Breaking the rules of growth: Why Shopify bans KPIs, optimizes for churn, prioritizes intuition, and builds toward a 100-year vision | Archie Abrams (VP Product, Head of Growth at Shopify)

0:00 When you have teams naturally break up the world into different final stages or different points in the journey. It gets very seductive to s look at My part of the funnel. and what's my conversion rate through that part of the funnel. Right. And then the team starts to optimize. for that conversion rate as their North Star, but in practice.

0:20 It's actually almost always easier to just make it harder to do the thing right before your step. in the funnel to increase your conversion rate. So instead of I'm trying to convert a bunch of people, I just want more people to get activated. And then once you start thinking that way, you realize actually the best way to get more people to get to a step is just to get more people in the door in the first place. That will always hurt your conversion rate, but it may actually give you more people on the outside. Today my guest is Archie Abrams. Archie is VPF product and head of growth at Shopify.

0:53 where he leads an org of over six hundred people across product, design, engineering, data, ops, and growth marketing. Shopify is both an incredibly unique and also an incredibly successful business. And they do things very differently. And as a result, there's a lot that we can learn from how they approach building product and driving growth.

1:12 Some examples include their priorities and product roadmap are driven by a hundred year vision that comes from Toby, the CO. And the core product teams don't have metrics or KPIs. They're essentially banned. And instead decisions are made based on taste. and intuition and building towards this long term vision.

1:30 Also, the growth team optimizes for churn, which is unlike any other company I've ever come across, and once you hear why, this will make a lot of sense. Also, they keep long-term holdouts for every experiment they run. And they automatically look at the impact these experiments have had on the бізнес. A year later, two years later, and three years later. And then revisit these decisions down the road. And in our conversation, we dig into all of this, plus how Shopify organizes their growth team, how they run experiments.

1:58 How the growth team collaborates with the product team, how they measure impact. Plus Archie shares a bunch of very specific and interesting examples of changes that have driven growth for the business, and so much more, this is such a fascinating conversation, and I know this will give you a lot to think about in terms of how you run and organize your own product and growth teams. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it helps the podcast tremendously.

2:28 With that, I bring you Archie Abrams. Archie, thank you so much for being here. Welcome to the podcast. Thanks, Lenny. Excited to be here. Okay, so

2:40 What I wanna do with our time together is to basically do kind of a a living archaeology. of how Shopify grows. And what you specifically have learned about growing a company like Shopify. Into the just juggernaut of a business that it's turned into. To give people a little bit of a sense of just like how large Shopify has gotten, to s maybe surprise them about the scale of this company at this point, could you share

3:05 Some stats that uh about the scale of the business at this point. Yeah, absolutely. So Overall, we're about ten percent of of e commerce in the United States. So basically if you're not buying You know, on Amazon or Walmart.

3:18 You're probably buying on a a Shopify powered store. And Behind the scenes Globally We do have two hundred thirty five billion in GMV.

3:28 In twenty twenty three, which is roughly the size of the economy of Finland. So we got a big Big economy and big impact. Half it from top five. Wow.

3:38 Uh I think interestingly with Shopify it's kind of this behind the scenes tool and so I imagine many people have no idea they're using Shopify a lot of the time when they're buying stuff online. And I think some of these numbers kinda creep up on people of just how large a company like Shopify's gone. Hundred percent.

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5:58 From roadmaps, discovery, to strategy sessions, and more. It's never been easier to make customer centric decisions. The good news is, Lenny's listeners can try Duftale's Pro Plan along with their newest products and features free for 30 days. Just gotta dove? dot com slash Lenny. I wanna start with something that I think is most unique from what I've heard and I think there's gonna be a lot of really unique

6:23 approaches to how y'all think about growth. Uh, one of the most interesting things I've heard is that How do you think about churn and retention? To most companies. the most important thing is to

6:34 Increase retention. Reduce. My sense or my understanding is you guys are kind of the opposite. You one Don't think tons about churn, you almost optimize for churn. Mm.

6:46 Talk about that. How does that work? The way we think about charge really going back to Shopify as a kind of our mission and what we want to do, which is to increase the amount of Entrepreneurship. On the

6:56 on the internet. And so As a business, we want to make it as easy as possible. To get started. With

7:03 With your online store, with your business. But most businesses do Do ultimately Fail. And to the way we

7:10 We look at it is Can we lower the barriers? To getting started and get as many people in the door. Trying their hand at entrepreneurship.

7:21 If we do that Again, many of those businesses, many of those folks will maybe on their first attempt. Not be as successful. But We're gonna have a set of merchants who go on.

7:31 to become extremely big businesses, the Alberts of the world, figs. etc. And the way the Shopify business model works is We do charge a subscription. But

7:41 Most of our revenue comes from Payments, which is tied to directly to a merchant's success. So in a given cohort of merchants, a lot of people will start. Some of those people on their first attempt at on premership might not succeed.

7:54 But the folks who do go on to be successful. Will gonna make that entire cohort. Of merchants you started. something that makes Shopify as a business extremely successful.

8:04 That's why we lower the barriers to get started. And help folks grow. And those winners Make the whole thing. Work.

8:12 I love that. So kinda what I'm hearing is it's It's not that you don't want people to stick around. You don't want people it's not that you don't want people to succeed. It's that you're not Optimizing every new shop. for sticking around long term. It's basically make it as easy as possible for people to try it.

8:29 And all you need is a few big wins for it to all work out. Correct. And and that's really kind of a different insight than most SaaS companies that Yeah. They get a couple discussion, they really never want that person to leave. And we we want to lower that barriers to get started and

8:44 One of the main reasons companies focus so much on churn and retention is Because it costs them a lot of money to drive new customers and users, I imagine there's an almost an implied it's really cheap for you all to find. new customers because of maybe the brand and word of mouth. Is that is that true? I think that definitely has some dynamics. I think the Bigger factor is the monetization model.

9:04 For most SaaS companies, they're making from a subscription. Right. They're paying you know, twenty nine bucks a month is the only way that they're gonna really monetize. Whereas our business works, you have a Folks who or paying a subscription.

9:16 But as folks get bigger Because we're monetizing on that GMV that that merchant is producing and the revenue the merchant is producing. In the form of payments and other services. It allows us to grow with the merchant. And those really successful merchants.

9:32 Make the whole system. Work well. Got it. So basically your net dollar retention or net review retention is just absurd. for the winners and it makes up for all the losers, slash not losers.

9:43 People that have tried to build it online. Try. Try and haven't been first successful. And you can think of the are the other parallel is You know, an angel investing, right? Most of angel investments are not gonna work out. But the couple that do make that entire investment. Uh

9:57 Got a portfolio. Successful. With retention. uh not being the primary goal and the metric you guys focus on optimizing.

10:07 How do you know if you're doing well? Is it Some number of these winners have to come out every quarter of a year. How do you think about progress and and achieving and and success, basically, for for growth? This way I was thinking about a cohort of users we B we acquire in a given time period, say a quarter.

10:23 And then over the next year, two years, three years, four years, five years. How much GMV? Have those merchants? Produced in total.

10:32 Not on a per merchant basis. That's But uh in total, did that co work? generate GMV and if they generate GMV, that will translate into revenue and gross profit. in all of those things that we can then use to reinvest in growing the business. So it's really looking at the total value.

10:47 But on that GMV basis, and GMV is a power law based Patrick. And so it's really that power law. That drives. the success of each cohort. Again, going back to investing.

10:58 Same thing there. Eat vintage. From a fundamental. How much did that return? kind of it's a fun then it's really driven by the few.

11:06 If you really uh successful outliers. So this back to the question. That sounds like a very long feedback loop and I don't know what I do with that information if five years from now, oh okay, that was a really good idea we did five years ago. Correct. Comment on that'cause it touches on something you said about how metrics aren't actually a driver of how you all think at Shopify.

11:24 So take that wherever you want to go. Yeah. So it's it's it's interesting on I think Shopify we kind of very purposely set up Different parts of the orc. to think on very different time horizons and with very different

11:37 ways of thinking about how to build product. and the like. Very different than a lot of companies that typically have maybe one kind of unified there's one North Star that the entire company is rallying around. And so There's three major product groups that Shopify. There's core product.

11:54 Which is basically building the hundred year The right things For commerce a hundred years from now. There is merchant services, which is building things like Payments.

12:04 Shipping, kind of the tools that entrepreneurs need. To be successful. With a more kind of shorter medium term horizon. And then growth is really thinking about kind of that end to end customer journey. How can we bring folks on?

12:17 And make sure that successful. And then from a metric standpoint We do have some obviously some leading indicators in growth that we're looking at on a given experiment or or what have you. But the key in what we try to instrument. In our experimentation.

12:32 is the ability to really look at long term effects. Um Experiments. So we have Constantly. Well

12:40 re look at an experiment a year later. See that the way the GMV curve for the distribution was different than we might have originally thought. Now actually change. What we do with

12:53 from that previous experiment. So there's a lot of long term monitoring. of experiments over these very long time horizons to both inform what those input metrics are More importantly, hold ourselves accountable. Two.

13:06 Did we actually move? What we cared about. Which is that long term GMV. In the right way. Wow. Okay, I want to spend more time here. So you

13:15 The way you're describing it is the way the business operates. Is you think What is our hundred year plan? How do we think where does this need to be in a hundred years? And with that

13:26 It allows you to run these long hold out kind of hold out experiments to see Is something we're doing impacting the business broadly and And because you think so long term you can take a year or two or three to see if there's an impact and then make adjustments. versus, you know, I'm having to drive a certain metric every quarter of a year.

13:46 Correct. And I mean on on growth, we're definitely in the you know, we we want to drive metrics on a short term basis and we can do that, obviously. Um but We we we have the the luxury and just the way kinda Toby kind of thinks about the world and the way we operate. to really think about these long term effects and make sure that we're holding ourselves accountable with these long term holdouts. And then constantly refining

14:07 the input metrics that we're using and getting a lot smarter. uh about that. But because we take that long horizon. It allows us to be better in the short term. And and just get a lot smarter. And a lot of counterintuitive things. And I would encourage everyone, if you can.

14:21 Look at some of the experiments that you thought were your biggest winners. look at the downstream metrics for a year, two years on that experiment. And I'll bet you'd be surprised how many times The metric. Is different.

14:33 than what you thought it would be. After a year. Because where people just make a call at a certain point in time, here's the left and it Here's the less experience. I love this'cause very few people have experiences running a h a long term experiment.

14:46 And so this is a really interesting Insight that you're sharing that I guess uh how often do you find this to be true in your long term holdouts where things end up being very different? Down down. On stream.

14:59 I think there's there's probably two things that have been very Common. And I would say in Quite a few cases. You get a short, you get a lift.

15:07 on the uh a metric up front, a more short term metric, number of people who become a paying shop or number of people make their first sale and Shopify's. And then you look a year later. And there's actually no incremental lift on GMV from that cohort. And so I think it like actually trains a lot of us in in growth are looking at these short term metrics, like A lot of the time it is actually more Pullford effect.

15:28 Then you fully, fully realize Or an incremental user that's just really not worth. That much. That's one? And then

15:36 Two. The so it's its effect size goes away. There are cases where the experiment has flipped the other way, and then there are cases, and these are the most interesting ones. Where you realize that you uncovered a pocket of merchants.

15:53 That are actually Extremely valuable entrepreneurs. Who go on to be successful? That you missed. In your

16:02 Your kind of normal short term. Uh. measurement techniques. Um and so kind of all across the board we see that, but actually the most common is Actually isn't a long term lift. From

16:13 A lot of things that You might think in the short term are. Is there an example in that second bucket of what you mean when you say there's like a pocket of Valuable merchants. Yeah, I think a lot of this has to do with um

16:26 We call monetary friction. Right. So w one of the the hardest things to do. with the business is when you're getting started. Is You might not have any revenue coming in.

16:35 Right. And and you're kind of Bootstrapping, which Your shop fi's case might be thirty nine bucks a month. But it's still. It's a real expense.

16:43 And so typically when you can lower the barriers to monetary friction in some form. That could be all sorts of monetary friction early. The common belief is that we'll usually get lower quality

16:58 Folks coming in the door. Because usually discounts are associated with lower quality. If you think about In a business case. If I give you

17:08 A little less. Little monetary boost and reduce that monetary friction. I can actually causally change your ability. To become successful. 'Cause I've given you a little bit more time to try that idea a little bit longer.

17:19 I've given you that opportunity to move your business over to Shopify. And so often in those types of experiments, you see that you've basically unlocked a class of people. What'd given up? Without that. Monetary.

17:34 We're using that monetary friction. Interesting. And giving them time to actually make it work. To make it work. So Uh, just roughly do you you have a sense of how often you find no effect after a year that you saw early impact just to

17:49 Yeah, it's probably in the it's it's in the thirty to forty percent. Right. Like I think you're tearing the heart out of so many growth people right now, and nobody wants to hear this that works on growth. Where you're saying Potentially a third.

18:01 of the experiments they're running today. That are showing lift. Probably don't have that same don't have any impact down the road. Yes.

18:10 Unfortunately I think that's Brutal. Like to believe. Yes, and that's gonna nobody wants to hear this, uh except Ex except people that you know, you should want to hear this because if you want to build a business that grows in

18:24 To learn that now. Yeah. Okay. Uh

18:31 So for people that Can't run whole long hold out experiments. I guess is there anything that you find is a good early indicator that that might be the case? 'Cause most people don't have time to sit around and wait a year or two or three. They're not thinking a hundred years. I mean I think end of the day.

18:44 That is gonna be the most Uh Effective then you actually lure the most. I I think it is So even in shorter term.

18:51 Horizons Um Really being as specific as you can be about what are the The early signs of

19:01 Of success in your product. And making sure you instrument those and then making sure particularly kind of Up funnel experiments. You are actually Looking at those

19:11 The further downstream metrics. To make sure you have some Understanding of of what's moving down. So as deep as you can go in the funnel for as long as you can wait. Do that. And if you can't

19:23 You know what I would say still you should just bet on If something is showing lift up funnel. Still ship it. And it's probably not gonna hurt you. But

19:31 Don't overestimate the amount of impact. That this is having. So Fanny like two things here is like don't American folks is don't

19:39 think, Oh my goodness, I have to wait all this time. Is that Video. If you didn't move the upper the short term impact, you're not gonna have the long term left.

19:47 Mm. So still ship if it's short term left. Just be reasonable that If you can do s measure it longer term, you'll get better. about identifying what things are that are really impactful.

19:57 Got it. And so you're So it may be positive. Initially, but Often Neutral.

20:03 Rarely is it neutral initially and then positive down the road. We've seen we've seen There are some there's some cases of that. But it's rarely I've seen neutral be positive, but I haven't seen negative. Got it. Okay. So this is all it.

20:18 Okay. That's so that's reassuring. It's not you're not harming the business. Yeah. But you're probably getting a lot more credit than you deserve as a growth team shipping things that Likely. Likely. And there's there's also just like trade offs to like moving on, you know, and Un balance.

20:34 This should J you're probably doing good things if you continue to ship things that are showing positive. Right. A hundred percent. Okay.

20:41 This is awesome. Okay. Uh For people that wanna r run long term I imagine you've built your own experimentation system internally.

20:50 Yeah. We have. Yeah. And is it basically hold out ten percent, say it was some percentage of users from seeing the new change? Is that how you approach it or is there different? Wave approach. Two things we to we have two layers of of hold out. So one is the tr like more of the hold outs of like every change in a quarter. Hold out five percent.

21:07 Across the board. Second is for changes that only affect New merchants. What we'll do is Well take that group of folks, it's called fifty fifty split.

21:17 And then Run that for you know a few weeks. And then what we're doing look at the long term effects. is we actually ship the winner. To a hundred percent.

21:26 But we're looking at the uh the cohort of folks who was in assigned to the experiment. We're going back and looking at those people who were signed. A year later, so it allows us to still ship. Get stuff out.

21:39 But we've kind of held the experiment in a way that um allows us to see those those long term sex just for the cohort that was exposed. That only works if you're doing it on new users. For existing It's a little more complicated.

21:53 Um That's okay. And then in our experimentation tools, all experimenters are paying that three months, six months, nine months, twelve months. With your the updated results. Oh. So you can't really get hide from What did this really

22:08 Result in. over a longer term horizon. So your tool email's everyone that's involved in the experiment of like here's what this cohort is doing now. Correct. I love that. Okay. That's awesome. It's interesting they use kinda these cohort Curves for

22:22 Gm V and is that the core metric you look at to see Th there's a few GMV, um Obviously gross profit, um but those but G M V is kind of like the Yeah, a a key.

22:34 Welcome success. So it's interesting. Most people use cohort. retention curves, you're using cohort'cause you don't look at retention. You're looking at for GMV over time. So that's really interesting. G of you over time, which correlates better. And there's there's a retention than profit.

22:48 And then really the like the absolute. Um number of merchants who are On the platform and then reaching Sar G I. Got it. Okay.

22:57 Uh I'm gonna I'm gonna not keep following his path because there's we can go on and on. While we're in the topic of just experiments and what you've done, I'm curious if there's just any Examples of big wins that your team has shipped that might inspire people as they're thinking about

23:13 Launching experiments. I know there's probably some trade secret stuff you don't want. Competitors to know. And I know this is particular to Shopify and a platform in e commerce, but I guess is there anything that would be worth sharing of like, oh, yours is a huge win that maybe we didn't expect. Going back, there's there's always a lot of value in thinking through. Um

23:30 Kind of monetary friction. As I mentioned, like that's always gonna be something to to explore trial dynamics. different types of incentives, all those things are are very kind of impactful, I would say, on things that are Maybe more

23:43 practical and and for everyone. There's an enormous amount, and we do see these with long term effects. But Just the nuts and bolts of Sign up.

23:54 Collecting the right information and you usually want to collect more information than most people think you do. In your sign up flow. If you can then leverage that to personalize the guidance and this is first asked product the guidance that someone can get.

24:08 when they onboard into Shopify. So whether you're coming on Shopify is a very diverse product. In person selling, online selling, different channels. There's the nuts and bolts of Get more information from folks. Build trust in there.

24:22 give them right amount of guidance when they come out in a personalized way. And that may sound like okay, that's kinda obvious. But the amount of Impact. By just

24:32 Nailing. Those flows. has never ceased to to amaze and Setting up that person for long term success. Um so

24:41 Yeah, Monte Friction. And then just really good onboarding personalization. A well of of opportunities there. I love that onboarding comes up Every time I ask anyone where they've seen

24:54 ongoing success and opportunities, particularly in actually surprisingly driving retention. Like it's interesting that that's not what you look at, but Turns out that's one of the biggest levers for increasing retention. Uh interesting that even for a company that doesn't look at retention, that's a big opportunity. Yes. Yeah, it's really because it's setting people up for Shafi's case, I think the big thing about Um

25:14 Is What we get very nervous about is the easiest way to increase retention. Is always to constrict The funnel stage one above the retention metric you're trying to optimize for.

25:27 The simplest way to increase my Sign up. to activate a thing is just make it harder to sign up. Right. Like Guts and bolts, that will always happen.

25:37 It's when you have teams on that line of like local conversion rates. You kinda get all these weird team incentives because they're optimizing To basically implicitly make it harder to do the step before them. And because we focus on that long term.

25:52 GMV number of merchants who are successful. Orienting every team. to think about the total number of people, not the rate, but the total number of people. who got to the end of their kind of part of the journey.

26:07 is a very powerful way to incentivize people to do the The right thing. In terms of getting people set up. versus do the I'm gonna constrict the top the

26:18 Funnel set right before me. to make my local conversion rate look better. Which is the bane of my existence, but something I I see a lot of teams Like implicitly or or explicitly. do uh when they when they get too focused on rates.

26:31 What a power. What a power. What a whatever. I definitely want to chat a little bit more about metrics. I know you have a really interesting take that's kind of built on what you're just talking about, but first of all, you mentioned this term monetary friction as one of the levers that you've seen success with. Can you just describe what that actually means? Totally. So it it things like Trial. Trial dynamics.

26:52 Trial length, trial amount. It means, you know, incentives. So What is in your product. What do people Uh value.

27:01 And need in order to be successful. So in Dropfield's case that might be like App Store credits or things like that. Um, but those are the two forms of monetary friction we we talk about, and then of course the actual price point. But That's what.

27:13 I thought the larger bucket of my target friction is. So let's follow this thread of metrics. Your big on absolute numbers. You've and you've been talking about this already versus like percentages and ratios. Talk that and how you encourage your teams to think about metrics.

27:29 Yeah, I think one of the things that I think happens, particularly in a large and shot by score authority is about six hundred folks, like When you have Teams naturally break up the world into different funnel stages or different points in the journey. It gets very seductive.

27:44 Just look at My part of the funnel. And what's my conversion rate through that part of the funnel? Right. And then the team starts to optimize. for that conversion rate as their North Star.

27:56 over a longer time period. I'm gonna try to move my conversion rate from ten to twelve percent or or what have you. But in practice Yeah, talked about like It's actually

28:08 Almost always easier to just make it harder to do the thing right before your step. In the funnel? To increase your conversion rate. If I make it harder to sign up. gonna be very easy to increase sign up to activated rate because I just have fewer people and the people who made it through are higher tent. And so I see teams get

28:25 Really stuck. When they Like are trying to optimize conversion rate. But they just make it harder to do the previous thing. Versus everyone.

28:34 You're thinking about absolute number of people who made it through. their quote stage of the funnel. So instead of I'm trying to convert. A bunch of people. uh a conversion rate. I just want more people to get activated.

28:48 And then once you start thinking that way, you realize Actually the best way to get more people to get to a step. Sometimes and often. It's just get more people. In the door in the first place.

29:00 So make it easier to sign up. Or reduce friction. It's the opposite, right? And so like Because that will that will always hurt your conversion rate. But it may actually give you more people. On the outside.

29:11 And a lot of teams get very nervous, their retention rate went down. Their L T V went down. Oh my goodness, this is gonna affect our ability to pay. No, your cack also went down by Probably more. And so now you have the ability to

29:24 Likely spend more. And you have more people through the door. um getting to each point in the activation. Or the the merchant journey. What I'm hearing is essentially teams are gold, not on

29:35 Increase lift lift this conversion step by some percentage. It's drive some incremental Absolute number of new Uh sh merchants, potentially. Merchants. Exactly.

29:46 Um This is a good segue to I wanna hear How you structure your growth team. At Shopify. Like essentially what's the broad structure, what are the different teams and what do they focus on? And then what are like the functions within each team's?

29:59 We have two big uh groups within within growth. So one is We call growth R and D. So this might be you traditionally consider like product design engineering data. your traditional product teams.

30:10 Then we have growth marketing. Which in Chop Fi's case is Paid acquisition, media buying. Affiliate marketing. Email

30:18 Content and SEO. So that's kind of like Growth R D. Growth marketing. Within growth R and D.

30:25 Three Uh. Three pillars. One is what we call growth products. And so this is basically

30:32 Everything from kind of landing pages, sign up. Onboarding. Monetization. So

30:39 Trial. incentives to like All the way through to home our what we call our home feed our engagement to basically get more merchants. Again, I say it's retain But to give keep giving entrepreneurship a try to become

30:52 Bigger and bigger businesses. So that's growth. product, gonna have the full life cycle there. Second is what we call our enabling pillar. And this T Pillars building tools for both growth and the rest of Shopify. So things like experimentation platform.

31:05 or communication platform. of our business intelligence tooling that that powers a lot of what we're doing. Our More Tech work to support our growth marketing team. And then our third bucket, which is maybe a little different from most Growth teams is actually our

31:18 Customer support. Groups it's within growth. Because we want to think about Customer support as part of This merchant journey of coming on

31:27 Giving entrepreneurship a try. all the way through to here's the support I need. As I'm becoming a you know, multi billion dollar. Business on Shopify.

31:35 So those are the like the three Big growth. Product buckets? And then within growth marketing. It's a more traditional channel setup.

31:42 Paid. All the different channels online, offline. SEO email and affiliates. Super cool.

31:50 Okay, so Within Growth R and D I just took notes I'm gonna summarize but you just shared, which is awesome. So there's kind of three big buckets. One is growth product. Which essentially is like onboarding. It feels like it's like the top of funnel. Get people.

32:03 Uh huh. In Well okay, so growth marketing feels like that's super top funnel. Bring that super top funnel. Yeah, correct. So growth marketing.

32:10 drive people to shopify.com. Then growth within R D team. growth product takes that user and tries to get them to activate it. Enable helps it feels like that's like internal tooling and ways to make the teams internally more efficient.

32:26 Correct. Both growth and outside growth. Awesome. Okay. And then the uh customer support team. That's really interesting. So there's a customer support product team. That helps. new sh merchants be s successful. And

32:42 Does that Include like actual customer support agents? Is that like within that team? That's not we build a tool to make those support advisors kind of Superheroes and then on the the help center. All of our AI stuff, uh to make

32:55 Kind of a a great customer experience for people who are just engaging in a self serve. So it's the tooling. And the experience for For merchants. Okay, so with these teams, is there anything you can share about just like how you think about metrics slash goals for these different buckets? We don't need to get too deeply, but just does everyone basically have like an absolute

33:14 New merchants. Goal or is it? A little different. So yeah, so you know, at the the highest level we think about that.

33:21 that total cohort value. Right. We bring in a set of merchants in a given year. How much GMV, how much that set of merches worth? Um over the next three, four years. to Shopify, right? And that's

33:32 That's the most important thing that we wanna Focus on and then that of course the for efficiency standpoint, that of course meeting our our payback guardrails and and all that. So that's kind of like the the macro growth perspective. Cohort value. over

33:48 kind of cost and and pay back. That that's the macro point of view. And then within Worth marketing. Yeah, each channel operates with Certain guardrails.

33:58 Around There are L TVD CACs. Same thing for content SEO. That operates with kind of a guardrail model for each piece of content. How much is that gonna come back?

34:07 And and and Down the line. For growth products. It's a Also a combination of total GP

34:15 Card incremental. Uh core value. That's produced. From those. Those teams.

34:21 Right. So Everything is basically gonna be measured on from from an experiment, ideally measured over a very long time period. What was the incremental Core value left. That this

34:32 Just generated? And And that that's how we think about a kind of measure. The impact of each of those. The sub teams along the way.

34:40 Each of those have a specific part of the file they play with. But because they're measure in absolutes. And they really think about that absolute value. We don't get caught into like did your conversion rate over the course of this year. go up or down. It's kind of irrelevant.

34:52 was the Some of the impact. over a long period on that total core value that we're trying to produce. From For four merchants.

35:01 And the way you come up with this goal, I imagine, is you have a forecast of where things would go organically, and then like here's the lift we want to see. From the work this team does this quarter this year. Correct. Um Yeah. And then

35:16 We're gonna measure against for each experiment. Did it actually get to where we we expect that lift to be. And those experiments again, are those all long term hold out experiments where you look wait a year or some you We call it. We call we call the experiment after three weeks, but in all cases

35:32 You still want to held. We watch them and that's where that ping comes back. Every experiment is watched and that ping comes back. Three, six months, twelve months to relook at. Was this actually successful? Okay, cool.

35:44 So that creates the loop of shipping. Value quickly. But making sure we're holding ourselves accountable to did this actually Produce results.

35:52 Over a long period, or did it actually just have this? Neutral effect. It's like oh Then we can learn from that and get better. This episode is brought to you by Dovetail, the AI first customer insights hub for all teams. Dovetail has always been the go-to tool for teams who want to find insights in customer calls, user interviews, or documents. Now they've stepped it up with the release of Dovetail 3.0.

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37:14 Product team ship stuff, they run an experiment, they see impact, say it's five percent lift on something. Ha ha huzza, you did it. Great work. Performance review. Up your exceeds. You're doing great. This team's killing it. And then a year later you realize oh, that didn't That didn't last. How often do you find like a team that is shipping wins looks back and ends up seeing like, Oh, that wasn't actually as successful as it I know you said like maybe it's like a third of the time. Thirty. Yeah.

37:39 Yeah. Okay. So it's still like roughly Yeah. And and it's great learning. And that's why we take it as like wow, okay, now we we really uncovered something. And it's like such a successful discovery. Wow, okay, we thought this thing. But now we now we learned it actually wasn't as true as we thought.

37:54 Cool. What what can we take from that and Be smarter. And next time. So we don't just double down on the wrong The wrong things. So interesting and again and you mentioned most of the reason this is the case.

38:05 when something doesn't show lift down the road is it's pulling forward. success. That would have Been seen later on its own if you had not even shipped this thing. Awesome. Is there an example by any chance that comes to mind of something like that that's just like Wow, that was a big win and then like oh I see, we just pulled forward some

38:22 Some revenue from the future. Yeah, so I think one one good example is is something around payment failure notification. So one of the things that a lot of teams have or or see is Call dunning effects, where Somebody might have a payment. uh not go through a credit card that doesn't go through. So we we did a bunch of experimentation around

38:40 Hey, how can we alert people? That their credit card is failed their payment. Uh attempt failed. And it's a typical kind of growth win.

38:50 usually produces a lot of short term impact. And that's what we saw here. We were doing much better alerting, reminding people, sending them a million emails about it. Cool, we got some pretty major left. You look back. Six, twelve months. There was really no long term

39:05 And why is that? Because there's really a s a a little bit of a selection bias there. The people who are letting that That payment. Fail. Probably weren't.

39:15 Actually that dedicated to this entrepreneurship craft. They may have updated their credit card. But they They still really weren't in it. And so that was a good example of

39:24 And a bunch of this stuff around kind of payments, you know quote preventing Turn where you look. Like it's six, twelve, eighteen months. On a GMD metric. Not a lot of lift.

39:35 Um, over that long term horizon. I love this example. Like I could see so many people having run experiments like this and like, Oh, we found such a huge win and woohoo. This seems killin' it. What a great idea. Of course this makes sense. Duh.

39:50 Yeah. And then turns out it's nothing long term. Yeah. Which is great because we were Because we were spending you know, we were gonna spend a a lot of time kind of okay, what else can we do here? Like no actually.

40:01 Bigger fish to fry. In some in a lot of other areas. So just it helps the team just feel really good at their their work. is really the things that um Da.

40:12 Yeah, we're good. Uh, you know, another one that that went the other way. Um, which was really interesting was In our online store and this might be Do you Shopify?

40:22 You have sections and blocks that come I'm preconfigured. Um And so we test it, okay, if we if we give you a preconfigured block. of like you should have a image up top.

40:32 Then a text banner and then a collage with your phone. Um Products. That should. Helks um understand what to do when they're building the online store. It actually had no lift in people converting to

40:45 Uh. A paying merchant. However. When we looked Longer term on that, six months later, it had a pretty massive impact on the number of people who were selling and producing GMV.

40:56 And why is that? Because it didn't likely really influence anyone to like Buy Shopify or pay for Shopify. But the people who who used it

41:07 Created better stores. That were higher converting. No. And so they got early sales, but they actually converted one of their their Visitors and they got momentum.

41:16 And they stuck with entrepreneurship a little bit longer. And we saw that in that opposite way. And so this is an example where that neutral So we tend to ship neutral. It's like

41:25 If Could be positive. And so it's like Let it go. If we have good intuition about it. And it will turn. So we've seen a bunch of these things going

41:35 Very different directions. This is so fascinating. I didn't realize that you ship neutral experiments. That's an interesting insight. So it's like if you feel good about it and it's neutral, you ship it. In our in our culture of kind of like aim. Aim heavy if the intuition is right, that this probably is helping merchants.

41:52 Why do we start with that the original control was better for neutral? Let's start with like what would we have shipped if we were a blank slate. And if it's neutral Actually neither's better. So let's just pick the one we feel better about. And ship that.

42:03 Makes so much sense. Oh man, okay. So let's start About this a little bit more so this aim heavy. concept, this idea of thinking a hundred years out. Can you just share more about just that insight and that

42:14 Philosophy I know it's sounds like it comes from Toby of how he likes to think about the business. Totally. This is all comes you know, it's all Toby of really making sure Shopify is so oriented around We are here to build. a hundred year company. And so the decisions we're gonna make are really oriented. Towards

42:30 The long term. success of of merchants. Of Shopify. you know, embedded in all of our principles are Make the best product.

42:39 In the world. Make money to do more of one, never reverse. Principle two and three. And every kind of Executive meeting, every town hall. That slide comes up.

42:49 Like You finish offline, you've probably seen that slide. Ten thousand times? But it's an important reminder. Like

42:55 Job is to build the best product. For merchants over the long period of time. And then all of kinda the metrics and kind of the make money part of it. Secondary to that.

43:04 So we care about that. that long term. Peace. It it ties a little bit to that original conversation about kind of entrepreneurs and being the core of like why we just want more people to start businesses and go

43:15 It's very Um Seductive, I think in kind of most companies, including in Shopfi, is we we want it we can support large enterprise businesses today. Right, big brands who want to get off a outdated solution.

43:29 And come over to Shopify. It's very easy. to just say, Oh, that's very concrete. There's an existing business. We wanna have them come. Join Shopify.

43:40 And in the short term, it feels really good because it brings a lot of revenue. Right away. But if you're thinking about the long term a hundred years from now. Guess what? All of the big brands of today Be out of business.

43:51 And Many of them will be out of business. in thirty, forty, fifty years. The real success of Shopify is getting every Business to start.

44:00 Витас And go. But but making that type of investment and being so focused on that entrepreneur segment and making it easier. is how we build kind of a very, very long term.

44:11 oriented company. So just even how we do capital investment, how we do product decision making. comes back to hey, we can't chase kind of the short term. Um Even more concrete things.

44:23 Is there an example that comes to mind where You did that were something short term look like, oh, we should definitely do this. But we're thinking long term, we're thinking a hundred years out. So we're gonna approach it this way.

44:35 It's kinda very much just imbued in in the culture. It's almost even almost everything kind of feels that way. And I'll give like Practically speaking. Every six weeks We all the kind of r and D group leads, we get together And we sit with Toby and and each other in review.

44:50 Every single project across the company. Every six weeks. Every single R D pull up the dashboard. And look at it, and in that conversation. So much of the

45:00 Conversation is About Both the technical how How are we building this? In a way.

45:08 That Oh, I was for Shopify app optionality. In the technical decisions. that we are making. And I think for Toby, one of the things I've I've learned and so is That the how?

45:20 The technical architecture determines strategy. In a technology company. even more than the kind of what and who we're building for. If you build the right kind of technical how and set yourself up to have a platform. That can be adaptable.

45:35 Flexible. That is incredibly valuable over the long term. It means we will sometimes take longer to ship a feature. It means we will not. Chase. kind of certain deals or what have you. But we're gonna kind of make that an investment and it comes through in all of our

45:50 reviews and just how we kind of do our work together. Wow. That is really unique. I've not heard of that. Where the how Usually it's the opposite. Let's not worry about how we're gonna build this thing. It's

46:01 Why are we building this thing? And then when are we building it and not just like The architecture is the key is the most important thing. Yeah, though I mean it's like in the last one we had a it was great. We had a thirty minute discussion. About we are how to build

46:15 CSV importers for people coming over. from different platforms. And it was all about are we using an open source library. doing it internally, are we doing it in the core code base? Are we building a separate first party app to do it? It was incredible detail. It's what's made about Toby.

46:30 The technical detail of how we're gonna do this was incredibly important. To get right. to kind of set up this type of infrastructure. In most companies it'd be okay, what You're gonna make it easier for people to migrate their data over cool.

46:42 Team go figure out the how. If the team does figure out that we work on it with kind of Toby in the details just the how is so important to how we Build for the future. That's fascinating. And usually it's how do we do this as quick as possible?

46:57 'Cause C V S importing is not our core differentiator. Let's just build something good enough, we'll ship it, we'll move on. It's the opposite. That is fascinating. What's also really interesting about this is I think about Brian Cheske at Airbnb where I worked for a while and his So one, he also had this idea of the hundred year vision and thinking for the future.

47:15 Way out in a hundred years. But interestingly Since he's a designer, he had a very different Focus. So Toby, he was an engineer. He still codes from what I can see on Twitter. He's still codes. Uh so I could see why his brain goes there and why he's really strong in the the how.

47:30 Brian on the other hand is very focused on experience. And making sure the design is Amazing and uh the app is exactly what he wants it to feel like. You know, it's very like Experience oriented.

47:41 So it's interesting that founders these founders lean into the thing that they're strong yet and understand deeply and that ideally connects with the way this business specifically wins and grows. And it makes sense, a platform. I could see why engineering would be so essential to get right.

47:59 travel hospitality consumer app. I can see why design is so important. Hundred percent. Fascinating. One more

48:07 Tidbit that I heard about how y'all think about this is is metrics and you You mentioned before we start recording that a lot of the company doesn't actually have metrics that drive What they build, especially within a core. business, which I think would surprise a lot of people. Most people are like every team needs a metric and a KPI, and this is how we measure progress, and this is how we know if they're doing well.

48:27 Talk about just how that works, how company how mostly company doesn't have a metric. Yeah. It's funny, we we rant against KPIs are basically banned as a and okay and and all that. So you know, we and so certainly like in You know, in growth yeah, the metrics, but they they take a different form. And then in court, it it truly is.

48:47 Do we have Conviction. That this is the right technical foundation to build the future of commerce. And that is built through Certainly looking at data. So it's not that teams are not

48:58 looking at data and using it as A piece of their puzzle. But it's not the overriding and when we sh go to ship a feature. In court, it's not like a team is held accountable for this metric over this six months it's much more did we ship the right thing? And we're gonna kinda get at that.

49:16 Through a variety of lenses. Uh could be some of that could be data qualitative, just our own And a product sense? Uh of what's good or not. And so that You know, I think the the the upside of that is I think we tend to

49:30 Ship things in core and that are incredibly Um Four facing and it may be taking more rest. I think the to acknowledge some of the the downside of it though is

49:41 Sometimes conversations get Extremely subjective. uh about what is the right thing to do. And so that that requires kind of a Um the right way of of having

49:53 kind of good discussions, kind of openness from all leaders and from teams. To debate those things, but it does result in some squishiness. Which Yeah, has his pros and cons, but kinda taste. is kind of what drives a lot of aware.

50:04 Shipping and core. Yeah, I'm glad you touched on that. I was gonna say, okay, everyone would love this idea of just build things that we think are awesome. Gonna be great. But then you build a whole org with teams and people building stuff. How does one know if they're building Things that are good.

50:19 And helping. versus not and You're pointing out there are pros and cons to that. The pros is we're not optimizing for some short term wins and driving some poor metric. The con is you might ship stuff that

50:31 Like there's a lot of uh subjectivity. And People may not agree and it's a lot of kind of Squishy stuff.

50:38 Yeah, totally. Uh Glenn, who is heads up core product. I mean, one of the things that's so impressive about Why the guy that core team is They go incredibly deep. Into

50:48 Every single. Release. That it shipped. And so you have do have a central kind of ion.

50:57 the quality and how it all fits together. And so that I think Hopes. Make sure there's a consistent kind of bar for taste. That's that's Glenn. Toby obviously.

51:09 That kind of can can enforce that. So it creates obje it's subjective, but it's objective in the sense that it's got a A small number of people who really hold what that That bar is and needs to be. I think if it's Just subjective, but just ship what we want without kind of a couple people really holding that.

51:26 That quality and that taste bar. That's where things go really. Sideways. Awesome. That's exactly what I was gonna ask, is who who's the ultimate decider of taste in And uh what is good. And so it sounds like basically Toby up Bove.

51:39 And then he's kinda deputized Glenn. and relies on him to make a lot of these final calls. Yeah. Yeah, okay. And then I imagine Glenn has some folks that he kinda deputizes to make smaller decisions along the way.

51:52 Or not. Yes. Or he's very involved in everything. Yeah, and I think I think this is the fun thing about Shopify. Literally like We have uh our own internal project management. system that's been kinda crafted just for Shopify and every shit. What is that called by the way? It's got like a cool name, right? G S D.

52:07 G S D Yeah. Get it something. Yeah, okay. Yeah, yeah. Get you done. And every project. So you got a core project, you got emergent service, you got a growth project.

52:18 And the expectation is that the group Leads. Every single project that goes out has a few minute video. With Figmas and everything and everything that shipped. Needs to be okay to

52:29 So approved? by the grouply. There's nothing that can ship without that OK two approval. And that okay two approval has to be Glenn. Carl or myself are different groups. And so that is kind of how the Everything is reviewed. Now of course there's great

52:43 Amazing teams that do amazing work. Um, but it is kind of that. That's how the System Some work.

52:50 And OK two specifically means someone above. No, just w so Glen reviews the core stuff. Okay two. Um So

53:04 It's interesting. It's basically Glenn is founder mode. And not as a founder, where he's involved in all the details. Yeah. So this is a really cool example of founder mode.

53:14 But not as a founder and correct. And the way you guys operate. And I imagine sometimes Toby disagrees with Glenn and then they talk about it and things get ironed out. Totally. And I thought we come together every six weeks. kind of everyone in person to review every project so we can hash out those disagreements.

53:29 Go through all the core projects, all the merch service projects, all the growth projects. And it's a great forum to say, Hey, here's where we disagree really on the how and the the tactics of what's happening. It's and we can flag those things, have good debates. About where there might be misalignment. Amazing. What a what a unique way of working. I'm so fascinated by all this.

53:47 So what I'm hearing essentially within core Glen. And his team come up with here's we're gonna build the next quarter. You guys have uh twice a year releases, is that right, or is it every season? Yeah, so big kind of additions twice a year. Obviously continually shipping, but we gotta package them twice a year in a big Yeah.

54:04 Yeah. Big launch, yep. I've seen those. Okay, so he's like here's what we're gonna do in the next release. We're just gonna build this because we think this is right. We're not driving a specific goal. Building for a hundred years in the future.

54:16 Let's just build it. And basically you build it, he's like, This is great, not great, iterate until it's this good. And then ship. And And great. Okay. This is great. Okay. So then there's that that team and then there's your team, which is like drive some freaking numbers. Drive growth, hit these goals.

54:32 How do you collaborate? across these two teams. What do you have a model for how You work together. Because these feel like very different ways of working. Yeah, uh honestly it's been one of the things I'm

54:44 Very proud of like We've built a really great partnership in the last three and a half years because it it's intentionally meant to be almost at odds. And and that's like Part of the structure. of how you want to work. Um

54:56 But but it comes from I think a place of of respect on on both sides and I say for anyone it's Okay, here's what growth is gonna do. We're gonna do it in a way that's that is high quality, that is shipping really good stuff for merchants. We're probably gonna approach it in a

55:10 In a faster way. We might disagree on things, but we're gonna have reasonable path to Gotta handle that conflict. And so while there's no magic bullet, it wasn't like These are the surfaces that growth can touch.

55:22 These are not it's like you can go anywhere in the product. But Let's go figure out how to Work together to figure out that quality bar to understand when you're gonna

55:33 be different on it on the quality bar to get something out to learn. And just building trust along the way that we're actually gonna Chip. high quality things and we ship it to A hundred percent. And move. And so a lot of great work on the team to make that

55:45 those relationships really strong. Got it. So basically you guys are like, uh moving this button over here is gonna drive so much growth and then Glenn's like, No, this is not acceptable. We don't want the button here. This looks terrible. Everyone's gonna hate it. So it's so that's the healthy tension. Like I'm describing the data combat. Yeah. Totally. And it's like okay, so how are we gonna how we gonna work to figure this out? And it might be, hey, we're gonna move the button.

56:06 Hey, let's run the let's run the test. Let's see the short term left, you know we're gonna monitor it long term. You know when we ship it. It's gonna be high quality, like high quality polish. Okay, then you trust us to like Make those

56:18 Those trade offs tonight. I wish I had a better answer of like it's very human. Right. And it's very that trust. That's very Yeah.

56:26 That's very important. Any of these, I think growth. with other teams is like There's no replacement for that's the human. trust and then falling through on commitments of no, we're actually gonna make this thing really good. Is there an example of that that comes to mind where you had something that was you thought was gonna drive

56:42 Meaningful growth. You showed it to Glenn, he's like no How about this? And then either you iterated or you just like forget it. But this isn't right for the platform, even though it's gonna sh Drive some meaningful growth.

56:54 The place that we we often come back to Is and this is with you know. I think Toby is great. Toby and Glenn. Is on.

57:04 Wizards. So wizards onboarding carousels. Yeah. Onboarding carousels. some way that basically has folks Get set up. By not using

57:17 The actual product. And so we've Oh we've always kind of danced around and we we have very specific no wizard principle. But I think the sometimes the the tension is

57:29 Wizards do serve a can serve a purpose in certain circumstances. And so we've but we've avoided doing that, but we've always worked To try to make The principles of Old Wizard does really well. Which is it.

57:41 It simplifies the product into something. That allows people to have a lower bar. To try to Work with core to bring that into The actual

57:51 experience itself. So the example of that experiment I mentioned to you. Um giving pre-filled sections in the online store editor. You could have solved that in a wizard y way of like enter a few things. Yeah we're gonna

58:04 generate these sections for you instead We actually took those pregenerated things based on what we know about you. and put it into the actual project experience itself. So It tried to get at some of the principles or what a wizard can do well without avoiding

58:21 the the wizard principle. Without creating actual wizard. So that that's been some of the like How do we work together to get the intent of what the growth idea is, but in a way that's consistent with the that we want building core.

58:34 Got it. And I get why the you think about this a lot,'cause you talked about one of the biggest levers is onboarding and helping more people get So activated. And so I could see why you spent a lot of time thinking about how do we help more people succeed there. Yes. I wanna ask your insight on

58:51 this idea that people might be listening to this and feeling like, Oh, we need to build a team that just builds Great product. And is not constrained by metrics and driving growth short term, thinking long term, thinking a hundred years. Like this is inspiring I think to a lot of

59:04 Companies. Because the sound's great. What do you think it takes to make something like that work? Because In a bad case, this team just sits around and builds whatever they want, and the rest of the company's like, God damn, this sucks. I have to

59:19 show success in metrics and moving a metric and this team over there just build beautiful things. Is it like you need a founder like Toby that prioritizes this and values it and has really good taste? And intuition. Like what do you think are important? Elements of something like that. Of of this approach working at a company based on what you've seen.

59:37 I I yeah I I think it it needs to have a very opinion founder or set of people who are Driving what? Good look like. I think if it is and I think Shopify, you know a a

59:50 Years ago before. Maybe sometimes drifted into the mode of we are just gonna build stuff and each kind of team is just gonna build stuff not really accountable for it. And that is a very, very bad state. So I think you either have to use My sense is metrics as accountability, which is the most common

1:00:07 kind of way to drive. Accountability and focus or Extremely strong. Founder or set of folks who have extremely strong opinions on what good is and what taste is.

1:00:19 If you have one of those two, you can make it work. But The worst case is let's just go build a bunch of cool stuff and kind of a haphazard. Way? That.

1:00:29 I don't think would work. Yeah, this is great. So either you need metrics to tell you you're doing the right thing, or Really Correct.

1:00:38 and good taste in And your founder. Correct. Cool. I think that's a really good way of sim and like I imagine every founder is gonna think, Oh, that's me. I have this, I can do this.

1:00:49 I think it's rare in real life. Like it's rare that You're like a Telbright Jesus skier. Or Elon. Yeah. Easier.

1:00:57 Yeah. internalize that, but I think that's the reality. So most people will be more successful building things that are driving metrics they can track in an experiment. Yes. Awesome. This is very fascinating. I'm so happy we're spending so much time with us.

1:01:12 Okay. There's a few other random things I'm gonna touch on. One is sales. So historically Shopify's been very product like growth, very organic. Go check it out, sign up, shop a store, start a store.

1:01:24 Row. And you guys have layered on sales in a sales motion that's an increasing Part of your business. What have you learned about? your team, the growth team working with sales.

1:01:34 And making that a successful relationship. Yeah, no, it it has been great over the last couple of years as built out. So it's it's added a full new Got a motion to Shafi a Shofi's product got Better or was it

1:01:47 It can act it can serve the biggest companies of the world. It's like the natural evolution. Well, let's we're gonna do that for people to grow up on Shop Find to be the biggest companies, but we're also gonna take folks. Another five will bring them over. For growth and sales. I think the

1:02:01 Biggest learning from the Kind of the R and D side at least. Has been The scale is very different.

1:02:10 W with sales and say it's really hard to use as much Quantitative data to make Growth to make some of those decisions. And so a lot of it has been building Um but for qualitative insights working with

1:02:23 Merchant success. sales about the face the challenges they're facing and onboarding uh a large customer. So how do we build import tools that work for them? How do we make sure they have the right guidance? in the product for a very different

1:02:37 set of use cases. So live it's just been like Very much empathy building. With sales. about what that merchant journey looks like and quite frankly challenging ourselves.

1:02:47 To think differently. Than one thing? And then second. We kinda built Two very distinct funnels for a l for a little bit. There's like a sales funnel. You come in, you contact us.

1:02:57 That's it. There's no mention of self service. There's no this. It's just like drive MQLs. Boom. Then there's the self service thing. There's no mention of sales anywhere. And so one of the last thing the year last year we've been really doing is how to create these hyper journeys. Where there is we shouldn't force the merchant.

1:03:13 The choose. Do you want to talk to sales or do you want to do self service? Should give them the options. Whatever path that they want to go on. And so a lot of that's been building into The self service journey.

1:03:23 over to sales and then from sales Into self service. That's broken a lot of metrics in the business. That's broken a lot of Ways people have thought about their jobs. And so there's been a lot of kind of cultural

1:03:37 Resetting? And just getting smarter from a metric standpoint about How do we measure this thing of hybrid journey? They came in via self service, they went over to sales. How do we value each of those components?

1:03:48 Um in the process and transparently still Getting better at? Um but it's really important to To get there.

1:03:55 Is there an example of something that Broke. Be illustrative of what you're doing. Yeah. Yeah, so

1:04:02 Yeah. Breaks is Drive someone to Uh F an ad.

1:04:09 Over to self service. We typically look at only the self service. L T V. Of that person. But what happens if they come in?

1:04:18 They sign up via self service and then they go talk to sales. They get changed to a sales. Driven merchant. Which means that that value that merchant, which is usually actually quite large.

1:04:30 Does not get Associated back to that. Add campaign. Oh guess what that makes that means you would probably reduce investment on that ad campaign.

1:04:40 Because you weren't valuing that because our system had two different models for calculating L T V. Sales driven one. A self service one. Uh oh.

1:04:49 We're gonna make sub optimal investment decisions now. Bye. kind of moving things around, even though it's the right thing to do. So a lot of it is in rebuilding all the instrumentation. How we do L T V modeling. how we do attribution, how we do incrementality testing.

1:05:03 across each of those different types of outcomes. Because it was Not. kind of an intuitive thing for us, you know, originally because we had built all these systems. But much more.

1:05:14 Yeah. Makes view. Yeah, basically attribution gets a lot more complicated. Uh Are you going in like a multi touch attribution direction, or is there something even more

1:05:24 Clever. You know, my my rant is I am a uh Well I multi-touch attribution has its I think ideally we wanna get through is what we really care about is the criminality.

1:05:37 And so incrementality is kind of the the gold standards of people who are less like you know, attribution measures like How do you assign value to a given touch point? Right? Click. A view, et cetera.

1:05:49 But it doesn't tell you causally. What drove something. Right? That's where incrementality tells you. Incrementality test is basically Don't show ads on meta for certain summer people.

1:06:00 Show it to the other set. See what the lift is and the outcome. And so a lot of what we're doing is trying to get a lot It's continuing yet. Even more sophisticated in incrementality measurement.

1:06:11 Four Not just self serve outcomes. But for Self service outcomes that then drive to sales. For sales specific.

1:06:20 Outcomes. And as soon as we have that kind of incrementality. at the channel level. we can get a lot more sophisticated in terms of our Are bidding, budgeting.

1:06:31 And all that. But that's really the key. The key thing we want to get to. There's certain topic that alone can be their own podcast conversation to just dive deep into the stuff, but I'm gonna stop myself. And I'll go further down that track. Let me touch on a couple more things before we before I let you go.

1:06:45 Uh One is marketing. So we talked about sales. Marketing, you guys Don't have a CMO. There's no Shopify CMO. Instead you embed

1:06:54 marketing leads within the org. For folks that are trying to Grapple with that. Should we hire CMO? Should we do something else? What have you learned about maybe the benefits and also maybe some downsides of approaching it the way you guys have approached it? The the benefit is so there's there's growth marketing who sits in

1:07:10 And growth. There's revenue marketing because it's over closer to sales. There's a a brand team under Harley. He does does amazing work, our president. Um There's marketing embedding in core and PMMs sit with product managers there.

1:07:23 The shop marketing on a consumer side. So marketing is truly Everywhere in the org. And I think the benefit of it is it's closest to The Primary Yeah.

1:07:35 Cool. that those marketers are trying to do, right? They sit with growth. So we can focus on kinda that self service. Motion. Harley is an amazing communicator. So brand sits with

1:07:46 With him so we can be You can have a lot of influence over that. And so I think it sits with the people what's most relevant. outcomes are driving. Which is great because it allows us to move faster.

1:07:56 with West kind of coordination. I think only works because Toby Harley have such amazing Intuition on what the brand is

1:08:07 Needs to be. In all of that, that some of what the CMO does of kind of creating the cohesive story of Shopify. It's kinda held in. in their their heads and the kind of their they have the pen on that. And so that allows then

1:08:21 That piece that CMO's job to not be as important Shopify. But the other pieces are obviously critical, but they can be now closer to the The action. And where they're kind of gonna drive the most.

1:08:33 Most impact. The downside is things are sometimes very messy. Right. So that's the Okay. Yeah, it's another example where the founder can

1:08:42 their background and interest and skills can impact significantly the way the work is structured and Who you hire and don't hire. Okay. Uh one last question. Totally different topic.

1:08:53 Discounting. So you worked at You to me for a long time. And From what I understand, discounting was one of the key reasons you to me succeeded and one of the big differentiators.

1:09:05 Uh-huh. I'm curious what you learned about discounting, the power of discounting as a growth lover. Yeah. So d so Unity's a very Uh you need an online marketplace for

1:09:15 For online courses. So Come on. Course. And I think what was happening in You know, I started over there two thousand twelve ish.

1:09:23 Well, people were what is this online course? Thing. I don't really understand what it is. I don't understand what the value is and what I'm willing to pay. And so what Discounting has a really powerful effect on is

1:09:34 It can signal value. With a high list price. But then bring something down to an affordable price. And that may seem like, of course, that's that's obvious, but it in online courses, what was important is The list price would be high. at a hundred bucks. So it's associated with like a college course.

1:09:50 But what people really value this thing as was a book. And so you could signal very high signal quality through price. Which is very murky at that point in online learning. Signal value through price. Discount it.

1:10:04 To ten bucks. Or that was a typical Udemy deal. And then So ninety nine percent off, ninety percent off. We might see like fire sales.

1:10:13 But but it it changed the value. A willingness to pay. And then it tapped into the fact that And still is. Education is very aspirational.

1:10:23 And so what a lot of people missed in that In education is Yes, we want people to actually take the course. But that's actually in many cases not the job to be done, that there's an emotional job that's even more important.

1:10:36 Which is I'm feeling like I'm making progress in my educational journey. And just the act of purchasing a course or the act of buying a book. is progress. And so if you can make it very enticing. Very high value thing.

1:10:51 Cheap. Urgency. You can let people make that emotional. journey by the active purchasing, which then allowed us to actually have very good retention. Because you could keep coming back to that emotional job.

1:11:05 Over and over again, which just kind of with urgency. allowed us to do. Amazing. Well with that we reached our very exciting lightning round. Archie, are you ready? I'm ready. First question, what are two or three books that you recommended most to other people?

1:11:21 So one I I love to go back to Like. marketers who wrote in like the nineteen twenties. And so one that I I love is

1:11:30 Scientific advertising by Claude Hopkins, so basically one of the first kind of direct Marketers. That came out. Innovated on some of the concepts.

1:11:39 of copywriting. It is how you like Sell a product around. Can't make this product. Can't sell the product, can you tell the product will help? customer achieved their goals. And so it's really fun. I find it really fun to go back

1:11:52 In time. There's a lot of really good first principles thinking that I think we've Actually lost in more modern stuff where it's like Personalization, bandits, optimization, all this stuff, or it's like No, like what how do you actually write

1:12:04 And sell things really effectively. So scientific advertising is It's a great book. Just like the name alone it sounds really cool. Especially for someone in your in your shoes. That feels like the perfect book for your Your role. And I think there's so much wisdom in just like the things someone figured out many years ago about what convinces people to buy something.

1:12:22 is still true and people overcomplicated it and just going back to the original is often Really useful. Sorry. Um the perfect mile. About it.

1:12:31 Mm-hmm. The uh The Chase for a Sub Four Minute Mile by Roger Bannister and a few other Um Folks, is it just a wonderful

1:12:40 As a runner, it's a really fun book to read about. Got perseverance. They've all competed. To get to that.

1:12:47 that really amazing goal of Under four minutes in a while. Awesome. Do you have a favorite recent movie or TV show you really enjoyed? You know, I I went back in time.

1:12:59 And I watched For the first time actually, the entire season or All the episodes of the Sopranos. Mm-hmm. Which was Quite

1:13:08 Quite fun. Highly recommend. I did that in the wire. In the last like Six months. It's a lot of watching. So it's a lot of watching. I you know, work out in the morning on my my elliptical or bike, so it's a nice

1:13:19 It's a nice smart work asset. Show. That's a good motivator to just work out as them. They gotta watch the next episode. The wire is like it's like hour long episodes and five seasons times twenty I think it's twenty two episodes per season, right? Yeah.

1:13:33 It's a lot of a lot of watching, but and I I did that once and it was like I've got a lot. We got a lot of episodes to watch. But incredible. Okay.

1:13:42 It's funny I sh you should say the Sopranos. I feel like a number of people recently told me they're watching the full Sopranos again. Like a trend recently for some reason. Oh, interesting. Anyway. Do you have a favorite product you've recently discovered that you really love? So the

1:13:55 AI music creator. Um My kids and I, I'm I'm the least musical person in the world. It's been amazing. My kids and I will create songs together about our days, about what's going on. So it's been

1:14:07 been really fun to You'll have a musical experience for a non musical person. And had that creative experience for them and it's been it's been really awesome. Sunno is insane. I think it's Sunno.ai. Folks want to check it out. It's just It'll it's just like such a fun party trick too, just to like write a song on the spot about something that you're thinking about.

1:14:24 Awesome. Two more questions. Do you have a favorite life motto that you often come back to find helpful in work or in life? Yeah, I I often come back to the plan is the plan. Until it's not. And it's basically like we have a plan.

1:14:38 If the plan is their best was commit to it. But acknowledged. Might change. And we'll deal with it then. But it kinda the the combination of like we have a plan

1:14:48 Stay focused on that. With also the acknowledgement that You need to be flexible. We try to combine those two. Sometimes contradictory things of Focus.

1:14:56 Plan with. We gotta be able to react. in an effective way. Reminds me of um Strong

1:15:04 Opinions loosely held. As a concept. Totally. Awesome. Okay, final question. Uh so I asked your wife what to ask you when you came on this podcast. And she suggested that ask you about your late father.

1:15:17 who had a lot of impact on your leadership style. So here's my question, just what Did you learn from your dad that impacts the way you work? Today. Yeah.

1:15:27 Yeah, my dad a lot is like a a father and he was a he's an entrepreneur in in technology and I think one of the things that I still appreciate it out. His leadership style. Was

1:15:38 Yeah, the the empathy and curiosity and kindness that that he he showed and everything and I Hope. Um Some of the stories that Uh You know him.

1:15:48 Sleep. No matter who anyone was, like Curious. Love to engage and learn from and and I hope that's something I

1:15:56 Try to take inspiration from is like Just Mm. Be with everyone, kind and um and learn. From every one year.

1:16:03 you're with it around. Um so So we gotta think about a lot. That super resonates. He sounds like a wonderful human. Uh as are you, Archie. This was wonderful.

1:16:14 We touched on so much. We covered so much. I feel like we could go on for many more hours. Maybe we'll do a round two. As you learn more things at your time with Shopify. Two final questions. Where can folks find you online if they want to potentially reach out or follow the stuff you're up to?

1:16:28 And how can listeners be useful to you? Yeah, so Not Super uh Social media, but uh LinkedIn.

1:16:35 Check me out, yeah. Uh send me a message. Um And Then yeah, if folks are Hiring a bunch of folks.

1:16:43 Growth marketers, PMs, engineers, data folks. U Xers. You wanna work at Shopify and growth or other parts? Um fully remote. So you'd love to Hope to have great people join.

1:16:54 Awesome. And that last point I think I've just highlight One of the few remaining fully remote. tech companies that is not returning to work. Returning to the office. The office. Much work. Yes. Yes. Amazing. And sounds like basically you're hiring across all functions.

1:17:12 All functions. So perfect. Archie, thank you so much for being here. Thank you, L. It's fun.

1:17:19 Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show. at Lenny's podcast dot com.

1:17:41 See you in the next episode.

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