Lessons Learned from Shopify’s Success Story
By Tricia McKinnon
Shopify is a great Canadian success story. Since the dot-com days it is the first Canadian tech start-up to surpass a billion-dollar valuation. It provides software that enables companies to easily set up an online store. With 600,000 merchants on its platform who have generated $82 billion in sales it has played a key role in primarily helping small and medium sized businesses sell direct to consumer. With such great success comes many lessons learned including the following.
1. Every challenge has the seeds of a potentially great business idea
In 2002 after arriving in Canada Tobi Lütke and then business partner Scott Lake decided to create a company called Snowdevil to sell snowboarding equipment online. Frustrated with the eCommerce solutions that existed at the time Lütke also decided to write his own eCommerce software. Snowboarding equipment sales ended up floundering but the duo saw an opportunity to sell Lütke’s software to other businesses that were looking for a way to easily sell their products and services online. This opportunity led to the launch of Shopify in 2006. The ability to identify a gap in a market and create a business to solve a challenge is a classic strategic move that has paid off tremendously for Shopify.
2. It takes times to build a great company
In the age of instant gratification people often think that success happens overnight. Shopify’s history tells of a different story. After launching Snowdevil in 2004 and then changing the focus of the company to eCommerce software, Shopify launched in 2006. It generated revenue of $8,000 in the October of its first year in business. Fast forward 12 years after launch and Shopify is expected to make $1 billion in revenues in 2018. Often stories of companies that achieve quick success are glorified in the media but the truth is most businesses take time to gain traction. Lütke has said: “I started out as a computer programmer with no business background—getting to where I am now, as CEO and with the knowledge that I have, it took years. The time I took speaking with mentors, reading, learning, that did constrict the growth of the business for a while. We went from two to 20 people in the first six years of Shopify. It’s not that great a growth, but it allowed me to find my own on-route to this highway that we’re on now”.
3. Trust your gut
When Lütke first searched for venture capital for Shopify he was told that he needed to move the company to the US. However, Lütke decided to keep the company in Canada. "I've just had this consistent experience in my life that if people tell you to do something, and you do the opposite, it works better" said Lütke of his decision. He felt that he could find great talent not only in Ottawa but also in Toronto and Montreal and he has achieved that goal.
4. It is not where you start but where you finish
Lütke left high school after grade 10 and took an apprenticeship at Siemens in a program targeted at generating Germany’s next generation of computer programmers. After starting Shopify Lütke focused on product while his co-Founder Scott Lake was the CEO. When Lake decided to leave the company in 2008, Lütke had to quickly learn how to run a company. He actually tried to find someone else to fill the CEO role but one of his investors suggested that he take on the role. Lütke shows that it is possible to stretch yourself in ways you may have never imagined.
5. Never stop learning
Four times a year Lütke takes one week off to focus on deep learning. He spends time alone where he codes and reads books. In a company that is growing as fast as Shopify’s there is always pressure to spend as much time as possible on the day-to-day operations of the business. However, most great leaders dedicate a significant amount of time to reading and personal development.