In the second instalment of our recap, Keith dives into OpenStore’s origins and end game:
At a glance, OpenStore provides instant liquidity to long-tail Shopify merchants with $500 thousand–$10 million GMV. From there, we combine these acquired businesses to form a horizontally broad e-commerce platform — the first of its kind in the U.S. since the 1990s.
Countless Shopify SMBs launch and scale decently well, but then hit their ceiling, whether that’s because the founder doesn’t want to run it forever or due to capital constraints.
In addition to providing qualified Shopify merchants with instant liquidity, OpenStore has modernized the process of selling a store. Merchants simply connect to their Shopify store, share a P&L, and link to their ad account. From there, OpenStore’s pricing engine and team evaluate the Shopify business with the aim of extending a cash offer within 24 hours. If the offer is accepted, founders receive 80% of the payment upfront and the OpenStore team takes on all store operations.
According to Keith, the idea came from Jack Abraham, Founder of Atomic venture studio and another OpenStore co-founder. In late 2020, Jack had him over for breakfast to explain the idea. A few minutes later, Keith was all in, because Jack found a profitable solution to a problem many Shopify merchants with scalable businesses come up against.
These businesses lacked the resources to continue profitably growing, and OpenStore could provide the technology, capital, and industry experience to help.
Aside from loving the idea of OpenStore, Keith knew he wanted to play a major role in making it happen. Today, he serves as our CEO, meaning, in his words, “You’re responsible for everything. Period. No excuses. You’re ultimately responsible for every single part of the business.”
This also makes perfect sense for Keith, considering how his background prepared him to lead OpenStore:
To finance OpenStore’s acquisition of 40+ businesses as well as grow our team, we’ve raised $150 million across multiple rounds, valuing OpenStore at nearly $1 billion.
When buying merchants, OpenStore is category-agnostic by design.
About 40% of our brands sell some kind of apparel. We’ve acquired furniture brands and even a drone company, which brought us into consumer electronics.
At a glance, we aim to mirror the entire Shopify ecosystem in terms of offerings.
It's a lofty goal, but Keith reminds us, "If you're going to build an ambitious business, it's almost as hard to build a $100-billion company as it is to build a billion dollar company. So you might as well aim as ambitiously as possible."
Ultimately, he co-founded OpenStore to become larger than the Shopify ecosystem and comparable to Amazon in retail. The only way to attain that size is to build horizontally.
After all, it’s far trickier to expand to that degree if you begin vertically. (i.e., Facebook going from college audiences to high school and then beyond)
As of late 2022, OpenStore has acquired over 40 stores across different categories.
In the short term, the OpenStore team operates under two North Stars.
In Keith’s words, “We’re going to acquire more and more brands faster and more successfully, absorb them perfectly, and then run them flawlessly.”
OpenStore’s horizontal orientation and aggregation of stellar Shopify stores with the best SKUs will ultimately result in — from the consumer’s perspective — a decentralized department store.
People can discover goods at scale, including products they didn’t even know they needed, unlike the model of utilitarian search and immediate payoff.
That serendipitous discovery of goods still accounts for most purchases in the U.S.
It's also why, according to Keith, people still shop in person and e-commerce in the U.S. is flatlining at 12% of purchases. Despite the gradual death of the shopping mall, people still crave the experience and feel of it when purchasing.
Overall, Keith hopes to run an independent public company — for two key reasons.
The first is access to capital. Whether you leverage debt, equity, or some combination of the two, public companies are prime candidates for access to greater capital under better terms.
The second is longevity. OpenStore strives to grow into an iconic company with permanent value. Once you build a public company, the likelihood that your business lasts for 30, 40, 50, or however many years goes up dramatically.
Our hassle-free acquisition process allows qualified Shopify store owners to move on fast with cash in hand.