Breaking the rules of growth: Why Shopify bans KPIs - Lenny
Lessons from Shopify's Unique Growth Strategy
This podcast episode discusses the unique growth strategy of Shopify, with guest Archie Abrams, VP of Product and Head of Growth. The conversation highlights common issues teams face when optimizing for conversion rates in funnel stages. Archie explains how Shopify prioritizes the overall increase in entrepreneurs starting their businesses, even if it results in lower retention rates for individual shops. Shopify's growth strategy involves not overemphasizing customer retention but instead focusing on lowering the barriers to entry for entrepreneurship.
The episode details how Shopify's structure includes growth R&D, growth marketing, and customer support within the growth team. Archie also shares insights on conducting long-term experimentation, emphasizing the value of long-term holdout experiments to identify the actual impact of changes. The Shopify approach is informed by a hundred-year vision from CEO Toby, focusing on building a platform that can support both large enterprises and small entrepreneurs, ensuring future adaptability and success.
**E-commerce Growth Unveiled**
Key Takeaways:
- Shopify focuses on long-term growth priorities over immediate metrics.
- Monetary friction reduction is crucial for supporting new entrepreneurs.
- Shopify's product development is guided by taste and intuition, not KPIs.
- Merging sales and self-service pathways improves customer journey.
- Continual revision of experiments ensures alignment with long-term goals.
Introduction:
In this episode, Archie Abrams, Vice President of Product and Growth at Shopify, offers a deep dive into Shopify's approach to driving e-commerce growth. Archie explains the company's unique strategies, including a century-long vision, growth tactics, and how Shopify differentiates itself in the industry. Archie shares insights into the brand’s product development ethos, and how Shopify effectively balances product innovation and long-term business success.
Outline:
- Introduction and Shopify’s Vision
- Growth and Sales Approach
- Product Development and Experimentation
- Insights on Marketing and Metrics
- Concluding Thoughts
Section Summaries:
Introduction and Shopify’s Vision:
Archie Abrams begins by discussing Shopify's scale, highlighting its significant share in the U.S. e-commerce market. The episode introduces the company's mission to foster entrepreneurship online, emphasizing a 100-year vision initiated by Shopify's CEO, Toby. This long-term approach prioritizes broad merchant success over short-term gains, allowing Shopify to maintain sustained growth and brand integrity.
Growth and Sales Approach:
Abrams delves into how Shopify's growth team optimizes the entrepreneurial journey by lowering entry barriers, indirectly increasing success rates. He stresses the unconventional focus on churn as an indicator of robust experimentation. Through unique pricing strategies and hybrid sales funnels, Shopify aligns its growth with diverse merchant needs and maximizes its market impact.
Product Development and Experimentation:
Product teams at Shopify operate without KPIs, instead guided by taste and intuition. Through detailed review processes and long-term experimentation holdouts, Shopify ensures its releases support a century-spanning vision. They’ve uncovered valuable merchant insights by leveraging trial dynamics and optimizing user experiences, exemplified through impactful onboarding solutions.
Insights on Marketing and Metrics:
The marketing strategy pivots on embedding specialized marketers across different teams, allowing agile responses to distinct market needs. Despite fragmented responsibilities, unified strategic direction comes from its leaders, particularly Toby. The conversation reveals discomforting truths about short-term metrics, underscoring the necessity of evaluating true market increments over time.
Concluding Thoughts:
The episode closes with reflections on maintaining effective collaborations across product and sales divisions, emphasizing the importance of adaptability as Shopify scales. Abrams insists on a balanced approach between immediate execution and futuristic innovation, ensuring both seamless merchant journeys and Shopify's enduring legacy in the e-commerce sphere.
Quotes:
- "We want to make it as easy as possible to get started with your online store."
- "The how is so important to how we build for the future."
- "Teams are measured on the absolute number of people who get through their stage."
Audience Insights:
Entrepreneurs will benefit from understanding how reducing initial barriers can foster long-term success. Product innovators will find value in Shopify’s intuition-led development and the emphasis on a holistic understanding of customer needs. Marketing professionals can explore the integration of embedded marketing functions and its potential to enhance strategic responsiveness.
Resources:
- Scientific Advertising by Claude Hopkins: A classic insight into copywriting and direct marketing principles.
- The Perfect Mile: A narrative on determination and the pursuit of breaking the four-minute mile in athletics.
- Evoke Music: An AI-driven platform for personalized music creation.
Ask Bash:
- How can entrepreneurs apply Shopify’s principle of lowering barriers to their product launches?
- What adjustments are necessary for traditional metrics to align with long-term visions?
- How can businesses integrate a similar non-kpi driven approach into their product development process?
- What lessons can startups draw from Shopify’s experiments with merchant success beyond initial churn?