tobias lütke

There might be only a few people who haven’t yet heard of Shopify, but if you are one of them, then you might have missed out on a gem. A venture-capitalist backed company that grew exponentially to become a multi-million-dollar enterprise, Shopify is the success story that we all dream of.

Shopify brings together stores and includes everything from large MNCs to small hobby stores that belong to local retailers. It even counts little businesses that didn’t get the funding they required through Kickstarter and includes people left out by department stores and malls. With monthly subscription fees ranging between $14 to $179, Shopify provides all of them a chance to sell their goods and reach out to a maximum number of people. The tool grants them access to everything from design templates to analytic tools to monitor sales. The platform has become such a huge revolution that it recently crossed the $7 billion mark in total sales.

Shopify has over 120,000 customers across the world, and they all pay a monthly fee to use the e-commerce giant who has tie-ups with bigshots like eBay, General Electric, Gatorade, Wikipedia, CrossFit and Amazon. Read on to understand how Shopify grew from being another run-of-the-mill idea to an e-commerce stalwart which does sales worth more than $7 billion!

About the Founders

Tobias Lütke exhibited an aversion to authority at an early age, and even while at school in Koblenz, Germany, he asked more questions back than answer the teachers. He always looked for shortcuts, putting in the least effort possible to pass, and spent most of his time on his computer. By the time he was 12, he was writing programs, fixing the machine itself and creating games for himself. It got to a stage where his parents were worried and took him in for psychoanalysis.

After Grade 10, Lütke chose to ignore studying at a university, and instead, joined an apprenticeship for computer programmers. He worked with Siemens during this period but found his work with Java to be repetitive and restrictive. He was also a passionate snowboarder, and on one of his trips, fell in love with a girl from Ottawa, prompting him to move to the city from where he would launch his company.

Meanwhile, Scott Lake was the polar opposite, being someone who looked like he would become a CEO. He had been a jock while at school and was an extrovert who was at ease around people. Lake was friends with Lutke’s girlfriend’s parents, and it was at their house that the two of them started talking. Being 12 years older than Lütke, was never a barrier, and soon enough the duo agreed to start a business. There were no large discussions, as the pair decided they would trade in snowboards and named their company Snowdevil.

Founding Shopify

Lütke enjoyed the idea, as, by 24, he was done with coding after having done it for the past 10 years. But looking at templates for their e-commerce website made him realise, they weren’t good enough, and he built their business website on his own. He wanted to use a Japanese programming language, called Ruby to build the framework and made use of Ruby on Rails, which was created by David Heinemeier Hansson.

Lütke used this framework to create Snowdevil’s software, and as Ruby on Rails was new, the website gained notice. As they were selling snowboards, Lütke and Lake both realised that their biggest product was the software itself! Hence, they coaxed 10 friends into investing in their company, named Jaded Pixel, and managed to raise about $200,000. Lake then named the software Lütke was building Shopify in 2006, setting the wheels in motion for an e-commerce revolution.

Soon they launched Shopify, added people, first of which was Daniel Weinand, who was a German programmer who was friends with Lütke. Shopify’s first office was a group of chairs around a table in a Bridgehead coffee shop, and in October, the same year, they made $8,000. In 2008, when Lake left the enterprise, the company had over 10 employees and was making over $60,000 a month.

Shopify: A Success

Soon angel investor John Phillips, who had founded Klister Credit Corp was interested in the company, valued it at $3 million and gave them $250,000. Until Lake left, Lütke had been in charge of product design and development and had never been involved with the finance side of things. When he became the CEO, he had to learn and learn quickly.

He flew to Silicon Valley, met with venture capitalists and read up on everything they told him, from conversion rates to marketing funnels. Slowly, yet surely, he picked on the finance, yet cash was hard to come by, and on several occasions, Shopify relied on Lutke’s girlfriend’s family to make ends meet.

Finally, in 2010, one of Silicon Valley’s most notable investment firms, Bessemer Venture Partners, found Shopify. Bessemer went on to purchase 20% stake in Shopify for $7 million, and in the next year, they raised $15 million. In 2013, OMERS Ventures and Insight Venture Partners invested $100 million in the company, and Shopify acquired Select Start Studios and Jet Cooper, hitting a valuation of $1 billion.

The Success

Shopify then grew exponentially, and now employs more than 500 people, with 400 of them being based in Ottawa, while the rest work from Toronto and Montreal. Most of the non-Ottawa based employees help with Research and Development and Customer support. The company is now regarded as Canada’s leading playing in the e-commerce and high-tech sector.

Since then, the company has grossed over $7 billion in sales and now has tie-ups with over 150,000 store owners. Shopify grew from a two-person storefront to a six-storey office building with clients from all over the world. During that process, Lutke grew from being an introverted coder to a remarkable leader, who led by example.

The New Office

Shopify’s new office in Ottawa is a huge structure, which took over 180,000 pounds of concrete to finish. Each of its floors has large staircases to connect each other, and every floor has its own theme, ranging from Urban Street to 1920’s Chicago! Intermixed with such a creative space that comes with a large slide, are traditional professional spaces comprises of meeting rooms and offices, with high-tech equipment, soundproofing and large-screen monitors. Much like Lutke itself, the building is some parts childish, and other parts professional, but all of it, much like the man himself, is genius!

The company is growing so fast that plans are already on for an expansion of its office. With market experts predicting Shopify to surpass $2 trillion in international sales, it goes without saying, that the company is gearing up for a bright and busy future!