How I Built This with Guy Raz
Shopify: Tobias Lütke. How a snowboarder built a $150 billion business (2019)
· Summarized
Key takeaways
- Entrepreneurship often involves a mix of skill, innovation, and a significant element of luck.
- Building technology that simplifies complex processes can enable more people to succeed in their ventures.
- Strategic pivoting—such as shifting from a snowboarding business to an e-commerce platform—can unlock new growth opportunities.
- Timing and external circumstances critically influence a company’s success, sometimes more than internal effort alone.
- Support networks, including family, friends, and investors, play a crucial role in entrepreneurial journey and resilience.
Summary
The Origins of Tobia Lütke and Snowdevil
Tobias Lütke, originally from Germany, moved to Ottawa and was an avid snowboarder. His initial challenge was creating an online snowboard shop due to the lack of suitable software, which led him to develop his own. This effort turned into Snowdevil, a successful online snowboard store that quickly gained traction, showcasing the power of entrepreneurship rooted in technical skills and innovative thinking.
Transition to Shopify and the Growth Journey
Recognition of the limitations of the snowboarding business prompted Toby and Scott to pivot from selling snowboards to developing e-commerce software. They launched Shopify in 2006 to help other merchants build their online stores. The narrative describes the early development of Shopify, including building the platform with Ruby on Rails, handling the first sales, and experiments with business models, all driven by a desire to empower small entrepreneurs and streamline online commerce.
Challenges, Investment, and Scaling Shopify
The story details various hurdles, such as financial struggles, leadership changes, and the need for external funding, including angel investments and venture capital. Toby reflects on the emotional and practical difficulties of leading a growing company, including moments of doubt and the importance of luck. Shopify’s story is one of incremental growth, strategic marketing, and adapting business models to scale up effectively, leading to its public offering in 2015.
Reflections and Lessons from Building Shopify
Toby emphasizes the role of luck in his success, acknowledging the importance of timing, supportive networks, and chance occurrences. The episode concludes with Toby contemplating his journey, the impact of his work on entrepreneurship, and his hope to continue contributing to business creation via Shopify. He also shares insights into the personal and professional sacrifices involved in building a global company.
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Show notes
In 2004, German programmer Tobias Lütke was living in Ottawa with his girlfriend.
An avid snowboarder, he wanted to launch an online snowboard shop, but found the e-commerce software available at the time to be clunky and expensive.
So he decided to write his own e-commerce software.
After he launched his online snowboard business, called Snowdevil, other online merchants were so impressed with what he built that they started asking to license Tobi's software to run their own stores.
Tobi and his co-founder realized that software had more potential than snowboards, so they launched the e-commerce platform Shopify in 2006.
Since then, it has grown into a publicly-traded company with over 7,000 employees and $11 billion in revenue.
Timestamps:
04:55 - Tobi discovers snowboarding–and meets his future wife–on vacation in Canada
09:00 - Building a new kind of snowboarding company
24:55 - Pivot point: skateboards or software?
29:45 - The night before Tobi’s wedding, Shopify switches business models
39:15 - The 2008 financial crisis hits… revealing a huge opportunity
52:45 - After a decade, Shopify goes public
This episode was produced by Casey Herman with music composed by Ramtin Arablouei. It was edited by Neva Grant. This archive episode was produced by Katherine Sypher.
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