5 ms·

Profitable & Proud: Shopify

115 points by xal 16y ago

gr366 16y ago
Their Unicorn system for paying out bonuses is a great idea: Revenue sharing across the entire staff, but distributed based upon input from the staff.
- xal 16y ago
  Thank you. The idea is loosely based on a system we heard about that Second Life uses.
  - brown9-2 16y ago
    If you don't mind, could you share some more about how this works? I'm curious about the mechanics of such a system, if you've set up rules saying "a bonus is paid out when 51% of the votes agree" (assuming that someone nominates someone for an award and an amount and the rest of the employees vote to approve it or not). Or is it just that everyone gets 1/Nth of the pie allocated to themselves and can dole out any slice of that 1/N however they like?
    - xal 16y ago
      Here is how it works at the moment: * twice a month we determine how much money goes into the system based on how well we are doing * Money is split evenly amongst all employees and contractors who have been with us for more then 3 months. * This money can be arbitrarily spend as a bonus on any other colleagues. You can't spend it on yourself and you can't simply take it. It has to be spend on others. * Once a quarter the bonuses are paid out through payroll. * As you can see in the screenshot, everyone can show their accomplishments. This looks a lot like http://dribbble.com/ http://dribbble.com/ . This serves as inspiration if someone doesn't know who deserves a bonus. Once an accomplishment is posted it will also be cross posted into our company Campfire.
      - Caligula 16y ago
        Glad to see your from Ottawa. I am a masters student at Carleton's TIM program. Are you guys involved with the Ottawa startup scene? I am curious if there are any meetups/events/websites you can recommend.
        xal 16y ago
        Lot's of people form Shopify show up for the regular startup drinks events. By the way, we love the Tony's Tim program. We hired 2 people directly from there. You should track our careers page and apply for some coop positions when they come up :-)
        Caligula 16y ago
        Yes Tony is great. I am doing a startup so no coop for me yet. I hope to meet you guys at a startup event sometime.
- petercooper 16y ago
  It seems like a great idea and if it works in practice, great. It's the sort of idea that could cause bad feelings to fester with the wrong group of people though. [Warning: gross generalizations ahead..] Think what happens when grumpy-but-reliable "server guy" doesn't ever get any bonuses because people don't understand what he does while "pretty girl on reception who buys candy bars for everyone on Thursday" does OK, etc.
  - run4yourlives 16y ago
    This would be less of an issue with a smaller team like Shopify. As you get bigger you're right, it starts to become a popularity contest. At < 30 employees though, everyone knows who is making real contributions.
    - semanticist 16y ago
      I work at a company with ~30 employees, and I can tell you that you're not always right. There's certainly a lot of gossip and speculation, but at 30 people there's enough division that it's not automatically obvious that any given person is doing something worthwhile.
      - run4yourlives 16y ago
        I suppose that depends on how you define worthwhile, doesn't it? Rewards encourage behaviour that earns them.
        semanticist 16y ago
        But that's exactly the problem with the 'unicorn' idea - the appearance of contributing to the company is more valuable than actually doing it. In a very small startup, you're not going to be able to fake it - but by the time the company's at 30ish people, it's not so clear cut. Who's the most valuable developer in my employer? I'm not on the dev team, so I don't know. They all seem to be doing great work, but I don't know the details. Do we credit the sales guy for landing this big contract, or the operations guys that made sure their trial system worked, or the devs who wrote their custom integration? If you're not involved in that project, it's going to be hard to judge whose contributions deserve what share of the reward. Basically, it's a neat reward system, but I don't think it scales very well at all.
adamhowell 16y ago
Not to be a stickler, but the series plainly says "'Profitable and proud' is a Signal vs. Noise series that profiles companies that have $1MM+ in revenues, didn’t take VC, and are profitable..." And here, in just the second post of the series, a company states "taking this investment from John H. Phillips was probably the best decision we ever made. Apart from allowing us to meet payroll for the first year..." That's not exactly "didn't take VC".
- xal 16y ago
  John's investment was tiny compared to what VCs invest. 90% of his investment is time and advice. Mostly in the form of CEO coaching. Another way of looking at it: Shopify only has common shares. There has not been any Series A or preferred share of any kind.
- jonpaul 16y ago
  I was thinking the same. Technically, they didn't take VC, they took angel investment. They are different, but I completely agree on your point as I wrote in my comment on SVN blog. I don't get how they can claim to be a bootstrapped company when they did indeed take angel investment. I would love for someone to shed some insight.
  - staunch 16y ago
    Here's some insight: It's hard to find successful startups that are truly 100% bootstrapped. 37 signals entire purpose for doing these posts will be undermined if they can't find a good number of companies that fit their theoretical profile.
    - alec 16y ago
      It seems likely that 37 Signal's primary purpose for doing these posts is to raise brand awareness.
    - jasonfried 16y ago
      It's not hard to find. We've got over a dozen stories lined up so far and we're hearing from more businesses every day. This one shouldn't have been posted as part of this series. We definitely want to keep this series clean and clear with no ambiguity.
maukdaddy 16y ago
sigh These types of companies sound like amazing places to work. At the same time, it is somewhat depressing because they don't seem to hire non-programmers. I'd love to work in an environment like this, but do any of these awesome companies hire 30-year old MBA grads who are technical but don't program?!
- xal 16y ago
  Absolutely. The single most important ceo/cto person in a tech company like ours would be an analytical marketing VP. Now, programming would help but being technical and having an MBA lends itself to transitioning into this track. I've heard of many places where amazing Analytical VP of Marketings make more then the CEO.
  - maukdaddy 16y ago
    Thanks, I will keep that in mind :) Also: congrats. Your business model is great, execution even better, and you provide an amazing environment/culture for your employees!
- carbocation 16y ago
  What does it mean to be technical, but not to program?
  - maukdaddy 16y ago
    Personally, it means that I have programmed in a prior life, understand web programming (rails, javascript, et al), can talk intelligently about technologies, but don't want to actually program for a living. EDIT: Another important point - understanding the business implications of technologies. A lot of people understand the business side, or understand the technical side, but few really understand how they fit together, and how their relationship truly impacts a company.
    - carbocation 16y ago
      Thank you; great answer.
ntulip 16y ago
"We use Ruby on Rails, we are in the ecommerce space, and we are profitable. That seems to make us a Perfect 10 in the VC world." -- When did Ruby on Rails become a driving factor for a VC?
- xal 16y ago
  Almost from day one. This has probably changed now but don't forget, Shopify is one of the biggest Ruby on Rails sites on the web and I've been part of the Rails Core team since it's inception (until recently). Rails stood for something new, it was a paradigm shift of sorts. That's what every VC in the world looks for. The VCs who correctly predict which technologies fuel innovations always do very well. See Peter Fenton of Benchmark to illustrate the point at hand.
  - deleted 16y ago
    [deleted]
  - cake 16y ago
    Do you mean the spotify.com frontpage or the content loaded in the Spotify app ?
subpixel 16y ago
It's worth noting that Shopify totally reevaluated their model and changed not only their prices, but what they charge their customers for, well after launching and becoming quite popular. I think the how and why of that decision and process would be really interesting to HN readers trying to put a price on their own product(s).
- xal 16y ago
  Oh boy. Changing our business model was one of the worst days of my life. I recently relived that day when I saw the ZenDesk thing unfold. Luckily we had grandfathered all our customers when we did the big switch. The problem was that our old system was setup so that Shopify was very cheap for people who weren't successful and became quickly expensive for people who actually sold a lot of product. Everyone who expected to setup a 1M revenue store ( e.g. everyone ) picked up a calculator and realized that. Once we changed to more of a subscription model for our pricing we ended up getting a lot more customers who build successful businesses. Even though in reality our product became somewhat more expensive overall.
alanh 16y ago
Humorous to see a HN front page article bash Yahoo Stores. (IIRC, PG’s well-known essay on why he loves Lisp talks a lot about building what would become Yahoo Stores.)
- xal 16y ago
  Yahoo stores was a great product for as long as Paul worked on it.
ssn 16y ago
One of the reasons for Shopify's initial popularity was their plan that only charged a transaction fee. No setup or monthly fees. They quickly abandoned that and now all programs have a monthly fee.

115 points by xal 16y ago

gr366 16y ago

Their Unicorn system for paying out bonuses is a great idea: Revenue sharing across the entire staff, but distributed based upon input from the staff.

xal 16y ago
Thank you. The idea is loosely based on a system we heard about that Second Life uses.
- brown9-2 16y ago
  If you don't mind, could you share some more about how this works? I'm curious about the mechanics of such a system, if you've set up rules saying "a bonus is paid out when 51% of the votes agree" (assuming that someone nominates someone for an award and an amount and the rest of the employees vote to approve it or not). Or is it just that everyone gets 1/Nth of the pie allocated to themselves and can dole out any slice of that 1/N however they like?
  - xal 16y ago
    Here is how it works at the moment: * twice a month we determine how much money goes into the system based on how well we are doing * Money is split evenly amongst all employees and contractors who have been with us for more then 3 months. * This money can be arbitrarily spend as a bonus on any other colleagues. You can't spend it on yourself and you can't simply take it. It has to be spend on others. * Once a quarter the bonuses are paid out through payroll. * As you can see in the screenshot, everyone can show their accomplishments. This looks a lot like http://dribbble.com/ http://dribbble.com/ . This serves as inspiration if someone doesn't know who deserves a bonus. Once an accomplishment is posted it will also be cross posted into our company Campfire.
    - Caligula 16y ago
      Glad to see your from Ottawa. I am a masters student at Carleton's TIM program. Are you guys involved with the Ottawa startup scene? I am curious if there are any meetups/events/websites you can recommend.
      - xal 16y ago
        Lot's of people form Shopify show up for the regular startup drinks events. By the way, we love the Tony's Tim program. We hired 2 people directly from there. You should track our careers page and apply for some coop positions when they come up :-)
        Caligula 16y ago
        Yes Tony is great. I am doing a startup so no coop for me yet. I hope to meet you guys at a startup event sometime.
petercooper 16y ago
It seems like a great idea and if it works in practice, great. It's the sort of idea that could cause bad feelings to fester with the wrong group of people though. [Warning: gross generalizations ahead..] Think what happens when grumpy-but-reliable "server guy" doesn't ever get any bonuses because people don't understand what he does while "pretty girl on reception who buys candy bars for everyone on Thursday" does OK, etc.
- run4yourlives 16y ago
  This would be less of an issue with a smaller team like Shopify. As you get bigger you're right, it starts to become a popularity contest. At < 30 employees though, everyone knows who is making real contributions.
  - semanticist 16y ago
    I work at a company with ~30 employees, and I can tell you that you're not always right. There's certainly a lot of gossip and speculation, but at 30 people there's enough division that it's not automatically obvious that any given person is doing something worthwhile.
    - run4yourlives 16y ago
      I suppose that depends on how you define worthwhile, doesn't it? Rewards encourage behaviour that earns them.
      - semanticist 16y ago
        But that's exactly the problem with the 'unicorn' idea - the appearance of contributing to the company is more valuable than actually doing it. In a very small startup, you're not going to be able to fake it - but by the time the company's at 30ish people, it's not so clear cut. Who's the most valuable developer in my employer? I'm not on the dev team, so I don't know. They all seem to be doing great work, but I don't know the details. Do we credit the sales guy for landing this big contract, or the operations guys that made sure their trial system worked, or the devs who wrote their custom integration? If you're not involved in that project, it's going to be hard to judge whose contributions deserve what share of the reward. Basically, it's a neat reward system, but I don't think it scales very well at all.

adamhowell 16y ago

Not to be a stickler, but the series plainly says "'Profitable and proud' is a Signal vs. Noise series that profiles companies that have $1MM+ in revenues, didn’t take VC, and are profitable..." And here, in just the second post of the series, a company states "taking this investment from John H. Phillips was probably the best decision we ever made. Apart from allowing us to meet payroll for the first year..." That's not exactly "didn't take VC".

xal 16y ago
John's investment was tiny compared to what VCs invest. 90% of his investment is time and advice. Mostly in the form of CEO coaching. Another way of looking at it: Shopify only has common shares. There has not been any Series A or preferred share of any kind.
jonpaul 16y ago
I was thinking the same. Technically, they didn't take VC, they took angel investment. They are different, but I completely agree on your point as I wrote in my comment on SVN blog. I don't get how they can claim to be a bootstrapped company when they did indeed take angel investment. I would love for someone to shed some insight.
- staunch 16y ago
  Here's some insight: It's hard to find successful startups that are truly 100% bootstrapped. 37 signals entire purpose for doing these posts will be undermined if they can't find a good number of companies that fit their theoretical profile.
  - alec 16y ago
    It seems likely that 37 Signal's primary purpose for doing these posts is to raise brand awareness.
  - jasonfried 16y ago
    It's not hard to find. We've got over a dozen stories lined up so far and we're hearing from more businesses every day. This one shouldn't have been posted as part of this series. We definitely want to keep this series clean and clear with no ambiguity.

maukdaddy 16y ago

sigh These types of companies sound like amazing places to work. At the same time, it is somewhat depressing because they don't seem to hire non-programmers. I'd love to work in an environment like this, but do any of these awesome companies hire 30-year old MBA grads who are technical but don't program?!

xal 16y ago
Absolutely. The single most important ceo/cto person in a tech company like ours would be an analytical marketing VP. Now, programming would help but being technical and having an MBA lends itself to transitioning into this track. I've heard of many places where amazing Analytical VP of Marketings make more then the CEO.
- maukdaddy 16y ago
  Thanks, I will keep that in mind :) Also: congrats. Your business model is great, execution even better, and you provide an amazing environment/culture for your employees!
carbocation 16y ago
What does it mean to be technical, but not to program?
- maukdaddy 16y ago
  Personally, it means that I have programmed in a prior life, understand web programming (rails, javascript, et al), can talk intelligently about technologies, but don't want to actually program for a living. EDIT: Another important point - understanding the business implications of technologies. A lot of people understand the business side, or understand the technical side, but few really understand how they fit together, and how their relationship truly impacts a company.
  - carbocation 16y ago
    Thank you; great answer.

ntulip 16y ago

"We use Ruby on Rails, we are in the ecommerce space, and we are profitable. That seems to make us a Perfect 10 in the VC world." -- When did Ruby on Rails become a driving factor for a VC?

xal 16y ago
Almost from day one. This has probably changed now but don't forget, Shopify is one of the biggest Ruby on Rails sites on the web and I've been part of the Rails Core team since it's inception (until recently). Rails stood for something new, it was a paradigm shift of sorts. That's what every VC in the world looks for. The VCs who correctly predict which technologies fuel innovations always do very well. See Peter Fenton of Benchmark to illustrate the point at hand.
- deleted 16y ago
  [deleted]
- cake 16y ago
  Do you mean the spotify.com frontpage or the content loaded in the Spotify app ?

subpixel 16y ago

It's worth noting that Shopify totally reevaluated their model and changed not only their prices, but what they charge their customers for, well after launching and becoming quite popular. I think the how and why of that decision and process would be really interesting to HN readers trying to put a price on their own product(s).

xal 16y ago
Oh boy. Changing our business model was one of the worst days of my life. I recently relived that day when I saw the ZenDesk thing unfold. Luckily we had grandfathered all our customers when we did the big switch. The problem was that our old system was setup so that Shopify was very cheap for people who weren't successful and became quickly expensive for people who actually sold a lot of product. Everyone who expected to setup a 1M revenue store ( e.g. everyone ) picked up a calculator and realized that. Once we changed to more of a subscription model for our pricing we ended up getting a lot more customers who build successful businesses. Even though in reality our product became somewhat more expensive overall.

alanh 16y ago

Humorous to see a HN front page article bash Yahoo Stores. (IIRC, PG’s well-known essay on why he loves Lisp talks a lot about building what would become Yahoo Stores.)

xal 16y ago
Yahoo stores was a great product for as long as Paul worked on it.

ssn 16y ago

One of the reasons for Shopify's initial popularity was their plan that only charged a transaction fee. No setup or monthly fees. They quickly abandoned that and now all programs have a monthly fee.