How Shopify Became the Everywhere Store
Bloomberg Businessweek|December 27, 2021 - January 03, 2022 (Double Spread)
Tobi Lütke transformed the Canadian upstart into an e-commerce giant by being the anti-Amazon. How long can the formula keep working?
Brad Stone

Last February e-commerce company Shopify Inc. replaced the “Ottawa, Canada” dateline that began its press releases and earnings reports with a strange new one: “Internet, Everywhere.” The geographical shift came at the insistence of Shopify’s founder and chief executive officer, Tobi Lütke, who tends to view such matters through the prism of cold, hard logic. In May 2020, only a few months into the pandemic, he’d made the early, seemingly rash decision to terminate the leases on Shopify’s offices in Ottawa and six other cities, declaring that his entire 7,000-person workforce would remain virtual—forever. Shopify, he concluded, was now omnipresent, located with its employees and customers in the digital ether. His senior execs were perplexed at the strange phrasing, but they knew better than to argue.

The dateline thing may be a bit pompous and a little too cute, but after an almost two-year run that’s turned the quiet enterprise-tech company into a global e-commerce power, Lütke has earned some creative license. Since he started Shopify 15 years ago, the company has sold software that allows about 2 million merchants worldwide to run websites— free from the complicated embrace of Shopify’s chief rival, Amazon.com Inc. For $30 to $2,000 a month, Shopify offers sellers more than a dozen services to run an online store, from the actual e-commerce website to inventory management to payment processing.

Its technology now undergirds the websites of giant retail chains such as Staples Inc. and Chipotle Mexican Grill Inc.; recently ordained public companies that grew up on the platform, including shoemaker Allbirds Inc. and medical scrubs maker Figs; and the retail side-hustles of Kylie Jenner, Taylor Swift, Lady Gaga, and other celebrities. But the company’s biggest impact has been at the smaller end of the scale, in the vast constellation of mom and pops, venture-capital-backed startups, influencer mini- moguls, twee entrepreneurs, merch heads, and more obscure outfits, like Offlimits—a two-person New York City startup trying to reinvent, of all things, breakfast cereal.

What Zoom was to corporate America during the early days of the pandemic, Shopify was to small-business owners, many of whom had never sold a single product online until it became the only way they might stay alive. At the time, Shopify, a little-known company powering some 600,000 merchants, was more likely to be confused with the music service Spotify than synonymous with e-commerce. But when businesses everywhere had to close en masse, Shopify armed them with the tools to become instantaneous online stores. While Amazon’s reputation as a vampiric partner to merchants was reinforced in 2020 by sellers’ testimony in front of a congressional subcommittee investigating Big Tech, Shopify suddenly emerged as their biggest ally.

The global quarantine boosted the company’s market capitalization from $46 billion in early 2020 to $174 billion today. In 2020 its sales jumped to $2.9 billion, an 86% increase from 2019. Over the recent Black Friday / Cyber Monday weekend, Shopify merchants brought in $6.3 billion in sales, a 23% rise from a year earlier. Now Canada’s most valuable company, it accounted for 8.6% of U.S. e-commerce sales in 2020, well behind Amazon’s 39% but ahead of Walmart and EBay, according to EMarketer. “The pandemic just turbocharged them. It’s ridiculous,” says Rick Watson, an e-commerce consultant and host of Watson Weekly, a podcast about online selling.

As the success of Zoom, Peloton, and other pandemic breakouts starts to fade, Shopify is working furiously to keep its momentum going and weave itself into the zeitgeist. Recently it hired a veteran of Kanye West’s Yeezy brand to run a new influencer program, opened a slick entrepreneurs’ hub in Manhattan, teamed with the actual Spotify to help musicians become merch machines, and rolled out a feature that allows shopkeepers to sell unique digital artworks—“I am creating NFTs,” tweeted Martha Stewart, now a Shopify merchant, in October, tagging the company. Pharrell Williams, who sells his skin-care line on Shopify, is a fan, too. “If you’re able to come up here and be part of this platform, you’re in great, great, great company,” the producer-rapper-singer-entrepreneur told a group of business owners over Zoom at the company’s annual conference in October.

Lütke, who decided to develop the underlying tools to build retail websites after shuttering his online snowboard store when he was 24, is now Canada’s second-wealthiest person, according to the Bloomberg Billionaires Index. In the insular circles of tech and retail, he’s become a popular and recognizable figure—41 years old, whip thin, Bezos bald, and never without his trademark pageboy cap (until recently, when he abruptly stopped wearing it amid the ceaseless quarantine). “It was defensible when I actually went outside at times,” he says.

In a sense, Lütke and his colleagues are the opposite of Jeff Bezos’ army of techno-capitalists. Amazon, which has enjoyed its own Covid-fueled boom, celebrates the almighty customer. It will happily risk alienating small businesses by knocking off their products or soliciting new competition, if it means lowering prices and accelerating shipping times. Shopify, on the other hand, has a romantic view of the merchant—its executives rapturously extol the virtues of “democratizing commerce” and “making entrepreneurship cool.” If Amazon’s devotion to customers and an infinite selection earned it the nickname “the everything store,” Shopify, as its new dateline suggests, wants to be the everywhere store.

A few years ago, Lütke sensed there was an advantage in contrasting Shopify with its widely feared competitor, remarking, “Amazon is trying to build an empire, and Shopify is trying to arm the rebels.” But it’s difficult to argue you’re still an insurgent force when you have a Death Star-size market cap. To keep the rebel alliance intact, Lütke has to make Shopify more useful to the world’s largest retailers, while helping smaller ones caught in the grip of supply chain shortages and inflation.

At the same time, he has to contend with growing pains at home, including C-suite turnover and questions about whether Shopify should get into the most laborious parts of e-commerce, like shipping. Winning over hordes of retailers by giving them a simple and sturdy online presence, it turns out, was the easy part. “I have huge blind spots just because, I mean, I grew up as a nerd, programmed all day long, and spent my entire 20s building Shopify,” Lütke says during a two-hour interview at his one-person office in Ottawa. “I have some catching up to do about how everything kind of fits together.”

Trying to talk to Lütke about pretty much anything is a perilous journey into an intellectual labyrinth built out of management books and discursive thoughts. His current fixations include the concept of the Trust Battery, which is how he gauges his confidence in employees, along with the hypothetical that one of the most critical pieces of technology, the web browser, couldn’t be introduced today because Apple Inc., Google, and other app store owners wouldn’t allow it. In any Lütke discussion, you’ve got to be ready for sentences like “I know how to exoskeleton my time” and “I fundamentally find nondeterminism more interesting than determinism.”

Before the pandemic, like a lot of tech CEOs and investors, he read Nassim Nicholas Taleb’s Antifragile: Things That Gain From Disorder and became fascinated by chaos engineering, the idea that allowing for both unanticipated calamities and intentionally introduced failures can make people and organizations stronger. “Nothing can become truly resilient when everything goes right,” Lütke says.

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