Quiet luxury in a can

Ready-to-drink cocktails from an elite island.

Good morning. Another letter just mere hours after my last one. This month is about CADENCE and QUALITY. Hoping to get you guys some big brain takes/essays this month :)

• Shopify announces it will reduce headcount by 20% and sell Shopify Logistics to Flexport. The announcement starts with “In the next 5 minutes you’ll get a follow up that tells you if you are affected.” Wild. Shopify became a Flexport investor as part of a fundraising in February 2022, valuing the logistics company at $8 billion. Starting with freight, in 2022, Shopify began a partnership with Flexport to help merchants more easily and cost-effectively inbound freight to the United States. hopify had 11,600 employees and contractors as of December 31, 2022. 20% of that number would equate to over 2,300 workers. Shopify’s CEO dedicates a good portion of this letter to “side quests,” or everything outside the company mission. “Side quests are always distracting because the company has to split focus… The balance of crafter to manager numbers is a tricky one to strike. Too few and you risk misalignment on the most important things, too many and you add heavy layers of process, approvals, meetings and… side quests.” What I want to know is:

  • Was this decision made because investors were asking for it? Right now investors are rewarding businesses who make MONEY. Increasingly the investor question is not, why does Shopify need a layoff, but why did a store-builder software ever need 11.6k employees? (Up from 3k in 2019). You can ask same question for lots of single-product tech and software companies. And I sure asked myself that a lot when I worked at Meta.

  • Is revenue at Shopify down? I doubt it’s facing a shocking dip, but maybe it was enough to start making some big decisions.

  • Did they realize it’s more effective to focus on core product? Some people questioned all along whether Shopify had the right DNA to run an asset-intensive business like logistics and go toe-to-toe with Fulfilled By Amazon. Different markets might have given them a longer chance.