Shopify Invests $100M in Klaviyo, Continues Investing in Ecosystem

Shopify continues to show that it does not feel that it cares about cries of "fair play" in its ecosystem, by taking a $100M investment in E-mail and Marketing Automation Provider Klaviyo.

Overall, that sentiment seems to be right. Investment attracts VCs, VCs fund new apps on top of Shopify, which are adopted by merchants, and the cycle continues. Getting a Shopify investment also clearly offsets the large % fees that Shopify collects from its ecosystem partners. You might even consider these investments a credit against those fees, rather than a true investment.

The big question I have with this partnership -- why now? Really, why now? I think likely Klaviyo wanted this implicit Shopify endorsement ahead of a potential IPO in the future, in the hopes that it would further turbocharge their growth.

Apps like this are often not successful "because" of Shopify investment -- and this applies to Klaviyo too, which is the most popular e-mail app on Shopify (by far, from what I can tell). Klaviyo has been doing great for a while. They also keep getting a lot more expensive for merchants too!

One thing surprised me a little about the Klaviyo release, which is repeated throughout the Klaviyo website:

"Recommended e-mail provider for Shopify Plus"

First, if you scour the Shopify website, and the statements from Shopify execs, you do not see this language. Certainly not in terms of what they mean for it to say -- i.e., "The Official Email Partner of Shopify Plus"

Now investment is an endorsement, that is easy to admit. But to say it's " THE recommended partner" (versus just "A" recommended partner) feels like a bit of sales puffery happening here. When Shopify invested in Sanity, did they become "the recommended Content Management System for Shopify"? They did not.

Something to watch to see if other vendors who have received Shopify investments start doing, and to see if Shopify polices it?

Either way, Shopify world keeps turning as people continue to watch the investments being made. Which have not worked out well overall so far from a investment returns point of view, particularly in this up and down economy.