This entrepreneur created a thriving business on Shopify
- Kelly Vaughn started an agency that helped Shopify-based websites.
- She explains how she helped create two successful businesses from Shopify’s growing ecosystem
- She offers advice for aspiring entrepreneurs who want to build a successful business using Shopify’s ecosystem of online merchants.
Founded in 2006, the Shopify e-commerce platform has exploded in popularity during the pandemic. In the first four quarters of the pandemic, the Ottawa-based company, which enables merchants to quickly launch their own digital storefronts, saw sales double year-over-year, with gross merchandise volume exceeding $400 billion in 2021. In response, Amazon is reportedly trying to build its own competitor to Shopify.
Kelly Vaughn was perfectly positioned to capitalize on the growth and excitement surrounding the platform. Self-taught web designer Vaughn, 31, started The Taproom, a web development agency for Shopify-based websites since 2017. She built her first site on the platform as a contractor on a resumed project from someone. else who needed an extra helping hand, before realizing that she wanted to embark on bigger projects.
Now with around twenty full- and part-time employees and revenue topping $1.4 million last year, Vaughn has stepped down as CEO of The Taproom and co-founded a new company that helps merchants issue gift cards on Shopify’s platform called Govalo.
Experienced with two Shopify companies, Vaughn spoke with Initiated about his experience in starting businesses to help serve the Shopify community and offered advice to other entrepreneurs looking to start a business serving merchants on the platform.
Hire lean and be nimble
Taproom’s growth to include companies like Nestlé and Motherly has happened faster than Vaughn expected. In the first year, the platform’s revenue grew by 70-120%, she said. The success made him think that hiring would be the logical next step. “I made several mistakes when hiring, sometimes hiring for jobs I didn’t need to hire for, sometimes hiring the wrong person for the wrong job,” she said.
Vaughn suggests that hiring for a service business, like a design agency, is itself a unique balancing act. You might have an immediate need to hire more people to complete a project, but that also means you’ll also need to make sure there’s plenty of work for those hires in the future. Contractors are useful during those times when you need more hands, Vaughn says, “but don’t necessarily have the work of a full-time employee.”
As The Taproom grew, Vaughn found herself gradually devoting more time to executive work — the “meetings, the dream,” as she puts it — with her executive team setting a goal in 2021 to making sure she didn’t need to jump in the weeds to help with the actual design work.
Find a niche
As an operator of an agency that built Shopify sites, Vaughn was intrigued by the opportunity she saw after hacking gift card solutions for clients together. “Gifts and digital in particular have been a very overlooked space in e-commerce as a whole,” says Vaughn, “but especially on Shopify there’s a native gift card solution you can use. But we knew that we could improve it.”
Identifying a niche is one way Vaughn sees entrepreneurs succeeding on the Shopify platform. There are nearly two million merchants on Shopify, and each merchant has unique needs. “There are so many opportunities to nestle into Shopify and become a true specialist on the platform – whether it’s building custom storefronts for merchants, building an app, or just focusing on writing or marketing.” Vaughn suggests using a niche to your advantage; get really good at solving a specific need for new merchants joining Shopify.
Try new things, but stick to what you do best
“Our service offering at The Taproom has changed a lot over the past few years,” Vaughn said. Over the years, the agency experimented with adding accretive services to its offerings, like email marketing and SEO, but found them more of a distraction than a place to stand out. Likewise, with Vaughn’s new company, it has partnered with merchants to experiment with new features, but not all of them will be rolled out at scale. Vaughn suggests that entrepreneurs should be prepared to pivot if something isn’t working, but stick to what they do best.
Shopify is offering developers a generous revenue-sharing deal
Having worked at Shopify for nearly eight years, Vaughn says the team has been “absolutely wonderful.” Last year, the company updated its revenue-sharing agreement so that app developers keep 100% of their revenue until the first million dollars, after which Shopify takes a 15% revenue cut, down from the previous catch rate of 20%. Govalo, for its part, charges merchants using its product a small percentage of the value of each gift card sold, starting at 2.9% for its free offering.
Govalo is already raising new funds, and Vaughn says there’s a lot of demand in the VC space specifically focused on e-commerce and SaaS (software as a service) gaming. There’s been a lot of commercial activity in the realm of companies building on Shopify, with Vaughn pointing to WeCommerce and the accumulation of other The Stable agencies building specifically for the platform as proof that there are money to be made for entrepreneurs building apps and services for Shopify.