“$100M dollar brands are being built for boring products” - Harley Finkelstein of Shopify

Oh, yeah, of course. I, in fact, I've given them out as like at events. But their headline doesn't make sense. It's 'sensory essentials that bring delight to everyday moments of care.' I... Is that

Well, thank you. Thank you for plugging Shopify.

I have a, you know, one of the cool... So we have 2 million stores on Shopify. We're about 12% of all US e-commerce right now. One of the things that I'm seeing a lot of right now are these what I think would be considered to be fairly, you know, this is going to sound pejorative but it's not, like boring products becoming very sexy. And then, I don't know if you guys saw this but literally a week ago, Dyson came out with this thing called the Pencil Z app. Have you guys seen this? Anyways, so Dyson, the guy, the man, the founder, he actually did this press conference. It's on YouTube now. I just checked.

I think it's even less than that. It's like 5 minutes, but exactly. But there's like millions of views on this demo for a [ __ ] vacuum cleaner. And actually what I thought about it like one, he's been... Dyson's not a new company. They've been around for a very long time. But this idea that he took something fairly boring, made it way better, and now he's able to actually leverage modern media like YouTube to actually tell a story. I bet a bunch of people are actually going to buy their first Dyson product because of this video than ever did before.

Amazing. But you could sort of look across a bunch of different... I'm having my coffee now like my Ember mug, right? This idea of adding a small heater to a mug I think seems kind of boring. Ember's a great Shopify store. So, I've been following them since pretty much day one. I mean, that's a huge company now both in wholesale and in consumer.

I'm not going to do anything like that. But what I will say is, you know, actually let me show you. Give me one second. You guys know my best friend David Siegel? I think you've had him on the show. Standard of David's Tea. He took his company public for many hundred millions of dollars. Him and I have this tea business on the side we started during the pandemic called Firebelly Tea. Anyways, we tinker like you guys do on weekends. We have this idea. It's literally... I'm showing you a prototype right here. You kind of see it. It is literally our way and we think that Duraflame needs to be disrupted.

So we had this idea in 2020 and actually now David and I have a working prototype. It's actually you can read it. It's literally made from Canadian softwood. It's 100% kiln dried. We have branding. It's called Flint, which we think is a cool name for it. But you look across all these different categories of things that most of us as consumers take for granted and there's always a 10x version of it. I like... my wife's really into, she would hate me saying this, she's really into karaoke. Have you ever gone and tried to buy a karaoke machine? There are companies that will rent them to you because they're so big and clunky. Like, right, someone should go and disrupt the karaoke machine business. That to me is such a brilliant idea. Or you know, tools. Like you move into a new house and you kind of need random tools. Most of these tool companies you buy at Home Depot, they're clunky and they don't look good. There's actually a couple beautifully designed, almost like the Touchland version of tools selling on Shopify. People misunderstand TAM to their detriment. Total addressable market. Everyone kind of looks at TAM as being this thing which is like, what is the... there's a pie and I'm going to take a bigger piece of the pie.

Yeah, it's very much like zero sum. And funny enough, you know, Sequoia has said this publicly, so I think I can say it now, but the reason Sequoia didn't invest in Shopify 15, 16 years ago was they looked at the TAM of retail SMBs on the planet and they effectively forecasted if Shopify would have a meaningful percentage of that market, how big of a company we could be. What they missed was that we're actually growing the pie itself, right? This positive sum. Someone who's starting... you know, I don't know the person behind Touchland, Shawn, but presumably this person didn't necessarily... what she wasn't in or he wasn't in this industry previously. Maybe it wasn't even an entrepreneur.

No, of course you can't. That's the... you almost cannot do it. You actually have to almost imagine, you know, let's just use Flint for a second. By the way, this is not for sale yet. This is a prototype. So, you can't go buy it. But let's just... what you would do for Flint is you'd say, 'Okay, what are the products in the market? The biggest one is Duraflame. How much does Duraflame sell a year?'

You know, I think it's something... I think last time we checked it was like half a billion dollars. And it was like Home Depot, Lowe's, these sort of home hardware stores. But then one of the things David and I were thinking about is, 'Why are these not sold in convenience stores?' Right? Why do I have to go to Home Depot for it? What if I'm picking up my weekend beer at a bodega or a 7-Eleven, I should also pick up my Flint as well. So, what you have to do as an entrepreneur is you really have to kind of broaden the horizon of what is the potential. And Kat Cole and I were just speaking last week. Kat Cole, who's the CEO of AG1, they're doing $600 million a year with AG1. With one single SKU. There is no way Chris, who's the founder of AG1, there's no way that Chris thought about that like, you know, basically they didn't just grow their piece of the pie. They grew the pie infinitely. And I think those are the best entrepreneurs for me.

I mean, I have... like you look at just shop or you look at Ritual, Ritual Vitamins or Seed which is probiotics. There's a company that I think is really cool. They're called Prose, p r o s e. They do personalized shampoo based on hair type. They're doing about $100 million. This is public information. They put it out there. $100 million in annual revenue, 80% of it is recurring customers. So you basically send them a follicle of hair, they analyze it and they send you a shampoo specific for what you need. I think that personalization stuff for shampoo... even I, obviously, I don't know if you guys take supplements. I take like eight a day. I wish, you know, I could basically just take one pill that has exactly what I need specifically fit for me.

It's a little bit of, you know, correlation versus causation. All of my lipids are getting better and I think there's definitely some correlation to it. Although as part of my taking all these supplements, I'm also working out more and I'm eating much better and I'm drinking far less, you know, red wine on weekends. And so I can't necessarily draw a direct causality to it but certainly I do think that and honestly it's not that big of an inconvenience. If it helps me by 5% or 10%, I'll do it. I also do every year for my birthday I do something called PreNuo. Do you guys know PreNuo?

Yeah, I love PreNuo. I've been doing it for the last six years. Every year my birthday is in November.

One year. You got to be careful with that.

I would get rid of the billionaire. I think, if you forget the billionaire thing for a second because I don't think you need to be a billionaire to do that. I think you can do it.

Of course.

Well, you're not... No, but Sean, it's [ __ ]. And this is... So if you didn't have the trainer come to the house, you'd be in way... I suspect you'd be way worse off than you are now.

You know, when I had my first child, Bailey is now my daughter's eight. So when I had my first child, Dave Siegel, again, bringing up again, Dave's a couple years older than me, he had kids before I did. He basically said to me when I was having Bailey, he's like, 'Look, if you can afford to have a nanny, he actually described it as a marriage saver.' And I didn't really understand what it meant. And what he meant was just everything is easier as a new parent at home. I was, you know, Shopify was already publicly traded. I work 70 hours a week. He's like, just if you can afford a nanny, you should do this. And I didn't really know what he meant by the whole it's a marriage saver. In hindsight, I now do because some of the stresses that I think some people have, they just don't go away. They're just less... you lessen them when you have certain luxuries in your life. And I mean, I grew up without money. So I didn't grow up in that world. I don't take that for granted, but I do see how these things get easier.

Yeah, that sounds that seems super. I mean, and to his credit, because he is so self-aware, he truly is incredibly self-aware, he knows what he's really good at. And that's if you think about Shopify, I think I said this to Sam when we were meeting, but you think of the phases of companies. At the beginning of the first phase of a company, everyone needs to be a Swiss Army knife. Everyone does everything. And then the second phase, it's more like what I call a triple threat phase, where like...

Yeah, I would say for us it was zero to I don't know. Dunbar's number, you know that concept, Dunbar's number?

Yeah, he said 150 or something like that, which comes from tribal times where that's how many people any human can remember at any one given time. So, I would say zero to 150 or so, it's like that, you know, Swiss Army knife. In those days at Shopify, I did BD, I did sales, support, partnership, built the app store and partnerships program. I was also the lawyer. I mean, I was the general counsel. I wasn't really a good lawyer. I'd only practiced for a few months, but

Yeah, I didn't have a CFO at the time or anything like that. So, it's like Swiss Army knife time. And then I think eventually, you can almost market for us around the series A or series B, where now more people can sort of slot into the right roles. Meaning you don't do one thing, but you do a couple things quite well. Now I was chief operating officer, and so I looked after a couple big organizations. We built a sales organization. We began to think about different areas of product. Post pandemic, so like 2021, 22, a couple things had to change for us. One is we were bloated. We had like 14,000 people that didn't work. We brought it down to what we are now, which is around 8,000 people, and we quite like our size right now. We had a couple businesses that were not the right business for us to be in. One of them was shipping and fulfillment. We ended up selling it to Flexport. So, we began to think about side quests and main quests. Like, what are our side quests? Let's get rid of them. Let's focus on the main quests. But the third thing that happened sort of in this new phase of Shopify is these spiky objects. And what that really meant was we basically brought in a new leadership team. And part of that process was Tobi and I sort of thinking about what are the things that we truly should be spending our time on, meaning the highest value for Shopify. And that meant that we kind of rearranged the company not necessarily around these traditional roles of you do this and that, but rather based on our strengths. And as part of that, you know, Tobi's not on the earnings calls anymore because I got that. I can do that. I think I can do that at a really great level. I think I can eventually be world-class at those earnings calls. I'm going to focus on that. And Tobi is going to run product for Shopify. That has been ultimately one of the greatest transitions, I think. This is my 16th year at Shopify. It's Tobi's 20th. And we've been public now for about a decade, but you can't get there right away. You have to almost go through these phases in order to figure out what your spiky object is.

Refers to me as the lead singer of the band. I think a lot of companies throw around this idea of mission. Shopify's mission is very simple. Increase the amount of entrepreneurs on the planet. That's it. And we increased it by adding more entrepreneurs to Shopify who otherwise were aspiring previously.

Well, actually the best part is we end up hiring mostly entrepreneurs. People that have had that entrepreneurship in some way has deeply affected their life. For me, my grandparents are Holocaust survivors. After the Holocaust they went to Hungary in the '50s, Hungary got really bad, the Hungarian Revolution happened. Canada let in 40,000 Hungarian immigrants in 1956. My grandfather came here with my father and his siblings. They came to Canada. My grandfather ended up selling eggs at a farmers market his whole life. That egg stall is called Le Capitaine and still stands today. It's like 5 km from where I'm standing right now. So, entrepreneurship for me is deeply personal because it allowed my family to survive and also create the life that allows me to be here. My version of that is when I moved... I grew up in South Florida. I moved to Montreal to go to McGill when I was 17 in 2001 and my dad was no longer in our lives. I had to support myself and my mom and my sisters and so I started a t-shirt company. That t-shirt company would eventually become an online t-shirt company and I would become one of the first merchants to use Shopify. That's kind of how I got here. But Tobi comes to it in a very different way. He's an immigrant. He lives in Germany, meets a wonderful woman who becomes his wife named Fiona. He moves to Canada, can't get a job as a new immigrant, wants to start a snowboard shop and finds it incredibly difficult to do so, writes a piece of code to sell these snowboards which would eventually become Shopify.

There are a couple things that I think define his leadership really well at Shopify. One fundamentally is that he spends a lot of his time using all the newest tech constantly. He's constantly reading the newest white paper on a new LLM that just came out. I don't think that's uncommon. I think you'd see that with Patrick or Zuck, but there is a category of these super technical founders that did not exist historically. At least if they did, they weren't running 100 billion-dollar or trillion-dollar companies. Tobi's in this group of people that are super technical that know more about the code base than anyone else on the planet. The other thing that I think is important is one of the things he does every year is basically, during Christmas break, he spends his time running the priorities for the company. And January 1st every single year, for the last decade or so, the whole company gets an email. And it's incredibly specific direction of what are we going to build this year. And it's not based on necessarily a survey, it's based on his deep intuition of how the product needs to evolve. In some cases, Shopify runs some of the largest flash sales on the planet like for Supreme or Taylor Swift or these massive, crazy throughput 30,000 transactions a minute type stuff. So, sometimes it's like we have to be able to have this type of throughput. And other times it's look, the future of retail is not going to be just online, it's going to be everywhere. And Shopify has to make it super easy to sell across every surface area. I announced 2 weeks ago what we're doing with Roblox inside the Roblox universe, that now we're embedding commerce in there as well. Tobi didn't say go do Roblox. What he did say was make sure that everywhere where consumers are spending their time, there is a way for our existing merchants to easily turn on that channel. And it turns out in something like Roblox, I forget what the DAUs are, but it's ridiculous. I think there's like 700 million monthly users in the metaverse. I think the largest chunk of those are in Roblox. It's like a hundred billion dollar industry today. It's going to be like 930 billion by 2030, I think. So, that's the type of stuff that he does. He doesn't necessarily... I know some CEOs will go and talk to customers. He does that also. But ultimately, what he's incredibly good at is the intuition on that. The second thing is I think he spots talent really well. He finds these people across Shopify that are unobvious people, and he gives them the room to do their very best work. And that ability to completely ignore an org chart and rather focus on impact and like, 'Hey, that person I saw that, he's in GitHub. He's looking at their commit.' And he's like, 'I like the way they wrote that. I'm actually going to elevate that person and let them do something much bigger, much more creative.' And then probably the last one I would say that we're kind of talking about it earlier is that I think what he's done for me is he sees a better version of me than I even see for me. I see a pretty good version for me. I've always been someone who's somewhat fairly confident in my ability to get better at stuff. But he basically always shows me that there's a new gear for me. And he's like, 'You don't even know that gear exists yet, but you think you're in the fourth gear. There's a fifth gear.' And his expectation of me and frankly, I think the entire team is that we re-qualify for our job every year. And it's one thing to expect that your team is going to re-qualify. Frankly, he also believes he has to re-qualify every year. And the pressure that he doesn't put more pressure on anyone else than he puts on himself. I think that is an amazing thing.