“If you want to be a relevant, modern brand, you have to be able to sell across every surface area where consumers are spending their time,” says Shopify President.
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00:00 We think the future retail is retail everywhere. So many people have something that they make or build that is truly meaningful to
00:06 them. Ensuring that with the world I think is incredible.
00:09 Welcome to the big question. The series from your news where we see some of the biggest names in business. Today I'm chatting to
00:21 Harley Finkelstein the president of Shopify. So great to have you. Great to be here. First of all can you just tell me a little
00:26 bit about what Shopify is and what Shopify does. Sure. Ultimately Shopify is a commerce platform. We make it really easy for
00:32 anyone to sell a product online offline everywhere in between on social media platforms or marketplaces. We're about 11 percent of
00:38 market share in terms of e-commerce in the US. In the top five European countries we're about 6 percent. So we have some real
00:44 room to grow here. And ultimately we believe the future of retail is not just online or just offline. It's retail everywhere.
00:50 And we're trying to create as the world's first retail operating system. So whether you're at your mom's kitchen table getting set
00:55 up or your me Paris you can build an incredible business and keep growing your business using Shopify.
01:00 So Shopify is a business like 2006 and then you came on board in 2009. How in that time since you started. How have you seen the
01:14 retail industry change. There is something remarkable happening particularly in Europe which is that a lot of these very large
01:19 brands high end brands fashion houses for the first time ever are looking to digitalize the brands that said we don't really we're
01:26 never going to sell online. They're actually not selling online but they're doing it in a way that really feels unique to their
01:31 brand. Part of it is that about 50 percent of consumers are telling us they expect digital products and digital experiences from
01:37 their favorite brands. But when you think about Paul and or is about Matt or the row or Donna Karen. These are brands that really
01:44 focus on a physical retail experience and they're now finding ways with Shopify to actually create an amazing experience online
01:50 too. What I think they're discovering is that consumers want to buy in the best in a way that's most convenient for them. And
01:56 then if you want to be a relevant modern brand in the future you have to be able to sell across every surface area where consumers
02:04 are spending their time and that's what we power as well. So you operate in more than 175 different countries. So from your kind
02:09 of view of the whole world how does the current economic situation in Europe compare to that of North America for example. But
02:16 from an economic perspective what we're seeing in Europe in particular is that consumers are voting with their wallets to buy
02:22 from brands they love that there's really more intentionality rather than buying 10 products indiscriminately. They're choosing the
02:28 three products that are really meaningful to them from brands they really love and direct to consumer which I think historically
02:34 was a bit of a fad is really becoming steady state that whenever possible consumers are actually buying direct from the brands
02:40 they really love.
02:41 And social media. How important is that now and how does that kind of play into the work you do. It's quite amazing because social
02:52 media is this incredibly democratizing marketing tactic where instead of traditional marketing or traditional advertising where
02:59 the company with the most amount of money always won. Now the company with the most creativity wins. You take a brand like
03:05 Gymshark for example it's now a billion dollar brand that didn't exist even 10 years ago. They were able to build a multi
03:11 billion dollar brand specifically by targeting great consumers and fans and personal trainers initially using social media. But
03:19 more recently what we're also seeing is that social media is actually a great channel for commerce. And so we've partnered with
03:24 companies like Google and Meta and Instagram and Tick Tock and Snap to really enable commerce natively on those platforms.
03:31 That's all powered by Shopify.
03:32 So right back at the start of Shopify you were actually one of the first sellers that before you joined the company. How have
03:45 you used your experience of using the platform to then help people now. One of the reasons that I joined Shopify was I
03:51 remember I was sitting in I was in law school at the time sitting in tax law class kind of a boring class. And I was I was
03:57 building my teacher business on Shopify as one of the earliest merchants. And I remember hitting that launch button to go live.
04:03 And immediately I was selling to a global audience all over the world. And it changed my life and allowed me to pay for school
04:08 and help me support my family. But more importantly it showed me that the future of retail is default global that it doesn't
04:14 really matter how much capital you have. It matters how much passion how good your brand is how great your product is. It felt
04:20 like there's sort of this new era of entrepreneurship that is much more inviting. And Shopify his entire mission is simply just
04:26 to make it a little bit easier to get started a little bit easier to be successful when you're starting a company. And we think a
04:31 world with more entrepreneurs is much more colorful interesting world. And we're trying to create more entrepreneurship on the globe.
04:37 Now it doesn't mean everyone's going to succeed. You know businesses do fail and that's OK. But we're trying to do is reduce the
04:43 cost of failure so that if you try something doesn't work you can try something else. And while a lot of people talk about
04:49 stories like Gymshark for example which you may not know is that Gymshark was not Ben's first company. He tried a few things
04:55 before landing on Gymshark which turned out to be this huge business. And I think now Ben is the youngest billionaire ever in the
05:01 U.K. which is pretty incredible. But that idea of making it easier to keep trying things and seeing what works. And then once you
05:07 find a business that does work doubling down on it that's what Shopify exists for. So is e-commerce the death of in-store
05:14 shopping. Is it mutually exclusive or can they work. Yeah not at all. In fact I think e-commerce is simply a new channel that
05:21 allows consumers to connect with the brands they love. We think the future retailers retail everywhere. We think that having great
05:26 in-store matters great online matters great social media matters. But it really matters. What specifically matters most is do these
05:32 brands and do these retailers have deep empathy for their consumer. Do they understand how their consumers shopping. And when you
05:38 do what you can do is you can then reverse engineer where you actually want to have commerce take place. And for a lot of great
05:44 brands in-store high street having a great physical retail location really really matters. But again it's not necessarily one
05:51 versus the other. It's retail everywhere. I mean that sounds like quite a big task if you kind of got to be everywhere. How how
05:56 difficult is that for for a small business. Well that's the great part. You can sort of one channel let's say online store and you
06:02 can begin to transact there build your business there. And then maybe you experiment a pop up store and say how is that going. You
06:07 know you take the glossies for example during the pandemic when most physical retailers were shutting their doors closing down
06:14 their stores. Glossier was looking at building more space knowing that on the other side of the pandemic they want to create the
06:19 most rich interesting environment in store. And now that the pandemic is over you walk into a glossy store. It's an amazing
06:26 experience. You go to the glossy website. It's an amazing experience. It all kind of fits beautifully together.
06:37 From your experience of working with businesses of all size. What does is there a kind of a secret to success in 2024. What does
06:44 it need to do to be successful. We have millions of businesses on Shopify selling all over the world. The business that are most
06:49 successful one have a really good understanding of their customer. They know who their customer is how they buy what their
06:55 preferences are to get a great product. I mean great marketing great content. That's all important. But if you don't have the
07:00 best product doesn't really matter. And so understanding that your value equation the cost to the cost of value has to be really
07:07 on the side of value. Second and the third of all is that your consumers actually turn in to net promoters or influencers of your
07:14 brand. When you have a brand or a business where every one of your customers also is telling other people to buy your brand. That's
07:21 where you actually create the biggest most robust and resilient companies. I mean look at a company like figs for example which is
07:26 really disrupting the hospital scrub business. The doctor scrub business publicly traded company today started by Heather and
07:33 Trina literally at their kitchen table and decided that doctors and frontline workers should be more comfortable should look
07:40 better. And by going to work on this I think in 2012 they were able to build this massive billion dollar brand that is now publicly
07:47 traded. So one of the things they did really well was they took an industry and a product that really wasn't cared for. I mean most
07:53 people took for granted that when you work at a hospital or you work at a clinic you have to kind of wear these things. Well they
07:58 said we can do this better. And so not only do they do it better but then they had this incredible ambition to change all of it.
08:04 And they have. They've affected an entire industry that probably hasn't been disrupted in 50 years or so. We're seeing all this
08:10 great success all this great new color in the world of entrepreneurship. And again I think ambition powers it. Culture powers it.
08:16 But ultimately it's the technology layer that Shopify provides that allows for this massive scale with 80 percent of new e-commerce
08:23 and businesses failing. And I guess the big question is is there a trend amongst the failures. And what are they doing wrong.
08:30 What is the downfall. Well often you know not every business is going to succeed as I mentioned. What we're trying to do from a
08:35 business model perspective is on Shopify is we want to make sure that the ones that do succeed offset the cost of the ones that
08:40 don't for us but also over time making sure that as they grow they never have to leave the platform. But for the ones that don't
08:46 succeed what we want to do is make sure that the cost of failure is so low that they'll give it another shot. And eventually what we
08:52 find is that people do eventually succeed. What's really important though is to effectively have that resiliency that if sales are
08:58 down one week to the next you don't quit. You keep going. Here's where technology really plays a great role here. There's all these
09:04 new tools that are available through Shopify that make success a little bit more likely and the cost of failure a little bit less.
09:10 We have a product called shop by audiences for example which really increases the return on ad spend so that if you're using
09:16 Shopify before you run an ad or ad copy you actually feed your ad copy through our audiences algorithm and we give you a look
09:22 like audience to ensure that you have a higher return on your money spent. But I think entrepreneurship today is this wonderful
09:28 thing where people can take something they love and again not everyone has to commercialize their hobby. But so many people have
09:33 something that they make or build that is truly meaningful to them. Ensuring that with the world I think is incredible. And you can
09:40 do that on Shopify for like thirty nine dollars a month. Feels like a pretty good way to build your future your life and
09:46 potentially find your life's work.
09:47 So I guess that brings me to my final question. It's looking into the future. How do you envisage say the next five years for
09:59 Shopify. Does AI play a role. And if so how how is it. I can play. But on the AI front that's where this gets really interesting
10:06 because we have a product called Shopify magic which is our AI product that's embedded all across all of Shopify's features and
10:12 functionality. And the reason so exciting to me is because ultimately this is a real leveling of the playing field. So take
10:18 something like product descriptions or product photography. If you're a small business you're competing with a big company
10:23 that big company may have an entire team of people working on product descriptions or product photography. Well now with AI
10:30 these small medium sized businesses they can write better product descriptions. They can take better product photography. AI is
10:35 such an amazing tool to level that playing field so they can better compete with the largest companies on the planet. I think
10:41 Shopify is one of the company's best position to leverage AI for future success for us and for our merchants. And I love the
10:48 fact that these iconic brands that have been around in some cases for hundreds of years are finally turning to Shopify to say we
10:54 want to have an online experience that is equal to our offline experience. Brilliant. Yeah. So it is really going to help small
11:01 businesses kind of level up and match some of the bigger organizations. That's exactly right. Wonderful. That sounds very
11:06 exciting. Well thank you so much for joining us on the big questions. It was a pleasure to talk to you. Thanks.
11:11 Thanks.
11:11 Thanks.
11:12 Thanks.
11:13 Thanks.
11:14 Thanks.
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