Tobi Lütke couldn’t get a job in Canada because he didn’t have a work permit.

So he started an online snowboard store instead.

That led to building his own software, years of living in his in-laws’ basement, repeatedly coming within weeks of running out of money, and ultimately building the platform that now powers more than 14% of U.S. ecommerce.

In this week’s issue, I share Tobi’s Canadian size mountain trip from snowboards to Shopify, along with:

Enjoy the going down the Shopify trail…LG

Tobi Lütke grew up in Koblenz, Germany. When he was 6, his parents bought a family computer and let him use it without restrictions.

The games he wanted came as code listings printed in computer magazines, and they were written for a different machine than the one he had. To play anything, he had to rewrite it first. That is how he taught himself to code.

School was a different story. Class after class handed him solutions to problems nobody had explained the point of, and he could not see what any of it was for. Computers were the opposite. He could take one apart, change it, and make it do exactly what he told it to. They were the only part of his world he could control.

He quit trying. The school diagnosed him with a list of learning disabilities and put him on medication. He calculated the minimum hours he needed in each class to pass, gave the rest of his time to the computer, and left after tenth grade.

THE RED MARKER

In Germany, that is not dropping out. A 16-year-old can leave school for a paid apprenticeship at a real company. Tobi got one at a Siemens subsidiary in his hometown.

His first year was rotations: 3-months each in the cafeteria, accounting, inventory and reception. He used the cafeteria to learn what everyone in the building drank, kept them supplied, and scouted for the team he wanted. He found it in a basement room: 4 men running a programming language nobody else at the company used, led by a long-haired rocker in his fifties named Jürgen who refused to wear the company clothes.

Tobi borrowed their manuals and memorized them between coffee runs. After the first year, Jürgen pulled him onto the team.

Most mornings he arrived to find yesterday's work printed out and marked up in red. Not wrong. Just not good enough yet. Every day, in writing, somebody showed him how his own work could have been better.

By 17 he was writing software for paying customers all day. No university. No degree. Nothing on paper.

CAN’T WORK? START A COMPANY

A few years later he and some friends planned a snowboarding trip. They looked at the United States first, then noticed how weak the Canadian dollar was and went to Whistler, British Columbia, instead.

He met Fiona McKean there. She finished her degree and moved to Germany for ten months, then needed to go back to Ottawa for a master's and asked him to come.

He moved into Fiona's childhood bedroom in her parents' house, put a desk in the room, and kept writing code remotely for a small startup in Germany.

After a year the startup folded, so Tobi tried to get hired in Ottawa and could not. His German trade qualification did not register as education with Canadian immigration, which meant no work permit, which meant no job.

An employment lawyer explained the one exception. He could not take a job, but nothing stopped him from starting a company.

There were two things Tobi knew well. Snowboards and computers. So he decided to open an online snowboard store. He was burnt out on coding, but he figured he could use his technical skills as leverage and eventually make money without having to program at all.

Right as he made that call, Fiona's family introduced him to Scott Lake. Lake was 12 years older, a political science PhD who had spent years building online communities for the US Army and John Deere. He also worked at the company that had tried and failed to hire Tobi.

They went snowboarding together, and the division of labor was obvious. Tobi could build anything and knew the gear. Scott knew how to find suppliers and talk to customers. So they went in together, each putting up $20,000 Canadian.

The Snowdevil snowboard store was born. Now they had to figure out how to sell the boards online.

OUTSOURCE VS. BUILD

Tobi did not want to build the store software, so they tried every online commerce tool they could find: Yahoo Stores, osCommerce, Miva. All of them were inadequate. He had paid a German agency for a store design, and none of the platforms would let him put it on the page. Yahoo Stores let him change the background color of the top frame and nothing else.

That was the breaking point, and it came with a realization. Nobody had figured out how to build good online store software yet.

He had spent his childhood on computers precisely because they did what he told them. Now he was paying for one that would not.

A friend sent him a message about Ruby on Rails, a new way of building web software that had been released weeks earlier. He downloaded it, and decided it was not programming he was burned out on. It was programming in languages that made him miserable.

Tobi spent the next two months building store software from scratch.

There was no office. He worked sixteen-hour days on Coca-Cola and pizza, at coffee shops with Wi-Fi that he found by taking random buses around the city.

Finally the code was ready. It was time to take the store live.

THE FIRST ORDER

By then he had settled on a coffee shop called Bridgehead on Elgin Street in Ottawa. He had fixed their router, which made it his de facto free Wi-Fi headquarters.

He was shaking before he hit enter. The site went live that fall.

A few days later he got his coffee, sat down, and started going through email. One arrived while he was reading. The subject was "new order."

He had written that line himself, months earlier, while building the software. This one came from a man in Pennsylvania he had never met, who had just bought a snowboard.

He had no cell phone, so he walked home to tell Scott. He has said that was the moment he stopped being a builder and became an entrepreneur.

SKATEBOARDS OR SOFTWARE

Snowdevil did well. Margins on handmade boards were good and the constraint was inventory, not demand.

Then spring came and the snow went. People stopped buying snowboards, and the two of them sat down to decide what the company did next. One idea was to sell skateboards during the warmer months.

But what Tobi had actually enjoyed all winter was the store system. He had spent every spare hour tweaking the nuts and bolts of the software that ran the business, and he thought it was amazing.

The big discovery of the season was not the store. It was the emails. Other merchants had started writing in to ask if they could license the software he had built to run it.

The decision was made. Software.

He called his closest friend Daniel Weinand in Germany, a programmer who was also a designer, and asked him to come to Canada for a summer and help.

As the software turned from something Tobi had built for Snowdevil into a product other merchants could use, it needed a name of its own.

The idea was simple: make ecommerce easier. Scott Lake combined shop and simplify into one word. They checked Shopify.com, found that nobody owned it, and registered it. No negotiation, no expensive domain purchase.

That spring, Shopify entered private beta with about 50 stores running. By the end of it there were over 400 beta testers.

On June 2, 2006, Shopify launched publicly.

THE WRONG PRICING

They wanted a merchant's first month to cost nothing. So opening a store was free, and Shopify took 3.75% of whatever a merchant sold. If the merchant made no money, Shopify made no money.

It was the friendliest offer on the market. Revenue for the month of October was $8,000.

And it was wrong. A percentage of sales punishes the merchants who succeed, which were exactly the merchants he most wanted. Anyone planning to build something real did the math and walked away.

So he switched the entire business model to monthly subscriptions with a much lower transaction fee.

Shopify now made money whether a merchant had a good month or a bad one, and made more as the merchant grew. For the first time its revenue and its merchants' success pointed the same way, and the merchants he had been scaring off started signing up.

FOUR WEEKS OF CASH

Growth did not reach the bank account. Tobi and Scott went without salaries for years. Tobi and Fiona kept living with her parents, and when payroll could not be met, Fiona's father wrote cheques out of his retirement savings.

Tobi sat in meetings planning products a year out while knowing Shopify sometimes had only four weeks of cash left. He told no one.

Then the software went out and found them an investor.

John Phillips, a Toronto lawyer and angel investor, first heard about Shopify from the CTO of one of his own portfolio companies, who would not stop talking about how easy the software was to use. Phillips called them out of the blue and put in $250,000 at a $3 million valuation.

Accepting his money was one of the most important decisions they ever made, and the money was the smaller half of it. Tobi had never run a company. Phillips spent the next several years teaching him how, and when his co-founder Scott left, Phillips was the one who talked him into the CEO chair and kept him in it.

Phillips was the exception. When Tobi went looking for more money the following year, investor after investor turned him down. The response he kept hearing from Canadian investors was the same: ecommerce was a 1990s idea.

Before he could try again, Lehman Brothers collapsed and the fundraising market closed for good.

It was the best thing that happened to them. Thousands of people who had just lost their jobs went looking for something they could control, and they opened online stores. 2008 became the first year Shopify passed $1 million in revenue and turned cash-flow positive, with about 10 people.

THE TOOLMAKER'S TOOLMAKER

Merchants were signing up steadily now, and every one of them wanted something the others did not. A children's clothing shop needed one thing, a shop selling racing tires needed another, and every request was reasonable on its own.

Software companies often fall into the trap of saying yes to all of it, and end up with a product nobody can figure out. Tobi's rule was that Shopify should do what most people need most of the time, and he was not going to bulk it up with every feature under the sun.

So exactly three years after launch, he opened Shopify up to outside developers and launched an App Store. It went live with 5,000 merchants and 5 apps.

He gave away a free tool called Liquid so any designer could restyle a store without being able to break it. He let outside developers build the features he would not. And instead of charging them for the privilege, he paid them a share of the revenue they brought in.

Within a couple of years there were 54 apps, two thirds of Shopify merchants were running at least one, and web design firms were sending 20% of all new signups. Word of mouth brought most of the rest.

Every designer and developer had quietly become a sales channel, because every one of them was making money on it. And no merchant resented it, because Shopify stayed invisible on purpose. Its job was to make the merchant look good.

THE LAST $100,000

What the company still did not have was money. Merchants kept signing up, apps kept appearing, and the founders had still never taken a salary. Monthly subscriptions from small merchants add up slowly.

About that time, the podcaster Tim Ferriss discovered Shopify and came on as an advisor. His first idea was a contest. Open it to anybody, and give the cash to whoever built the biggest store.

Tobi loved the idea. He took the last $100,000 they had in the bank and made it the prize in a contest they called Build a Business.

OWNING THE CHECKOUT

By the end of 2011 there were 16,000 stores in 70 countries running on Shopify, merchants sold $275 million worth of goods through it that year, and the company went from 30 people to 80 in twelve months. Investors put in another $15 million.

But there was one piece of every sale that Shopify still did not handle. The money. When a customer paid, the payment ran through an outside company, and Shopify had no part in it. The thing every merchant did every single day was the one thing Shopify was outsourcing.

So they built it. Shopify Payments, built with Stripe, took the outside company out of the transaction and let Shopify process the money itself. On the same day they shipped a card reader and a checkout system, so a merchant selling in a shop or at a market was running on Shopify too, and the inventory finally matched the website.

That changed what Shopify was. It had been software a merchant rented to run a website. Now it was the whole setup, the store, the register and the money, in one place. Revenue from those services went from 19% of the business to 37% in two years.

Four months later, investors put in $100 million at roughly a $1 billion valuation. Nobody was calling ecommerce a 1990s idea anymore.

Today, more than $1 billion in commerce moves through Shopify every day, across millions of businesses in 175+ countries.

Most founder stories get told backward. The company succeeds, and then the founder explains what happened.

Tobi Lütke and his team published what they believed and what they were building while Shopify was still taking shape. By the time it worked, the record was already there. Here are three ways to do the same.

#1. Stage the Proof Instead of Arguing It

Canadian investors kept telling Tobi that ecommerce was a 1990s idea. He could have built a better pitch. Instead he put the last $100,000 in the bank up as prize money, and 1,300 entrepreneurs opened stores and sold $3.5 million worth of goods. The opportunity stopped being an argument and became something people could watch.

ACTION: When people doubt your market, demonstrate it instead of explaining it. Run the test, create the challenge, put customers in motion. Give people something real to point at.

#2. Blog the Build, Not the Launch

Shopify's company blog went up ten months before the product did, so people could get to know the team before the release. They published the build as it happened, including the part where they promised to ship that fall and did not ship until the following June.

ACTION: Start building an audience before the product is finished. Share what you are making, what you are learning, and what is not working. On launch day you want witnesses, not strangers.

#3. Give Others a Role in the Story

Tobi did not try to build every feature merchants asked for. He opened Shopify to outside developers instead, and paid them a share of the revenue they brought in. Within two years every designer and app developer working on Shopify had a reason of their own to tell merchants about it. The people spreading the story were not on the payroll.

ACTION: You do not have to be the only hero in your own story. Show what customers, partners and your community built with what you made. A story other people are in is a story other people will tell.

What started as software Tobi Lütke built to sell snowboards now powers millions of businesses across 175+ countries. In 2025 alone, merchants sold $378 billion through Shopify, more than $1 billion every day. Since its launch, roughly $1.6 trillion in commerce has moved through the platform. Shopify itself generated $11.6 billion in revenue in 2025 and now represents more than 14% of all U.S. ecommerce.

Tobi Lütke sat down with David Senra and walked through the whole thing. Why he thinks companies are a technology nobody has figured out yet. What it cost him to spend the years after the IPO imitating other chief executives. How he rebuilt his entire executive team out of founders. Why he models his own company as code.

He is unusually specific about decisions most founders describe in the abstract, and blunt about the ones that went badly. If you would rather hear a founder explain his operating system than his highlight reel, start here. Watch here:

Tobi Lütke: 21 Years of Building Shopify

https://youtu.be/ZSM2uFnJ5bs

Need help with your story? I got you.

Send an email to [email protected] and someone from my team will circle back with you.