Today, Shopify powers over 5.6 million active stores across 175 countries, generating a staggering $235.9 billion in sales volume. But the Shopify founders started with something much simpler in 2006 – a small online store selling snowboarding equipment.
When Tobias Lütke, Daniel Weinand, and Scott Lake launched their snowboard shop called Snowdevil, they didn’t expect it would grow into a company worth over $108 billion. Faced with clunky e-commerce platforms, Shopify CEO Lütke made a decisive choice to build his own solution – one that would ultimately reshape the online retail landscape.
This article traces the remarkable story of how these founders transformed a practical solution to their own problem into one of tech’s greatest success stories. You’ll discover the key decisions, business philosophies, and strategic moves that propelled Shopify’s impressive rise from snowboard shop to global e-commerce powerhouse.
The early days: how Shopify was really born
“I learned to always take on things I’d never done before. Growth and comfort do not coexist.” — Virginia Rometty, Former Chairman, President and CEO, IBM
Image Source: Popupsmart
In 2004, German programmer Tobias Lütke moved to Canada and found himself at a crossroads. Burned out from programming, he decided to follow his passion for snowboarding by opening an online store called Snowdevil with his friend Scott Lake [2]. Neither suspected this modest snowboard equipment shop would end up changing e-commerce forever.
From Snowdevil to Shopify: the pivot that changed everything
Snowdevil gained some early traction, but as sales predictably slowed during spring, Lütke and Lake had to make a crucial decision [2]. Their custom-built e-commerce software had caught other merchants’ attention, with several asking to license it for their own stores. This unexpected interest led to an important realization: their software could help many other entrepreneurs succeed online [2]. In 2006, they officially shifted from selling snowboards to launching Shopify as a platform that would help others create their own online stores [1].
Why Tobias Lütke built his own platform
Lütke’s path to creating Shopify began with simple frustration. After each founder invested 20,000 Canadian dollars into Snowdevil [2], they discovered existing e-commerce solutions were surprisingly bad – which Lütke described as “user-hostile database editors, at best” [3].
“It was so clear that no one who’s ever run a retail business had had any part in building these pieces of software,” Lütke recalled [3]. Instead of settling for clunky, expensive options, he decided to build his own e-commerce software from the ground up [4]. This practical solution to their immediate problem eventually became the foundation for Shopify [5].
The role of Ruby on Rails and early tech choices
A key factor in Shopify’s development was Lütke’s choice to use Ruby on Rails, a relatively new web application framework at the time [6]. After discovering Rails around 2004, Lütke was drawn to its design philosophy that tools should be both easy and enjoyable to use [7]. Using this framework, he built the streamlined platform for Snowdevil in just two months [8].
Ruby on Rails matched Shopify’s goals perfectly: it allowed fast development through its “Convention over Configuration” approach, provided scalability for businesses of any size, and came with strong community support [9]. These technical foundations proved essential as Shopify grew from serving just a few merchants to becoming a global platform.
Shopify also created an open-source template language called Liquid, written in Ruby and used since 2006 [6]. This commitment to open-source principles became a cornerstone of Shopify’s technical philosophy and growth strategy.
Key decisions that shaped Shopify’s growth
Following their early technical foundation, several pivotal business decisions propelled Shopify from a small startup to a global e-commerce giant. These strategic moves fundamentally reshaped the company’s trajectory and market position.
Launching the Shopify App Store in 2009
Recognizing the power of third-party innovation, the Shopify founders opened their platform to external developers by launching the Shopify App Store in 2009. This decision created a vibrant ecosystem where merchants could customize their stores with specialized tools. The App Store quickly became a significant competitive advantage, letting Shopify expand functionality without building everything themselves.
“We knew we couldn’t build every feature merchants would need,” explained Tobias Lütke, Shopify CEO. “By creating an open platform, we unleashed thousands of entrepreneurs to solve problems we hadn’t even identified yet.”
Going public in 2015: a turning point
In May 2015, Shopify took the monumental step of going public on the New York Stock Exchange. The IPO raised approximately $131 million, valuing the company at nearly $1.3 billion. This influx of capital fueled aggressive expansion into new markets and product development.
The public offering dramatically increased Shopify’s visibility, attracting more merchants to the platform. Between 2016 and 2019, Shopify’s stock price surged over 1,400%, reflecting investor confidence in the company’s growth strategy. The public market access also allowed the founders to make bolder, longer-term investments that would have been difficult as a private company.
The Amazon partnership and its ripple effects
In a seemingly counterintuitive move, Shopify formed a strategic partnership with Amazon in 2017, despite the e-commerce giant being viewed as a potential competitor. This alliance allowed Shopify merchants to easily sell on Amazon’s marketplace while managing their inventory through Shopify’s platform.
This partnership positioned Shopify as the central commerce platform for independent merchants, regardless of where their products were sold. The move reinforced Lütke’s vision of Shopify as the “retail operating system” for modern commerce, enabling sellers to reach customers across multiple channels while maintaining control of their brand and customer relationships.
The mindset of the founders behind the scenes
Behind Shopify’s impressive growth lies a unique corporate mindset that sets it apart from typical tech companies. The founders, especially CEO Tobias Lütke, crafted a distinctive company ethos that continues to influence every aspect of the business.
How Tobias Lütke’s philosophy shaped company culture
Lütke’s leadership philosophy centers on high-quality standards and continuous learning. Unlike many Silicon Valley companies, he embraces a detail-oriented approach, maintaining an exceptionally high bar for quality in all Shopify products. “I operate under the fundamental assumption that all companies are terrible,” Lütke once stated, reflecting his belief that businesses must constantly fight inefficiency and bureaucracy.
This perspective translated into a trust-based corporate culture where employees are encouraged to act like entrepreneurs. At Shopify, team members don’t need multiple levels of approval before implementing ideas – they can approach managers directly with projects and typically receive immediate support to proceed. This autonomy became a cornerstone of Shopify’s culture, attracting talent who thrive in environments that value initiative.
Why Shopify embraced remote work early
Long before the pandemic made remote work common, Shopify had already built systems supporting distributed teams. In 2020, Lütke declared “office centricity is over,” formalizing Shopify’s digital-by-default approach. The company provided employees with stipends for home office setups and developed comprehensive resources for remote collaboration.
This early adoption stemmed from Shopify’s belief that talent shouldn’t be limited by geography. The leadership also recognized environmental benefits, documenting how remote work reduced their carbon footprint compared to office-based operations.
The founders’ approach to risk and innovation
Innovation at Shopify thrives through structured risk-taking. The company runs regular “Hack Days” where employees pause regular work to experiment with new ideas that could improve the platform. Their “Do Things, Tell People” program encourages sharing these innovations through town halls and demos.
Failures aren’t punished but viewed as learning opportunities. As one Shopify leader explained, “We let people experiment and fail, but help them not fail repeatedly.” This balanced approach to risk has created a culture where innovation flourishes without recklessness.
From startup to $100B: what made Shopify different
“We have a very complex business where we make our own products that we manufacture, distribute, and sell across multiple channels in different markets across the globe. We need to introduce simplicity into our systems where we can.” — Paul Stephens, Head of Data and Technology, Neal’s Yard Remedies
“We have a very complex business where we make our own products that we manufacture, distribute, and sell across multiple channels in different markets across the globe. We need to introduce simplicity into our systems where we can.” — Paul Stephens, Head of Data and Technology, Neal’s Yard Remedies
Shopify’s rise to a $100B valuation wasn’t accidental—it came from strategic advantages that set the platform apart in a crowded market. While competitors focused on technical complexity, the company Lütke built took a fundamentally different approach.
Focus on small businesses and ease of use
Unlike established e-commerce solutions, Shopify prioritized user experience for small merchants from day one. The platform made previously complex processes intuitive, allowing entrepreneurs to create professional-looking stores without technical expertise. This commitment paid off as small businesses faced increasing challenges—with research showing 48% concerned about economic uncertainty and 45% struggling to acquire new customers [10]. By simplifying commerce technology, Shopify democratized online selling for businesses that lacked resources for expensive custom solutions.
Building a developer-first ecosystem
At the heart of Shopify’s growth lies its thriving app ecosystem—a network of 13,000+ apps and 200+ themes that enhance merchants’ capabilities [11]. This developer-friendly approach created a flywheel effect: more merchants attracted more developers, who built better tools, which then attracted even more merchants. By 2020, the App Store had nearly doubled from 3,700 to 6,000 apps [12], with app partners earning $230 million that year [12]. The typical merchant uses approximately six apps to run their business [12], creating a platform that’s continuously improved by thousands of external innovators.
Shopify Plus and scaling with enterprise clients
As merchants outgrew basic solutions, Shopify created Shopify Plus—an enterprise platform starting at $2,000 monthly for businesses doing up to $1 billion annually [13]. With 99.99% uptime and the ability to handle thousands of transactions per minute [14], the platform offered enterprise-grade reliability without enterprise-grade complexity. This allowed Shopify to expand beyond its small-business roots while maintaining its ease-of-use philosophy.
Shopify Payments and Shop Pay: owning the checkout
Perhaps most critically, Shopify vertically integrated payment processing through Shopify Payments and Shop Pay. This strategic move eliminated third-party payment fees [15] while dramatically improving conversion rates—Shop Pay increases checkout conversions by up to 50% compared to guest checkout [10]. With 43% of buyers preferring Shop Pay at checkout [16], Shopify effectively owns the most critical moment in e-commerce: the purchase decision.
Conclusion
Shopify’s transformation from a modest snowboard shop to a $100B tech giant proves that solving real problems can lead to extraordinary success. Their story shows how frustration with clunky e-commerce tools sparked innovation that changed online retail forever.
Beyond impressive numbers, Shopify’s real achievement lies in democratizing e-commerce. Through smart technical choices, strategic partnerships, and relentless focus on merchant success, they built more than just a platform – they created opportunities for millions of entrepreneurs worldwide.
The founders’ commitment to quality, continuous learning, and calculated risk-taking shaped a company culture that keeps pushing boundaries. As e-commerce continues to evolve, Shopify’s foundation of merchant-first thinking and technical excellence positions them to lead the next wave of retail innovation.
FAQs
Q1. Who is the founder and CEO of Shopify?
Tobias “Tobi” Lütke is the co-founder and CEO of Shopify. Born in Germany, Lütke moved to Canada and started Shopify after initially launching an online snowboard equipment store called Snowdevil.
Q2. How did Shopify grow from a small startup to a multi-billion dollar company?
Shopify’s growth can be attributed to several key factors: focusing on small businesses and ease of use, building a developer-friendly ecosystem, launching Shopify Plus for enterprise clients, and integrating payment processing through Shopify Payments and Shop Pay.
Q3. What makes Shopify different from other e-commerce platforms?
Shopify stands out due to its user-friendly interface, robust app ecosystem, focus on empowering small businesses, and ability to scale with growing companies. It also owns the checkout process through Shopify Payments, which significantly improves conversion rates.
Q4. How does Shopify’s company culture contribute to its success?
Shopify’s culture, shaped by CEO Tobias Lütke, emphasizes high-quality standards, continuous learning, and entrepreneurial thinking. The company embraced remote work early on and encourages structured risk-taking and innovation through programs like “Hack Days.”
Q5. What strategic decisions helped Shopify become a leader in e-commerce?
Key decisions include launching the Shopify App Store in 2009, going public in 2015, partnering with Amazon in 2017, and developing Shopify Plus for enterprise clients. These moves expanded Shopify’s reach, increased its capital for growth, and solidified its position as a central commerce platform for businesses of all sizes.