Interview: Shopify’s CEO Insights
This week I had the honor of interviewing Tobias Lütke, the CEO and co-founder of Shopify. Shopify is the marquee shopping cart system of the e-commerce industry. As a programmer Tobias worked as a core member of the team that developed Ruby on Rails framework. Tobias is an incredible speaker on array of topics such as startups, crowd-sourcing, and large server cluster performance optimization. He also maintains a popular tech weblog at too-biased.
What made you want to start Shopify?
The great entrepreneurial catalyst: personal frustration. My partner at the time and I were running an online snowboard and winter-sports business in 2004 and couldn’t find a software that wasn’t limiting in some way. I must have tried every shopping cart software on the market back then, OsCommerce, ZenCart, Miva Merchant, Yahoo! stores, you name it. Frankly, they all sucked in 2004 and haven’t changed since.
In a fit of frustration and perhaps a little hubris, I decided to build my own software. My background is in programming, so after a lot of pizza and caffeine fueled all-nighters we relaunched the store based on my own system and have never looked back.
Describe the beginning stages of Shopify: Did you face obstacles? Early successes?
After building my own e-commerce shopping cart software, I quickly realized that the software was filling a big hole in the market. We moved the company away from snowboards and pivoted our focus entirely to software.
This came with an incredible amount of challenges. Starting an e-commerce company in Ottawa, Canada wasn’t an easy task. Although Ottawa is the capital of Canada, it’s still off the beaten path for building a world leading Internet business. There was no infrastructure for us, no mentors and certainly no investors. We lucked out in the end and managed to raise seed capital from Toronto which let us build Shopify and go to market.
How did you choose employees at the beginning? Were there any particular characteristics you looked for?
Like most start-ups, for the first year or so we had no money at all. Shopify’s first employees were all my friends who didn’t take a salary and believed in what I was building.
At the time, Ruby on Rails (the technology we use) was in its infancy so we organized a Ruby meet-up here in Ottawa to see who was using the language. Looking back, I think everyone who showed up for the first couple meetings ended up working here. We’re a very tightly knit group of people who share a passion for smart technology and great products. While building my team, I’ve always chosen passion and resourcefulness over specific skills. Of course skills are important as well, but we created an environment where people can learn the skills needed incredibly quickly.
Looking back, would you have chosen differently? What advice would you give to new startups (particularly in the eCommerce space) on how to choose new team members?
My biggest regret is that we weren’t focused enough in the beginning. We should have picked a certain niche of e-commerce and streamed all of our focus toward that. Another regret is that we didn’t launch fast enough. We spent almost two years developing the core product, but I think we could have done this much faster.
What tips/advice would you give founders/CEOs on how to keep a team motivated/focused?
As the CEO you’re the only person in the company who works on two products instead of one. You have to build the product that you ship, in my case the Shopify platform, while simultaneously building the company itself as a lucrative corporation. You also have to find, hire, and retain the best people in the world, which is extremely difficult if your company isn’t an incredible place to work, so working environment and corporate culture should always be a priority.
Also, never forget the implications of your product. When we make a sale at Shopify (and we make hundreds a day), what does that mean? It means that someone signed up to start their own online store. Many entrepreneurs that start an online store as a side project end up shifting more and more of their time and resources to growing their business. What started as a weekend project can quickly become a new full-time career. The point is, we have a product that has the ability to dramatically improve people’s lives, and it happens every day… it’s incredible. Everyone at Shopify understands the importance of their work and is proud to be a part of so many new and successful online businesses.
I discussed my initial thoughts on networking within the eCommerce community here; one of which is affiliate partnerships. What does Shopify look for in a product/service before entering into an affiliate partnership?
Great article, I enjoyed this a lot. Truth is it’s hard to get started. Shopify is doing incredibly well these days but the beginning was very, very slow. If our angel investors wouldn’t have picked up our payroll payments we would have been toast.
I personally love what Catarina Fake coined Business Development 2.0. We operate in a similar way, for instance, we have an open API that everyone can use. This API allows third parties to add any integration or feature to Shopify that they can think of. We also have something called the Shopify App Store. Here developers can create and submit an App, and after some quality testing it’s published and our merchants can download and add further functionality to their store. Then we strategize various marketing efforts toward our mutual benefit.
It’s an effective model in so many ways: We can work with more partners at the same time, and we can focus on development, instead of on sales and technical phone calls. After an App launch the developer can access tens of thousands of customers who are accustom to paying monthly for their software. It’s the most focused and qualified marketing channel imaginable. Everyone wins.
Yotpo’s goal is revolutionizing the way merchants integrate product reviews. How much influence do you think product reviews play in a customer’s purchasing decision?
Heh. It’s hard to overstate. Reviews make or break online stores. Study after study shows that there is no better influencer of buying decisions then reviews.
I can’t wait to see your product on the market. There are some competent players in the enterprise space but we need more Yotpos!
Why do you think Shopify has been so successful?
It’s allright, but you haven’t seen anything yet
From behalf of the Yotpo team, it was a pleasure Tobias, thanks a lot!