January 4, 2023: What we can learn from Shopify's recent announcements
Plus: an in-depth profile on Frate, more opportunities, and the headlines that matter
Quick Takes: Why we are getting a Shopify every day of 2023
We are less than a week into the New Year and Shopify has already made several large announcements including:
- Making a composable stack, Commerce Components, available for enterprise customers. This enables established brands and retailers to build their own custom eCommerce experience using components of the Shopify stack/experience. This enables these retailers to create their own experience while using Shopify's best-in-class software and infrastructure "a la carte" via APIs. You can read more here.
- "Ending meetings" by publicly announcing it did a calendar purge of any recurring meeting with more than two people and banning all meetings on Wednesdays. Meetings of 50+ people can only occur on Thursdays and are limited to one per week. Furthermore, company leaders are encouraged to remove themselves from large internal chat groups.
- Launched a new Audience marketing tool. The new tool is an effort to help Shopify merchants better target potential customers and improve margins. It should be noted that this is only available to Shopify Plus customers. You can read more here.
Why is Shopify making all these announcements now?
Shopify's leadership is focused on the long-term and views the company's share price as a random noise that is uncorrelated with the value being created. This great podcast goes into detail on Tobi's view on the meaning of share price and his philosophy in building Shopify. Despite this, potential employees and customers do pay attention to share price and its direction when making decisions about their next job or suppliers. As a result, Shopify's leadership is mindful of the importance of share price, even if they don't view it as a reliable indicator of the value of the company. Shopify has been working on these products and strategies for a while, and they have decided to group these announcements in quick succession in the New Year to take control of the narrative of the Shopify story in a typically slow news period, allowing them to enter the year with momentum.
Why these announcements?
The Ending Meeting announcement is a statement to current and potential employees that Shopify is less bureaucratic than other employers. You will get more autonomy and spend less time on non-value add work. The other two announcements are product enhancements enabling Shopify to grow with current customers and convert enterprise customers. The Audience product is taking advantage of an opportunity created by Apple with its focus on privacy which made customer acquisition more expensive. The Commerce Component may be partially in reaction to new headless eCommerce competitors that emerged over the last two years. Nevertheless it "atomizes" the Shopify Platform for enterprise customers. These customers can drive meaningful revenue at high margins. For example, Shopify's infrastructure has a high fixed cost, each merchant plugging into it adds relatively little variable costs and improves Shopify's margin.
What is the takeaway for me?
I think all teams can learn a few things from these announcements:
- Strategically announcing several small changes together can help build a narrative and momentum around your business
- Know who you are targeting with an announcement. Many large enterprise announcements are actually aimed at current and potential employees
- The best way to create value is to continue building products that customers use.
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What is Frate?
Frate is a peer-to-peer returns solution to help retailers decrease the cost of returns and their carbon footprint. When customers want to return an item, we incentivize them to hold onto their return while we re-list their item back on the retailer's store at an “EcoDrop” discount. If purchased, the returner ships the item directly to the buyer.
What was the insight/inspiration that led you to launch it?
We realized two things:
- People don’t return items right away after receiving their shipping label
- Over 90% of returned goods are in perfect condition once they arrive at the warehouse
So you have perfect condition items just sitting in people’s houses for a prolonged period of time. Why not use that time to try and re-sell it?
How has it been received by the market? Why do you think it has been so well received?
Retailers and their customers are loving it.
- 81% of eligible returns are held onto to be re-listed as an EcoDrop
- 37% of EcoDrops are purchased
- 0% of purchased EcoDrops have been returned
- 100% retention rate for our retailers
One of our retailers recently started charging for return shipping instead of offering free returns. Because of this, they’re able to offer free shipping on EcoDrop purchases, as the returner is covering the cost of the label. The result? 100% of EcoDrops have been purchased within their 7-day hold period.
How did you know you were ready to found a company?
I’ve always wanted to be a founder. I worked on Frate part-time while at school, then full-time after I graduated. I was supposed to go to a management consulting job in September but decided to take the leap and quit my (future) job and go all-in on Frate once I realized this is something retailers and people really want.
How did you meet your founders/know they were the right people to start a company with?
I started Frate with Charlie Mackie, a friend from school, but he made the decision to take his full-time job offer and go to Meta back in August. This made me a solo founder and led me to go out and find our first employees, who I found through cold outreach on LinkedIn…seriously! Jake Goodman (Founding Engineer) and Yenn Lei (CTO) were the first to join, and I was just in awe of their passion for Frate’s business model and knew I needed them to join me. They’re also immensely talented engineers.
What has been the hardest thing on your journey so far?
Fundraising as a first-time founder, with barely any founder-market-fit. I had to convince investors that I was the guy to solve this problem sheerly through my grit and competitiveness. I’m a true believer that if you’re solving an extremely large and important problem, a founder that is extremely competitive with a track record for success outside of work could be a more effective founder than one with direct experience in the space they’re building in. Controversial I know, but I believe it’s true. We ended up raising $1.45M USD.
What has been the most pleasant surprise?
Our ability to hire amazing talent quickly. The market has certainly shifted in the favour of employers, but we’ve found it much easier than most to build a strong team. People just really seem to believe in what we’re doing.
What is your super strength?
This relates to the point above, but I would say building a strong team. We’ve grown from just me in August to now 6 full-time employees. These include engineers from Meta, Shopify, Emotive, and others.
Who is the unsung hero on the team? Why?
Our Founding Engineer Jake Goodman. He’s only 20, but his ability to learn, lead, and execute is astonishing. He also has immense patience with our retailers and new hires. He’s a gem and feels like the glue to our team.
What are you trying to achieve over the next 12 months?
We want to launch on the Shopify app store and then onboard 50 retailers. A lofty goal, but I believe we can do it. We want our solution in the hands of as many retailers as possible to keep proving that this really is something that retailers, people, and our planet need.
What advice do you wish you had been given prior to launching?
Under-promise and over-deliver. Things never seem to move as fast as you predict, and I set some pretty non-attainable goals for our retailers. Internally, I think it’s great to have lofty goals.
What is your proudest accomplishment outside of your startup?
When I played NCAA Division 1 hockey, I was one of the youngest captains in the nation.
Who are the 5 Canadian startups you like in your market?
There aren’t too many tackling the returns space! But here are some e-commerce enablement/logistics companies I really like:
BlackCart - Eliminate the fear and uncertainty of online shopping while giving your customers the power to physically touch, see, and try items just like they would in-store.
TyltGo - A delivery partner that takes your business further, faster
GoBolt - Leveraging state-of-the-art technology to provide integrated services for customers with a focus on Express Services
ReturnBear - Save time and money with our full suite of pay-per-return services for brands selling in the US and Canada
Quil - Re-usable packaging for better brands
*Learn more about Frate here
Top Headlines and Content
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Events and Links
Check out the interesting content, events, and happenings for the community here:
- TechTO Together | Toronto: January 16, 2023 - Kick-off 2023 with us! - REGISTER HERE
- TechTO Together | Montreal: January 31, 2023 - Join us LIVE from Montreal and kick off the year with the Montreal tech ecosystem - REGISTER HERE
- TechTO Together | Toronto: February 6, 2023 - Announcements coming soon! - REGISTER HERE
- Google for Startups Accelerator Canada - NOW ACCEPTING APPLICATIONS until February 1 - APPLY HERE
Want to showcase your company, events, and opportunities to 60,000 subscribers across the Canadian Tech Eco-system? Reach out to [email protected] to learn more!