Yet Another Value Podcast - Minion Capital (aka Shomik Ghosh) on Shopify and VC investing

Episode Date: October 2, 2020

Shomick Ghosh (aka Minion Capital), a Principal at Boldstart, talks about his experience as a Venture Capitalist and how he balances investing in both public and private companies. Then we dive deep into the investment case for Shopify (SHOP).Minion Capital twitter: https://twitter.com/MinionCapitalShomick's twitter: https://twitter.com/shomikghosh21Boldstart: https://www.boldstart.vc/

All right. Hello and welcome to Yet Another Value Podcast. I'm your host, Andrew Walker. And with me today, I'm excited to have Shomit Ghosh, aka Mingian Capital. Shameek, how are you doing? Good, good. Thanks for having me on. Andrew. A huge fan of Yet Another Value Blog. I've been reading it for a long time. And also, I've really enjoyed these podcasts that you've been doing recently. So thanks for having me on. Hey, I appreciate that. And let me just turn it right around and start the podcast the way I do every podcast. And that's by pitching you. You know, it's funny. I think I've been following Minion Capital, your kind of alternative Twitter handle for three years. And as I was telling you before the pod, at first, I just thought you were a guy who was running a really SAS focused personal account.

And I really appreciate a lot of your insights. But I was like, oh, okay, you know, this is just a home gamer who's got a lot of knowledge. And then over the years, people were like, no, you don't get it. Like, this guy is actually a really sharp VC who really knows what he's talking about. And some mutual friends were even like, he really helped me with a lot of software as a service stuff. So, you know, I've loved your charter account as an anonymous thing. I always knew you were sharp, but then you find out, oh, like, there's kind of a reason behind this. So everyone should be following you, really enjoyed all of your stuff.

And that out the way, you know, why don't you give us some background on you and how you came into investing, B.C., all that type of stuff. Yeah. So, you know, it's kind of funny. One just started the anonymous account a while ago. Moore is just, you know, I'd seen, I met Bluegrass and a couple of the other early FinTwit folks. and I thought it was just exciting to kind of do it anonymous and just get the things out there and started tweeting about SaaS,

met a lot of really great people. And then when I joined my most recent firm where I'm at, which is called Bull Star Adventures and I can describe a little bit more about what we do, then I was like, okay, well, now actually I think it's time for me to start like a real Twitter account. So I'm at ShowMick Ghost 21. And there really I tweet more about kind of true enterprise software,

engineering blog posts, things that I'm thinking about in terms of enterprise software startups. But really what I do is I like to just invest in great business models. And so one of the things that drew me to enterprise software and specifically the infrastructure niche, which I would say I mostly focus on, is the mission criticality of this software, right? So if you're running your database and you're running on MongoDB, that is something that's really hard to rip out. Like if you think about it, Amazon, transitioned off of Oracle databases, and it took them, I forget how long, but it was a huge deal when they finally tweeted out the picture of like, hey, our last fulfillment center is no

longer running on an Oracle database, right? And so these sticky mission criticality, mission critical software companies and products are really interesting to me. So that's kind of why I got interested in sort of infrastructure and enterprise software. And at Bolster, basically, we are you know, pre-product or early in product investors in technical founders, building for the enterprise. So everything we do is trying to identify founders who have, you know, kind of an opinionate view of how that world should evolve and then have ideas in terms of how the product should form and how they can best serve kind of the end user. In this case, a lot of our cases is developers. So that's where we like to focus and that's where my passion is. And that translates over to

my PA as well and my personal investing stuff. Let me ask you a little bit more about the difference between like your day job as a VC investor and kind of your night job as investing in public portfolios. Because like, you know, I think four years ago, I think it was really misunderstood among public equity investors that, hey, when you've got something like an Amazon web service, just how sticky it could be, how much pricing power there could kind of be there, all this type of stuff, right? But I do think most people looked at it and said, oh, like this is sticky. It's probably going to be a good business once to say at scale. When you're making these VC bets, you know, you're investing much more in the person. And yeah, they can come and say,

hey, I've got a vision, but you know, I can come to you and say, hey, I've got a vision of building this great SaaS product. I have no background doing it. Like I can describe the perfect vision, but I'm obviously not the person to execute it. How do you balance those two or kind of, how do you focus more on the person as a VC versus, you know, somebody just pitched you in a great business model or finding a great business model on the public markets? Yeah. So, so I would say, you know, there's a lot of correlators between both, right? And in a lot of it at the beginning point, again, like you said, you're investing in people and people pivot. Like the great, one of the, one of my favorite stories is Slack, right? It started off as a gaming company, right? And then they

had this, this sort of, it's straight out like Hult and Catch Fire where, you know, they're a gaming company. Then all of a sudden, they see this, uh, chat feature taking off and they're just like, huh, maybe we should do something there, right? And then they pivot and then now they're slack, right? And that's just, like, fascinating to me. Like, where else can you do that besides early stage, you know, early in product investing and be able to just truly bet on people, but see something kind of special in the way that they think, how they think about products, what their product intuition is? And then also how they're thinking about the components, like, that actually drive that product,

right? What are the architecture tradeoffs that they're like, we're going to make these? And so, like, I don't know if you've heard of a company called Superhuman, but basically it's lightning fast email. And when you look at superhuman, it's really funny because, like, there's little nuances that you wouldn't really, it's hard to pick up on. But the design is super simple. Like, there's not many buttons.

Everything's keyboard based. It's like an Excel or coding experience, right? You don't need to touch the mouse. And that is purposely done. He literally went through and literally marked up Gmail and was like, we don't need this. We don't need this. Like slash those off. And that was his initial product idea, Rahul's product idea, which is slashing

gmail components right um and then if you think about the tradeoffs he's making every single time it's all about speed and so when they when they introduce a new feature they're like well how much does this inject latency into the process right and if if it does then like how do we rejigger the architecture to make sure that that doesn't happen right and so those sort of product thinking is what gets us really excited because if someone is that deep in the weeds and and and that thoughtful about it even if they pivot they're going to be able to figure out a new way to expand the product and so now if take that to the public market side, it's not like, yeah, we have more metrics to go off of, but it's still based on that intuition, right? Because if you take a company, and sure,

like Zoom is a great example, for me, that's one where I kind of struggle with because they have a great video product that's ramping really quickly. But that video product is ramped so quickly that now they have to expand into adjacent markets. And my question is, okay, well, how are they going to expand into those adjacencies? And, you know, one way is they're kind of taking on ring central in the phone space, right? And I think that will do pretty well. They have Zoom rooms. So like they're doing stuff that are that are in those adjacent categories. But I still think it's a little bit too early kind of to understand really, you know, what's that what's that product that they're going to bring to like a whole new sort of product and expand their

tan and expand their surface area with customers. So those are sort of the ways that I think about when I'm public investing derived from the private side. And I just love that you look, you did Zoom and superhuman because a as we were prepping for this podcast obviously went and looked at uh looked at all the VC investments you guys made and I saw superhuman on there and I was like good good for them but you know you use zoom and superhuman and those are two that I think a lot of people would not have bet on because you know Zoom even if it's a better product like you have Google hangouts Google me their Skype like there were plenty of ways to do uh there were plenty of ways to do video online and full disclosure we're talking over a Zoom call right now and you know superhuman like

Everyone would look at it and say, Gmail is free. Like, why are you investing in an email app? So I just think it's interesting, like the vision, the skew, right? If these things break huge, they're going to be huge. And yeah, no, I just think those are super interesting. Let me ask a little bit more about the public portfolio. So you do this thing on your Twitter where I think once every three months or so, you publish the coffee can portfolio, right?

And I'll let you describe the coffee. Why don't you describe the coffee can portfolio? And then I have a couple questions on that. Yeah. Yeah. So by the way, like when I say coffee can, it sounds like maybe some other people had different views on what it was. But the way that I think about it is basically, you know, what are kind of the core components of portfolio that you wouldn't want to change for, let's say, I'll say a three to five year timeframe, right? Like if you didn't have to touch it, would you be okay owning those businesses? And for me, that's where I get excited, right? And so I constantly kind of refreshing that because at certain times, I think companies are going to be okay. going through phase shifts, they're going through transitions, they're introducing new products or the competitive positioning is changing. And so even within a shorter time frame of three months, there could be something that all of a sudden, something that was on the bottom of your list

may have just actually gotten a little bit more interesting and moved to the top of that list because of like the dynamic, like they just introduce a new product that you're just like, wow, oh my God, like I can see how this could just, you know, open up a whole new vertical for them and I could see the attach rates between this product that would really make it expand quickly, right and so that's where uh the coffee camp portfolio is just basically what's my core watch list or core positions i own that i wouldn't touch for the long term and then i'm constantly kind of adjusting those as as uh you know things play out yeah no i love the idea and you know it's something it's so funny like until a couple months ago i didn't even know who who was behind the minion capital

account and then jerry capital i still have no clue who's behind that account but you two have kind of been really instructive for me and like hey if you own a great business you you believe in it you've got a great understanding of it, even if it looks a little expensive in the near term, like, it's often best just to hold through that because like you're not going to buy something at, well, maybe you will, like Shopify, which we'll talk about in a second, you're not going to buy something at 50 times. But you know, if you think it's worth 20 times earnings and it's trading for 22, save the headache, keep it. And if you've got great managers, oftentimes as you said, they'll kind of ladder into other things. And it's one of the lessons

I've really learned from you. But you know, when I look at your coffee cam portfolio, it's interesting because you've got AMT, that's towers, cell phone towers, Amazon, everybody. knows them. CSU Canadian software kind of roll up Costco you know Amazon and Costco on the same list is a little interesting Facebook and IAC which I love but there's also Nike is on the watch list so how do you balance all these different types of things you're looking at? Yeah I mean for me from the public side right I have a day job I have to focus on and so you know for me like let's herbal life is never going to be something I ever look at and part of the reason why is there's just too hard of a cognitive load for me to understand like that that battleground stock who's

right and who's wrong. And there's a ton of money to be made, by the way, on both sides. But like, it's just not for me, right? So for me, it's all about decreasing that cognitive load. So if I can't understand a story of a company really quickly, then frankly, it just goes into two hard pile and I just move on. There's enough companies and enough quality businesses out there that should be able to understand them just by going through it quickly. And so that's where my first filter. So I would say, you know, all these kind of have similar dynamics. Like if you think about distribution. It's a powerful concept that goes through from software to grocery stores, right? Shelving and getting, buying your, having tied on the middle row, eye level in a grocery

store, that's distribution, right? And you're paying for that slotting fee to get in front the consumer or Costco getting your product in a certain case makes you into a certain shelf that's in front of the consumer. Those are all distribution concepts that still apply to software. There's a way of like you're trying to get in front of the consumer or the end user or the customer, right? And how can you do that? And so I think these are these powerful mental models that you just, once you get them, you can kind of start to see the correlaries between like different high quality businesses. And then it makes it a lot easier. On the distribution thing, you know, one of the spaces I spend most of my time is looking at media and cable companies. And

there's been a huge short case on Netflix for years, right? And to my detriment, I've never invested in it because I did always think it was expensive and I did always think there was a lot of competition there. But I could never imagine how you could short something where the Netflix home screen is the best distribution spot in the entire world. I would say bar none. Maybe if you're a product and you get on the Amazon home screen, but even that, I really think it's Netflix. You look at what they can do with something like Cobra Kai where it's an also ran on YouTube and then they put it on Netflix and everyone's going crazy for it. Like they can make hits and it just shows that distribution. They've got power that no one else in the world has. And it's it's really

funny that you bring that up because like Netflix is one that again, that's a huge mistake. of omission on my part and I still I still frankly to this day have trouble with the the steady state cash flow dynamics and just understanding how that that how the competition matures in that area but but yeah exactly the distribution concept is there and then and then also it's it's this concept of you know this this frictionless experience right so turning on Netflix is so much easier and you think about the UI of Netflix compared to Amazon Prime I don't know if you've looked at both but like it's just it's like night and day right like trying to try to navigate through your amazon prime video it's it's like horrible it's a horrible experience if you use if you use

disney plus uh so i love star wars and uh i heard really good things about clone war so i've been doing star wars and like one thing i've noticed is if i watch an episode to the end you know i normally try to like watch an episode and stop and then i want to go to the next time i open up the app they'll have me watch the last it'll open up to the end of that last episode like in the credit instead of auto starting on the next credits. And yeah, that seems small and seems stupid. But like, Netflix doesn't do that type of stuff, you know? And there's just a lot of stuff there. What about, so you're a VC, you know, I think as we talked about, it's no longer, everyone knows now like kind of SaaS companies, enterprise companies, all this are, you know, they're the dream. They're what you're

looking for. They're what every VC is trying to firm. So how does, how do you, at Bullsart, how do you guys kind of get an edge or is there any like kind of differentiating thinking around that that you have? Yeah, I mean, I would say we're pretty focused in our niche. So when we say enterprise software, I would say, you know, most of the stuff we do is actually an infrastructure or in the application stack. And in the application stack, we have certain, you know, kind of really opinionated product views that we look for, like Rahul or like Brad and Jeremy at customer with a K, which is going up against Zendes and sales course. Like there's certain things that we look for that, you know, make us comfortable backing these founders and these kind of reimagining

an existing category. But then a lot of areas in infrastructure are actually completely kind of new categories, right? Category creation. And that requires maybe a different lens in terms of the founder that you're looking for and the product and tuition and the pain point that they lived. And so everything has to kind of stem from like, have they lived the pain point, do they understand the workflow of the end user, do they understand the different components of an organization?

So, for example, if you're a developer tool, your end user may be a developer, but then you also have a technical buyer or technical decision maker who may be like an engineering manager and then you also probably have a buyer who might be maybe even someone who's outside the engineering manager maybe it's in the finance order or something right like there's all these different components and that human coordination problem of trying to figure out like okay well if i get the end user love if i get the developer to love me and use my product how does that matriculate to them buying is a super interesting process that again we're looking for people who have you know been through that pain point, understand that, so they can start to kind of figure out how am I going

to deliver value not only to the end user, but also to the manager and to the finance person and to all these different components. And so that's the kind of model we use. Is over time, like obviously every, I think it's not overplay, but everyone knows like delighting the end user is one of the most important KPIs at this point. But are you finding over time that delighting the end user is getting more and more important? You know, I think about something like Slack, which was getting literally pulled into enterprises because everyone was using Slat, so eventually the CIO had to use it. Do you find that's happening in kind of some of your startups? Yeah, I would say that's one of the biggest components, right? And, you know, it's

something we'll talk about because I think there are certain products that are much more of a CIO or CTO type of decision process. A lot of security kind of falls into that. When that, when that changes, right, Sneak is now a $2.6 billion company in our portfolio. And one of the ways that they actually thought about was, well, what if we enable developers to use open open source code securely. And then now they're becoming basically developer security platform company, right, that that's moving to adjacent products. But when you go into something like security, typically that has been CIO focused. And there's still a lot of things like CISO focused. There's still a lot of areas that still probably do resonate more with the CISO than it would with

the end user. And that's still a fine vertical to go into. The only thing is at that point, then you need to align your cost structure. So if you're going in to sell to a CISO or CTO or this top down level sale. What you want to do then is make sure that, you know, it's going to be longer sales cycles. You're going to have a direct sales force. And so that's going to be a little bit costlier and sort of that way, right? And so you just got to make sure that like, okay, well then our average contract value, right, our ACVs that we're going to target are going to be much higher and our price point is going to be much higher, right? Versus if you're serving end users actually can go in and do something that's much more consumptive, like, and, you know,

like a Spotify subscription or something like that. We were like, hey, you have different plans. So, you know, you pay $10 for this. If you want to add on another user to your account, you pay $15. And then if you want to have access across all of your devices, you pay $20 or something like that, right? And that's much more of something that's starting to happen more at the end user level when you're targeting those end users. But again, that cost structure then shifts because then you can't have a huge sales force going after these, you know, $100 contracts from different developers, right? because otherwise then you'd go bankrupt.

And so it's something that I start to evaluate, especially at the public markets, when I see a mismatch in that cost structure, that makes me run the other way. Or I'm trying to understand why are the founders or why are the management team going with that cost structure? Are they seeing something in the future that means they need to go and chase the product that way? Can you think of a company in the public markets or it could be private markets that that you see that mismatch in terms of, hey, we've got these 150,000 plus Salesforce guys out here who are chasing these $100 accounts down?

You know, I can, I, you know, I'd rather not go into it, but I just would, I just would say, like, I think there's, you know, that's one of the most interesting things in SaaS right now is when these companies go public, they're all trading at pretty large multiples. And I don't think there's enough investors that are really kind of. of doing that alignment of cost structure sort of deep dive, right? And so there's a bunch of companies. Like, for example, if they're saying, hey, we serve end users and we have viral adoption, but then they have, you know, a large S&M expense and then they're saying about their direct sales team and stuff like that, you should then start to kind of dive in a little bit

deeper and be like, okay, like what's happening here, right? And we'll go into like having a direct sales team and having a bottoms up funnel is not a bad thing. Like most companies will eventually go into that, but you should be able to see how it's working in the financials, right? Because the load in terms of acquiring new customers will not be that huge. Like if you look at Datadog versus Anna plan, you'll see very different models and very different cost structures in those two businesses that can help you kind of better triangulate when you look at a new company. Yeah, the two I think about is Dropbox, which, you know, it's mainly students and individuals versus something like box, which is going after giant corporations.

And yeah, let's see, endgame for your company. So we've talked a lot, you're normally investing these infrastructure things. And generally, I think like when you're investing those things, eventually the end game is probably a roll up by someone bigger. Is that how you think about the end game for most of your companies? Or do you think these things just grow forever, IPO, maybe get taken out by a spec at 500 times sales, something like that? Yeah, I mean, you know, I would say every single company has a different.

different endgame, right? Because it's all based on, on the TAM that they're targeting on how they're able to expand into adjacencies. You know, I think Modis just did a talk with on Invest Like the Best, the podcast. And one of the things that he brought up was really kind of expanding the TAM, right? And that's such a useful thing, especially when multiples right now are as high as they are, the companies that have the ability to expand to product adjacencies and expand their market that they're addressing should be worth actually a larger multiple, right? And whenever things straight at the same multiple, that's actually probably how you can drive some alpha. And so, you know, what we're looking for is in our companies, for them to take the end user

love, right, the developer love that they have or the customer love that they have and then start to expand into product areas after they've reached, you know, a certain level of scale such that they can invest in that through the org, right? And so that becomes much more of a capital allocation decision rather than actually, you know, a necessarily product decision. It's much more of like, okay, well, you know, at 10 million of ARR, we probably don't have the money to, we still need to stay on our core vertical, but maybe at 30, we now can free up a couple of resources with some spend, especially with people paying forward on our, on our ARR estimates. Yep.

You know, we can start to invest in some of these new product areas, and we can almost have like a tiger team that's working on this, right? And so if you're able to do that, then like sneak, for example, you know, the goal there right now is they're going to be a public company, right? and hopefully a fairly large one. And they will be the standalone developer security company that exists in the public markets, which doesn't exist right now. There's no developer security company right now.

They're all top-down sales, right? So that's a pretty powerful thing where, you know, their exit should be being a large public company. Some other companies, maybe they get bought, maybe they get rolled up, maybe they go public. You know, there's a bunch of different ways and it just depends on the market. you know one of the things I think that's most fun about like this space is a lot of it is your creativity right like if I came to you and I pitched uh hey superhuman we're just going to be a great email service I'd be like you know hey I originally would have thought there's a lot of competition there as we discuss you know Gmail I'll look all that sort of stuff but if that was the whole business I'd probably wouldn't do it but if you start really like dreaming right like superhuman hey we're going to own all of these people's emails and if we do it really well like you could almost break even on the email and make all of your money on all sorts of other things. You know, you could expand in this customer relationship management

because you own all of their emails. You could expand. Like, there's just so many different things. And one of the things I love about these spaces is if you can get really creative, like there are these, I believe modest called it in the best like the best, these ladder up opportunities, right?

Where you have this one thing and you almost don't even need to be profitable. An open door, we talked about on our last podcast. If they can dominate home buying, if they could just break even that, maybe they can make all their money on title services and mortgages or something. So that's one of the things.

Last question for you on this, and then I want to switch over to Shopify, capital allocation. You know, like when you're talking VC bets where, you know, probably the base case is zero and the upside case is 100, 200, 300x versus your personal portfolio of investing in public market companies, which, you know, a lot of these SaaS companies have gone up 10x or 15x, but it's a much different risk ward. How do you think about balancing between the two? Yeah. So, you know, I would say the way I kind of look at everything is, is relative valuation and then absolute valuations. And so for me, especially in the public markets, relative valuations I pay attention to. And so for example, right now when everything's trading really high,

like I may actually still, even though people will be like, oh, data dogs trading at a nosebleed multiple and it's higher than everything else, well for the quality of that business and how they're expanding to adjacent categories, maybe that's actually one of the cheapest companies out there compared to, you know, some other, what I perceive as lesser quality company, but still trading at, you know, a 20x AR multiple, right?

And so that's where I think, you know, that's the relative aspect to it. And then the absolute aspect is, okay, well, if this company is a $10 billion market cap, well, what's the market that they're targeting? We'll talk about this with Shopify, but like, you know, Shopify right now is like $100 billion market cap. But if you have six or seven percent market share of the, of the U.S. e-commerce business, I mean, I don't know. What if that share doubles and goes to 14 percent, right? Like, what if that in the future gets to 30 percent?

Yeah. What is that worth? And that's the kind of way to think about it. And then you start to have to handicap, well, what's the ability for them to gain that market share? What's the ability for them to capture more of that, that TAM or expand their TAM so that they can capture more market share in other areas, right? And so that's a constant analysis.

where, you know, from an absolute valuation, actually something that is trading at a high relative valuation could be really cheap. You just have to lengthen your time frame, which then starts to kind of bring into opportunity costs and different other variables as well. But that's kind of where I think about from a public market perspective. Yeah, one company that I've written about a little bit this weekend, I just absolutely love right now is Angie, Angie's list home advisor. And, you know, I just think about that. And they're attacking home services, right? And like, yeah, it's a difficult flywheels to get going. But if you can be the dominant person and getting plumbers, electricians, carpenters, like basically any home remodeling done, like that, that market is

so big and there's so much level opportunities there. And yeah, I just love, you know, yeah, if you look on trailing financials, it looks expensive. But if you think about the opportunity and the skew there, I mean, my lord, if they get it right. And there's no guarantee, but I think it's better odds than not. And that's one where, you know, it's just in terms of friction. So I actually, I own Angie through my IAC exposure. And one of the ways that I think about that is like, if you have the ability to partner with the best marketplace investor in the world, like take my money, right? Like that's a frictionless, no cognitive load decision every single day of the week. And, and, and that's where I'd like to find opportunities like that. Like Mark Leonard

over at Constellation Software, there is no one better at buying vertical market software than that guy and the team that he's built and the organization that he's built, the decentralization in that organization. So there's so many different aspects to this, right, where I think this is the fun part about investing in companies is it's not just financials. It's also culture. It's also like management practices. It's team topologies. It's friction within the user experience. There's so many different areas with which you can kind of look at these companies. And once you coordinate them together, you can find really powerful kind of investments to make yeah with angie and i've just been dying to say this point out like you know four years ago

people were saying with match dot com they they were like oh you'll never monetize this nobody's been able to do this before it was like it's it's literally teenagers and 20 year olds looking to meet their life partner like if you can dominate that market you're it's going to be worth a fortune like you will find a way to make money if you can dominate that market and i mentioned match because as you know iAC controlled match at the time this they figured it out and the stock was up like probably five or six X. And Angie's list right now people are saying, hey, you know, it's going to be tough to dominate home services. Like, well, they're growing requests by 20% per year. And like you've got the best marketplace investors. And by the way, they did it four years ago over

the same objections with match. So not a guarantee, but I just love that setup. Anyway, any last words here or can we turn over to Shopify? Yeah, yeah. Before actually we do, there's one other component that I think is really interesting about match in particular. So you remember when match went down a lot because they said Facebook was going to go into dating. Oh, it went from 60 to 35 incher day because Facebook was really not dating, yeah? Right. So it got cut in half because Facebook announced that they were going into dating. You know, what's really interesting and actually this is actually, I think modest did another thing about this with maybe it was invest like the best again, where he kind of talked about, you know, sort of niche focus on a core area being

something where you can dominate, right? And frankly, you know, at Bolster, we do that with infrastructure, we do that with enterprise software, and we see the benefits of that through the network effect of people, customers, talent, things like that, that come to us, right? But what's interesting is, you know, a lot of people say, like, okay, well, Facebook is going to blow up a match, or AWS is now, you know, with MongoDB, did document DB, right? That's in that space. They did Elastic search, targeting Elastic. But what's, if you flip that around, why is AWS entering your market?

Why is Facebook thinking about your market? Probably the market size is a whole heck of a lot bigger than you originally thought, right? And that's the powerful thing to me is like when these companies absolutely like they could, you have to start to really rethink the competitive positioning, the product positioning, all those sort of components. But at the same time, like it is a validation that there's something big here. And so you probably explore that a little bit more, right? So that's where I kind of flip that.

I get more excited when a large company says, hey, we're targeting your area because then I'm just like, wow okay now game on like this is now a lot bigger than I originally thought because they're devoting resources to this And I think there's that great slide where it's like the history of tech giants announcing that they're going to come into a market. And like, you know, Match.com, the stock's down 50% in the day that announces. And then two years later, like nine times out of 10, the stocks up like two or 300% because the giant was like they were just the second too late trying to get in there. And, you know, focus dominates. So anyway, let's turn over to the company. Speaking of focus, I mean, this is one of the great public market success stories over the past, I'd say 10-ish years.

It was founded in 2004, but the company we want to talk about today is Shopify. Why don't you just start? Give us a little background on Shopify. Yeah, so Shopify, you know, it's become one of those cult classics, I would say, right now. And rightfully so, because basically, you know, what Shopify is able to do is if you're any, any sort of entrepreneur, you want to, you want to spin up a store where you want to sell goods, it could be tank tops. It could be sandals or it could be something like, you know, elaborate lamps. basically Shopify can be your go-to infrastructure to not only set up your e-commerce site, but also if you need a POS for your store, point-of-sale system, for your retail store,

if you need distribution, if you need a CRM software, if you need marketing, like everything, it's an all-in-one place for you to go to for all the resources to set up your retail business. And so that's really powerful, right? Because, one, what does Shopify do, right? So, yes, it serves, you know, the local cupcake shop that is trying to sell their cupcakes. But also, it serves me and you, right? So let's just say, like, I, you know, I just want to make t-shirts that have my logo on them because I think it would be funnier or something like that, right?

I'd wear one right now if you were. I would wear it for the podcast. But, like, you know, I could just go and spin that up, right? And start selling those T-shirts. And that's so powerful because you're just, you're starting this new entrepreneurial spirit in a number of different people. and we'll go into some of the financials here, but like, that's, that's one of the funniest things. Like, there was a short report that was like, oh, Shopify, it churns a lot of customers.

Well, no shit, it churns a lot of customers because it's like, if I started a store and I'm doing my side hustle, and if it doesn't work out, then yeah, I'm going to churn. But again, it goes to alignment of cost structure. How much did it cost to acquire ShowMick as a customer, right? And if it was just some SEO where I looked up, like, what's the easiest way to start a business? And then I popped open Google search and I saw Shopify, that cost is not that much, right? And so that's a very aligned cost structure for something like that. So anyway, just, you know, a brief overview of that's great. So the brief overview is you want to build a store, Shopify can, it's basically all in one for building an online storefront, right? And I guess the thing that surprised me is,

you know, I heard about it a couple years ago into my chagrin. I didn't invest because maybe I thought like Shopify is a Canadian company and I was like, oh, those Canadians, they love to to talk about their national Canadian companies. But I looked at it and thought, like, what's the different, Shopify said we have a flywheel. And some of their, especially the new businesses, I think they do. But I looked at and said, what's the difference between like a WIC storefront and a Shopify storefront or there are any number of competitors?

So what is the Shopify flywheel? Why has Shopify been so successful and grabbing so much of the market? So Shopify is one of the, my favorite, like, so people ask me like, what companies you learn a lot from? And what was the company that you learned the most from? And, you know, I would say, obviously, Berkshire, right, I learned a lot from things like that. But Salesforce was probably one of the most influential for me in my SaaS journey, right? And then I learned a lot about concepts like distribution and things like that.

I think the next generation is going to be studying Shopify and not salespeople. And part of the reason why is there's a confluence of trends that are happening that is creating this flywheel. So if you think about how Shopify first started, it was a truly bottoms up end user serving product. Right. So again, mirror you, the login, transparent pricing. You can have the early plan, the advanced or professional, and it's all right there. You know what's going to happen. You can just spin it up, boom, all of a sudden you're starting to sell your product, right?

Okay, so that's great. That's just sort of consumerization of IT that everyone starts to talk about. But now you think about, you know, Heinz ketchup or, well, they're more than ketchup, but Heinz, all these large brands are now going on to Shopify. How are they getting served? They're actually coming on to Shopify Plus, which is the enterprise offering. and there's a direct sales force that goes out and gets those leads, right? So now you have an enterprise offer.

You have a Salesforce like CRM sale that's happening within this thing that started from bottoms up, right? Which is just freaking fascinating, right? That they're balancing both those business models. Did you have a question? Yeah, no, I agree. I 100% agree with you, but let me just push back a little bit further. So you know, like three years ago, even before Shopify Plus really got going,

like why was Shopify so successful in taking so much? share versus the other competitors. You know, like, three years ago, I could have gone and done a Wix store. I could have done a Square store, I believe. Like, why did Shopify take all the market? Because I think they've got like, as you said, seven or eight percent of online retail at this point, right? Only Amazon is bigger.

How did they grab this much? Yeah. So, you know, what's interesting is, you know, you think about Wix or you think about automatic, right, which is WordPress is their open source and they're the enterprise version of that. You know, yeah, they should have been able to, frankly, take a lot more. market share, but they also started off in a different way, right? They were serving users who wanted to spin up a website, which was really hard before they came. And yes, they're now moving

into different areas, but still the core thing that they worked on and the core like kind of pain point that they came from was how do you spin up a website? And that can be used for a variety of different things. It could be a financial website. It could be a resource. It could be so many different ways. So, you know, it's much more broad in nature. Now, if you look at how Shopify got started. Toby, I think, famously was selling snowboards or something. Yeah, that's right. 2004 selling snowboards. Yeah. So he's selling snowboards. So this guy comes in, he's selling snowboards and he realizes like, hey, you know, this could be a much more seamless experience if we had kind of these different components, right? So he builds that out. He lived that pain

point himself. He was selling his own snowboards, right? And so now it's a much different experience, even from the design, the checkout, like everything that's tailored from the initial Shopify website and the structure is much different than Wix or automatic or anything like that. Because it's not just a website builder, it's a website tailored for retail, right? Because he's delivered that pain. And so again, that's where he had a narrow focus that he was focused on. He knew that pain really well and then was able to quickly start to reach out to, you know, fellow co-sellers and then spread violently because there was this easy to adopt a platform.

And so that's where it's really powerful, right? It comes from that end user pain that he experienced. No, that's great. So at this point, I mean, I think they are the dominant way if you're not kind of going on Amazon. They're the dominant way that you're going to sell online. And if it was just that, obviously that's a huge market, but I think they've got tons of level up opportunities.

So can you talk about all the different things that they're leveling up into and expanding into and how that kind of increases that flywheel. Yeah. So let's like I think what's really core with Shopify is to understand all the different components are coming together. So you have bottoms up, you have a top down Shopify plus sale, right? Yep. Then have an ancillary product and payments that they've now tackled on to give like almost what I would call, you know, net dollar retention for a, for a SaaS company where you're selling kind of new products on top of your core product. That's sort of what they're doing with payments. But then now think about the other moves. that they've made. One, there's like 30,000 agencies and, and, uh, and different kind of shops

that help start, that help entrepreneurs get their Shopify, uh, store up and running. And so the, the corollary to this would be like Salesforce or service now. They work with a bunch of system integrators like Deloitte, Accenture, things like that to set up your instance. That's what's happening now in the Shopify ecosystem. And that is a huge flywheel because now you don't even need to invest those resources yourself. Other people are making money. by enabling your platform, right? You're now truly a platform. And so that's creating this flywheel effect. And then they now have an app marketplace as well. So there's also upsell not only coming from the payments, but also from this app marketplace where there's developers creating stuff,

Shopify's creating stuff internally. And then also they do some really interesting things. So this is where the capital allocation starts to play in, where they, I think Kitt CRM was something that I believe started on the Shopify marketplace. But there was a couple other things that also, I think they bought from the shop-life marketplace. Anyway, if you think about that as a CRM product, it's interesting. They bought that product and then they actually bundled it into their offering. And so why would you do that? If you bought this thing, you paid a bunch of money, why would you bundle it into your core offering? Well, one, you increase the value of that bundle, right? And you're increasing the retention as well. But also, secondly, like, what they've realized is, hey,

you know, a weak point in our offering may be that people don't have a customer, you know, portal to kind of track all their customer engagements and everything like that. And so that may be a reason why if Wix maybe worked with someone who had a really tight integration, they might go over to Wix or they might go over to Square, they might go over to this other things, right? So they actually go out and buy one of the number one used CRMs on their platform and then just give it away for free in their bundle to cement their place, right? And that's really where the powerful nature of Shopify is coming from.

They have all these different components that are working with them. and they're thinking further ahead in terms of even capital allocation of where can we stave off competitors and improve the product offering. So that's where it gets really exciting. Yeah. And one of the ones that I'll let you talk about a little bit, I think the coolest one that I saw because I see it and, you know, I think the biggest moat for Amazon is the logistics network and the shipping and just having all these warehouses built out in one day shipping. And I didn't think anyone would ever be able to come close to replicating that aside from maybe Walmart. But, you know, Shopify fulfillment, which I just think is the coolest thing for turn reduction, anything.

So maybe you can talk about that and how you kind of view that expansion. Yeah, you know, so it was funny because they expanded into that. And then I was like, okay, wow, this is really exciting. And then I was like, but wait, this is going to take a lot of money. Like, oh, my God, this is going to take so much money. Like, how are you going to build this up, this distribution? Like, you've got all these warehouses. Like, this is just crazy.

It's you're building a supply chain, right? And then what's funny is kind of there's a reflexive component to this where the stock price kept on going up, and then they just start selling stock. So they raise something like three billion dollars at great prices that now, like the capital of the entry is no longer a barrier, right? They have infinite amounts of capital now to pursue what is a major large market, where again, now you can increase the value of your bundled offering, right? Where now you're just saying, hey, it is literally point and click, or not even point and click, you can actually work with one of these distributors so that you don't even have to worry about, they will

set up your Shopify store, all you need to worry about is designing your product. And then we can help you from the total supply chain of even working with your manufacturer, getting it shipped here, getting it distributed to your customer. Everything will be handled by us. And you don't have to worry about, right? And think about that. Again, we're talking about decreasing cognitive load and decreasing friction to adopt. This is like the easy, like, I can't think about any friction in this process. Like, I'm struggling to even understand, like, where I would have trouble to adopt this, because I could just work at work with an agency to then start using the product right away. So I think this is a really powerful concept and one of the things I'm really excited about

for them in the future. Yeah. And it's funny you mentioned, hey, they announced it their stock keeps going up and they can raise money at great prices. And it reminds you of in the late 90s, Jeff Bezos, when he was like the dot-com bubble crashes. And he says, this is great. Because before, like, my competitors could raise unlimited funds. And like we had, we just had to spend on crazy stuff just to keep our moat. Now that no one else can raise money, like our mode is kind of cemented at this point. And for them, you know, the stock goes up, they can get all this capital and they can get into all these different ladder up opportunities. Yeah, it's just interesting to me, right? Because like we, I think right now, I don't want to say

everyone, but a lot of people are shying away from capital intensive models, right? Because they're just like, oh, we want this asset light, you know, just 80% gross margins and stuff like that. And, you know, it's worked really well. But at the same time, also as we all know, like multiples usually reflect that over time at least. And those will kind of, those should at least come to some sort of steady state, right, in terms of future returns. But the interesting thing is like, now all of a sudden you have Shopify, which is asset light, going into a kind of asset heavy type business, right, where they're having to invest in logistics infrastructure. And maybe they won't own warehouses. I'll be curious to see if they actually go about that route. But like, even if they

don't, it's still the robots, the, you know, all this different infrastructure that you need to set up to actually have that occur. You know, that's, that's capital intensive. And that's so, that's so interesting to have happen where an asset like business is raising enough capital to go into that thing because then that's going to further cement their mode. No, you know, it's such a good point. And it makes me think like we talked eye buying, right? And Zillow, which Zillow is super capital right, right? Like they just run some algorithms and put out his estimate. And they're moving into, hey, we're actually going to invest our money to buy homes. Like, that's maybe the most capital-intensive business I could think of.

Netflix, we're really capital-lite. We basically lease Stars' Disney movies and just show them to you and said, hey, we're going to go spend hundreds of millions of dollars to building an original. So I do wonder, and it's something I'm going to think more about, like when an asset light business actually pivoted into asset-heavy, maybe that's a sign of both moat, a visionary CEO, and that's actually where the real alpha can be generated. Yeah, you know, it's an interesting concept. And it's something that I would have to, I'd have to explore a little bit more as well.

But it's just, it's, I think one thing is if they have the capital to do so without leverage, I would say. If they have the capital to do so without leverage, you could have a really powerful outcome right there, right? Which could be exponentially higher than whatever we think. Because again, now you just increase the power of that bundle. So you could not increase the lowest price because those entrepreneurs probably can't pay, but that middle tier could actually go up. And the advanced tier could certainly go up.

And then Shopify Plus just got a lot more, you know, expensive on a dollar basis. But in terms of value, as we know with bundles, like actually probably just went down for the utility of the customer. Well, look, here's the good news. We've got something we can talk about for years going forward because from now on, whenever you and I see a company asset light pivoting to asset heavy, we're going to have to send a message and be like, this is our signal. We need to at least look at this heavily. Let's talk about the bear case. You know, I think Shopify, you mentioned one of the bear cases, which I think, you know, a couple other that did a great job of disproving was churn as high. Well, yeah, you're dealing with

like startup businesses. Of course, turn as high. That's actually kind of a good thing. But I think the simplest bear case right now would be valuation. Shopify trades at 50x. Not 50x earnings, not 50x, but it trades at 50x sales right now, right? That's a huge number for any company. And Shopify, it's not like it's a startup. You know, it's almost 20 years old at this point. So tell me why 50x sales at this point is not too expensive for Shopify. Yeah. So again, I would say 50X sales is not. So I don't think it's expensive from an absolute valuation perspective. I do think it could be expensive from a relative valuation perspective. But again, the question then becomes, what's your holding time then? Right. So now you're holding time probably just got longer in terms

of how much you're willing to pay ahead of revenue and of free cash in the future. For me, the reason why I think it's still actually an attractive valuation for, you know, let's say five years out, is because, first of all, one, we haven't really seen many businesses with this many different kind of confidences of business models that are all hitting it at once, creating this mode around this business, right? And I think, you know, what's that Charlie Munger Lollapalooza quote? Like, when you see a bunch of things happening, like there's probably something that's working there. And I don't know how to like handicap the magnitude of what that could be because we just haven't seen it before, right? It's something that's still a relatively new thing in terms

of business models and structure when you have all these different things that are coming together. The second thing is, again, 7% market share of the U.S. e-commerce market, right? That could certainly go up, but then also you have international and you have all these different areas. So, like, it's one of the largest markets you can think about. E-commerce is the largest retail is the largest, you know, market we can think about, right? And so serving those customers, like, from an absolute valuation basis, I don't know. hundred billion is not much in the grand scheme of like five trillion dollars of spent right no i i would only push back on one thing you said we haven't seen this lala pelusa effect before and like i think we've

compared this to amazon like 15 times at this point right and i i think that that comparison makes a lot of sense if this is amazon 2.0 you know you say hey it's a hundred billion it's 50x well run this forward 10 years if this is amazon 2.0 like wouldn't you want to buy into amazon at a hundred billion dollar valuation and like you you can see a lot of different stickier things and as we mentioned like it's 50x trailing sales but what if they can get into two more things right they're doing shipping what if they build out the next uPS or something like there's just a lot of level up things so i do think we've seen a lollapaloo like this before and as we say it it just reminds me so much of amazon though i would say just you know kind of uh you read ben thompson like

trajectory. Yep. So, you know, I would say Amazon has a bunch of different business in it, but, you know, probably core Amazon, what we think of is an aggregator. And then the actual platform is AWS. And what Shopify is in the platform is not an aggregate, right? And so I think there's, there's kind of different components where it's almost like more of looking at what Microsoft is doing as a corollary or what AWS is doing as a corollary to what Shopify is doing, right? I don't disagree with you, but you know, AWS was spun out like Amazon retail needed all this computing services. And like when I was, I was reading the Shopify, I think it was the 2018 Investor Day to prep for this. And Shopify fulfillment. One thing they said was, hey, we dog fooded

this by the Shopify hardware we send out. That was our first customer. And like, that was such an, that was such an Amazon sounding thing that they did. And like maybe they are an aggregator right now, but you can see how the platform comes out of the aggregator at some point with a CEO like this and a platform like this. Yeah. So I mean, but I think the bear case, there's a couple different things, right? Go ahead. I was going to ask more on the bear case. Yeah, please. Yeah. So one is bear case is the competitive landscape is evolving, right? Square is not sitting on their ass. Wix is not sitting, right? They are making changes. Big commerce also just came out. I think their offering is is not quite up to snuff with Shopify. So I don't, you know, anyway, I won't go into that.

But, but basically what I would say is I think, I think Shopify has a strong product lead and also a strong business model lead at this point. But at the same time, there's a bunch of other players out there with different entry points that could still figure out different ways to do the same thing that Shopify is doing. And the question is, is the entry point that they're doing like square with easiest POS systems out there? Like, is that the best entry point to go into this, you know, category, right? And it's still unclear on that. So that's one thing in just terms of the competitive moves that these other companies are making. That's a potential bear case because then that could change Shopify's competitive position in the future. The other bear case is

MailChimp has had a pretty public falling out with Shopify, right? And MailChimp itself is kind of starting to build out its own offering, right? It's also starting to partner with other players. And so that's something where if some of these best breed players start to say, hey, Shopify, you're encroaching on our turf or for some reason we don't like working with you, that can actually damage the moat, right? because while they do have all these things bundled, still a lot of customers want to choose best of retooling. And MailChimp is probably one of the best, you know, email subscription things out there.

And so if that goes away and the integration is not as tight there, that's also a bare case to the product offering that Shopify can offer their customers, which then could lead to more churn, right? And then I think the third thing on valuation is, you know, for me, I struggle with, again, And I think it would all depend on time frame. So it's hard to say of like the bear case because absolutely I can make a bear case for next year Shopify getting cut in half, right? And then you being like, oh, I'm down 50% right. But the question depends on your holding period.

Like if your holding period is three to five years, I start to think that actually you can, you can see some pretty attractive dynamics here because I'll give an example, net new customers are being added to their base. my parents have never done online shopping ever right they don't even like they have phones they don't use laptops right so it's all through mobile but recently through this crisis what has my mom been doing she pops open her phone and starts being like oh this is a cool watch well guess who that who that watch is sold on the shopify platform right so that's where this net new is being created so absolutely there'll probably be some sort of reversion when we kind of go back to normal whenever that is but still there's net new uh behavior that's being created that will stick around for the long time. Yeah. No, and look, I hear you on it's all about time frame. Like personally, I want to buy a business that five years from now, you know, it's going to be worth two X what I'm paying for today, something along those lines. Like, I just think the most boring thesis is are, hey, this trades for 25 times and I think it's actually worth 20 times,

right? Like, that's what my DCF model spits up. I think that's the most boring short thesis. And I think it's also been disproven. You know, we talked about Salesforce, which you said was your your case study. Like I remember so many people were like Salesforce trades at a hundred times earnings. Like there's no way a company could ever justify that. Like Salesforce, you know, 5x since then. You know, so many people were short Amazon and Netflix, some of them for competition, but a lot of them, hey, these trade at nosebleed valuations. And guess what? Their best-of-breed businesses run by the best CEOs and the industries and both them found a way, you know, I think Shopify's got a lot of that.

Let me ask just real quickly, one competitor that isn't, I'm a little surprised by is Facebook, right? And I think Facebook and Shopify actually announced a partnership. And I had always kind of thought, like, this is a natural area for Facebook, right? They've got a lot of capital they can invest. You could run a Facebook website with Facebook handling all the back end. Like, I'm just a little surprised with that. So can you talk about why Facebook isn't a competitor in the Facebook partnership? So I think the reason why is there's some cultural aspects to it, right?

And, you know, again, it's hard to, these are all different things that you have to take from different resources and synthesize your viewpoint. right but there's a there's a book on uh i think it's called no filter um on on the story of instagram that came out it's a really fascinating read but basically you know it talks about how um mike creger and kevin schistram their company was bought uh and how it goes through you know just what they experienced within the facebook organization and a lot of things that that at least that book talks about is how everything was tailored to how are you going to keep big blue alive right so if you think about stories stories natively work really well within uh within Instagram, but stories are now everywhere, right? They're in the big blue app as well.

And, you know, I assume people are engaging with it, but it's just something that, you know, originally was supposed to be in Instagram, right? And you can see now how cross-posting and stuff happens. And so when you think about that being like kind of the core tissue of this, it gets to be a little bit more challenging because if you're going to start to now build Facebook pages for businesses and then start to set up this whole retail business around it, well, that's going to detract away from the user experience of bringing people together and groups and all that, right, within the core big blue app. And so, you know, that's something where I imagine, you know, Zuck probably isn't that happy about, right? And it's not something

that he wants to do about. So there's a cultural barrier to that. Now, Instagram, though, is super interesting. And that's one to watch, right? Because I do think that they have, with the influence, or trend with people already, you know, conditioned to look at things, click on what they're looking at and then go to that store and now sort of be more of an affiliate model. They should be able to turn that into more of a direct model where you can purchase right away. The question there becomes like, can Shopify provide a frictionless enough experience such that Facebook doesn't want to build out Shopify's offering on their own, right?

And I think for now that's not their focus, right? They're still focused on growing users, on connecting users, on making it more of a seamless experience. And right now, the most seamless way is you connect to Shopify, and they'll handle all these different aspects of the business. And then over time, you know, they'll start to take some share like Facebook pay or whatever they're calling it. Like they're going to come out with their own payment platform. And that I think could, you know, be a detriment to some of Shopify's payment revenue. So that would be interesting to watch. But it's just how tightly can they integrate it? What does the user experience look like? That's something we'll still have to watch as it goes for.

And look, I think this goes back to the level off opportunities can be very profitable, but it's also about building the mode out, right? Like if Shopify, if they're only the core Shopify website experience, Facebook can eventually replicate that. But if they've got all your customer relationship management on there and they own all the data, and by the way, you're doing all your shipping and warehousing and stuff through them, like that's a lot more expensive, a lot more time consuming and a lot more headache for Facebook to look at. So I think all that's it. Last thing I want to talk about, Shopify CEO, Toby. back in 2018 somebody tweeted hey i think amazon will buy shop by in 2019 and toby responded i'd rather buy amazon in 2020 now i'm pretty sure he was joking i don't think there's any chance regulators that happened but what does that tweet tell you about him and just kind of dive into him

for a second because i think he's a revolutionary CEO that not a lot of people are super familiar with maybe because he's Canadian so so you know i think every single interview that i've at least heard about He's extraordinarily thoughtful about org design, about how to make sure. You know, one of the things I think is fascinating about the best capital allocators over time is if you think about the way that they look at things, it's mostly org design, right? It's how do you decrease the ability to get bad news up to where decisions need to happen and also empower different folks to make decisions when they need to? And that's where Toby is completely, that's his whole trust battery thing, right?

If you have a certain trust level, like, by all means, at that point, you go make your decisions and, you know, make them quickly, right? And this is the same thing that Mark Leonard does is Constellation, or even Berkshire, right? Berkshire centralizes capital allocation decisions from, you know, a holdco level. But then each of these individual companies is kind of just told like, hey, you're completely decentralized. Go. Yeah.

Yeah. And so I think that's fascinating that Toby has kind of, is studying all this work design and building that into his, you know, into his company. The second thing about Toby, though, is, you know, there's an interesting thing that's happening right now with influencers in the entrepreneurship world, right? And right now, there's a huge war for talent. I'll even say from our companies that we're working with, right, to hire an engineer or to hire a developer relations person or stuff like that, it's a battle. It's a, you know, you're going to war with like other companies because everyone has capital.

They all are able to pay. So it's really about the vision and the opportunity of responsibility. Toby goes out there, play StarCraft online. I was going to use the same anecdote. Go ahead, please. Yeah, like he goes out there. He plays StarCraft. He's like the LeBron James of Twitter, right? Like he's literally, he goes, he messes or he jokes around with people.

He quotes funny stuff. He pokes humor at himself, right? And all this engenders this ability within Shopify for others to express themselves as well. And so one of the interesting things is if you look at different Shopify employees' tweets, they're literally celebrating like we've been here for five years we've been here for eight years we've been here 10 years right that is crazy that they're just you know one that they've stayed that long but also too that they're just like going out there and they're celebrating it right and everyone else is like can't wait to hit my one year milestone or can't hit to wait to hit my two year right

so you're attracting more talent you're attracting the best talent to your company because you're out there and everyone's like wow i want to work with toby because he's this amazing person No, the coolest one I thought was, he played StarCraft, as you said. And if I remember correctly, there was, you know, a 20 year old StarCraft, basically professional player who was, who was, and Toby said, hey, we'll give you, you'll have an internship. And I love that the, the StarCraft player didn't know who he was. So it's like, oh, great, cool. But who are you? Like, how can you give me a shop by internship? But I just love, like, you know, this guy, yeah, maybe he's not your traditional business candidate, but he has exhibited, like, talent, drive, expertise. Like, I know, still a lot of people probably scoff at e-sports players, but, like, it is hard, hard work. There's a lot of training, a lot of kind of, what's the zero to 10,000 thing, like concentrated practice or mindful practice or whatever, like, if you're going to be a pro, you need that.

And he's exhibited that skill set. And I'm sure that guy, if you give him six months in any organization, I'm sure he's going to be fantastic. And like, Toby was hiring for talent, not for fit right now, but for talent and fit three years out. And I just think that speaks to a great leader. Anything else on Shopify or anything you want to talk about before we wrap up? You know, I don't really think so.

I would just say like, you know, again, this is a, I think it's really hard to comprehend the market size here because as we talk about other companies like starting to target this area, right? Shopify was the first mover, but then now you have all these like square different entry point, but now realizing like, whoa, there's a lot to do here, right? We'll see if, you know, kind of what Stripe does in the future too, right? as they start to look at different things. And I think it's just really validating that this is a huge market. So in terms of the size of how big this could be, now you have to start thinking about,

like, okay, well, what's the global market share that a company like Shopify could get? And then what are the blockers to them getting that? And if you know those blockers, then you can start to handicap. What's the risk that they're going to be able to remove that, right? And so that's kind of where I focus my time with Shopify is like, okay, well, how do they get to 15% market share? Well, I know Amazon's doing this. I know Square is doing this. Hmm, okay, what do I think about the thesis where they're approaching?

Oh, that's interesting that they're now like bundling in Kitts, CRM. They're bundling in, you know, marketing automation tools. They're bundling all this stuff in. I can see how they're starting to move into these adjacent areas that could start to help them get that market share. So that's where I would just say, like that's the focus and the level of detail that you almost need to dive into to truly understand these companies at these valuations. Perfect. Well, look, I'm going to say it again. I've learned so much from the Minion Capital account over the years.

It's great to put a face to a Twitter handle. And, you know, this has been even more enlightening than I thought it was. Anytime you've got a new SaaS company or one of your portfolio companies goes public or anything, you're going to have a standing invite because this was great. I'll put the link so everybody can follow you guys in the description, which they absolutely should. But hey, thanks so much for coming on and we'll be in touch. Yeah, thanks to you as well. And I love yet another value blog and all that you're doing.

So please keep doing what you're doing. I will. Appreciate it, man. All right, see it.