E24: Is the Shopify Gold Rush Over?

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Why are so many smart founders drifting away from e-commerce?

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Over the last few months I’ve heard the same thing from people visiting SF. They’re building outside the Shopify ecosystem. Not tinkering. Actively exiting. The pattern ties to fundraising. The conclusion is rough for brand operators. If builders and capital pull back, the downstream leverage brands rely on dries up.

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Here is how I’m thinking about it after a long debate with Rishabh and Zach.

Venture scale on Shopify is brutally hard

You can build a great business in e-commerce SaaS. Building a classic venture scale outcome on Shopify alone is near impossible. Most apps deliver incremental lifts on top of fundamentals. A better reviews widget might add a few points. Email is different. Email is a pillar. That is why Klaviyo wins.

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Why Klaviyo over cheaper options? Because for a healthy, well operated store the fee is tiny relative to revenue generated. They also nailed timing, built a serious agency program, and stayed reliable on game day. Black Friday at 5 million sends cannot go down. Most tools are not pillars. They are nice to haves that get scrutinized when cash is tight.

The cash conversion barbell

E-commerce brands live three very different lives.

• Sub 5 million GMV. Often happy, cash generative, weekend warrior energy. High ROI changes get adopted fast.
• 5 to 100 million GMV. Pain. Inventory, ad spend, long cycles. Every dollar is scrutinized. You pay for ad rails, payments, 3PL, and new SKUs. Everything else fights for oxygen.
• 200 million to multi-billion. Different world. Digital and AI transformation moves needles. Stakes are high. Budgets are real.

SaaS maps to this barbell too. The very small and the very large are growing. The middle is hollowing out. Even outside e-comm, dev tools and horizontal SaaS are seeing the same pattern. That should make operators sit up. It is not just a Shopify thing.

Survival is operator skill, not luck or runway

Bootstrap vs VC gets framed as identity. It is mostly about operator quality and time horizons. Capital pulls your end state forward. It does not create competence. If you were going to run into a landmine in year four, raising lets you hit it in year two.

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Survival compounds learning. A business at 1 million ARR after three years with consistent decision quality is often sturdier than a rocket to 1 million in year one. Not because time alone does magic. Because the operator kept picking the least bad path in changing terrain. That skill is the moat.

Flow of funds sets the game board

Money creates incentives. Capital goes where returns look best, then builders follow. When investors fear that Shopify apps cannot return a fund, they look elsewhere. You feel it downstream as fewer tools, less experimentation, and slower infra upgrades.

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At the same time, consumer and enterprise spending is barbelled. Luxury surges. Dollar stores surge. The middle gets squeezed. My own bias says luxury wins in the next leg. Value wins too. The middle struggles.

AI is reshaping the stack

AI is giving superpowers to teams of one. It is also making large enterprises leaner. Mid market struggles to feel the benefit while carrying the overhead. Look at how many mid market SaaS companies are reinventing themselves around AI. Some went up market, then turned back to PLG to onboard the smallest users fast. The homepage copy tells you everything.

E-commerce still powers the internet

One thing I never want to lose in the doom loop. E-commerce is the signal pipe for the modern web. Click. Purchase. Data. That loop funds free services and keeps the ad marketplace sharp. Ads and e-commerce are why so much software is free to use. If you pull that signal out, the internet looks different.

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That is why I still like building in and around e-comm. The signal is immediate. The feedback is honest. The learnings transfer.

A contrarian bet

I’ll plant a flag. I think we get a new-cycle e-commerce boom. Not the same shape as 2020. Different drivers. Some people will feel richer in dollar terms. Risk capital is chasing returns. If discretionary spending rises, a chunk flows to Shopify merchants. I would overweight the barbell. Luxury first. True value second.

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Could I be wrong? Of course. That is why we operate, measure, and adjust.

Where this leaves builders

• If you are new and have no specific insight, there are higher leverage markets than Shopify.
• If you have deep context and a problem that found you, build. Just be honest about ceiling and payback.
• Design for pillars or undeniable ROI. Email-level importance or hard savings.
• Price and package for the barbell. Serve the smallest teams fast. Have a story for the largest. Expect churny, opinionated mid market behavior.
• Treat capital like acceleration, not salvation. It brings the future closer, good or bad.
• Keep your eyes on the flow of funds. Incentives explain most motion.

Where this leaves brands

• Invest in the pillars. Channels that directly print revenue or reduce real cost.
• Expect less magic from on-site widgets. Your brand, product, and distribution decide the game.
• Operate to survive the middle. Inventory discipline, cash clarity, and clean analytics.
• Watch the barbell. If you are mid price, you need a reason to exist that is not price alone.

The optimistic close

I love this moment because the ground is shifting. That creates room. If you survive and keep your decision quality high, you earn the right to compound. If you are small, AI makes you bigger than you look. If you are large, transformation moves are finally worth the pain. If you are in the middle, the path is narrower, but it exists.

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E-commerce still pays the internet’s bills. The signal is alive and loud. Build like that is true. Operate like cash is scarce. Pick markets where the flow of funds wants you to win.

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That is where I want to play.