← Making It with Jon Davids
Making It with Jon Davids
202 - Shopify President: "Here's what every business builder needs to know today"
00:55:27
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- [00:00]
John Davids
Shopify handles half a million dollars in sales a minute across more than 5 million stores. That makes them one of the top 5E commerce companies in the world, worth $162 billion. But that's not all. It's actually changed the way millions of entrepreneurs run their businesses. Shopify is pretty much shorthand for I have an e commerce store. And at the head of this entire operation is this guy, Harley Finkelstein. He's the president of Shopify. And, and he joins me now to talk about how it all started, where this company's going, and lots of little things that every business owner should be paying close attention to right now. Here we go.
- [00:42]
Harley Finkelstein
You're listening to Making it with John Davids.
- [00:49]
John Davids
So Harley, you guys started as this website builder for indie companies. You know, if you're selling snowboards or you've got a local store, you can use Shopify. And to today, fast forward a couple decades, you're like the default. You are the noun for an E commerce store. Was that just like a straight line up or were there milestones along the way where you kind of realized like, oh, this opportunity is getting bigger and bigger.
- [01:12]
Harley Finkelstein
I mean, it's part of the, part of the problem with entrepreneurship is that we often talk about the highlight reels and we don't talk about the blooper reels. So we give off the impression that these things often are kind of these linear curves where it's just slow and steady and it just keeps going up. And that's, that's not true. That doesn't happen. No business works that way. That's just, that's never the case. And certainly that was not the case for Shopify. I mean, if you sort of go back and you think about the different kind of phases of Shopify, you know, I remember in 2010 we started talking to some VCs about raising money. And their concern was, well, your TAM, your total addressable market is just too small. And I think at the time if you looked at retail SMBs in, in America, it was like 16,000 or so. And then across the world it was like, I don't know, 40 or 50,000. So they're like, look, even if you have every retail SMB using Shopify, it's still a very small business. But we never looked at it that way. We sort of the problem with looking at tam, I think is ultimately that if you're doing analysis based on the existing market, you effectively are looking at how taken a larger piece of an existing pie, which is very zero sum. And I Think that the positive sum version of that is, well, no. What if you grew the pie itself? What if anyone who needed to or wanted to build a business was able to do so? What would happen? And that effectively is the answer. That was the question that we answered with Shopify, which is that if we turned ambition or ideas in the shower into real businesses, what would happen? And the end result is this would happen. We would build this incredibly wonderful company that effectively has democratized entrepreneurship, that has made entrepreneurship more accessible. But in those early days. No, the early days was let's just try to get as many SMBs that want to use Shopify. Small business want to use Shopify. Let's get them to use it. Let's make sure everyone knows that we exist. That for know, 20 something dollars a month. I think initially it was $24 a month or something that you could build a business and that business could become a multi billion dollar company. Let's encourage more people to do so. And those early days was really just about, you know, getting as many people to, to think about entrepreneurship and Shopify as possible. Yeah.
- [03:31]
John Davids
The fallacy of, of TAM is something I just want to zoom in on there because the total addressable market and it's especially ironic when you hear that kind of thing from investors who are really investing in the innovation economy. If you're investing in technology and you're looking at TAM as it is today, what was the TAM for Internet search in 1999?
- [03:49]
Harley Finkelstein
It was zero. That's exactly right. Exactly. But also the reason that I think that founder led companies have an unfair advantage over professionally managed companies is that founder led companies have founders and founders are entrepreneurs. And entrepreneurs tend to reject the fallacy of TAM or the fallacy of existing tam. They don't believe that there is this sort of fixed opportunity. They see opportunities being unlimited. They believe in positive sum opportunity. And I think that, you know, if you look across a lot of stores on Shopify, you know, especially the homegrown success stories, companies like, like Figs or Gymshark, two companies who effectively started businesses. I mean Figs makes, you know, hospital scrubs. They've built a billion dollar company doing hospital scrubs. You walk into hospitals now, Frank, you walk into any doctor's office now, you see everyone wearing Figs. When Shreena Heather were starting this, I'm sure they were told that their town was too small, that the, that the market for, you know, high end scrubs, so more expensive scrubs than the average pair of scrubs is very, very small. Then most People want the cheapest scrubs because you got to throw them out. They're like, they're almost disposable. And they're like, no, what if they look really good? What if they feel really good? What if you feel better wearing them? Or in the case of Ben France with gymshark, this idea that somewhere between, you know, like yoga gear, like Lululemon and bodybuilding gear, there is this blank space of opportunity that needs to be filled for people that go to the gym that want to look good, they want to feel good. And we're going to create a company called gymshark for that particular segment. I'm sure that they were told that the town was too small or didn't exist. But that's the best part of entrepreneurship. Entrepreneurship is this way to take a magic, you know, magic wand to an existing market and completely blow it up. And I think that what you're seeing now is if you look at the largest companies by market cap, especially in the US you will see a lot more founder led companies today than you have historically because of this, this ability to imagine what is possible as opposed to this sort of fixed mindset of, well, you know, I can only serve an existing, you know, existing pie.
- [06:11]
John Davids
This episode is brought to you by my new tool, the 1 Minute Marketing Roadmap. Available@johndavids.com roadmap. It's a fully customized report that shows you how people are finding you online and where you're losing sales. We've packed 10 years of research at Influicity into a smart AI powered tool that delivers real results. I'll tell you things about your business you probably haven't thought of. Go to JohnDavids.com roadmap and get your custom report. That's JohnDavids.com roadmap. So can you share some examples? I really want to zoom in on this. So I was telling you before the mics heated up, I had an office right across the street from you guys for years. And I remember just seeing Shopify as this steady march of like, this company can do no wrong. Every. And this is back when you were private. This is like, like 2012, 14ish. And you know, take it to today. But you said on the inside it wasn't like that. So give us maybe one or two milestones along the way where things actually got really hard.
- [07:11]
Harley Finkelstein
I mean, things are still really hard. I don't think there, I don't think there is ever, there is never a plateau that you eventually get to when you're building A business, especially one that's incredibly ambitious like Shopify, where things just start, you know, you go to cruise control. I think cruise control is where is where companies go to die. But I think, you know, a couple of things kind of happen along the journey that, that, that are kind of these beautiful kind of bookmarks and not necessarily beautiful in the positive way. Some of them, you know, cause a lot of sleepless nights. But one of the things that I think kind of happened around that time where you are a neighbor, 2012 or so is we began to realize that, I mean, if you look at E commerce as a percentage of total retail, it's still very, very small. But one of the things that began to happen was ultimately there was this dichotomy between online and offline that like you either are an online merchant or offline merchant. And we were of course building software for online. And so we began to have to kind of rethink the way our positioning in the market. If we only focus on E commerce and merchants and brands begin to think about being everywhere. Because quick foreshadowing to where we are right now, the future of retail in the future, but like right now is also retail everywhere. I mean, the reason you see and hear about Shopify, you know, integrating commerce and retail into places like Roblox and Spotify and YouTube and point of Sale, is because ultimately the future of retail is where consumers spend their time. And that's going to evolve. That's a dynamic definition. But if Shopify wants to qualify to be the retail partner for the most important brands, we have to make it easy to sell everywhere. Around 2012, 2013 or so, it became obvious that, okay, we have to think about beyond just E commerce, that we have to make it easy to sell across every service area. And physical retail then as it is now, is still the vast majority of all retail. So moving outside of our core focus of E commerce, that, I mean, that was really difficult. And that had to, you know, we had to almost retail as about as old as currency, which is about as old as time. So thinking about, you know, how do we reinvent how retail is done in a physical venue or IRL in real life was. Was one of those. The second one was what happens when these merchants who started businesses on Shopify at their mom's kitchen table got really big? How do we ensure that as they grew in scale that they never would leave Shopify? And that's a really difficult thing to build a piece of software that, you know, if you're just getting started, is Very easy to use. But as you grow and the complexity your business increases, that, you know, all those solutions unveil themselves but at the right time, so you're not overwhelmed. And that issue of, of, you know, being able to start a business in like an hour on your lunch break using Shopify, but then be able to run the business when you're doing a few billion dollars a year at scale that all being built on the same code base, that is an incredibly difficult engineering and product challenge. So those are two that I think about. And then obviously a couple years later we went public and then the transition from being. We'll get to that in a second.
- [10:19]
John Davids
Yeah, yeah.
- [10:19]
Harley Finkelstein
I mean from being this like, you know, Canadian company. Toby and I were in Ottawa. We always had very big ambitions, but we were a private company in Ottawa, Canada. And all of a sudden, you know, May 21, 2015, we're publicly traded, we're dual listed, we're on the New York Stock Exchange and we're in the tsx. And all of a sudden we now have institutional investors and we have earnings calls and, and now all of a sudden we have to. We didn't want to become a public version of Shopify. We wanted to become, we wanted to remain Shopify but create, you know, we didn't want to become a publicly traded company per se. We wanted to be a version, our own version of what, what we thought a publicly traded. And for us it was how do we become a trusted public version of, of what we've been building for the last, you know, years, decade or so. At that point that, that was really difficult.
- [11:13]
John Davids
That second one that you mentioned, which is the, and I never thought about it like this, that you'd have companies coming on board, building their businesses and then maturing off Shopify and then that sort of takes you to, okay, well, we have to build so that they, we can service them at whether they're making $100,000 a year or $100,000,000 a year or more than that. Is that the reason you started to get these much bigger names on board, like the Mattels of the world? Did that sort of naturally come because you had already built the tools, or was it that you wanted to start chasing big, bigger companies from the start?
- [11:44]
Harley Finkelstein
It actually happened in, in reverse order. What happened was around the time of the ipo, some of the merchants that started on Shopify when they were very small grew really, really big and they did not leave the platform. And so that was sort of an insight that we had which is, wait a second. If we can help brands that are, that are, that are growing up on Shopify and ensure that they're still supported by us when they're really big, could we also help existing legacy brands also use Shopify as well? So it started with these homegrown stories and eventually we realized that, you know, companies like Mattel or Hunter Douglas or, you know, on running or Birkenstock or Staples or, you know, these incredible companies that we all love, all the, you know, like, could we also help them as well? Well, turned out that if you sort of go back in business history, what tended to happen was small companies tried to emulate the actions and personalities of larger companies. Small companies tried to make them make themselves seem like they were very large established companies mostly because of, because of risk. They wanted their consumers to feel that they were stable, that they were, you know, timeless, that they were going to be around for a long time or what sort of flipped on its head around the time period we're talking about is. This is fascinating. Larger companies began to want to emulate smaller companies. They want to be able to move really fast. They wanted to be agile, they want to be innovative. They want to recruit people that traditionally would have only gone to startups. And so even the largest company, I mean, you know, Birkenstocks is built in 1700s. Hunter Douglas was built in 1919. Mattel was built, I believe, in 1947. So these iconic legacy companies that are, that are like legendary, I should say, they wanted to start operating in this very innovative way. And so they began to look at who was using, like, what software, what products are these companies that want to emulate are using. And all roads led to Shopify. And so that's really where we began to really focus more on getting some of the largest brands on the plan lineup. And now actually, if you ask me about, you know, like, who comes to Shopify right now, it's people that are just getting started that have an idea in the shower and they want to, they want to see if that idea has legs. They want to see if they can commercialize that. But it's also the most innovative companies, regardless of size. So whether it's, you know, and you think, you know, I'm wearing, right, actually wear all James Purse right now head to toe. So James Purse, I think, is one of the greatest companies and brands on the planet. I think James, the founder behind James Purse Company is just incredible. He thinks about apparel in this really unique way, like that people that really give a shit about what they're making and Again, you know, you know who is the CEO of Mattel really gives a shit what he's doing right now with, with all these new, this new IP that he's bringing up from the vault? Or how he's thinking about, you know, incorporating AI into his products or how he's using, you know, his IP and going to Hollywood and making these incredible movies like, like Barbie. Shopify is for people. Is for, is for merchants who are just thinking very ambitiously and very, in a very innovative way, regardless of their.
- [14:56]
John Davids
S. And I gotta, I gotta put an asterisk on that. So. Something funny that just hit me as you were talking about big companies acting like small companies, which really is a flex for the big companies. Yeah, I've had, because of my agency, I talked to a lot of CMOs and we happen to work with a lot of banks. And I've had more than one big bank cmo. Tell me, hey, what are they doing with Shopify? Like what are they doing on the marketing side, the branding side? Like how do we emulate them so that we can sort of be the bank for the, you know, the big company that wants to be more innovative. Like they really. And the tough thing you have to tell them is this is kind of in their DNA.
- [15:29]
Harley Finkelstein
So everyone talks about culture, everyone talks about how do we create a more entrepreneurial culture, a more innovative culture, a more founder driven culture. Culture is not something you plug in. Culture is not something that you go and you, you take someone's playbook and incorporate into your own business. What you're talking about is culture. Culture is what happens. Nobody is looking. Culture is the way the company, the organism of the company conducts their, their day to day business. The way they build products, the way they think about new campaigns. And part of the reason that I think Shopify is probably. I don't know this for a fact, but I believe this to be true. I think Shopify as a company is probably the greatest collective. Like the people that work at Shopify is the greatest collective of entrepreneurs of any company. What I mean by that is there's 8,000 or so people that work at Shopify. Every one of those people that work with us could be running their own companies. But we've decided that actually in aggregate we can create far more impact on the world and we all do it together. But by having a company that is making software for entrepreneurs, that is built by entrepreneurs, it creates a very different culture and it's the reason why there is no playbook on it. Right. When someone brings me an idea. And I think it's an absolutely crazy idea. I'm curious about it. I want to test it. I want to know whether or not it's going to work. And if it works, let's scale the hell out of it. And if it doesn't work, that's okay too. This idea that failure is the successful discovery of something that did not work. That is something that is embedded into the culture of Shopify. Other companies have heard me say that and I've heard them say, well, we should experiment more. But then I follow up with them and I ask them, so are you experimenting? Well, you know, there's a lot of, there's a lot of committees, there's a lot of red tape. And they give me all this, they give me all this like, bs.
- [17:15]
John Davids
Yeah.
- [17:15]
Harley Finkelstein
Excuses. They give me these, these, these excuses. It's not, it's like, it's not even legitimate excuses. It's just, well, we can't. We tried. Well, the reason that a lot of these banks want to be more like Shopify and it's flattering to hear that is fundamentally it's because they all want it, but they're not willing to like, the cost of it is something that they're not willing to tolerate.
- [17:37]
John Davids
There's a sacrifice to it and it's.
- [17:39]
Harley Finkelstein
You have to get very, very comfortable with being very, very uncomfortable. And if you. And we are very comfortable with being uncomfortable. And part of it is if you look at the average tenure of the leaders of Shopify, it's very long on a relative scale compared to other companies of our size and our tenure. People have been in Shopper. I mean, I've been in Shopper almost half of my life. That is very unique. And I think because of that you get high context. And when you add high context to very entrepreneurial, ambitious people, you end up building what is now $150 billion USD publicly traded company.
- [18:13]
John Davids
So another major trend, because if I look through your history, there are so many things that you kind of latched onto and you were partially in the right place at the right time and partially just did the right thing with what you had at the right time. Another massive trend was D2C and then this kind of creator led business thinking. What comes to mind first is, is Kylie Jenner and Kylie Cosmetics. And that was the first time that I kind of heard like, oh, this big celebrity creator person is doing something on Shopify. And Shopify was kind of inserted into that story. I don't know if that was intentional or not, but did the whole D2C movement, was that just another massive tidal wave for you?
- [18:54]
Harley Finkelstein
Well, first of all, let's, let's be very clear about direct to consumer. D2C. Direct to consumer. DTC is always how retail was done.
- [19:04]
John Davids
It's, it's, it's the new way to say retail.
- [19:07]
Harley Finkelstein
I mean, when, you know, rewind the clock 150 years, rewind the clock 600 years, when you bought bread, you bought it from the baker. When you bought shoes, you bought it from the cobbler. When you bought whatever, you bought it from the maker. So direct to consumer was always the case. And then what happened is around, you know, the late 1700s, a guy named John Wanamaker created, actually 1800s, created Wanamaker's department store and want to make department store was this beautiful, beautiful store in Philadelphia where all of a sudden a bunch of brands were selling their products to Wanamakers and Wanamakers then sold those products to the end consumer. And all of a sudden wholesale was born. And this model of wholesale of effectively having this intermediaries between the maker and the, and the consumer, that became effectively the trend. And it was a really great trend because what the re, what the intermediaries allowed you to do was they allowed to have much more scale distribution. If there are stores all over the world and I have a single product, I can get my products in the hands of more consumers by selling my products to those retailers who would then sell my products to the end consumer. And then all of a sudden the 90s happened. Internet happens, and the Internet completely disrupts distribution. The Internet says all of a sudden anyone can get anything to anyone else directly. And so direct to consumer is simply, you know, it's, it's, it's simply the technology that entered the market allowed you to return to this, frankly, the original format for commerce, which is, well, Shopify.
- [20:44]
John Davids
In the example you just gave, or in, in the Wanamaker example, what, what Shopify did was it enabled you to have one point of sale anyhow. So instead of just selling to Walmart and Walmart, you know, sent it to their 4,000 stores, I can put it on my Shopify and now it goes to the whole world.
- [20:58]
Harley Finkelstein
Yeah, but, but the reason that you couldn't do that previously was because there was no way for me as the maker of the product to get into the hands of every consumer in the world. But the Internet completely democratized that. So now that was accessible, now was available. And yes, Shopify took advantage of that. We said, okay, this is a great opportunity. Now anyone that Has a product should be able to sell to anyone, everywhere, right? This idea of default global, this idea that from your mom's kitchen table, in an hour you can build a store that will allow you to have the distribution channel to sell your product to anyone you want. That was really, really compelling. But back to your point on sort of this, this trend. So certainly, you know, as more people realize that the products they make they can sell to the end consumer, it meant that one, they keep more of the profit margin, they make more money. And the second thing is they can own the entire stack selling stack and they can dictate exactly what the experience is going to be for the consumer. So I can buy James Purse, the shirt that I'm wearing from james purse directly.com or at a james Purse store. Or I can buy it from historically from some upscale retailer, some department store. I've done this before. I've done the test. The experience of buying it in the James Purse store is not a little bit better than buying from the department store. It's 10x better. Why? Because they've been people in the James Purse store. All they know, all they think about is this particular garment. They know the gsm. They know where it's made, they know what it fits with. They know how to like, you know how to wash it. The people in the department store have to sell hundreds of products and therefore the consumer experience is never going to be as good. But you touched on something interesting, which is you mentioned Kylie and some of the celebrity stuff that's happening. Okay, well, this is where this gets really cool. So bucket one was direct to consumer, now becomes a thing. Bucket two is now all of a sudden, people that have audiences are now thinking about what can I sell to the audience that they're going to find of value? And if you go back in time, the way retail typically worked was again, going back to hundreds of years ago was first you built a product and then you found an audience. Well, now all of a sudden you have people that have audiences. And this is not a new thing. Celebrities for many decades have had audiences. But generally the way that celebrities commercialized their relationship with their audience was through a third party, through a sponsorship, an endorsement, something, you know, some sort of rubber stamp that I'm going to put my name on someone else's product. There's a famous one. I think it was Brad Pitt in the 80s selling toothpaste, Colgate toothpaste. It was a big disaster. It was sort of this case study that I read about years ago. Why? Because Brad Pitt, even though he was this up and coming star in the 80s 90s, he had no relationship to Colgate. It was just an endorsement deal and Colgate paid him to do that. And they put their stamp on it and it worked fine. I'm sure it sold slightly more. But it wasn't necessarily a hyper relevant product in the eyes of his audience or his fans. Okay, so all of a sudden now in the last decade or so, some of these celebrities with audiences began to have this direct relationship with their audience through social media, through interaction, through concerts, through media, through YouTube channels, through whatever, through Instagram, it doesn't matter. They now have this understanding of their particular audience, their likes, their dislikes, their curiosities. And now they begin to think about, you know, I'm Kylie Jenner as an example and I talk a lot about makeup and I use makeup tutorials on, on, on TikTok and on Instagram and on YouTube and I'm basically talking about other people's makeup. I actually think my audience would really like if I created my own based on the particular needs that I have that I've been vocalizing in all these videos. I'm going to create Kylie cosmetics and create a product called Lip Kit. And now I'm going to use this direct to consumer thing that we talked about 10 minutes ago. And now I'm going to actually use this vehicle to bring it to market. And the end result was incredible. New businesses and brands were created.
- [24:54]
John Davids
Were you guys involved at the beginning of that? I'm curious how this relates to Shopify in terms of did you guys see that happening and then try to bring her onto your platform or she just.
- [25:02]
Harley Finkelstein
Kylie was a Kylie. Kylie was a particular, was, was. I mean we were, we were very close with that particular one, but that happens all the time now. But in the case of Kylie, we really, you know, we'd met Kylie years earlier. We knew that she was beginning to think about, you know, building a cosmetics company and we just offered our help to her. Any, anything we can do for her. We were, if she needed fulfillment, if she needed manufacturing, whatever she needed, we wanted to be helpful to. It was really important for us to do that because we wanted to prove that this model worked really, really well. And it did. Now we never could have expected it would have gone this way. I mean the fact that, you know, you have Rihanna and Fenty or Beyonce and Sacred or Hailey Bieber just built road and sold it for a billion dollars or I mean even just think about like Drake, you know, you're In Toronto right now, what Drake has done with ovo. Think about what the old, that that model, Drake and OVO a decade ago would have been. You go to a concert of your favorite musician and you go to a merch table and you buy merch, right? The merch is printed on some shitty T shirt. It's a shitty screen print. It's a promotional product. That is not what we're talking about here. What we're talking about is that Drake and his team and Ollie who runs OVO get together and say, we know our audience, we have a direct relation with our audience. Let's make a clothing brand and a brand of product that is so intertwined into the music and culture and vibe and energy of Drake. And let's put it out there and commercialize it. What would happen at that, at that, at that. And they've built these, these incredible companies. And so in many ways you can hear it in my voice, what I'm excited by. I mean, obviously Shopify is at the epicenter of this, but as an entrepreneur, I think this is like, we are living in like this like golden age of entrepreneurship right now where anyone with an idea can build an audience and that idea, that audience can then, can then create this incredible, you know, communication channel with and you can develop products from. I mean, the idea that Hailey Bieber figured out that you can take your phone and create a phone case and put your, like your lipstick in it. If I would have told you 10 years ago that someone was going to build a billion dollar company like that, you would have said I was crazy. But it's happening now every single day. And I'm very proud that Shopify is at the epicenter of it. But I think partially it's like cultural moments have met commerce opportunities. And it is, I think it's really, really exciting. And I think frankly this idea of commerce everywhere, which we sort of talked about with my Roblox example, is also interesting because it means that for the first time ever, it's the consumer that's dictating to the retailer, to the merchant, to the, to the business what they want and how they want to buy it. And it's creating these rich experiences.
- [27:52]
John Davids
If you're spending more than $50,000 a year on marketing, I've got something for you. It's a playbook I wrote called how to build a Social Media Selling Machine. You can grab it now for free at johndavids.com playbook. This is the nine step formula we use for our clients at Influicity. To turn their social media channels into reliable revenue engines. Grab it right now@johndavids.com Playbook. Yeah. And you're contagious. Your, your energy is contagious, man. I've got so many questions here. But, but the thing I want to zoom in on here is, you know, you have the examples of course, like Kylie, like Hailey Bieber. And I'm curious to know because there's, for every success story, there's also a lot of failures. Where do you think that whether you're a creator or an entrepreneur, tuning in and listening to this right now, what is, what's really important to think about? Because when you take away all the friction and you say you can throw up a website in five minutes on your lunch break, you can create a product on this site, what do you think actually goes into a winning product or a business on Shopify?
- [28:51]
Harley Finkelstein
I mean look, let's. Okay, so let's talk about entrepreneurship in general. Let's talk about how to win an entrepreneurship. First of all, I mentioned the golden age of entrepreneurship. Right now. Entrepreneurship in the US is currently at record highs. 58 million people in the United States, 36% of the population, 36% of people self describe themselves as a self employed. So 50 million people in the US are now self employed. If you look at new business creations like at the consensus level, like you go to, at the US government statistics level, but 500,000 new businesses are created every month in the United States, some online, some offline. I assume most of those are offline, perhaps in Canada, obviously having a much smaller velocity. Unfortunately actually in Canada if you compare to the US but half as many people are launching businesses today in Canada as they were 20 years ago. There were a hundred thousand fewer entrepreneurs in Canada than in 2003, which is not good. But at a global level and certainly the US level, entrepreneurship is currently at record highs. So it does feel like what is happening is the barrier to entry into entrepreneurship has been drastically reduced. That is amazing. So what's happened is a lot more people are trying it, therefore there's a lot more competition. And therefore, you know, if you want, if you're going to win, it's going to become more difficult. When you look across, we Shopify powers about 12% of E commerce in the U.S. which is, you know, we're the second largest checkout in the US After Amazon. And if you look at the successful stores in the platform, two things come up. One is many of them, not all of them, many of them, it was not their first store they tried something, it didn't work. They tried it again, it didn't work, tried a third time. Then they, then they became gymshark, right? So one is that they have this appetite to innovate, an appetite to build that is very different than past generations. So they're building more. And again, they don't look at failure as this, I'm done, but rather, what can I learn from this for the next one? It's the first thing. The second thing that's different is that this idea of authenticity is not just a marketing tactic or a marketing device. It has to really be true. So when you look at the stores, we talked about some of the celebrity stores, the reason they're not promotional products is because these are the products that those celebrities themselves were looking for. This is what they wanted themselves. And so they found this niche. I mean, I know you had my friends from Midday Squares on, I think a couple weeks ago, right?
- [31:17]
John Davids
Had Jake on.
- [31:18]
Harley Finkelstein
Yeah, Jake on. Great, great, great team, Great entrepreneur. Jake and Nick and Les, like, they're incredible people, but they live the Midday Square story, right?
- [31:29]
John Davids
They're not in the Midday Squares factory.
- [31:32]
Harley Finkelstein
I mean, they might as well live. Exactly. But they, they live this thing. They're so authentically into it. Entrepreneurship is not just my job. It is my entire life. Like, like Shopify is, is. Is as much of a, you know, it's my life's work. This is how my family survived immigration and after the Holocaust, how they made a life for themselves in Canada. So I think one of the things that didn't work then, it still doesn't work, is just trying to hawk stuff that just is not meaningful, is not authentic. So again, they try a lot. They're very authentic. I think the third thing is they figured out a very specific niche. Now the niche thing is something that didn't work necessarily before, direct to consumer. So, you know, the example that I always thought was funny was I heard someone say like Pokemon jewelry, that someone who's making Pokemon jewelry in like the pre E commerce world is never going to. Nothing is never going to work. But in the current model where we're all online and e commerce is important and impactful and in all our lives, the vendegram overlap of jewelry and Pokemon for Pokemon jewelry is actually it might be a million or 2 million people and you can find them online. And so that's sort of where I think, like, if you, if you're building something for a particular niche and you have a deep understanding of that niche, you know what they want. You're already in that community. It's never going to be easy, but it is accessible. I would say those are three things that I've noticed to be incredible tactics that have made people that have helped you build these big things.
- [33:04]
John Davids
And one I'll add, which is how I think about it, because people talk about, you know, when you make a podcast, most podcasts fail. When you start a business, most of them fail. Yeah, but that's also because as you have more people doing it, the percentage of failure goes up. The people who were going to win in the first place can probably still win. It might just take a little longer or be a little harder. But it's not an excuse to not do it just because someone who was never going to succeed in the first place tried it and failed. Like, yeah, but you know, you're not them. If this is your life's work, as you said, you're going to be in a much better position to win. So can you talk about. I'm curious. You mentioned yourself and your family and your history, and I know a bit about it. What I'm really curious, though, is you've been at Shopify for an insane amount of time. What year did you start here?
- [33:46]
Harley Finkelstein
I became a merchant in 2006, so I was one of the first merchants on the platform.
- [33:51]
John Davids
That was year one, right?
- [33:52]
Harley Finkelstein
That's right. And I joined the company about four years later.
- [33:56]
John Davids
Okay, and you're a lawyer. Before that, you were articling. So, like, how did you get into the role? How did you move into president and just like, take me through that journey.
- [34:06]
Harley Finkelstein
Yeah. So I was born in Montreal. I grew up in South Florida, went to McGill for college in Montreal. And I went. I started a T shirt business when I was in McGill. My dad wasn't around anymore, and I support myself and my sisters, my mom. So I started selling T shirts to universities across Canada. And a mentor of mine convinced me to. This is at the end of. As I was graduating McGill, a mentor of mine convinced me to go to law school, not to become an entrepreneur, not to be a lawyer, but to become a better entrepreneur. Excuse me. I never wanted to be a lawyer. That was never in the cards. But this particular mentor, his name is Phil Reimer, he was a lawyer. He really looked at law school potentially like finishing school for entrepreneurship that I would learn how to write, how to think, how to articulate myself better, how to critical reason, how to digest 4000 pages and pick out the one line that really matters. He really, I mean, the. Because he was a lawyer. And because he was teaching law part time, he felt that he understood that the curriculum of law school would be very valuable for me. And I was graduating pretty young. I was 21 when I graduated college. This mentor was teaching law at the University of Ottawa in 2005. And so he convinced me to. He convinced me to move to Ottawa. And I moved to Ottawa in 2005. Had never been to Ottawa. Had no friends or family there. Started law school there. I did a joint JD mba, joint law mba. And I started hanging out with a bunch of really great entrepreneurs at a local coffee shop. They became my friends, and we called ourselves the Young Entrepreneurs Club. That's now been rebranded to the Fresh Founders, which still exist in Toronto and Montreal and Ottawa. But we were the original group of five for what would become Fresh Founders. And one of those entrepreneurs that I met with was Toby. And he was just transitioning from selling snowboards to selling the software that he had written to sell those snowboards in the first place. And I ended up becoming one of the first people to use Shopify and back in 2006. And I fell in love with the product. I fell in love with the what it did, the super power that Shopify created. I was sitting in tax law class, I was moving my T shirt business from a wholesale, you know, B2B business to being a retail business. And sitting in tax law class, I pushed the launch button on Shopify and I was selling to a global audience. I was. I was a global retailer.
- [36:18]
John Davids
Well, the 2006 version, if you kind of look back in the way back Time machine, what did that look like?
- [36:23]
Harley Finkelstein
Oh, man, it was. It had way too many images on the site. It was way too busy. It was. It was fluorescent green. It was called smoofer and it was. I was selling licensed T shirts.
- [36:34]
John Davids
But it was enough. It was. It was enough to get. To get the job done.
- [36:37]
Harley Finkelstein
Yeah. Oh, yeah. I mean. Oh, you mean the product of Shopify? Yeah, it was great. It allowed me to add to pick a theme. It allowed me to customize the theme. It allowed me to go into liquid and customize the liquid so I can make the store look the way I wanted to. I was able to create an About Us page. I had inventory management on there. I was able to accept payments on credit cards. I had analytics available. It had all the basics that I needed for like 24 bucks.
- [36:59]
John Davids
I was like, wow, code that first site himself.
- [37:03]
Harley Finkelstein
Well, sir, what do you mean by that?
- [37:06]
John Davids
Like, back in 2006? Because the story that I've heard and you can tell me if this is right. These three guys were selling snowboards and then they decided to build a E Commerce.
- [37:13]
Harley Finkelstein
Oh no, no. Yeah. So only like let me, let me, let me give you the real story. So. So Toby moves to Canada from Germany and can't get a job because he's new immigrant. So decides he's going to build a business because you can do that as a new immigrant and decides he wants to see love snowboarding. He decides to sell snowboards on the Internet. No good software available. He tries every software on the market. None of it works really well. It's either too expensive or too clunky. He writes some code to sell these snowboards. It was called Snowdevil CA and he had a very successful online snowboard shop. It did really, really well. But he began to realize that while the snowware business was a good idea, the software business may be a great idea. That more people might be looking to sell their own products on the Internet like me and as a first year law student, like 21 year old Harley. And so. But it was great. It was, remember in 2000 and around that time, 2004, 2005, 2006, there wasn't a lot of E commerce happening. And when it was happening in Canada, it was Canadian tire. In the US it was Walmart.com, they were paying millions of dollars to these very large enterprise, you know, software companies, Oracle and SAP and IBM, you know IBM and WebSphere. You paid them millions of dollars to build an online store. It wasn't accessible to most people.
- [38:29]
John Davids
Right.
- [38:30]
Harley Finkelstein
And so this idea that you actually were able to build this thing for $24 or whatever it was at the time was dramatically innovative. It was incredibly powerful. That some young kid. Again, I wasn't, I had no technology background. I was just a kid in law school that had a T shirt business the side. And I plan on finishing law school and going right back to my T shirt business. But when I encountered Shopify using it myself, it was so dramatic. It was, it was like, it was as if I like it was this massive epiphany that what if people could effectively transfer ambition into real company? And so when I finished law school and business school, I called Toby in 2009 and said I want to join you and help you build this incredible company. Because I'd never seen anything like it. Right.
- [39:15]
John Davids
So I talked to one of your. I've talked to many of your early investors, but one in particular, who John Ruffalo who said that he was sitting in a coffee shop With Toby, I think it was their first meeting, maybe it was her second meeting. And basically over a two hour coffee and a handshake they raised, I don't know, it was 50 or 100 million. Some crazy number. You said earlier that you've had this, that you were trying to raise money in the early days. I'm curious to know what was the story and what was the reception from investors when you first started to pitch this and then how did it kind of change over the years?
- [39:47]
Harley Finkelstein
Well, we had been historically had been bootstrapped up until 2010. And in 2010 we realized it was time for us to go raise some VC and some investors in the US who want us to move to the us. So the condition of financing was move to Silicon Valley, which we were not going to do in other cases.
- [40:04]
John Davids
Why were you so opposed to that? What was the guess?
- [40:07]
Harley Finkelstein
We didn't, we didn't think, we didn't think we needed to. We thought, we thought that fundamentally that Otto was this great place to build. There wasn't like there wasn't a lot of competition for the best talent. We were really focused. Winners are very cold. So we weren't going out to the beach, stay inside and work. And I think there is something to be said for those that are listening that are building companies in secondary or tertiary cities. So again, not Toronto per se, not New York, not Chicago, not Miami or la, but in cities that are, you know, secondary cities, tertiary cities, I think you have a massive, massive advantage of being the best place to work even in a small town, relative to being the 18th best place to work in a big city. It's so true that if you look at every university across in the world, even if you take the most remote university, maybe not the most, but a remote university, the number one student there in engineering is probably close to as good as the number one student at any at an Ivy League school. Not always the case, but you will find that from time to time. And so this idea of being the very best place to work in Ottawa, which we were cultivating, the fact that we were focused, that our team was there, we just, we felt that we could build something really big and we didn't let our geographic footprint dictate our level of ambition. I always want to build a huge company. I didn't realize it'd be this big. But I always had big men and so did Toby. Toby's one of the most ambitious people I've ever met in my whole life. But John invested, I think in our series C or Series B or C. So by that point there was already some traction. But those investors, they bet on us and obviously they were rewarded for that bet, but they bet on us. But the geography was one issue. The second one going back to TAM was how can this be a billion dollar company one day when your TAM is so small? And again, what they missed was they thought that we were just trying to grow our slice of the pie and we were trying to grow the entire pie itself.
- [42:02]
John Davids
So when you look at the company today and you are one of the biggest, I heard some number, I don't know if you're 30 or 40th biggest company in the world in terms of like publicly traded. When you look at the biggest tech companies, think about like the metas, the Amazons, the Googles of the world and you look at all the different spaces that they get into, it almost feels like if there's a big technological innovation, they have to be there. Cloud computing, mobile, AI, whatever it is. How do you guys think about where to stay today? Like this is our track. Here's where we should be versus oh no, no, we need to be there. We need to build for that.
- [42:37]
Harley Finkelstein
I don't think there's any question. I think that we started as an e commerce platform for small businesses and now we're the world's retail operating system. There's no way to connect those things. There's no way to extrapolate. At least in my world, 16 years ago when I first joined to where we are now to be like, oh, I can see a straight line. What you have to do is you have to just keep ingesting as much information as you can, analyzing it and then making really good decisions. So like the reason that it was important for us to also have a point of sale product is because the future retail, we believe, will be retail everywhere. That's the reason why you hear us do things that you may say, well, why would they want to do a partnership with Roblox, as you mentioned earlier? Well, it's because some merchants some of the time are going to find great success selling their products in this place where I think there's like a hundred million or two hundred million monthly actives in Roblox. That's a lot of people spending time in Roblox. That's a new surface area where consumers are spending time everywhere. Where there's a surface area that, where consumers are spending time. We should be, we should, we should bring commerce there. Not for everyone, but for some merchants that's going to be a great Place for them to be successful. And there's this idea of requalification that you know, you, we all, we all have a role to play in our customers lives. Whether it's, you know, we are their producer of, of a physical product or where they're a software vendor or where their service provider were their dentist or were there, you know, cleaner whatever it might be. I think you always have to take that relationship you have with the people you serve and figure out what else can I do that will be valuable to them. Now you can go too far. You can, you cannot be everything to everyone. Right? So for example, you know, a lot of companies have asked us to, you know, move into restaurants and move into grocery. We don't do that. We are physical retailers. So physical retail is online, offline, everyone between. But generally the products on Shopify that are sold are actual like physical products. Things that like, you know, things you can, you can hold. There may be a point where we completely saturate the physical product market. I don't think we will, but there's a lot of, there's a huge space. But then maybe we consider going into an adjacency. But we don't go into adjacencies just because it feels good. We figure out can we be the very best at what we do. And sometimes we make mistakes. I mean, you know, we've, we figured out, sorry, my dog is barking. As you can hear one second.
- [45:03]
John Davids
I kind of like it.
- [45:04]
Harley Finkelstein
Okay. It's real life. One of the things that people don't realize about Shopify is that if you were to aggregate all of our stores, we would be the second largest online retailer in America. The reason I raised that is because that has allowed us to do, to create these massive, that allows us to have massive economies of scale. And with those economies of scale we tried to figure out what else can we do to make our merchants lives better. Payments Shopify Payments Capital. Shopify capital markets help them sell internationally. There's a bunch of these things that we're like, okay, we are in a better position to absorb the complexity than our merchants are. And because of our scale, we think we can do it in a much better way. But there's other areas where we say, look, we're just like fulfillment. For example, we tried to do fulfillment, it didn't work. Now we basically have a fulfillment network where we partner with the greatest fulfillment companies on the planet. They do a better job than we do or buy now, pay later, which was, you know, is a very large trend in E commerce. We Have Shopify, we have Shopee installments, that's powered by a firm. We have, you know, Shopify, Shopify Payments powered by Stripe. Now there's some others as well. But so we always look to figure out where are the areas where we have to do it entirely ourselves versus where can we leverage other people. And then there are areas that are just so outside the scope of our core focus that, that there are side quests and we don't do side quests. Shopify, we are a main quest company. But the math of what becomes a side quest or what is a side quest to leave away or what becomes part of main quest, that's the challenge of being an entrepreneur is figuring out what to serve your customers at, what time and how the configuration should be. Do it on your own or do you partner with somebody.
- [46:43]
John Davids
Marketing executives, business owners. If you are running a company and looking for a fresh perspective on how to grow that company, take a look at Influicity. That's my marketing agency where we work with brands across influencer marketing, podcasts, social media, AI content, paid ads and so much more. But don't take my word for it. Go to Influicity. Check out our case studies from all the amazing clients we've worked with over the last decade. That's inf l u I c I t y influicity.com and I'll see you there. Do you remember like over the years you've had, I'm sure, so many milestones where you've launched a new thing and it's failed or it's worked or whatever. Have there been really sort of big moments where maybe something that you've thought about that wasn't going to work, actually worked or vice versa? Because I'm sure there's a lot of people listening that are maybe thinking about their next move in their business. How do you think about. And then what, what have you been surprised by but by like sort of what works as you grow the business?
- [47:43]
Harley Finkelstein
I mean, if you were listening right now and you're thinking about building a business on Shopify or not, I hope you build it on Shopify. But otherwise one of the things I think that a lot of entrepreneurs fall victim to is there are these boring products that I've been noticing lately that are these billion dollar opportunities. You know, my, my daughter, as in camp as Sleepway Camp, her first year at Sleepway Camp and she brought her Stanley water bottle and we were packing it up and I was looking at the Stanley water bottle and she's like I think she brought two of them to camp and all her friends brought them too. And I was like, wow, a hundred year old company, a tool company reinvented themselves for this sort of social media age. They 10x their sales in 4 years through redesign, through collabs to influencers. That is unbelievable. Or I heard the story of this company called Prose P R O S E. By the way, they're not on Shopify. If anyone knows Proz, please tell them to call me because I really want them on. But Proz is making personalized shampoo based on hair type. So what you do is a customer does this like in depth like questionnaire. Then they get these customized products and I read an article that they're doing about $100 million annual revenue, 80% recurring customers.
- [48:54]
John Davids
Wow.
- [48:56]
Harley Finkelstein
Shampoo is not a sexy space. The, like the water bottle space is not that sexy. You know, there are these stores on Shopify that I love, Ritual does supplements or seed probiotics. You know, I think this trend of entrepreneurs taking existing boring products and creating these, a better version of them, or even aspirational brands around them is really, really fascinating. And if you go to a meetup or you go to a tech event, or you go to an entrepreneurship event, you're not going to hear about these things. But ultimately they work and they work at incredible scale. You know, there's a skirt that was worn by Taylor Swift, speaking of my daughter, I took her to the Taylor Swift concert in November in Toronto and there was a skirt that she wore. And I think the number that I saw was her wearing it drove a 17,000 percent 1 7. So 17,000% surge in sales for that particular skirt. There's no way for anyone to business plan, write this out, to draft this out. I think the best entrepreneurs kind of read the tea leaves, assess what's happening. They're willing to take risks, but they learn every step of the way. And then eventually they figure out, okay, this is the direction I'm going to go in and I'm going to be obsessive about this. And then they go all the way with it. And I think one of the greatest parts about building in 2025 or frankly 2028 or 2035 is the tools that historically were inaccessible to entrepreneurs, small businesses, solo entrepreneurs that and were sort of limited and were only available to the biggest companies. They're now available to everybody. And that is incredibly unfair advantage. And then on top of that, when you add in things like Sidekick, which is our AI tool built into Shopify, the reason we call it Sidekick is because it is literally like having the greatest co founder on the planet, someone that knows everything about your business, someone that knows everything about Shopify. They are the greatest, you know, product description writer in the world. They're the greatest marketer, they're a data scientist. For you, this is becoming really interesting now. And I think you're going to see a lot more of these billion dollar companies created by solopreneurs in the next 10 years relative to the last 10 at an incredible scale.
- [51:09]
John Davids
And I think it's safe to say on that note that AI really, if you look at what Shopify and E Commerce have been over the last 20 years, like, you can kind of hit the reset button because AI is going to totally change that for the better and give people way more opportunity. If you thought it was easy to launch an E Commerce store before, wait till you do it now with the power of AI.
- [51:27]
Harley Finkelstein
Yeah, that's exactly right. And one of the reasons that I think some small businesses historically did not get as big as the bigger companies is, is capacity. You know, I have this. I have this hobby every Sunday afternoon, myself and my best friend, we have a podcast called Big Shot. Big Shot is an archive of the greatest Jewish entrepreneurs of the last half century. These icons, people that, you know, Izzy Sharp created the Four Seasons, or Linda Resnick who created Fiji Water, or Bobby Kotick who created Activision Blizzard. He's amazing people. And one of the people we interviewed was Mickey Drexler, who ran the Gap. He was a. He was the creator of Old Navy and, and pretty much put, you know, J. Crew on the map. He talks about the size of their teams at the Gap for things like merchandising and product photography and product descriptions and discounting and how to create those massive teams that Mickey had building the gap in the 80s and 90s. You all have that for free with Shopify. In fact, you have a better version of that and it's included in Shop. Like there's no additional cost for it. It's embedded into the product. This is amazing. And that's what I mean when I say this is truly the glory or the golden age of entre. This is the golden age of entrepreneurship because of the tools available. And when you match people with great ambition and incredible tooling, you get incredible, you know, success, incredible impact.
- [52:45]
John Davids
Well, Harley, I hope people feel inspired. I hope everyone goes out right now. If you're on the edge of building your business or taking that next leap, like, I don't know, I don't know. What else you need? Guys, I'm feeling pumped right now.
- [52:55]
Harley Finkelstein
Well, let me, let me leave you with one thing because you know, we talked a bit about the Shopify story. We talked a bit about my story. And you know, I am a non technical leader running a tech company. And one of the things I think that most people miss is that often a lot of people end up building companies with people just like them, people they'd be friends with in high school. And what I always tried to offer Shopify and Toby was a very complimentary skill set. And I think if you're listening and you're looking to bring in someone to find a co founder to go work for an early stage company, this idea of adding value everywhere is really important. For me, that was storytelling that I made. My focus then and my focus now is the people at Shopify are building incredible products. My job is to make sure that everybody knows about it, everyone uses it. And I think that this idea of finding your unique skill, your superpower and then sharpening it over time in service of a much bigger mission, for me, that's Shopify and entrepreneurship. And that is an incredible way to build something of great meaning. And it's also a great way to find your life's work. My life's work is Shopify. It's storytelling, the story of Shopify. And I think the way to find that is to be around people that are not like you. And I think a lot of us end up falling into the trap of we start companies, we hang out with people that we would have been friends with in high school. And I don't think that's always the most, I don't think that's always valuable.
- [54:21]
John Davids
You made a really good point and you know, we sort of glossed right over it. But I'll just, I'll put a pin in it now because I think it might have been the biggest takeaway for me is that your life completely changed when you took a risk, moved to Ottawa and started hanging out with a group of guys. And one of those guys was the guy who created Shopify. And then boom, it changed your entire life. And like if you hadn't decided to go to that school, if you hadn't decided to join that group, like we wouldn't be talking right now. You wouldn't be doing what you're doing. And so it really is those moments of that you don't think are necessarily going to, to anything in particular. Like that's what life is made of.
- [54:56]
Harley Finkelstein
Totally agree. No, it's been, it's I totally agree. And it is. It's a wonderful thing to find your life's work. It's a wonderful thing to find the thing that you love doing. I mean, you know, I've often said that, you know, you're doing your life's work when you know your Monday morning. When you wake up that Monday morning, it feels like a Saturday morning. And when you find that there's nothing better, that's it, man.
- [55:14]
John Davids
Okay, this one's for the entrepreneurs. Harley, I so appreciate it. This was awesome.
- [55:19]
Harley Finkelstein
Thank you for having me.
- [55:20]
John Davids
If you like this, then you're going to love my newsletter. Subscribe now at John Davids. Com.