Shopify Hired a New CTO - Platform Ambitions Ahead?
I believe in the last few years Shopify has reached an inflection point, but overall in a good way. Coming out of the pandemic, Shopify tried to figure out a new way to monetize the company -- logistics.
While you have to take big swings, it ended up badly. Wrong people on it, wrong vision, and ultimately while it was a big (big capex) vision -- at the same time it was a small vision. Small margins I mean. A bad combination for a platform.
What Are the Key Areas of Focus for Shopify's New CTO?
With the hiring of Mikhail Paraikh who ran a large advertising group at Microsoft, a scaled ML expert, and also ran one of the few scaled search engines in the world outside of America (Yandex).
In technology, these kinds of people (I have spoken with just a few in my 25 year history -- that's how hard it is to find these people) are so rare and so we are only left to speculate what the vision is. My guess concerns these three huge areas.
How Will Shopify's Shop App Evolve?
#1 - Shop App need to take a huge step forward out of the shadows. A scaled marketplace is the one thing that Shopify is still lacking versus its Silicon Valley brethren like Meta, Google, and Amazon. Rest assured Shopify will not be in that conversation until this and the next point is solved.
What Role Will Advertising Play in Shopify's Future?
#2 - Advertising. Mikhail brings a ton of ad experience. Where has the ad business gone in the last 5 years? From crafters (manually setting up campaigns) to algorithms (PMax, Advantage+).
The missing gap is not on the platform side, it's on the brand side. No one knows what they are doing, and they can't produce the content or analyze the results and take the next action. The Shopify Advertising CoPilot is here for you.
How Will Shopify Leverage Content and AI?
#3 - Content. With the rise of AI, you would not build a scaled eCommerce platform in 2024 the same way you would have 10 years ago. The challenge is to take a small number of assets and products and multiply them given all the channels and ads platforms out there. Generative AI to the rescue.
Shopify has proved (sadly in some cases) to the agency world that you don't need big agencies to design/build/maintain a website.
What Does Shopify's New CTO Hiring Mean for the Company?
I believe the same type of analysis, at much higher margins than their current business, can be applied to both content and advertising.
With the new CTO, Tobi has shown progression. The progression to not hire someone to "take over Engineering" (like the last ill-fated CTO). Instead, filling world-class talent gaps in the team, and the ability to run it at a higher level long-term than Tobi himself.
The ability to hire at a higher level than yourself is a rare skill in business for a manager, and Shopify has proved it's finally going there. The only question now is, when will the resulting AI future materialize?
We are only left to speculate. Other eCom platforms are trying to deal with Shopify stealing all their oxygen. Shopify is not even looking in their direction as far as I can tell.
What Is Shopify's Focus Compared to Other eCommerce Platforms?
They are only looking at Meta, Google, TikTok as their future.
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