from Hacker News

Bootstrapping to €600k MRR and getting killed by Shopify: Checkout X

by ericthegoodking on 7/27/23, 4:46 PM with 197 comments

• by rahimnathwani on 7/27/23, 5:38 PM

  I’m surprised at all the comments focusing on the negative here.

  I found the story inspiring: they bootstrapped a business, grew revenue, hired some people, and grew revenue further.

  The founder created value and captured some of that value. The fact that the business can no longer acquire new customers is sad, but it’s only a small part of the story.

  The founder’s 6 year journey is probably more interesting than what most people did at work over the past 6 years.

• by spamizbad on 7/27/23, 5:03 PM

  I'm not a business expert or an entrepreneur, but I've been around this industry long enough to know: Unless your intention is to flip your startup into an acquisition, I would recommend against plays like this.

  Specifically, tying yourself up to a closed ecosystem by building what amounts to a (albeit very nice and powerful) super-feature.

  I am saying this because I work for a large-ish company where someone did this to a section of our product that was also mediocre. One of our co-founders reached out to the company and actually offered to buy them for, what I felt, was an insanely high amount for what they were building. They rejected the offer so we threw some devs and an awesome designer at the problem, made something just as good, and then shut them out. They ultimately shut down.

• by brianwawok on 7/27/23, 5:22 PM

  Well, I can relate as I just got an email that Shopify changed their partner TOS today because of me.

  They had demanded that I add a negative keyword "Shopify" to all of my Google ads.

  I declined, because - it wasn't in our partnership agreement and I in fact DID want clients who used Shopify to find my business. (I am in the e-commerce space selling a product that works for many marketplaces including Shopify).

  Just got an email today about a partnership TOS change. Now I need to put a negative keyword in any Google ad campaign they deem it necessary, despite like I said, Shopify users being great product fits for me.

  I am just a little dude. What power do I have? Not really anything, the biggies get to tell me what to do. I either follow the rules of the game or get banned from the platform. Rather frustrating to say the least.

• by atourgates on 7/27/23, 5:58 PM

  An interesting take. The only bit I strongly disagree with is this:

  > One advice we got was to file an antitrust case against Shopify in a European Court.

  > Theoretically, we could’ve argued that Shopify uses anti-competitive practices to get rid of their checkout competition. Similar to what Spotify & Epic Games did against Apple.

  > While that might’ve been a viable option, honestly, I don’t have the balls to pick a legal fight with a multi-billion corporation.

  > On top of that, I believe that crying to the regulator is a bitch move. After everything, I still believe that Shopify built their platform and they should be able to do whatever they want with it.

  I have no insight into how the EU's competition laws would or would not apply here, but that's literally the regulator's job, and it's certainly not a "bitch move" to hold companies accountable for anticompetitive behavior (if that's what's happening).

• by leteyski on 7/28/23, 5:25 AM

  Hello everyone, I'm the founder of Checkout X and the original post creator - so flattered to see all the engagement here. Thanks for the kind words and the criticism, I totally respect everyone's opinion on the topic. I intentionally waited a couple of years before I wrote the post as I just wanted to share the story of Checkout X for people to see it - without any agenda. Checkout X is a closed page for me and I'm looking forward towards the future.

  Some updates from me: - I built another Shopify app ( Vanga AI ) that got acquired this year - I've summarised my thoughts on the current Shopify ecosystem in another blog post: Why I'm leaving the Shopify apps business ( https://www.leteyski.com/why-i-m-leaving-the-shopify-apps-bu... ) - I've summarised some of the business lessons I've accumulated into a Startup assessment framework called: The Dead Horse Framework ( https://www.leteyski.com/the-dead-horse-framework )

• by ivanmontillam on 7/27/23, 6:10 PM

  My 2 cents here: It's not always too bad or weak to assume some platform risk to make some business.

  Just always keep in mind that, it's not forever and that you should preserve some of that piggybacked money for less risky endeavors. I think business that are mounted over a giant, whilst prone to be killed anytime, can be used for a quick buck[0] as part of a larger plan. In this case, the author was aware of that, but more fore-thinking would have helped.

  For instance, I leverage Telegram bots to make some business, but I'm ready for such an scenario where Telegram, decides:

  - To make its API paid.

  - To copy the features of my bots into product features.

  See what happened with Reddit's API. WordPress purchased WooCommerce and it became a happy story, but it could have gone wrong and become a horror story where the purchase could have not happened, and WordPress gone into destroy mode.

  I tread lightly.

  --

  [0]: Do not conflate "quick" with "easy" in this context. The faster, the harder it is.

• by eYrKEC2 on 7/27/23, 5:09 PM

  When you expand on something core to another company's platform, that is sometimes referred to as "picking up pennies in front of a bulldozer."

• by matrix_overload on 7/27/23, 5:03 PM

  This is a very expected outcome if you are creating your business around improving a larger business' product.

  You are effectively doing the product/market fit for them, for free. Once they see that your solution works, they will just knock it off, or ban you altogether.

  It used to be seen by companies as bad PR/karma a couple of decades ago, but not anymore.

• by lazzlazzlazz on 7/27/23, 6:00 PM

  It's remarkable when stories like this reach the top of Hacker News, but then people still do not understand why one might want to build an application on a "Can't Be Evil" platform like a crypto network.

  Scalability/costs/complexity aside — this is why Ethereum and similar decentralized computers are attractive.

• by ilrwbwrkhv on 7/27/23, 5:22 PM

  A lot of bootstrappers start of this way. Hell even I started out this way.

  But the golden rule is, you need to move away while the sun is shining. Reinvest profits elsewhere and start a business which doesn't depend on anybody else.

  The current crop of people building on Open AI should also pay heed.

• by lolinder on 7/27/23, 5:38 PM

  The author set up a business in what they knew was a gray area. 6 months later the ToS were updated to explicitly ban what they were doing, and they got an email that pretty clearly implied that they would need to make major changes but wouldn't be shut down right away, but the author chose to interpret silence as authorization to keep scaling. About 8 months later Shopify's COO told them explicitly that Shopify didn't want them to keep operating, and the author used a technical detail of the way they phrased the ToS to justify continuing to scale.

  At that point I lost all sympathy for the author. The COO of the company you've built your product on told you that they don't want you to keep running your business. At that point they shouldn't have to keep playing whack-a-mole with loopholes in the ToS, and the fact that they did does not speak well of the author or their company.

• by Michelangelo11 on 7/27/23, 5:29 PM

  > Shopify also dedicated some of their employees to pretend to be desperate Checkout X customers and beg our support to let them in. Not sure if I should be proud or annoyed by such pitiful actions.

  Man that's something. Kinda flattering that they're so desperate for reasons to cut you off, they start to try to fabricate them.

• by shopi-throw on 7/27/23, 7:16 PM

  I work at Shopify. This was inevitable. Shopify is Checkout. Checkout hijacks like this are taken extremely seriously because it diverts GMV and provides an inconsistent buyer experience that Shopify doesn't control. I'm honestly surprised the company didn't take stronger action here.

• by cryptica on 7/27/23, 10:30 PM

  Wow that is a crazy next level user acquisition story. Acquisition using source code as marketing, never heard that before. Great to read from a true self-made entrepreneur.

  I can relate to the feeling of everything working against you and having to do some insanely contrived stuff to get around all the hurdles though I never faced such constraints as the author.

  Entrepreneurship in the tech sector these days feels like a full circus show; you need to clown around a bit in front of investors to raise funding, when that fails, you need to ride a unicycle over crocodile infested waters, then jump through some flaming hoops, then tame a few hungry lions... Then after all this, one of the lions goes nuts and you get devoured anyway.

• by cycomanic on 7/27/23, 9:56 PM

  >... locked us out of Upsell X and we couldn’t support it anymore. Even further - they kept charging merchants for Upsell X - but we never received those payouts.

  Putting all the other things aside, but this struck me. How is that legal? That sounds like outright theft to me.

• by invalidname on 7/27/23, 5:18 PM

  I was contacted by a non-technical team with a concept about a new shopify based startup. I thought I can just build it in a couple of months then let them operate it.

  I spent a month on it just researching through the mess that is the Shopify API. It was a pain. I got the mockup working but it looked like this is risky. Tried all channels and got nothing. Eventually someone answered and it seems that everything I built won't work. We would need to jump through hoops to be Shopify compatible and I decided it would strip the startup of its value.

  Decided to declare the month of work I did as a loss and bail. Still traumatized from the whole mobile development pain of Apple and Google...

• by jimkoen on 7/27/23, 5:01 PM

  > However, Shopify killed it - just because merchants were choosing our solution over theirs.

  I don't see whats so suprising here.

• by justinclift on 7/27/23, 6:41 PM

  Isn't this Shopify clearly engaging in theft?

      ... they locked us out of Upsell X and we couldn’t support it anymore. Even further
      - they kept charging merchants for Upsell X - but we never received those payouts.

• by sharps_xp on 7/27/23, 5:18 PM

  I'm impressed a single individual got to 600K MRR by himself. Only a few people can say that they've done that. Who knows when shopify would've taken their checkout experience seriously were it not for this guy. you can have interesting experience, build temporary things, be proud of it, and move on to the next thing.

• by tsunamifury on 7/27/23, 6:55 PM

  "Crying to the regulator is a bitch move"

  I both understand the sentiment, but also how else are we going to stop 5 companies form running the world, and the rest of us eating grass?

• by locallost on 7/27/23, 5:40 PM

  But still: congrats! Seems like a fun ride, a lot accomplished, money earned, and if I understood correctly they still have their current customers, just no new customers. So they are still getting that MRR. Maybe raise prices since the customers have no other options :-).

• by 3m on 7/28/23, 9:06 AM

  In this thread: lots of people who have never started a business giving advice to a guy who was making 600k/mo about why his business was dumb. Hacker News at its best.

• by thinkingkong on 7/27/23, 5:17 PM

  Theyre lucky they let this last as long as they did. Lots of other teams and products built on top of someone elses ecosystem havent been as lucky.

  I think the term we use for this is being “Sherlocked” back from when Apple copied Sherlock and turned it into spotlight. Anyway theyre joining the ranks of famously successful short lived products. Glad they made bank in the meantime.

• by kunalgupta on 7/27/23, 7:10 PM

  Their mistake was that they built something hard that was literally a clone of Shopify. It made it hard for anyone else to want to compete with, but it was exceedingly easy for Shopify to compete with. Most Shopify apps build features that Shopify doesn’t have, and therefore the App Store revenue share model makes more sense for Shopify.

• by mwn on 7/27/23, 5:20 PM

  You had a great run, but I think it is unfair to say that Shopify “saw what you were doing” and “hijacked” your business. Obviously a small team can move faster and Shopify could easily have internal development plans for the same solution for a long time. Kudos for the €600k MRR and your execution.

• by rootsudo on 7/27/23, 5:28 PM

  Hey, better be killed by Shopify then murdered by Meta/Microsoft/X with "Checkout X"

  But yeah, should've gotten the MRR high and then shop it around and take a nice buyout. Some PM noticed, shopify noticed the MRR and decided they can implement it and take it for a ride.

• by chupchap on 7/27/23, 5:13 PM

  The only logical move would've been to setup a Shopify competitor and making a new platform

• by totallywrong on 7/27/23, 10:49 PM

  Don't build your house in another man's land.

• by asdev on 7/27/23, 5:47 PM

  people giving their advice but never even made $1 MRR from their own products. this is an amazing write up, lots of lessons to learn from this.

• by rglover on 7/27/23, 6:10 PM

  Best business lesson I've ever learned: never build your business on top of someone else's business.

• by satvikpendem on 7/27/23, 5:29 PM

  How many times are we going to hear the same old story warning of platform risk? It happened with Twitter, Reddit, Facebook, Stripe, and so many others. If you want to control your company, don't build off someone else's infrastructure, make your own, even if it's harder to do so.

• by asdfasdfkjl on 7/27/23, 6:10 PM

  > While that might’ve been a viable option, honestly, I don’t have the balls to pick a legal fight with a multi-billion corporation. On top of that, I believe that crying to the regulator is a bitch move.

  Everything was so composed and professional until they got to that part. Whattttttttt?

• by pirsquare on 7/27/23, 10:58 PM

  The key to long term success in Shopify ecosystem is to focus on a niche market. For example, a scheduling tool for merchants. If you build something that almost every merchant will use, it will be eventually added to Shopify's core offerings.

• by szundi on 7/27/23, 6:31 PM

  Takes years until he loses 80% of clients, people are so lazy switchig even if it saves money

• by bluishgreen on 7/29/23, 4:27 AM

  "honestly, I don’t have the balls to pick a legal fight with a multi-billion corporation. On top of that, I believe that crying to the regulator is a bitch move."

  So somewhere between balls-less and a bitch. Mmkay.

• by oellegaard on 7/27/23, 5:57 PM

  What is the value of using something like Shopify if you don’t even use the checkout and gateway included? You also need to code your own theme AFAIK

• by thedangler on 7/27/23, 5:30 PM

  Can you still get around not using Shopify for their checkout with your own payment provider?

• by dgb23 on 7/27/23, 5:31 PM

  Aside: Why isn't there a payment protocol standard that's implemented in browsers?

• by nolok on 7/27/23, 5:07 PM

  "I built my business on top of someone else's product without any gurantee whatsoever of being able to continue in the future, and when it became valuable for them to stop me they did".

  Doesn't matter if you're a twitter client, a facebook app, a shopify app, a reddit client or whatever, either what you offer is negligible, or you did their research for them and now they can take over.

• by rhuru on 7/27/23, 9:26 PM

  Kudos for the author to write this article. Really learned so much from it.

• by shove on 7/28/23, 12:04 AM

  The comments are generally impressed at the “600k monthly revenue” and while I am too, is that “our business was grossing 600k/month” or “the sites we supported were grossing 600k/month through our checkout”? These are … very different.

• by smsm42 on 7/27/23, 6:45 PM

  Maybe sell it to Musk? Rumor is loves everything with X in it.

• by intrasight on 7/27/23, 5:22 PM

  You made some bank. Be happy. Find the next opportunity to do the same.

• by slim on 7/27/23, 11:04 PM

    I own Shopify stock
  

  aha! that explains the tone

• by kunalgupta on 7/27/23, 7:01 PM

  ah the old private app switcheroo

• by mcemilg on 7/27/23, 7:30 PM

  > Our affiliate program was simple. You bring a customer and we pay you 15-25% of the revenue we make from that customer. Forever.

  there is a very thin line between a pyramid/ponzi scheme and a generous affiliate program.

  https://en.wikipedia.org/wiki/Pyramid_scheme