Shopify: The E-commerce On-Ramp
💡JC's Newsletter #78
Dear friends,
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In JC’s Newsletter, I share the articles, documentaries and books that I enjoyed the most in the last week, including a must-read.
Let’s talk about this together on LinkedIn or on Twitter. Enjoy!
💡Must-read
👉Alex Danco - Shopify: The E-commerce On-Ramp (Join Colossus)
Super interesting view of how Shopify built their pillars on top of each other.
Core:
You can start with Core Shopify, which is like, what is at the nucleus of Shopify? It is a team that is called Core internally, but this is like the iPhone, right. The job of the iPhone is to be like the operating system of your entire digital life. And similarly, like the job of Core is really to be the operating system for commerce. It sits at the heart of everything that we're building for merchants, and its job is to support everything around it and have it just work beautifully well.
It includes the online store and other storefronts where their businesses are expressed. So that might include Shop
It includes checkout, and it includes things like your inventory and your ability to get it delivered to your customers. It includes Shopify the platform, which supports everything for the community of developers.
What is the core for you? How do you define it? How do you make it too good to be true?
Services:
Our job in Merchant Services is to try to figure out, what is the best way for us to help merchants get these services done for them? Could it be building a platform to allow many, many different payment providers to all plug right into their businesses?
How do we help you print shipping labels and interface with all the shipping providers? Right? We obviously don't run a shipping service, but we can help you get the most out of the ones that are there.
Integration and adding services to your customers is a great way to support them more and more, and increase switching costs.
Ecosystem (platform):
The third product group is Ecosystem So this is the whole world of developers, and the app community, and the extensions, and everybody who sort of wants to build on top of Shopify to build for the hundreds and thousands and tens of thousands of different use cases
And then for every possible version of commerce that we want to support, our job is to let developers out in the world build their version of that, and help merchants out in the world build their version of that. And say no matter what it is, we want to make it possible for you to do.
We have a saying inside Shopify, which is, "We want to make the important stuff easy and the rest possible."
Building a platform is compatible with integrating with services.
Business model:
Core or the nucleus at the middle of Shopify starts out very simply as this subscription product that you get started as a merchant starting out paying, I think it starts at $29 a month." It's very cheap, but you pay for this as a subscription. We want this to be the best deal that you will ever have on any product ever.
This is a subscription product that gets larger as you get bigger. We have a couple of tiers of pricing and it does get somewhat more complex as you become a big plus merchant.
If you move to Merchant Services, now Merchant Services job is to make money on you consuming these services, however those look. There is no subscription fee for Shopify payments. Instead, there's a take rate
We have an app store and the app store takes a cut of what you make on it
Interesting view on the different business models: subscription, usage, platform cut.
Being open:
you can sell on Etsy from your Shopify store, you can sell on Amazon from your Shopify store. You can even sell on Walmart through a Shopify store.
There's this whole art and partnerships to doing this that has been interesting for us to learn how to do
Look, there's no reason why Shopify can't be everywhere.
Interesting that they sell on what could be considered as competitor platforms. It is a really bold strategic move.
🏯 Building a company
In addition to selected articles, I share one of Alan's leadership principles every week - the same one that I share internally every Wednesday.
👉Alaners dig dipper
We think it is important to spend time on what we are going to do. If we want to dig into a subject, we try to estimate how long it will take and especially we make clear how much time we want to spend on it.
For Alan, we can spend months studying the landscape and then take the time to dig in and share our findings as a team!
👉 Parental leave at startups: What to think about (Sifted)
Spotify’s parental policy provides all parents (including surrogates) six months paid leave that can be taken in blocks until the child is three years old.
Model scenarios where you assume a low, mid or high percentage of the workplace taking leave over the next 1-4 years. What would be the financial impact? Remember to factor in the cost to recruit cover for the leave and allow for a flexible return. Have you factored in a pay back clause into your enhancement agreement in the event that your colleague doesn’t return or leaves soon after returning?
Does your business consider employees for promotion or new roles before or during leave?
Remember every parent’s experience is different. Plans can go up in smoke when you have a baby with colic or you suer from peri and/or post natal depression. Leave space open for the parent to change their plans by proactively checking in long before the agreed dates.
Sleep deprivation is very real for parents and can impact performance. Manage expectations upfront with your colleagues to maintain psychological safety. Try saying, ‘We expect that you may feel this way, it’s okay,’ or ‘If you are struggling, please be open with us.’ If you can oer shorter working days or weeks when parents are transitioning back that can be very beneficial.
🗞In the news
📱Technology
👉 Apple's privacy war (Ben-evans)
CPMs are already down by half.
The cookie apocalypse is upon us and the tracking model of the last 25 years is going away.
What happens next? No-one in advertising quite knows.
👉Snap Partner Summit summary and how Snap is building a platform (Stratechery) (turner.substack)
Numbers & AR:
Snapchat now reaches 500 million Monthly Active Users (MAU’s)
Over 200 million of Snapchat’s 280 million DAU’s (71%) engage with augmented reality (AR) daily.
In an AR try-on beta with 30 brands, Snapchatters tried products on 250+ million times, and were 2x more likely to purchase than in other campaigns.
Lens Studio now has multi-person 3D Body Mesh and Cloth Simulation, as well as some new, no-code visual effects. This allows for more realistic, tighter than ever AR. Snap hinted at clothing as big use case, specifically in no code.
Platform:
Snap shared Scan, its camera search feature, now has 170 million MAU’s.
Visual Classification in Lens Studio, which brings the capabilities of Scan to all developers.
Snap revealed its 2.5 year old developer platform Snap Kit now has 250k+ developers.
Games and Minis are built on the same platform and offer developers one engine that works cross-platform across iOS and Android. Snap is also turning on revenue generation via ads, tokens, and commerce.
Each piece of the Snapchat platform - the Camera, Messaging, the Map, Games, Bitmoji, Stickers, Discover, Snap Ads - has quietly opened itself to developers and third parties through products like Snap Kit, Lens Studio, and Snap Audience Network.
Mini-apps:
Snap is building a platform for HTML-based multiplayer games than be launched directly from a chat screen, no download required. Probably the closest parallel are WeChat mini-apps, but it is notable that the interface for these games is not a separate tab but rather the chat interface itself:
Snap, though, got its foot in the door by framing them as chat add-ons, and it is only now, when there is already a large ecosystem developed, that they are getting a screen of their own, that oh-by-the-way, is an Aggregator-type interface as well.
🏥 Healthcare
👉Mental Health numbers (Platformer)
Nature reported that the number of adults in the United Kingdom showing symptoms of depression had nearly doubled from March to June of last year, to 19 percent.
Prolonged isolation created by lockdowns has been linked to disruptions in sleep, increased drug and alcohol use, and weight gain, among other symptoms.
👉Bright Health S1 for IPO (Prospectus)
We generated over $1.2 billion in total revenue in 2020, as well as $874.6 million in total revenue for the three months ended March 31, 2021, and we are well-positioned to continue achieving significant growth across our diversified enterprise.
Our significant growth to date, attributable to both rapid organic membership growth and acquisitions of other businesses
Utilization management vendors. Our utilization management vendors assist our business in managing healthcare costs by educating our health plan consumers and directing them to effective, efficient and personalized healthcare treatments based on evidence-based criteria or guidelines
These examples demonstrate how Bright Health’s alignment model can adapt to the nuances of local markets while continuing to deliver MCR improvement as our markets mature. As shown below, our MCR performance in states with IFP product offerings, as grouped by cohort based upon number of years operating in a given state, demonstrates a declining average MCR from 92.1% in the first year to 66.4% in our most mature markets by the fourth year.
We afford consumers easy, convenient access to their Personalized Care Teams, with our proprietary technology having delivered approximately 4.0 million visits through March 31, 2021. Our simple, customer facing virtual care platform ensure consumers know where to go for care at the click of a button, and through a diverse set of initiatives and programs, consumers never leave an interaction without a clear, customized follow-up action
Through Bright Health’s alignment model, we have demonstrated the ability to decrease healthcare utilization, while simultaneously increasing consumer engagement to drive behavior change and improve outcomes
💚 Alan
👉The new CCN search tool is online on Alan.com
Companies can now search directly for their collective agreement with our intuitive tool. Registration is faster and smoother, try it out
🔨 A Useful tool
👉 Make very simple diagrams in one go (Figjam)
You want to make a diagram for your colleagues and you don't know which tool to use? Figjam is made for you. It is a tool that allows you to make all kinds of diagrams online and very quickly.
The result is rather pleasant and readable!
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Let’s talk about this together on LinkedIn or on Twitter. Have a good week!