Weaverse Weekly #2: Good founders know when to start. Great founders know when to quit.
Dec 04, 2023
By Paul Phan6 mins read
Weaverse Weekly #2: Good founders know when to start. Great founders know when to quit.

Hello hello, welcome back to another edition of Weaverse Weekly.

How was your BFCM? A rush of adrenaline? Ecstatic? Euphoric? Anyway, I hope you have taken enough rest before the Christmas/Year End sales season surged in!

Oh and in case you haven’t heard, here are some interesting stats about our BFCM season this year:

  • Total GMV was $4.1B up by 22% from last year.

  • Peak sales per minute: $4.2 million at 12:01 PM EST on Nov. 24.

  • Hottest product categories: apparel and accessories, health and beauty, and home and garden.

  • Average cart price: $108.12 ($107.53 on a constant currency basis).

  • Cross-border orders represented 15% of all global orders.

  • 17,500+ entrepreneurs made their first sale on Shopify.

  • More than 55,000 merchants had their highest-selling day ever on Shopify.

But that was last month, and I think we agree: the past is over. This week, I’ve got you an interesting story on how founders quit, how B2B is becoming the biggest eCommerce opportunity in 2024, and an exciting product update, and more!

Read on!

Deploying your Shopify Hydrogen to Weaverse, without touching code

[No-code speedrun]: Deploy the Shopify Hydrogen project to Vercel and customize it with Weaverse. Watch here.

The Best Writing About Headless, WebDev, and Everything In Between

Good founders know when to start. Great founders know when to quit.

In 2008, Stewart Butterfield - Flickr’s co-founder, left Yahoo after selling Flickr to Yahoo for $25M just one year earlier.

He went on and founded Tiny Speck, a gaming company. Its first product was a massively ambitious open-world game called Glitch. The company raised $17.5 million from venture investors including Andreessen Horowitz and Accel. They launched the game publicly on September 27, 2011. By November 2012, the game had a devoted following of about five thousand diehard users, who were playing at least twenty hours a week. And it was well-deserving: Glitch looked amazing, had a vivid storyline, and was ahead of its time.

The problem? It had trouble monetizing.

Their loyal users, who paid a monthly subscription fee, represented less than 5% of more than a hundred thousand users who signed up to try out the game for free. Over 95% of new users played Glitch for less than seven minutes and never returned. Stewart’s team did what any team would do: a new, more aggressive marketing plan. More ads. More affiliate spending. Anything to get more eyeballs.

And it worked. In the last week of the campaign, they got 10.000 new users. The number of super hard-core players - those who played at least five days a week, had been growing by over 6% per week. It was their greatest growth ever. Life was good. At that time, Glitch was well-capitalized with $6 million in the bank.

Yet, on Monday morning the following week, Stewart sent an email to his investors that started with, “I woke up this morning with the dead certainty that Glitch was over.” He went on to quit Glitch, and offered to return the remaining capital to investors.

“Wait, what does this have to do with a newsletter on Shopify and Headless?” - you asked.

We’ll get to that later, but in case you haven't realized yet: The Shopify ecosystem is one of the most dynamic, most competitive environments there are.

Shopify App Market is hyper competitive

Merchants’ need is ever-evolving, technologies change every day, and copycats and competitors spring up like mushrooms after rain. To survive and thrive in the ecosystem, you need to practice mental time travel, and know when to quit.

Just like what Stewart did.

Stewart quit because he was able to peek into the future, and he saw that the probability was too high that the game would become a money pit. Tiny Speck experienced a surge in new accounts for Glitch, yet to break even, Stewart saw a future where they would have to sustain week-over-week growth of 7% for 31 weeks just to break even. This assumed new users would convert to paying customers at historical rates, a doubtful prospect as more eyeballs often lead to lower-quality users, especially in gaming. Worse, over time, paid ads would saturate the core gaming audience, and their potential for new users would depend on people with little background or interest in online gaming, which would further lower conversion rates. The entire growth of Glitch would depend on throwing money to acquire vast numbers of new, yet lower-quality, accounts. The math just didn’t work.

So there he went.

When Stewart Butterfield walked away from Glitch, he freed himself up to develop another product, which he promptly did. He toyed with the potential of turning an internal communications system into a standalone productivity tool. The tool combined the best parts of email, instant messaging, and texting, allowing team members to communicate in real-time and share documents and other materials. Everybody at the company loved it. Everybody who knew about it loved it. Within two days of quitting, his team was moving on with this new thing, including the investors who decided to roll their capital into this new product. When they used it at Tiny Speck, it didn’t even have a name.

On November 14, Butterfield came up with a code name for the tool, based on the acronym for “Searchable Log of All Conversation and Knowledge.SLACK.

The rest, as you know, is history.

Out of all the Shopify founders I work with, the great ones quit quite a lot of things, but they never rest. They quit, to start better things. They’re able to do so because like Butterfield, they practice mental time travel, and they think about future expected value:

  • They ask themselves “Does the course of action I’m considering (either a new course of action or continuing the status quo) have a positive expected value?”

  • They compare that expected value with the expected value of all other possible options.

  • Because time, attention, and money are limited resources, if they figure out that another path carries a higher expected value, then they will switch lanes.

Here’s another useful heuristic that Ron Conway - founder of SV Angel - used at his VC to help founders get better at quitting:

  • He asks them what success would look like over the next few months.

  • He asks them for specifics, which allows him to sit down with the founder and set performance benchmarks that would signal that the company is heading in the right direction.

  • After an agreed period, he revisits those benchmarks with founders and, if the venture is falling short, thinks about shutting it down.

What Ron Conway offers to founders is essentially a new perspective - the type of perspective that we might have trouble seeing when we’re in it.

As founders, you and I, we’re gritty by nature. We build our company brick by brick. We own it. We put tremendous time, effort, and money into it. We’ve sacrificed so much. It becomes part of our identity. This is exactly why it’s sometimes hard for us to see that quitting is not abandoning, but rather a calibrated decision-making that allows us to effectively react to new information. We just don’t often see the decision-making part in quitting. So if there’s one thing you can take away from this piece is that quitting not abandoning.

It’s informed venturing.

That's all for this week :) See you next year, I guess.

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