So Facebook is taking on Amazon with its Shops, powered by Shopify (and a bunch of other smaller players.) I don’t know why that agreement kept reminding me of that deal I read about as a young lad: Americans teaming with the rebels to drive out the Russians from Afghanistan. We know what happened.
Why do I fear that in the end Facebook will suck Shopify dry of its utility and become a competitor? It is not like that hasn’t happened before — ask all those gaming companies, music startups, media companies, and everyone else who fell for the promise of Facebook’s reach. Facebook’s DNA is that of anything goes as long as Facebook keeps growing. It gobbles and destroys everything in its way.
Sure, there is an alternative scenario. Let us assume the deal goes swimmingly. Facebook then decides to buy Shopify, offering more money than we can imagine. At present Shopify is valued at over $90 billion — more than Citibank. That said, it is not clear how much bargaining power Shopify will have at that point in the future when it is reliant on Facebook and its family of apps to drive a majority of its growth.
I really want Shopify to win against Amazon — and happy to smother my inner cynic when it comes to Facebook and its dubious business ethics. Still, I am afraid for Shopify. After all, companies, like people, don’t really change.
May 20, 2020, San Francisco