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.
Still it sounds like a heroic tale and I this this guy is going to end up landing on his feet.
I'd say it's a _huge win.
Everything was so composed and professional until they got to that part. Whattttttttt?
This is actually one of the biggest reasons for app churn on Shopify - stores going out of business :-)
So somewhere between balls-less and a bitch. Mmkay.
[1] https://developer.mozilla.org/docs/Web/API/Payment_Request_A...
Apple Pay is definitely integrated into Safari.
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.
I own Shopify stock
there is a very thin line between a pyramid/ponzi scheme and a generous affiliate program.
For checkout x it's a negligible amount and there's a free trial.
It's just a generous affiliate program.
"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.
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.
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.
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.
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.
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.
> 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.
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.
No, they shouldn't have to play whack-a-mole, I'd argue they shouldn't be allowed to.
We should be rooting for the small guys like this who shake monopolies out of their complacency.
"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."
I don't begrudge OP making some money on this product, but I'm definitely not sympathetic to this outcome.
Good for him.
I agree with you.
He acknowledges this in the post.
Launching a product in a walled garden, getting around 10 million recurrent revenue with a small team and almost no other fees, then stopping after a few years looks to me like a dream come true. Almost better than not having the pull rugged. Once you have that much money it's time and a stress-free life that I would seek.
The article reads a bit weird to me because there's a lot of complaining about Shopify including in the title, yet they also mention that they knew this would be the outcome from the beginning.
A similar question would be how Airbus prevents airlines from building their own airplanes.
This separation of responsibilities presents TSMC with a difficult reverse engineering challenge if they were interested in violating their NDA.
- 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.
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.
And if shopify actually didn't want to be involved they would just fire those customers.
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.
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.
Quantity has a quality all its own.
Does Exxon stop drilling for oil just because it won’t be possible someday?
They could just said that they do it for the safety of children and some would believe it.
While living in Bulgaria
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.
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.
What? 600k euro per MONTH is like you can retire forever in one year. That would be 7mm euro. More than like what most people make during their entire life.
But of course they probably made that in revenue, not profit. Still, I bet they are in a pretty good spot to create a new product, company, etc and with a nice cash reserve if they want to retire.
Btw, according to the article they still keep their old customers, so not like the service has being completely shut down. It's just that they can't take new customers, so at some point they should have pretty low revenue, but maybe they still have a fair amount per month like 100~200k with a super reduced team.
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.
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.
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.
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!
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.
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.
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.
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.
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!
Apollo fell into this bucket as well (with Reddit).
Never understood why more didn’t realize that.
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.
> 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).
Some updates from me: - I built another Shopify app ( Vanga AI ) that got acquired this year - I've summarised my thoughts on the current Shopify ecosystem in another blog post: Why I'm leaving the Shopify apps business ( https://www.leteyski.com/why-i-m-leaving-the-shopify-apps-bu... ) - I've summarised some of the business lessons I've accumulated into a Startup assessment framework called: The Dead Horse Framework ( https://www.leteyski.com/the-dead-horse-framework )
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.
Sure, they got steamrolled in the end, but it’s an absolute win by any metric.
Not that it takes away from your point, it still sounds like a great success to me.
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...
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.
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.
If $600k/mo is what you consider free, I'd absolutely love to do some free work for you!
There is nothing in between. 600k per month? Is that enough to live in SF?
Edit: I forgot the moat. Without moat, it doesn't matter if you make a trillion dollar a month, your product would still be crap.
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.
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. :(
Scalability/costs/complexity aside — this is why Ethereum and similar decentralized computers are attractive.
lol. Come over here and stand on this crypto rug for me.
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.
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.
> 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.
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?
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?
Man that's something. Kinda flattering that they're so desperate for reasons to cut you off, they start to try to fabricate them.
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.
Putting all the other things aside, but this struck me. How is that legal? That sounds like outright theft to me.
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...
I don't see whats so suprising here.
... 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.As a layman very much not-lawyer, the term "unjust enrichment" is springing to mind. Wonder if that's what this would be considered as?
" 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!
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?
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.
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.
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.
Thanks 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"
Go look up negative search terms if you aren't familiar.
So they waited two years and couldn't sign up any new customers during that time. How is that better?
"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."
Option A - Stop what we’re doing, downscale the business and wait for the new APIs.
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. :/
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"
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.
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.
Presumably Shopify has at least one person in their general counsel’s office that’s not a complete fucking moron.
I use to run our businesses webshop with my own code but having less time to keep up on it I gave up and switched to OSS CMS instead. Not Shopify though as they take (at least back when I checked) a huge chunk of money for the service. I can't remember the amount but it was something like 3%? For a medium business that's enough to hire developers to create your own! Now I use a payment provider (bank) instead and it costs nothing except the payment processor fee I already had to pay.