WEBVTT - Shopify: The Business That Helps Build Businesses 0:00:15.316 --> 0:00:22.956 Pushkin. When the pandemic hit in twenty twenty and everything 0:00:22.996 --> 0:00:26.276 shut down, hundreds of thousands of people in the US 0:00:26.316 --> 0:00:30.476 reacted in a surprising way. They started new businesses. This 0:00:30.596 --> 0:00:33.756 isn't just some anecdotal thing, right. You can see it 0:00:33.756 --> 0:00:36.236 in the data. In twenty twenty, the rate of new 0:00:36.276 --> 0:00:39.636 business formation went through the roof. Now two and a 0:00:39.676 --> 0:00:42.916 half years later, the economy has reopened. Things are sort 0:00:42.956 --> 0:00:46.916 of back to normal, but entrepreneurship hasn't died down that much. 0:00:47.236 --> 0:00:49.956 The rate of new business formation is still way up 0:00:49.996 --> 0:00:52.556 from where it was before the pandemic. In a world 0:00:52.596 --> 0:00:55.956 that feels scarier and riskier than ever, people are more 0:00:55.996 --> 0:01:00.036 willing than ever to bet on themselves. They're becoming entrepreneurs. 0:01:04.036 --> 0:01:06.596 I'm Jacob Goldstein and this is What's Your Problem, the 0:01:06.636 --> 0:01:09.396 show where entrepreneurs and engineers talk about how are going 0:01:09.396 --> 0:01:11.716 to change the world once they solve a few problems. 0:01:11.996 --> 0:01:15.196 My guest today is Harley Finkelsty, a man who may 0:01:15.236 --> 0:01:18.596 love entrepreneurship more than anyone I have ever met, and 0:01:18.676 --> 0:01:21.116 this trade is a good fit for his job. Harley 0:01:21.236 --> 0:01:26.236 is the president of Shopify. Shopify started out building software 0:01:26.276 --> 0:01:29.836 that makes it easy for people to start online stores. Today, 0:01:29.956 --> 0:01:32.756 millions of stores use Shopify, and the company is trying 0:01:32.756 --> 0:01:35.436 to solve a new problem. How do you aggregate the 0:01:35.476 --> 0:01:38.636 power of millions of small businesses to help them compete 0:01:38.676 --> 0:01:44.676 against giants. My conversation with Harley started with the beginnings 0:01:44.676 --> 0:01:46.996 of his life as an entrepreneur. He was a kid 0:01:47.036 --> 0:01:50.036 who was so impressed by the DJs he saw playing 0:01:50.076 --> 0:01:52.996 at his friends bar Mitzvah's that he started his own 0:01:53.156 --> 0:01:56.716 DJ company. I'm started at DJ company because I want 0:01:56.756 --> 0:02:00.316 to be at DJ and nobody would hire me. And 0:02:00.436 --> 0:02:04.036 how old were uh? And it was my dad that said, 0:02:04.076 --> 0:02:06.316 why don't you start your own company? High yourself? And 0:02:06.356 --> 0:02:08.036 so I did? And actually when my dad did my 0:02:08.076 --> 0:02:10.076 dad and have my parents very much money, but my 0:02:10.116 --> 0:02:12.076 dad made me a business card and the business card 0:02:12.116 --> 0:02:16.276 had said Harley Finkelstein DJ. And that was the endorsement 0:02:16.396 --> 0:02:18.036 or the validation, whatever you want to call it. That 0:02:18.076 --> 0:02:21.276 I needed to have the hutzpah or audacity to walk 0:02:21.316 --> 0:02:23.636 next door to my neighbor and say, um, can I 0:02:23.716 --> 0:02:27.156 DJ your son's bar Mitza and what they say? They 0:02:27.196 --> 0:02:31.476 said no? And so then I mean, were you always 0:02:31.516 --> 0:02:33.556 starting companies? Was it just can can you draw? A 0:02:33.556 --> 0:02:35.956 line from there to starting a T shirt company when 0:02:35.996 --> 0:02:39.036 you're in college. Yeah. During during high school, um, I wasn't. 0:02:39.476 --> 0:02:41.876 I wasn't really in sports. I wasn't really into like 0:02:42.036 --> 0:02:44.436 you know, um different like school clubs. I was. I 0:02:44.436 --> 0:02:46.076 was an entrepreneur and so I was always trying to 0:02:46.116 --> 0:02:48.116 start different companies. I started a bunch of smaller ones 0:02:48.116 --> 0:02:50.596 that didn't work out. Started a poker chip company, making 0:02:50.596 --> 0:02:52.756 poker chips. I started a company that had was a 0:02:52.756 --> 0:02:56.036 slipper company called Woolen Stock, didn't do very well. I 0:02:56.036 --> 0:02:58.316 started a bunch of small, little side houses like that. 0:02:58.756 --> 0:03:00.876 But it was only in college when I was I 0:03:00.916 --> 0:03:02.836 went to McGill in two thousand and one where I 0:03:02.876 --> 0:03:05.996 needed to actually start something for real because my mom 0:03:06.036 --> 0:03:08.396 and sisters my dad was around anymore. Mom and sisters 0:03:08.436 --> 0:03:11.116 needed needed the support financially. And that's when I started 0:03:11.116 --> 0:03:13.236 making T shirts universities and that was really the first 0:03:13.276 --> 0:03:16.596 business that made any real money. Can you give me? 0:03:16.636 --> 0:03:19.796 I feel like there's this very like rom com meat 0:03:19.876 --> 0:03:23.796 cute of how you get to shopify. There is I 0:03:24.076 --> 0:03:26.996 don't know if it's rom Comms, it's a meat cute. 0:03:28.156 --> 0:03:30.476 I moved to Ottawa in two thousand and five to 0:03:30.516 --> 0:03:32.396 go to law school, not to become a lawyer, but 0:03:32.516 --> 0:03:36.356 to become a better entrepreneur. Ottawa, Canada. That's right, yeah. 0:03:36.516 --> 0:03:39.676 Mentor of mine told me the teacher business was cute 0:03:40.596 --> 0:03:43.356 but had never really had any real potential of scale, 0:03:43.756 --> 0:03:45.396 and he was teaching law the next year at the 0:03:45.436 --> 0:03:47.996 University of Ottawa as a guest lecturer. Convinced me that 0:03:48.116 --> 0:03:51.836 law school might be like finishing school for entrepreneurship, and 0:03:51.916 --> 0:03:54.276 it very much. Was moved to Ottawa, Canada in two 0:03:54.276 --> 0:03:56.636 thousand and five, had no friends, had no family there, 0:03:57.276 --> 0:04:00.196 asked where the entrepreneurs hung out and was directed to 0:04:00.236 --> 0:04:02.756 a coffee shop in a small little town area of 0:04:02.796 --> 0:04:05.236 Ottawa called the Glebe and I walk in. There were 0:04:05.276 --> 0:04:08.236 five other entrepreneurs and one of those entrepreneurs was this 0:04:08.276 --> 0:04:11.996 brilliant programmer name Tobias lute K, and he just moved 0:04:11.996 --> 0:04:14.636 to Canada a year or two earlier because he met 0:04:14.676 --> 0:04:18.036 a girl in Canada and couldn't work because he didn't 0:04:18.036 --> 0:04:21.316 have his working papers. So started a business selling snowboards 0:04:21.356 --> 0:04:24.076 on the internet. And in two thousand and four, there 0:04:24.156 --> 0:04:26.116 was two ways to sell a product on the internet. 0:04:26.956 --> 0:04:31.156 You either posted your products on a marketplace, or you 0:04:31.276 --> 0:04:34.596 paid some big enterprise software company millions of dollars total 0:04:34.876 --> 0:04:39.116 marketplace like eBay, or was Amazon market Amazon wasn't really marketplace, 0:04:39.116 --> 0:04:41.436 so basically eBay. There was a couple others like that, 0:04:41.716 --> 0:04:44.796 but but eBay, that's exactly right. The alternative was you 0:04:44.876 --> 0:04:48.396 would you would go and spend a million dollars with 0:04:48.516 --> 0:04:52.716 IBM they had a product called WebSphere or ATG or SAP, 0:04:52.996 --> 0:04:56.076 these big companies, and he didn't have a million dollars. 0:04:56.236 --> 0:04:57.676 So you wrote a piece of software to sell these 0:04:57.676 --> 0:05:01.116 snowboards and very quickly realized that other people may also 0:05:01.356 --> 0:05:03.116 want to use the software to sell their own products. 0:05:03.396 --> 0:05:04.996 And I was one of those first people. I became 0:05:04.996 --> 0:05:07.596 one of the first merchants on Shopify, and I moved 0:05:07.636 --> 0:05:10.316 my T shirt business to Shopify in two thousand and six. 0:05:10.596 --> 0:05:11.996 And so in two thousand and nine I called Toby 0:05:11.996 --> 0:05:13.356 and said, I'd love to join you in a small 0:05:13.396 --> 0:05:15.796 handful of other people and help you build this company 0:05:16.116 --> 0:05:18.356 and make it easier for more people to try their 0:05:18.356 --> 0:05:21.156 hand in entrepreneurship. And I was about twelve or thirteen 0:05:21.196 --> 0:05:27.836 years ago. Great and so Shopify now is giant, right, 0:05:28.556 --> 0:05:30.756 And you know, It's interesting because I feel like for 0:05:32.076 --> 0:05:35.756 most people, Shopify is invisible. It's maybe like the way 0:05:36.076 --> 0:05:39.116 you know, Intel was in nineteen ninety before they started 0:05:39.156 --> 0:05:41.916 putting their name on every computer or something. Shopify is 0:05:41.956 --> 0:05:43.796 the thing behind the thing. So it's I mean, it 0:05:43.876 --> 0:05:47.356 seems like pretty close to if you've bought something online 0:05:47.756 --> 0:05:50.636 and it wasn't Amazon, and it wasn't Walmart, it was 0:05:50.636 --> 0:05:53.996 probably a Shopify store, Right, there's a good chance it's 0:05:54.036 --> 0:05:58.396 a store that's running Shopify. But just so briefly, like, 0:05:58.476 --> 0:06:01.756 what's the briefest version of what is Shopify. Shopify is 0:06:01.756 --> 0:06:04.516 the easiest way to sell a product to a consumer, 0:06:04.716 --> 0:06:07.556 and the vast majority of our merchants uses to sell online. 0:06:07.676 --> 0:06:10.076 And as we've grown, we're now ten percent of all 0:06:10.076 --> 0:06:12.356 e commerce in the US. As we've grown, one of 0:06:12.396 --> 0:06:13.876 the things we've also done is try to figure out 0:06:13.956 --> 0:06:16.876 what are the other elements of starting and running and 0:06:16.876 --> 0:06:22.636 scaling a business that is difficult. So whether it's accepting payments, 0:06:22.916 --> 0:06:26.156 or it's shipping, or it's raising money having capital, we've 0:06:26.156 --> 0:06:28.636 gone ahead and gone to these other we call merchant solutions. 0:06:28.916 --> 0:06:30.556 And what we're trying to do is we're trying to 0:06:30.636 --> 0:06:33.836 use our size, our economy of scale being this ten 0:06:33.876 --> 0:06:36.356 percent of all e commerce, which technically, if we were 0:06:36.396 --> 0:06:38.876 a retailer, we would be the second largest online retailer 0:06:38.876 --> 0:06:42.756 in America just given our sales volume. So companies using 0:06:42.756 --> 0:06:47.636 Shopify sell more stuff than anybody else online except Amazon. 0:06:47.676 --> 0:06:49.836 That's right, Yeah, that's exactly right. So if you compared 0:06:49.876 --> 0:06:52.196 to Target, for example, or compared to best Buy, Shopify 0:06:52.196 --> 0:06:54.636 and aggregate store sells more than those places. So when 0:06:54.676 --> 0:06:57.276 we go to negotiate rates on payments or on shipping 0:06:57.556 --> 0:07:00.796 or on capital, we're doing so as effectively the second 0:07:00.836 --> 0:07:03.476 largest online retailer in America. And then we give those 0:07:03.476 --> 0:07:06.396 economies of scale directly to the entrepreneurs, and we think 0:07:06.396 --> 0:07:09.316 that's what really helps them level the playing field, like 0:07:09.556 --> 0:07:13.196 get a sense of the scope of what you do. 0:07:13.316 --> 0:07:16.796 I thought it would be useful to to just talk 0:07:16.796 --> 0:07:19.796 through an example. Sure, right, so I have this podcast 0:07:19.836 --> 0:07:22.556 it's called What's Your Problem? And like we don't have 0:07:22.596 --> 0:07:25.796 any merch why not? Why not? Indeed? Yeah, so let's 0:07:26.036 --> 0:07:28.716 white T shirts or black T shirts? Sure? Or like 0:07:28.876 --> 0:07:30.836 we could have fun with it, right, we could like 0:07:31.036 --> 0:07:33.436 have like a magic eight ball that says, what's your problem? 0:07:33.436 --> 0:07:36.676 And it has you know answers, you're you're not grinding 0:07:36.716 --> 0:07:39.316 hard enough, or you haven't found product market fit or whatever. 0:07:40.156 --> 0:07:43.436 So say I come to shop, if I sign up 0:07:43.436 --> 0:07:45.756 for shop, if I like, what is the set of 0:07:45.796 --> 0:07:48.196 things you can do for me? Yeah, so you come 0:07:48.236 --> 0:07:51.556 to shop fl dot com and for twenty nine dollars 0:07:51.596 --> 0:07:53.276 you can se a beautiful online store. You can pick 0:07:53.316 --> 0:07:55.396 a theme, or you can design your own theme, and 0:07:55.476 --> 0:07:57.436 you can start adding products. You can say I'm going 0:07:57.436 --> 0:07:59.356 to add this hat or this T shirt, this water bottle, 0:07:59.476 --> 0:08:01.916 or you can in fact, if you if you're not 0:08:01.996 --> 0:08:05.196 sure exactly what's going to resonate ironically around the product 0:08:05.236 --> 0:08:07.916 market fit example you gave, you can actually do something 0:08:07.956 --> 0:08:10.156 called print on demand, where you actually put up a 0:08:10.156 --> 0:08:12.316 bunch of shirts without even making those shirts yet, and 0:08:12.356 --> 0:08:14.876 the ones that sell will get printed automatically and then 0:08:14.956 --> 0:08:17.356 drop shipped to your to the consumer. But you come on, 0:08:17.396 --> 0:08:19.556 you build this beautiful store in a matter of an hour. 0:08:19.716 --> 0:08:22.396 You have you know, Jacobs merch dot com all set up. 0:08:22.436 --> 0:08:25.316 What's your problem and what com? Okay, what's your problem? Sure? Um, 0:08:25.516 --> 0:08:27.396 what's your problem? Dot com? Well, the ways that taken 0:08:27.956 --> 0:08:30.916 I'm sure it is okay, problem dot dot com or 0:08:31.036 --> 0:08:33.476 like dot okay that's good, or dot co or something 0:08:33.516 --> 0:08:36.796 like that. Um, And so you set up your online store, 0:08:36.836 --> 0:08:39.556 you add inventory, you set up your payment gateway, and 0:08:39.596 --> 0:08:41.876 now you're ready to sell. Now you can launch your 0:08:41.876 --> 0:08:44.676 marketing campaign. You can post ads on Facebook or Instagram 0:08:44.796 --> 0:08:46.916 or Google from there, or TikTok or snapped it or 0:08:46.956 --> 0:08:49.236 anywhere for that matter. When orders come in, you go 0:08:49.276 --> 0:08:51.396 to your shop fight admin and that really is your 0:08:51.436 --> 0:08:54.396 central retail operating system. That's sort of the the the 0:08:54.956 --> 0:08:57.716 central nervous system of your of your business. And orders 0:08:57.756 --> 0:08:59.996 come in, you can fulfill them. You can use Shopify 0:09:00.076 --> 0:09:02.356 to do fulfillment. You can use us to buy shipping 0:09:02.396 --> 0:09:05.156 labels if you want to see where your traffic is 0:09:05.156 --> 0:09:06.916 coming from. And you want to understand, I just I 0:09:06.996 --> 0:09:08.796 just want to slow down a little bit there. So 0:09:09.196 --> 0:09:11.436 when you say I can use shopify to do fulfillment, 0:09:11.556 --> 0:09:14.436 this is like new ish for you. Right, stuff you 0:09:14.476 --> 0:09:17.636 described up until then it feels like sort of Shopify classic. Right, 0:09:17.676 --> 0:09:20.156 It's like all the online stuff, it's all the just 0:09:20.276 --> 0:09:22.596 software stuff. And I feel like there is this shift 0:09:22.636 --> 0:09:26.036 you're making now into the physical world and a number 0:09:26.076 --> 0:09:27.956 of dimensions, right, And fulfillment is a piece of that. 0:09:27.996 --> 0:09:30.756 You had an acquisition last year, right, Right, So fulfillment 0:09:30.796 --> 0:09:34.676 seems obviously it's hard to write software. But software it's 0:09:34.676 --> 0:09:36.796 like famously a good business. Right, You're write the software 0:09:36.836 --> 0:09:38.716 once and then you can sell it as many times 0:09:38.716 --> 0:09:42.276 you want. There's no marginal cost. Fulfillment seems harder if 0:09:42.396 --> 0:09:44.476 I dare say so, I mean, tell me about getting 0:09:44.476 --> 0:09:45.836 into that side of the business. So what does it 0:09:45.836 --> 0:09:47.396 mean that you can do my fulfilm? Yeah? Sure, So 0:09:47.596 --> 0:09:48.876 just take a step back for a second. While the 0:09:48.916 --> 0:09:51.236 Internet sort of democratize a lot of things, the one 0:09:51.236 --> 0:09:53.356 thing you didn't really do very well was help with 0:09:53.676 --> 0:09:56.476 sort of you know, atoms where software's bits and bites 0:09:56.516 --> 0:09:59.876 atoms and moving product that didn't actually get better through 0:09:59.876 --> 0:10:02.596 the advent of the Internet. But going back to that 0:10:02.636 --> 0:10:05.156 conversation we were having a few minutes ago, because we 0:10:05.236 --> 0:10:07.476 now have such scale, because we are ten percent of 0:10:07.516 --> 0:10:09.876 all e commerce in the US, we thought about this. 0:10:09.876 --> 0:10:12.036 We're like, well, what if we can actually help small 0:10:12.076 --> 0:10:15.116 businesses and larger businesses with fulfillment, And so we began 0:10:15.156 --> 0:10:17.596 to create this network of third party warehouses where we 0:10:17.676 --> 0:10:20.636 tie them together using our software. It's called FMS, fulfillment 0:10:20.636 --> 0:10:25.036 management software, and any any third party logistics company can 0:10:25.116 --> 0:10:27.516 apply to be part of this logistics network. And third 0:10:27.556 --> 0:10:30.476 party logistics is another giant kind of behind the curtain, 0:10:30.556 --> 0:10:33.436 and exactly it's it's who ships you everything. But the 0:10:33.516 --> 0:10:36.196 idea is not necessarily that we wanted to get into logistics. 0:10:36.356 --> 0:10:38.476 It's that it's one of those barriers to success that 0:10:38.516 --> 0:10:41.756 we thought we can play a role in. So I'm curious, 0:10:42.196 --> 0:10:46.596 as you're expanding into these different parts of business, basically, 0:10:47.796 --> 0:10:50.956 what's what's been particularly hard? What are you still trying 0:10:50.956 --> 0:10:54.076 to figure out how to do? What went wrong? What 0:10:54.156 --> 0:10:56.916 was harder than you expected? Um, Initially we decided we 0:10:56.956 --> 0:10:58.716 don't want to build our own warehouses. It's just the 0:10:58.996 --> 0:11:01.516 business model that we are using is different than Amazon. 0:11:01.796 --> 0:11:04.036 We are not doing one day delivery. We don't think 0:11:04.076 --> 0:11:07.716 we need to own everything ourselves, and so fundamental we thought, hey, 0:11:07.716 --> 0:11:09.836 there are all these warehouses all over the that are empty. 0:11:09.956 --> 0:11:11.356 What if we made them part of the network and 0:11:11.876 --> 0:11:16.276 effectively configured them using our software. Not every partner warehouse 0:11:16.436 --> 0:11:18.836 was very good, some of them actually were really bad. 0:11:19.196 --> 0:11:21.356 But because we were using a network of warehouses, and 0:11:21.436 --> 0:11:24.676 because Shopify's brand was the thing connecting all these things, 0:11:24.676 --> 0:11:27.676 even if it was a third party warehouse, we were responsible. 0:11:27.996 --> 0:11:30.156 And in the first couple of in the first year 0:11:30.236 --> 0:11:33.476 or so of fulfillment and shipping a Shopify, we really 0:11:33.516 --> 0:11:35.276 noticed that some of the warehouses were just not hitting 0:11:35.276 --> 0:11:37.596 a quality control standard and so we had to take 0:11:37.596 --> 0:11:39.996 some of them offline. And that was and does that mean, 0:11:40.036 --> 0:11:42.276 I mean, does that mean basically, customers don't get stuff 0:11:42.276 --> 0:11:44.236 when they are told they'll get stuff, or it's broken. 0:11:44.276 --> 0:11:46.236 It could be accommodation thing. So if they're doing some 0:11:46.276 --> 0:11:48.516 sort of look what's called custom kitting, where they need 0:11:48.556 --> 0:11:50.556 to sort of the product hast to look. Let's say 0:11:50.556 --> 0:11:52.316 you want to, you know, for your merch company, you 0:11:52.356 --> 0:11:54.236 want to send out your box with stickers on it. 0:11:54.396 --> 0:11:56.676 Maybe the stickers are misplaced, Maybe it doesn't get there 0:11:56.716 --> 0:11:58.676 on time, Maybe it's the wrong product, maybe it's broken. 0:11:58.796 --> 0:12:00.836 It could be a combination of all those things. But 0:12:00.876 --> 0:12:02.636 we actually had to pull some partners out of the 0:12:02.716 --> 0:12:05.876 network because they weren't hitting a certain quality control thing. Which, again, 0:12:05.956 --> 0:12:09.116 even though we're leveraging third parties from the merchant perspective, 0:12:09.156 --> 0:12:11.636 to the millions of merchants you shopify, they don't really 0:12:11.636 --> 0:12:14.436 care who salt it is because customers it don't care. 0:12:14.476 --> 0:12:17.156 It's always Shopify's faults. Yeah, and that was really really 0:12:17.236 --> 0:12:20.436 challenging for us. I mean it is extraordinary, Like fundamentally 0:12:20.436 --> 0:12:24.636 there you're competing against Amazon, right, and like Amazon is 0:12:24.676 --> 0:12:28.196 so good at that, it's unbelievable. Like I'm old enough 0:12:28.196 --> 0:12:31.796 to remember ordering things before Amazon existed, right, and they're 0:12:31.876 --> 0:12:34.356 so much better than anything that came before. And you 0:12:34.396 --> 0:12:36.796 have to be at least that good. Yeah, And so 0:12:37.236 --> 0:12:39.956 I respectfully disagree. I don't think we actually have to 0:12:39.956 --> 0:12:41.756 be We have to be, we have to be as 0:12:41.836 --> 0:12:43.316 good a thing we do, but we don't have to 0:12:43.316 --> 0:12:45.196 do is we don't have to focus on like like 0:12:45.236 --> 0:12:47.196 this thing, this one day to delivery thing is just 0:12:47.276 --> 0:12:49.916 not that important for most merchants and most consumers. You 0:12:49.956 --> 0:12:52.996 have to be that reliable and that good exactly doing 0:12:53.036 --> 0:12:56.436 what you'll say you'll do. It's like Amazon is extraordinary 0:12:56.556 --> 0:13:00.156 at that. For Shopify, people's livelihoods are at stake. And 0:13:00.196 --> 0:13:03.036 because people's livelihoods are at stake Shopify, for most of 0:13:03.076 --> 0:13:05.196 the merchants on shop for the millions of merchants, we 0:13:05.236 --> 0:13:07.556 are the most important piece of software they use and 0:13:07.596 --> 0:13:09.636 so the term it uses exactly the right one. We 0:13:09.756 --> 0:13:12.116 have to be reliable and I think we've done that really, 0:13:12.116 --> 0:13:17.276 really well. But but that is a constant challenge. After 0:13:17.316 --> 0:13:20.156 the break probably talks about the challenges of growth and 0:13:20.316 --> 0:13:31.876 of layoffs. Now back to the show, So what's what's 0:13:31.956 --> 0:13:34.716 like the next thing you're trying to do? Like what 0:13:34.876 --> 0:13:36.516 so that's what? So you you? I mean, do you 0:13:36.596 --> 0:13:39.956 have the warehouse situation? Is that now that you've got 0:13:39.996 --> 0:13:42.556 that's in a really good place, what's the new warehouse 0:13:42.596 --> 0:13:44.876 problem for you? Yeah? And there's always new new sort 0:13:44.916 --> 0:13:47.156 of merchant challenges to solve. I mean, anyone who's been 0:13:47.196 --> 0:13:50.956 following the news knows that Apple has made advertising and 0:13:51.036 --> 0:13:54.396 particularly privacy changes that make it more difficult to target 0:13:54.436 --> 0:13:59.036 a particular consumer. So, for example, I love writing motorized skateboards. 0:13:59.036 --> 0:14:01.076 I've been a motorise skateboard guy for a very very 0:14:01.076 --> 0:14:06.076 long time. Um My interests are technology because you know, 0:14:06.076 --> 0:14:09.316 I lead a technology company and skateboarding. And so if 0:14:09.316 --> 0:14:11.356 you are boosted board or you're one Wheel, do you 0:14:11.356 --> 0:14:14.916 know those companies? Yeah, the one Wheel is like the 0:14:14.956 --> 0:14:19.996 guy on one it looks really cool. Yeah, it's like 0:14:19.996 --> 0:14:21.916 a boost board it's just like a skateboard, but the 0:14:21.996 --> 0:14:24.436 dude's not pushing exactly. It has motorized right, So if 0:14:24.436 --> 0:14:27.516 you're a boosted board or you're one wheel the ven 0:14:27.556 --> 0:14:30.676 diagram overlap of Harley's interest which is technology and skateboard, 0:14:30.756 --> 0:14:33.076 I am the perfect ideal customer for it, so they 0:14:33.076 --> 0:14:35.116 can target me really really well, Well, that has become 0:14:35.116 --> 0:14:36.996 a lot more difficult now because of some of the 0:14:37.076 --> 0:14:40.596 change that Apple has made, so UM what roads. Really 0:14:40.596 --> 0:14:42.716 it's harder for them to target you on like Facebook. Yeah, 0:14:42.716 --> 0:14:46.116 they can target because it's much harder to buy targeted 0:14:46.476 --> 0:14:49.036 Facebook and Instagram ads. That's exactly right. So that has 0:14:49.076 --> 0:14:51.916 made it more difficult, more challenging for small business to 0:14:52.196 --> 0:14:55.356 find their their target customers. Well, we figured out was well, 0:14:55.396 --> 0:14:57.996 if we look at um Shopify as a whole, we 0:14:58.036 --> 0:14:59.756 actually have a lot of good indication, a lot of 0:14:59.756 --> 0:15:02.156 good insight on the type of customers that might be 0:15:02.236 --> 0:15:04.916 right for your particular product. So if you're on Shopify 0:15:05.196 --> 0:15:07.676 and shopfy plus in particular, where this product is this 0:15:07.716 --> 0:15:10.036 feature sits, you can say I want to send more 0:15:10.076 --> 0:15:11.996 of these three products here, I have ten skews, but 0:15:11.996 --> 0:15:13.996 I want to send more of these three skews, you 0:15:14.156 --> 0:15:17.556 feed it into the audience's algorithm, we feed you back 0:15:17.596 --> 0:15:20.196 with the sample audience or a lookalike audience. And now, 0:15:20.236 --> 0:15:22.356 when you're buying ads on some of these ad platforms, 0:15:22.436 --> 0:15:25.076 whether it's Facebook or Instagram or any the others Google 0:15:25.076 --> 0:15:27.756 for example, you don't just upload your product description and 0:15:27.756 --> 0:15:30.756 your product photography and your meta information. You also upload 0:15:30.836 --> 0:15:33.036 this lookalike audience. And we know by doing so you 0:15:33.076 --> 0:15:35.116 will get a higher return dance. And are you I mean, 0:15:35.116 --> 0:15:38.036 that's sort of the kind of ad targeting version of 0:15:38.076 --> 0:15:42.556 your big idea, which is aggregating, which is scale basically right, 0:15:42.556 --> 0:15:45.516 it's bringing the power of scale to small businesses, right, 0:15:45.676 --> 0:15:47.596 when that's the big idea. Yeah, when you combine a 0:15:47.676 --> 0:15:49.316 lot of tiny little lights, you end up with the sun. 0:15:49.476 --> 0:15:52.356 Is a question that I've heard, you know, but a 0:15:52.436 --> 0:15:55.036 lot a lot of tints. But more importantly, think about 0:15:55.076 --> 0:15:57.116 it this way. When you sell in a marketplace, if 0:15:57.116 --> 0:15:59.796 you're a brand, you are able to leverage the economy 0:15:59.836 --> 0:16:02.396 of scale of that market Sell on a marketplace like Amazon, 0:16:02.476 --> 0:16:04.596 like any any Bay or something or Etsy or any 0:16:04.596 --> 0:16:06.516 of those, you get to leverage the economy's a scale 0:16:06.556 --> 0:16:10.676 of those marketplaces. When you build a custom online store 0:16:10.716 --> 0:16:13.716 on your own, you get independence, right, you own your customer, 0:16:13.916 --> 0:16:16.796 your customers, you own everything on Shopify, you get both. 0:16:16.836 --> 0:16:19.076 You get independence and you get this massive economy as 0:16:19.116 --> 0:16:20.556 a scale, and we think that makes us a really 0:16:20.636 --> 0:16:24.156 unique company. You seem very confident. Actually you have a 0:16:24.276 --> 0:16:28.276 very confident vibe. But I'm curious, like, what what are 0:16:28.276 --> 0:16:30.796 you worried about? Right, you're running this big company. It's 0:16:30.836 --> 0:16:33.516 been tough times in various ways. When you think about 0:16:33.516 --> 0:16:36.276 the company, what worries you? A bunch of things. Um, 0:16:36.396 --> 0:16:39.516 we're now you know, we have but ten thousand people 0:16:39.516 --> 0:16:42.556 to work at the company today. That's that's a lot 0:16:42.556 --> 0:16:44.276 of people making sure everyone's working at the right thing 0:16:44.316 --> 0:16:46.636 at the right time. That is obviously you know, how 0:16:46.676 --> 0:16:49.196 do you scale culture? That's one thing. The second thing 0:16:49.196 --> 0:16:51.356 that I worry about is um I think that it 0:16:51.436 --> 0:16:53.836 is getting harder for in some cases, for small businesses 0:16:54.116 --> 0:16:56.556 to grow and to succeed. I think there's a lot 0:16:56.556 --> 0:16:59.596 of aggregation happening, and I think that it's like I 0:16:59.636 --> 0:17:01.676 think for as a consumer, I'll say that's not even 0:17:01.716 --> 0:17:04.196 as a president Shopify, I think for retail to be 0:17:04.236 --> 0:17:06.956 interesting and exciting, it needs to have more voices, not less, 0:17:07.196 --> 0:17:09.316 and I think there are some times where I worry 0:17:09.316 --> 0:17:11.196 about that whether or not we're all just going to 0:17:11.316 --> 0:17:14.356 end up wearing the exact same basic thing. The other 0:17:14.396 --> 0:17:18.556 one is, it's more about the macro environment, right, I mean, 0:17:19.756 --> 0:17:21.316 your stock it's down a lot, like a lot of 0:17:21.316 --> 0:17:24.316 other growth companies, and maybe more importantly, like a lot 0:17:24.356 --> 0:17:26.436 of other growth companies, you had to lay off a 0:17:26.436 --> 0:17:28.516 lot of people recently after sort of making a big 0:17:28.556 --> 0:17:30.916 bet on growth. Tell me about that, I mean, tell 0:17:30.916 --> 0:17:32.396 me about sort of the bet you made and what 0:17:32.516 --> 0:17:34.716 worked out and what didn't work out. Yeah, I mean 0:17:34.716 --> 0:17:37.836 that was one of the most challenging days of think 0:17:38.196 --> 0:17:40.116 if any leader's life is to do layoffs, and we 0:17:40.196 --> 0:17:42.836 lay off about ten percent of our team a couple 0:17:42.876 --> 0:17:47.556 months ago. When the pandemics started, let's call it March 0:17:47.636 --> 0:17:51.196 twenty twenty. March twenty twenty pandemic starts, all these physical 0:17:51.236 --> 0:17:54.236 retailers have to shut down their stores, and most of 0:17:54.276 --> 0:17:57.036 them did not have another channel to sell by, and 0:17:57.076 --> 0:17:59.556 so their business went from whatever was doing to zero. 0:18:00.036 --> 0:18:02.036 And we were really fortunate to be the recipients of 0:18:02.156 --> 0:18:05.396 most of that business. Most of those retailers that shut 0:18:05.396 --> 0:18:08.916 down their physical stores to move online, came to Shopify, 0:18:09.636 --> 0:18:12.436 and very quickly they opened up these beautiful online stores 0:18:12.476 --> 0:18:14.596 and started selling and in some cases, and we don't 0:18:14.596 --> 0:18:16.316 take any credit for it, but we certainly, you know, 0:18:16.356 --> 0:18:21.636 we helped ensure the business continued when as things continued 0:18:21.676 --> 0:18:23.796 through the pandemic, it was clear that e commerce was 0:18:23.796 --> 0:18:26.076 playing a much larger role, both in the lives of 0:18:26.116 --> 0:18:28.836 consumers and also in the lives of retailers. There's a 0:18:28.956 --> 0:18:31.076 there's an equation that a lot of people monitor, which 0:18:31.116 --> 0:18:34.116 is e commerce as a percentage of total retail. So 0:18:34.156 --> 0:18:36.676 the numerator in that equation is e commerce and the 0:18:36.756 --> 0:18:40.436 denominator is all of retail. When the pandemic hit, two 0:18:40.476 --> 0:18:43.756 things happened. E commerce went up, and the denominator went 0:18:43.796 --> 0:18:46.276 down because you pulled out all physical retail. So it 0:18:46.316 --> 0:18:49.356 looked for for some time that like e commerce was everything, 0:18:49.356 --> 0:18:51.756 and it was. We knew that that was not going 0:18:51.756 --> 0:18:54.236 to stay, but we did think that the growth rate 0:18:54.276 --> 0:18:56.956 that we saw in twenty twenty twenty one was more 0:18:56.996 --> 0:18:59.316 reflective of what it would be in the future. You 0:18:59.396 --> 0:19:01.996 thought that pandemic era growth would persist, not just that 0:19:01.996 --> 0:19:03.876 people would know, but that the growth rate yeah, we 0:19:04.356 --> 0:19:06.316 we knew that the new baseline would stay, but we 0:19:06.356 --> 0:19:07.836 also thought it would just it would just increase, and 0:19:07.916 --> 0:19:11.036 so we staffed up a both support people and salespeople 0:19:11.036 --> 0:19:12.996 and those are really the two groups that we've staffed up. 0:19:13.636 --> 0:19:15.316 And then at the beginning of this year in twenty 0:19:15.436 --> 0:19:18.396 twenty two, we realized that, okay, it looks like the 0:19:18.436 --> 0:19:20.636 growth rate of e commerce is going to return to 0:19:20.676 --> 0:19:23.996