Simon and I arrived in San Francisco in 2014, eager to experience all that the fabled Silicon Valley had to offer. Until then, we had only heard about SV by reading TechCrunch articles, and we were excited to experience it live. The two of us were employed at different startups at that time, while also brainstorming ideas about the kind of company we could start ourselves. However, we were uninspired and couldn’t find a world-changing idea no matter how much we whiteboarded, and so we decided to start an e-commerce store, which seemed like an easy and low-risk thing to do. After all, there were a lot of building blocks out there for e-commerce merchants, and even inexperienced merchants like us could look like professionals on the internet by using Shopify, Stripe, and other out-of-the-box solutions.
When our first orders came in, we had to ship them to our customers, and it dawned on me that this was where our entire e-commerce operation finally entered the real world—that shipping is the convergence of online and offline. Initially, we walked to the USPS location close by, but that wasn’t a good solution. We then started looking at APIs provided by USPS, FedEx, and UPS, and soon realized that these APIs were not as developer friendly as a Stripe API or a Twilio API.
Shipping was turning out to be a lot more difficult than expected.
The founder I used to work for, Sasha from LendUp, always said, “build something that’s a painkiller, not a vitamin.” With that in mind, we decided to focus on building shipping software full time. Early on, Simon and I talked about whether shipping is a problem that we’d be excited about solving day in and day out for the next 10-20 years.
We were both doubtful.
But soon, we started working with SMBs and realized just how many inefficiencies are hidden within SMB shipping processes.
That’s what gets us out of bed every morning.
In hindsight, I am incredibly grateful to be in a business with a giant TAM, where the pie is continuously expanding, and where our customers have a real need for a better product. Fast forward to today, we have 140 Shippos working with us to make our vision of building the shipping platform for 21st century e-commerce a reality. We work with more than 70,000 e-commerce businesses. We power shipping for platforms such as OfferUp, Mercari, ShipBob, and Ecwid, and most of the major shipping carriers are our partners. Last year we shipped more than $12 billion worth of products through our platform.
We Raised Another $45 Million, Now Valued at Half a Billion USD
In 2020, we raised two rounds of financing. In Q1, we announced a $30 million round led by D1 Capital. In Q4, all of our existing investors doubled down and put in an additional $45 million, valuing Shippo at half a billion. We doubled our valuation within just 12 months. In addition to our existing institutional investors, we also had several best-in-class SaaS and API founders join the round. I am excited to be teaming up with Jen Tejada, Jeff Lawson, Patrick Collison, Nat Friedman, and Daniel Gross as sounding boards for scaling Shippo.
While we hadn’t yet spent much of the extra capital we announced in Q1, 2020 was a year of massive growth for us. Shippo more than doubled total shipping spend on its platform in 2020 and grew over three times faster than the rapidly-accelerating U.S. e-commerce shipping market, which grew more in Q2 2020 than the previous five years combined. All of us at Shippo had to keep up with a massive increase in new customers, while also supporting our existing customers who experienced unprecedented growth themselves. Shipping is an industry full of opportunities. We don’t lack problems to tackle.
Most people outside this industry tend not to spend a ton of time thinking about shipping. However, everyone receives products that have been shipped, often multiple times, before they arrive at their doorstep. For the consumer, packages showing up is just part of their day, but for e-commerce merchants, it’s a complex challenge.
Meeting Customers At The Digital-Physical Divide
Today, most retail businesses must have an online presence. While the shift to online has been going on for a while, COVID has accelerated it. Consumers have embraced online commerce, and the shift of consumer behavior—both through preference and necessity—is permanent. Customers can’t avoid doing business online, and as a result customers can’t avoid shipping products.
The irony is that this shift toward online shopping has actually created a remarkably offline problem in shipping: the undeniable convergence of the digital and physical worlds. You have to pack boxes, find a shipping provider to pick them up, and often interface with real people delivering via trucks in the last mile. It’s an incredibly complex web to navigate and a lot can go wrong.
What doesn’t help is that traditional shipping providers have also built in an offline-first approach. They were founded before e-commerce existed, and their main focus is on the operational aspects of making supply chains more efficient. They are simply not built to think about the software aspect of shipping or mapping shipping back to the online consumer experience.
Shipping has become more than moving packages. It’s become a part of the online shopping experience, which consumers care about before deciding to purchase. Many customers have come to expect free shipping. Most expect to know when the package will arrive, and expect it to do so in less than a week. Amazon Prime has set the bar and everyone who’s not Amazon is trying to figure out how to keep up. Everyone is able to do e-commerce because companies such as Shopify, Woo, Square, and Wix have paved the way, but excellent shipping is reserved for retail giants with scale, massive shipping volumes, and big logistics and engineering teams.
What We Are Doing Next: Building The Shipping Platform For Everyone
The dynamic that everyone in e-commerce is always trying to catch up with Amazon Prime constantly puts merchants a step behind. Every merchant faces the same challenges of inadequate technology and rising consumer expectations, and it doesn’t make sense for every merchant to solve this by themselves. It makes sense for a platform to solve this for all merchants. That’s why Shippo exists. We are building the shipping platform for 21st century e-commerce. We make sure that every e-commerce merchant gets access to best-in-class shipping. Merchants need to keep up with Amazon’s shipping speed, infrastructure, and consumer experience. The goal is to set a new bar for SMB shipping for everyone who’s not Amazon.
So here is what we are going to do with the capital this year:
Power Shipping for Platforms and Marketplaces
We are doubling down on the platforms and marketplace pillar. Our goal is to build an out-of-the-box shipping experience for platforms and marketplaces to provide shipping as a default feature for their customers. We see shipping as must-have functionality for all platforms and marketplaces in the future, and we will be providing the best shipping for platforms’ building blocks. This plays into our strengths because we have always been strongly connected to platforms and marketplaces and powering shipping for best-in-class marketplaces such as OfferUp, Depop, Mercari, GOAT, Whatnot, Curtsy, eBay Canada, and many more. We integrate with all of the top e-commerce platforms, including Shopify, BigCommerce, Square, Wix, GoDaddy, Ecwid, and WooCommerce, even powering the backend shipping for a number of these platforms. If you are a platform or building a platform/marketplace and want shipping as a functionality, let us know!
Ramp Up International Carrier Coverage
As part of our platform pillar, we will accelerate our international expansion to become the largest network of shipping carriers on a single platform. There is no standard across different carrier APIs, each carrier API is different. We are building a universal connectivity layer on top of carrier APIs. Shippo abstracts away all the differences while adding value on top of the carrier APIs in ways that the carriers can’t in terms of uptimes, security, reliability, developer friendliness, data and analytics, and merchant and consumer-facing features. With the same API call, you can get a shipping label from any carrier in the world. This is more challenging to build than it seems on the surface. We’ve spent our time getting this right for the last few years and are now ready to scale up our carrier connections.
Today we have 80 carriers on the Shippo platform, mostly in North America. This year we are going global with a focus on getting best in class carrier coverage in Western Europe. International expansion also fuels our platform strategy. The majority of platforms we work with are already international and want one shipping partner to cover all major e-commerce geographies.
Continue Core Product Improvements
While we double down on our core customer segment and add functionality to move upmarket, we won’t lose sight of our core focus: the SMB merchant customer base. We will keep improving our core product and make shipping more frictionless for SMBs. We’ve benefited from acquiring a lot of our largest customers when they were small and growing with them. Today we work with over 70,000 SMBs, among which we have a good amount of sizable mid-market customers, such as hims, BonLook, Aesop, and Touch of Modern. As our customers grow, their shipping needs become more complex. To best serve our fast-growing customers, we are adding a number of features that help with processing and shipping larger volumes of orders , with automation functionalities at the top of the list.
We’re Hiring 150 New Shippos in 2021
We will be expanding our team rapidly. In 2020, we hired 80 new Shippos. This year, we plan to hire 150 new Shippos. We also opened an Austin hub, in addition to our SF base, and plan to continue scaling the team, while also hiring remotely.
As a first-time founder, I am keenly aware of needing experienced operators in our leadership team to help us in our phase of hyper-growth. When I hire leaders, I look for people who have stayed at a high-growth company for many years, so I know they can see around corners. We brought on Catherine Stewart last year as our COO; she was previously the CBO at Automattic (WordPress.com) for five years, where she led the acquisition of WooCommerce. We also hired Brandon Terry as our SVP of Product — he spent the last nine years leading product at Procore Technologies, creating the category-leading platform in the construction industry, an industry that similarly has challenges with complexity and inefficiencies. And Vince DeAngelis now heads up our Carriers team as the VP of Carrier Partnerships. He brings 34 years of experience in the shipping and mailing industry, including a role in which he had responsibility for a $4.5 billion P&L and 4,000 employees.
Our vision is to build Amazon Prime for everyone else. We want to put SMBs at a competitive advantage by setting a new bar for SMB shipping. I’m more excited about this vision than ever. There’s a lot of momentum and a huge pull from the market right now. Shipping is a giant space that hasn’t been touched by modern software just yet. This is a take rate business. Given how many packages are shipped, you can imagine the size of it. We are making shipping programmable. We make moving atoms as easy as moving bites.
If our vision is compelling to you, please reach out! We are hiring. If you are a merchant, a platform, or a marketplace that needs to ship, let us know. We exist so that you don’t have to worry about shipping.