Nativity Triumphs Over Nascency

That One Time Shopify Made Bank on Klaviyo
September 20, 2023

Editor’s note: earlier this week, we launched our most critical piece of research to date. Together with our friends at Stripe, Shopware, and Bloomreach, we created the very first operator-centric study of GenAI in the eCommerce ecosystem. It’s worth your time.


Welcome to Wednesday, futurists! 

Today, our friends at Klaviyo (NYSE: KYVO) are taking a victory lap as we witness one of the largest eCom-centric IPOs in years.

The eye-popping $9.2B valuation for Klaviyo is a modern record for eCom SaaS. The New York Stock Exchange listing amounts to a $570M fund raise for the Boston-based martech firm.

Let’s contrast this outcome with one of Klaviyo’s late-stage strategic investors: Shopify. At IPO in 2015, Shopify raised $131M on a $1.3B valuation. Today, Shopify will make a quick $295M on their thirteen-month-old investment in the martech giant (source: The Information), over twice as much as their own public listing.

I first came into contact with Klaviyo back in 2017 when they reached out to sponsor my first podcast, MageTalk. From the get-go, they had the desire to service multiple facets of the eCom ecosystem, with the understanding that nativity triumphs over nascency. By being part of the broader eCommerce ecosystem and integrating into every part, they could gain the advantage of perspective.

And they did it from outside the New York startup scene. The Boston startup ecosystem was a quieter, more focused environment that partied less and shipped more.

While they were still new, Klaviyo was hungry to learn and to understand the market. They made critical investments in content creators (including my many podcast properties), hired and retained incredible talent, and led the market in agency relationships and technology partnerships, which their more mature competitors did… but Klaviyo somehow did it better.

Timing was also key to success. They entered a mature eCommerce market, post-smartphone, in the Cloud era. While competitors rearchitected multiple times in a quickly evolving compute and mobile device landscape, Klaviyo entered when the rate of change had slowed to a more manageable pace.

That’s not to say that everything is rosy. Over the years, there has been plenty of critique for Klaviyo’s managed service product, challenges around deliverability and uptime during critical seasons (namely BFCM), and their obsession with building out a multiproduct platform over improving their core product, email.

They also managed their growth with poise. Despite their growing dominance, they rarely “punched up” at competitors, something that Klaviyo’s current crop of competitors do with frequency. Rather than focus on other products’ shortcomings, Klaviyo demonstrated a modern product that simplified complex problems for the marketer.

In the end, Klaviyo gained market share over email automation pioneer Netsuite (neé Bronto), and outpaced the sales growth of Emarsys and Dotdigital in DTC eCom; and they did it in a shorter period of time. Both platforms had developed deep roots in eCommerce.

Somehow, Klaviyo did it with a brand name that nobody can pronounce.


— Phillip

P.S. Modern life requires business-like efficiency.That’s why we believe that the consumer is becoming a corporation. What happens when people begin to operate with the behaviors and tools of a business? Find out in this week’s Insiders, written by Brian Lange.

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Cover photo by Avelino Calvar Martinez from Burst

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