How Shopify Makes Business Simple for Entrepreneurs — Even Aspiring Ones

Have you ever had a genius idea in the shower that you thought would make an incredible business? So many of us dismiss those plans because we don’t know how to move forward, but Shopify president Harley Finkelstein says entrepreneurship is for anyone: “If you know how to use email, you can effectively build a store on Shopify within an hour or two.”

We wanted to know more about this full-service system for launching an online commerce business, so Katie called up Finkelstein for an in-depth chat about Shopify’s business model, its origin story, and how it’s setting up entrepreneurs to take back control from marketplaces like Amazon or Etsy.

Katie Couric: If someone landed from Mars and they didn’t know what Shopify was, how would you explain it?

Harley Finkelstein: Shopify makes it easy to turn an idea into a business. It’s a tool — a piece of software — that we hope makes it a magical experience. Fundamentally, if you want to sell something to somebody else, anywhere around the world, you can do so with Shopify. If you pretend for a second that Shopify was a single retailer and you were to aggregate all our stores, we’d be the second-largest online retailer in America, after Amazon.

The cool part is that with Shopify, the payment rates and shipping rates and functionality and technologies you get are things that, unfortunately, were out of the hands of small businesses pretty much until a couple of years ago. Now, starting a business is a lot easier. You’re able to scale it a lot better, and it reduces the barriers to success. They’re your customers, and you’re not renting them from some big marketplace. So I think Shopify is sort of an entrepreneurial magic wand.

So Shopify provides infrastructure for a small business, from soup to nuts.

So many people have great ideas in the shower in the morning, but then their second thought is, it’s too complicated or it’s too expensive or I’m not an entrepreneur and I don’t know how to do this. But the next step is just going to Shopify.com and for $29, we walk you through the entire process of building a business. If you know how to use email, you can effectively build a store on Shopify within an hour or two.

We think that’s not only incredibly democratizing, but it’s incredibly fun as well. One of the coolest parts about being an entrepreneur now is that not only is it as easy and inexpensive as it’s ever been, but also, there’s a term called DTC — direct to consumer — and it’s a business model whereby you as the brand can connect directly with the end consumer. I don’t think that’s a fad. I actually think that’s where retail is going. You know, 20 or 200 years ago, the baker sold their bread to the consumer and the cobbler sold their shoes to the consumer. And so I think we’re going back in many ways to having this really authentic, interesting relationship between the brand the entrepreneur and the person buying from them.

Tell me a little about Shopify’s origin story.

About 16 years ago, we were trying to sell snowboards on the internet. Tobi Lütke, our founder, had moved to Canada from Germany and met a girl. It’s not it’s not easy for new immigrants to get a job, but one of the opportunities as a new immigrant in Canada is that you can start a business even if you can’t seek employment. And so he’s in Canada, he likes to snowboard, and he decides he wants to sell snowboards on the internet.

Back in 2005, there were two ways to sell a product on the internet. The first way was to sell on a marketplace, like eBay or Etsy. That was a very inexpensive way to sell a product online. The only problem with that model was you effectively are renting customers from that marketplace. You don’t have a direct relationship with the person buying your snowboards. And so it’s very difficult for you to build your own brand because pretty much every one of those those snowboard pages kind of look the same; there’s no way for you to stand out. The other option was you would pay some very large software company $1 million or more and they would help you build your own custom online store. That’s what some of the big retailers did.

So Tobi was frustrated that there wasn’t a great way to build a beautiful, scalable, easy-to-use online store to sell the snowboards. Being a computer programmer by trade, he decided to write a piece of software to allow him to sell these these snowboards. Around that time, people begin to ask him, “Hey, can I use the software to sell my products?” He realizes the snowboard business is a good idea, but maybe the software behind the snowboard business that enables more people to participate in entrepreneurship and small business is a great idea. So he stops selling snowboards and starts focusing on the software. I met him around that time, when I moved to Canada from the U.S. to go to school. I needed to support myself in school — my parents weren’t around anymore and didn’t have any money. So I became one of the first merchants to use Shopify. I put myself through law school and business school selling T-shirts. After I finished school, I called Tobi back in 2009, and I said, “I think this piece of software is effectively a superpower for anyone that has ambition.”

There’s a great quote by your CEO, who differentiated Shopify from Amazon by saying, “Amazon is trying to build an empire, and Shopify is trying to arm the rebels.” I love that, but what exactly does he mean?

He’s using a bit of a Star Wars metaphor there, of course. We don’t want commerce to be one-size-fits-all. I think the world would be a pretty sad place if we were all walking around wearing the exact same T-shirt or hoodie or non-branded baseball cap. The world is more exciting when we have lots of brands and lots of entrepreneurs participating in the global economy.

You’ve said the Great Resignation is baloney, and I’m curious why. We know 3.5 million women have left the workplace because of too much pressure with doing their job and homeschooling and everything else. But I gather you think people aren’t resigning, but reassessing.

More than half the businesses on Shopify are women-owned. In fact, about 49% of people who started a business during 2020 were women. So you’re seeing a lot more people, a lot more women, try entrepreneurship. This great resignation, I think, has been completely misunderstood. I think that people left the workforce, because some of them were disenchanted with office life. But some of them actually recognize that they wanted more, that their life’s work was important to them. And they have more options now. I don’t believe the great resignation is legitimate: I think it’s a great reset. I think that people don’t want to work at bad jobs. I think people are looking to spend their time doing things that are deeply meaningful to them — they want to self-actualize.

In many ways, this is the golden age of entrepreneurship. And I’m curious what you think is fueling that. How did the pandemic accelerate trends that were already happening?

First of all, I think COVID-19 brought challenges for small businesses. That’s fairly obvious, but I think there were two reactions: the first reaction was that a lot of businesses saw the tidal wave was coming, and they they decided to run for the shore. They sort of waited for the “normal” to come back. But there were these other entrepreneurs who saw the tidal wave and grabbed their surfboard. Many traditional businesses realized, “This is the right time for us to digitize.” It was sort of this great catalyst, and that resilience was incredibly inspiring. And I don’t think we’re going back to a pre-pandemic way of doing business.