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Romeen Sheth

29 Apr, 12 tweets, 3 min read

0/ Breaking: Shopify Q1 earnings are out. They're BANANAS

In Q1, $SHOP had

- GMV: $37B (+114% YoY)
- Revenue: $988M (+110% YoY)
- Gross Profit: $559M (+117% YoY)
- Operating Income: $118M (vs. -$73M last year)

Here are the takeaways / how to put these numbers in context👇

1/ First, let’s define how SHOP thinks about their business.

Everything boils down to 3 components: (1) Merchants, (2) Partners / Capabilities, (3) GMV.

⬆️merchants with ⬆️capabilities drives ⬆️activity.

This is what Shopify means when they say they're “arming the rebels”

2/ Financial metrics are all growing fast (at 100%+ YoY), but the better way to think about the SHOP is by looking at how fast it’s growing its ecosystem.

- Financials are a TRAILING indicator of the business.

- Ecosystem is a LEADING indicator of the business.

3/ The ecosystem is firing on all cylinders.

- Partner Ecosystem: 45,800 referred a merchant to SHOP over the past 12 months (+73% YoY)

- Apps: 6,600 apps and extended capabilities are available for merchants to leverage

- Users: More than 107 million registered users

4/ SHOP is continuing to innovate by rapidly adding capabilities on to their platform:

- Channels
- Working Capital
- Payments
- Shipping
- Platform Expansion
- Fulfillment

5/ These increased capabilities are being leveraged by merchants to generate more activity

- Gross Payments Volume: $17B (+135% from Q1 2020)

- Merchant Advances and Loans: $309M (+90% from Q1 2020)

6/ More users, partners, channels and capabilities drive exactly what you want to see in a healthy SaaS business:

Expanding cohort curves and net negative churn.

This is jargon for “more revenue in then out.”

The sharper the curve, the more attractive the company.

7/ Meanwhile, growth drives margin.

Implication?

⬆️operating leverage = ⬆️cash
⬆️cash = ⬆️capital for investments
⬆️investments = ⬆️capabilities
⬆️capabilities = ⬆️retention / revenue expansion
⬆️revenue expansion = ⬆️operating leverage

A virtuous cycle for more growth.

8/ If we zoom out, we’re seeing this dynamic start to result in a fundamental shift in the market.

E-Comm is still a fraction of overall retail, but in this segment SHOP has soared past everyone else to only be second behind Amazon.

@harleyf

9/ So, what’s next?

@harleyf said SHOP is now shifting from a pandemic story to a global recovery story. He expects 3 consumer preference trends to continue:

1. Faster shift from brick and mortar to online
2. Brands that align with values win
3. Independent brands thrive

10/ The roadmap reflects this. SHOP is building / shipping a ton.

Short Term:

- Platform
- Payments
- Shipping
- Capital
- Plus

Medium Term:

- International Expansion
- Retail POS

Long Term:

- Fulfillment
- Balance
- Wholesale / B2B

11/ SHOP is now positioned for a monster decade.

WIth retail activity shifting online, SHOP is the ultimate “pick and shovels” business.

If there’s a gold rush, the price of gold may go up or down, but picks and shovels are a wonderful way to make money.

Long the rebels 🔥

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More from @RomeenSheth

Romeen Sheth

@RomeenSheth

10 Apr

There’s a lot of bad advice out there on how to pitch your startup.

Last year, I invested $1M+ and heard 200 companies pitch.

Every great pitch I've heard nails 5 ingredients.

In this thread, we'll go through each to help maximize your chances when fundraising

Let's dig in👇

1/ Every pitch should have 5 ingredients:

- Problem: Is this an issue
- Solution: Do you have the fix
- Market: Is this a big enough issue
- Business: Can you make money
- Team: Are you the people to do it

The best pitches nail all 5. Good ones hit 4. Subpar hit 3 or less.

2/ PROBLEM

The problem statement is an explanation of why a set of circumstances is painful for a set of users.

There’s one word in that sentence that is most important: painful.

If your problem is not painful enough, it's a vitamin.

The best startups are pain killers.

Read 9 tweets

Romeen Sheth

@RomeenSheth

6 Apr

0/ Breaking: Coinbase Q1 earnings are out and they are bananas.

In Q1, Coinbase did….

- $1.8B Revenue
- $1.1B Adjusted EBITDA
- $730-800M Net Income
- $335B Trading Volume
- 56M Users

Here are the big takeaways / how to put these numbers in context 👇

1/ GROWTH

Coinbase is growing FAST

- Revenue Run Rate: $7.2B
- EBITDA Run Rate: $4.4B
- Net Income Run Rate: $3B

They’re growing each of these 3 metrics 200%+ QoQ.

2/ Users

56M users is no joke. That’s larger than:

- Almost every global bank
- Every payment gateway (Square, Venmo, etc.)
- Major stock trading platforms (Robinhood)

Read 7 tweets

Romeen Sheth

@RomeenSheth

27 Mar

0/ With 320 companies in the latest batch, it’s time YC seriously considers a YC ETF.

Why?

- The whole batch would get funded < 1 week
- Founders can personally de-risk and share in upside
- 1M+ new “outsiders” could get some skin in the game

Here’s how I would do it:

1/ First, let’s level set. What’s an ETF?

ETF = a collection of securities in a single vehicle.

Suppose you wanted to buy shares of all companies in the S&P 500.

Pre-ETF, you’d buy each individual stock.

An ETF let's you buy 1 stock (SPY) to get exposure to all 500.

2/ Let’s take a look at the latest YC Batch:

- Companies: 320
- Avg. Funds Raised at Demo Day: ~1-2M

Meaning, the total funds raised across the batch are ~$300-600M

Since Demo Day on Tuesday, 50,000 "investor intros" have been made according to YC's tracker (!)

Read 15 tweets

Romeen Sheth

@RomeenSheth

22 Mar

@shl

0/ Last week, @shl and @ArlanWasHere raised $9.3M from 14,937 people.

This was a breakthrough moment, but we're just at the tip of the spear.

In this thread, I'm going to lay out the backstory, data & implications.

Punchline? VC is on the verge of being completely upended:

1/ First, let’s set the stage.

Over the last 10 years, private assets under management (AUM) have risen over 2.7x from ~$2.7T to $6.5T.

Private equity (including venture) alone has grown to $3.9T.

That's 1.3x of ALL private AUM from just 10 years ago.

2/ At the same time, private company growth continues to dramatically outpace public equity.

Over the last 20 years, the value of private assets has grown nearly 8x. Meanwhile, public equities have grown by ~3x.

Read 15 tweets

Romeen Sheth

@RomeenSheth

7 Mar

0/ Over the last 5 years, I’ve had some lucky breaks and meaningful wins.

Growing a bootstrapped business by 8 figures in revenue is at the top of the list.

The “highlight reel” is pretty.

Reality was filled with failure, doubt and misstep.

Top things I wish I knew 👇

1/ Everything boils down to AMA

A: Ability - do you have the skills to pull it off?
M: Motivation - do you have the desire to pull it off?
A: Attitude - do you have the headspace to pull it off?

Strive for situations where each of these 3 are firing on all cylinders.

@ChrisJBakke

2/ Play games worth playing

My friend @ChrisJBakke has a pithy quote:

“$30M Under 30 > Forbes 30 Under 30.”

He said it in jest, but it’s spot on. In the internet era, it's easier than ever to chase vanity metrics (meaningless PR/accolades).

Focus on what actually matters.

Read 22 tweets

Romeen Sheth

@RomeenSheth

1 Mar

0/ Ryan Kaji might be the most incredible 9 year old in the world.

In 2020, Ryan made more than the CEOs of Salesforce, Goldman Sachs, Paypal, Cisco, HP, Starbucks, Target, UPS and Pfizer.....COMBINED.

His story is amazing. Let's dig in.

1/ Ryan Kaji was born in 2011.

Ryan started out as an average kid - he spent his days watching cartoons and singing nursery rhymes.

The difference was he did it on YouTube.

And on YouTube, he accidentally stumbled across an odd, but trending genre: "unboxing videos."

2/ "Unboxing videos" are exactly what they sound like.

Someone takes an object - any object - and "unboxes" it.

Ryan was completely caught up in this thread - at 3, he asked his mom: "How come I'm not on YouTube?"

Little did he know, his life was about to change forever.

Read 16 tweets

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