Back in 2004, Tobias Lütke was a 24-year-old German immigrant with a snowboard shop in Ottawa and a problem: no easy, efficient and cost-effective way to sell his boards online, hence no way to reach customers beyond the city limits. Sure, he could give an enterprise developer $100,000 or more to build an electronic storefront from scratch (where would he get that kind of dough?!). Or he could plug into existing e-commerce platforms from the likes of eBay or Yahoo (feature-impoverished, unscalable—in short, not good enough). "We did a lot of online retail using Yahoo stores, but it really wasn't very good," recalls the slightly built, soft-spoken Lütke with a sad shake of his head.
In the end, he did what any frustrated entrepreneur with world-class smarts and mad programming skills would do: he wrote his own software that would allow him to upload photos and prices for his boards, track inventory and accept credit-card payments.
Doing his own fix was smart—he's a trained and gifted coder, having apprenticed with German tech companies from the age of 16. Genius, though, was realizing that he had created something new and potentially massive. Something he could build a multimillion-dollar company around.
Eight years later, as CEO of Ottawa-based Shopify, Lütke sits at the helm of a soaring industry star that churns out e-commerce software enabling independent retailers to set up digital storefronts quickly and cheaply. "Shopify was one of the first companies to recognize that more and more small businesses are moving sales online and need an easy-to-use and inexpensive platform to do so," says Boris Wertz of Version One Ventures, a Vancouver-based VC firm. "Being an early entrant in this space helped them initially, but they also are the company that has executed the best. They build great product, pursue aggressive sales strategies and are extremely metrics-driven."
Those metrics are impressive. From the original three co-founders, Shopify's head count has increased to 130, while its customer base and sales have both more than doubled in each of the past three years. By the end of 2012, the company expects to have 40,000 clients selling $600 million worth of product in 90 countries worldwide. Moreover, the market for Shopify's do-it-yourself web stores is seemingly insatiable: in North America, only 10% of retail is currently conducted online, but the sales volume is increasing by 14% annually.
Gold-plated metrics aren't the only things recommending Shopify, however. By eliminating the barriers of cost and complexity and allowing almost anyone to sell over the Internet, Shopify is potentially transformative, enabling a whole new cadre of micro-businesses to sprout, while providing additional sales channels for existing companies—including such current clients as Pixar and Tesla Motors. For this work in "democratizing" online retail, Shopify was named one of the world's most innovative retail companies by Fast Company magazine last year.
It is also a key reason why Shopify is PROFIT's inaugural pick as Canada's Smartest Company—this year's most inventive and visionary entrepreneurial outfit, one from which all businesses can learn. Here are a few things that particularly impress us.