What do you do when you follow the love of your life to a new country and aren’t legally allowed to work? You start Shopify…
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
[Kooler Garage Doors Ad]
Dave Young:
Welcome back to the Empire Builders Podcast, eh.
Stephen Semple:
Eh?
Dave Young:
See what I did there? See what I did there, Stephen?
Stephen Semple:
I do.
Dave Young:
Stephen whispered in my ear that we’re going to talk about a Canadian company, eh. Shopify.
Stephen Semple:
Shopify.
Dave Young:
And I didn’t know they were Canadian.
Stephen Semple:
Yes, they are. Yeah.
Dave Young:
Well, do tell.
Stephen Semple:
Yeah. Well, and here’s one of the things that I love about this story is it was started by a person who couldn’t get a job and decided to sell snowboards online.
Dave Young:
All right.
Stephen Semple:
Right?
Dave Young:
Snowboards.
Stephen Semple:
How could I not love that?
Dave Young:
Yeah. You would love that all day long. Is that where you bought your first snowboard?
Stephen Semple:
No, it is not but…
Dave Young:
Wait, wait, you weren’t that kid, were you?
Stephen Semple:
No, I was not. So they’re a big deal, annual revenue of close to $12 billion. They’re one of Canada’s most valuable companies with $160 billion market cap. They’ve got 7,600 employees worldwide and kind of like five million online stores in 175 countries. And here’s the figure that got me the most when I was researching it. And it’s the number 378 billion. That’s how much merchandise was sold in a year. $370 billion worth of merchandise was sold through Shopify.
Dave Young:
All right.
Stephen Semple:
Put that into context, that’s the GDP of Singapore.
Dave Young:
Yeah, that’s crazy.
Stephen Semple:
Isn’t that crazy?
Dave Young:
That’s a lot of sales.
Stephen Semple:
Yeah. So Shopify was founded in 2006 in Ottawa by Tobias Lutke, Daniel Weinand and Scott Lake. But our story starts a couple of years before with Snowdevil, the snowboarding business.
Dave Young:
Okay.
Stephen Semple:
So Tobias was born and raised in Germany, and his parents had this place in the Alps, and they would often drive to the Alps to go skiing. Then they decided to do a trip to Canada to do Whistler. At the time, the Canadian dollar was low. It was like the 2000s, and he decided he was going to snowboard rather than ski. And this is when he fell in love with two things, snowboarding, and he met his now wife, Fiona.
Dave Young:
Was she also snowboarding? Do we know?
Stephen Semple:
I don’t know whether she was snowboarding or not. That’s an interesting question.
Dave Young:
All right.
Stephen Semple:
So he returns to Germany, they keep in touch, and when she finishes her bachelor degree, she decides to move to Germany. So in Germany, Tobias struggled in school, ADHD, dyslexia, dropped out after grade 10, and he joins a programming apprenticeship program at Siemens. And he’s part of this kind of rebellious environment. He loves it. And he and Fiona are together for about 10 months, and she decides she needs to return to Ottawa to start her master’s program. So he moves with her to Ottawa. Now, he tried to work remotely, but remember, this is the early 2000s. Tools were not really there. You didn’t have Slack, you didn’t have Zoom. It was tough. He wasn’t really able to do it.
Dave Young:
A little bit of Skype going on by then maybe, but yeah.
Stephen Semple:
Yeah, maybe, but even not great, right? He’s spending a bunch of time snowboarding and he dives into it and he’s learning all he can about it. And he even started thinking, “Well, maybe I could sell snowboards online.” And around this time, he gets offer for a job with a business in Ottawa, and the topic of work permit comes up, which oops, he doesn’t have.
Dave Young:
Doesn’t have a work permit. Yeah.
Stephen Semple:
Right. He’s legally allowed in the country, but he’s not allowed a work permit. So he goes to see a lawyer and he’s told, “Hey dude, you’re unlikely you got a work permit. You’re legal in the country. You could start a business, but you can’t work for someone.”
Dave Young:
But you can start one.
Stephen Semple:
But you could start one.
Dave Young:
That’s all right. I mean, that’s fair.
Stephen Semple:
So he decides snowboards online, it is. That’s what he’s going to do.
Dave Young:
Put a hold on that because I’m thinking, start a business. I’m wondering if that’s why there are so many foreign taxi drivers, that a taxi cab was actually a business.
Stephen Semple:
Could be.
Dave Young:
Working for somebody, you’re working for yourself.
Stephen Semple:
You are, you’re independent. Yeah.
Dave Young:
Maybe the whole taxi industry was a loophole. All right. Anyway.
Stephen Semple:
Could be.
Dave Young:
So he-
Stephen Semple:
So Scott Lake, who’s one of the founders, worked for the company that tried to hire Tobias, and they keep in touch. And they decide to create this company Snowdevil together because Scott had all these vendor relationships. Tobias worked on the technology. Now, here was the problem at the time. There was not software to make any of this easy, especially the credit card.
Dave Young:
Sure.
Stephen Semple:
And it was really hard updating and changing websites. Here’s the part that I loved. They wanted to tell stories about every snowboard that was sold. They actually wanted to take the board onto the mountain and chronicle how they spent the day and tell that story of that board and put it on the website. That’s how they were selling boards. This was also around the time the emergence of blogging. So they really felt that if you could wrap this really great story around the product and get people excited about it, they would buy from you and they wanted to break away from this Sears catalog model through the stories.
Dave Young:
Is this every individual board?
Stephen Semple:
Yes, had a story.
Dave Young:
Or every model.
Stephen Semple:
Every board had a story.
Dave Young:
Not every model of board. Every single board.
Stephen Semple:
Well, sorry. When I say board-
Dave Young:
Every model.
Stephen Semple:
Every model.
Dave Young:
Okay.
Stephen Semple:
Yes.
Dave Young:
Got you.
Stephen Semple:
Every model had a story.
Dave Young:
I mean, because that’s a lot of snowboarding.
Stephen Semple:
Well, but it was also the early days, there weren’t that many boards out too.
Dave Young:
Yeah, yeah.
Stephen Semple:
Your universe was not as big as it is today. So Tobias, they’re trying to figure out how to do this, and he comes across this program called Ruby on Rails. And here’s the thing that was funny.
Dave Young:
I remember Ruby on Rails.
Stephen Semple:
The source code at the time was Latin characters and all the documentation was in Japanese, but he still figured out how to make it work.
Dave Young:
Okay.
Stephen Semple:
So he started to build an e-commerce platform on that. And one of the big moments for Tobias, and this is the inspiration for Shopify, is the feeling he got when they got notice of their first sale where he’s sitting there and he gets a bing on his phone and they’ve made a sale. And that feeling that he had in that moment was just unbelievable for him.
Dave Young:
Cha-ching. Yeah. Somebody found us and bought something from us.
Stephen Semple:
Somebody found us and bought something. This is incredible. Now, they built the business on pay-per-click, but you got to also remember, AdWords at the time, 20 cents a click is what they were spending. Think about it. In the sporting goods space, 20 cents a click.
Dave Young:
Nobody else had figured it out yet.
Stephen Semple:
No one else figured it out. And at the time, snowboards had really good margins. They had a good winter. Things went really well. They’re coming into the summer, things are slowing down, and they’re thinking about, “Well, what should we do?” And here’s one of the things that happened. They started getting approached by other people in the industry saying, “Hey, can you license all this stuff that you built? Because we’re trying to figure out how to do this online stuff and it’s really hard. Can you just license that to it and can we just use it?”
Dave Young:
Seems like they figured that out. Yeah.
Stephen Semple:
So in 2006, right, so in 2006, Snowdevil disappears. Shopify is born.
Dave Young:
All right. We can’t… Yeah.
Stephen Semple:
And Shopify is shopping simplified, Shopify.
Dave Young:
That’s brilliant.
Stephen Semple:
Right.
Dave Young:
The cool thing about software companies like that is you end up with one product and then you can sell that product a million times and it doesn’t cost you anything to make it, really. I mean, it’s software. There’s no manufacturing.
Stephen Semple:
There’s even something else on this. I’m in a program I think I’ve mentioned before called the Strategic Coach, quarterly coaching program, created by a guy by the name of Dan Sullivan. And one of the things Dan talks about is this idea of strategic byproducts, that when you create a really big goal, what will happen is in the process of achieving that goal, new things come out of it. And the reason why he calls them byproducts is sometimes some of the things that come out of it are way more powerful and way more valuable than the original thing you were trying to achieve. And this is a great example of it. The most valuable thing came out of it was this ability to make doing online shopping easier.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Using Stories To Sell]
Dave Young:
Let’s pick up our story where we left off, and trust me, you haven’t missed a thing.
Stephen Semple:
And the reason why he calls them byproducts is sometimes some of the things that come out of it are way more powerful and way more valuable than the original thing you were trying to achieve. And this is a great example of it. The most valuable thing came out of it was this ability to make doing online shopping easier. Their goal was to sell snowboards online.
Dave Young:
Yeah.
Stephen Semple:
The byproduct was this, and the byproduct was way more powerful, way more valuable.
Dave Young:
Oh, yeah. A lot of people want to sell a lot of things.
Stephen Semple:
But the problem is sometimes we lose sight of that. We can lose sight of it because we go, “Yeah, but I just wanted to sell snowboards. No, I’m going to ignore this thing.” Rather than, “Oh, wait a minute. Oh, wait a minute. Wait a minute. There’s this opportunity here.” So I commend them for recognizing that. So they start wanting to develop it as more of a product. Tobias calls Daniel Weinand, who’s the third founder, who’s a buddy from Germany, and he convinces them to come to Canada to help him build the product because he needs more coding. They raise some money, they’re off to the races.
But here was even their challenge when it came to running money. Back then, everyone believed the future belonged to giant online malls, Amazon, eBay. Everybody just wants to go to one giant marketplace. Shopify believed something radically different. Instead of building one giant store, what they wanted was help millions of people have their own store. Because when you’re on Shopify, it’s your store. Shopify is just the back end.
Dave Young:
And they’re not going to do all the things that you hear Amazon does when you try to sell on Amazon, right? They’re going to go figure out how to make your product cheaper and sell it under their name.
Stephen Semple:
And Tobias talks about in interviews that feeling he had when they got that first online transaction.
Dave Young:
Yeah.
Stephen Semple:
That’s what he wanted people to have. He wanted people to have that opportunity. The idea behind this business was not to develop software. They don’t see themselves as a software company, but they see themselves as a company that helps people start businesses. Shopify wasn’t selling software, they were selling independence. You can own your business, you own your customer list, you own your brand, you own your future. That emotional positioning matters. And it helped attract entrepreneurs who didn’t want to sell inside the Amazon ecosystem because what they were buying was freedom. And this drove a lot of the decision-making because in 2009, the next big evolution that came along was Shopify launched an app store.
And basically what it did is it opened its platform to outside developers. Suddenly anyone could build an application that extended Shopify’s capabilities, email marketing, inventory managing, shipping, loyalty programs, accounting, subscriptions, thousands of other tools. And that fundamentally changed the company because if they though of themselves as a software development company, they would’ve tried to develop those things. Instead, they saw themselves as a company that is supposed to simplify this process for people. So therefore, why don’t we take your tool and plug it into ours?
Dave Young:
Yeah. Yeah.
Stephen Semple:
Right? But that thinking is what changed everything. Now, I also want to think about this because we often talk about north stars and things along that lines. When they think about it even from a marketing perspective, when what I’m selling is I’m going to make it easier for you to become an entrepreneur, that’s a very different emotional sales pitch and positioning than I’ve got this tool. And it helped them do things like, well, why wouldn’t we do this app store? Does this app store make it easier for a person to be an entrepreneur? We’re doing it.
Dave Young:
Yeah, I love it.
Stephen Semple:
There’s 16,000 apps now in the Shopify app store, and Shopify paid developers over a billion dollars through its ecosystem.
Dave Young:
That’s pretty amazing.
Stephen Semple:
Yeah. So think about this. It’s a software company started by a software engineer that decided not to build software.
Dave Young:
All right. Yeah.
Stephen Semple:
Right? And it all goes back to that moment that Tobias felt when he had that first transaction. And he also talks about nothing else changes a person’s life by being able to build their own business. And he was like, if we can facilitate that, their goal is to facilitate people building their business. And if you think about even things like opening it up to the outside, Apple has done it with the App Store. Salesforce has done it with AppExchange, Amazon with Marketplace, Microsoft. Other companies have all done it. But I think these guys just had a real strong north star because they stopped asking the question what we can build and started asking the question of what can others build on top of what we’ve built?
Dave Young:
Yeah. It’s a beautiful ecosystem.
Stephen Semple:
Because that driving goal-
Dave Young:
Yeah.
Stephen Semple:
Yeah, because the driving goal was make it easy to start a business. Now, here’s how powerful that idea is. Heard this in an interview with Tobias. So Tobias was being interviewed and this is literally what he said. I recorded it and wrote down the quote. And since we’re talking about stats, this is the most gratifying of all the numbers related to Shopify, and it’s actually the north star of the company. That’s the words he uses. Every 52 seconds, someone has had that experience of getting their first sale, the one I described. And in so many cases, someone is going from being a builder to now being an entrepreneur. There’s so few things you can do that actually changes your identity in a meaningful degree. This company’s heart is really the founder onboarding process and trying to make this simpler. What’s been so fascinating is that the initial idea behind Shopify was that idea.
Dave Young:
Yeah. Every 52 seconds somebody gets their first buyer.
Stephen Semple:
First sale.
Dave Young:
First sale. That’s amazing.
Stephen Semple:
Their first transaction. Isn’t that incredible? And that’s-
Dave Young:
It’s a new store every-
Stephen Semple:
Right. And his summary from his interview of what’s the thing that he was most proud of was that, that’s that. Not the billions of dollars, not this, that every 52 seconds, somebody’s getting their first transaction.
Dave Young:
I love that.
Stephen Semple:
Isn’t that incredible?
Dave Young:
Yes. Yes. There’s nothing not incredible about it.
Stephen Semple:
Yeah.
Dave Young:
It’s a good thing they didn’t give him a work visa, is what I’m saying.
Stephen Semple:
Yeah, it all worked out well. But the part is that I found so interesting about this, because we do this when we work with customers. Well, with customers, we help them to find their north star. What’s your north star?
Dave Young:
Yeah, oh yeah.
Stephen Semple:
What is that thing for your business? And that the finding of the north star is what actually made all of this work. And they found their north star starting their own business when they had that first transaction. It remained true to that and has driven those decisions and has allowed them to make better strategic decisions such as the App Store. But on top of that, I’m going to say it helped all their marketing messaging because somebody who aspires to be an entrepreneur will connect with Shopify and its goals and dreams and aspirations.
Dave Young:
Yeah. I love that story.
Stephen Semple:
Yeah.
Dave Young:
Wizard Academy has a Shopify store.
Stephen Semple:
Does it?
Dave Young:
Yeah.
Stephen Semple:
Cool.
Dave Young:
Yeah, shop.wizardacademy.org. You can buy a mug or a postcard.
Stephen Semple:
There you go.
Dave Young:
Things like that, so.
Stephen Semple:
Awesome. The only reason I didn’t know that is anytime-
Dave Young:
I didn’t get the notifications for it.
Stephen Semple:
Well, and the only reason why I don’t know about that is anytime I buy stuff, I always like getting it when I’m in person.
Dave Young:
Exactly.
Stephen Semple:
Yeah, yeah.
Dave Young:
Way more fun. We don’t do banging business, but it’s there.
Stephen Semple:
It’s there and it helped you do it.
Dave Young:
You want the mug that I drink out of sometimes.
Stephen Semple:
Well, that’s it. That’s the way you should be selling them. You should be selling your dirty mugs.
Dave Young:
I test every mug. Very cool, Stephen. Thank you for bringing us the Shopify story.
Stephen Semple:
All right, thanks, David.
Dave Young:
Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app, and leave us a big fat, juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute Empire Building session, you can do it at empirebuildingprogram.com.
