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🤔 Breaking the rules of growth: Why Shopify bans KPIs, optimises for churn, prioritises intuition, and builds toward a 100-year vision

It’s been a while but we’re back with another from Lenny; covering the recent Podcast with Archie Abrams - VP Product at Shopify. He talks how they’ve flipped the script on traditional growth metrics and operate with a 100-year vision in mind 👀. Led by unconventional strategies like effectively banning KPIs, embracing churn, and prioritising intuition, Shopify’s approach is both interesting and completely different to the conventional status quo. Dig in to find out some of the core principles driving Shopify’s success and whether they could be something you can apply.

🎥Watch the full episode here

📆 Published: November 8th, 2024

🕒 Estimated Reading Time: 4 mins. Time saved: 73 mins🔥

📈 Ditching KPIs for a 100-Year Vision

Archie talks how Shopify is one of the few companies actively building with a 100-year vision. Rather than being tied to KPIs or quarterly goals, Shopify’s core product teams operate with long-term conviction and a focus on quality. This approach stems from CEO Tobi Lütke’s leadership style, which emphasises product longevity over immediate numbers. By banning KPIs, Shopify creates a culture where teams focus on delivering quality features that can evolve and adapt over time.

In Product we’ve all learned that KPIs drive everything, from resource allocation to product launches. But at Shopify, intuition, taste, and long-term value have become the guiding forces. While Shopify’s growth teams do monitor short-term metrics for experimentation, they ultimately aim to build products with the future in mind—products that may still be relevant and valuable a century from now.

Key Takeaways:

• Encourage your teams to think about your product’s long-term impact instead of solely focusing on short-term growth metrics.

• Base decisions on conviction, intuition, and alignment with the company’s ultimate vision.

• Find balance by having some teams focus on shorter-term wins and others on the long-term vision.

🚀 Optimising for Churn: A Counterintuitive Growth Strategy

In most businesses, high churn is a red flag. But Shopify views churn differently. Instead of fearing customer churn, Shopify embraces it. The reasoning? By lowering entry barriers for new users, they enable more people to try their hand at e-commerce and entrepreneurship—even if many don’t stick around long-term.

Shopify’s core mission is to make starting an online business accessible to everyone, understanding that many entrepreneurs fail on their first attempt. By focusing on the quantity of new entrepreneurs entering the platform, Shopify banks on a small subset becoming highly successful and generating significant returns. Essentially, Shopify doesn’t need every new merchant to succeed—just a few big wins in each cohort justify the overall approach.

Key Takeaways:

• Lower entry barriers to encourage more users to try your product, even if they’re not all long-term customers.

• Accept that high churn isn’t always a bad thing; it can help refine your user profile and help identify the most valuable customers.

• Consider your core mission and whether retaining every customer is necessary or if you can focus on nurturing top performers.

🔍 Long-Term Experiments: Measuring Impact Over Years, Not Months

Experimentation is a powerful tool for growth, but Shopify takes it a step further. They run long-term holdout experiments, assessing the impact of changes on user behaviour over one, two, or even three years. This approach lets Shopify observe if an experiment delivers sustainable growth rather than just a short-term lift.

Instead of making quick changes based on immediate results, Shopify’s teams wait to see how an experiment influences the total revenue and gross merchandise volume (GMV) over time. This patient, long-term view has helped Shopify focus on changes that add lasting value rather than optimising for short-term gains that might fade.

Key Takeaways:

• If feasible, run longer-term experiments to capture the true impact of product changes.

• Avoid relying solely on short-term metrics and consider the downstream effects on user lifetime value.

• Encourage teams to evaluate success based on absolute numbers and overall growth, rather than just immediate conversions.

🛠 Breaking Down Metrics: Absolute Numbers vs. Conversion Rates

Conversion rates often drive decisions in growth and product teams. However, Shopify takes a different route, focusing on total absolute numbers rather than conversion percentages. Instead of obsessing over each stage of the funnel, Shopify encourages teams to think about the entire journey and the total number of users who complete it.

This approach prevents teams from creating friction in earlier steps to make their own conversion rates look better. Instead, they focus on the bigger picture—bringing as many users as possible through the journey. By shifting from percentages to total users, Shopify ensures that each team contributes to holistic growth rather than isolated optimisations.

Key Takeaways:

• Challenge teams to consider absolute impact rather than optimising individual conversion rates.

• Incentivise teams to focus on the total journey and end goals, rather than just one part of the funnel.

• Redefine what “success” looks like by focusing on volume and total impact over incremental percentage improvements.

🧠 Intuition as a Core Driver: The Power of ‘Taste’ in Product Decisions

One of the most interesting elements of Shopify’s culture is its emphasis on taste and intuition. At Shopify, product decisions are often based on what feels right rather than on purely data-driven conclusions. Taste, or a shared sense of what quality looks like, has become a vital part of the decision-making process.

Instead of assigning KPIs to each feature, Shopify trusts its teams to design products that are simply “right.” While data is a tool, it’s not the only one; subjective judgment plays a huge role. This creates a culture where product leaders focus on quality and user experience, knowing they have the freedom to make judgment calls that support long-term brand equity.

Key Takeaways:

• Develop a strong culture around quality and intuition to foster a unique sense of taste in product design.

• Empower your teams to make decisions based on their expertise and understanding of the product vision.

• Handle subjectivity by fostering open, constructive discussions that refine the shared vision of quality.

⚙️ Hybrid Journeys and Non-Traditional Sales Motions

Traditionally, companies have clear paths: users either opt for self-service or go through sales. But Shopify blends these experiences, offering “hybrid journeys” that allow customers to switch between sales and self-service based on their needs. For example, a user can start with self-service and later get assistance from sales without starting over.

Creating this seamless flow between self-service and sales presents measurement challenges. It requires creative thinking around metrics and attribution. Shopify’s focus remains on user experience over forcing customers into rigid paths, trusting that these hybrid journeys ultimately increase customer satisfaction and loyalty.

Key Takeaways:

• Think about whether you could offer multiple paths for users to interact with your product, based on their preferences and needs.

• Challenge the traditional view of separating self-service from sales; consider hybrid models to better serve users.

• Adjust your metrics and measurement methods to account for hybrid journeys, ensuring you capture the full user experience.

🏗 Creating a Cohesive Growth Team Structure

Shopify’s growth team is structured into three pillars: Growth Product, Enablement, and Customer Support. Each pillar addresses a specific part of the customer journey, with Growth Product focusing on acquisition, Enablement providing internal tools, and Customer Support enhancing the user experience.

This cohesive team structure, aligned with Shopify’s unique metrics and goals, ensures that each part of the growth team has a clear mandate. By centralising customer support under growth, Shopify underscores its commitment to nurturing every merchant through their journey, from startup to success.

Key Takeaways:

• Organise growth teams around the most impactful parts of the customer journey.

• Empower growth teams with support functions like internal tooling and customer support to enable faster, more effective outcomes.

• Encourage collaboration between product and growth to ensure a cohesive user experience.

🌍 A Final Thought: Building for the Next Century

Shopify’s approach to growth may be somewhat against many of the standard norms, but it’s precisely this uniqueness that has helped them thrive. By prioritising long-term impact over short-term wins, relying on intuition, and creating an innovative team structure, Shopify demonstrates that there is more than one path to sustained growth.

This approach may not work for all. As all success stories do it no doubt requires some great talent too. But I really like the case-study as it presents an opportunity challenge how we think about the “right” way to do things, and rethink growth not as a sprint, but as a marathon. Food for thought!

Want to know more quickly? Just ask the episode below [web only]👇️🤯
or if you prefer, 🎥Watch the full episode here

📅Timestamps:

• 00:00:00 - Introduction to Funnel Optimisation

• 00:02:35 - Guest Introduction: Archie Abrams

• 00:03:09 - Shopify's Scale and Impact

• 00:06:23 - Churn and Retention Philosophy

• 00:08:12 - Lowering Barriers for Entrepreneurs

• 00:09:44 - Cost Dynamics of Customer Acquisition

• 00:10:18 - Measuring Success Beyond Retention

• 00:11:26 - Long-Term Experimentation Insights

• 00:12:40 - Different Time Horizons in Product Groups

• 00:13:12 - Long-Term Monitoring of Experiments

• 00:14:36 - Surprising Experiment Outcomes

• 00:16:22 - Monetary Friction Explained

• 00:18:14 - Impact of Onboarding on Retention

• 00:20:27 - Running Long-Term Holdout Experiments

• 00:22:44 - Metrics for Measuring Impact

• 00:23:07 - Examples of Successful Experiments

• 00:25:07 - Importance of Personalization in Onboarding

• 00:26:36 - Incentives and Team Dynamics

• 00:27:29 - Growth Team Structure at Shopify

• 00:29:59 - Goals and Metrics for Growth Teams

• 00:32:29 - Customer Support's Role in Growth

• 00:33:19 - Measuring Incremental Value

• 00:35:01 - Shipping Neutral Experiments

• 00:36:01 - Aim Heavy Philosophy

• 00:38:01 - Long-Term Thinking in Decision Making

• 00:40:24 - Technical Architecture's Importance

• 00:46:54 - Conclusion and Key Takeaways