Tobi Lütke

The move

2004. Tobi Lütke, a 24-year-old German programmer, moves to Ottawa to be with his girlfriend and tries to start an online snowboard shop called Snowdevil. The shop software out there, OsCommerce, Yahoo Stores, is terrible. He can't get the catalogue to work properly. So he builds his own.

The snowboards didn't last long. Two years in, the platform he built for himself is way more interesting than the boards. In 2006 he switches and calls it Shopify. The market's full of big players. Everyone thinks small sellers will always live on giants like eBay or Amazon, and a platform for independent shops is a niche.

Shopify grows on a rule Lütke took from open source. Build for the merchant. The shop belongs to the customer. Deep tools for developers. An app store. No lock-in, on purpose. By 2013 Amazon launches Amazon Webstore to compete head on. Within two years they shut it and partner with Shopify instead.

Shopify goes public in 2015 at $17 a share. By 2021 it's the biggest commerce platform outside Amazon, handling over $200B a year in sales. Lütke still reviews product changes himself. The bet was that merchants would always want their own front door over a stall in someone else's market. It's paid off for nearly twenty years.

Why it was risky

In 2006, selling software to small shops was something most VCs ignored. The market looked tiny. Everyone thought big online selling belonged to the marketplaces. Lütke ignored them, turned down Amazon's buyout in 2010, and bet on the long game where the merchant keeps the customer. It paid off because he held that position for fifteen years.

The numbers

From a snowboard shop to the biggest commerce platform outside Amazon. Same move the whole way. Back the merchant against the marketplace, and turn down every exit along the way.

The lesson

The platform wasn't the risk. Holding his ground against the whole market for fifteen years was. Lütke built Shopify on one rule he never broke. Back the merchant, never compete with them. R.I.S.K. is for builders ready to hold an unpopular position for ten years longer than feels comfortable.