Businesses helping to run the "rails": Polar Analytics vs Storetasker vs Macro vs Lodgify

Our increasingly old but just as horrible friend COVID has taught us a lot, but few lessons so important as exponential growth. When infections, or sales, visitors, or any number for that matter, are compounding exponentially, the figures start small but quickly and unapologetically mushroom into once-fantastical ones. It is easy to dismiss such trends when they are on the fringe, but as we saw in the spring of 2020, disinterest soon becomes negligence.

It’s in this light that we consider one business emerging from the pandemic, now powered by this genre of growth. That business is DTC ecommerce platform Shopify - whose recent Q2 GMV was larger than its entire GMV in 2018; with the company on track to reach $200b by year end. There’s a brilliant Tim Ferris episode with the company’s President from late last year, which puts a lot more colour into how and why the business works so well, but in a nutshell Shopify allows anyone to set up, manage and grow an online store more simply than ever before.

As such, Shopify is a “rails” business; one that has built tracks upon which other companies then run. We spoke about such products in relation to productivity software, but the best known example is Apple’s iPhone; whose 30% “line fee” on all apps which run on its App Store has consistently proved one of the company’s most lucrative P-and-L line items.  

“Rails” businesses are found across categories, typically providing software, sometimes hardware (e.g. microchips for phones or literal train tracks), but their defining feature is how unassuming they are relative to their importance. In the same way that few think of Stadler when they’re travelling on the Eurostar, few consumers think of Shopify as they’re buying from Gymshark, Allbirds or Beardbrand - but these businesses are customised front-ends running on pre-defined back ends. Unassuming back ends they may be, but important soon becomes indispensable for the vehicles that use them to operate. Today, for every 1000 residents in New York City, 4 of them are Shopify business owners.

Rahul Vohtra of Superhuman has a lauded blog post in which he describes his test for product-market fit. It’s simple: Rahul doesn’t care about how much your users love you, but how disappointed they would be were you to disappear. When a “rails” company like Shopify starts to grow exponentially in this way, more people become increasingly, existentially reliant on it very quickly. 53% more in the last year, to be precise. As reliance increases, rails businesses become solid ground for a second rung of business infrastructure.

At a certain scale, not only do the likes of Shopify enable businesses to start running on their rails, they enable businesses that exist to help the businesses running on the rails. It sounds complicated, but we’re simply talking about the wider support ecosystem which is built around the main interaction between vehicle (e.g. Allbirds) and rail (e.g. Shopify). For a literal example, in France in the late 1890s, as cheaper fuel took train travel from niche hobby to mass usage, the ecosystem produced companies that operated luggage delivery services, station cafes and travel magazines. In Hollywood in the 60s and 70s, as cheaper cameras took filmmaking from fringe fascination to global industry, the ecosystem produced popular film journals, VCR players and the talent management industry.

In the case of Shopify, we have seen these businesses form in three broad groups:

1. Lubricants: Businesses that slicken the interaction between the business and the rail e.g. Zapier for automated sequences on e-commerce sites
2. Signals: Businesses that help businesses change or improve their direction of travel on the rail e.g. MorningBrew or Web2pc for insights around the future of e-commerce
3. Stations: Businesses that denote the progress of a business along the journey e.g. MicroAcquire for selling your e-commerce business

As this wider ecosystem grows, the original “rails” company grows even bigger. It’s logical: the better built out the ecosystem, the easier it is for the businesses on the rails to succeed, and more success for existing businesses will encourage new businesses to use your tracks, and more usage equals a bigger line fee.

In some ways, the best of these ecosystem businesses function like outsourced R and D departments, and are eventual acquisition targets; as we saw with Zoom’s recent acquisition of Five9. Let’s look at the marketing of some of the most exciting players that are building off the back of successful “rails” businesses.

Lodgify

Vacation rental software for hosts using Airbnb, VRBO etc.

Founders: Dennis Klett, Marco De Gregorio

Funding: $6.6m (Series A)

Their resources section doubles as a genuinely useful bank of information to their customer base, as well as a smart SEO play. They seem strong across the digital marketing spectrum, ranking highly for ads on relevant keywords. There are some strong testimonials from customers as well but it would be helpful to see them brought to life some more through video.

Storetasker

Vetted freelance Shopify developers on-demand.

Founders: Charlie Fogarty, Sam Wilcoxon

Funding: $3.3m (Series A)

Incredibly crisp product marketing throughout their website, with a well worked look and feel befitting of a leading partner to a brand like Shopify. The main issue is trying to compete with Shopify’s own “expert network” - to build their own fame, Storetasker should leverage noisy, emotional content marketing to demonstrate the difference they can make to individuals using the platform to grow their business.

Macro

A super-powered, customizable interface for Zoom, reimagined for collaboration and inclusive conversations.

Founders: Ankith Harathi, John Keck

Funding: $4.8m (Seed)

For a startup to have found its voice and personality this early on is encouraging. Their Twitter channel in particular is worth a follow. As Macro starts to deploy their healthy pool of capital they will need to find more robust growth channels than an engaging social account, and with this well-defined brand energy, everything feels primed for content marketing where quality, inclusive conversations are brought to life. Definitely one to watch.

Polar Analytics

Full-stack Business Intelligence Software for Shopify Merchants.

Founders: Charbel Seif, David Dokes

Funding: $1.41 (Seed)

From the outside it looks like a game changer product for Shopify businesses, but the marketing efforts appear nascent; with no social media, blog or anything that will be driving inorganic top of funnel leads. In fairness they are hiring for a content marketing manager in both EU and NA, in order to build out case studies and white papers that help onboard customers. Providing that kind of functional, informative value is essential - but what’s even more essential is pulling on the heartstrings of your customers through an emotional, even editorial approach. For a startup, that is where the path to fame often lies