As the CEO of Canada’s biggest technology company by market value, Tobias Lütke is part of a new wave of Canadian business royalty. In late 2017 he even reached billionaire status.
His company, Shopify, is a unicorn-status Canadian e-commerce company Ottawa, Ontario providing the software for people to build and take control of their own online stores and retail point-of-sale systems. The company reported that it had more than 800,000 businesses in approximately 175 countries using its platform when 2019 began, with total gross merchandise volume exceeding $41.1 billion over 2018.
Like many successful Canadian businesspeople, Lütke’s story doesn’t come without its twists, turns, hiccups and scary moments.
Here’s 15 interesting things you probably didn’t know about Shopify’s Tobias Lutke, courtesy of his interview on NPR’s How I Built This with Guy Raz.
1) He struggled in school because he was dyslexic and likely had ADHD
Shopify was founded in 2004 by Lütke, Daniel Weinand, and Scott Lake after Lütke built an online store for Snowdevil, a snowboarding brand. But long before that, he had troubles in school growing up in Germany.
The reason? Various learning disabilities.
“I got diagnosed with all sort of disabilities and it was very hard for me to perform well in the tests. I don’t think I ended up getting a full diagnoses of it, but now its pretty clear-cut that it was ADHD,” said Lütke.
“Basically I was bored [in school]… If I don’t understand the problem I’m trying to solve, it’s very hard for me to learn a solution to a problem, and so it just didn’t work well for me.”
Lütke left school after grade 10 to join an apprenticeship program to learn how to become a software engineer.
2) His hero at his first job was this rebel coder guy named “Jürgen Starr”
Lütke’s first job placement out of school was at a subsidiary of Siemens. His boss was a guy named Jürgen Starr who Lütke came to idolize.
“He would always come to work on his BMW motorcycle and he would have long hair and he wasn’t wearing a suit like he was supposed to. Like a total rebel,” said Lütke. “I immediately gravitated to him and his little group of rebels. They were working on really interesting things…and I wanted to be a part of their group,” he said.
By his second year Lütke was getting paid to program all day.
“And I loved it.”
3) He and his now wife Fiona executed a true distance relationship to perfection
Lütke met his wife, Fiona, in Canada when he was on a snowboarding trip. They stayed in contact afterwards until she was graduating her bachelor’s degree. She proposed to come back to live with him in Germany. Imagine telling that to the parents.
“I’m perpetually impressed by her parents,” laughed Lütke. “They are the most wonderful people.”
Fiona landed a job and the pair lived together for 10 months. At that point Fiona had to return to Ottawa to start a Master’s program. Lütke followed her.
4) If not for a missing work permit, Lütke may never have created Shopify
Once he landed in Ottawa, Lütke was deep in talks with a local company to join them. When it came time to sign the papers, they realized they couldn’t hire him without a work permit, which he didn’t have. A family lawyer advised him that he couldn’t work in Canada, but he could start his own company.
Since he liked snowboarding, he decided to start a snowboard business.
5) His wife’s parents were basically the coolest, most supportive in-laws
So he’s this German kid living with his girlfriend’s mom and dad all the way in Canada. But it was all good. “They were amazingly supportive,” said Lütke.
“Here’s the reality: I don’t think I can live with anyone’s parents. But I can live with them. They made it incredibly easy. They’re just the most kind, genuine people and they played massive roles. [My mother-in-law] was a diplomat and she later did all the payroll and accounting at our office, and Bruce [McKean] ended up saving the company later. Entrepreneurship is messy and it’s a journey… Everyone around you are coming along for the trip.”
Bruce McKean is now one of the largest shareholders, with about a 4-per-cent stake that was worth about $388.5 million in 2017. Indeed, he wrote cheques for Shopify to meet its payroll when cash flow was tight.
6) He couldn’t find software to build his first ecommerce website, so he built it himself
It was 2004 and Lütke wanted to get his online shop up and running within a week. He looked around at the options and… didn’t find much.
“I was sitting in front of my computer absolutely stunned that we hadn’t figured out how to build online store software yet,” said Lütke. “There was no software that would make this easy, especially the credit card part.”
Lütke wanted more than what modern website-building infrastructure could offer at the time. They would take a snowboard up a mountain and chronicle its day through blog content. He wanted to tell stories about every snowboard he sold.
“We had something in mind that wrapped good storytelling around products that people were excited about, trying to breakaway from the CS Catalog metaphor, but we were much too early.”
Lütke and his partner Scott Lake each put $20,000 into the business but it wasn’t really enough. So Lütke built the ecommerce website himself.
7) To do that, he learned Ruby by looking at the code
Lütke always loved the Ruby programming language, an open-source coding language with Japanese-only documentation at the time. He learned the language by looking at the code, creating and launching the Snowdevil website about 2.5 months later.
The way he talks about his love for the language is pretty special:
“I really really love the idea of constructing something in your brain, having this idea – it’s a little bit like painting. You have an idea for something and the programming language ends up becoming the mechanism for translating this idea you have in your head onto a canvas.
If you have an amazing landscape but they give you crayons, it’s possible to build a massive landscape with crayons, but it always be a crayons painting. So this was sort of in the way Java and others…they just didn’t match up with the way my brain ended up constructing the relationships that make up software.”
During those 2.5 months, Lütke spent 16 hours a day programming. “There was literally nothing more interesting in the world at this time,” he said.
8) His first sale on Snowdevil was a magical experience
Lütke’s first sale came soon after he developed the website from scratch. It came from a guy in Pennsylvania.
“Until then you’re just someone who built something. When I meet Shopify customers I often ask them, ‘Where were you when you got that first order?’ And everyone can remember.”
Snowdevil did well from a profit perspective, earning the cofounders a small amount of savings. Lütke’s biggest challenge was keeping inventory in stock.
“The moment I got my first sale, from that point on I could never get that again,” said Lütke. “But that was such a profound moment, and I wanted to spend my time on helping other people get that experience.”
9) People immediately wanted to get their hands on the software he built
People loved the design of the Snowdevil website and pretty soon they began asking Lütke if he would license the software that built it.
“It was just different. It wasn’t the normal grid. It told stories. It was clearly modern and web 2.0ey. And so people were saying, ‘I would love to just build my business on that foundation,'” said Lütke.
All of this posed a legitimate question for the two founders of Snowdevil. Eventually they made the decision to pivot from a snowboard company to a software company. Goodbye Snowdevil. Hello Shopify.
“Scott and I said, ‘Ok, skateboards or software?’ It was pretty obvious that we should go with software.”
10) Shopify’s original CEO Scott Lake left the company in 2007
The software industry was headed in a direction in which most CEOs had highly technical backgrounds, but that wasn’t the case while Lake was CEO of the company. Lütke said “I think he also realized that I would end up being the person who cared most about this company in the long run.”
“I was hugely worried about it,” said Lütke. “I was not convinced that I should have a CEO job. But someone told me that if a great VC invested in the company, they would have the network to find a great CEO. And so I was like, ‘Okay, maybe I should talk to venture capitalists.'”
11) He was comically unprepared to pitch VCs
It was 2008 and Lütke headed to California to chat with investors. He had a couple appointments and no pitch deck.
After all, he only ever had dreams to build a 20-person company. He didn’t need the money and he didn’t think this was a venture. His biggest worry was the expense of flying out to Silicon Valley and spending a few days there.
Lütke crashed at a youth hostel in San Francisco, bought a bike on Craig’s list and biked to the VC meetings.
“They probably were already thinking, ‘Who is this?'” laughed Lütke.
But the investors perked up once they started asking questions. The VCs offered term sheets on the condition that Shopify move to California.
Since the company needed its new CEO, Lütke was introduced to several potential CEOs. “I wanted to play with technology. That’s what I was good at. That was my identity”
Lütke returned to his team in Ottawa and ultimately declined the term sheets and the CEOs.
12) The global recession of 2008 highly benefitted Lütke and Shopify
“I thought we were toast,” said Lütke. “I was ready to tell people that I can’t meet payroll.”
It was late 2008 and Shopify’s money was running out. However, a lot of folks who lost their jobs in the recession had lots of ideas about starting their own online businesses. They did just that.
Lütke watched as the numbers climbed and accelerated in late 2008 and 2009. And in 2009 Shopify hit cash-flow neutral status for the first time.
13) Lütke was pretty bad as a first-time CEO
“Not good,” he said. “My team was very, very patient with me.”
“The wonderful thing about computers is when you tell them what to do they’ll keep doing it and they’ll do it until you tell them to stop. It turns out humans are not like that,” joked Lütke. “It was a very large learning curve”
The founder said he largely held the company back from what it should have become in 2009 due to him learning the job of CEO at his own pace. He intentionally slowed down the growth of the company.
Being a CEO was also a large amount of responsibility for the new leader.
By this point the company’s revenue was over $1 million a year, but it had big expenses and a growing staff. People depended on Lütke and the pressure weighed heavy.
“It’s a crushing responsibility. You’re responsible for everyone who’s there. People had families, kids. My family, it’s not a wealthy family. People gave me money that they didn’t really have,” he said.
McKean, Lütke’s father-in-law, gave him cash to meet payroll. As a government bureaucrat, McKean was basically putting his life savings into Lütke, the German kid that his daughter met at a ski mountain.
“Everybody was just unbelievable supportive because they somehow believed in this idea,” said Lütke.
14) Shopify more than survived
Lütke focused on marketing and continued to see the numbers grow. He went back to Silicon Valley and raised $7 million from investors on a $25 million valuation.
All kinds of new businesses started popping up, and the investors pitched in another $15 million. The rest is pretty much history.
By the end of 2013, Shopify had over 80,000 customers and 300 employees. In 2013 the company would go on to raise $100 million and eventually IPO in 2017.
In 2014, Lütke and Fiona finally moved out of her parent’s house.
15) Lutke has a secret Shopify shop that sells socks
Today there is more than 800,000 Shopify merchants, and most reading this post have likely bought something from a store powered by Shopify. Every 52 seconds on Shopify, someone has the experience of getting their first sale. It’s where Lutke says they go from being a builder to being an entrepreneur.
In fact, Lütke has his own side-hustle. It sells socks, but he won’t reveal what it’s called.
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