Shopify

Shopify's story began in 2004 when Tobias Lütke, a German-born programmer living in Ottawa, Canada, wanted to sell snowboards online. He found the existing e-commerce platforms frustrating and inadequate. So he did what any self-respecting programmer would do: he built his own.

"We were going to sell snowboards, but we never sold a single one," Lütke recalled. Instead, they created something far more valuable.

Lütke, along with his partners Scott Lake and Daniel Weinand, launched Snowdevil, their snowboard shop, using the platform they had built. Other small businesses noticed and asked if they could use it too. The team realized they had stumbled upon a much bigger opportunity.

In 2006, they pivoted. Snowdevil became Shopify, a platform that would allow anyone to easily set up an online store. But the early days were far from smooth sailing. They struggled to gain traction and faced skepticism from investors.

"Everyone thought we were crazy," Lütke said. "They told us the e-commerce market was already sewn up."

The turning point came in 2008 when they introduced a third-party developer platform. This allowed other developers to build apps that would integrate with Shopify, greatly expanding its functionality. It was a gamble that paid off handsomely.

Shopify's user base began to grow rapidly. By 2010, they had 10,000 active stores on their platform. But with growth came new challenges. The company needed to scale quickly to meet demand while maintaining the quality of their service.

In 2013, Shopify faced a major crisis when a sudden influx of new users overwhelmed their servers, causing widespread outages. It was a wake-up call that forced them to overhaul their infrastructure.

"That was a tough moment," Lütke admitted. "But it made us stronger. We learned we needed to build for scale from day one."

Shopify bounced back stronger than ever. They went public in 2015, with shares priced at $17. Today, the stock trades at over $600, a testament to the company's phenomenal growth.

As of 2024, Shopify powers over 4 million businesses in 175 countries. They've expanded far beyond their initial e-commerce offering, providing tools for in-person retail, shipping, and even small business loans.

"We're building the 21st century's retail operating system," Lütke declared.

Shopify's success stems from its unwavering focus on empowering entrepreneurs. Lütke has always maintained that Shopify's mission is bigger than just making money.

"We want to make commerce better for everyone," he said. "That means lowering the barriers to starting a business and giving entrepreneurs the tools they need to succeed."

From a snowboard shop that never sold a single board to a company valued at over $70 billion, Shopify's journey embodies the transformative power of entrepreneurship. It's a story of perseverance, innovation, and the profound impact that can come from solving a problem you personally experience.

As Lütke puts it, "Entrepreneurship is about turning the things that bother you into the things that no longer exist."

Lessons

Lesson 1: Don't confuse activity with productivity. Shopify rejects the notion that long hours equal success. Lütke states, "I've never worked through a night. The only time I worked more than 40 hours in a week was when I had the burning desire to do so." This focus on quality over quantity extends to how they view their employees' work. "For creative work, you can't cheat. My belief is that there are 5 creative hours in everyone's day. All I ask of people at Shopify is that 4 of those are channeled into the company."

Lesson 2: Treat your platform as a product. Shopify doesn't just build tools for merchants. They treat their entire ecosystem - including their app store and partner network - as a product to be designed and optimized. This approach has created a powerful network effect. Harley Finkelstein, Shopify's President, explains, "We view marketing/ops/support/commercial as a product." This holistic view has allowed Shopify to create a seamless experience for merchants and developers alike.

Lesson 3: Build for a decade, not a quarter. Shopify's approach to hiring and team building is distinctly long-term. Lütke explains, "When I hire someone at Shopify we can make the assumption that we work together for a decade." This long-term view changes how they approach everything from onboarding to career development. It allows them to invest heavily in their people, knowing that investment will pay off over time.

Lesson 4: Absorb complexity, don't offload it. Many software companies try to simplify their product by pushing complexity onto the user. Shopify takes the opposite approach. Bobby Morrison, Shopify's CRO, says, "We take what's complex and make it simple - absorbing, not offloading complexity." This philosophy has allowed Shopify to create a platform that's powerful enough for large enterprises but simple enough for small businesses to use.

Lesson 5: Stay main quest, no side quests. Shopify has been ruthless about focusing on their core mission of empowering commerce. They've avoided the temptation to branch out into adjacent areas like CRM or marketing services. This focus has allowed them to excel in their chosen area. As Morrison puts it, "No side quests, stay main quest." This clarity of purpose has been a key factor in Shopify's success, allowing them to outcompete larger, more diversified competitors.

Further Readings

• Shopify Business Model
• CEO and founder Tobi Lütke on UX at Shopify
• Reinventing E-commerce: The History of Shopify (2004-2024)
• Ecommerce Business Models: Types and Examples (2024) - Shopify
• Exploring the Future of Ecommerce with Shopify
• The History of Shopify - Radiant
• The History of Shopify: Founders, Funders, and Timeline