Uh-huh.
I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off on the road. Let's travel. Never looking back.
All right, we are here. We're live. Harley, what's going on? Um Sean, how are you?
Hey, Sean. Hey, Sam. Good to good to be here.
We're going to get to intros in a second. Apologies if my internet is going to suck. I u I'm recruiting this guy who lives in Philly to be a writer at my company and I'm currently living in New York, but like he was like, you know, I'm not sure. So, I just got in a car and I went and rented a hotel for two days and I just showed up at his house and I was like to recruit him and convince him to join my company. And uh so that's kind of why I'm at the hotel. I used to do f I I used to do fake trips by the way to Seattle.
Like just fake like I I had to be in Seattle.
I'll be in town. Yeah. So I I'll just be in town and uh and actually uh the person that runs ecosystem is probably the greatest leader I've ever recruited. Uh came from one of those meetings where every year for like three years I would just happen to be in Seattle and we'd happen to have breakfast and eventually he's like, "All right, I'm ready to jump ship." So I get it. Yeah. So I did one of those trips and I booked the hotel for two nights because I was like, "If he doesn't say yes the first day, I'm for sure here the second day. So I'm going to show up again."
So we're here. Well, the trick is is if you can get the uh the partner, significant other out with you to the dinner, it's, you know, it's a done deal because I used to talk to um
You did that? Yeah. Exact. So, I talked to Scott Harrison who's the he's a co-founder of Charity Water and his big thing was he's like trying to recruit world class talent to come work in a nonprofit and he's like, "How do you convince somebody to leave their, you know, million-dollar job at at Google and like, you know, come work for one-tenth of that for me and like save the world?" And so I used to he'd always be in San Francisco. We'd catch up and I'd be like, "So what are you in town for?" And it's always that. He was like, "I'm taking, you know, the person I want and their husband or wife out to dinner and I'm going to tell him, you know, the Steve Jobs line of like, you know, stop selling sugar water and let's, you know, come change the world." And it was pretty effective. I got to say, he was closing a lot of good people.
It works. I mean, the key to this whole model is is you have to be so long-term, right? If you're going to be at a company or you're going to be running your business for only a year or two, you can't plant those type of seeds. But when you sort of use a 10-year or to be honest with you, I I use a hundred-year horizon uh on most of the stuff we do at Shopify and most of the stuff I do personally, which I know sounds extreme, but it's a good lens to use. You begin to say it doesn't matter if I don't close this person or get this person for a year or two or three. At some point, this may work itself out and and and it it always does.
And so, we should explain. So, Harley, you are um the big dog over at at Shopify. I think that's the official job title. Some people call you the COO. Um how long have you been there? So, you said you're taking a long-term view. When did you join Shopify?
Yeah. So, um I joined Shopify uh 11 years ago. I was one of Shopify's first merchants. I was born in Montreal in Canada, grew up in South Florida and moved to uh Montreal to go to McGill when I was 17. That was 2001. Um frankly, the world, you know, went sideways in September 2001. Um stock markets crash and my parents lost everything. And I sort of became an accidental entrepreneur through that process. I wanted to support myself and wanted to help my parents and started a t-shirt business. Started making t-shirts for universities. A mentor of mine convinced me to go to law school. Um, not to become a lawyer, but to become a better entrepreneur. He, his hypothesis was that it would provide me, it'd be like finishing school for entrepreneurship, teach me how to write, how to think, how to be more articulate. And he happened to be teaching law at the University of Ottawa in 2005. And so I applied to one single law school. It was Ottawa and moved to University of Ottawa and had no friends or family here in town. Started to look for the entrepreneurs, hung out, met Toby. He was transitioning from being a snowboard entrepreneur to being a software entrepreneur. And uh I ended up uh opening one of the first stores on Shopify uh in 2006.
And that was a t-shirt shop.
Uh it was a t-shirt shop. Yeah. Licensed t-shirt shop. Uh and I finished law school. I made made some money with the t-shirt shop. Helped my mom and sisters and supported my family. And then in 2009, I was practicing law in Toronto for all of 10 months and hated it. Thought it was the worst thing ever. And I called Toby and I asked him uh if I can come join him and and and a couple others, mostly engineers, and sort of was the first non-engineer at the company. And I'm I'm now actually the president of Shopify. Uh and it's been uh it's been amazing.
Just like uh seven days ago,
Like a second ago. Yeah. Just just just uh changes. Thank you.
Uh and it's been it's been the ride of of a lifetime. And and frankly, it's what's neat and I'm sure I know you guys talk a lot about this, but the my my my mission, my personal mission and my sort of professional mission are exactly the same. I think entrepreneurship is the greatest tool for uh freedom and for independence in the world and it was out of touch for for most people for a very very long time and Shopify tries to level the playing field so anyone can do it and on a personal level u my wife and I who are both entrepreneurs, we also try to do that as well. So, it is um it's uh it's it's truly my life's work.
What what how how into the business is it Toby, right? That's the founder's name.
How into how far along was he into the business when you worked we started with him full-time?
Uh about three or four years.
Do you know how in like in terms in terms of employees? Uh any numbers you can give?
Uh sub sub 15 or you know certainly sub 20. Um and it was mostly the interesting story was so Toby had moved to Canada. um because he met a girl. Uh a good reason to move from Germany to Canada. And when you move to Canada, I think it's the same in the US as a new immigrant, you can't just get a job. You don't have any working papers. There's you're missing the the uh the documents to actually get a real job, get hired. But someone had told him that, okay, you can't get a job, but you can totally start your own business. And so, being in Canada, he decided he would start a snowboard shop. And this is 2004. In 2004, there were two ways to sell something on the internet. The first way was you put it on a marketplace uh like an eBay or a uh an Etsy or Amazon. I don't know if Amazon was doing third-party sellers at that point, but you can use another person's marketplace and it was very inexpensive to do that. Uh but you effectively rented customers from those marketplaces. So you didn't really build your own brand, your own business. And the other way was you would go to GSI Commerce if you remember those companies or um Hybrids or uh company like ATG Magento. You go to these big enterprise companies and for like a million bucks you build an online store. He didn't have that kind of money, but he was also one of the Ruby core members uh building Ruby on Rails with people like DHH and some others. And he ended up falling in love with Ruby on Rails and deciding to build a piece of software to sell these snowboards. And that was 2004. And by 2006, uh it was clear as clear as day that the snowboard business was a good idea, but the software business was a great idea. And that's around the time where I met him and he started uh enabling or allowing others to use the software to start their own businesses and uh and I joined a couple years after that.
And when you jo when you join like an early company like that often times there's like not like a clearly defined role especially if you're a non-engineer. It's like hey there's a bunch of that we need done and it's a little bit of this and a little bit of that. Was is that how it was at that time? Was it kind of
I I actually um the the advice or the the insight I I give to folks who are thinking of starting an early stage company who don't necessarily have who are not an engineer or a designer or product manager or something like that is just make yourself as valuable as possible. Forget everything you think you are. Just find ways to add value.
I was I was technically a lawyer. I had built a number of of businesses both online and offline. Um and I we didn't have a CFO then. We had no CMO then. I remember uh within a couple of months of joining, we raised our first our series A. It was from Bessemer. Bessemer led it. It was a $7 million round and I think it was a $25 million preer post. I can't remember. But I was like, look, I'm going to figure out a way to like help raise this series A. I'm going to figure out what what what that means, how what that takes. Um I was, you know, furiously, you know, looking up what is a liquidation preference. Turns out it's a pretty important thing to know what what it is. Um but that was it. It was it was really it was just add as much value as I possibly could. And it was only much later when we hired you know a CFO and a chief marketing officer that it became clear where I wanted to spend my time which really was both on the storytelling side of Shopify making sure the world knows that Shopify exists. So on the growth side, on the um on on the uh you know PR side of things, but also internally focus on commercialization uh which is uh for me now things like our growth team, our sales team and got to build a Shopify platform which is cool and Shopify plus and I've just got to do some really neat things. So I I the other day I was reading because um Bessemer who invested they have this memo that they put out uh they put out a bunch of the historical memos of like what they said at the time they invested and these are
By way this is something that Sean's obsessed with. He'll go back and read like the the founding letter of eBay or something like he loves or like but like instead of dinosaurs it's businesses.
I got this idea about this like marketplace. What do you think?
Right. So, so I dug up the fossils here. They, you know, they put it out there, which is pretty easy, but it's there's a couple really interesting things I wanted to to ask your opinion on. So, um, so like you said, they invested, um, you know, the series A and they put this little chart on their memo. If you want to see it, just go to bvp.com/memos and, um, they say, you know, what are the possible exit scenarios? So, they'll say like, you know, it could be a zero, you know, if they burn through cash and they mismanage it and they can't return, you know, the money. Um they gave it a 12% chance of of a zero outcome. Uh and then they gave it, you know, a 28% chance of a $50 million outcome. And that the top of the range they had was a $400 million exit they thought would take six years. And they thought, uh there's a 3% chance that they can that they can reach this mark. And you know, looking at it right now, Shopify market cap is 129 basically $130 billion. And so um exceeded you know even the their grand scenario was 400 million 130 billion is sort of like out of the you know out of this world compared to what they were expecting. Um and I think this goes to show that even really smart savvy investors who have seen many many deals.
Those are some of the best guys in the business right the best team. Those like that's a next level team.
Exactly. And so you know our ability to forecast and project these category leaders and growing markets is is so so poor. And in fact, in some ways, what you did, I think was a much better way to guide your intuition, right? Just follow your intuition, which is like, hey, I've had this problem before. I used this thing. I think more people are going to have this problem. Let me jump right in and just see how much value we can create out of this.
And that that was for me sort of my own sort of holy moment. uh when I when I when I realized that Shopify was something much more than a software company was um when I moved from undergrad when I moved from from Montreal to Ottawa to go to law school. Um undergrad, as you all know, you don't have to show up for class,
You can just show up for the exam, you pass, you're all good. And that worked great for me because I was, you know, I was running a t-shirt business and I spent all my waking hours running this little this little business. Law school uses the Socratic method and you're required to actually be there. So, the t-shirt business, the wholesale business just didn't scale properly. And so, I needed a way to make money concurrently while I was in class without having to leave class. And the the moment where um I I had some relationships in the t-shirt industry because of the wholesale business. And I set up this little online store called Smooofer, which was a nickname of of a law school buddy of mine. This was sort of in the Zappos days where we all sort of people were creating uh business names and brands that were kind of random words that really meant nothing. So Smoother seemed fitting [snorts] and I remember sitting in tax law class and I wasn't an engineer. Uh I had very little experience at that point in in digital retailer or retail in general. And I was able to build a store and my biggest competitor after a couple of weeks was Walmart Canada. And it was great. I made some money. I was able to pay tuition and my my you know help the family. But the fact that I, as a 21-year-old law student, was able to build a company sitting in class that competed against the largest, one of the largest retailers on the planet at that that time. That felt incredibly different. That felt like giving people with ambition these incredible superpowers, these magical tools in which they can go and take their to their ambition and turn into something really, really big. And if I was able to do that and I was able to create independence, freedom, quote-unquote success for myself, wouldn't it be great if we can do this at scale for at that point thinking of a million merchants, which we have now, we bought a million merchants. That would have been crazy. But I thought, hey, if we give this to 10,000 people, this would be so unbelievable. And what would happen if anyone who had a product or an idea or a craft or a hobby was able to commercialize that thing and take it to a global audience? What what would that look like? And I don't think the the Bessemer letter memo was was wrong by any means, but at that point, the total addressable market for people that needed an online store was very small. That's the first thing. Second of all, the Shopify product was fundamentally an online store builder. We were effectively CMS with a checkout. We had some bells and whistles, but it was it was mostly just uh you know, an online store builder. And if you sort of fast forward till today, the relationship that Shopify has with the million or more brands on Shopify, some are, you know, a lot of small brands, but also some really big ones, the Gym Shocks and Allbirds and Bombas and Tommy John underwear of the world and Schwinn Bicycles and Nestle and and and Proctor and Gamble. The relationship we have with them is is that of we are their work. When someone says they're going to work in the morning and they're on Shopify, what they mean is they open up the Shopify dashboard. And the relationship we have with them today is we've given out over a billion dollars of capital. So we're their banks in some cases. We have we helped them with shipping and fulfillment. We help them with payments. Uh we help them with physical commerce as as well as online commerce. And so there was no way to predict where Shopify was going unless you were inside of Shopify where you were able to visualize or extrapolate, oh wait a second, we can be more than just online commerce. We can be a retail operating system. We can also help with capital and shipping and fulfillment. Also, the addressable market is going to be more than just the people currently looking for online stores. It's anyone that has ambition or it's anyone that wants to wants a piece of software that makes more money than it costs. And I think for that reason, it'd be very difficult to to predict something like Shopify 10 years ago.
Well, how big did you um like let's say 5 years into your journey, you you joined in 2009, you said?
2010. 2013, do you remember your revenue? Let's say your third year in, your fourth year in, do you remember your revenue?
I don't. Not not offhand. I mean, it was it was sub probably 100 million at that point. Um uh or maybe close to that. Um
Yeah. I mean, we we I mean, I certainly knew we were on to something. I I sort of always had the, you know, the twinkle in my eye that hey, this is something really really special.
Wait, so you guys were doing 100 million in revenue in year four?
It's probably it's probably less than I don't know the exact numbers, but
So, one cool thing with this memo is it has it for those earlier years. So, 09 uh 0809 uh basically. And it looks like 08 was like a million dollars in sales revenue. Um 09 two and a half million and then 2010 predicted was five million at that time. So it's definitely sub hundred million. So I'm not even close at that point. Um but
But you guys weren't struggling right
We we uh struggling. I mean I did not know I mean I I thought there was huge potential to this thing but like any early stage startup there is a sense of is this thing going to completely
Did you sell shares along the way? Um,
Not much. No. Uh, I mean I I may have done a very small secondary just to be able to afford a house when I got married. Uh, but beyond that, no. Um,
And and I think that is a great question to ask because it does show sort of the confidence you have in the business. So yes, there was some traction and yes, we began to see that people were being successful, but it was actually watching stores that started on Shopify around their mom's kitchen table that grew to be um I remember there's a company out of San Francisco called Dodo Case. Do you guys ever remember Dodo Case? It was like this beautiful um leatherbound iPad case and they started with us early, you know, at some point in 2010. And then Obama took a photo of of of him holding his iPad with a Dodo case. And I remember thinking like this is a company they make a great product but what we have done is we've we've enabled them to distribute it at scale and and and and including to the president of the United States. And I remember thinking that um this is real now. It is real that it's not just a place to sell a product for a limited period of time or some sort of promotional product but this actually enables more people to try their hand on entrepreneurship. And again it wasn't like you couldn't do it. You could sell on eBay or you can sell a product, you know, you can build a store on Magento, but it was just out of reach for so many people. So the the amount of people back in 2013 who self-identified as entrepreneurs was so damn low. And it wasn't because they weren't ambitious. It was because they're just the tools just did not exist.
Sam, there's this uh dope quote that I think Toby said that I think is like one of the you know, like
Yes, you you've heard this one.
So I was going to say the exact same thing. I'm not going to steer thunder, but let me preface by saying Harley's got this like beautiful PC inspirational way of describing like we're going to empower these people. The best description of Shopify was described exactly how Sean's about to explain it, which I I thought you guys wouldn't want like to militarize it, but it is the best way.
I thought it was amazing. Uh basically he there's a quote that he said where he was like you know Amazon wants to build a giant empire and at Shopify we want to arm the rebels which is basically like give give each of the individual merchants the tools and abilities to to sell and have great shops on their own rather than become the one big mega shop of the world. And I thought,
Which by the way would be would be really boring, right? I I think as consumers, you know, one of the major things that I'm I'm seeing now in retail sort of in kind of a a pandemic is one the obvious the obvious thing which is that we've had like eight or 10 years worth of acceleration in digital commerce as a percentage of total commerce um in the last like 6 months. So we've gone from like 15% of of e-commerce to total retail to like 25%. Okay, that's cool. That's neat. But the bigger thing that I'm watching is consumers globally have unequivocally began to vote with their wallets to buy from independent businesses whenever possible. And that's those are the rebels. And it's not that those rebels didn't exist. It's that now if you are a business, you know, let's say you make beautiful jewelry for your family and you decide this morning in the shower, I'm going to start a business today and sell this jewelry. The fact that you can give consumers the same one-click checkout experience that Amazon does. You can offer really affordable shipping for two-day shipping. You can get pricing on payments and late shipping labels that is similar to what the big guys are getting. That is only happening because of this arming the rebels thing. And and what really has happened is that Shopify, if you pretend for a second that we are a retailer, we're not, but if pretend for a second we are, we are the second largest retailer online retailer in America after Amazon. The difference is that number three, number four, number five, that's like Walmart.com, Target, all these other retailers. They take those economies of scale and keep them for themselves. Whereas, because we're a platform and because we're trying to arm the rebels, we actually can distribute all those economies of scale to entrepreneurs. So that today, starting on Shopify, you effectively get the same rates on all these things you need to run your business that the big companies were able to afford and you get it day one. And that is the idea of Army of the Rebels. That is how you level the playing field ultimately.
Were you guys just sitting around hanging out brainstorming and you came up with that shtick or did someone bring it to you or did you read it? That's a beautiful
Is that like an ad agency, you know, either million dollar retainer by
No, no, no. We are we are so we [laughter] are so not that company. We don't believe in in ad agencies. I I I don't know where where it came from. Uh but it certainly is resonating and sticking. And the truth is the the rebels are winning. Like I think I think the greatest, you know, workout gear right now is Gym Shark. I think the most comfortable pair of shoes I have is Allbirds. I think maybe too much information. The best underwear is Tommy John. Like the stuff that I love, not because they're on Shopify, but because I think as a consumer I like high quality products. They are all independent businesses, aka Rebels. So, it isn't like I'm I'm supporting them from this philanthropic charitable um angle. I'm supporting them and I'm buying from them because they have the best stuff. And I think that is
That is really great.
So, let's let's actually go down that path. And you mentioned something earlier about Schwinn Bikes. I like Schwinn Bikes because it's like a classic American brand. One of my favorite entrepreneurs, Sam Zell, bought it and I don't actually know if he still owns it, but he's a real estate guy. And it's super interesting. If you had $50 million to buy a brand right now and and and put them on Shopify, what would you do? Who would you buy
Or invest in if you can't?
Uh so I'm speaking personally now, right? Just you Harley.
Um
I'm trying to think of some of the worst experiences I've ever had online shopping. So here's the cool part of the Schwinn story to to your point about about Sam or you know whoever owns it now. Um Sam I I think the reason I love the Schwinn story is because Schwinn bicycles is a great brand. It's iconic. People that have Schwinn bicycles love Schwinn bicycles. But it took you know decades to convince them to go direct to consumer. It took them, it took a pandemic to convince them to finally decide to create a beautiful direct to consumer online store on Shopify. Um, in the first week of COVID hitting, I remember Heinz Ketchup set up a store on Shopify to do a direct to consumer in-home condiment site. I think it's called Heinz at Home. Ghirardelli chocolate did the same thing. Snickers did the same thing as well.
I think Pepsi did it too.
Yeah. I mean, Pep, we've had PepsiCo Pepsi Co brands on Shop for a while. Lays potato chips. Um
I think you guys did like a snacks.com or something
Something like that. Yeah, I don't remember exactly what what what the domain was, but the idea that these brands are are now going direct to consumer is great and also kind of weird. Why have they not been direct to consumer? Go back 250 years. Think about the way that consumers purchased. First of all, as a consumer, the way the place you went to buy was the place where people congregated. So the town square in a small town. If you bought bread, you bought bread from the baker. And if you bought shoes, you bought it from the cobbler. There was no intermediary there. And then in 1876 in Philadelphia, a guy named John Wanamaker created this concept called a department store called Wanamaker's Department Store. And it was the first time that a bunch of different brands and a bunch of different products were all sold under the same roof. And it was a big store in in in Philadelphia, which is I think where you are right now, right, Sam? Yeah. Uh, and I'm sure there's some Wanamaker Street there as well.
