w/ Harley Finkelstein, Firebelly Tea
This episode is also available on YouTube: youtu.be/eyGIORYpio4
Before Harley Finkelstein was President of Shopify, he was one of their first customers, selling t-shirts on a Shopify store sixteen years ago. In 2010, he joined the company as a "jack of all trades" and now serves as its president.
Today, Shopify as a platform is the second largest online retailer in the U.S., and Harley is once again a merchant selling on Shopify.
In this episode, Harley opens up to us to share his origin story, why ecommerce is an outdated term, what he's most proud of at Shopify, and where he thinks he could have done better.
The Unofficial Shopify Podcast
Kurt Elster: On this show, we share stories of retail entrepreneurship, commerce entrepreneurship, entrepreneurship in general. It is my passion. And with that, we also share learnings to help you, entrepreneurs, along the way on your journey. Now, today’s guest is an entrepreneur with an incredible background, having founded his first company at age 17. In addition to a law degree, he has an MBA from the University of Ottawa, where he cofounded the JD/MBA Student Society. He’s received the Canadian Angel Investor of the year award, Canada’s Top 40 Under 40 Award, Fortune’s 40 Under 40, and was inducted into the Order of Ottawa. I don’t know what that is, but it sounds good.
From 2014 to 2017, board of the C100, and from 2017 to 2020, he was on the board of directors of the Canadian Broadcasting Corporation. You may have seen him on TV as one of the dragons on CBC’s Next Gen Den, and a starring role in Discovery Channel’s I Quit, and in a number of CNBC appearances. Have you figured it out yet, my friends? Yes, it is my honor and pleasure to tell you we’re speaking with Harley Finkelstein, the president of Shopify today. I’m your host, Kurt Elster.
Ezra Firestone Sound Board Clip: Tech Nasty!
Kurt Elster: And this is The Unofficial Shopify Podcast. Harley, welcome. Oh my gosh. I can’t believe you’re here.
Harley Finkelstein: Dude. It is an honor to be here. You and I have known each other for I think a decade, at least, right?
Kurt Elster: Yeah. 10 years. It’s gotta be.
Harley Finkelstein: And we’ve never done this before. In my sort of prep before this, I was just looking at the notes, and I was just trying to remember when we first met and how we first met, and I think one of the reasons that you and I have always connected, and always been friends, and have always sort of liked each other, is you believed in Shopify, the ecosystem, the community, pretty much before anyone else did. And you took a bet on something that… You know, I see your Shopify license plate behind you. I think you had that on a Jaguar at one point. Is that right?
Kurt Elster: It was. A Jaguar.
Harley Finkelstein: A Jaguar. Sorry. I’m saying it very Canadian. Very British. But I remember seeing that license plate on your car and thinking, “Oh my God. Somebody got a Shopify license plate.” Now, not to say that right now if someone got a Shopify license plate… I actually have the Ontario one right here, because I don’t have it on my car, but I don’t want anyone else to have it, so I locked it away so no one in Ontario can have it. But if I saw it today, I would still say, “Oh my God.” But it’d be like it kind of makes more sense. There’s millions of merchants on Shopify. There’s millions of partners on Shopify. We’re a much larger company now.
When you did that, it’s sort of like when Josh got the Shopify tattoo.
Kurt Elster: Oh, that I remember.
Harley Finkelstein: I remember that too. And I was like, “Wow.” And by the way, I put this in the same category. Josh getting a Shopify tattoo and you, Kurt, getting the Shopify license plate. There was this like, “Holy shit,” moment. The impact, the community that we have is so much bigger than anything I think we ever could imagine. And so, thank you for being an OG. I think that you have probably inspired, not kidding, hundreds if not thousands of Shopify partners to build agencies, and apps, and themes, and just connect with the Shopify ecosystem in a way that most companies don’t really work with their community. So, yeah.
Kurt Elster: Well, of course I’m thrilled to death to hear you say it, but I think it bears repeating. When I started with Shopify it was because I had a friend who owned a local bike shop and he said, “Look, I hate my eCommerce site. I need something new.” I said, “What do you hate about it?” He goes, “It’s hard. I just want something easy.” I said, “I heard about this thing called Shopify. We should try it.” And I didn’t know what I was doing. We went and custom designed a theme. We’d never done it. But the documentation was great, and the community was there, and so it made it easy to adopt. And I thought, “Well, this is good.” And really very quickly we recognized-
Harley Finkelstein: What year is this? This is like 2010? 2009? Something like that?
Kurt Elster: Yeah. It’s probably 2010. And I thought… By 2012, we put together like, “Oh, it’s the community. It’s the ecosystem. That is the magic here.” And that’s why we said, “You know what? We’re going all in on this.” And certainly, hitched our cart to the right horse.
Harley Finkelstein: Yeah. Well, we appreciate that, but you also… You took a huge shot and a huge chance, and you deserve all the success you’ve had because of that shot that you took. One of the things I think that is missed about Shopify fairly often is I remember being at… I think it was Unite 2019, which was in Toronto. I think you were there. And I remember looking around. There were thousands of people everywhere. And thinking, “Oh my God.” And I started just randomly walking up to people and introducing myself and saying hi. And every one of them had a story. And every one of their stories was a story of entrepreneurship. It was a story of them taking the road less traveled. It was them solving a problem for themself, or a neighbor, or friend that led them to something else, that led them to something else, and eventually ended up becoming a large app developer, or theme developer, or large Shopify agency, or just someone who’d host The Unofficial Shopify Podcast.
What’s interesting, you started the show by saying you are an entrepreneur. I also am an entrepreneur. Tobi is also an entrepreneur. The 10,000 people that work at Shopify for the most part are also entrepreneurs. The merchants on our platform are entrepreneurs. Our app developers are entrepreneurs. Our theme developers are entrepreneurs. This is the entrepreneurship company. Not because of Shopify, but because of all the people that are involved with this thing, this community. Every one of us has decided that entrepreneurship is the greatest tool to self-actualize, to solve a problem, to find success, to find ourselves. I mean, like self-identity. The reason… The Venn diagram overlap of Kurt Elster and Harley Finkelstein is entrepreneurship even before Shopify. Entrepreneurship was a thing that I did at 17. It was a thing you did early in your life. Not because we thought one day we would meet, and we’d build businesses shoulder to shoulder, but because it felt like this great thing that was accessible to us.
And so, when I talk about, I try to tell the whole world that Shopify is the entrepreneurship company, it’s not about our company, or our business model, or any of the KPIs or metrics we run the business with. It’s about the fact that it is sort of like we are the guardians of the world entrepreneurs, and we invite all these entrepreneurs to join our cause, and we have always tried to create space for partners in a way that the famous Bill Gates said to create more value for others than we capture for ourselves. That goes for our merchants. That goes for our partners. And that goes for people that work at the company.
Kurt Elster: I had no idea that was a Bill Gates.
Harley Finkelstein: It’s called the Bill Gates line. I think someone had famously asked Bill Gates, “Hey, how do you know when you’re a platform?” And either Bill Gates or someone on his team said, “Well, you know you’re a platform when you create more value for others than you capture for yourself.” The actual thing that I think was missing from it is the next line, which I’ve sort of informally added, which is and over time that proportion should shift more towards others. Meaning over time, you continue to create more value for others relative to what you’re capturing for yourself. That’s what makes a real community, a real platform. I don’t think most companies that have an app store, or that say they have a partner program, are actual platforms. I think what they’re doing is they’re simply just plugging holes in their… they’re plugging product deficiencies.
I think a real platform makes space for others to build on top of. You have this incredibly… From what my notes tell me, you have two million downloads on this podcast?
Kurt Elster: 2.1.
Harley Finkelstein: 2.1 million. You have 2.1 fucking million downloads on a podcast you created by yourself. By the way, it’s unofficial, meaning you didn’t ask anybody for permission. I love that.
Kurt Elster: It was a working title and I’m like, “All right, let’s see how long we get away with this.”
Harley Finkelstein: No, it’s great. Because it shows what my mother, and my bubby, and my family would say is it shows chutzpah. It shows audacity. And so, the fact that there was room for someone like you that really gives a shit about entrepreneurship, eCommerce, retail, technology, is able to say, “You know what? I’m just gonna grab an SM70 microphone. I’m gonna add this really cool soundproofing in my office behind me. I’m gonna create these thing called The Unofficial Shopify Podcast.” And you now have 2.1 million downloads. That is the most entrepreneurial thing I could think of.
And so, that happens all over this ecosystem and community, and that’s the reason why I’ve been at Shopify for a third of my life, and I’d like to be at Shopify for the rest of my life.
Kurt Elster: Speaking of being at Shopify, how’d you get there? How did you get involved? I have no idea.
Harley Finkelstein: So, born in Montreal, raised in South Florida, went to McGill University in Montreal for undergrad. My mom and dad lose everything in 2001. Sort of forced into entrepreneurship. Montreal is I think the most amazing city in the world, but I was in Montreal, needed to make money, started a little t-shirt business, tiny little t-shirt business making t-shirts for my university, which was McGill, and eventually more universities started buying my t-shirts, and I built a nice little promotional t-shirt business selling t-shirts to universities for their orientation weeks and their bookstores.
A mentor of mine says, “Your business is… It’s a nice little business, but it’s never gonna scale. You should consider going to law school to become a better entrepreneur. Not a lawyer, but a better entrepreneur.” And he’s like, “Why don’t you apply to the University of Ottawa? You can go to law school here. I’ll be here. We can be closer together.” And I was like, “I don’t know anyone in Ottawa, but sure, that sounds like a good idea.”
So, I get to Ottawa in ’05 to go to law school. It was a joint law MBA. Have no friends. Have no family except this one mentor in town. Started asking around where the entrepreneurs hang out and I’m directed to a coffee shop in The Glebe here in Ottawa, Bridgehead, to a group of founders and entrepreneurs that called themselves at the time The Young Entrepreneurs Club. YEC. And I started hanging out with this group, because I didn’t have any other friends here, and there were about five or six of them, and one of those entrepreneurs, one of those founders was this brilliant computer programmer named Tobias Lutke, who just moved to Canada two years earlier from Germany.
And we became friends, and he had built this snowboard company, didn’t like the software on the market, so wrote a piece of software to sell these snowboards, and very quickly people started asking him if they can use the software behind the snowboard business to start their own online stores. And I ended up becoming one of the first merchants to use Shopify. I was store 136. I turned my wholesale t-shirt business into a direct-to-consumer retail business. We sort of had small licenses for comic book characters and a bunch of stuff like that. Very inexpensive licenses and very limited geographies. And spent the rest of law school and business school trying to get as much value as I could out of school. I mean, I thought law school was very much like finishing school for entrepreneurship. Learned how to write, how to think, how to debate. But more importantly, building this online store.
And then in 2008, went out to Toronto to Article, which is what you do after you finish law school. You have to sort of get called to the bar and get insured. And so, part of the process is you have to go work for a law firm for a year, and I didn’t even make it the full year. Sort of halfway through I called Tobi and said, “I would love to come back to Ottawa and join you, and at the time Cody, and Daniel, and help you build this company.” And so, a year later I moved back to Ottawa with my then girlfriend, who’s now my wife, Lindsay, and started at Shopify as effectively the jack of all trades. How can I help? Business development, I did law. We had no CFO at that point. We had no CMO. It was just we were a small group of people. And that was about 13 years ago.
Kurt Elster: Looking at Shopify now, and the global force it’s become, hearing the humble origins, it’s almost hard to imagine, right? Just the incredible growth over time. And that you were an online merchant and one of the first customers. And selling t-shirts, no less, which is where a lot of people start with their Shopify stores, and joined, and it sounds like you worked your way up to president. Hey, good job on the promotion. Wow.
Harley Finkelstein: Thank you. Yeah. Yeah. Well, I mean Shopify is… You know, there’s this thing. I don’t know what it is. I think it’s called the law of ecology, but I cite it from time to time because I really like it. The law of ecology, I’m sure someone’s gonna call me out for getting this wrong, but it’s effectively that for a species to survive it has to grow at a rate that is equal to or faster than the environment around them. If you bring that analogy or metaphor into a business building situation.
The first way is, holy shit, that is impossible. These startups and these companies that grow so fast, how the hell am I gonna keep up? There’s another way, which is sort of the entrepreneurial way, the optimistic way, the way that I’ve always wanted to live my life, which was challenge accepted. If Shopify is gonna grow at this ridiculous pace every year on the product side, on the growth side, on the business, on every side. I need to keep up. I need to grow at an equal to or greater pace than Shopify. And that was always very motivating to me.
Just one random example. You go back seven years. I guess seven years ago we were November 2014. We were thinking about the IPO, which was… We were considering in early 2015, which turned out to be May 2015 when we rang the bell, went public. I had never worked at a public company before. I never really had another job before. I certainly had never taken a company public. I’d never done a roadshow. I’d never met with bankers. It was something that it was out of my depth entirely. But it felt like a challenge. Okay, I need to get really good at this. All right, who recently went public? Who’s doing this really well? What does a roadshow look like? How do we create a Shopify version of the IPO?
I mean, there’s always a little bit of imposter syndrome, and insecurity, and anxiety, and all of that is always the case, and so let’s not pretend like that goes away. That doesn’t go away. Still doesn’t go away today. However, there’s also an aspect of that which is incredibly motivating. All right, let’s get good at this thing. And I think we got good at… I think we got as good as needed to to have a really good, successful IPO. I think we’ve become a good publicly traded company. We’ve become a good, trusted, publicly traded company, which is what the goal was. And we did it in a way where I don’t think we lost our soul. I think we were able to do it in a way that is still very much true to the character, true to the identity of Shopify. We are a weird group of people. We all are kind of like… The executive team at Shopify, it’s kind of like the Avengers, right? Everyone’s so different.
I mean, Tobi and I are polar opposites, but there is a deep, mutual respect for each other’s crafts, and like the Avengers, when we get together we can move mountains.
Kurt Elster: I want to talk to you about Shopify, the platform, like we’ve got your superhero origin story here, and it is incredible in how relatable it is to general entrepreneurship. I think a lot of people, myself included, were nodding along with that experience. So, let’s talk about Shopify itself. In a recent AMA, and ask me anything, a Shopify merchant who sells Tesla accessories, Peter White, asked is Shopify still the go-to platform for commerce. What do you say to Pete?
Harley Finkelstein: More than ever before, Pete. Yeah. It unequivocally is. And don’t take my… I’m the president of Shopify. Of course, I’m gonna say it is, but don’t take my word for it. Look at the product. Look at how the product is evolving. The product is not only evolving in terms of simplicity, making it easier to get started. It’s evolving in terms of scale, so very large merchants, like in the last couple of quarters I mentioned companies like Glossier, and Spanx, and Mattel. These big brands that in some cases had their own massive custom stacks in house are now coming to Shopify, as well.
So, we’ve made it easier to get started. We’ve made it easier to scale. The merchant solutions, you go back five years ago, I think the only merchant solution we had is payments. We didn’t have Capital. Now Capital is a $4 billion capital business. I mean, we’ve given out $4 billion of cash advances and loans to merchants. We have fulfillment now, because we think fulfillment-
Harley Finkelstein: Thank you. I love the cha-ching. Actually, I also run a Shopify store now, as you know. I should probably turn on my… I’m gonna turn on my sound in case Firebelly gets a-
Kurt Elster: That’d be fantastic.
Harley Finkelstein: Yeah. Just I think that’d be super fun and Firebelly is doing pretty good right now, so we usually get a cha-ching every… I don’t know. At least every couple of hours. So, you look at the product, how it’s evolved. Fulfillment, shipping, Capital. Shopify Markets for international. Things like Shopify Balance to manage money. You look Audiences, which is our new ad product. I don’t know another company that is innovating at that pace in the commerce space. At the same time, making sure that if you are at your mom’s kitchen table right now and you want to start a business, it’s still really easy. And if you’re a publicly traded company, or you want to be a publicly traded company, like FIGS, or Allbirds, or Oatly, you can also use it. So, the breadth and the total addressable market of Shopify is massive, but it’s just as good if you’re starting out right now for the first time as if you’re running a multi-billion dollar company and you’re publicly traded.
And along the way, all of these challenges, and barriers to success that most merchants face, we’re trying to reduce those barriers. So, I don’t know. And then you add things like Hydrogen, and functions, and Oxygen, and you add things… Storefront renderer. And you add things like the way that our theme store operates. And you see the evolution of the app store and the types of apps we’re adding. And you know, new checkout functionality. I mean, we’re a product company first and foremost. I think we’re getting better at the sales, and marketing, and storytelling aspect to the business. That’s part of the reason that I’m out there so often now, is telling the story.
But I think there is no company that is more future-proofing commerce than Shopify.
Kurt Elster: In our Facebook group I said, “Hey, I’m interviewing Harley. What do you want to know? What should I ask him?” Almost everything was about like, “Well, this is my one pet feature and when am I gonna get that?” Or you talked about the absolute… I’m sure your mentions are insanity on Twitter of like, “When am I getting X, Y, and Z?”
Harley Finkelstein: Yeah. Everyone wants something very specific, and everyone thinks that everyone else wants the exact same thing. The truth is they don’t, so part of being good at building product is making sure that we do things that most people need most of the time. So, make the important things really, really easy, and make everything else possible. That is, I think the right model. And I think that’s how we think about it.
Kurt Elster: That’s how you prioritize… So, when you’re looking at essentially an endless, just an infinitely updating list of feature requests, that’s how you prioritize them?
Harley Finkelstein: Yeah. I mean, a lot of it is… A lot of the stuff that’s coming out right now we’ve been working on for two or three years. So, stuff that… Like Audiences, the ability for us to do Audiences now is because we did a lot of work many years ago to make Audiences available now.
Here's a great example. On our IPO roadshow, we did 93 meetings with investors all over the world, and one of the biggest questions we got was, “Why are you doing this whole physical commerce thing? Why are you doing that? You guys are eCommerce. Focus on eCommerce. Aren’t you distracting?” We said, “No, no, no. You don’t understand. We want to create a retail operating system and what that means is we need to make it really easy for merchants to sell anywhere they have customers.” And so, customers, consumers are spending time online, of course. We know that. But they’re also spending time offline. And you still got a bunch of side looks and questionable reactions. “Well, it feels distraction.” But today if you were to… No one would ever say, “Why are you doing physical retail today?” No one would ever say, “Why do you have integrations to Instagram, or Pinterest, or Snap, or TikTok? Or YouTube?” It’s like of course. It’s omnichannel. It’s everywhere.
So, sometimes the products we put out, like we did the omnichannel functionality in 2015 when we started talking about that, people… It just wasn’t well understood, but our hypothesis was that’s where it’s going, and by the time people need that we need to be ready for it. You know, as you probably heard, I did the Limited Supply Podcast with another of our great partners, Nik and Moiz, who I know you know well, and we talked about a bunch of features that we weren’t doing well. You know, taxes, and luckily some of the stuff we talked about ended up getting shipped shortly thereafter. But there’s always gonna be stuff that merchants want and are frustrated with us about.
The difference, I think, and I hope, is that we really listen. I mean, everything that everyone said in this Facebook group, I’d love to actually hear them before I actually comment on them, but I suspect that it’s something worth thinking about, and if it’s something that is really important, you better believe we’re gonna put that out soon.
Kurt Elster: Yeah. I’ve been around long enough to see what features do end up getting shipped, and then seeing how useful they eventually become, and so I have faith in that. As we’ve discussed what Shopify does, I’ve heard commerce, eCommerce, omnichannel, social selling, in-person retail. When I say eCommerce anymore, I feel like I’m using the wrong word. How do we encompass this?
Harley Finkelstein: Kurt, it’s like saying electronic mail. You sound like my grandmother. Here’s the difficult part or the challenge, and it’s actually… It’s the challenge of my life, given my work and my craft at Shopify, which is as president, I really view my craft as storyteller. Public storyteller of the company. Whether it’s to contingencies like investors, or media, or general public, or merchants, or partners, or government. Anyone that needs to know what Shopify does and how we exist, that’s sort of my job.
And in many ways, the company, the product teams, the R&D teams make it really easy for me to do so, because they’re really fuckin’ smart, and they’re really good at their jobs. But in other ways, in 2012, I would have said Shopify is an eCommerce provider. In 2013 or ’14, I would have said we’re an eCommerce provider. We also do physical retail, so point of sale provider. In 2015, I would have said, “Well, we also have this thing called Shopify Plus we just announced, and so we also do some enterprise stuff.” And in ’16 I’d say, “Well, we also do payments, and we do shipping labels,” and then ’17 or ’18 I would have said, “Well, we also do Capital, and we do some other things, as well.” So, over time as you add all these things, it makes it more challenging to describe Shopify in sort of these sound bites of these fortune cookie type one-liners.
But everything you said is true and I think that is the real value of Shopify, that no matter what you need, if you want to sell something to somebody else we need to make it easy, we need to make it scalable, and we need to make it so that that connection, that direct relationship you as the merchant have with your customer feels authentic, organic, and in line with your brand.
You know, just to sort of… This one metric that I really love talking about, which is attach rate. And I mentioned on the earning calls, and I talk about it on TV, but I don’t really talk about it on sort of a product podcast like this, or community podcast like this, but the reason it’s important is this. Attach rate for us, and for me, is a really important metric because the equation is very simple. It’s basically revenue divided by GMV. Our attach rate is the highest it’s ever been in the history of the company. The reason is not that we’ve done anything, any financial maneuvering, or anything funky. It’s just more merchants are taking more of our services. You can almost replace the term attach rate with product utilization rate. More merchants are taking more of our products.
And that, to me, is really, really important. There’s a lot of other metrics that matter too, that we care about, but gross profit dollars is important, GMV is important. There are things like that that obviously we monitor and care about. But the product utilization rate or attach rate is important because it actually demonstrates what is the value we create for the merchants and the people that use our product. And that’s the highest it’s ever been, so I’m really proud of that.
Kurt Elster: Is that the thing you’re most proud of right now with Shopify?
Harley Finkelstein: Okay, most proud, it’s like picking your favorite child.
Kurt Elster: Yeah. Tell me. Which is your favorite of your children?
Harley Finkelstein: Couple things. I really… I’m very, very proud of how Shopify operated and acted during the pandemic. I think the pandemic was really difficult for everybody. Even those people that were pandemic winners still should say it was difficult. But Shopify earned incredible trust with businesses, and entrepreneurs, and merchants during the pandemic in a way that it meant that first week when the pandemic hit, moving Capital from just U.S. capital to U.K. and to Canada. It meant adding curbside pickup instantaneously. Tap and checkout so you don’t have to… Made things easier on the checkout side. We did a lot of things that made things a little bit easier during a very, very difficult time. And I think we showed up in a way that I’m really, really proud of.
So, now that the pandemic is somewhat behind us, at least in some places, I’m really proud of how we showed up, and I think the trust that we built during the pandemic is now paying dividends because everyone that had to shut down their physical store during the pandemic that didn’t have an online store, a lot of them had to open up overnight. Luckily for us, and fortunately for us, a lot of it was Shopify. Now that they’re reopening their physical stores, they’re now replacing their existing old traditional point of sale system with the Shopify. That’s really… That’s the result of that trust.
Beyond that, more recently I think just the pace. The pace of Shopify is really strong. I mean, there’s a lot of issues right now in sort of the macro economy. I don’t think there’s any sort of doubt about that. But generally, it feels like every couple of days, or every week or so, there’s now a new product release. And the product release is not trivial. I mean, these are like Collabs, Audiences, Markets Pro, Point of Sale Go. Those are four major, major releases in the last… I don’t know, eight weeks or so?
There are companies built, like companies with hundreds of people built around each of those one single products, and a lot of that’s just part of Shopify, and a lot of it’s just part of the core product. So, that’s something I’m really proud of too.
Kurt Elster: And you should be. Yeah. Into that pandemic, very quickly I’m like I’m losing my mind with anxiety. I’m gonna throw myself into my work to distract myself. With curbside pickup and other features being added and the explosive growth in eCommerce, pretty quickly I was… I had something I was really proud of to be able to work on.
Harley Finkelstein: Yeah. And I think that’s to your credit. I mean, I know you work closely with Jay Leno, for example, and Jay Leno’s Garage. That is something that means when we provide those new features and products, you then can offer it to Jay Leno, and to all your clients, as well, and they’re able to actually maintain, sustain, maybe not thrive, but certainly survive a very difficult time.
Kurt Elster: I’ve heard so much about what you’ve done right and what you’re proud of. They can’t all be wins. Certainly, with some of that introspection, I want to know. What’s the biggest mistake you think you’ve made at Shopify?
Harley Finkelstein: On a personal level, I don’t think I really valued hiring as much as I should have, hiring really, really good people. I think I’m getting better at that now, but it’s really… At our scale, hiring the very best people is really important. I think in the early stages of Shopify I just wasn’t very good at that. Partially was I sort of steeped in the fire of entrepreneurship, which is I can do everything myself, and that’s cool when you have to, but you don’t get to scale there. You don’t get expertise like that. And I think now if you look at the leadership of Shopify, you look at the product team, you look at the commercial teams, support teams, the people there are… I mean, they are either the best at what they do are very, very close to being the best at what they do. So, that’s something that I think on a personal level I failed at in the early days.
As a company, I think we need to do a better job of explaining, again, maybe this is on me too, explaining how Shopify serves these merchants. There’s millions of merchants on the platform. We’re about 10% of all eCommerce in the U.S., which in aggregate would make us the second largest online retailer in America, which is a very, very big deal. I think making it easier for a merchant to understand what products, what services, what functionality we can help them with at this particular time, for a long time it was sort of… It was a bit of a buffet. Pick this or pick that as opposed to saying, “Hey, looking at your business we think these three products would be incredibly valuable for you.” That one is also really important.
One thing we very publicly got wrong was, and unfortunately it caused us to have to do layoffs earlier in the summer, where we had to layoff like 10% of the team, which for any entrepreneur or founder is really difficult. I’m not gonna overdo it with the whole… like the LinkedIn tear meme that sort of… It was really fucking… I’m just gonna say it, like yeah, forget all the drama. It is very difficult. That is a very difficult thing to do. It’s a very difficult thing if you’re on the other side of it, obviously being laid off, but it’s just that is a bad, shitty period. But we got something wrong. We looked at the growth rates of eCommerce and just to sort of say the thing, because it’s important, the key metric to this whole eCommerce growth thing is a very simple equation. It’s eCommerce sales on the numerator, and on the denominator, it's all of retail. During the pandemic people were so focused on the numerator, they forgot about the denominator.
So, during the pandemic two things happened. Not one. Two things happened. The denominator… Excuse me. The numerator on top, eCommerce sales, skyrocketed because physical retailers shut down.
Kurt Elster: Yeah. Fully hockey stick.
Harley Finkelstein: Exactly. However, below the line, so in the denominator, physical retail was completely taken out of that. So, you saw this massive growth rate for eCommerce. Now that physical retail is reopening, I think there was sort of this strange perception that eCommerce is going away. Not at all. eCommerce growth has actually returned to closer to 2019 levels, which is massive. Huge levels. On a much higher base, because you’ve now re-added physical retail sales volume into the denominator. And so, what we got wrong was we thought that the eCommerce growth would be… We knew it wouldn’t be like 2020 or 2021. We thought it’d be closer to… like it would be higher than 2019. And the truth is it has returned to the mean on a much higher base, closer to 2019.
And so, we over hired, and we had to make changes, and that sucked. We got that wrong. But just to sort of finish the point, eCommerce is still so small. It’s like 15% of total retail in the U.S. It’s less than that I think in… Maybe it’s 16 or 17% now, but it’s under 20% in the U.S. It’s less than that in Canada. It’s slightly higher in the U.K. I mean, we got a lot of ways to go here, and I think part of to your comment earlier about talking about eCommerce, sounding like you’re talking about the color TV, or electronic mail, or something like that, I think eCommerce is just going to be a major component. It’s still minor. It will become a major component of total retail. But I still think physical retail is gonna play a role. I think social commerce is just starting to really ramp up. I think people are really finding joy and great buying experiences and shopping experiences using things like the Shop app, using Instagram, and using TikTok, and using YouTube live selling, but it’s all the same thing. It’s all retail. And I think the brands that are going to be most successful are gonna be the ones that have just a very good, strong empathy for how to sell to certain customers regardless of what surface area, what service they’re on.
Kurt Elster: It has become abundantly clear that you consider yourself an entrepreneur. You certainly, you are an entrepreneur, or we could all agree absolutely started life as one. And I heard a little bit of advice in there, starting to segue into some advice for entrepreneurs. What’s your advice for new entrepreneurs launching online stores in 2023? Like in January, we see a lot of people. That’s their new year’s resolution. They’re gonna really focus on, “I’m gonna start it. I’m gonna scale it. I’m gonna try it.” Whatever that may be. What do you say to them?
Harley Finkelstein: I think you should try it. I think that there’s this… I think a lot of the baggage around entrepreneurship comes from a dated version of small business creation, where you had to go to city hall and register a business. You then went to the bank and took out a loan, where you then went ahead and took a lease, or had to do leasehold improvements, and I think in that era of business creation the cost of failure was really, really high. This new version, the cost of failure is about as close to zero as ever. And when you think about the stores, the businesses that you admire most, all of them started with something totally different.
Fashion Nova is one of the most important retailers of our time, and Richard started with a physical store in a second tier mall in Los Angeles. It was a physical store. And it was just… I think there was one. Then there was two, and there was four, and then 2014 he’s like, “I’m gonna move this online.” Ben Francis did not set out to build a multibillion dollar brand with Gymshark. He wanted to… He loved to work out. At the time, the products on the market were either for these big, kind of like massive, like bodybuilders, or it was yoga stuff. There was nothing in the middle. He wanted something in the middle. And so, every one of these stories on Shopify started with someone that had an idea, had some sort of ambition, and just started picking at it, and sometimes one of those ideas didn’t work out and they tried a different one, and then from there they tried a different one, and eventually it worked.
This is the greatest time truly ever, in the history of the world. Right now. And tomorrow will be even better. And the next week will be even better than that, to build brand new business. The two main ingredients, which historically has been experience and capital, are just not as valuable as they once were. Now, creativity, hustle, community, all the tools that you need are currently available to you as an individual. You could start a business for 29 bucks on Shopify. You can design everything you want on a free trial on Figma. You can place ads on Instagram, or Snap, or TikTok, or Google on your own. Ad managers UI are really good. Getting much, much better. You can try it. And if it works, great, and you can scale it. If it doesn’t work, you can try something else.
But I think this idea that entrepreneurship is not for me, it’s only for people that have experience, that have money, is this dated version. A lot of it is caused by previous generations. My grandfather, for example, I’ve said this story, but he sold… He was a Holocaust survivor, then goes to Hungary in the ‘40s and ‘50s. Hungarian Revolution happens. He’s basically… Immigrates with my father and my dad’s siblings to Canada. There’s no money in their pocket. Starts selling eggs at a farmers market. Total forced entrepreneurship. He didn’t care about eggs. He just cared about surviving and putting food on the table. And ended up selling eggs for like 65 years. He had no choice. If the egg thing didn’t work, he was gonna lose his house. His family was not gonna eat. And it was because there was a cost to failure in that era of business creation.
Now, today, it is less expensive. Just to be clear, it’s still very difficult. There’s a lot more people are participating, and so setting yourself apart is really important. Besides my role as president of Shopify, I’m also a founder of a brand new online business, brand new brand called FirebellyTea.com. and part of the reason I started Firebelly Tea was during the pandemic my… I had anxiety. My anxiety was spiking. I was drinking too much coffee. A friend of mine said, “Hey, try this amazing green tea.” I liked it. He started bringing me amazing green tea, like the best green tea ever every single week. He started designing little funky products for me to try, different cups and mugs with different handles, and different ways to steep the tea, and eventually I was like, “You know, why don’t we just start a small business?”
And what was cool was because not only was it cool because I can share something that I found, amazing green tea, with the world, but it also allowed me to really test Shopify products. So, for example, I’m using all of SFN from manufacturer directly to end consumer, all of our inventory, all of our products are being shipped entirely through the fulfillment network. Shopify Fulfillment Network. That’s great because now I can use it, and I can understand what it’s like to actually work with freight forwarders, and cross dockers, and fulfillment companies, and shipping companies. But also, I can get feedback in real time to say, “Hey, this should have been better. This could have been better. This was really cool.”
So, long answer to a short question, but my advice for any entrepreneur, or someone that’s thinking about it, is there’s probably something in your life. If you really want to be an entrepreneur, if that’s something that is interesting, compelling to you, there’s probably something in your life that you already have, or make, or do, that someone else will value. And I think you should do more of that. Maybe it’s a hobby that you have. Maybe you make beautiful jewelry, beaded jewelry for your nieces and nephews, and maybe other people may also want that. Maybe you make delicious coffee, and you roast your own beans, and you make delicious coffee for your spouse. Maybe other people might want that. That is how it starts. And if it works, great. You may change your life. You may put food on your table. You may be able to supplement your income. You maybe now can make it easier to afford ballet lessons for your daughters. Or maybe it’s just something that gives you a really fun side hustle and maybe that’s all it is.
And that’s the best part of entrepreneurship. Everyone’s definition of success is completely different. And that’s okay. If you just want to sell delicious barbecue sauce to your friends and quit your job that you hate, like Mike D’s BBQ Sauce in Durham, North Carolina, you can quit your job and sell barbecue sauce and make a living doing that. And if that’s it, and that’s all you want to do, good for you. But if you want to be Tim and Joey, and you want to basically completely disrupt the traditional sneaker market and build Allbirds, you can also do that.
Kurt Elster: After working with so many entrepreneurs and interviewing so many entrepreneurs, I was reflecting on it last night and one thing I always come back to is, and I’m so glad to hear you say something very similar, is everyone’s definition of success is different. And not only that. The path to it, they’re all different. And so, really the starting point is identifying the thing, that spark, and there’s so many different things. It’s different for everybody. And then saying, “Why not me?”
And now more than ever, in the past the misconception was like, “Well, you have to have access to capital and all these things.” And today it is more accessible than ever with Shopify as a platform and toolset. But you, as an entrepreneur yourself, what’s the best piece of advice you’ve ever been given?
Harley Finkelstein: It wasn’t a piece of advice. I was given a gift early on in my career. Actually, before I was 17. When I was 13. By my dad. My dad was an entrepreneur. He may listen to this, and he probably won’t like that I say this, but you know, he never hit it out of the park or anything like that. But he was an entrepreneur. He always tried and always had small little businesses, and he grinded away at it. And so, when he heard that I wanted to start a DJ company when I was 13 years old, he went out and he made me business cards, because he couldn’t give me much money. He couldn’t buy me equipment. But he could give me business cards, which I’m pretty sure he made at like… on the family home printer.
That business card that said Harley Finkelstein, DJ Company CEO, or DJ, whatever it was, that was really profound. It gave me this gift of confidence that I can do this. For some reason, you can tell yourself a thousand times, “I’m a DJ. I’m gonna start a DJ company.” But it was only when my dad said, “Hey, I made you some business cards for your new business,” I was like, “Oh, shit. This is a thing. I own a DJ company now.” And so, especially for those people listening or watching that are parents, if my dad would have bought me the DJ equipment, he couldn’t have afforded to. But if he did, if he could have afforded to, giving me DJ equipment would not have been as valuable as him giving me the audacity and the confidence to say, “I can do this sort of thing.” And so, that to me was… That’s not really advice, but it certainly was the greatest gift that I think I could have ever received as an entrepreneur.
And now, when my daughters have crazy ideas, like they find a bunch of random stickers in some drawer and say, “I want to go outside and sell them.” I’m like, “All right, let’s go on the driveway. Let’s sell these stickers.” One person ends up buying them who’s an old neighbor who kind of like thinks they’re cute. I go along with the crazy ideas. I support their random, “Hey, let’s try this thing.” And I try to do that a lot. That was probably the best thing, that gift, I ever got an as an early entrepreneur.
In terms of beyond advice on that, this idea, this is something that Tobi sort of taught me. It’s not really about entrepreneurship. More about life in general. But this idea of requalification is really important. That especially if I want to continue to lead Shopify in the future, I need to requalify for my job every year. Nothing is granted. Nothing is given. I have to earn the right to be the president of Shopify a week from now, a month from now, a year from now. And if I don’t earn that right, then the board, and Tobi, and everyone should just say, “Harley, you did a great job, or good job,” whatever they think I did, and they should find somebody else.
However, if I want it, and I really want it, then I’m gonna make sure that I do requalify every year, that I do keep up with the pace of Shopify through mentorship, through learning, through coaching, through meeting people much smarter than me, through knowledge and information acquisition. I think that makes for a very interesting, meaningful life. I mean, that’s where you get into this concept of life’s work, and like you, and Kurt, I know you well enough to say this, you are doing your life’s work and so am I, and we are so frickin’ lucky that we can do our life’s work during our life. Most people only end up doing their life’s work after their life is over, after their career is done. They’re like, “Okay. I just retired from Bell, or from FedEx, and now I’m gonna go do the thing I’ve always wanted, which is I want to go open up a hamburger chip wagon, or I want to go and make these toys, or I want to go and become a fashion designer. I want to become a photographer.”
Doing your life’s work during your life is incredibly, incredibly wonderful. And we should all be grateful that we have that, because we are blessed. I mean, that’s not something that my parents or grandparents had. I don’t think that’s something your parents or grandparents had.
Kurt Elster: No. I’ve got goosebumps. And all I could think when I heard it was, “Challenge accepted.”
Harley Finkelstein: Let’s go.
Kurt Elster: Oh, incredible. I had not thought about it that way. And to hear you say it, you can think it yourself. Having someone else hold up the mirror and say it just provides such incredible validation. Similar to that business card that provided that spark when you were 13. And look what it turned into. This lifelong career of incredible entrepreneurship that has at this point now affected positively millions of people. Truly incredible. Absolutely.
Harley Finkelstein: Funny enough, I don’t think I have a Shopify business card. We just don’t have business cards at Shopify, so it’s funny how that came full circle, but-
Kurt Elster: Well, you know, at this point I’d have to explain to my kids what a business card is.
Harley Finkelstein: Well, true. Just tell them my Twitter handle. That’s almost as good now.
Kurt Elster: Well, yeah, it’s like your handle but they printed it out.
Harley Finkelstein: That’s right.
Background Noise: Cha-ching!
Harley Finkelstein: Oh, see? Do you hear that?
Kurt Elster: I did.
Harley Finkelstein: That was a Firebelly sale. That’s awesome.
Kurt Elster: I was like, “Did I hit the button? What happened?”
Sound Board: Cha-ching!
Harley Finkelstein: That’s so funny. Let me see where this came from. It’s always cool to see where they came from. You know, like what city and stuff. And who they are and how they kind of found the store. But actually, one of the things I love about the cha-ching sound is that no matter where you are, if you are in a coffee shop, or you’re in a conference, or you’re in the airport, for all those merchants listening, if you have a store, turn on that cha-ching sound. And turn it up loud. I have no other notification on except that one. I turn it up loud when I’m in public. And you hear it-
Kurt Elster: That’s great.
Harley Finkelstein: … and immediately you’re like, “Oh, that’s my person. That’s another entrepreneur. That’s another merchant.” That person immediately I have a connection to. We are on similar paths. Different industries, and we may not know each other, but there’s an immediate connection when you hear that cha-ching sound, and I love that. I think that’s one of the least talked about aspects of this community. But it’s kind of our secret handshake.
Kurt Elster: Oh, I love phrasing it that way. I remember at Unite we heard a cha-ching go off in the audience and the whole room just went nuts.
Harley Finkelstein: Well, also, everyone turns off their phone because they don’t want to disturb anyone, but actually that is the one sound that I think… If I’m on CNBC, or I’m giving some keynote on stage in front of 1,000 people, I keep it on and then when that happens, Jim Cramer says, “What was it?” I’m like, “Oh, I just got a sale on my tea shop. I’m also a Shopify merchant.” It’s cool.
Kurt Elster: It is cool. Okay. We’re coming to the end of our time together. Can I hit you with the lightning round?
Harley Finkelstein: Sure. Let’s go.
Kurt Elster: All right. Favorite business book.
Harley Finkelstein: Oh. Probably High Output Management by Andy Grove from Intel. Just a great sort of like how-to on how to manage.
Kurt Elster: So, who inspires you?
Harley Finkelstein: I know everyone says the Steve Jobs and stuff there, but actually it’s people that are sort of less obvious. Someone that people would know… Seth Godin inspires me. Seth Godin has become a friend and mentor of mine. He inspires me not because he’s this marketing genius. He inspires me because of the way he lives with incredible intentionality. Every single aspect of his life, from his marriage to Helene, to his relationship with his children, his two boys, to the way he makes dinner for his friends, the way that when he invites you over and it’s Halloween, the way he prepares for Halloween. Everything is done with such intentionality. He absolutely embodies this expression that I love, which is how you do anything is how you do everything. And Seth is just… He’s that guy.
Kurt Elster: I didn’t realize that was a Seth Godin line. I’ve heard that one. I use it.
Harley Finkelstein: I don’t know if he said that line. I don’t know if he said that line, but he embodies that, for sure.
Kurt Elster: Okay. VR headsets, cop or drop?
Harley Finkelstein: I have the Oculus. Actually, one of the sort of killer apps for me with the Oculus is there’s a mini golf game in there.
Kurt Elster: Walkabout.
Harley Finkelstein: Yeah. Exactly. Walkabout. I really like it. I like it because it’s about 40 minutes for a full course, and if you do it with two or three people, you sort of walk around with them for two or three, for 45 minutes. You really do… You can have a really interesting conversation. You’re golfing, so you don’t really have to talk the whole time. It sort of creates this really great social dynamic in Walkabout. I think Walkabout is really cool.
Kurt Elster: I love to hear… I’m a big Oculus fan, so I love to hear that. Especially about Walkabout. It’s a ton of fun. All right, two more. Number five. What’s your favorite recent purchase from a Shopify store?
Harley Finkelstein: I love Bleusalt. I love my Ember mug. I love my tea from Firebelly. I mean, Vuori. Do you know Vuori?
Kurt Elster: No.
Harley Finkelstein: That’s like the… I just discovered them a month ago. It is the-
Kurt Elster: I wrote down Bleusalt because I’ve been admiring that hoodie.
Harley Finkelstein: Oh, yeah. It’s great. Bleusalt’s amazing. Lyndie’s the CEO and founder. She’s an incredible entrepreneur. Vuori, V-U-O-R-I Clothing, I think they make amazing workout gear, and just athletic gear. I just discovered them. They’re a Shopify store out of San Diego. I literally emailed the CEO two days ago and said, “You don’t know me. I don’t know you. But I love your stuff.” And he wrote back right away. He’s like, “We’re huge Shopify fans. We’ve been with Shopify for a long time.” Vuori is awesome.
Kurt Elster: Oh, how fun must that be for someone to get out of the blue?
Harley Finkelstein: Oh, it’s so fun for me when I randomly stumble across a really cool ad on Instagram and I’m like, “Oh, I love that shirt. I love that pair of socks or sneakers.” I click on it, and it takes me and then I see the Shop Pay tab and I’m like, “Oh yeah, Shopify store. These are my people.”
Kurt Elster: I always get a kick out of walking around a store with my kids and going, “Oh, that’s a Shopify store. That’s a Shopify store. Oh, that’s one of our clients over there.”
Harley Finkelstein: That’s awesome.
Kurt Elster: That’s like… That never gets old. Final question. This one’s timely because Black Friday is almost here. It’s around the corner. When this episode’s over, what’s the one thing merchants should be doing?
Harley Finkelstein: First of all, I think Black Friday’s like 14 days away. Start your promotion right now. Black Friday, Cyber Monday is not a weekend. It’s now a season. And I think it’s the perfect time to push promotion now. First thing. Second thing is everyone wants to focus on getting new customers. I think that’s great. Obviously, we want new customers. But you can do something super, super simple. Figure out easily through Shopify, because Shopify will tell you all your returning customers. Find out who’s bought two times and send them an email, personal email from Harley, or Kurt, whoever, and say, “Hey, you bought twice. Two times. Hope you like our product. Because it’s Black Friday Cyber Monday coming, here’s a special discount code just for you.” And just personalize it.
Don’t overthink it. Just send emails out. I do that by the way with Firebelly. I’ll send 30, 40, 50 emails out on a Sunday afternoon to people that have bought two or three times and say, “Thank you for your business. Any feedback? And by the way, here’s a coupon code for your next purchase.” It works so, so well.
Kurt Elster: So, you personally send… This is not newsletter. It doesn’t look like a personal email.
Harley Finkelstein: We have great newsletters, and we use all types of great email marketing applications, but I also send out emails directly from me, from my personal email address.
Kurt Elster: Oh. That’s a really good idea. I like that. All right.
Harley Finkelstein: It works well.
Kurt Elster: We’re gonna use that one. Okay.
Harley Finkelstein: You got an hour out of this. We were supposed to talk for a half hour. This is longer than I thought, which is a credit to your questions and your ability to be a great interviewer.
Kurt Elster: Thank you so much.
Harley Finkelstein: Thank you, Kurt. Yeah. Thank you for this. This is awesome.
Kurt Elster: Incredible. Harley Finkelstein, president of Shopify, thank you for being here. My pleasure and honor, sir.
Harley Finkelstein: My pleasure and honor.