The Chomp #041

Beginner's Mind, The Lure of Shopify, and More...

Hey Everyone,

Welcome back to The Chomp—your weekly dose of the best strategic thinking content and top emerging business trends from the internet and beyond, designed to expand your mind and get you thinking. If you’ve been sent this email and you’re not a subscriber, you can join by clicking on the blue button below. With that, let’s dive into it.

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Quick Bite

Beginner’s Mind Screenshot Essay: Below is a new screenshot essay I put together on shoshin, known in English as beginner’s mind. The concept of beginner’s mind is something I constantly try to keep top of mind.

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Deeper Dive

Shopify and the Hard Thing About Easy Things: Shopify’s stock keeps doubling and doubling, so everyone wants to know its secret. The most fun explanation is Shopify CEO Tobi Lütke’s claim that the company is “trying to arm the rebels.” But it’s not true, really. By giving everyone access to the same tools, Shopify isn’t arming the rebels as much as it’s profiting off the chaos created by arming everyone.

Few companies have been as exciting to watch as Shopify in 2020. The stock has more than tripled in price over the last six months to a high of $1,134 on September 1st. Along with the stock going to the moon, Shopify has rolled out a number of innovative new features. They've also added notable new hires like John Wexler, the GM of Yeezy (and 18 year Adidas veteran), who announced earlier this week he was jumping ship to lead Shopify’s Creator & Influencer program.

So, what’s behind all this success? Shopify’s CEO Tobi Lutke typically attributes it to “arming the rebels”. Shopify is giving any and every one the tools and resources needed to build and run an e-commerce site. But, as Packy McCormick points out in this excellent essay, by doing this Shopify isn’t so much arming the rebels as they are profiting off the chaos created by arming everyone.

When you start to dig a bit deeper, it becomes clear why Shopify has had so much more success than the DTC and e-commerce stores its platform is enabling. By arming everyone, Shopify has lowered the barriers to entry to starting an e-commerce site significantly. Lower barriers to entry = more competition, and more competition = more profits flowing back to Shopify.

Shopify, along with other infrastructure players like Stripe, has reaped the rewards as new competitors plow into the e-commerce market. With everyone needing to be armed, it’s a great time to be an arms dealer. But it’s not so great to be stuck in the DTC battle. Now that everyone has the same tools, differentiation, brand, and marketing matter more than ever.

Being an innovator in the DTC market no longer wins you the battle. Let’s look at the mattress company Casper and suitcase company Away as examples. Both of these companies were early innovators in their space and raised a ton of VC money. They built up their teams with hundreds of employees and spent tens of millions on marketing. They did all the hard work only to be copied by countless competitors—competitors whose products are nearly indistinguishable.

As of 2019, CNBC counted over 175 mattresses-in-a-box companies that directly competed with Casper. On the luggage side, copycats like Monos, Arlo Sky, and Roam luggage have built products and sites nearly identical to Away. It took Away $181M in venture capital and 480 employees to get to their current position. It took Monos 24 employees and a few plug and play tools like Shopify to build a copycat.

It’s become harder than ever for DTC brands to make outsized profits. The onslaught of new entrants has created pure chaos. With everyone now armed, Packy aptly notes that the next opportunity to make money is by bringing order to this chaos. This is where Shopify is headed next.

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Chum Bucket

• Stripe CEO Patrick Collison, Never Flashy, Is Fired Up (The Information)

• The Conscience of Silicon Valley (GQ)

• Walmart Tries Again to Find Its Answer to Amazon Prime (WSJ)

• Remote Work Is Killing the Hidden Trillion-Dollar Office Economy (Marker)

• Robinhoods of the Art World Lure Scores of Investors in Pandemic (Bloomberg)

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Tweet of the Week

Ryan Broderick @broderick

On this day six years ago, Lucky Luciano decided to do it to us

Song of the Week

Apple Music Link

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Books

Currently Reading

Recently Read

• Zero to One sat on my reading list for quite some time before I finally picked it up. Despite having rave reviews and being considered one of the quintessential books on startups, I never felt compelled to prioritize it ahead of other books on my list. After finishing it, I’ll admit that was a mistake—I should have read it sooner. Peter Thiel is one of the great contrarian thinkers of our time, and his work speaks for itself. Setting his somewhat controversial political views aside, Thiel is an expert founder, operator, and investor. Zero to One offers a fantastic outline of Thiel’s business philosophy and his filled to the brim with valuable advice. This is worth a read regardless of your interest in the startup economy. (4.5/5)

Parting Thoughts

This Week in History

• On September 1, 1977, Pioneer 11 became the first man-made object to fly by the planet Saturn. (Source)

“Humility will open more doors than arrogance ever will.”

— Zig Ziglar

If you found something that piqued your interest this week, please help me out in expanding the reach of The Chomp by forwarding it along to a friend or sharing it with others in your network. Until next week.

-CM

This newsletter is created and authored by Cody McCauley and is published and provided for informational purposes only. The information in the newsletter solely constitutes Cody’s own opinions. None of the information contained in the newsletter constitutes—or should be construed as—investment advice.