David Rosenthal: belief

Transcript context

…Yeah. That’s a great point. We talk about this a lot on the show. We think about this a lot as venture capitalist. Distribution and distribution advantages are not often talked about or thought through in the early stages of a startup, but they make the difference between becoming a big, successful company that starts to get traction than a flywheel spinning versus just spinning your wheels. Yup. “If you build it, they will come,” is just so, so rare. All right, I had one more and that’s looking at the financials of this company. As customers sell more, Shopify makes more per dollar sold. I just want to pause and we can think about that for a moment. The classic thing I’m always afraid of when we’re starting a new company at PSL is, “Oh man, are we building something that will be really great for someone to get started and then when they have sufficient resources, they’re going to build their own thing and they’re going to move off of us? It’s a great business to get other people started, but then you don’t get to keep their business over time.” As these businesses grow, Shopify actually makes more money off of them. This is amazing. Merchants pay for advanced services as they become larger and more sophisticated, so the effective take rate for Shopify actually goes up as the customers grow the business. It’s amazing that they can keep pricing power and keep layering on through the platform that they’ve woven with the app store, and with the incredible ease that they provide in taking on a lot of things that these companies don’t ever want to do themselves. It’s incredible that they can grow that take rate as these businesses scale.…

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