Lenny's Podcast: Product | Career | Growth

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)

November 7, 2024

AI Summary

5 min read

Archie Abrams, VP of Product and Head of Growth at Shopify, explains how the company drives growth by lowering barriers for new merchants, accepting higher churn, and focusing on cohort-level GMV over years, as a few high-performing merchants subsidize the rest via payments revenue.

Cohort-Based Growth and Churn Optimization

Shopify prioritizes getting more entrepreneurs started quickly, knowing most businesses fail but winners generate outsized GMV. Revenue ties to merchant success through payments, creating power-law dynamics like angel investing: total cohort GMV over 1-5 years measures success, not per-merchant retention. This allows cheaper acquisition and tolerates churn, unlike subscription SaaS models.

Long-Term Holdout Experiments

Experiments use layered holdouts (5% quarterly, 50/50 for new users) and automated re-evaluations at 3, 6, 12+ months via cohort GMV curves. Short-term lifts often fade (30-40% of cases, e.g., payment dunning pulls forward weak merchants), but some neutrals unlock value (e.g., pre-configured store blocks boost long-term sales momentum). Ship positives or strong-intuition neutrals; deeper funnel metrics help shorter-horizon teams.

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What you'll learn

1 *(00:00:32) **Shopify Scale and Growth Intro**
2 *(00:07:06) **Optimizing for Churn to Fuel Entrepreneurship**
3 *(00:10:56) **Cohort GMV as Core Success Metric**
4 *(00:11:49) **Long-Term Experiments and Holdouts**
5 *(00:16:43) **Key Levers: Monetary Friction and Onboarding**
6 *(00:27:16) **Metrics Philosophy: Absolutes Over Ratios**
7 *(00:42:03) **100-Year Vision and Taste-Driven Core Product**

+ Full timestamped outline available in the app

Show Notes

Archie Abrams is the VP of Product and Head of Growth at Shopify, where he leads a 600+ person growth org across product, design, engineering, data, ops, and growth marketing. Shopify powers over 10% of e-commerce in the United States, with $235 billion in GMV in 2023 (roughly the size of Finland’s economy). He previously led Consumer product and growth at Lyft and was at Udemy for 8 years as SVP of Product having joined the company when it was 10 people. In our conversation, we discuss:

• Why Shopify optimizes for churn

• Why the core product team doesn’t use metrics-based goals

• Why they keep multi-year experiment holdouts

• How they structure their growth team

• The benefits of not having a CMO

• Lessons learned about integrating sales into a product-led growth model

• The power of discounting as a growth lever

• Much more

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• Explo—Embed customer-facing analytics in your product

• Dovetail—The customer insights hub for product teams

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Find the transcript at: https://www.lennysnewsletter.com/p/shopifys-growth-archie-abrams

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Where to find Archie Abrams:

• X: https://x.com/archieabrams

• LinkedIn: https://www.linkedin.com/in/archie-abrams-b6aa8b6/

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Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

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In this episode, we cover:

(00:00) Archie’s background

(02:30) Shopify’s impressive growth

(06:17) Shopify’s unique approach to churn and retention

(08:43) Monetization model and success metrics

(11:08) Long-term experimentation and metrics

(23:00) Examples of big wins that Archie’s team has shipped

(26:42) Monetary friction

(27:14) Metrics

(29:47) Shopify’s growth team structure

(33:03) Goal setting and forecasting

(37:10) Examples of long-term results within Shopify

(41:36) Shipping neutral experiments

(42:05) Building a hundred-year company

(48:04) Why Shopify doesn’t use KPIs

(51:30) Shopify’s “Get s**t done” framework

(54:30) Cross-team collaboration

(58:48) The importance of an opinionated founder

(01:01:12) Growth and sa