Shopify COO Harley Finkelstein on the future of digital retail

The face of Canada’s leading e-commerce firm on how to scale startup culture and his “weird, dirty secret” for managing better

Shopify COO Harley Finkelstein

Shopify COO Harley Finkelstein. (Portrait by Regina Garcia)

Shopify has been around since 2004 but only went public in May of 2015. The IPO raised $131 million— which was more than expected. What did you learn from the experience?

We always put pressure on ourselves as a company, so it’s not really a change to have pressure from public investors. But what we learned is there’s a big difference between going public and being a trusted public company. We’ve really spent the past eight or nine months trying to become a company that’s trustworthy. We always want to make sure our earnings reflect what we said we were going to do.

In terms of building trust with investors, I can’t imagine that’s a problem when you saw 93% revenue growth in the third quarter of 2015. That performance must be worth something.

You know, numbers like that are really good, but building trust is even more important. The Street’s still trying to figure us out. There aren’t many companies from little Ottawa, Canada, on the New York Stock Exchange. So we need to explain to the market why we’re a company that could be around for the next 100 years—why we’re a company that’s making commerce better.

What practical steps have you taken to build that trust?

We make sure investors get a chance to come visit us in Ottawa. Getting people to visit Ottawa in December is obviously challenging, but it ensures transparency. In the past couple of months, we’ve struck partnerships with Facebook, Pinterest, Twitter and Amazon, and we were very forthcoming about those deals. We explained to the industry, our merchants and the general public why those partnerships will help us improve commerce.

Shopify has always put a heavy emphasis on its corporate culture. When you’re hiring during this time of massive growth, how do you ensure people will be a good fit?

Most people assume a great culture is having a cool office or really great perks—and we have those things. But what really defines whether somebody is a fit for your company is how they act when nobody’s watching. What do they do when they are left to their own devices? It’s not about how they act when they know the right answer. It’s about how they act when they don’t know the answer.

That’s a really tough goal. How do you determine someone’s true character through a standard job interview?

You can tease things out. When I’m hiring, I don’t want the guy who played on the tennis team; I want the guy who created the tennis team. I don’t want the guy who participated in some charity; I want someone who created a brand new charity. I look for people who are self-starters—people who have a bit of a founder mentality.

It sounds like you want to hire entrepreneurs. 

We try to find the best and brightest. Then we try to remove all the roadblocks and red tape in their way. Most companies of our size have a lot of bottlenecks. This is a company with a startup culture. That means people can run very, very fast. “People can get shit done” is one of our core values. That somehow made it into our filings with the SEC, which is pretty neat.

How does the company change as it gets bigger?

I can’t sit around one table with the entire team and have pizza and talk about the future of the company. That has become more difficult. But we now have four offices. It would be a mistake to impose our Ottawa culture on Montreal or Toronto. That also wouldn’t scale well. So we don’t have one office culture—we’re multicultural. But most things have scaled. Things like town halls actually get richer with the more people you add.

You started with e-commerce, and then dropped the “e” and have started offering a platform that supports traditional retail as well. What’s the relationship between online retail and bricks-and-mortar retail these days?

Most people assume the future of retail is one or the other: It’s online or it’s offline. You have big retailers like Macy’s or Best Buy talking about how online retail is hurting the offline business. Our view is that it’s all digital retail. In the future, consumers will dictate to the retailer how they want to purchase. That’s why our partnerships with platforms like Pinterest and Facebook are so important. We need to empower our merchants to sell on those social networks. But that only serves one customer demographic. In other cases, people still walk into a store, so we have our point-of-sale system. Or they’re buying something at a farmers market, so we need to be able to accept mobile payments.

It’s pretty well-documented that Canadian companies haven’t embraced e-commerce like those in the United States. Why is that?

For a long time, Canadians were buying from American stores where duty and shipping was fairly expensive. That turned off some people. And once consumers weren’t interested, retailers had no reason to be aggressive. But honestly, in the past two years, I think all that has changed. There are some incredible online businesses that started online that are just dominating here in Canada, and we power most of them.

Tobias Lütke, your CEO, did an interview in which he described Shopify as a utility. If the company does its job, nobody will notice it’s even there. But as the company grows, does it need to develop more awareness of its brand?

Shopify is a brand to merchants—it’s not a brand to consumers. We’re quite happy to be behind the scenes, which is different from other e-commerce companies. Companies like Etsy effectively rent customers to merchants. Customers go to; they aren’t going to a particular vendor’s store. I think our model’s much better. We actually want the merchants to control the businesses themselves.

If I was doing one of these interviews at any other company, I’d be speaking with the CEO. But you’ve become the public face of the company. How did the executive team decide how to divide responsibilities?

We want to create a management team in which people can do the best work. Tobi’s one of the most brilliant product minds in the entire world. I know what he’s great at; he knows what I’m great at. We’ve just decided to focus on those areas of strengths. A lot of companies get that wrong. They focus on mitigating the weaknesses of their leaders instead of amplifying their strengths.

You recently became chief operating officer at Shopify after serving as chief platform officer. Why the change?

We don’t let the title define the role; we let the role define the title. My job at Shopify hasn’t been to oversee sales or another specific area—it’s been to add as much value as I can. And as my role has expanded, I think the CPO title became confusing. We also want the public to know I’m freeing up Tobi to focus on product and technology.

You have an executive coach. How does that help?

Until recently, it was a weird, dirty secret that some of the best leaders in the world have coaches. So I’ve become very vocal about it, because I think it’s important. Coaching at Shopify actually started with Cody Fauser, our CTO. He was a phenomenal engineer and software creator, but it didn’t come naturally for him to manage a team. So he hired a coach for himself. Once we saw the benefit for Cody, the entire executive team started seeing coaches. We now have full-time coaches on our staff and anybody who manages people can see one. Many companies take people who are great as individual employees and promote them to become managers. But just because he or she is a great engineer doesn’t mean he or she will be a great manager. Management is not instinctive.

So how does a coach help with that? Many people assume a coach is just a personal cheerleader.

Not at all. It’s a place you can go that is very safe and you can talk about things that are working—or not. Or you can use it as a sounding board. Our coaches are all experienced people. Mine was at IBM for many years, so he can say, “Look, I was in a similar situation, and here’s the way I worked it out.” I find that’s really valuable.


3 comments on “Shopify COO Harley Finkelstein on the future of digital retail

  1. -It’s pretty well-documented that Canadian companies haven’t embraced e-commerce like those in the United States. Why is that?–
    WRONG!!! In the USA shipping is fast and CHEAP.In Canada it cost a bundle to send a bundle. Get a handle on that and on the online selections/price. To date USA companies who set up Canadian operations are doing it better than those with home field advantage.
    WAKE UP I want you to succeed but if you are too busy patting your own back you will FAIL!

    • Here lies a great example of an uneducated opinion. Your comment reeks of a total lack of Canadian shipping knowledge.

      1. Canada is the 2nd largest country (by area) in the world
      2. Canada’s population ranks 37th in the world
      3. The USA is the 4th largest country (by area) in the world
      4. The USA rank 3rd in the world by total population

      What does this information tell us?
      1. The USA is more densely populated.
      2. Canada is sparsely populated in comparison

      In terms of logistics/shipping what does that information point to?
      Why of course, it’s pointing at network density. And what is network density you ask?
      Having good network density is achieved by having large volumes of shipments moving in all directions across a well populated area.
      Toronto is a large world class city and transportation hub. There is massive consumer demand in Toronto, and you can find great shipping services and prices in and around Toronto and the GTA – heck even in and out of Montreal and Ottawa. Once you start looking at the flow of shipments back and forth across the whole country, you realise that many cities are small, and don;t have much demand, or outbound product. Therefore, there is not a required level of network density. Not enough processing DCs, not enough infrastructure, not enough trucks, not enough drivers, driven by a largely one-sided amount of consumer demand.

      Instead of complaining about how cheap it is to ship in the US, or how US companies ship better from within Canada than Canadian companies, have a think about network density, economies of scale, and corporate buying power.

  2. What a great story! Shopify is a great motivator for new emerging canadian businesses like us at . Just like others like Frank & Oak, BTR and many more, we are changing in our industry the way businesses are buying ergonomic office furniture in Canada. Can’t wait for the day Canadian Business magazine will give us the opportunity to talk about our business in an article :)