Citron thinks Shopify is like Herbalife | Hacker News Reader

Citron thinks Shopify is like Herbalife

citronresearch.com

33 pointsinfynyxx227 comments

This is beyond grasping at straws.

Shopify performs a service, Herbalife does not. Shopify recruits people, Herbalife sells inventory.

I don't see Shopify asking for upfront payments from their affiliates.

Not to mention the fact that a successful Shopify store relies on skill at SEO, social media and picking the right products. Herbalife relies on being early enough in the "reverse funnel" and having a lot of people downstream (not skill).

There is literally no similarities between Shopify and HerbaLife beyond a program recruiting people, which basically every large site has.

There's one overlap where there might be a bit of tooth is in the possible revenue claims which seems like a big portion of what Herbalife actually got hit for it seems, though I'm not really familiar with the exact details of the FTC's findings in the Herbalife case.

Other than that though there's very little relation between the two Shopify really doesn't sound like a pyramid scheme even from this page.

If you're in the mood for a documentary 'Betting on Zero' is pretty good. http://www.imdb.com/title/tt3762912/

Saw it. Just don't remember so much and didn't read in depth at the time so no idea what may have been glossed over or slanted in that documentary.

But nothing I saw seemed to claim you could become a millionaire by participating in the affiliate program.

And in reality, if you have a good product and decent marketing skills you could use Shopify to build an online store and easily become a millionaire. It's not a stretch, IF you have a good product and decent marketing skills.

The article explicitly lists many more similarities listed than that. 'Quit your job for Shopify', claims about how the platform makes people millionaires in days with people sitting in Ferraris. I like Shopify from what I've seen at tech events but that's some very sketchy marketing.

Shopify Digest is their newsletter.

Here are the topics I have received for a store recently (I'm sure it's targeted).

-Protect your reputation using social media

-Lifelong learnings for entrepreneurs

-Get the perfect photo

-6 Bulletproof ways to improve conversions

-How to track your marketing campaign

If I look at a few months of emails, there is only 1 that is "make millions type" and it's titled "How two entrepreneurs generated $91,470 in 3 months"[1] and it's an interview with the store owners. I don't see anything wrong with that.

https://www.shopify.com/blog/14917217-how-two-ecommerce-entr...

The sketchy marketing I see for Shopify (FBA, dropshipping) is from users who are selling a course they made.

What? They're basically the same thing. Herbalife sets you up with a way to be a solo salesman, just like Shopify. Both sell inventory.[0] (Note: Shopify acquired Oberlo in May)

>Not to mention the fact that a successful Shopify store relies on skill at SEO, social media and picking the right products. Herbalife relies on being early enough in the "reverse funnel" and having a lot of people downstream (not skill).

Silly! Don't you know that Herbalife relies on skill at salesmanship, networking and picking the right products.[1] Shopify on the other hand relies on you being early enough in the "reverse funnel" and having a lot of people downstream.

The crash-and-burn charts Citron links to are also pretty damning. This seems almost exactly like Herbalife from where I'm sitting.

[0] https://www.shopify.com/oberlo

[1] http://products.herbalife.com/product_catalog

I can't help but laugh at the irony of the copywriting style, is this meant to appeal to the same kind of clueless audience that calls numbers for MLM-scheme posters stapled to telephone poles? If so, to what end?

This is a fundamental misunderstanding of the problem with Herbalife. The problem with Herbalife is that it is a pyramid scheme. You don’t make your money by selling products, you make it by recruiting people to sell for you, who recruit people to sell for them, and so on.

Shopify does not appear to be a pyramid scheme. I see nothing to suggest that you recruit other sellers recursively in order to generate revenue.

Herbalife is primarily noteworthy because they are a pyramid scheme. If you say that something is like Herbalife, then you’re strongly implying that other thing is also a pyramid scheme. If I say my cousin is like Vincent Van Gogh, you’d assume I mean that he’s a brilliant painter. If I was actually trying to convey that my cousin only has one ear, you’d understandly find my statement misleading, and probably poorly conceived.

> Google search shopify and millionaire and you'll see 27k results. Then go to Youtube and enter shopify and millionaire and you'll see 10k results.

Funny, I just searched "google ads millionaire" and it returned 6M results, as well as 30k from Youtube. By Citron's logic, Google is also like Herbalife.

Now, he might have a case if Shopify and Google generated these pieces of content themselves, but he makes no attempt to discover where the content originates.

I wouldn't disagree with that comparison :-)

Back when I was working at Google there clearly was tension between people who were promoting the AdSense platform and Google's desire to have more inventory. Much of it seemed to fall into the "we didn't tell them to do this, they just came up with it on their own."

At the time (2006 - 2008 or so) the "deal" was person A would get a partner ID and they would resell Google ads through their partner ID to shops that they recruited. It was so bad that after I had left Google and joined Blekko the easiest web spam page to detect was the same AdSense ID across more than a handful of domains. The ranking team de-indexed every site where the AdSense ID appeared on more than 50 different URLs and it pruned a very significant chunk of the index of 'web spam'.

The only point I'm trying to make is that when your platform makes money on a per-use basis, whether its transactions or page views, there are people who will use that to create affiliate type businesses.

But aren't the vast majority of Shopify users selling products (not recruiting other users to Shopify)?

Exactly. I believe Shopify has an affiliate program (like just about every other platform) but it's not pushed like MLM. The main goal of majority of shopify users is to sell their product, not to sign up their friends.

Pretty hilariously bad report. When they first came out with it the URL path said 'Spotify' instead of 'Shopify'

I've never heard of this Citron Research group. However, anytime a company tries to sell something as a "lifestyle" or other cult like mentalities, you know something sketchy is going on.

Also, I'm disappointed that Herbal Life was only required to pay $200 million. Their predatory practices destroyed lives in order to enrich top dogs in the business, and that makes my blood boil

Who listens to these clowns? I'm shocked they have such an overwhelming effect on the market ($SHOP is down ~20% since last week).

He probably made a ton of money shorting the stock.

Are these the losers who underestimated the fandom of the Ubquiti networking owners?

They are (1), and although that did hurt Ubiquiti's stock price nothing else ever came of it. I have no idea why anyone listens to these guys.

[1] http://www.citronresearch.com/citron-exposes-ubiquiti-networ...

@dang

What's up with this flagging? A contrarian opinion on a tech darling shouldn't be a basis for removal from the front page.

Apparently enough HN users flagged the story.

Sure and we've seen over-rides before due to misuse of flagging. In this case it seems to me that flagging has been used as a mega-downvote because people don't want a negative story on Shopify, that misuse is bad for the community and silences people who act within the norms and are upvoting articles they want to see. If stories like the below are fine here, I think this story should be fine here.

https://news.ycombinator.com/item?id=9583196

https://news.ycombinator.com/item?id=8032614

https://news.ycombinator.com/item?id=13200455

https://news.ycombinator.com/item?id=14209161

https://news.ycombinator.com/item?id=13806397

https://news.ycombinator.com/item?id=15441429

Why was this flagged?

Indeed. Was hoping for more discussion on this topic.

You have a vigilante shorter that roams around markets “identifying fraud and terminal business models” and using strawman arguments with little research to improve his position.

This is probably just as sketchy as his claims about Shopify’s marketing and referral tactics are.

So is this like a conspiracy theory / clickbait blog but for investors? The content (and even web design) is laughable.

Despite that he has an audience. He’s also shorted Nvidia, claiming it to be a “casino stock” and the price followed accordingly.

Crazy how prices can be manipulated by these people so easily.

Reply on news.ycombinator.com