Author: Albert Wang
This post was originally posted on https://medium.com
Data and metrics were pulled from publiccomps.com — the best benchmarking tool & platform for enterprise software investors. All other tables were made, and graphs pulled from various sources on the internet.
Shopify is an all-in-one e-commerce platform that enables users and businesses to create a full-scale online store using its site creation, hosting, and payment platforms.
Management & Founding Story
“To me, a great company starts with a great product and ends with a great product.” - Tobi Lutke, CEO Shopify
Photo of Lutke taken from Forbes, originally shot by CATE DINGLEY/BLOOMBERG
Shopify’s founder and CEO, Tobi Lutke, is a technical founder who is one of the pioneers of global e-commerce and understood the pain points of online platforms prior to launching Shopify.
In 2004, alongside his co-founders, Tobi initially founded Snowdevil to sell snowboards. At the time, online store software was built for existing big businesses that were transitioning online. It was incredibly expensive, unnecessarily complex, and infuriatingly inflexible. Frustrated with the available e-commerce platforms, Lutke, a software engineer, then designs a whole new tool through which Snowdevil operates. Dissatisfied with available e-commerce options, Lutke designed and created new software to run Snowdevil, but it quickly became apparent that the software was more valuable than the site.
“I set up our online store based on a variety of different systems such as Miva, OsCommerce, and Yahoo stores. Truth be told, all those systems made my skin crawl because of how bad they were. The final straw was when I got a custom design made for my snowboard store and I couldn’t get it to work in Yahoo stores. We had this great CSS-based layout done with all these new fanged ‘web standards’ and the customizability of Yahoo Stores barely allowed me to change the background color of the top frame.” — Tobi Lutke in 2010
Inspired by his experiences with Snowdevil, Shopify was officially launched as a set of tools for merchants to build their own sites. Shopify focused on the essentials like customizable store templates, tracked order feeds, inventory organization as well as payment processing and PayPal/credit card integration. Shopify’s high degree of customization lays the groundwork for its shift from being a tool to a platform.
“It is incredibly powerful if you solve the problem you actually have yourself. It’s really tough to develop a good product when you don’t have very close proximity to the people who actually use your product. The closest proximity you can have to those people is to be that person” - Tobi Lutke
By 2009, Shopify had established its value as a simpler, cheaper, and better e-commerce tool that replaced old tools like Yahoo! Stores and Microsoft Commerce. Cognizant of the evolutionary power provided by open-source platforms, developers-by-trade Lutke and Weinand made the crucial decision to construct Shopify’s first external API and an app store.
“E-commerce is a highly individualized business. Every store wants to offer a unique buying experience but providing too many features makes the software cumbersome and difficult to use. The Shopify API solves this by allowing merchants to install exactly the features they need to get the most out of their store…and our Partners can get a recurring source of revenue by developing great applications for these stores.” - Tobi Lutke, 2009
CEO Tobi Lutke embodies a couple of the key attributes as a successful visionary CEO, here I highlight just a few:
Vision: Transformed Shopify from Snowboards -> Tool -> Platform -> Omni-Channel
Drive: Self-taught programmer passionate about solutions
Culture Warrior: Successfully instilled a customer-obsessed culture
Adaptive: Constantly challenges himself and SHOP to look for efficiencies
Self-Awareness: Continuous reader that utilizes mental model frameworks for improvement, created a dominant business about empowering others without disincentivizing competition.
“Instead of stifling this enthusiastic pool of talent and carving out the profits for ourselves, we’ve made a point of supporting our partners and aligning their interests with our own. In order to build long-term value, we decided to forgo short-term revenue opportunities and nurture the people who were putting their trust in Shopify.” - Tobi Lutke, Shopify Shareholder Letter (2019)
“A unique founder can make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades. Paradoxically, impersonal bureaucracies staffed by trained professionals can last longer than any lifetime, but they usually act with short time horizons.” - Peter Thiel, Zero to One (2014)
As a founder-leader, Tobi is so incredible because he’s a missionary who thinks long-term and sees the potential of his platform while others did not.