who founded shopify

Shopify Founder & CEO Tobias Lütke on 'Bloomberg Studio 1.0' he grew up in rural Germany tinkering,w

Bloomberg Technology

Updated on Jan 21,2023

Shopify Founder & CEO Tobias Lütke on 'Bloomberg Studio 1.0'

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Shopify Founder & CEO Tobias Lütke on 'Bloomberg Studio 1.0'

he grew up in rural Germany tinkering,with computers and writing code in 2002,a love story brought him to Canada where,he tried his luck as an entrepreneur,opening an online snowboard shop he,quickly realized ecommerce software to,make selling snowboards and really,anything online more simple was the real,opportunity over a decade later Shopify,is now Canada's largest publicly traded,company by market value powering over a,million online merchants around the,world joining me remotely on this,special pandemic edition of bloomberg,studio 1.0 is tobias toby Latka founder,and CEO of Shopify,so you are at your home right now in,Ottawa Canada what is it like running a,massive public company from your house,with your family and your kids in the,other room,it's um I I mean it'd be a lucky intech,have you been collaborating a remotely,for for longer time now and we've well,set up for it but that's on a technical,side and in reality I think it was very,touch-and-go,for the first couple of days but it's,it's been it's been also an incredible,experience from inside just because,there's a real role for Shopify to play,you know like VB we host a million small,merchants small medium businesses and,vivi we said as it is our mission to,make sure that more of them survive if,this crisis been otherwise sport because,of hopefully our help and we're trying,to ship everything we've got that could,be helpful right now so in a way it's,been a pretty explosive time as well and,in this regard for us Facebook came out,with a survey that said a third of small,businesses have basically shut down 11%,of them expect to fail if conditions,persist what are you seeing I mean in,many cases it's a crushing and testing,and trying experience for many we do be,bee do secret news I mean like for,instance I've been buying dairy and like,cheese and everything from a local,farmer through a Shopify store which,they set up as part of us this has been,there's been incredible a community,organization to get the favored local,businesses online there's been such an,incredible pickup of curbside pickup and,and local delivery and all these kind of,kind of things so there there are lots,of good news but retail sales have fun,of cliff in the early days of,shelter-in-place of course the adaptable,businesses have quickly replaced,actually a good deal of his lost sales,through online channels and through,other channels so the demand of a bias,is actually still around and we see,across the system that 94,percent of lost sales have actually been,replaced by people just going online and,some data doesn't really capture this,enormous change of trend what's the sort,of operating normal right now the,operating normal is like again retail,sales up maybe just taking up in some,places but like basically 70 percent 80,percent of it was gone well online,stores have like online shopping if it,has increased the category of online,shopping world is increased by far the,most is sales which are within twenty,five kilometers of favorite products are,this sort of local e-commerce is,something that across the platform we,haven't seen a seen a lot before I,entrepreneurs are adaptable people you,know they are people who get the most,out of what they've got and so there's,been a lot of an amazing entrepreneurial,activity now if so many companies are,gonna go out of business if so many,people are going to lose their jobs if,discretionary spending is gonna drop,isn't that gonna hurt Shopify's business,and if so how much,yeah and and yes so Shopify is but it's,not immune it's part of a economy at,large it has visibility and is quite a,chunk of a economy at this point so yeah,if consumer spending significant changes,we would see this reflected in virgi MB,of a platform one thing BOE is no it was,a much much much much smaller company,but so far has been around doing the,last financial crisis beg been fought,better but better boss that would be the,end of Shopify what I've actually found,out is that the a situation like this,like people losing their jobs,it's a terrible event but in at least,for a subset of people it is an impetus,to act on these ideas that maybe I'm,building my own company you know this,kind of impetus so you did withdraw your,guidance for the year and I'm curious,what are the uncertainties you're,dealing with and how are you sort of,filling in the blanks as you try to plan,for the next six months so the first,thing I did when we started and it's,sort of a gravity of of oil situation,became a little bit more clear and we,decided to,you know work remotely because offices,were you know like not wasn't it wasn't,prudent thing to do I asked the company,to delete our plans because I think it,is important so hang on you asked the,company to delete all of your plans yes,what do you mean,I asked to like I'm a big fan that's,obviously not know each other but like,I'm a big fan of planning I don't think,plans end up being as useful as people,make them out to be I think the worst,thing you can do is try to adhere to a,plan to create stability and you can't,you you you shouldn't act the act the,plan usually at the very least you,should read arrive the plan so what I,asked everyone to say is like like take,all the planning of a preparation work,we've done you know and and you know and,your planning and just read arrive this,against the change parables like let's,come up like let's figure out let's look,deep in our roadmap and look at,everything that might be helpful in,terms of getting your employees back to,work you've said employees can stay home,through the end of the year and you're,gonna completely redesign offices to be,digital first what do you mean by that,yeah so it's a bit more sweeping even,than that I think yes like I do think we,are seeing the end of off of office,centricity it used to be that the office,was a place where work is being done and,and being remote really meant you are,like using some digital crutch to be,basically in the office so that you can,get work done I think what covet is,going to accelerate as something which,would have happened anyways but would,have happened many years from now which,is that really everyone rearranges their,understanding of that that at least for,companies that can do it all the work is,really digital by default I think so so,we will not like we will we expect that,the majority of people will work from,home and home offices in the future we,also expect,yeah so what percentage of people would,still be in the office on a regular,basis I would say it's 20 25 percent,something really um I I think that I,come across a lot of people who say I,can't wait for this war thing to be over,because I really would like to go back,to authors I don't think there's are,going back to offices were way way we,had I think we would go back to,something different potentially better,in some ways and potentially in some,instances also worse than it might have,been and I think the first time any like,if he would always more and saying okay,this is back to normal time I think we,would get by basically as far as the,elevator banks to say it doesn't feel,right,and so I don't actually think that the,demand would be there to go back in a,way that that people might expect we're,gonna keep our office closed for a next,level and actually we derive for floor,plans just like all our other plans we,are read arriving for for coming times,so would you be comfortable saying your,employees can work from home forever if,they want to Jack Dorsey has basically,said that Twitter yes absolutely,and you're not at all concerned about a,negative impact on productivity or team,building or for Al I mean it's gonna be,different and if there's gonna be up um,it's gonna book better for some people,and and and then it's gonna be worse for,some other people and and there's gonna,be a lot of learning to be done,the choices really are the passengers on,this tidal wave of change change or do,we jump in in a driver seat and and it,just embrace it and try to figure out,how to build a global world class,company by not getting together that,often,about once every 60 seconds someone gets,a first sale on Shopify I understand,that as a child you were kind of a rule,breaker you liked to find the shortcuts,as a parent that sounds like kind of a,nightmare but it seemed to turn out okay,for you well I grew up in the 80s 90s,early 90s in a small town in Germany,called Koblenz I lucked into having a,computer early age my parents got me a,computer when I was six years old it is,an internal they thankful for was,obvious help avoid what was constantly,rearranging itself to make computers,more and more important but I had no one,to talk with that about like other,people wouldn't understand this because,it's kind of a change was too slow for,most people to notice and so I think,that's part of why I ended up being a,rule breaker I just ended up having like,if it wasn't a lot of people I ended up,being able to share the things that the,of massive interest to me that at the,same time I had like my grandma was a,incredible entrepreneur on her own right,she started a printing shop then that,was a crazy thing to do especially as a,woman right after World War two and,having had a role model who just sort of,put starting your own company as a not,that big of a deal,tool into the toolbox for which I which,I used to solve the kind of problems in,front of me I have friends who started a,branded apparel business in their,basement and suddenly were making,hundreds of thousands of dollars in,quitting their jobs because of Shopify,you provide entrepreneurs tools to start,selling online immediately from shipping,to social media to even some warehousing,you know what is the main mission of the,company because you do so many things,boil it down for us the mission of the,company is,to try to make entrepreneurship more,approachable common and easy and just,simply obvious to me but in the future,most businesses would be digital by,default and then would start on the,internet and then go from there,so now 15 years later Shopify well have,succeeded past my wildest dreams to be,frank but the core of our mission is,still is still the same we really really,really really celebrate the corner,stores the pet stores the basement,fashion labels about once every 60,seconds someone gets their first sale on,Shopify and that's part to us is the,most important metric V V track and how,we charge our our our own impact,speaking of your wildest dreams Shopify,is now an 80 billion dollar company and,on any given day you are the fourth,richest person I believe in Canada why,don't we hear more about Shopify and,Toby latke in mainstream media that is a,good question okay no I I but I I also,don't mind like so we all saw our job,not to make ourselves look good it was,always to help make our merchants look,good like we did never be like everyone,has already bought something on my,Shopify store but you probably don't,know that you did it's because you,bought something from like basically if,you if you're buying something online,and it wasn't on Amazon and the,experience was any was reasonably like,was good then it was a Shopify store and,so that's we pride ourselves actually,being behind the parents well and as you,get bigger who are you taking market,share from and is it Amazon I don't,think so it's certainly not something,we've ever fought about about who we're,taking market share away like for,instance on my first fund raising in,Silicon Valley I got pretty far with,great funds and and and,for one reason another video didn't come,together and and and part of a reason,was that and this is now like this is,gonna sound silly,and it was like early last decade so it,should be a should be okay to say but,they just didn't think there was that,big market for online stores where they,researched yesterday there was 40,000,online stores during this time and it's,not that they missed anything whether,they were correct but but they like,missed in this case I think was that the,reason why there was only 40,000 on that,stores to this time was because no one's,built something like Shopify it would,make sure you make it easier to start,them I wonder if you're being charitable,there did Silicon Valley in Silicon,Valley VCS actually underestimate you,yeah I think I think so but like that's,okay,and actually there's lots of advantages,of that because honestly all I'm trying,to do is I'm trying to build the,software I wish I would have found in,2004 when I started my snowboard store,and if other people judge this of value,then they will use it and if not then,that's kind of when we didn't make it,good enough,Shopify went public in May 2015 at the,end of the day your market cap was two,billion dollars now it's eighty billion,dollars so what's happened between then,and now that makes it worth 37 times,more I don't know I would I work on,every day is what I call a real market,value of a company which is unknowable,but presumably goes up as we are,shipping all these products and make,more value in the businesses that we,serve so I think what the stock price is,is a attempted approximation of what the,real market value of a company should be,these days you have basically like every,larger retailer is at least that is at,least launching something or to having,some brands on Shopify Plus that's a big,thing we've announced that be a going,into a into logistics world with a,Shopping Network I think the potential,has come significantly better in focus,because it's just digital commerce this,day very very very important part of,economy at this point and then so you,know in a in a lot of ways we've got,good timing and the right product,if someone is found to look at the stock,price doing in my office Levin have to,buy doughnuts for everyone in the next,morning,you are now the biggest public company,in Canada well past the Royal Bank of,Canada that said you've got analysts out,there who say the company is overvalued,do you worry about that do you think,you're tempting fate yeah I mean I don't,worry like a babe shop if I have a girl,it's harder to enforce right now vary,all remote but if if someone is found to,look at the stock price doing inves live,and have to buy doughnuts for everyone,in the next morning so the stock market,price is determined by supply and demand,and you know for every sale there's a,there's a bio novel site and it has not,a lot to do with a real market value of,a company other than directionally it's,a it's a it's a price finding machine,you've been making news you were,speaking with Facebook CEO Mark,Zuckerberg you're partnering with them,on a new shopping initiative how will,that work and and how optimistic are you,about e-commerce on Facebook and,Instagram and whatsapp when it hasn't,really worked out so far yeah I'm very,optimistic about it you right but,there's a lot more potential there and I,think this is the most credible approach,to figure out how to make Native,commerce really integrated into these,platforms but it's it's worth saying,that a lot of a success of the,direct-to-consumer space,a lot of these businesses that are doing,really well on Shopify our already put,product of the combination of a shop,affair platform and the Facebook,platform and and other advertising,platforms as well this has been this has,dislodged a you know 60 70 year or,stalemate over being able to bring,really new products to market because it,used to be the only way to really find,audience was through mass media through,television channels and the price of,entry into placing ads this was just,massive and so you know finding a,specific audience is something that is,extremely important for small and medium,businesses that's at how much business,is,being driven through these stores,through your stores through Instagram,Facebook whatsapp so far I mean isn't it,pretty and significant depends on if you,look at the ads or not once you had bad,thing it's a lot now does this mean that,Facebook and Instagram could eventually,become competitors to Shopify like,Amazon again it's it's hard to make,similarities there because I mean Amazon,again is like Amazon is selling its own,products right and and and and then,they're also selling a lot of,third-party products right and then,usually until they don't anymore let's,talk about that Amazon has a lot of,issues with third-party sellers I mean,do you think that that relationship is,problematic I mean even Jeff Bezos has,been called to testify before Congress,about how the company has been using,third party seller data to potentially,build their own products at least that's,the allegation you know there's like,house brands a staple of every of every,grocery store of every superstore it's,something that's been done as long as we,tell history has been around and I don't,know if it's necessarily different and,in a digital realm it's you know Amazon,is the Internet's biggest store and they,behave that's the exact same way how the,biggest store in every other community,be behaved that's it it provides a lot,of value and and from a perspective of,merchants it comes with downsides,so when you say they're selling,third-party products until they don't,what do you mean by that,I don't think it's a it's a secret that,everywhere we receive Amazon basic brand,favors probably other brands there,before which might have saw it a little,bit better before was arrived right so I,think that makes perfect sense as,Shopify gets bigger does that put you,into more direct competition with Amazon,with potentially Facebook with Google I,mean google also has Google Shopping,yeah I also all again receive us as,channels you see those as opportunities,I don't know I think that would be,extremely disappointing if you won't end,up being and like more conflict with our,merchants that's not that then then we,went wrong somewhere and again it's our,merchants who might be competing with,Amazon in instances it's not really it's,not really us doing it you've also made,a big bet on logistics how is that going,and and certainly what are the,challenges especially in the middle of a,pandemic it's going very well we we have,over 100 customers using it again so,it's early days but like it's it's it's,it's amazing what it allows them to do,like covetous makes this challenging now,we have one advantage which is so V we,bought a company called six river,systems or Boston early last year or mid,last year that is like like DOS robotics,for warehouses it has a specific kind of,robotics that like actually really,really helps in the warehouses that it's,with it it makes it easier for people to,keep social like keep a distance it's a,bit that's a large space it's really,good it's a fascinating,I love learning so it's it's an it's a,direction from which I'm learning a lot,of new things every day so is the goal,then to give your merchants everything,they need so they don't have to be,reliant on Amazon or sell through Amazon,ever,it's about it yeah it's about,empowerment right like it's it's like,it's maybe they should not I mean,hopefully they shall provide trust move,enough to rely on us but outside of that,but ideally you don't need like anyway,there's no gatekeepers now as you look,out five years from now maybe ten years,from now with new technology with a are,potentially how does the e-commerce,experience look different and how much,more shopping is happening online from,all the numbers we're looking at they're,basically in 2030 right now on Orbitz on,all trend lines we were tracking like,the future has been port for,like some of Akuma still go back to,being in person because that's what,people like,but once given the choice that's what,people will do again but I think there's,no one who is again doesn't think that,all these systems should be integrated,and I think we will see in a future that,even small merchants or new,entrepreneurs and new business but might,have been started within the last couple,months will actually show up across you,know face book shops and Pinterest and,have a point of sale location,potentially just opening up and their,online store and this is like dizzying,amounts of channels they might be,present and so I think I think we will,see a lot of new categories of retail,actually becoming really really cool,digitally rather than being imperfect,similes of a real experience,all right well we'll certainly have to,catch up five or ten years from now to,check you on your predictions if not,before,Shopify CEO Tobias Lascaux thank you so,much for joining us thank you very much,for having me

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