What's New: TikTok is the new Amazon
(from the latest issue of the Indie Hackers newsletter)
Is TikTok on track to possibly replace Amazon?
- Younger generations prefer shoppable livestreams on TikTok over traditional online shopping. Why? Because traditional retail websites are boring. #TikTokMadeMeBuyIt is creating bestselling products, and TikTok was the most popular domain in 2021.
- Looking to join an existing company as a cofounder? This guide will show you what to look out for, and what questions to ask before signing on the dotted line.
- Founder Erman Küplü bootstrapped his Shopify app to $15,000 in monthly revenue and 500+ users. Here's his advice on competing in the crowded Shopify marketplace, and why you shouldn't rely on the app store for sales.
Want to share something with nearly 85,000 indie hackers? Submit a section for us to include in a future newsletter. —Channing
🤑 TikTok is the New Amazon
from the Growth & Acquisition Channels newsletter by Darko
TikTok is on its way to becoming the Amazon for Gen Z, and could possibly even replace Amazon in the long run. Here's why!
Traditional retail websites are boring
Happening already: Alibaba had terrible single-digit gross merchandise value (GMV) growth, according to last month's earnings. Daniel Zhang, CEO of Alibaba, cited a slow sales period as the reason.
However, many analysts believe that there is a deeper explanation:
The social media shoppable livestream market is booming. The value of goods sold through livestreams doubled in 2021, according to LinkedIn:
Livestreaming e-commerce expanded China from a yearly GMV of $3B in 2016 to a GMV of $313B in 2021 with 782M online consumers.
By comparison, traditional online shopping will grow by only 15%. Why? Looks like Gen Z doesn't simply want to shop; they want to shop while having fun. It's more fun to shop on TikTok than on Alibaba!
TikTok continues to break records
Watch time: In November, TikTok surpassed Instagram as the most-used app among teens in the US. In September, TikTok also passed YouTube in terms of average watch time in the US and the UK.
Users: TikTok has also been Apple's most downloaded iOS app in 2021. By 2022, the app will likely surpass 1.5B active users. Just for a comparison, Instagram recently hit 2B active users.
Overall traffic: According to a recently published Cloudflare article, TikTok was the most popular domain in 2021 (Google came in second). Let that sink in for a bit.
2022 will be the year that TikTok competes with Instagram for the title of second largest social network:
TikTok creates Amazon bestsellers
Many products have become bestsellers as a result of viral TikTok videos:
- The BookTok trend helped books get back to the top of bestseller lists.
- Over 175 songs that trended on TikTok in 2021 charted on the Billboard Hot 100. This is twice as many as last year.
- TikTok's favorite beauty items are quickly becoming Amazon bestsellers.
#TikTokMadeMeBuyIt is a popular hashtag in this trend.
Amazon continues to sabotage sellers
Amazon is taking increasingly higher fees from sellers, making its search results pay-to-play, and manipulating its "Amazon's Choice" results.
It appears that starting out as a small seller on Amazon will become really, really expensive. TikTok, however, is just getting started. The company recently launched a standalone shopping app in China to take on Alibaba, JD, and Pinduoduo in the Chinese market.
The app is rapidly getting traction, ranking sixth among all iOS shopping apps in China...
...and it's slowly expanding to the West.
Back in September, TikTok launched several shopping features for its US app.
The company has also started experimenting with live shopping, hosting an online live shopping event in December.
TikTok also wants businesses to have their own separate profiles. The company is currently testing a "Business Registration" feature that will provide businesses with access to special features.
Will TikTok also launch an international standalone shopping app in 2022? If things keep going at this rate, I'd bet my money on it.
What are your thoughts on TikTok's shopping trends? Let's chat!
Discuss this story, or subscribe to Growth & Acquisition Channels for more.
📰 In the News
from the Volv newsletter by Priyanka Vazirani
✨ Beeple says that we have already entered the metaverse.
👅 This lickable TV screen can imitate food flavors.
🩺 Medical supplies are the latest victim in the supply chain crisis.
🤖 A Chinese "AI prosecutor" can now press charges against people.
🎤 Cardi B has launched a new creator platform with Playboy.
Check out Volv for more 9-second news digests.
🤝 Joining a Business as a Cofounder
Have you ever considered joining an existing business? If so, you know that the process can be fraught with questions and considerations. How do you split ownership? How do you structure distributions? How do you make sure that you're both protected? Whether you're joining a business, or bringing on a cofounder, this list can be a helpful resource.
Adding a cofounder
A well-matched cofounder can be a godsend. They have expertise in the areas that you don't, and can help share the workload. They bring their network and audience to the table, while supporting and motivating you.
A few factors that make a cofounder a good match are complementary temperament, different operational skills, similar work habits, similar vision, self-sufficiency, and resilience.
If you're the one with the business, it's important to keep in mind that you usually don't need a cofounder right off the bat. Unless you already have someone that you trust, you probably shouldn't go looking for one until you've made some headway. If you're non-technical, check out my article on when and how to find a technical cofounder.
You can also check out this article on where to find cofounders.
How to form a partnership
I'm not a lawyer, and this is not legal advice, but here's what I've learned on how to form a business entity.
Stripe Atlas makes the whole thing easy, so if you don't mind dropping a few bucks, start there. Personally, I've always registered companies through the Secretary of State. If you're in the US, and you're going the LLC route, LLC University is a free, step-by-step resource on how to do this in each state. I've found it to be tremendously helpful.
Speaking of the US, here's a list of the best and worst states in which to incorporate. Interestingly, Delaware isn't listed, so I'll just mention that it's a popular state for indie hackers to set up shop, thanks to its privacy protection, tax benefits, business-friendly laws, cheaper filing fees, and so on.
As for what type of legal structure is right for you, here's a good place to start.
Now, if you're the one with the business and you're bringing someone on, here's how you add them legally to an LLC in the US. First, check your operating agreement for any requirements about how to handle bringing on a new member. Then, settle on terms. Update your operating agreement, if you have one, to include the new member and the terms. Next, update your articles of organization and file them with the Secretary of State.
State laws do vary, so make sure to take a look at yours. If you were a single-member LLC, bringing on a cofounder will make you a multi-member LLC. Therefore, you'll be taxed as a partnership. You'll need to file IRS Form 8832, and apply for an employer identification number (EIN).
Founders agreement
A founders agreement is a legally binding contract outlining the rights and responsibilities of each founder. It provides clarity on the following:
- Roles.
- Conflict resolution: This is particularly important when equity is split equally.
- Exit clauses.
- Equity percentages.
- Financial contributions.
- What happens when a cofounder defaults.
This kind of structure is important from a legal perspective, but the clarity that it provides can also be helpful in avoiding conflict between founders. Everything is in writing, so you have something to lean on when tensions are high.
Draw it up before you officially join the company. If you're joining a business with multiple cofounders, they may already have one in place. In that case, you would only need to make adjustments to that one. It's a good idea to re-examine the agreement on a yearly basis.
When you're ready to draw up an agreement, you've got a few options. You can find a business lawyer to write it up, but that can be expensive. You can also grab a free template, which can sometimes be a decent option for bootstrapped founders.
You can do a mix of the two: Find a template, fill in all the blanks, and customize it to the best of your ability, then ask a lawyer to review it and suggest edits. This will take far less of the lawyer's time, and saves you a few bucks. Some lawyers may have their own templates that you can fill out, so check in on that if you go this route. I've done this before, and it has worked well for me.
Here are a few free templates to choose from:
- Template by the University of Pennsylvania School of Law.
- Template by PandaDoc.
- Template by Wonder Legal.
- Template by Cocosign.
Finally, there are services like LegalZoom, ZenBusiness, and more that can help you out.
Whichever route you take, make sure that your agreement includes names, length of validity, company goals, roles and responsibilities, equity percentages, financial contributions, IP, compensation, vesting schedule, events of default, and exit clauses.
How to split equity in a startup
Advice on splitting equity is all over the board. While online calculators and weighted formulas attempt to help you figure out who should get what, they're really just starting points. Nothing can replace conversations between cofounders to figure out what really feels fair for all parties involved.
Folks like Michael Seibel of YCombinator think it’s best to split as close to equal as possible. Unequal splits can create resentment and apathy. Splitting equally means that all owners feel an equal sense of ownership, which also means that they'll be more motivated and invested.
If any one partner owns more than 50% equity, that person’s opinion weighs out to be higher than anyone else’s. Most people look at this as a good thing because it means no stalemates. But there are other ways to avoid those, and one person getting the final say can lead into dangerous territory.
Some would argue that the person who did most of the initial work (or the person who's the "visionary") should get more, but that may be shortsighted. Michael says that it can take 7-10 years to build a really successful company, and there are going to be times when one person plays a greater role than the other.
Others, like Mike Moyer of Slicing Pie, are sure that dynamic splitting is the way to go. An equal split can hinder the decision-making process because it requires a majority (or, in the case of two cofounders, unanimous) vote. For the really tough decisions, this can actually lead to mediation, which no one wants. Equal splits can also act as a red flag to investors, as they might mean that the founders are avoiding the tough conversations.
Many companies wait a month or more to get a feel for the partnership before deciding on equity. It gives them time to get a feel for what each cofounder will bring to the business before having the conversation. If you do that, just make sure that the founders agreement notes that you'll be getting equity, and lists what date negotiations will take place.
Check out the rest of the article, including information on dividing income, vesting schedules, and more, here.
Do you have a cofounder? Please share your experience below!
Discuss this story.
🛠 Crafting Your Sales Page
Useful free samples can build confidence and show the quality of your product. They also play on the Rule of Reciprocity, which makes people want to support someone who has done something for them.
Discuss this story.
💻 Erman Küplü's $15K MRR Shopify App
by Erman Küplü
Hey, all! I’m Erman Küplü. I've realized that not many indie hackers are into Shopify apps, so I thought an AMA could be helpful!
10 months ago, we launched our very first Shopify app, Analyzify. We knew that we were solving a real problem, but we didn’t expect this much traction. We have reached 500+ paying clients and $15K MRR with just the very first version of our product.
AMA!
Can you share a bit of your background?
We have been offering productized services on the Upwork marketplace for over four years now. We noticed that Shopify merchants always came with similar requests:
- Fix my analytics.
- Connect my store to Google Tag Manager or Google Analytics 4.
- My ads conversions aren’t working, please help troubleshoot.
Initially, we were using some products that didn’t meet our clients' needs, and we had pricing that wasn’t really beginner-friendly, so we decided to develop our own app. At first, we thought that it would be a private app, and that we would only use it on our projects.
After the first 10 clients, I almost regretted that we opened it up. As explained shortly here and there, we attracted some clients that had their own custom setup and requirements, and truly this was something that I didn’t expect at all. Their cases were too complex, and we needed to provide in-depth support for them. However, we soon managed to make all of our tough cases happy. We started to receive amazing reviews and attracted clients who stayed with us. Our free YouTube course also helped us tremendously with sales.
What's been your experience with Shopify as a market?
We've had a great experience with Shopify, and we like it even more since they removed the 20% commission fee from the app store in August. Shopify is growing rapidly, and all merchants need apps. Definitely consider building for the Shopify marketplace (themes, apps, etc.).
However, don't rely on the app store for sales. You need to build your own channel and audience if you want to gain traction. Create relevant longform content, like YouTube videos, blog posts, articles, and so on. Here's a great example: A Complete Guide to Shopify Analytics.
Go above and beyond when it comes to support, and guide merchants deeper into the app whenever they reach out. Hang out in Shopify community forums and DTC Twitter. Merchants' posts will give you tons of new app ideas. Finally, don’t fear the competition! Shopify has 1.7M stores, but don't let that intimidate you.
How did you increase views to your YouTube channel?
YouTube naturally ranked our videos pretty high. Our content is useful and actionable, and I think that helped. At first, I was trying to distribute the videos and articles into forums and Reddit for the first few weeks. Soon, I stopped doing that because the organic growth was enough.
I guess GA4 Wizard (which helps Shopify merchants install Google Analytics 4 into their stores), the free tool, and the video that we made were the triggers for everything else. This probably brought us credibility and authority in the first place.
Content pillars are quite new, but we keep adding more content.
Why do you have a one-time fee instead of a subscription?
The core version of the app doesn't have any ongoing costs because we are just using Google toolset (GTM, GA, GDS, etc.). That's why we wanted to charge a one-time fee.
However, we are now working on a few new add-ons that provide ongoing value and use our servers. We'll be charging the new add-ons a monthly fee, while the core version will remain as a one-time fee.
Would you consider VC funding?
I don't know what the future brings, but I don't like the idea of VCs. I am happy staying independent and bootstrapped.
However, when we needed funding, we got it from EpsiFund. I loved the concept of revenue-based funding.
I think it is great for people like me who are not attracted to VCs, big funds, or exits!
Discuss this story.
🐦 The Tweetmaster's Pick
I post the tweets indie hackers share the most. Here's today's pick:
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Special thanks to Jay Avery for editing this issue, to Gabriella Federico for the illustrations, and to Darko, Priyanka Vazirani, James Fleischmann, Ivan Romanovich, and Erman Küplü for contributing posts. —Channing
