The Wild Story of Tobi Lütke and Shopify

This guy went from selling snowboards online to leading a $73 BILLION dollar e-commerce empire.

It is perhaps the greatest business pivot of all time.

The wild story of Tobi Lütke and Shopify 🧵 pic.twitter.com/Mog1Ilrgr2

— Luke Sophinos (@lukesophinos) June 19, 2023

Shopify was founded in 2006 by Tobias Lütke and Scott Lake after attempting to open Snowdevil, an online store for snowboarding equipment.

Dissatisfied with the existing e-commerce products on the market, Lütke, a computer programmer by trade, decided to build his own. pic.twitter.com/EOeME5KxHR

— Luke Sophinos (@lukesophinos) June 19, 2023

Lütke built Snowdevil’s online store and launched it after two months of development.

Recognizing that there were likely a ton of other entrepreneurs that struggled to find a tool just as he did, he decided to enable anyone to use his software to sell their own products online. pic.twitter.com/IhfsLbjXp7

— Luke Sophinos (@lukesophinos) June 19, 2023

The business model was simple, companies that wanted to use the software would pay a small monthly fee and percentage of sales made through the platform.

It took off like wildfire.

In ~2 years retailers on Shopify sold $100 million worth of products through their software.

— Luke Sophinos (@lukesophinos) June 19, 2023

The founders again saw into the future, this time recognizing that they should enable any type of developer to build apps and plug-ins.

In 2009, they launched an API and App Store.

This was ground-breaking, given that the Apple App Store launched around the same time. pic.twitter.com/pawCXJIEeq

— Luke Sophinos (@lukesophinos) June 19, 2023

In 2010, Shopify raised a $7M Series A from Bessemer Venture Partners, FirstMark Capital, and Felicis Ventures.

Alex Ferrara, a Bessemer partner, joined Shopify’s board. He had this to say at the time: pic.twitter.com/MOOR2r61Ql

— Luke Sophinos (@lukesophinos) June 19, 2023

Many were worried about Amazon or eBay taking their lunch.

Amazon chose to not go the 'white-label' route, requiring SMB's to sell through their own platform.

eBay was unable to compete, ultimately shutting down their competitive product, Magento. pic.twitter.com/l3ygIfVyQ1

— Luke Sophinos (@lukesophinos) June 19, 2023

So over the next 5 years Shopify continued to roll.

They grew to ~500 employees and added a whole host of new products.

By 2015 they had 140,00 stores using their software that were collectively doing $3.7B in sales (!) pic.twitter.com/IRJ2EIL9Ry

— Luke Sophinos (@lukesophinos) June 19, 2023

So, it was time to do what most entrepreneurs dream of.

Take the business public.

In August of 2015, Shopify went public on both the New York Stock Exchange and the Toronto Stock Exchange, raising $131 million in its initial public offering. pic.twitter.com/w3is1WFZBL

— Luke Sophinos (@lukesophinos) June 19, 2023

Fast forward to COVID, and Shopify had taken over the world.

With in-person shopping no longer an option, every consumer turned to the internet.

Their growth rate during this time was some of the highest we've EVER SEEN at this scale... pic.twitter.com/Duyjn4DBSD

— Luke Sophinos (@lukesophinos) June 19, 2023

But for most companies that experienced insane, abnormal growth during COVID, it would not be sustained.

SaaS growth slowed to 10% year-over-year, down from a peak overall growth of almost 100% (!) during peak Covid in Q3 2020.

— Luke Sophinos (@lukesophinos) June 19, 2023

Founder & CEO, Tobi Lütke“ had this to say: pic.twitter.com/Nm0tNyVcbr

— Luke Sophinos (@lukesophinos) June 19, 2023

Not just for Shopify, but e-commerce generally has pivoted entirely back to the growth rate we were seeing pre-pandemic: pic.twitter.com/MB5gbRFqnq

— Luke Sophinos (@lukesophinos) June 19, 2023

Today, Shopify offers a whole host of products enabling anyone to start, sell, market, and manage their business online.

2 MILLION businesses across 175 COUNTRIES use the platform.

They've come quite a ways from a guy selling snowboards online... pic.twitter.com/TIsZKfVFN5

— Luke Sophinos (@lukesophinos) June 19, 2023

Thanks for reading.

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— Luke Sophinos (@lukesophinos) June 19, 2023