#1: Shopify

As our trust in tech loosens, Canada’s eCommerce titan stays golden
(Photograph by Margeaux Walter)

In the public-opinion battle of good versus evil tech companies, Shopify has intentionally planted its flag in the nice-guy territory. Its Twitter feed reads like the musings of Ted Lasso crossed with an extremely online dad: “and i thought calling our own app ‘shop’ was very meta,” the account posted in punctuation-less, lowercase internet prose in the late fall of 2021, making light of Facebook’s name change. Noting the popularity of TikTok star Noodle the pug, it wanted to know, “is it a bones day or a no bones day.” It even dispensed timely Nicki Minaj-related advice: “I think the only time you should listen to your cousin is if they’re telling you to start a business.” These are the tweets of a company that wants to bake you chocolate chip cookies and tuck you into bed—not like those other giants that fundamentally want to race you to the bottom of the free market.

It isn’t only on social media that Shopify plays nice. Like some kind of Bizarro Bezos, 41-year-old founder Tobi Lütke has long been on a mission to promote independent small- and medium-sized businesses, or SMBs, and help them succeed rather than consolidate them under one dominant money machine. Its Shop app is designed to help people discover its merchants, not to take over the customer relationship and use vendors merely as order fulfillers. Company president Harley Finkelstein says that while some tech platforms prioritize empire-building, Shopify aspires to create a “fair and equitable” playing field: “We don’t compete with our merchants; we empower them to own their relationships with their customers and give them the tools necessary to succeed.” It is, as Lütke has said, their way to “arm the rebels” against the Amazons of the world.

Shopify has taken tangible steps to make this happen. The company operates an SMB lending arm called Shopify Capital, which fills in when institutional banks fail entrepreneurs by presenting obstacles such as slow processing times and loan refusals. And the company is making sure that its own employees are set up to succeed too. Baked into its hiring policies is an open-mindedness to give job candidates without direct experience a chance. It also offers a tuition-free Dev Degree initiative, giving enrollees computer-programming training on the company’s dime.

The hits keep coming: At the start of the pandemic, Shopify promised it would let all employees work remotely forever, adding to an already deep bench of progressive people policies. (“Office-centricity is over!” Lütke declared, coining a new pandemic-era catchphrase.) And in 2021, it changed the payment structure applied to third-party Shopify app developers in a way that puts more money in partners’ pockets.

Shopify sure looks like a kind, generous company that just so happens to have averaged more than a billion bucks per quarter in the first three quarters of 2021. Still, given the high-profile scrutiny of some of the world’s tech giants for actions ranging from predatory and anti-competitive behaviour to worker abuse, it’s reasonable to wonder whether it’s all too good to be true.

We have come to expect the worst from our generation’s tech barons, often deservedly so. “Tech loses its halo,” declared the headline of Edelman’s 2021 Trust Barometer report, which noted that the industry “is now being held to account for all manner of societal ills, from information bankruptcy to job loss, to human rights, to the mass-class divide.” So how did Shopify become such a powerful, profitable company while preserving its nice-guy reputation? And, can it keep it up?

By now, everyone knows Shopify’s origin story: Founder Lütke wanted to start an online snowboard shop but couldn’t find a good enough platform to host it, so he built one himself. He was in his early 20s then, but he already had the perspective of a high-flying hawk. By 2013, the company he had started seven years prior hit the $1-billion valuation mark. Its massive success pulled Canada’s tech scene up out of the wreckage of Research In Motion’s collapse and gave entrepreneurs around the country a reason to believe in the promise of start-ups. At the end of 2021, Shopify’s market cap exceeded $260 billion, and it is now in a constant neck-and-neck battle with RBC for the title of Canada’s reigning most valuable company. For some companies, that kind of meteoric growth can be dangerous. Since the Y2K-era dot-com bubble, we’ve seen more than a few founders turn from garage-dwelling coding savants into emotionally detached man-babies, as if they become pompous oracles of the digital age by virtue of their massive expense accounts, stock options, and Joe Rogan Experience podcast subscriptions. Every now and then, we see a remorseless Mark Zuckerberg deflecting whistle-blower and antitrust allegations while he—along with several of his tech-magnate peers—parries accusations of harbouring white-supremacist communities, spreading disinformation, and shirking competition rules. It’s a side effect of founder-itis: When everyone tells you you’re a genius, you develop an elevated risk of losing touch with the values and culture that first made you relevant and likeable.

Yet Lütke and other members of his leadership team don’t appear to have succumbed. “I can’t speak to the business practices of other companies,” Finkelstein says. “What I can tell you is that we firmly believe commerce is stronger with more voices, not fewer.” For a company whose own growth depends on the growth of its merchants and partners, a “the more the merrier” philosophy appears to be a smart business.

It took 15 years for Shopify merchants to reach $200 billion in cumulative sales. When the pandemic hit, it took just 16 months to double that.

Doug Stephens, founder and CEO of business advisory company Retail Prophet, says Shopify’s magnanimity is legit. He’s spent time in conversation with Finkelstein and believes he has a reasonably unvarnished view of the corporate culture. “I think what you’re seeing and hearing come out of Shopify is genuine,” Stephens says. “I believe they very clearly identify their corporate mission and purpose as being supportive and nurturing and a white knight, if you will, for SMBs in particular.”

Stephens cites Shopify data that says its merchants, when combined, amass a sales volume and e-commerce market share that is second only to Amazon. Yet, unlike Amazon—which is under investigation for copying products to undermine its own vendors—Shopify has intentionally chosen not to compete with its own clients. This has gained them incredible traction, especially during the pandemic, Stephens says. “Whatever they’re doing, it’s working.”

Shopify has been building a big business out of small businesses for some time, but its growth during the pandemic surprised even the most optimistic observer. It blew up as bricks-and-mortar stores around the world went online for the first time and Great Resigners looking to try something new launched new ventures. By late 2021, the company was hosting more than 1.7 million businesses in 175 countries. With a few taps on your phone, you can now buy lipstick from Rihanna’s Fenty Beauty, a ream of paper at Staples, a loaf of rye from your local bakery, and flowers for your mom in another province—all on Shopify software.

“It took 15 years for our merchants to get to $200 billion in cumulative gross merchandise value and just 16 months to double that to $400 billion,” Finkelstein said in an October 2021 announcement about the company’s third-quarter results. The markets have noticed: In early 2020, Shopify traded at $520 a share on the TSX. By the end of 2021, that same share went for more than two grand.

It’s a rare pandemic success story, made all the more compelling by the feel-good nature of the work that made it happen: Shopify’s client roster is bursting with stories of transformation and dream-following, of resilience and adaptability. As narratives go, “Company enables the entrepreneur to follow her dreams” and “Company helps beloved shop survive lockdown” are a lot more endearing than “Company exploits warehouse workers” or “Company enables insurrection in D.C.”

Still, it’s not like Shopify has never misstepped. For several years, much to the consternation of many observers, right-wing organizations like Breitbart, Rebel News, and the Trump election campaign used Shopify’s platform to sell their merchandise. A late-2021 workplace review on Glassdoor states: “To work at Shopify, you have to be okay with the fact that part of your paycheck will come from gun paraphernalia and far-right propaganda merchandise shops who use that money to fuel their ambitions, all while at the same time having leadership give one-hour conference talks about how commerce and Shopify are morally good and that Shopify is good for society.”

(Illustration by Joanna Ławniczak)

The dissonance grated on the nerves of some onlookers when, at the peak of 2020’s Black Lives Matter protests, the company issued a series of tweets saying it stood with the Black community. Lütke tweeted: “Racism of any kind is one of the bleakest aspects of humanity.” This led to accusations of hypocrisy. Shopify promptly partnered with Operation HOPE, an initiative dedicated to creating a million Black-owned businesses by 2030.

Vivian Kaye has been using the e-commerce platform since 2015. Under the name KinkyCurlyYaki, she sells textured-human-hair extensions for Black women. She notes that a lot of brands used the BLM movement to earn goodwill with their customer bases, but Shopify was one of the few to back it up. “They were quick to create initiatives to support Black businesses, and then not just Black businesses,” says Kaye, who is based in Hamilton, Ont. “They would do things to purposely highlight and encourage different groups or different demographics of people to start and grow businesses.”

Kaye, a single mother, adds that Shopify was willing to fly her and her young son to Ottawa to speak to their merchant support team, signalling to her that they walk the talk when it comes to inclusion. “They’ve gone above and beyond what a big corporation like that would do for a small entrepreneur like me.”

Their long-standing relationship helped inspire Kaye to become a guide for other merchants. In addition to KinkyCurlyYaki, she now also runs Shopify Prep School, a course to help vendors scale their businesses on the platform. The course is no outlier. It is part of a burgeoning merchant universe—content-marketing agencies, software programmers, app developers, vendor coaches, advisers, and other auxiliary services—that revolves around one single nucleus: Shopify.

David Hicks is another independent partner. As part of his freelance business, he sells custom developer services such as private apps, plug-ins, themes, and programming to Shopify merchants via the Shopify Partners marketplace. Such add-ons are popular, but they can make what is commonly billed as a straightforward user experience more complicated, especially for merchants who just want to sell stuff. “These are business owners who got into business to run their online jewelry store or sell shoes online,” Hicks says. “That’s their area of expertise—they’re not web developers. It doesn’t take long for them to bump into a wall.” While add-on apps can quickly increase a merchant’s costs, depending on the volume and scope, Hicks rationalizes the few hundred dollars a month it takes to run a top-shelf e-commerce site with all the bells and whistles is still cheaper than, say, opening a bricks-and-mortar space.

Today, Hicks earns about half of his income from his Shopify-based clients. He is one of many entrepreneurs piggybacking on the company’s growth. The Shopify Partner ecosystem generated US$12.5 billion in 2020, spread out across 46,400 partners—some of whom have become almost evangelical about the company’s impact on their own tech-start-up journeys. “It’s more than just being a fan—this platform has truly changed my life financially, professionally, and personally. Building on @shopify was a pivot point in my life,” tweeted one developer, explaining his tattoo of the company’s logo.

Shopify is aggressive in currying such favour; last year, it made a very popular move to let developer partners keep their first $1 million each year, free and clear of the fees normally applied to the list in the marketplace. Some would argue that this is hardly benevolent. Developers are in short supply globally, so attracting them with a more tempting rev-share model ultimately serves Shopify’s best interests. Are measures like this really generous? Or are they just great PR? As with most things Shopify does, it appears to be both.

As the company continues to evolve, its promise to share the wealth—or some of it—is what makes it stand apart from the Machiavellian milieu. Our free-market values and economic realities make this feel refreshing. More than that, it makes nice guy Shopify the hero of its own story.

Read more from the 2022 New Innovators List