Business Breakdowns
Episode 1 Shopify: The E-commerce On-Ramp
Business Breakdowns

Episode 1: Shopify: The E-commerce On-Ramp

Shopify: The E-commerce On-Ramp

Alex Danco works on the Money team at Shopify. We cover the revenue model of Shopify's different business units by using Apple as a guide, how it monetizes different derivatives of merchant success, and Shopify's philosophy, culture, and role in global commerce.

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[00:03:03] - [First question] - What Shopify is as a product

[00:04:58] - Product pillar 1: Core

[00:06:58] - Product pillar 2: Merchant services

[00:09:02] - Product pillar 3: Ecosystem

[00:11:04] - Product pillar 4: Shop

[00:13:08] - The evolution of commerce with the rise of the internet

[00:20:01] - Differences between high and low-trust commerce

[00:24:48] - The role of friction and trust among the many stakeholders

[00:29:18] - Overview of all four product pillars’ business models

[00:32:10] - Shopify App Store

[00:33:16] - How Shopify competes and partners with its competitors

[00:35:53] - Shop Pay expands to Facebook and Instagram

[00:37:49] - Key areas where Shopify will continue to grow across its product pillars

[00:41:52] - Improving North America's payments systems, and partnering with Affirm, Klarna, Afterpay.

[00:42:56] - Potential pitfalls of having such a high self-imposed quality bar

[00:44:12] - Conway’s law

[00:44:12] - Aggregators versus platforms

[00:52:35] - Unique marketing aspects for Shopify’s sales and marketing with their subscription model

[00:55:37] - Shopify: A StarCraft Inspired Business Strategy

Shopify: The E-commerce On-Ramp

Introduction

Patrick
Today, we will be diving into Shopify. Shopify was founded in 2004 by Toby Lutke and Scott Lake around their original problem of why it's so hard to build an online business when they struggled to open an online snowboard equipment store. Today, Shopify's goal is to make commerce better for everyone and is essentially an on-ramp for people looking to sell online.

To help us break down Shopify, I'm joined by cohost Zack Fuss, and our guest Alex Danko, who works on the money team at Shopify. To really understand Shopify, you have to understand its different business units. Core, Merchant Services, Ecosystem, and the new Shop platform, and the role they each play in making commerce easier and better for merchants. We begin this breakdown by covering each of those business units and how they compare to Apple's business lines. We then dive deep into how Shopify makes money through the first and second derivative of their merchant success and how Shopify thinks about friction in e-commerce. We close with an incredible analogy of Shopify and StarCraft, and the tools that Shopify has built into the still-nascent world of e-commerce. I hope you enjoy this breakdown of Shopify.

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