💲 Is Shopify a fintech company?


June 21, 2021

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The Hustle

We know Father’s Day was yesterday… but it’s never too late for a good dad joke: “What do you call a cheese that isn’t yours? Nacho cheese!”

The big idea
Shopify logo

How Shopify became a payments company

What is Shopify?

Your 1st guess might be “ecommerce platform.”

While that answer is not wrong, it is also incomplete. Over the past few years, Shopify has increasingly morphed into a payments company.

Shopify was launched in 2006…

… and for the 1st decade of its life was primarily known for its Subscription Solutions, which let you create an online store in a few clicks.

In 2013, the software firm launched Shopify Payments — an easy checkout solution for merchants. The fee on a basic plan is 2.9% and 30 cents per transaction.

While a small business at launch, the payments business has grown significantly, per tech analyst Ben Thompson:

  • 2015: In the year Shopify went public, revenue from Subscription ($67m) was nearly 2x Payments ($38m)
  • 2020: Last year, the results flipped: revenue from Payments ($2B) was nearly 2x Subscription ($909m)

Last week the $183B Canadian firm…

announced that its payments business — now known as Shop Pay — will be available to users who sell on Facebook or Google properties starting this summer.

Crucially, these sellers don’t have to be existing subscribers to Shopify’s platform.

Shopify — which “powers nearly 10% of ecommerce in the US” — says Shop Pay is 70% faster than other checkout options.

Facebook, Google, and Shopify are taking on…

… a small company named Amazon. Thompson calls their cooperation “The Anti-Amazon Alliance.”

While Jeff Bezos’ baby is trying to centralize all ecommerce activity, Shopify’s goal is to give any merchant a chance to compete (or to “arm the rebels” in company slang).

Shopify says 1.7m businesses already use its product. By opening Shop Pay up to Facebook and Google, millions more can join the ranks.

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SNIPPETS

Online money transfer startup Wise plans to go public on the London Stock Exchange. Its 2 Estonian co-founders are set to become billionaires. #fintech-cryptocurrency

Forbes rounds up 10 “ridiculous” retail moments in 2021…including a CEO-less JC Penny, Gap + Kanye and Home Depot’s container shipping issues. #ecommerce-retail

In Norway, 60% of new cars sold are electric vehicles (EVs). A vast supply of renewable resources — namely hydropower — is a big reason for the country’s success with EVs. #clean-energy

On-demand grocery startup Gopuff just acquired a fleet management platform (rideOS) for $115m. This move follows a recent fundraising round that valued Gopuff at a massive $8.9B. #emerging-tech

Mediflasha freelance marketplace for health professionals — raised $2m to help bring temp staffing to nursing homes, mental health clinics and more. #emerging-tech

Alex Cooper started the “Call Her Daddy” podcast 3 years ago. It just sold to Spotify for $60m…Trung breaks down how it happened. #hustle-picks

Amazon’s cargo ships are moving packages for a new customer: the US Postal Service. #big-tech

Bring Sexy Back to 2021
models

The new faces of Victoria’s Secret (Source: Yahoo Finance / Victoria’s Secret)

Victoria’s Secret trades its Angels for a more inclusive ‘Collective’

Victoria’s Secret is a brand in desperate need of a pushup.

According to The New York Times, Martin Waters — the lingerie brand’s CEO — believes the scantily clad Angels are no longer “culturally relevant.”

The old Victoria’s Secret is being replaced…

… with a more inclusive “VS Collective,” with 7 notable women becoming the face for the brand:

  • Actress Priyanka Chopra Jonas
  • Soccer player Megan Rapinoe
  • Freestyle skier and future Olympian Eileen Gu
  • Model Paloma Elsesser
  • Model Adut Akech
  • Photographer Amanda de Cadenet
  • Valentina Sampaio, who became Sports Illustrated’s 1st trans model in 2020

Once the undisputed champ of the lingerie market…

… Victoria’s Secret’s market share dropped from ~80% in 2016 to 65% in 2019. Why? Consumers now prefer more body-positive and inclusive brands, comfort over pushup bras, and athleisure.

In 2010, 10m viewers watched VS’s annual fashion show — a spectacle of models in angel wings and bejeweled bras. In 2018, only 3m watched and it was canceled the following year.

The VS Collective and the company’s intention to expand sportswear options may help, but it’ll still have to compete with…

… the underwear up-and-comers

  • American Eagle Outfitters’ Aerie ditches photoshop and embraces body positivity. Sales have grown by double-digits every quarter for 6 years.
  • Rihanna’s Savage X Fenty hit a $1B valuation earlier this year and saw 200%+ sales growth last year.
  • Gender-inclusive Les Girls Les Boys saw 400% YoY sales growth in 2020.

Fun fact: Victoria’s Secret’s “Red Hot Fantasy Bra” contained 1.3k gemstones and was valued at $15m. It’s probably not very comfortable, though.

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Free Resource

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By the Numbers
hybrid work preferences stats

Source: Microsoft Work Trend Index Survey

Digits: Erasing student debt, Amazon’s Black Business Accelerator, and shrooms

  • One year after antitrust regulators blocked their merger with Cengage, McGraw Hill, America’s 3rd largest textbook publisher, will be acquired by Platinum Equity for $4.5B (roughly the cost of 3 college textbooks).
  • Speaking of college, the Department of Education erased $500m+ in student loan debt owed to ITT Technical Institute after 18k former students claimed fraud.
  • Microsoft surveyed 30k+ people in 31 countries to surface 7 key work trends for 2021. Shocking: 41% of employees are thinking of leaving their employers.
  • ATAI Life Sciences became the 3rd psychedelic company listed on the NASDAQ, alongside Compass Pathways and MindMed.
  • Amazon committed $150m to support Black-owned businesses through its new Black Business Accelerator, which includes startup and advertising credits, free product photography, and $10k cash grants. Applications open July 1.
  • Tennessee has 50k+ people collecting unemployment. The state’s job board has 250k+ postings, but only 3% show a salary of $20k+.
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Founding story of the day
Snow Devil screenshot

The Snow Devil website (Source: Product Habits)

Shopify’s origin story is definitely unique in tech lore. Shopify CEO and co-founder Tobias Lütke launched an online snowboard shop in 2004, called Snow Devil.

According to Product Habits, the German-Canadian software engineer built the original store on Yahoo Stores.

In an absolute shock to no one, Yahoo’s product sucked.

Lütke realized he had to build a custom solution for Snow Devil to integrate payments, inventory, and a decent UX together.

The tooling he put together for Snow Devil was repackaged and launched as an ecommerce platform called Shopify in 2006.

In that 1st year, the software did $8k a month ($96k annualized). In 2020, Shopify’s revenue was $2.9B.

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