- Kelly Vaughn created an agency that helped Shopify-based websites.
- She explains how she helped build two thriving businesses off of Shopify’s growing ecosystem
- She offers advice to aspiring entrepreneurs who want to build a successful business using Shopify’s ecosystem of online merchants.
Founded in 2006, the e-commerce platform Shopify has exploded in popularity during the pandemic. During the first four quarters of the pandemic, the Ottawa-based company, which allows merchants to quickly launch their own digital storefronts, saw sales roughly 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 growth and excitement surrounding the platform. A self-taught web designer, Vaughn, 31, launched The Taproom, a web-development agency for Shopify-based websites all the way back in 2017. She built her first site on the platform as a subcontractor on a project taken over from someone else who needed an extra hand, before realizing she wanted to take on larger projects.
Now with roughly twenty full and part-time employees and revenue last year exceeding $1.4 million, 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 businesses, Vaughn spoke to Insider about her experience launching businesses to help service the Shopify community, and offered advice for other entrepreneurs hoping to build a business serving merchants on the platform.
Hire lean and be nimble
Growing Taproom to include companies like Nestle and Motherly happened faster than Vaughn expected. Within the first year revenue on the platform increased 70 to 120%, she said. The success made her think hiring up would be the next logical step. “I made several mistakes while hiring, sometimes hiring for jobs I didn’t need to be hiring for, sometimes hiring the wrong person for the wrong job,” she said.
Vaughn suggests that hiring for a service-based business, like a design agency, is itself a unique balancing act. You might have an immediate need to hire more people to fulfill a project, but then that means you’ll also need to ensure there’s plenty of work for those hires going forward. Contractors are useful for these periods when you need more hands, Vaughn says, “but don’t necessarily have the work for a full-time employee.”
As The Taproom grew, Vaughn found herself progressively spending more time on executive work — the “meetings, the dreaming,” as she says — with her leadership team setting out a goal in 2021 to make sure she wasn’t needing to jump into the weeds to assist the actual design work.
Find a niche
As the operator of an agency that built Shopify sites, Vaughn was intrigued by the opportunity she saw after hacking together gift card solutions for clients. “Gifting and digital in particular has been a very neglected space in e-commerce as a whole,” Vaughn says, “but especially on Shopify, there is a native gift card solution that you can use. But we knew we could make it better.”
Identifying a niche is a way Vaughn sees entrepreneurs can succeed on the Shopify platform. There are nearly two million merchants on Shopify, and every merchant has some unique needs. “There’s so much opportunity to niche down to Shopify and become a true specialist on the platform — whether it’s building custom storefronts for merchants, building an app, or focusing solely on copywriting or marketing.” Vaughn suggests using a niche to your advantage; get really good at solving one 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 quite a bit 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 to be more of a distraction than a place where it could stand out. Likewise, with Vaughn’s new company she has partnered with merchants to experiment with new features, but not all of them will be deployed widely. Vaughn suggests that entrepreneurs should be willing to pivot if something isn’t working, but should stick to what they do best.
Shopify offers developers a generous revenue-sharing agreement
Working on Shopify for almost eight years, Vaughn says that the team has been “absolutely wonderful.” Last year the company updated its revenue-share agreement so that app developers keep 100% of their revenue up to the first $1 million, after which Shopify takes a 15% cut of earnings, down from the previous take rate of 20%. Govalo for its part asks merchants using its product for a small percentage of the value of each gift card sold, starting at 2.9% for its free offering.
Govalo is already in the process of raising new funding, and Vaughn says there’s plenty of demand in the VC space specifically focused on e-commerce and SaaS (software-as-a-service) plays. There’s been a lot of deal activity in the area of companies building on Shopify, with Vaughn pointing to WeCommerce and The Stable’s rollup of other agencies that build specifically for the platform as evidence there’s money to be made for entrepreneurs building apps and services for Shopify.