Shopify Crosses 1m Customers; Spotify Gives Away More; Sprout Social IPOs with SMBs

Shopify crosses 1,000,000 Customers ... Growing 45% (!)

Think Amazon won everything in e-commerce?

Well, Shopify just crossed 1,000,000 merchants on its platform. And just as importantly, it announced it is still growing 45% year-over-year, at $900m+ in ARR.

Roll that forward, and it is easy to see Shopify crossing $10b in ARR in 5-7 years. Once it does, its partners and ecosystem will easily do $2b+ in ARR themselves.

That will yield 10+ Unicorns built on the Shopify platform. Klaviyo, a Mailchimp competitor focused on Shopify, was an early beneficiary, raising a $150m Series B earlier this year. More importantly, Klaviyo exploded from 1,000 customers in 2016 to over 12,000 today.

Amazon has killed a lot of businesses. But Shopify in particular has enabled brands and SMBs to thrive outside of Amazon. To control their brands, their distributions, and more.

The Business of Commerce is bigger than ever.

Listen to our podcast with Loren Padelford, GM of Shopify Plus here and how Gorgias got to 1,000+ customers on the Shopify platform here.

Spotify Gives Away More For Free, Makes More Money

Spotify's Q3 '19 had a really interesting driver of growth -- giving away more for free.

Running a free / freemium component of any subscription business can be quite complicated. How much should you give away? What should the "choke" be?

Most of us end up making the choke tighter and tighter over time, trying to force more and more conversions. Interestingly, Slack and Zoom haven't gone "less free" yet, which is telling.

And Spotify went even further. It gave away more for free. More playlists for free, more skips for free, more podcasts, etc.

And what did they see? Higher conversions to paid.

It is a remind to me to not shoot from the hip, and to speak with data. And to not forget about the free guys and the small guys. They are your biggest army of brand ambassadors. Try to over-monetize them, and take away features, and they go away.

At a personal level, I saw Adobe Sign's market share plummet when they stripped out the free version entirely. It didn't save any money, and it dramatically decreased the brand ambassadors out there.

Sprout Social IPO:  Winning with SMBs

SurePath Capital Partners has a nice analysis of the upcoming Sprout Social IPO here.

A few facts jump out:

• 90% of their customers come from free trials (see Spotify point above).
• Net retention isn't Zoom-beating, but still > 105% from SMBs.
• 9 Years to $100m in ARR. Go long, folks.

Last Chance before Annual Prices Go Way, Way Up!! 

We've just put out the first detailed agenda for 2020 SaaStr Annual here.

Grab tickets by November 1. They go up 20% after that!!

Get the very last discounts here.