Scaling Shopify: Tobias Lütke and Ben Horowitz on Building a Global Giant
a16z Podcast
Deep Dive
Why did Shopify start as a snowboarding company and how did it evolve into a global e-commerce platform?
Shopify started as a snowboarding company called Snow Devil Snowboard in 2004. Tobias Lütke, the founder, couldn't get a work permit in Canada but was allowed to start a company. He began an online store for snowboarding and found the existing e-commerce software to be of poor quality. This frustration led him to build his own e-commerce platform, which evolved into Shopify, now serving millions of merchants in 175 countries.
Why would A16Z never have invested in Shopify in its early days?
A16Z would have likely passed on Shopify in its early days because the e-commerce category was highly competitive with many existing platforms like Magento. However, Shopify succeeded by focusing on digital natives and entrepreneurs starting online, rather than established retailers moving online.
Why does Tobias Lütke continue to write code despite being the CEO of a nearly $100 billion company?
Tobias Lütke believes that being hands-on and understanding the details of the company's operations is crucial for making high-quality decisions and setting the direction. He finds it inefficient not to understand the details and values being in the trenches with his team, which helps align everyone with the company's mission.
How does Shopify approach the integration of new technologies like AI and crypto?
Shopify integrates new technologies like AI and crypto by focusing on practical applications that solve real problems for merchants. For AI, they are experimenting with AI assistants and other tools to enhance the merchant experience. For crypto, they support cryptocurrency payments and are working to improve the user experience and infrastructure to make it more accessible.
Why does Tobias Lütke believe that regulating AI at this point is a bad idea?
Tobias Lütke believes that regulating AI at this stage is premature and could stifle innovation. He argues that regulating technology itself is impractical, and instead, regulatory clarity should focus on institutions and market rules. He emphasizes the importance of permissive regulations to allow for experimentation and the development of open-source solutions.
How does Shopify handle calls for activism and political stances within the company?
Shopify maintains a clear stance that the company's primary mission is to foster entrepreneurship. They avoid taking political stances unless aligned with their mission. Tobias Lütke emphasizes clarity and transparency, providing potential employees with a letter outlining the company's values and reasons why someone might not want to work there. This approach helps avoid divisiveness and maintains a focused company culture.
What is Shopify's approach to building a partner ecosystem and how does it evolve with new technologies like NFTs and the EVM?
Shopify built its partner ecosystem by solving real problems for merchants and providing tools and APIs that developers could use to build themes, plugins, and apps. They overcame the chicken-and-egg problem by starting with practical solutions and gradually expanding. With new technologies like NFTs and the EVM, Shopify sees potential for more sophisticated incentive systems and token economies that could further enhance the ecosystem.
- Shopify's founding in 2006, predating the iPhone's widespread adoption
- Initial venture as a snowboarding company, Snow Devil Snowboards
- Inability to secure a work permit in Canada, leading to the creation of Shopify
- Early disillusionment with existing e-commerce software quality