Breaking the rules of growth: Why Shopify bans KPIs, optimizes for churn, prioritizes intuition, and builds toward a 100-year vision | Archie Abrams (VP Product, Head of Growth at Shopify)
Archie Abrams, VP of Product and Head of Growth at Shopify, discusses their unique strategies, including a 100-year vision, optimizing for churn, long-term experiment holdouts, and focusing on absolute metrics. He shares insights on their growth team structure and founder-driven product development.
Deep Dive Analysis
18 Topic Outline
Shopify's Scale and Unique Business Model
Shopify's Contrarian Approach to Churn and Retention
Monetization Model and Long-Term Success Metrics
Running Long-Term Experiment Holdouts and Learnings
Key Growth Levers: Monetary Friction and Onboarding
Optimizing for Absolute Numbers, Not Conversion Rates
Shopify's Growth Team Structure and Goal Setting
Counterintuitive Long-Term Results of Experiments
Shipping Neutral Experiments with Strong Intuition
Building a Hundred-Year Company: Founder's Philosophy
Why Core Product Teams Avoid Metrics and KPIs
Shopify's 'Get S**t Done' Project Review Framework
Collaborating Between Growth and Core Product Teams
The Importance of an Opinionated Founder's Taste
Integrating Sales into a Product-Led Growth Model
Shopify's Decentralized Marketing Organization
Lessons on Discounting from Udemy Experience
Lightning Round with Archie Abrams
7 Key Concepts
Shopify's Churn Philosophy
Shopify intentionally lowers barriers to starting a business, accepting high churn rates. Their model relies on a few highly successful merchants generating significant Gross Merchandise Value (GMV), making the entire cohort profitable, similar to angel investing.
Monetary Friction
Refers to any cost-related barrier for users, including trial dynamics, incentives, or price points. Reducing monetary friction can enable a new segment of entrepreneurs to succeed by giving them more time and resources to make their business work.
Absolute Numbers Metric Focus
Instead of optimizing for conversion rates, teams at Shopify focus on increasing the total number of people who reach a specific stage. This prevents perverse incentives where teams might inadvertently make earlier funnel stages harder to improve their local conversion rates.
Long-Term Experiment Holdouts
Shopify maintains control groups for experiments for one to three years, automatically re-evaluating their impact on long-term metrics like GMV. This often reveals that initial short-term 'wins' were either pull-forward effects or had no lasting impact.
Aim Heavy Culture
A company culture where if an experiment shows neutral short-term results but aligns with strong intuition about what's right for merchants and the long-term vision, it is still shipped. This prioritizes good product sense over immediate metric lifts.
Technical Architecture as Strategy
The principle that the technical 'how' of building a product is paramount, as it determines the company's future strategic options and adaptability. This means sometimes taking longer to ship features to ensure the underlying infrastructure is robust and flexible.
Incrementality Measurement
A superior method to attribution for understanding causal impact, where a control group is used to determine the true incremental lift from an intervention. This helps make more accurate investment decisions by focusing on what truly drives new value.
8 Questions Answered
Shopify measures success by the total Gross Merchandise Value (GMV) produced by a cohort of merchants over several years, rather than individual merchant retention rates, as a few successful merchants can make an entire cohort profitable.
Long-term holdouts allow Shopify to understand the true, lasting impact of changes on core metrics like GMV, revealing if initial short-term lifts were merely pull-forward effects or if they unlocked truly valuable merchant segments.
Approximately 30-40% of experiments that show a short-term lift on metrics like paying shops or first sales have no incremental long-term lift on GMV, often due to pull-forward effects.
Focusing on absolute numbers (e.g., total activated users) prevents teams from inadvertently making earlier funnel stages harder to artificially inflate their own conversion rates, ensuring a focus on overall business growth.
Core product decisions are driven by a "hundred-year vision" and taste/intuition, focusing on building the right technical foundation for the future of commerce. Accountability comes from strong leadership with clear opinions on quality and taste.
Monetary friction refers to cost-related barriers like trial prices or incentives. Reducing it can unlock a class of valuable entrepreneurs by giving them more time and resources to succeed, even if it initially attracts lower-quality users.
Shopify uses a custom project management system (GSD) where every project requires approval ("OK-to") from group leads (e.g., Glenn for core product), ensuring a consistent bar for quality and taste set by a few key leaders.
Discounting can effectively signal high value (high list price) while making a product affordable (low discounted price). It also taps into the emotional job of feeling progress in an aspirational journey, encouraging purchases even if retention isn't high.
18 Actionable Insights
1. Long-Term Experiment Holdouts
Implement long-term holdout experiments (1-3 years) and regularly re-evaluate past “wins” against downstream metrics like total GMV, as short-term lifts often don’t translate to long-term impact or can even be pull-forward effects.
2. Optimize Absolute Numbers, Not Rates
Orient teams to optimize for the absolute number of people reaching a specific funnel stage, rather than conversion rates, to prevent local optimizations that restrict the funnel and ultimately reduce overall output.
3. Prioritize Technical Architecture
Prioritize robust and adaptable technical architecture (“the how”) over quick feature delivery, as strong technical foundations provide long-term strategic optionality and flexibility, even if it means slower initial shipping.
4. Embrace 100-Year Vision
Adopt a “100-year company” mindset, prioritizing long-term success and foundational investments (e.g., enabling entrepreneurship) over short-term revenue gains or chasing existing large enterprise clients.
5. De-emphasize Core Product Metrics
For core product development, consider de-emphasizing short-term metrics and KPIs, instead relying on strong conviction, product sense, and a consistent “taste” bar from leadership to build foundational, forward-facing products. This approach requires a highly opinionated founder or leadership with strong product taste.
6. Lower Barriers, Embrace Churn
Lower barriers to entry and embrace churn if your business model monetizes disproportionately from a few highly successful users (power law distribution), as this allows more people to try and increases the chance of finding those big winners.
7. Scale Monetization with Success
Design your monetization model to scale with user success, allowing a few high-value users to offset churn from many lower-value users, similar to an angel investing portfolio.
8. Reduce Monetary Friction
Explore reducing “monetary friction” (e.g., trial length, incentives, price points) to unlock a class of valuable users who might otherwise give up, as this can causally increase their likelihood of success.
9. Invest in Personalized Onboarding
Invest heavily in collecting relevant information during signup and using it to provide personalized onboarding guidance, as this foundational work significantly impacts long-term user success.
10. Ship Neutral Experiments Judiciously
In an “aim heavy” culture, consider shipping neutral experiments if your intuition strongly suggests they align with long-term product vision or user benefit, rather than strictly adhering to short-term statistical significance.
11. Create Hybrid Customer Journeys
Create hybrid customer journeys that seamlessly integrate self-service and sales channels, allowing users to choose their preferred path without being forced into a siloed experience.
12. Measure Hybrid Journey Incrementality
For hybrid self-service and sales journeys, invest in sophisticated incrementality measurement across all channels and outcomes (including cross-channel effects) to avoid suboptimal investment decisions caused by siloed LTV and attribution models.
13. Avoid “Wizard” Onboarding Flows
Avoid “wizard” style onboarding flows that abstract users from the product. Instead, integrate the simplification and guidance benefits of wizards directly into the core product experience to teach users within the actual interface.
14. Embed Marketing Teams
Consider embedding marketing leads directly within relevant product or sales teams to align them closely with specific goals, especially if founders or key leaders possess strong brand intuition that centralizes the overall brand narrative.
15. Apply Strategic Discounting
Use discounting strategically to signal high value (high list price) while making a product affordable, especially for aspirational products where the act of purchase itself fulfills an emotional “job to be done” (e.g., feeling of progress).
16. Organize Teams by Time Horizons
Structure your organization with different teams operating on distinct time horizons (e.g., 100-year vision for core product, medium-term for merchant services, short-term for growth) to allow for varied strategic focus and decision-making.
17. Embrace Flexible Planning
Adopt the motto “the plan is the plan until it’s not,” committing to your best-laid plans while remaining flexible and ready to adapt when circumstances change.
18. Lead with Empathy and Curiosity
Cultivate a leadership style characterized by empathy, curiosity, and kindness, actively seeking to learn from everyone you interact with.
6 Key Quotes
But in practice, it's actually almost always easier to just make it harder to do the thing right before your step in the funnel to increase your conversion rate.
Archie Abrams
And I would encourage everyone, if you can look at some of the experiments that you thought were your biggest winners, look at the downstream metrics for a year, two years on that experiment. And I'll bet you'd be surprised how many times the metric is different than what you thought it would be after a year.
Archie Abrams
The how the technical architecture determines strategy in a technology company, even more than the kind of what and who we're building for.
Archie Abrams
The real success of Shopify is getting every business to start with us and go, but making that type of investment and being so focused on that entrepreneur segment and making it easier is how we build kind of a very, very long-term oriented company.
Archie Abrams
The plan is the plan until it's not.
Archie Abrams
The people who are letting that, that payment fail probably weren't actually that dedicated to this entrepreneurship craft.
Archie Abrams
2 Protocols
Shopify's Long-Term Experiment Monitoring
Archie Abrams- Run experiments, often with a 50-50 split for new merchants, for a few weeks to observe initial impact.
- Ship the winning variant to 100% of users if a short-term lift is observed.
- Maintain the original cohort assignment for all users exposed to the experiment.
- Automatically ping experimenters at 3, 6, 9, and 12 months with updated long-term results, particularly on GMV.
- Use these long-term insights to refine input metrics and hold teams accountable for sustained business impact.
Shopify's 'Get S**t Done' (GSD) Project Review
Archie Abrams- Document every project (Core, Merchant Services, Growth) within the internal GSD project management system.
- For each project, create a few-minute video presentation detailing the work, including design mockups (figmas).
- Obtain an 'OK-to' (approval) from the relevant group lead (e.g., Glenn for Core, Carl for Merchant Services, Archie for Growth) before shipping.
- Every six weeks, all R&D group leads, including the CEO Toby Lütke, meet in person to review every single project across the company.
- Use these review sessions to debate and align on technical architecture, tactics, and overall direction.