Shopify Inc. headquarters signage in Ottawa on Tuesday, May 3, 2022.Sean Kilpatrick/The Canadian Press
An excerpt from The Shopify Story: How a Startup Rocketed to E-commerce Giant by Empowering Millions of Entrepreneurs, Larry MacDonald, ECW Press, Oct. 8, 2024
As Shopify’s growth took flight, the task of nurturing its core values was handed to Daniel Weinand with his appointment in 2012 as Chief Culture Officer (CCO). He would work on this assignment in collaboration with Chief Talent Officer Brittany Forsyth while retaining his duties as CDO.
In an interview for the Hazel Blog, Weinand said the definition of culture that resonated with him was: “Culture is the beliefs and willing behaviours of a group of people.” With the right beliefs or values, a company didn’t have to direct or monitor employees very much; nor did it need to formulate a lot of rules and procedures. Employees would on their own initiative be looking for ways they could contribute and add value. At a 2019 Core Summit Conference, CEO Tobi Lütke riffed on Shopify’s culture:
Everyone in the company knew that – wherever possible – we would resist creating excessive process and rules. Instead, we wanted everyone to use their best judgment, bring their own authentic selves to work, and add little bits of their own lived experience. Then, everyone in the company simply trusts that, against the backdrop of all that is happening, great judgment ends up winning, and people make good choices. The truth is, though, that this started at around 20 people, but it continued to work for us at 40 people, 400 people, and even now at 5,000 people.
Having core values can be a way for a large company to retain many of the positive aspects of a startup, Lütke and Weinand felt. Without a lot of rules, procedures or close supervision, employees had more autonomy to get stuff done. Having a greater say in performing jobs could also release creativity and productivity while providing job satisfaction. What were Shopify’s core values? One was: “We value people who get shit done,” to use the phrasing from Shopify’s early Annual Reports and IPO Prospectus (it is believed Shopify enjoys the distinction of being the only company to get the word “shit” into its prospectus). In later Annual Reports, the phrase was replaced with the toned-down equivalent, “We value people who are impactful.”
Staff were given latitude to deliver results and told not to be afraid to take risks. As Lütke told Motley Fool in 2018, failure “is not a bad word at Shopify. … We usually refer to it as a successful discovery of something that did not work.” On the Disruptors podcast in 2021, Forsyth added: “New hires are empowered by telling them they are going to fail and it’s actually okay. Failure is part of the learning process. We talk a lot about these mental models and create a psychological safety zone that gives them permission to experiment, fail, change their mind.”
Within Shopify, negative feedback was not to be interpreted as a putdown. Employees were urged to give and welcome honest opinions so everyone got better at their craft and issues didn’t fester. Lütke and Weinand found that Canadians were too nice, so they needed encouragement to participate in more direct communication.
Feedback was best served directly to avoid dilution of the impact needed to promote growth. “I am not a fan of the popular ‘shit sandwich,’” Weinand declared (shit sandwiches give negative feedback between two slices of positive feedback). “We need to be able to openly talk about issues,” he added. For those viewing negative feedback as a personal affront, the recommended reading was Carol Dweck’s Mindset: The New Psychology of Success, a guide to converting fixed mindsets into growth mindsets.
However, disregarding the feedback and chronically repeating mistakes or habitually failing to deliver projects ran one’s “trust battery” down with superiors and co-workers, which could lead to closer supervision or poor ratings on evaluations. The “trust battery” was charged at 50 per cent when people were hired, as Lütke said; every time they worked on a project, the trust battery was charged or discharged based on what transpired.
Probably the second-most important cultural value at Shopify was “thrive on change.” At its core, Shopify’s culture embraced staff who were not only resourceful and adaptable but also “antifragile,” meaning they emerged better than before from trials (recommended reading was Nassim Nicholas Taleb’s book Antifragile: Things That Gain from Disorder). If they saw a tidal wave coming, they grabbed their surfboards – and maybe even ended up more skilled at doing some tricky flips or rolls on the whitecaps. Software firms like Shopify needed such sturdy individuals on board because of the frequent disruptions in new technologies. If a new thing was emerging, it needed to be quickly investigated and addressed; teams should be ready to switch to new tasks virtually at the drop of a hat, even in the midst of a project.
Shopify’s culture also valued people who were “committed learners.” Emerging stronger from upheavals and keeping up with the company’s rapid growth required continuously learning new things and getting comfortable with the uncomfortable transition periods. Often recommended to employees for reading and discussion were the books from the Shopify Book Bar. The over two dozen books on innovation, design, leadership, business organization and other related topics were well read – to such an extent that “people have accused Shopify of being a book club thinly veiled as a public company,” Lütke told The Observer Effect in 2020.
“The core competency of our business needs to be how to thrive in chaos and how to react quicker than anyone else,” Lütke told Jason Calacanis during his This Week in Startups podcast. To promote adaptability, Lütke applied Chaos engineering and periodically subjected Shopify to random disruptions. For example, he would log into Shopify’s server farms and turn off random servers, to make sure the company was prepared in the event servers actually crashed. The tests created an environment where staff would feel that things going wrong was not such a rare thing, leaving them more prepared to cope with Black Swan events. Resiliency can be lost when everything goes right for a long time and complacency sets in.
The Shopify Story: How a Startup Rocketed to E-commerce Giant by Empowering Millions of Entrepreneurs by Larry MacDonald.Supplied
Recruitment: Key to Shopify
When Weinand was given the CCO role in 2012, it included responsibility for recruitment. The hiring process could be used by Weinand and Forsyth to screen employees for the likelihood that they would be a good fit with the company’s core values. To this end, the interview process placed a lot of weight on getting to know the applicant through their “Life Story,” which was simply a conversation about their interests, passions, key decisions and major turning points in life.
It could be said Shopify’s core values resemble the traits of an entrepreneur in many respects. Even better if the applicant has had actual entrepreneurial experience or their personal history exhibited a strong inclination toward it. On the other hand, certain personality types rarely get through. “For instance, we ban any office politics and thus try to avoid adding people who in their previous jobs, worked toward their own personal gain rather than their team’s,” Weinand told the Hazel Blog.
Through the Life Story technique, Shopify wanted to uncover events in the job seeker’s life that demonstrated they were likely to fare well at Shopify. For example, was there a positive reaction to unexpected upsets? When CEO Lütke was interviewing for an executive assistant, the applicant who got the job told him about a trip he took to Europe; he went there with a band to help his friend organize the tour because he liked doing that sort of thing (That’s good, thought Lütke). But then the bassist didn’t show up. The band could have packed it in or played without the bassist even if the performances would be subpar. Instead, the organizer learned how to play the bass lines himself and filled in during the performances. “You’re hired,” Lütke told him.
When Chief Marketing Officer Craig Miller was interviewing a candidate in 2015 and learned he was working a successful side hustle selling selfie sticks online, it was a big factor in awarding the job. This applicant, Brandon Chu, had discovered that bestsellers on amazon.com tended to become bestsellers on amazon.ca with a lag, so his successful gig was arbitraging that lag. At Shopify, Chu went on to become a vice-president responsible for the partnership ecosystem.
President Harley Finkelstein, too, was keen on hiring people with entrepreneurial tendencies: “When I’m hiring, I don’t want the person who played on the tennis team,” he explained to Canadian Business in 2016. “I want the person who created the tennis team. I do not want the person who participated in some charity; I want someone who created a brand-new charity. I look for people who are self-starters – the people who have a bit of a founder mentality.”
However, Shopify’s biggest source of proactive recruitment was “acqui-hiring.” This term refers to acquiring certain startup companies, not just for their technical expertise but also to bring their founders into the Shopify fold so they would become product managers running a particular area of the company with a considerable amount of freedom. Lütke was well acquainted with the poor track record in the industry of acquiring other companies, so his acquisitions were conditional on the staff in the acquired company welcoming the opportunity to become part of Shopify. Some of the founders joining Shopify included:
• Daniel Debow, VP of Product, founded the startup Helpful.com
• Satish Kanwar, VP of Product Acceleration, started Jet Cooper
• Glen Coates, VP of Product, founded Handshake.
• Carl Rivera, VP of Product, co-founder and CEO of Tictail
• Mike Schmidt, Head of Shopify Collabs, founded Dovetail
• Kaz Nejatian COO, founded Kash
In fact, much of Shopify was made up of fairly autonomous teams run by former founders. Some of the founders arrived, as mentioned, after their startup was acquired, while others were failed founders who had subsequently joined Shopify. The failed founders actually played an important role. They “ended up being an amazing source of talent for Shopify,” Chu remarked during an April, 2021, Black Box of Product Management podcast. Many of those who “made it through to leadership levels were ex-founders and we liked to joke, but it was totally true, that our gold mine was finding failed founders … they had been through that founder experience and had the weight of everything on them, so they often kind of had a chip on their shoulder and wanted to prove themselves.”
In short, bringing in so many entrepreneurs and startup founders was likely a big reason why Shopify was able to scale up to a large size yet maintain a startup culture and entrepreneurial mindset to get stuff done as a culture-driven organization. As Finkelstein replied to a question raised at a conference in 2019: “One of the keys to our success … is that nearly every team that you’re on at Shopify feels like a startup.”
Often, people who cleared the Life Story segment of their interviews did not have all the boxes checked for technical skills and experience required by the position. This was to be expected since Shopify was not based in a primary talent market, like Silicon Valley, where there is an ample supply of fully qualified workers ready to hit the office floor running. However, job tenures in those primary markets averaged 18 months, much shorter than the 5 to 10 years in secondary talent markets like Ottawa, Toronto, Montreal and Vancouver. Since they would be staying for a while, this meant Shopify could still hire staff who were short of résumé-type credentials but long on potential, then invest in training them up to their potential.
But for those seeking to work at Shopify, the Life Story technique was a key tool for screening candidates. In a post to his blog, Josh C. Simmons described his experience applying for engineering jobs at two top U.S. technology companies and Shopify. At the U.S. companies, he had to solve algorithm problems during his interviews. “My hunch with those companies was that it wouldn’t have been a major issue if I was videoing in from the State Penitentiary … as long as I solved the algorithms correctly,” he commented. On the other hand, during his interviews at Shopify, Simmons found the “Life Story was a refreshing and free-ranging conversation that felt humanizing.” He landed a job at Shopify and observed in his blog post: “The people were phenomenal. I think assholes are pretty effectively filtered out during the Life Story round.”