[HN Gopher] Bootstrapping to EUR600k MRR and getting killed by S...
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Bootstrapping to EUR600k MRR and getting killed by Shopify:
Checkout X
Author : ericthegoodking
Score : 286 points
Date : 2023-07-27 16:46 UTC (6 hours ago)
(HTM) web link (www.leteyski.com)
(TXT) w3m dump (www.leteyski.com)
| lolinder wrote:
| The author set up a business in what they knew was a gray area. 6
| months later the ToS were updated to explicitly ban what they
| were doing, and they got an email that pretty clearly implied
| that they would need to make major changes but wouldn't be shut
| down right away, but the author chose to interpret silence as
| authorization to keep scaling. About 8 months later Shopify's COO
| told them _explicitly_ that Shopify didn 't want them to keep
| operating, and the author used a technical detail of the way they
| phrased the ToS to justify continuing to scale.
|
| At that point I lost all sympathy for the author. The COO of the
| company you've built your product on told you that they don't
| want you to keep running your business. At that point they
| shouldn't have to keep playing whack-a-mole with loopholes in the
| ToS, and the fact that they did does not speak well of the author
| or their company.
| ketzo wrote:
| The author very clearly doesn't want your sympathy:
|
| > I was never so naive to believe that they'll just let me go
| around forever, piggyback on their platform and reap most of
| the benefits. Even though what we were doing was not forbidden
| - it was clear that Shopify would disapprove of it.
|
| They made their money while they could. They are disappointed
| they couldn't keep going, but it doesn't seem like they feel
| "entitled" to continue.
| darkarmani wrote:
| > The COO of the company you've built your product on told you
| that they don't want you to keep running your business.
|
| That doesn't sound like a reasonable request. It's not like the
| COO is paying them anything to stop running their business. Can
| you imagine if Microsoft shutdown, because IBM asked them
| nicely to stop their business back in the 80s?
| deely3 wrote:
| I'm not sure why did you lost all the sympathy. If company
| decided to kill your business, thats ok, because company in its
| rights to do so. But why thats mean that you should not feel
| sympathy to killed business?
|
| Google is in its rights to kill Google Reader or ad-blockers,
| Mozilla in its rights to kill complex 3rd party extensions,
| Nintendo in its rights to kill any emulation but does it mean
| that we should be happy to oblige?
| rahimnathwani wrote:
| I'm surprised at all the comments focusing on the negative here.
|
| I found the story inspiring: they bootstrapped a business, grew
| revenue, hired some people, and grew revenue further.
|
| The founder created value and captured some of that value. The
| fact that the business can no longer acquire new customers is
| sad, but it's only a small part of the story.
|
| The founder's 6 year journey is probably more interesting than
| what most people did at work over the past 6 years.
| Magi604 wrote:
| Same here, it was a great story.
| davidw wrote:
| Yeah, the story isn't one of those "THIS IS SO UNFAAAAAAIR"
| things. It's just a description of what happened.
|
| Depending on the costs, 600,000 euros a month is pretty good
| even if it doesn't last forever.
|
| > If I sound bitter - I'm not. I like Shopify. I own Shopify
| stock. I believe they're completely dominating the e-commerce
| platform space and none of their current competitors stand a
| chance of catching up. I know they did what's best for their
| business and this is the end I expected.
| nerdponx wrote:
| If anything, it's quite a success story.
| J_Shelby_J wrote:
| I don't understand how Shopify can maintain market dominance
| as just a middleman value extractor. Probably why they're
| forcing their app. I deleted my account and haven't used
| Shopify since they wouldn't let me get my order tracking any
| way besides the app. As someone who worked adjacent to
| logistics it was just the hardest hard "no" of all time for
| me. Money moves to easily now days to build a monopoly on
| e-commerce.
| WheatMillington wrote:
| Value extractor? I'm a non tech guy so I have a different
| perspective. I started a side business selling online. I
| have no idea where I would even start on my own, between
| setting up a website and handling payments etc. Shopify
| allowed me to literally stand up an ecommerce platform in
| an afternoon, and soon enough I was accepting $6k per
| month. The cost was something like $39/month, which was
| phenomenal value for money.
| hintymad wrote:
| Similar to how Alibaba did with Taobao and TMall in China
| and Southeast Asia? Aggregators do offer values.
| lockhouse wrote:
| I completely see the value in using something like Shopify.
| Collecting money from customers online in a safe,
| trustworthy manner, that is fully in compliance with
| multiple countries laws, to include charging the proper
| taxes and duties would take more time than developing the
| product you're actually trying to sell.
| rhuru wrote:
| Kudos for the author to write this article. Really learned so
| much from it.
| ivanmontillam wrote:
| My 2 cents here: It's not always too bad or weak to assume some
| platform risk to make some business.
|
| Just always keep in mind that, it's not forever and that you
| should preserve some of that piggybacked money for less risky
| endeavors. I think business that are mounted over a giant, whilst
| prone to be killed anytime, can be used for a quick buck[0] as
| part of a larger plan. In this case, the author was aware of
| that, but more fore-thinking would have helped.
|
| For instance, I leverage Telegram bots to make some business, but
| I'm ready for such an scenario where Telegram, decides:
|
| - To make its API paid.
|
| - To copy the features of my bots into product features.
|
| See what happened with Reddit's API. WordPress purchased
| WooCommerce and it became a happy story, but it could have gone
| wrong and become a horror story where the purchase could have not
| happened, and WordPress gone into destroy mode.
|
| I tread lightly.
|
| --
|
| [0]: Do not conflate "quick" with "easy" in this context. The
| faster, the harder it is.
| totallywrong wrote:
| Don't build your house in another man's land.
| chupchap wrote:
| The only logical move would've been to setup a Shopify competitor
| and making a new platform
| injb wrote:
| I'm not familiar with Shopify but this was my first thought on
| what he should have been doing with the money. Even if he
| didn't actually achieve it, if he had made substantial headway
| in that direction then Shopify would have been well advised to
| buy him out rather then kill him and risk a major new
| competitor.
|
| Still it sounds like a heroic tale and I this this guy is going
| to end up landing on his feet.
| asdfasdfkjl wrote:
| > While that might've been a viable option, honestly, I don't
| have the balls to pick a legal fight with a multi-billion
| corporation. On top of that, I believe that crying to the
| regulator is a bitch move.
|
| Everything was so composed and professional until they got to
| that part. Whattttttttt?
| rglover wrote:
| Best business lesson I've ever learned: never build your business
| on top of someone else's business.
| locallost wrote:
| But still: congrats! Seems like a fun ride, a lot accomplished,
| money earned, and if I understood correctly they still have their
| current customers, just no new customers. So they are still
| getting that MRR. Maybe raise prices since the customers have no
| other options :-).
| mcemilg wrote:
| > Our affiliate program was simple. You bring a customer and we
| pay you 15-25% of the revenue we make from that customer.
| Forever.
|
| there is a very thin line between a pyramid/ponzi scheme and a
| generous affiliate program.
|
| https://en.wikipedia.org/wiki/Pyramid_scheme
| Dylan16807 wrote:
| The most important factor is how much it costs to join.
|
| For checkout x it's a negligible amount and there's a free
| trial.
|
| It's just a generous affiliate program.
| cycomanic wrote:
| >... locked us out of Upsell X and we couldn't support it
| anymore. Even further - they kept charging merchants for Upsell X
| - but we never received those payouts.
|
| Putting all the other things aside, but this struck me. How is
| that legal? That sounds like outright theft to me.
| jimkoen wrote:
| > However, Shopify killed it - just because merchants were
| choosing our solution over theirs.
|
| I don't see whats so suprising here.
| rootsudo wrote:
| Hey, better be killed by Shopify then murdered by
| Meta/Microsoft/X with "Checkout X"
|
| But yeah, should've gotten the MRR high and then shop it around
| and take a nice buyout. Some PM noticed, shopify noticed the MRR
| and decided they can implement it and take it for a ride.
| kunalgupta wrote:
| Their mistake was that they built something hard that was
| literally a clone of Shopify. It made it hard for anyone else to
| want to compete with, but it was exceedingly easy for Shopify to
| compete with. Most Shopify apps build features that Shopify
| doesn't have, and therefore the App Store revenue share model
| makes more sense for Shopify.
| oellegaard wrote:
| What is the value of using something like Shopify if you don't
| even use the checkout and gateway included? You also need to code
| your own theme AFAIK
| szundi wrote:
| Takes years until he loses 80% of clients, people are so lazy
| switchig even if it saves money
| imafish wrote:
| Correct, although eventually most stores using the product will
| die out.
|
| This is actually one of the biggest reasons for app churn on
| Shopify - stores going out of business :-)
| satvikpendem wrote:
| How many times are we going to hear the same old story warning of
| platform risk? It happened with Twitter, Reddit, Facebook,
| Stripe, and so many others. If you want to control your company,
| don't build off someone else's infrastructure, make your own,
| even if it's harder to do so.
| monsieurbanana wrote:
| This reads like a success story, I'm not sure your advice hits
| the target.
| satvikpendem wrote:
| How does it read like a success story? The bottom half of the
| article is all about how Shopify pulled the rug out from
| under them by giving them 3 days to tell their users about
| "breaking ToS", locking them out of their app, and ultimately
| seizing their account.
| pirsquare wrote:
| The key to long term success in Shopify ecosystem is to focus on
| a niche market. For example, a scheduling tool for merchants. If
| you build something that almost every merchant will use, it will
| be eventually added to Shopify's core offerings.
| Michelangelo11 wrote:
| > Shopify also dedicated some of their employees to pretend to be
| desperate Checkout X customers and beg our support to let them
| in. Not sure if I should be proud or annoyed by such pitiful
| actions.
|
| Man that's something. Kinda flattering that they're so desperate
| for reasons to cut you off, they start to try to fabricate them.
| atourgates wrote:
| An interesting take. The only bit I strongly disagree with is
| this:
|
| > One advice we got was to file an antitrust case against Shopify
| in a European Court.
|
| > Theoretically, we could've argued that Shopify uses anti-
| competitive practices to get rid of their checkout competition.
| Similar to what Spotify & Epic Games did against Apple.
|
| > While that might've been a viable option, honestly, I don't
| have the balls to pick a legal fight with a multi-billion
| corporation.
|
| > On top of that, I believe that crying to the regulator is a
| bitch move. After everything, I still believe that Shopify built
| their platform and they should be able to do whatever they want
| with it.
|
| I have no insight into how the EU's competition laws would or
| would not apply here, but that's literally the regulator's job,
| and it's certainly not a "bitch move" to hold companies
| accountable for anticompetitive behavior (if that's what's
| happening).
| wackget wrote:
| Yeah seriously. Sounds like he drank the capitalism kool-aid.
| spamizbad wrote:
| I'm not a business expert or an entrepreneur, but I've been
| around this industry long enough to know: Unless your intention
| is to flip your startup into an acquisition, I would recommend
| against plays like this.
|
| Specifically, tying yourself up to a closed ecosystem by building
| what amounts to a (albeit very nice and powerful) super-feature.
|
| I am saying this because I work for a large-ish company where
| someone did this to a section of our product that was also
| mediocre. One of our co-founders reached out to the company and
| actually offered to buy them for, what I felt, was an insanely
| high amount for what they were building. They rejected the offer
| so we threw some devs and an awesome designer at the problem,
| made something just as good, and then shut them out. They
| ultimately shut down.
| fy20 wrote:
| It can work the other way around too. Early in my career I was
| working for a company that provided value added services in the
| telecommunications space. We grew quite large, working with
| household name brands in Northern Europe. However everything we
| did went through a single third party provider - we didn't
| communicate directly with telecommunications companies.
|
| This provider did an ok job, however at the volumes we were
| processing it meant we were paying them a pretty handsome sum -
| which the owners (we were privately held without any outside
| investment) wanted to reduce to increase their profit margin.
| We made an offer to buy this provider, but they knew how much
| we were depending on them, and made a counter offer much
| higher, which we refused.
|
| We started building out our own platform to connect directly to
| the telecommunications companies, which if you've ever worked
| in this space, you will know it's no easy task. Although there
| are standards, each company does things slightly differently,
| so each integration is effectively from scratch. To make it
| even harder, the process of migrating phone numbers etc is
| effectively turn it off in one place and turn it on in the new
| place, there is no gradual switch over. After the failed
| negotiations our provider did not want to cooperate with this
| (any more than they legally had to) and they gave us a hard
| deadline after which they would turn off all our services. Any
| major issues during this migration could take weeks to resolve,
| and would surely result in large customers leaving which could
| be the end of our company.
|
| But in the end we did it. The migration over to our platform
| worked without any major issues, and we were even able to build
| in extra features that our provider didn't have.
|
| And the icing on the cake: a year or so later we bought that
| provider. As we were their biggest customer - by a long way -
| they lost a big chunk of business. What we paid for them was
| much lower than the original offer we made.
| tsunamifury wrote:
| What your describe is monopolistic behavior to a T
| notJim wrote:
| How so? Shopify has many competitors and is clearly not a
| monopoly.
| spaceman_2020 wrote:
| But at the same time, if you are bootstrapped, profitable and
| can iterate fast, building on top of an existing platform is a
| fantastic way to get customers. You have a captive audience,
| you can understand the market easily, and can launch products
| fast since the tech stack is already well defined.
|
| Not every business has to be sold for $100M or be around
| forever. A well-run bootstrapped startup like the OP's can make
| you millions if it survives just 3-4 years.
| altdataseller wrote:
| Exactly, and people are forgetting what's the alternative?
| Doing absolutely nothing, twiddling your thumbs because you
| CAN'T find another good market opportunity and earning less?
| ketzo wrote:
| Yeah, seriously -- everyone in this thread seems to be
| talking about this like a story of failure, and I... don't
| really get that?
|
| There aren't a lot of hard numbers in the post, but it sounds
| like Checkout X grossed in the high 7-figure to low 8-figure
| range, in ~four years, while paying (not very many) Eastern
| European salaries. The founder alone probably came away with
| a few million dollars!
| sjducb wrote:
| This guy clearly made several million euros. That's a massive
| win.
|
| Sure founding a billion euro company is better, but if you
| don't have a billion euro idea then starting a million euro
| company is worthwhile.
| alberth wrote:
| Agreed
|
| Apollo fell into this bucket as well (with Reddit).
|
| Never understood why more didn't realize that.
| notJim wrote:
| Apollo had a successful app for years that would never have
| existed without reddit. It's unfortunate it didn't last
| forever, but it's not like their efforts were wasted.
| Dylan16807 wrote:
| How I feel about this depends on what exactly you mean by "shut
| them out".
| varispeed wrote:
| Hacker News is a funny place. Few days ago I pointed out
| something similar - that first thing investors look at is how
| easily someone can eat your lunch? and got heavily downvoted.
|
| These ideas are only bootstrappable, because nobody is going to
| put their money into it, apart from founders having a dream,
| but everyone else seeing that competitor can wipe them by just
| assigning a team to build that extra feature in their product.
|
| Don't get me wrong - it doesn't mean you shouldn't do it. If
| you don't care much about money and value experience more, that
| is an extremely exciting journey to take oneself through and
| also sometimes dreams come true!
| HWR_14 wrote:
| I feel fairly confident your "insanely high amount" wasn't as
| high as you feel it was.
| spamizbad wrote:
| For a product built by 2 people it was enough for both of
| them to retire (albeit humbly) or seed a more ambitious
| company.
|
| Anyway, their best move was to take the money. They gambled
| that, even after noticing their work and our customer's
| feedback, we wouldn't turn around make our product better.
| They lost that bet.
| HWR_14 wrote:
| That sounds about where I was thinking. You have to imagine
| that you're not paying as much for the product as a sign on
| bonus for the talent that has demonstrated the ability to
| improve the value of your product quite a bit over the four
| years of being locked in.
| Dylan16807 wrote:
| Enough money to retire on sounds even _more_ like an
| "insanely high amount" when I think of it as a sign-on
| bonus.
| HWR_14 wrote:
| I assume that means that the offer is the company
| purchased for just under 2 million dollars. Maybe a bit
| more, maybe some seed investors take a small percentage.
| Let's assume each founder takes almost a million dollars.
| I would understanding feeling weird paying almost 2
| million for something that I can get done with 6 man-
| months. That is a lot of money! Enough to retire humbly
| or seed their next start up. But it's also something they
| will only get (or only get most of) over a 4-year vesting
| period.
|
| So it's a 250k/year boost. That's again a lot. But that
| difference might also be what they can make at Google
| instead of a startup salary-wise.
|
| But think about who they are hiring. People who have
| proven they can find new places to add value.
|
| I'm making up numbers. But the point is that if you think
| about selling the next four years of your life (and not
| just the time spent on the company already), it is
| certainly reasonable and might be a good outcome. But it
| also might be worth turning down.
|
| But maybe my guesses are totally off. Maybe he meant
| "retire humbly but continue to live in SF" instead of
| "take your money and retire to a ranch somewhere"
| pixl97 wrote:
| Better than 0 I guess
| adwn wrote:
| If it was much higher than what they ultimately spent on
| reproducing the product, then yes, "insanely high amount"
| might actually be an appropriate assessment.
| HWR_14 wrote:
| Considering the "for what they were building." I assume
| that was the poster's thinking. On the other hand, there is
| value in acquihiring people who can see a need in your
| product you overlook and want to make it better. Sure, that
| feature was cheaper, but that's not all you buy.
| liquidise wrote:
| I had the same thought. There is a a lot of value to be created
| with moves like this, but it is risky and does not have a long
| shelf life. Not necessarily a bad business play, but should be
| expected to be a short-lived one either way.
| nolok wrote:
| > Specifically, tying yourself up to a closed ecosystem by
| building what amounts to a (albeit very nice and powerful)
| super-feature.
|
| Couldn't agree more. It goes something like this :
|
| "What do you offer ?"
|
| "Feature X on top of Y"
|
| "What stops Y from doing it themselves ?"
|
| Either A "Well it's not worth it" (then why do you do it), or B
| "Well, they haven't so far ..." in which case you have an end
| date already, you just don't know it yet and it's in the hands
| of Y.
|
| As you said, planning to be aquired is probably the best move,
| second one being to plan your independence (imgur to reddit
| like), because otherwise your company has no real future.
| adamckay wrote:
| > otherwise your company has no real future
|
| That's not necessarily as bad as it sounds, though.
|
| If the future where your company can exist is long enough for
| you to learn some valuable things and make decent money, it's
| obviously worth it.
| withinboredom wrote:
| Usually it's "C. Because they don't care." It's when you
| start walking away with millions that they could have had,
| had they cared, that they will suddenly care.
| thedangler wrote:
| Can you still get around not using Shopify for their checkout
| with your own payment provider?
| thedangler wrote:
| Never mind, read further and seems you can't.
| matrix_overload wrote:
| This is a very expected outcome if you are creating your business
| around improving a larger business' product.
|
| You are effectively doing the product/market fit for them, for
| free. Once they see that your solution works, they will just
| knock it off, or ban you altogether.
|
| It used to be seen by companies as bad PR/karma a couple of
| decades ago, but not anymore.
| notJim wrote:
| > You are effectively doing the product/market fit for them,
| for free
|
| If $600k/mo is what you consider free, I'd absolutely love to
| do some free work for you!
| CharlesW wrote:
| > _You are effectively doing the product /market fit for them,
| for free. Once they see that your solution works, they will
| just knock it off, or ban you altogether._
|
| Or buy you. https://9to5mac.com/2023/07/01/apple-shortcuts-
| workflow-mana...
|
| In this case, the TFA notes that Shopify offered the ISV a path
| forward and Mr. Leteyski chose "go to war" (Option B). He
| killed the business, not Shopify. He may chalk that up as a
| "win", but I'd bet his customers and employees don't.
| justinclift wrote:
| > Shopify offered the ISV a path forward ...
|
| It sounded more like the "path forward" was to wait 2 years
| for the new Shopify APIs to come out.
|
| That's not even slightly a credible in-good-faith option. :(
| CharlesW wrote:
| > _It sounded more like the "path forward" was to wait 2
| years for the new Shopify APIs to come out._
|
| So they waited two years and couldn't sign up any new
| customers during that time. How is that better?
| justinclift wrote:
| From the article, it sounds like if they didn't choose
| the option they did, then they would have had to either
| close their business or largely cease it:
| "He told me in plain words they don't want us to continue
| operating and that they're locking our API key for new
| installs as we speak."
|
| That's the "Option A" in the list:
| Option A - Stop what we're doing, downscale the business
| and wait for the new APIs.
|
| "downscale" there is a bit confusing, as it's unclear if
| that really means to comply with the "don't continue
| operating" desire from the Shopify people. I'm guessing
| it does, and that they'd look for other business ventures
| instead, thus not a complete cessation of the business.
|
| So, it _seems_ (to me) like they chose the right option.
| 2 further years of operating income and growth, though
| they didn 't manage to figure out a working, alternative,
| income strategy before things went sideways at the end of
| the 2 years. :/
| thinkingkong wrote:
| Theyre lucky they let this last as long as they did. Lots of
| other teams and products built on top of someone elses ecosystem
| havent been as lucky.
|
| I think the term we use for this is being "Sherlocked" back from
| when Apple copied Sherlock and turned it into spotlight. Anyway
| theyre joining the ranks of famously successful short lived
| products. Glad they made bank in the meantime.
| darkarmani wrote:
| And the quicksilver app (command+spacebar).
| tsunamifury wrote:
| "Crying to the regulator is a bitch move"
|
| I both understand the sentiment, but also how else are we going
| to stop 5 companies form running the world, and the rest of us
| eating grass?
| jc_811 wrote:
| I really enjoyed the article, but this one sentence also rubbed
| me the wrong way. Comes across as very immature & petulant IMHO
| cryptica wrote:
| Wow that is a crazy next level user acquisition story.
| Acquisition using source code as marketing, never heard that
| before. Great to read from a true self-made entrepreneur.
|
| I can relate to the feeling of everything working against you and
| having to do some insanely contrived stuff to get around all the
| hurdles though I never faced such constraints as the author.
|
| Entrepreneurship in the tech sector these days feels like a full
| circus show; you need to clown around a bit in front of investors
| to raise funding, when that fails, you need to ride a unicycle
| over crocodile infested waters, then jump through some flaming
| hoops, then tame a few hungry lions... Then after all this, one
| of the lions goes nuts and you get devoured anyway.
| sharps_xp wrote:
| I'm impressed a single individual got to 600K MRR by himself.
| Only a few people can say that they've done that. Who knows when
| shopify would've taken their checkout experience seriously were
| it not for this guy. you can have interesting experience, build
| temporary things, be proud of it, and move on to the next thing.
| alexfoo wrote:
| He didn't get to 600K MRR by himself:
|
| " The highest headcount we had a at a particular time was 16
| people - all remote "
|
| First hire came at "around 100 customers". So that was probably
| EUR10k/MRR given the average monthly revenue per store.
|
| Still very impressive!
| dgb23 wrote:
| Aside: Why isn't there a payment protocol standard that's
| implemented in browsers?
| hadrien01 wrote:
| There's the Payment Request API[1] which in theory allows you
| to use a single JS interface to declare a payment intent and
| your providers (so far only Apple Pay, Samsung Pay, and Google
| Pay are compatible). Though it is a single way of declaring
| your payment for multiple providers, you still need to
| subscribe to each provider individually and implement each
| specific post-authorization logic.
|
| [1]
| https://developer.mozilla.org/docs/Web/API/Payment_Request_A...
| sneak wrote:
| Because the browser manufacturers have their own centralized
| payment protocols (Google Pay, Apple Pay) that they would
| prefer you use so that they can surveil your habits and get a
| cut of the fees.
|
| Apple Pay is definitely integrated into Safari.
| lazzlazzlazz wrote:
| It's remarkable when stories like this reach the top of Hacker
| News, but then people still do not understand why one might want
| to build an application on a "Can't Be Evil" platform like a
| crypto network.
|
| Scalability/costs/complexity aside -- this is why Ethereum and
| similar decentralized computers are attractive.
| imafish wrote:
| How would a crypto network help here?
| projektfu wrote:
| They should build a hypothetical business with unproven revenue
| instead of the one with $600k MRR and growing?
| kwar13 wrote:
| Can't upvote this high enough.
| invalidname wrote:
| I was contacted by a non-technical team with a concept about a
| new shopify based startup. I thought I can just build it in a
| couple of months then let them operate it.
|
| I spent a month on it just researching through the mess that is
| the Shopify API. It was a pain. I got the mockup working but it
| looked like this is risky. Tried all channels and got nothing.
| Eventually someone answered and it seems that everything I built
| won't work. We would need to jump through hoops to be Shopify
| compatible and I decided it would strip the startup of its value.
|
| Decided to declare the month of work I did as a loss and bail.
| Still traumatized from the whole mobile development pain of Apple
| and Google...
| draw_down wrote:
| [dead]
| shopi-throw wrote:
| I work at Shopify. This was inevitable. Shopify is Checkout.
| Checkout hijacks like this are taken extremely seriously because
| it diverts GMV and provides an inconsistent buyer experience that
| Shopify doesn't control. I'm honestly surprised the company
| didn't take stronger action here.
| altairprime wrote:
| Taking stronger action would alienate the affected Shopify
| customers and create bad press for them. Their selected level
| of action is just sufficient to keep everyone happy except the
| one person that is their competitor. Presumably, then, they
| deemed it "insufficiently profitable" to shut the existing
| customers down.
| asdev wrote:
| people giving their advice but never even made $1 MRR from their
| own products. this is an amazing write up, lots of lessons to
| learn from this.
| mwn wrote:
| You had a great run, but I think it is unfair to say that Shopify
| "saw what you were doing" and "hijacked" your business. Obviously
| a small team can move faster and Shopify could easily have
| internal development plans for the same solution for a long time.
| Kudos for the EUR600k MRR and your execution.
| matsemann wrote:
| If Shopify "hijacked" it by making a better product it would be
| more okay. When they however outright just ban competition,
| that's anti-consumer behavior and should be stopped.
| mwn wrote:
| No, in the part "April 2020 - Shopify hijacks Upsell X" they
| are requesting him to "not distribute mass solutions via
| private apps to Shopify merchants in order to bypass
| checkout". Shopify had their own checkout from the beginning
| and the whole purpose of his application was to bypass the
| existing solution. I assume there were Bulgarian payment
| providers connected to Shopify in 2017, but according to
| himself these payment providers wouldn't accept their
| business idea to run a pharmacy as an e-commerce. Therefore,
| he made a workaround.
| [deleted]
| nolok wrote:
| "I built my business on top of someone else's product without any
| gurantee whatsoever of being able to continue in the future, and
| when it became valuable for them to stop me they did".
|
| Doesn't matter if you're a twitter client, a facebook app, a
| shopify app, a reddit client or whatever, either what you offer
| is negligible, or you did their research for them and now they
| can take over.
| kubota wrote:
| I feel like many niche AI startups that use ChatGPT / X as
| their foundation might learn this the hard way.
| chefandy wrote:
| It's not even like they were making some cool thing that just
| happened to only run on AWS or something. It's more like:
|
| "We improved an important but comparatively small core feature
| of a huge, complex service built, owned, run, maintained, and
| constantly improved by one company. They probably had our whole
| business on a Trello card in their long-term project board from
| the moment we started. Then, _out of nowhere,_ they just
| implemented it themselves! "
|
| Business is hard, and I don't have the hubris to assume I can
| do any better than them, but that's why I don't try. I really
| feel for the folks that put their time, effort, and creativity
| into making something useful for people that didn't pan out...
| but this just seems _really_ shortsighted.
| wongarsu wrote:
| It can still be a great business strategy, as long as you're
| aware of exactly the points you outlined. You just can't run
| a normal startup strategy of subsidized growth, instead you
| have to rush through the product lifecycle towards cash cow
| status and make hay while the sun is shining. Once $bigcorp
| kills your business by implementing their backlog you pivot
| to something else, with the advantage of already having a
| huge database of people willing to pay extra for such
| features.
| orasis wrote:
| I wouldn't call it a "great" business strategy if your
| shelf life is limited.
|
| We have a finite amount of life energy to put into our
| businesses and I'd prefer to give it to something that can
| generate an annuity.
| WJW wrote:
| Financial technology has you covered: spend your finite
| life energy providing the feature until the bigco
| implements it themselves, then _buy an annuity_ with the
| profits you made in the meantime.
| CPLX wrote:
| I mean, the fact that this guy was making $7.2MM a year
| in revenue from his software seems relevant.
|
| Quantity has a quality all its own.
| dangus wrote:
| Almost all businesses have a limited shelf life and/or a
| business cycle of growth and decline. The scale is just
| different.
|
| Does Exxon stop drilling for oil just because it won't be
| possible someday?
| xwdv wrote:
| Heh, deep company backlogs are a great place to mine for
| startup ideas.
| mindcrime wrote:
| It's rarely the case that there's only room for one player
| in a given market. Market segmentation is a real thing, for
| good reasons. If $BIGCO pivots to producing a product
| similar to yours, that doesn't _have_ to mean "the end".
| I'd suggest everybody read _The Discipline of Market
| Leaders_ for more on how to choose among different
| strategies and position yourself vis-a-vis competitors.
|
| Of course the problem of fundamentally building on someone
| else's platform remains. This is why it's a good idea to
| start at least _thinking_ about how to move your business
| onto another platform, from day zero. Of course there 's a
| balance between investing time and money in building
| abstraction layers and evaluating other platforms and doing
| these different things, versus spending that time and money
| on immediate growth. But if one invests literally 0 in this
| situation, they can hardly expect much sympathy if the
| underlying platform gets yanked out from underneath them
| and kills their business.
| axus wrote:
| After reading the article, I think the turning point was when
| Terms of Service were unilaterally changed to forbid selling
| his service to new customers. If he'd been permitted to keep
| selling to new customers, he'd have been able to continue.
|
| Would a good analogy would be Apple banning other web
| browsers on iPhone, because they are an important part of the
| iPhone experience?
|
| His conclusion was that this was a limited time opportunity,
| which he profited from and it has come to an end.
| smilespray wrote:
| Apple bans other browser engines because can they run
| arbitrary code, which is not allowed per the store rules.
| They are fine with other browsers on top of WebKit.
| rvba wrote:
| Banning other browsers with extra steps.
|
| They could just said that they do it for the safety of
| children and some would believe it.
| troupe wrote:
| > Then, out of nowhere, they just implemented it themselves!
|
| If I'm understanding the timeline and details, it isn't that
| Shopify came out with a better solution which lost them
| customers. Shopify banned them from adding any new customers
| and at some point later Shopify delivered something that
| replicated some of their features.
| avn2109 wrote:
| >> "...but this just seems really shortsighted."
|
| This guy made literally (tens of?) millions of dollars in
| revenue from his software. Sure the gravy train stopped, but
| man I hope to be shortsighted like that someday.
| CPLX wrote:
| > This guy made literally (tens of?) millions of dollars in
| revenue from his software
|
| _While living in Bulgaria_
| [deleted]
| toomuchtodo wrote:
| Absolutely this. If you've built something profitable on
| someone else's land, get big and cash out as fast as you can.
| It's unsustainable, you're just doing an arbitrage play while
| it lasts. Do well fast so you optimize for more dice rolls in
| the future.
| drited wrote:
| The author seems well aware of that though.
| toomuchtodo wrote:
| Reinforcing the idea to help avoid future heartbreak and
| broken dreams for people here. If you're equipped with the
| knowledge upfront, you won't be as unhappy later.
| Expectations minus reality equals happiness.
| henry2023 wrote:
| "After everything, I still believe that Shopify built their
| platform and they should be able to do whatever they want with
| it."
|
| He acknowledges this in the post.
| jeroenhd wrote:
| Building apps for other platforms, be they Shoppify or the App
| Store, always comes with the risk of getting booted off or
| Sherlocked.
|
| You can pray that the platform's customers will be upset if
| your product gets killed ("Shoppify broke our checkout screen"
| is not exactly bringing in new users) but in the end you need
| an exit strategy as a company.
|
| In this case, I do think legal action would've succeeded, but
| it would probably be a long, expensive, painful lawsuit, that's
| probably too much for this company to bear. You're also not
| guaranteed that the judge will make the losing party pay for
| your defence even if you do win, so it could easily be quite a
| Pyrrhic victory.
|
| With the new DMA coming into effect soon, I think businesses
| like these will stand a much better chance. The restrictions
| put onto gatekeepers by the EU can introduce significant risks
| to platforms being scummy to smaller developers.
| chiefalchemist wrote:
| > "but in the end you need an exit strategy as a company."
|
| Simple. Reach out to the platform and ask to be acquired. You
| might not get top dollar, but it beats having the plug
| pulled. While he acknowledges he didn't expect the gravy to
| be pouring forever, he also didn't have an exit mapped. Exit
| is one of those things that is in the text book definition of
| what is an entrepreneur.
| caycep wrote:
| One question in my mind is - how does TSMC structure their
| "platform" such that not-sherlocking-customers is
| incentivized into their business model?
| philipkglass wrote:
| I don't think that TSMC is really in a position to Sherlock
| their customers:
|
| - Buyers of leading edge fab services have patented
| features in their chip designs which TSMC would violate by
| simple cloning.
|
| - If TSMC wanted to profitably manufacture something like
| "a modern GPU, but avoiding existing patents" they'd have
| to expand massively beyond their current core competency of
| fabrication. They'd need experienced chip designers,
| software engineers for developing drivers and APIs, retail
| partners... it's a much different business.
|
| The key thing that makes "Sherlocking" easy is that it's
| just imitating third party software with first party
| software, from a first party that is already good at making
| software.
| politician wrote:
| As I understand it from my time at AMD, TSMC provides what
| is essentially an SDK for specifying how to use their
| process for a given node. Clients translate (compile) their
| higher level specifications into this framework for
| fabrication, and own responsibility for characterizing
| (testing) the resulting silicon.
|
| This separation of responsibilities presents TSMC with a
| difficult reverse engineering challenge if they were
| interested in violating their NDA.
| dtech wrote:
| They don't have to. Building a semiconductor fab is such an
| enormous investment and requires so much specific knowledge
| that it's not an attractive option, orders of magnitude
| harder than copying some software.
|
| A similar question would be how Airbus prevents airlines
| from building their own airplanes.
| Borgz wrote:
| From the article:
|
| "I always saw Checkout X as a limited-time-window opportunity
| and honestly I couldn't see a future different to what happened
| to us."
| lolinder wrote:
| It's worse than that--within 6 months of them starting to
| operate Shopify updated the ToS to make it clear that the app
| they already knew was a grey area was actually formally banned.
| They received an email that said they wouldn't be shut down
| right away, which the author took to mean "carry on!" Then
| Shopify's COO called them personally to tell them to knock it
| off, and they used a technicality in the phrasing of the ToS to
| keep operating.
|
| Shopify shouldn't have to play whack-a-mole with these guys--
| they made their stance very very clear and the author willfully
| ignored it. This isn't just a case of platform dependence, it's
| a case of deliberately ignoring the platform's repeated
| warnings that you aren't authorized to be running your
| business.
| matsemann wrote:
| Why should Shopify be allowed to decide what two other
| businesses (merchant and OP) willingly do just because they
| own the platform?
|
| No, they shouldn't have to play whack-a-mole, I'd argue they
| shouldn't be _allowed_ to.
| lolinder wrote:
| What OP did was bypass Shopify entirely for the checkout
| part of the process, thereby taking away Shopify's revenue
| for OP's customers. That's not software freedom, that's
| theft.
|
| Any two businesses are welcome to transact with each other,
| as long as they're not using resources that belong to a
| third party who doesn't want to be involved in the
| transaction.
| Dylan16807 wrote:
| It's not theft. Calm your horses.
|
| And if shopify _actually_ didn 't want to be involved
| they would just fire those customers.
| drited wrote:
| Aren't authorised? You seem to be way to accepting of
| authority for my liking.
|
| We should be rooting for the small guys like this who shake
| monopolies out of their complacency.
| lolinder wrote:
| I'm perfectly happy for someone to shake up a monopoly. I'm
| not okay with people acting entitled to do so on top of
| someone else's platform when that someone else has made it
| clear they're not welcome.
| chiefalchemist wrote:
| Agreed. At that point, he should have turned around and offer
| to be bought out by Shopify. Instead, he was greedy and
| figured running it into the ground was the only way out.
| Maybe that was true. Maybe not.
| [deleted]
| PUSH_AX wrote:
| They're still millions of dollars richer. It's hard to be
| entitled about it because of the reasons outlined, but this was
| a great if ephemeral business.
| jasonlotito wrote:
| "I decided to misrepresent what the article said and respond to
| some strawman to make myself seem smart."
|
| I agree with you.
| zengid wrote:
| I feel like this applies to iOS apps too
| idopmstuff wrote:
| You're even understating the case for this particular issue. I
| own a Shopify store, and one thing that I found out early on is
| that Shopify does not want you to mess with checkout. It is far
| and away the most limited piece of their application in terms
| of customization, and their help articles made it clear that it
| could not be changed. This app is built on top of a platform
| and doing something that the platform did not intend for you to
| be able to do.
|
| I don't begrudge OP making some money on this product, but I'm
| definitely not sympathetic to this outcome.
| selectodude wrote:
| Didn't really seem like OP was asking for sympathy. Didn't
| take outside money, fully bootstrapped, took his money and
| went home.
|
| Good for him.
| chefandy wrote:
| If everyone involved can pivot easily enough, I'm sure it
| was probably a useful exercise in figuring out how to
| alleviate subpar product design, and getting a software
| project off the ground.
| lq9AJ8yrfs wrote:
| Can you keep going on this? Is it a slippery slope fallacy to
| lump in app store, handset, cloud, web browser, instruction set
| architecture? Only half teasing - seems like there should be a
| measure of platforms. Like the Gini coefficient, except for
| platforms instead of countries.
| cddotdotslash wrote:
| Did you read the article? The author understands this. They
| addressed it directly:
|
| > I was never so naive to believe that they'll just let me go
| around forever, piggyback on their platform and reap most of
| the benefits. Even though what we were doing was not forbidden
| - it was clear that Shopify would disapprove of it.
| justinclift wrote:
| Isn't this Shopify clearly engaging in theft?
| ... they locked us out of Upsell X and we couldn't support it
| anymore. Even further - they kept charging merchants for
| Upsell X - but we never received those payouts.
| Michelangelo11 wrote:
| Yeah, they should have an open-and-shut case against Shopify
| here, no?
| eYrKEC2 wrote:
| When you expand on something core to another company's platform,
| that is sometimes referred to as "picking up pennies in front of
| a bulldozer."
| jeroenhd wrote:
| 600k per month in a country where the average salary is
| reportedly about $8k per year (Georgia) isn't terrible,
| especially for such a small team. Getting in about 75 local
| yearly wages of recurring revenue per month is definitely worth
| the risk!
| appplication wrote:
| Agree 100%. People here are missing the forest for the trees.
| The creator made way more doing this than he could being
| employed at even the highest levels in tech, and pulled in
| huge income with way shorter time frame and less risk than
| taking VC money and having to exit via acquisition or IPO.
|
| Sure, they got steamrolled in the end, but it's an absolute
| win by any metric.
| sdfghswe wrote:
| Yes, but some times you have time to pick up enough pennies to
| buy the huge mansion that you see on their photos.
| eYrKEC2 wrote:
| Sure. $600k/month sounds like some fantastic pennies.
| spaceman_2020 wrote:
| Yeah, OP probably made $5-10M. I know founders with $100M
| exits that made less than that thanks to equity dilution.
| sdfghswe wrote:
| [flagged]
| jcollins1991 wrote:
| Good afternoon -
| https://news.ycombinator.com/newsguidelines.html
| sdfghswe wrote:
| > Good afternoon -
| https://news.ycombinator.com/newsguidelines.html
|
| Yes, good afternoon. Have you actually read what you're
| linking?
|
| > Please don't complain that a submission is
| inappropriate. If a story is spam or off-topic, flag it.
| Don't feed egregious comments by replying; flag them
| instead. If you flag, please don't also comment that you
| did.
| Philpax wrote:
| > Be kind. Don't be snarky. Converse curiously; don't
| cross-examine. Edit out swipes.
| sdfghswe wrote:
| > Please don't complain that a submission is
| inappropriate. If a story is spam or off-topic, flag it.
| Don't feed egregious comments by replying; flag them
| instead. If you flag, please don't also comment that you
| did.
| Dylan16807 wrote:
| It shouldn't be referred to that way. That term has a specific
| meaning. The profit has to be quite small compared to huge
| losses when you get run over.
|
| When the profit pays back the initial investment quickly, and
| the risk is that you have negligible losses but stop making
| _more_ money, that 's not a bulldozer.
| dublinben wrote:
| As others have pointed out, that phrase means something else.
|
| What they were doing here is usually referred to as
| sharecropping, because you're building your business on someone
| else's land/platform. The real owner can kick you out at any
| time, and you have no recourse.
|
| http://weblog.raganwald.com/2004/11/sharecropping-in-orchard...
| brianwawok wrote:
| Well, I can relate as I just got an email that Shopify changed
| their partner TOS today because of me.
|
| They had demanded that I add a negative keyword "Shopify" to all
| of my Google ads.
|
| I declined, because - it wasn't in our partnership agreement and
| I in fact DID want clients who used Shopify to find my business.
| (I am in the e-commerce space selling a product that works for
| many marketplaces including Shopify).
|
| Just got an email today about a partnership TOS change. Now I
| need to put a negative keyword in any Google ad campaign they
| deem it necessary, despite like I said, Shopify users being great
| product fits for me.
|
| I am just a little dude. What power do I have? Not really
| anything, the biggies get to tell me what to do. I either follow
| the rules of the game or get banned from the platform. Rather
| frustrating to say the least.
| CPLX wrote:
| So you have to _exclude_ the word Shopify, or just not use it?
|
| Like if you bid on the phrase "Checkout Software" and people
| searching for "Shopify Checkout Software" were reaching you
| that would be against the TOS? You'd have to tell Google to
| _suppress_ your ad from reaching people in that way?
|
| Or you're just not allowed to bid on the word "Shopify" if
| you're a partner or whatever?
|
| The latter seems inappropriate but at least arguable to some
| extent.
|
| But the former, where you're actually required to suppress the
| results, seems anti-competitive to the point of being
| actionable, and is certainly not an ethical business practice.
|
| Curious which one it is.
| brianwawok wrote:
| EXCLUDE Shopify. I did not bid on Shopify. I bid on
| "e-commerce sales"
|
| Shopify is insisting, and in the new terms mandating, I add a
| "Negative search term" of Shopify to my bid for "e-commerce
| sales" So it would be + "e-commerce sales" - "Shopify"
|
| > But the former, where you're actually required to suppress
| the results, seems anti-competitive to the point of being
| actionable, and is certainly not an ethical business
| practice.
|
| That's fine to say, but is a small fry like me to actually
| do?
|
| The actual wording in the memo is
|
| > In order to promote a fair ecosystem and maintain
| competitiveness, partners may need to include 'Shopify' as a
| negative keyword in advertising campaigns that utilize pay-
| per-click keywords or are promoted through a search engine.
| CPLX wrote:
| I mean I do totally understand why someone would choose not
| to try to battle a big tech company, for sure.
|
| But it strikes me at first glance as obviously anti-
| competitive, and reaching out or filing a complaint with
| the FTC and its international equivalents would be one
| starting point.
|
| The FTC has been paying attention these days, you might
| actually get something moving.
| jacquesm wrote:
| He will get something moving alright: Shopify will nix
| his partner agreement in a heartbeat and it will never
| ever be re-instated.
|
| These things are next to impossible to win for the
| smaller party unless you have all the time in the world
| and extremely deep pockets.
| withinboredom wrote:
| Can you hire a few friends of yours to write a blog post and
| advertise instead of you? Blog-spam is a thing, now I know why.
|
| Thanks Shopify.
| ed wrote:
| Atlassian has this policy for 3rd-party developers too. It
| feels pretty reasonable, to be honest. Developers still get to
| advertise against phrases relevant to their niche (and I have
| to imagine the keyword "shopify" would be a poor performer
| anyway unless you're building a shopify competitor).
| brianwawok wrote:
| I'm advertising on the word ecommerce. Which is literally
| what I do. You have a negative keyword on Jira?
| shopify_throw wrote:
| This has been the case for years. You weren't allowed to bid on
| any search terms related to Shopify on Google Ads. Lots of
| Partners did though.
| brianwawok wrote:
| You did not read my post.
|
| I did not bid on Shopify. I bid on "e-commerce sales"
|
| Shopify is insisting, and in the new terms mandating, I add a
| "Negative search term" of Shopify to my bid for "e-commerce
| sales"
|
| Go look up negative search terms if you aren't familiar.
| ed wrote:
| You didn't specify but I assume you are only required to
| add [shopify] (exact match) as a negative KW, which is very
| different from shopify (broad match).
| brianwawok wrote:
| It doesn't say.
| appplication wrote:
| Pretty scummy practice. Not only does it drive out
| competition/innovation, it effectively reduces the cost of
| Shopify's ad buy.
| brianwawok wrote:
| Yah it increases my ad cost and decreases their ad cost.
| Partners eh?
| kunalgupta wrote:
| ah the old private app switcheroo
| [deleted]
| ilrwbwrkhv wrote:
| A lot of bootstrappers start of this way. Hell even I started out
| this way.
|
| But the golden rule is, you need to move away while the sun is
| shining. Reinvest profits elsewhere and start a business which
| doesn't depend on anybody else.
|
| The current crop of people building on Open AI should also pay
| heed.
| intrasight wrote:
| You made some bank. Be happy. Find the next opportunity to do the
| same.
| smsm42 wrote:
| Maybe sell it to Musk? Rumor is loves everything with X in it.
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