Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How Shopify Built an Ecommerce Empire Without Owning Inventory
Transcript
- Lucas: In 2004, a German-born snowboarder living in Ottawa named Tobias Lütke tried to sell snowboards online. The existing ecommerce software was so bad he decided to build his own — just for his shop. By 2025, that side project processed over two hundred billion dollars in gross merchandise volume in a single year. Luna: That's the Shopify story in one line. But what I find wild is that they almost weren't a company at all. Lütke and his co-founder Scott Lake built the tool because they needed it, not because they planned to disrupt anything. Lucas: Exactly. They called their snowboard shop 'Snowdevil.' The Shopify software was literally an afterthought. But other store owners started asking if they could use it. By 2006, they'd launched the platform publicly. And here's the thing — they didn't raise venture capital for nearly four years. They bootstrapped it on subscription fees from small merchants. Luna: That patience paid off. But I think the more interesting strategic choice came later — around 2015, right before the IPO. That's when they decided to double down on third-party integrations rather than build everything themselves. Lucas: Right. Shopify has always been a platform, not a retailer. They don't own inventory, they don't handle payments directly — well, they do have Shopify Payments now, but originally they relied on partners. The thesis was: make it dead simple for a merchant to plug in Stripe for payments, ShipStation for shipping, Oberlo for dropshipping. That ecosystem became their moat. Luna: And it worked brilliantly. By the time they went public in May 2015 at seventeen dollars a share, they had over one hundred sixty thousand merchants. But here's what I find fascinating — the IPO was almost an afterthought for Lütke. He said in the S-1 filing, and I'm paraphrasing here, that Shopify's mission is to 'make commerce better for everyone.' Not to maximize shareholder value. Lucas: Yeah, that line stood out to me too. It's very much in the founder's voice. Lütke has always framed Shopify as arming what he calls 'the rebels' — small businesses fighting against Amazon's dominance. That narrative helped them attract merchants who felt locked out of the big platforms. Luna: Before we go deeper into that — and I know this is a bit of a pivot — but it's worth noting that conversations like this one, where we get to explore these strategic decisions without any commercial interruption, that's a deliberate choice on our part. Lucas: It is. We keep this show ad-free because we think the ideas deserve space to breathe. And if you find value in that — if these episodes have helped you think differently about building something — the simplest way to support that choice is at buy me a coffee dot com slash fexingo. Luna: No pressure, no perks. Just a way to keep the conversation going. And like Lucas said, it lets us stay focused on the story. Lucas: So back to Shopify's 'arm the rebels' strategy. One of their boldest moves came in 2019, when they announced the Shopify Fulfillment Network. They were essentially building a competitor to Amazon's logistics — but for independent merchants. They acquired a company called 6 River Systems for about four hundred fifty million dollars to get the warehouse robotics technology. Luna: That was polarizing. On one hand, merchants loved the idea of two-day shipping without managing warehouses. On the other hand, logistics is a brutal, low-margin business. Amazon lost billions building it out. Shopify was taking on a massive operational challenge. Lucas: And they felt it. In 2022, after the pandemic boom faded, Shopify had to lay off ten percent of its workforce — then another twenty percent in 2023. They sold the fulfillment network to Flexport. Lütke wrote a memo saying they'd gotten distracted from their core mission: making software easy. Luna: That refocus seems to have worked. By early 2026, Shopify's revenue was growing again in the mid-twenties percent year-over-year. They've returned to their ecosystem roots — the app store, the partner program, the theme marketplace. It's almost like they learned that being the best platform means letting others handle the heavy lifting. Lucas: There's a specific number that sums up the platform effect. As of last quarter, Shopify's app ecosystem had generated over two and a half billion dollars in revenue for third-party developers. That's not Shopify's revenue — that's money flowing to the people who build on top of Shopify. That's a healthy sign of network effects. Luna: It also explains why merchants stay. Once you've integrated your inventory, your accounting, your email marketing, your shipping — switching costs are enormous. But in a good way, because you're not locked into Shopify's own tools. You can use whatever you want. Lucas: Lütke has a phrase for that. He calls Shopify an 'operating system for commerce.' And operating systems don't have to own every application — they just have to make the applications run well. That's the model that took them from a snowboard shop to a company with a market cap well over fifty billion dollars. Luna: It's a remarkable run. And I think the lesson for founders is: don't try to own the entire value chain. Find the one layer where you can be indispensable, and make it so easy to plug into that nobody wants to leave. Lucas: That, and start with a problem you actually have. Lütke didn't set out to build a billion-dollar company. He just wanted to sell snowboards. Everything else grew from that honest starting point.