Few people did better during the pandemic than Tobi Lutke. The Shopify founder signed merchants to his e-commerce platform at a record pace, doubling revenues in 2020.
It was all systems go. Lutke hired like crazy to meet demand and locked up every server he could.
Meanwhile, Shopify’s stock price more than quintipled, putting the company’s valuation at over $200 billion.
In an excellent episode of This Week in Startups, Lutke tells us what it was like to guide his company through these heady times.
Employees were so distracted that Lutke had to make a rule: anyone caught checking the stock price had to buy donuts for everyone. Tim Horton’s, if you please.
But as the pandemic receded and stores reopened, consumers retreated from e-commerce. This left Shopify overbuilt and overextended.
Lutke was in a position he’d never been in throughout Shopify’s heady expansion. He had to do layoffs.
Shopify laid off 10% of the company this summer. For Lutke, the decision was wrenching.
Because Shopify had expanded ahead of demand. When demand dropped, that left Lutke with no choice but to lay off workers.
However, many of those workers would’ve never had the job in the first place had Lutke not expanded aggressively. And as well-paid tech workers, they’re likely to land on their feet.
Shopify’s tough times show how even large businesses struggle. A company with a $200 billion market cap can see its stock crushed and be forced to do layoffs just months later!
Take heart, early stage founders! The big boys face huge challenges too, just like you.
In all, I think Shopify is well positioned for the long term. It focuses on providing amazing service and doesn’t copy merchants’ products like Amazon.
When your livelihood depends on a platform, you want someone you can trust. Shopify fulfills that role better than Amazon.
I also commend Lutke for building a more honest culture at Shopify than most companies. He calls Shopify a team, not a family.
We all know the “family” rhetoric is nonsense. I have to give Lutke credit for telling it like it is.
I think his employees will too!
What do you think of Lutke’s leadership during the pandemic? Leave a comment at the bottom and let me know!
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