little about trimming some more of my Shopify position (sold a smidge a few months back), but I’ll simply sit tight still.

Cognex had seemed a bit like a trim candidate, but the tax plan also seems positive in regards to additional manufacturing Capex, so I’ll be holding that too.

Not much of my portfolio I want to expunge, other than the tiny bit of Under Armor.

I think Siri and Home Kit is the synergy with SHOP. Prioritize Siri to list Apple MFI compliant home appliances and if nothing else reduce the overall growth pie of Amazon & google in the connected home.

This is the first major appliance I’ve heard of being issued MFI/Apple license but if they are moving into the home appliance market connectivity then SHOP would be a good platform for it to list by home voice searches thru Siri.

https://www.macrumors.com/2014/01/08/haier-mfi-smart-applian…

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Definitely not a coincidence. What it means, who knows, but clearly some sort of relationship, personal perhaps (maybe they met at a convention and Tim Cook was invited to stop by and look at our set up), or Apple has some real interest in SHOP.

Tim Cook would not just stop by to observe how SHOP uses iOS 11…or would he. Amazon is a competitor of Apple, but SHOP, that is the second leading supporter of grass roots commerce, does provide perhaps the best laboratory of how eCommerce is working with mobile.

As such, just a mutual meeting that is exciting for SHOP and informative for the goliath Apple as it works, as always, to perfect how its product works in ways that no one even knows it should work.

But yeah, quite the kudos. Apple is moving $250 billion back to America. That alone is 25x the market cap of SHOP! The tax alone on that is more than 3x larger than SHOP’s marketcap.

Nice!

Tinker

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“we do know that Apple has been interested in integrating Apply Pay into web sites and ecommerce so perhaps this is indicative of their interest in a mutually beneficial financial per purchase arrangement.”

Good call Duma! Where better to figure out how to integrate Apple Pay at the grass roots and come from behind to get a head of companies like Square or PayPal or the like.

My business website uses my local bank. But I will tell you, there is nothing like having a click here button in your emails when you send out your invoices. And then a pay now button at the top of your website.

For a long time it did not work on mobile. But I checked last month and now it does! Yippee for me! But why shouldn’t Apple become the PDF of mobile website payment infrastructure!

Okay, I think as I go by stream of consciousness, so it all has come together now…really.

Tobi has spoken often about the friction in current payment transaction technology. That SHOP came out with its own Square like product because no one was doing it any better. And that SHOP has been thinking about how to antiquate its own credit card system.

Tobi has spoken about one click (or no click) purchasing with no friction. Much like Amazon’s just opened grocery store in Seattle (their first, where you walk in, pick your items, pack them up, walk out the door. Your credit card is already on file with Amazon).

Between Samsung and Apple, you can cover the majority of mobile users in the first world and beyond.

That would be a big deal to Apple and a big deal to SHOP.

My best speculation and what makes most sense other than having bumped into Tobi at some convention or vacation site or wherever else really rich business leaders bump into each other. Polo grounds? :wink:

Tinker

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I’m looking forward to owning SHOP for as long as I invest.
To see anyone snooping around to buy it would be the
worst news I can imagine short of some operations catastrophe.

SHOP is executing close to perfection. Maybe Mr. Cook just
wants to learn something.

One can hope.

Dan

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<<>>

Well, Apple does have a history of just looking around to learn something.

E.g. Xerox giving away the family jewels when they showed Steve Jobs their GUI operating system.

Somehow I doubt that is the case here. But yeah, Mr. Cook does not pay a visit anywhere just out of happenstance. Heck, I don’t have the time to do so, much less the man running Apple who has handlers up the yin yang and is followed by press and security and shareholders wherever he goes.

Tinker

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Vol,

I stand by my analysis of the long tail of SHOP. But also remember that I expressed that my bias was to find some more money to put into Arista. SHOP was long-term capital gains, so I looked there. And it has worked out to be a fortuitous redirecting of resources.

It is best not to overthink these things. I did my analysis comparing SHOP to Saleforce and came up with the number of merchants SHOP would need to equal the $10 billion in revenues that Salesforce has just reached, using similar multiples for what SHOP is now (and so are multiple other remarkable high growth companies when they reach Salesforces size, with price to sales falling to 4x or so from what SHOP has as 10-11x forward looking) to determine how SHOP gets to be a 6 bagger from here.

What I found, that hit me, was how many millions of merchants SHOP would need to have to make this progression, if using the same business model longer term. And it occurred to me, how do you go from 500,000 to multiples of millions and maintain the same quality of merchants? Well, you don’t. It is that simple. You simply don’t, and you simply can’t, and to make matters worse these undifferentiated merchants (that SHOP won’t break out by demographics) will all be competing against each other, with an inherent contradiction in the business model.

So it was a good justification to move more money into ANET. I am good at doing that.

This said, no, I do believe I am correct in this analysis. I also think I am correct that Shopify Plus and the other mid-tier premium products are the future of SHOP, not the long tail of the drop shippers and undifferentiated merchants, for whom we saw, can be emulated in a matter of a few hours by a 17 year old kid on Utube.

Whether or not my analysis is correct. I have no doubt Tobi and his team have figured this out as well and no doubt have longer term plans. What those are, I do not know.

So just take my analysis as more color on SHOP and also a good bit to justify what I wanted to do anyways, and that was to find as much money as I could raise to put in Arista at the time.

Worked great for me, and has created good discussion and analysis. So win - win and all (as the Brits might say, as I am reading a nearly 3000 page biography of Churchill that is mixed with more detailed British history than any book I have ever read in my life, including the History of Great Britain from Rome to Victoria. Really amazing this is).

Tinker

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Ok 2 comments…

I’m not sure I would read anything about Apple M&A into this. If Apple was interested in buying SHOP and went to visit I’m 100% sure Luke wouldn’t have tweeted a pic of him and Tim - unless of course it is part of his defence strategy against and unwanted move. More likely they could be working on Shopify integration with IOS and/or the App Store.

Worked great for me, and has created good discussion and analysis. So win - win and all (as the Brits might say, as I am reading a nearly 3000 page biography of Churchill that is mixed with more detailed British history than any book I have ever read in my life, including the History of Great Britain from Rome to Victoria. Really amazing this is).
Maybe it’s because he wrote this?
https://en.wikipedia.org/wiki/A_History_of_the_English-Speak…

Winston was definitely a highly productive over-achiever.

Ant

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Don’t know what to make out of it but it is more of a good sign than bad.

Little doubt it’s about integration of Apple Pay, which I take as a good sign for both companies. Certainly not an acquisition – Apple doesn’t do things this big, and it certainly wouldn’t start with something so far outside its wheelhouse.

-IGU-
(been following Apple closely since 2002, and less closely since 1978)

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Tinker’s “merchant quality concerns” had me thinking a little about trimming some more of my Shopify position (sold a smidge a few months back), but I’ll simply sit tight still.

Does Walmart worry but their clients’ “quality?” Quantity will do just fine! Of course, if you are selling private jets you would worry about your clients’ quality.

Shopify clearly has two tiers of clients, fewer big quality ones and lots of low quality ones which is quite normal in any power law distribution. As long as you are perfectly aware of the difference and take it into account in your business process it should not be a problem.

When I worked at Colgate-Palmolive in Caracas in the late 1960s Procter & Gamble was delivering in 24 hours vs. our 48 hours, a big competitive disadvantage. They had their factory in Caracas, ours was about 100 miles distant. The comptroller asked me for a sales report (I was second in command in data processing). Instead of the usual report by zone and sales rep my report was sorted sales volume which was an eye opener for the comptroller when he realized that 20% of our customer (high quality) were responsible for 80% of sales. This insight allowed us to redesign the sales process to reduce shipping time to quality customers to 24 hours and instant delivery to small clients*.

I don’t think Tinker’s concern is valid.

Denny Schlesinger
No position in AAPL or SHOP

  • Instant delivery was made possible by having the sales reps drive a van full of merchandise which was sold cash on delivery. We “borrowed” this idea from a candy outfit.
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18 posts in this thread and no one mentioned ARkit, AR and VR.
IMO, it is obvious from the tweets that this is what the point of the whole meeting was about.

Cook: Thanks @tobi and @Shopify for showing me your latest work with AR and VR

Tobi: Thanks @tim_cook for dropping by @Shopify today to check out how we’re changing the future of commerce with ARKit and iOS11 @getfrenzyapp

The thing about AR and VR…you really have to be there to “see” the demo, thus Tim Cook’s on site visit rather than just a phone call or a lower level person reporting to Tim Cook what he saw.

Mike

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https://www.shopify.com/blog/augmented-reality

Mike:

True dat!

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