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Shopify: The Business That Helps Build Businesses · What's Your Problem?

0:15
Speaker 1: Pushkin. When the pandemic hit in twenty twenty and everything
0:22
Speaker 1: shut down, hundreds of thousands of people in the US
0:26
Speaker 1: reacted in a surprising way. They started new businesses. This
0:30
Speaker 1: isn't just some anecdotal thing, right. You can see it
0:33
Speaker 1: in the data. In twenty twenty, the rate of new
0:36
Speaker 1: business formation went through the roof. Now two and a
0:39
Speaker 1: half years later, the economy has reopened. Things are sort
0:42
Speaker 1: of back to normal, but entrepreneurship hasn't died down that much.
0:47
Speaker 1: The rate of new business formation is still way up
0:49
Speaker 1: from where it was before the pandemic. In a world
0:52
Speaker 1: that feels scarier and riskier than ever, people are more
0:55
Speaker 1: willing than ever to bet on themselves. They're becoming entrepreneurs.
1:04
Speaker 1: I'm Jacob Goldstein and this is What's Your Problem, the
1:06
Speaker 1: show where entrepreneurs and engineers talk about how are going
1:09
Speaker 1: to change the world once they solve a few problems.
1:11
Speaker 1: My guest today is Harley Finkelsty, a man who may
1:15
Speaker 1: love entrepreneurship more than anyone I have ever met, and
1:18
Speaker 1: this trade is a good fit for his job. Harley
1:21
Speaker 1: is the president of Shopify. Shopify started out building software
1:26
Speaker 1: that makes it easy for people to start online stores. Today,
1:29
Speaker 1: millions of stores use Shopify, and the company is trying
1:32
Speaker 1: to solve a new problem. How do you aggregate the
1:35
Speaker 1: power of millions of small businesses to help them compete
1:38
Speaker 1: against giants. My conversation with Harley started with the beginnings
1:44
Speaker 1: of his life as an entrepreneur. He was a kid
1:47
Speaker 1: who was so impressed by the DJs he saw playing
1:50
Speaker 1: at his friends bar Mitzvah's that he started his own
1:53
Speaker 1: DJ company. I'm started at DJ company because I want
1:56
Speaker 1: to be at DJ and nobody would hire me. And
2:00
Speaker 1: how old were uh? And it was my dad that said,
2:04
Speaker 1: why don't you start your own company? High yourself? And
2:06
Speaker 1: so I did? And actually when my dad did my
2:08
Speaker 1: dad and have my parents very much money, but my
2:10
Speaker 1: dad made me a business card and the business card
2:12
Speaker 1: had said Harley Finkelstein DJ. And that was the endorsement
2:16
Speaker 1: or the validation, whatever you want to call it. That
2:18
Speaker 1: I needed to have the hutzpah or audacity to walk
2:21
Speaker 1: next door to my neighbor and say, um, can I
2:23
Speaker 1: DJ your son's bar Mitza and what they say? They
2:27
Speaker 1: said no? And so then I mean, were you always
2:31
Speaker 1: starting companies? Was it just can can you draw? A
2:33
Speaker 1: line from there to starting a T shirt company when
2:35
Speaker 1: you're in college. Yeah. During during high school, um, I wasn't.
2:39
Speaker 1: I wasn't really in sports. I wasn't really into like
2:42
Speaker 1: you know, um different like school clubs. I was. I
2:44
Speaker 1: was an entrepreneur and so I was always trying to
2:46
Speaker 1: start different companies. I started a bunch of smaller ones
2:48
Speaker 1: that didn't work out. Started a poker chip company, making
2:50
Speaker 1: poker chips. I started a company that had was a
2:52
Speaker 1: slipper company called Woolen Stock, didn't do very well. I
2:56
Speaker 1: started a bunch of small, little side houses like that.
2:58
Speaker 1: But it was only in college when I was I
3:00
Speaker 1: went to McGill in two thousand and one where I
3:02
Speaker 1: needed to actually start something for real because my mom
3:06
Speaker 1: and sisters my dad was around anymore. Mom and sisters
3:08
Speaker 1: needed needed the support financially. And that's when I started
3:11
Speaker 1: making T shirts universities and that was really the first
3:13
Speaker 1: business that made any real money. Can you give me?
3:16
Speaker 1: I feel like there's this very like rom com meat
3:19
Speaker 1: cute of how you get to shopify. There is I
3:24
Speaker 1: don't know if it's rom Comms, it's a meat cute.
3:28
Speaker 1: I moved to Ottawa in two thousand and five to
3:30
Speaker 1: go to law school, not to become a lawyer, but
3:32
Speaker 1: to become a better entrepreneur. Ottawa, Canada. That's right, yeah.
3:36
Speaker 1: Mentor of mine told me the teacher business was cute
3:40
Speaker 1: but had never really had any real potential of scale,
3:43
Speaker 1: and he was teaching law the next year at the
3:45
Speaker 1: University of Ottawa as a guest lecturer. Convinced me that
3:48
Speaker 1: law school might be like finishing school for entrepreneurship, and
3:51
Speaker 1: it very much. Was moved to Ottawa, Canada in two
3:54
Speaker 1: thousand and five, had no friends, had no family there,
3:57
Speaker 1: asked where the entrepreneurs hung out and was directed to
4:00
Speaker 1: a coffee shop in a small little town area of
4:02
Speaker 1: Ottawa called the Glebe and I walk in. There were
4:05
Speaker 1: five other entrepreneurs and one of those entrepreneurs was this
4:08
Speaker 1: brilliant programmer name Tobias lute K, and he just moved
4:11
Speaker 1: to Canada a year or two earlier because he met
4:14
Speaker 1: a girl in Canada and couldn't work because he didn't
4:18
Speaker 1: have his working papers. So started a business selling snowboards
4:21
Speaker 1: on the internet. And in two thousand and four, there
4:24
Speaker 1: was two ways to sell a product on the internet.
4:26
Speaker 1: You either posted your products on a marketplace, or you
4:31
Speaker 1: paid some big enterprise software company millions of dollars total
4:34
Speaker 1: marketplace like eBay, or was Amazon market Amazon wasn't really marketplace,
4:39
Speaker 1: so basically eBay. There was a couple others like that,
4:41
Speaker 1: but but eBay, that's exactly right. The alternative was you
4:44
Speaker 1: would you would go and spend a million dollars with
4:48
Speaker 1: IBM they had a product called WebSphere or ATG or SAP,
4:52
Speaker 1: these big companies, and he didn't have a million dollars.
4:56
Speaker 1: So you wrote a piece of software to sell these
4:57
Speaker 1: snowboards and very quickly realized that other people may also
5:01
Speaker 1: want to use the software to sell their own products.
5:03
Speaker 1: And I was one of those first people. I became
5:04
Speaker 1: one of the first merchants on Shopify, and I moved
5:07
Speaker 1: my T shirt business to Shopify in two thousand and six.
5:10
Speaker 1: And so in two thousand and nine I called Toby
5:11
Speaker 1: and said, I'd love to join you in a small
5:13
Speaker 1: handful of other people and help you build this company
5:16
Speaker 1: and make it easier for more people to try their
5:18
Speaker 1: hand in entrepreneurship. And I was about twelve or thirteen
5:21
Speaker 1: years ago. Great and so Shopify now is giant, right,
5:28
Speaker 1: And you know, It's interesting because I feel like for
5:32
Speaker 1: most people, Shopify is invisible. It's maybe like the way
5:36
Speaker 1: you know, Intel was in nineteen ninety before they started
5:39
Speaker 1: putting their name on every computer or something. Shopify is
5:41
Speaker 1: the thing behind the thing. So it's I mean, it
5:43
Speaker 1: seems like pretty close to if you've bought something online
5:47
Speaker 1: and it wasn't Amazon, and it wasn't Walmart, it was
5:50
Speaker 1: probably a Shopify store, Right, there's a good chance it's
5:54
Speaker 1: a store that's running Shopify. But just so briefly, like,
5:58
Speaker 1: what's the briefest version of what is Shopify. Shopify is
6:01
Speaker 1: the easiest way to sell a product to a consumer,
6:04
Speaker 1: and the vast majority of our merchants uses to sell online.
6:07
Speaker 1: And as we've grown, we're now ten percent of all
6:10
Speaker 1: e commerce in the US. As we've grown, one of
6:12
Speaker 1: the things we've also done is try to figure out
6:13
Speaker 1: what are the other elements of starting and running and
6:16
Speaker 1: scaling a business that is difficult. So whether it's accepting payments,
6:22
Speaker 1: or it's shipping, or it's raising money having capital, we've
6:26
Speaker 1: gone ahead and gone to these other we call merchant solutions.
6:28
Speaker 1: And what we're trying to do is we're trying to
6:30
Speaker 1: use our size, our economy of scale being this ten
6:33
Speaker 1: percent of all e commerce, which technically, if we were
6:36
Speaker 1: a retailer, we would be the second largest online retailer
6:38
Speaker 1: in America just given our sales volume. So companies using
6:42
Speaker 1: Shopify sell more stuff than anybody else online except Amazon.
6:47
Speaker 1: That's right, Yeah, that's exactly right. So if you compared
6:49
Speaker 1: to Target, for example, or compared to best Buy, Shopify
6:52
Speaker 1: and aggregate store sells more than those places. So when
6:54
Speaker 1: we go to negotiate rates on payments or on shipping
6:57
Speaker 1: or on capital, we're doing so as effectively the second
7:00
Speaker 1: largest online retailer in America. And then we give those
7:03
Speaker 1: economies of scale directly to the entrepreneurs, and we think
7:06
Speaker 1: that's what really helps them level the playing field, like
7:09
Speaker 1: get a sense of the scope of what you do.
7:13
Speaker 1: I thought it would be useful to to just talk
7:16
Speaker 1: through an example. Sure, right, so I have this podcast
7:19
Speaker 1: it's called What's Your Problem? And like we don't have
7:22
Speaker 1: any merch why not? Why not? Indeed? Yeah, so let's
7:26
Speaker 1: white T shirts or black T shirts? Sure? Or like
7:28
Speaker 1: we could have fun with it, right, we could like
7:31
Speaker 1: have like a magic eight ball that says, what's your problem?
7:33
Speaker 1: And it has you know answers, you're you're not grinding
7:36
Speaker 1: hard enough, or you haven't found product market fit or whatever.
7:40
Speaker 1: So say I come to shop, if I sign up
7:43
Speaker 1: for shop, if I like, what is the set of
7:45
Speaker 1: things you can do for me? Yeah, so you come
7:48
Speaker 1: to shop fl dot com and for twenty nine dollars
7:51
Speaker 1: you can se a beautiful online store. You can pick
7:53
Speaker 1: a theme, or you can design your own theme, and
7:55
Speaker 1: you can start adding products. You can say I'm going
7:57
Speaker 1: to add this hat or this T shirt, this water bottle,
7:59
Speaker 1: or you can in fact, if you if you're not
8:01
Speaker 1: sure exactly what's going to resonate ironically around the product
8:05
Speaker 1: market fit example you gave, you can actually do something
8:07
Speaker 1: called print on demand, where you actually put up a
8:10
Speaker 1: bunch of shirts without even making those shirts yet, and
8:12
Speaker 1: the ones that sell will get printed automatically and then
8:14
Speaker 1: drop shipped to your to the consumer. But you come on,
8:17
Speaker 1: you build this beautiful store in a matter of an hour.
8:19
Speaker 1: You have you know, Jacobs merch dot com all set up.
8:22
Speaker 1: What's your problem and what com? Okay, what's your problem? Sure? Um,
8:25
Speaker 1: what's your problem? Dot com? Well, the ways that taken
8:27
Speaker 1: I'm sure it is okay, problem dot dot com or
8:31
Speaker 1: like dot okay that's good, or dot co or something
8:33
Speaker 1: like that. Um, And so you set up your online store,
8:36
Speaker 1: you add inventory, you set up your payment gateway, and
8:39
Speaker 1: now you're ready to sell. Now you can launch your
8:41
Speaker 1: marketing campaign. You can post ads on Facebook or Instagram
8:44
Speaker 1: or Google from there, or TikTok or snapped it or
8:46
Speaker 1: anywhere for that matter. When orders come in, you go
8:49
Speaker 1: to your shop fight admin and that really is your
8:51
Speaker 1: central retail operating system. That's sort of the the the
8:54
Speaker 1: central nervous system of your of your business. And orders
8:57
Speaker 1: come in, you can fulfill them. You can use Shopify
9:00
Speaker 1: to do fulfillment. You can use us to buy shipping
9:02
Speaker 1: labels if you want to see where your traffic is
9:05
Speaker 1: coming from. And you want to understand, I just I
9:06
Speaker 1: just want to slow down a little bit there. So
9:09
Speaker 1: when you say I can use shopify to do fulfillment,
9:11
Speaker 1: this is like new ish for you. Right, stuff you
9:14
Speaker 1: described up until then it feels like sort of Shopify classic. Right,
9:17
Speaker 1: It's like all the online stuff, it's all the just
9:20
Speaker 1: software stuff. And I feel like there is this shift
9:22
Speaker 1: you're making now into the physical world and a number
9:26
Speaker 1: of dimensions, right, And fulfillment is a piece of that.
9:27
Speaker 1: You had an acquisition last year, right, Right, So fulfillment
9:30
Speaker 1: seems obviously it's hard to write software. But software it's
9:34
Speaker 1: like famously a good business. Right, You're write the software
9:36
Speaker 1: once and then you can sell it as many times
9:38
Speaker 1: you want. There's no marginal cost. Fulfillment seems harder if
9:42
Speaker 1: I dare say so, I mean, tell me about getting
9:44
Speaker 1: into that side of the business. So what does it
9:45
Speaker 1: mean that you can do my fulfilm? Yeah? Sure, So
9:47
Speaker 1: just take a step back for a second. While the
9:48
Speaker 1: Internet sort of democratize a lot of things, the one
9:51
Speaker 1: thing you didn't really do very well was help with
9:53
Speaker 1: sort of you know, atoms where software's bits and bites
9:56
Speaker 1: atoms and moving product that didn't actually get better through
9:59
Speaker 1: the advent of the Internet. But going back to that
10:02
Speaker 1: conversation we were having a few minutes ago, because we
10:05
Speaker 1: now have such scale, because we are ten percent of
10:07
Speaker 1: all e commerce in the US, we thought about this.
10:09
Speaker 1: We're like, well, what if we can actually help small
10:12
Speaker 1: businesses and larger businesses with fulfillment, And so we began
10:15
Speaker 1: to create this network of third party warehouses where we
10:17
Speaker 1: tie them together using our software. It's called FMS, fulfillment
10:20
Speaker 1: management software, and any any third party logistics company can
10:25
Speaker 1: apply to be part of this logistics network. And third
10:27
Speaker 1: party logistics is another giant kind of behind the curtain,
10:30
Speaker 1: and exactly it's it's who ships you everything. But the
10:33
Speaker 1: idea is not necessarily that we wanted to get into logistics.
10:36
Speaker 1: It's that it's one of those barriers to success that
10:38
Speaker 1: we thought we can play a role in. So I'm curious,
10:42
Speaker 1: as you're expanding into these different parts of business, basically,
10:47
Speaker 1: what's what's been particularly hard? What are you still trying
10:50
Speaker 1: to figure out how to do? What went wrong? What
10:54
Speaker 1: was harder than you expected? Um, Initially we decided we
10:56
Speaker 1: don't want to build our own warehouses. It's just the
10:58
Speaker 1: business model that we are using is different than Amazon.
11:01
Speaker 1: We are not doing one day delivery. We don't think
11:04
Speaker 1: we need to own everything ourselves, and so fundamental we thought, hey,
11:07
Speaker 1: there are all these warehouses all over the that are empty.
11:09
Speaker 1: What if we made them part of the network and
11:11
Speaker 1: effectively configured them using our software. Not every partner warehouse
11:16
Speaker 1: was very good, some of them actually were really bad.
11:19
Speaker 1: But because we were using a network of warehouses, and
11:21
Speaker 1: because Shopify's brand was the thing connecting all these things,
11:24
Speaker 1: even if it was a third party warehouse, we were responsible.
11:27
Speaker 1: And in the first couple of in the first year
11:30
Speaker 1: or so of fulfillment and shipping a Shopify, we really
11:33
Speaker 1: noticed that some of the warehouses were just not hitting
11:35
Speaker 1: a quality control standard and so we had to take
11:37
Speaker 1: some of them offline. And that was and does that mean,
11:40
Speaker 1: I mean, does that mean basically, customers don't get stuff
11:42
Speaker 1: when they are told they'll get stuff, or it's broken.
11:44
Speaker 1: It could be accommodation thing. So if they're doing some
11:46
Speaker 1: sort of look what's called custom kitting, where they need
11:48
Speaker 1: to sort of the product hast to look. Let's say
11:50
Speaker 1: you want to, you know, for your merch company, you
11:52
Speaker 1: want to send out your box with stickers on it.
11:54
Speaker 1: Maybe the stickers are misplaced, Maybe it doesn't get there
11:56
Speaker 1: on time, Maybe it's the wrong product, maybe it's broken.
11:58
Speaker 1: It could be a combination of all those things. But
12:00
Speaker 1: we actually had to pull some partners out of the
12:02
Speaker 1: network because they weren't hitting a certain quality control thing. Which, again,
12:05
Speaker 1: even though we're leveraging third parties from the merchant perspective,
12:09
Speaker 1: to the millions of merchants you shopify, they don't really
12:11
Speaker 1: care who salt it is because customers it don't care.
12:14
Speaker 1: It's always Shopify's faults. Yeah, and that was really really
12:17
Speaker 1: challenging for us. I mean it is extraordinary, Like fundamentally
12:20
Speaker 1: there you're competing against Amazon, right, and like Amazon is
12:24
Speaker 1: so good at that, it's unbelievable. Like I'm old enough
12:28
Speaker 1: to remember ordering things before Amazon existed, right, and they're
12:31
Speaker 1: so much better than anything that came before. And you
12:34
Speaker 1: have to be at least that good. Yeah, And so
12:37
Speaker 1: I respectfully disagree. I don't think we actually have to
12:39
Speaker 1: be We have to be, we have to be as
12:41
Speaker 1: good a thing we do, but we don't have to
12:43
Speaker 1: do is we don't have to focus on like like
12:45
Speaker 1: this thing, this one day to delivery thing is just
12:47
Speaker 1: not that important for most merchants and most consumers. You
12:49
Speaker 1: have to be that reliable and that good exactly doing
12:53
Speaker 1: what you'll say you'll do. It's like Amazon is extraordinary
12:56
Speaker 1: at that. For Shopify, people's livelihoods are at stake. And
13:00
Speaker 1: because people's livelihoods are at stake Shopify, for most of
13:03
Speaker 1: the merchants on shop for the millions of merchants, we
13:05
Speaker 1: are the most important piece of software they use and
13:07
Speaker 1: so the term it uses exactly the right one. We
13:09
Speaker 1: have to be reliable and I think we've done that really,
13:12
Speaker 1: really well. But but that is a constant challenge. After
13:17
Speaker 1: the break probably talks about the challenges of growth and
13:20
Speaker 1: of layoffs. Now back to the show, So what's what's
13:31
Speaker 1: like the next thing you're trying to do? Like what
13:34
Speaker 1: so that's what? So you you? I mean, do you
13:36
Speaker 1: have the warehouse situation? Is that now that you've got
13:39
Speaker 1: that's in a really good place, what's the new warehouse
13:42
Speaker 1: problem for you? Yeah? And there's always new new sort
13:44
Speaker 1: of merchant challenges to solve. I mean, anyone who's been
13:47
Speaker 1: following the news knows that Apple has made advertising and
13:51
Speaker 1: particularly privacy changes that make it more difficult to target
13:54
Speaker 1: a particular consumer. So, for example, I love writing motorized skateboards.
13:59
Speaker 1: I've been a motorise skateboard guy for a very very
14:01
Speaker 1: long time. Um My interests are technology because you know,
14:06
Speaker 1: I lead a technology company and skateboarding. And so if
14:09
Speaker 1: you are boosted board or you're one Wheel, do you
14:11
Speaker 1: know those companies? Yeah, the one Wheel is like the
14:14
Speaker 1: guy on one it looks really cool. Yeah, it's like
14:19
Speaker 1: a boost board it's just like a skateboard, but the
14:21
Speaker 1: dude's not pushing exactly. It has motorized right, So if
14:24
Speaker 1: you're a boosted board or you're one wheel the ven
14:27
Speaker 1: diagram overlap of Harley's interest which is technology and skateboard,
14:30
Speaker 1: I am the perfect ideal customer for it, so they
14:33
Speaker 1: can target me really really well, Well, that has become
14:35
Speaker 1: a lot more difficult now because of some of the
14:37
Speaker 1: change that Apple has made, so UM what roads. Really
14:40
Speaker 1: it's harder for them to target you on like Facebook. Yeah,
14:42
Speaker 1: they can target because it's much harder to buy targeted
14:46
Speaker 1: Facebook and Instagram ads. That's exactly right. So that has
14:49
Speaker 1: made it more difficult, more challenging for small business to
14:52
Speaker 1: find their their target customers. Well, we figured out was well,
14:55
Speaker 1: if we look at um Shopify as a whole, we
14:58
Speaker 1: actually have a lot of good indication, a lot of
14:59
Speaker 1: good insight on the type of customers that might be
15:02
Speaker 1: right for your particular product. So if you're on Shopify
15:05
Speaker 1: and shopfy plus in particular, where this product is this
15:07
Speaker 1: feature sits, you can say I want to send more
15:10
Speaker 1: of these three products here, I have ten skews, but
15:11
Speaker 1: I want to send more of these three skews, you
15:14
Speaker 1: feed it into the audience's algorithm, we feed you back
15:17
Speaker 1: with the sample audience or a lookalike audience. And now,
15:20
Speaker 1: when you're buying ads on some of these ad platforms,
15:22
Speaker 1: whether it's Facebook or Instagram or any the others Google
15:25
Speaker 1: for example, you don't just upload your product description and
15:27
Speaker 1: your product photography and your meta information. You also upload
15:30
Speaker 1: this lookalike audience. And we know by doing so you
15:33
Speaker 1: will get a higher return dance. And are you I mean,
15:35
Speaker 1: that's sort of the kind of ad targeting version of
15:38
Speaker 1: your big idea, which is aggregating, which is scale basically right,
15:42
Speaker 1: it's bringing the power of scale to small businesses, right,
15:45
Speaker 1: when that's the big idea. Yeah, when you combine a
15:47
Speaker 1: lot of tiny little lights, you end up with the sun.
15:49
Speaker 1: Is a question that I've heard, you know, but a
15:52
Speaker 1: lot a lot of tints. But more importantly, think about
15:55
Speaker 1: it this way. When you sell in a marketplace, if
15:57
Speaker 1: you're a brand, you are able to leverage the economy
15:59
Speaker 1: of scale of that market Sell on a marketplace like Amazon,
16:02
Speaker 1: like any any Bay or something or Etsy or any
16:04
Speaker 1: of those, you get to leverage the economy's a scale
16:06
Speaker 1: of those marketplaces. When you build a custom online store
16:10
Speaker 1: on your own, you get independence, right, you own your customer,
16:13
Speaker 1: your customers, you own everything on Shopify, you get both.
16:16
Speaker 1: You get independence and you get this massive economy as
16:19
Speaker 1: a scale, and we think that makes us a really
16:20
Speaker 1: unique company. You seem very confident. Actually you have a
16:24
Speaker 1: very confident vibe. But I'm curious, like, what what are
16:28
Speaker 1: you worried about? Right, you're running this big company. It's
16:30
Speaker 1: been tough times in various ways. When you think about
16:33
Speaker 1: the company, what worries you? A bunch of things. Um,
16:36
Speaker 1: we're now you know, we have but ten thousand people
16:39
Speaker 1: to work at the company today. That's that's a lot
16:42
Speaker 1: of people making sure everyone's working at the right thing
16:44
Speaker 1: at the right time. That is obviously you know, how
16:46
Speaker 1: do you scale culture? That's one thing. The second thing
16:49
Speaker 1: that I worry about is um I think that it
16:51
Speaker 1: is getting harder for in some cases, for small businesses
16:54
Speaker 1: to grow and to succeed. I think there's a lot
16:56
Speaker 1: of aggregation happening, and I think that it's like I
16:59
Speaker 1: think for as a consumer, I'll say that's not even
17:01
Speaker 1: as a president Shopify, I think for retail to be
17:04
Speaker 1: interesting and exciting, it needs to have more voices, not less,
17:07
Speaker 1: and I think there are some times where I worry
17:09
Speaker 1: about that whether or not we're all just going to
17:11
Speaker 1: end up wearing the exact same basic thing. The other
17:14
Speaker 1: one is, it's more about the macro environment, right, I mean,
17:19
Speaker 1: your stock it's down a lot, like a lot of
17:21
Speaker 1: other growth companies, and maybe more importantly, like a lot
17:24
Speaker 1: of other growth companies, you had to lay off a
17:26
Speaker 1: lot of people recently after sort of making a big
17:28
Speaker 1: bet on growth. Tell me about that, I mean, tell
17:30
Speaker 1: me about sort of the bet you made and what
17:32
Speaker 1: worked out and what didn't work out. Yeah, I mean
17:34
Speaker 1: that was one of the most challenging days of think
17:38
Speaker 1: if any leader's life is to do layoffs, and we
17:40
Speaker 1: lay off about ten percent of our team a couple
17:42
Speaker 1: months ago. When the pandemics started, let's call it March
17:47
Speaker 1: twenty twenty. March twenty twenty pandemic starts, all these physical
17:51
Speaker 1: retailers have to shut down their stores, and most of
17:54
Speaker 1: them did not have another channel to sell by, and
17:57
Speaker 1: so their business went from whatever was doing to zero.
18:00
Speaker 1: And we were really fortunate to be the recipients of
18:02
Speaker 1: most of that business. Most of those retailers that shut
18:05
Speaker 1: down their physical stores to move online, came to Shopify,
18:09
Speaker 1: and very quickly they opened up these beautiful online stores
18:12
Speaker 1: and started selling and in some cases, and we don't
18:14
Speaker 1: take any credit for it, but we certainly, you know,
18:16
Speaker 1: we helped ensure the business continued when as things continued
18:21
Speaker 1: through the pandemic, it was clear that e commerce was
18:23
Speaker 1: playing a much larger role, both in the lives of
18:26
Speaker 1: consumers and also in the lives of retailers. There's a
18:28
Speaker 1: there's an equation that a lot of people monitor, which
18:31
Speaker 1: is e commerce as a percentage of total retail. So
18:34
Speaker 1: the numerator in that equation is e commerce and the
18:36
Speaker 1: denominator is all of retail. When the pandemic hit, two
18:40
Speaker 1: things happened. E commerce went up, and the denominator went
18:43
Speaker 1: down because you pulled out all physical retail. So it
18:46
Speaker 1: looked for for some time that like e commerce was everything,
18:49
Speaker 1: and it was. We knew that that was not going
18:51
Speaker 1: to stay, but we did think that the growth rate
18:54
Speaker 1: that we saw in twenty twenty twenty one was more
18:56
Speaker 1: reflective of what it would be in the future. You
18:59
Speaker 1: thought that pandemic era growth would persist, not just that
19:01
Speaker 1: people would know, but that the growth rate yeah, we
19:04
Speaker 1: we knew that the new baseline would stay, but we
19:06
Speaker 1: also thought it would just it would just increase, and
19:07
Speaker 1: so we staffed up a both support people and salespeople
19:11
Speaker 1: and those are really the two groups that we've staffed up.
19:13
Speaker 1: And then at the beginning of this year in twenty
19:15
Speaker 1: twenty two, we realized that, okay, it looks like the
19:18
Speaker 1: growth rate of e commerce is going to return to
19:20
Speaker 1: a more normalized place circle like twenty nineteen, like before
19:24
Speaker 1: the pandemic, or the growth rate's going to slow down.
19:25
Speaker 1: The growth rate is gonna slow, but it I mean,
19:27
Speaker 1: it's gonna slow to what it was pre pandemic, but
19:29
Speaker 1: on a much larger base because the rest of the
19:32
Speaker 1: e commerce, like adoption is not going to go away.
19:35
Speaker 1: And so we you know, we had this insight and
19:37
Speaker 1: we said, look, we took a bet that it was
19:38
Speaker 1: going to the growth rate was gonna increase. It didn't
19:40
Speaker 1: increase as much as we thought, although it did, it's
19:42
Speaker 1: still quite high, and so we had to make those
19:44
Speaker 1: changes and that was really really challenging. In a minute,
19:50
Speaker 1: the lightning round including praise for micromanagers and the hardest
19:55
Speaker 1: thing about being an entrepreneur. Okay, back to the show.
20:06
Speaker 1: We're going to close with the Lightning Round. You were
20:10
Speaker 1: our Mitzfit DJ Bar and Button MITSFJ. I was what's
20:14
Speaker 1: the one song that's best for getting everybody on the
20:16
Speaker 1: danceler September, Earthwinn and Fire. I heard another interview you
20:23
Speaker 1: did where you sort of made the case for micromanaging,
20:27
Speaker 1: and I loved it because it's it's nice and contrary.
20:30
Speaker 1: It's like the backlash to the backlash. So so give
20:32
Speaker 1: it to me. Give me the case in favor of micromanaging.
20:36
Speaker 1: The best managers I know are able to work sort
20:39
Speaker 1: of at the forty thousand foot view, set strategy, set
20:42
Speaker 1: the direction, you know, make sure the people were in
20:45
Speaker 1: the right in question. That's macromanaging, that's right. But also
20:49
Speaker 1: sometimes you have to get to the details. And I
20:50
Speaker 1: think the best leaders and managers I've ever I've ever
20:53
Speaker 1: worked with, they get into details when they need to.
20:56
Speaker 1: Some of the worst managers don't get into the details,
20:59
Speaker 1: and they only sort of work at the forty thousand
21:01
Speaker 1: foot view. And even Toby, like sometimes he writes code um.
21:04
Speaker 1: There are times where I look at a press release, right,
21:06
Speaker 1: I look at something that's about to go out, and
21:07
Speaker 1: I rewrite the sentence word for word or you know,
21:10
Speaker 1: wordsmith it myself, because I don't think it's good enough.
21:13
Speaker 1: And I don't think that's a bad thing. I think
21:15
Speaker 1: that there's this this hate on micro management, and I
21:18
Speaker 1: don't really mean micro management like you need to you
21:20
Speaker 1: don't trust the people that work for you. What I
21:23
Speaker 1: mean is it is important for leaders to get into
21:25
Speaker 1: the details when it calls for it. What's the best
21:29
Speaker 1: thing about running a tech company in Ottawa, Canada? Less distraction?
21:34
Speaker 1: What's the worst thing? Less inspiration? What's one thing I
21:40
Speaker 1: should do if I'm in Ottawa in say January, skate
21:44
Speaker 1: on the Rito Canal, the largest skating rink in the world.
21:47
Speaker 1: That's a good one, and come for dinner in my house. Okay,
21:49
Speaker 1: thank you? What in your experience has been the hardest
21:52
Speaker 1: thing about being an entrepreneur? Running a company at scale
21:58
Speaker 1: like Shopify forces you to get really really good at something.
22:03
Speaker 1: It also makes you get really really good at being
22:05
Speaker 1: self aware for the things you're not good at, and
22:07
Speaker 1: either hiring people that are better at at it than
22:09
Speaker 1: you are, or you know, I don't know, finding outsourcing it.
22:13
Speaker 1: I guess is someone else. What part of your job
22:16
Speaker 1: are you, in fact really good at and what part
22:18
Speaker 1: of your job did you realize, Oh, I'm actually not
22:20
Speaker 1: good at that, and I should get somebody else to
22:21
Speaker 1: do that part of the job. Yeah, there was a
22:22
Speaker 1: period of time that I was like chief operating officer
22:25
Speaker 1: of Shopify, and I don't think I was especially good
22:27
Speaker 1: traditional chief operating officer. I don't live in the details
22:30
Speaker 1: all the time. I tend to think about like I
22:33
Speaker 1: nack that into process. My favorite thing in the world
22:35
Speaker 1: to do is to tell the reason I'm on this podcast.
22:37
Speaker 1: Reason I love doing the show with you and I'll
22:38
Speaker 1: stay on for five hours if you'll have me, is
22:40
Speaker 1: I love telling the story of Shopify. I think the
22:42
Speaker 1: story of Shopify is fundamentally the story of entrepreneurship. And
22:45
Speaker 1: no matter where you come from, no matter who you are,
22:47
Speaker 1: what your background is, entrepreneurship has touched most of us.
22:50
Speaker 1: My parents are my father's an immigrant, my grandparents are
22:53
Speaker 1: Holocaust survivors. They didn't call it entrepreneurship, but starting a
22:56
Speaker 1: business was their means of survival. And the fact that
22:59
Speaker 1: I get to spend my life now helping other people
23:01
Speaker 1: find their own versions of success and survival is pretty
23:05
Speaker 1: damn incredible. So is that the part of your job
23:07
Speaker 1: that you like is telling the story? Yeah, yeah, by far.
23:13
Speaker 1: What's one piece of advice you'd give to somebody trying
23:15
Speaker 1: to solve a hard problem. I think a lot of
23:19
Speaker 1: people that are trying to solve hard problems foundationally because
23:24
Speaker 1: we're humane fear failure. One of the things that I
23:26
Speaker 1: often think about is like, what is the cost of
23:28
Speaker 1: failing at this particular thing. The cost of failing at
23:31
Speaker 1: this particular thing is not that bad, you might as
23:32
Speaker 1: well just go forward, full steam ahead. If the cost
23:34
Speaker 1: of failure is, like, you know, your family won't eat
23:36
Speaker 1: that night, or you can't pay your mortgage, that's something
23:38
Speaker 1: you should consider. But I think that I'm just just
23:41
Speaker 1: bringing back to entrepreneurship. I think that right now the
23:43
Speaker 1: cost of failure of starting a business is as low
23:45
Speaker 1: as has ever been in the history of the world.
23:48
Speaker 1: And so if you try shopify store, or you try
23:50
Speaker 1: starting a business selling lemonade in Manhattan and doesn't work,
23:53
Speaker 1: maybe try hot dogs and maybe try pretzels after that.
23:56
Speaker 1: That is something that wasn't available to previous generations. They
23:59
Speaker 1: just there was too much leverage involved, and just to
24:02
Speaker 1: flesh that out I mean the idea is, you can
24:04
Speaker 1: start a business now with almost no money, right, with
24:07
Speaker 1: almost no capital. You don't have to buy a factory.
24:10
Speaker 1: You don't have to even buy a cart. You just
24:12
Speaker 1: need a computer and an internet. You don't you don't
24:14
Speaker 1: have to buy inventory. I feel like there is some sharp,
24:18
Speaker 1: interesting entrepreneurship question that I could ask you that I
24:21
Speaker 1: haven't quite nailed. What is it? Is entrepreneurship easy to
24:28
Speaker 1: most entrepreneurs fail? Maybe will you give me a surprising answer?
24:32
Speaker 1: Is entrepreneurship easy? No, that's not the surprising answer? Okay? Interesting? Well,
24:37
Speaker 1: I mean I think that most people there's a glamorizing
24:40
Speaker 1: of entrepreneurship generally. And I think the reason that I
24:46
Speaker 1: thought that was the right question to ask was I actually,
24:49
Speaker 1: I think entrepreneur is still very very difficult. It's slightly
24:51
Speaker 1: less difficult now than it was, it's slightly less expensive
24:54
Speaker 1: now than it was, but it's still very very difficult.
24:57
Speaker 1: And so I think all the glamorizing, whether it's through
25:00
Speaker 1: you know, my friend is Damon John, So I'll be
25:02
Speaker 1: careful here, But like I think Shark Tank is an
25:04
Speaker 1: amazing show, but it glamorized entrepreneurship it is really difficult.
25:08
Speaker 1: What's the sort of under appreciated hard thing about being
25:13
Speaker 1: an entrepreneur loneliness. It's a lonely it's it's it's a
25:18
Speaker 1: lonely sport. And um, I don't think that gets talked
25:23
Speaker 1: about it at all. I mean entrepreneurship, you're you are
25:25
Speaker 1: by yourself for the most part. You may have a
25:26
Speaker 1: co founder, but but most people don't and at least
25:29
Speaker 1: when they get started, and even if you co found
25:30
Speaker 1: or just the two of you, Um, there's a loneliness
25:33
Speaker 1: to it. Um, anything else you want to talk about,
25:37
Speaker 1: I'd like you to start a merch store. I'm not
25:39
Speaker 1: out starting a merch store, Okay, I'm really not. I mean,
25:43
Speaker 1: advertising is a is a tough business. It's very cyclically.
25:48
Speaker 1: You know, you have a built in advertising like what
25:50
Speaker 1: they call these viral loops. You kind of have a
25:53
Speaker 1: built in viral loop here with your own too platform.
25:56
Speaker 1: You have a podcast. I do think what's your problem?
25:58
Speaker 1: I mean even just a shirt that says what's your problem?
26:01
Speaker 1: I don't know if it's like too aggressive, Well, it
26:03
Speaker 1: depends how how you say, Like it's like, what's your problem?
26:05
Speaker 1: Winky face? And then you're another one also, which is
26:07
Speaker 1: have you found product market fit it? Well, that is
26:10
Speaker 1: a possible problem. I mean there's a list of possible problems.
26:13
Speaker 1: Haven't found product market fit? Not grinding hard enough? I
26:15
Speaker 1: don't know. You tell me what are other clients hate
26:17
Speaker 1: that term? I don't know, like not not grinding card?
26:19
Speaker 1: Give me a good one. A possible answers for the
26:22
Speaker 1: entrepreneur of the question, what's your problem? Uh, what's your problem? Um?
26:25
Speaker 1: Like if we make a like a magic eight ball,
26:27
Speaker 1: has different answers come up. I can't get my shipping
26:34
Speaker 1: done on time. I don't know. I'm sorry, Uh, it's
26:36
Speaker 1: what don't Actually it's a very fascinating issue. You can
26:39
Speaker 1: almost sort of do, like like there's a whole other
26:41
Speaker 1: game version of of of your merch store, which is like, like,
26:44
Speaker 1: what is your problem for business? Like you've a problem
26:46
Speaker 1: with capital, You're a problem with like I can't accept payments,
26:48
Speaker 1: or I'm selling I'm selling CBD and no payment gateway
26:51
Speaker 1: will transact my product. Or I'm getting a bunch of returns,
26:56
Speaker 1: or have a coupon code and it got leaked on
26:58
Speaker 1: the internet on Reddit and now everyone's getting forty percent discounts.
27:01
Speaker 1: I feel like we're designing a monopoly for the twenty
27:04
Speaker 1: first century. Kind of cool. Yeah, I'm not out. I
27:06
Speaker 1: really quite like it. It is interesting, though, I mean
27:08
Speaker 1: this is total aside may be interesting. The merch store
27:12
Speaker 1: thing is fascinating because if you go back and you
27:14
Speaker 1: think about like merch ten years ago, twenty years ago,
27:18
Speaker 1: there really was a sense like merch was promotional product.
27:22
Speaker 1: And I think something is deeply changed around promotional around merch.
27:26
Speaker 1: It's no longer promotional product. And the best example I
27:29
Speaker 1: can give you is we've about twelve stores from the
27:32
Speaker 1: Kardashian Jenner group, right, I mean there's amazing businesses from
27:37
Speaker 1: you know, Kylie Cosmetics, too, Skins to Skims to Good
27:40
Speaker 1: American across the board. And I remember when they were
27:43
Speaker 1: first announcing that they were going to launch these stores,
27:46
Speaker 1: and the initial reaction by the market, by the public was, yeah,
27:51
Speaker 1: these are just going to be gimmicky kind of promotional things.
27:53
Speaker 1: But actually, in some cases, like Kylie Cosmetics is now
27:56
Speaker 1: one of the largest cosmetics companies on the planet. Jim
27:59
Speaker 1: telling me I'm not thinking big enough. Well, I'm gonna
28:01
Speaker 1: have to figure out a thing. I really believe it interesting.
28:05
Speaker 1: Maybe a magic gate Ball. It's a fun one. Gate
28:08
Speaker 1: is a fun one. Harley Finkelstein is the president of
28:15
Speaker 1: shopifive I do want to sell some merch, so you
28:19
Speaker 1: want to buy some If you want to magic eight
28:22
Speaker 1: ball or something else, let us know. Email us at
28:25
Speaker 1: problem at Pushkin dot fm, or you can find me
28:28
Speaker 1: on Twitter at Jacob Goldstein. Today's show was produced by
28:32
Speaker 1: Edith Russolo, edited by Robert Smith, and engineered by Amanda
28:36
Speaker 1: k Wong. I'm Jacob Goldstein. We'll be back next week
28:39
Speaker 1: with another episode of What's Your Problem.