Letters #276/277: Tobi Lütke (2015/2025)
Shopify Cofounder and CEO | IPO Letter and AI Memo
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Tobi Lütke is the cofounder and CEO of Shopify. He cofounded the first iteration of the company in 2004 as CTO, launched Shopify in 2006, and became CEO in 2008. He initially set out to start an online snowboard shop, but quickly pivoted to ecommerce. Tobi has also worked on the core team of the Ruby on Rails framework and has created many popular open source libraries such as Active Merchant.
Today’s letters are two memos from Tobi, ten years apart. The first letter is timeless—Tobi’s IPO letter for Shopify, where he shares their founding story and the underlying aspirations and values that drive their mission to make commerce better for everyone. The second letter is timely—a recent internal memo on reflexive AI usage is now a baseline expectation at Shopify, what it means for the company, and their path going forward. The first letter is strategic, the second letter tactical.
I hope you enjoy these two letters as much as I did! It’s a fun look at Tobi’s leadership and writing styles, how they’ve changed, and what’s stayed constant. The first letter is timeless, and the second letter is timely. There’s a tremendous amount to learn from each.
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IPO Letter (2015)
The first Shopify store was our own. In 2004, we took something we loved, snowboarding, and built a business around it. The idea was to set up an online store and create a snowboarding empire. But there was a problem: the software landscape we encountered seemed to work against our ambitions at every step. Back then, online store software was built for existing big businesses that were transitioning online. It was incredibly expensive, unnecessarily complex, and infuriatingly inflexible.
Existing software was not designed with the new entrepreneur in mind, so we rejected the existing models and created our own. Our custom software met our needs so well that we decided to take everything we learned and shift our business away from snowboards and towards fixing the glaring hole in the ecommerce market. We knew that many future businesses would be created online first, and software needed to support the first steps of entrepreneurship, not just the established big guys. We set out to create the software that we wished would have existed, and we launched it in 2006 under the name Shopify.
Shopify is exactly this: the only platform you need to build your empire. Shopify is the first thing our merchants log into in the morning and the last thing they log out of in the evening. It’s at the heart of their business—a responsibility that we take very seriously. Chances are that you’ve already bought products through stores that use Shopify and you didn’t even realize it. More than 165,000 stores use Shopify today. Yet, as a brand, we are virtually invisible to consumers. This is by design, as our job is to make our merchants look their very best in every interaction they have with consumers.
Over $8 billion of GMV has already been transacted through our platform, with the most recent quarter coming in at over $1 billion. We’ve proven that there’s incredible potential in early-stage entrepreneurs when they are empowered with great technology. Focusing on inspiring entrepreneurship and helping people iterate their ideas, launch new stores and scale their businesses creates a sense of solidarity: we did it together. We believe that by giving merchants an affordable, easy to use solution that helps them sell and run their business, Shopify will share in their success as they grow. We’ve shown that it was possible to build a single platform that works from the very beginning—an entrepreneur with an idea—to a business with millions of orders. And while many of our larger merchants switched to Shopify based on the quality of our platform, a large number of our merchants are “homegrown” and started their businesses with us. I’m incredibly proud of this.
Over the years we’ve also helped foster a large ecosystem that has grown up around Shopify. App developers, design agencies, and theme designers have built businesses of their own by creating value for merchants on the Shopify platform. Instead of stifling this enthusiastic pool of talent and carving out the profits for ourselves, we’ve made a point of supporting our partners and aligning their interests with our own. In order to build long-term value, we decided to forgo short-term revenue opportunities and nurture the people who were putting their trust in Shopify. As a result, today there are thousands of partners that have built businesses around Shopify by creating custom apps, custom themes, or any number of other services for Shopify merchants.
This is a prime example of how we approach value and something that potential investors must understand: we do not chase revenue as the primary driver of our business. Shopify has been about empowering merchants since it was founded, and we have always prioritized long-term value over short-term revenue opportunities. We don’t see this changing.
In terms of the value we create, we think that the most important thing that we deliver to our merchants is simplicity. Simplicity isn’t simple. It takes tremendous care, discipline, and craftsmanship to take something inherently complex like commerce and make it intuitive. We have spent the last decade democratizing commerce, simplifying it, and making it accessible for businesses of all sizes.
Today, businesses sell through dozens of different channels: online stores, retail stores, wholesale, at pop-up shops, on social networks, through mobile apps or any number of other ways. Merchants often hack together different applications and technologies in order to try to address their multi-channel requirements. We’re now showing them that they don’t have to; that their complex setup can be reduced to a single, simple platform. By the time we’re done, we think Shopify will have established the “new normal”.
I want Shopify to be a company that sees the next century. To get us there we not only have to correctly predict future commerce trends and technology, but be the ones that push the entire industry forward. Shopify was initially built in a world where merchants were simply looking for a homepage for their business. By accurately predicting how the commerce world would be changing, and building what our merchants would need next, we taught them to expect so much more from their software.
These underlying aspirations and values drive our mission: make commerce better for everyone. I hope you’ll join us.
-tobi
AI Memo (2025)
Team,
We are entering a time where more merchants and entrepreneurs could be created than any other in history. We often talk about bringing down the complexity curve to allow more people to choose this as a career. Each step along the entrepreneurial path is rife with decisions requiring skill, judgement and knowledge. Having AI alongside the journey and increasingly doing not just the consultation, but also doing the work for our merchants is a mind-blowing step function change here.
Our task here at Shopify is to make our software unquestionably the best canvas on which to develop the best businesses of the future. We do this by keeping everyone cutting edge and bringing all the best tools to bear so our merchants can be more successful than they themselves used to imagine. For that we need to be absolutely ahead.
Reflexive AI usage is now a baseline expectation at Shopify
Maybe you are already there and find this memo puzzling. In that case you already use AI as a thought partner, deep researcher, critic, tutor, or pair programmer. I use it all the time, but even I feel I'm only scratching the surface. It’s the most rapid shift to how work is done that I’ve seen in my career and I’ve been pretty clear about my enthusiasm for it: you've heard me talk about AI in weekly videos, podcasts, town halls, and… Summit! Last summer I used agents to create my talk, and presented about that. I did this as a call to action and invitation for everyone to tinker with AI, to dispel any skepticism or confusion that this matters at all levels. Many of you took up the call, and all of us who did have been in absolute awe of the new capabilities and tools that AI can deliver to augment our skills, crafts, and fill in our gaps.
What we have learned so far is that using AI well is a skill that needs to be carefully learned by… using it a lot. It’s just too unlike everything else. The call to tinker with it was the right one, but it was too much of a suggestion. This is what I want to change here today. We also learned that, as opposed to most tools, AI acts as a multiplier. We are all lucky to work with some amazing colleagues, the kind who contribute 10X of what was previously thought possible. It’s my favorite thing about this company. And what’s even more amazing is that, for the first time, we see the tools become 10X themselves. I’ve seen many of these people approach implausible tasks, ones we wouldn’t even have chosen to tackle before, with reflexive and brilliant usage of AI to get 100X the work done.
In my On Leadership memo years ago, I described Shopify as a red queen race based on the Alice in Wonderland story—you have to keep running just to stay still. In a company growing 20-40% year over year, you must improve by at least that every year just to re-qualify. This goes for me as well as everyone else.
This sounds daunting, but given the nature of the tools, this doesn’t even sound terribly ambitious to me anymore. It’s also exactly the kind of environment that our top performers tell us they want. Learning together, surrounded by people who also are on their own journey of personal growth and working on worthwhile, meaningful, and hard problems is precisely the environment Shopify was created to provide. This represents both an opportunity and a requirement, deeply connected to our core values of Be a Constant Learner and Thrive on Change. These aren't just aspirational phrases—they're fundamental expectations that come with being a part of this world-class team. This is what we founders wanted, and this is what we built.
What This Means
Using AI effectively is now a fundamental expectation of everyone at Shopify. It's a tool of all trades today, and will only grow in importance. Frankly, I don't think it's feasible to opt out of learning the skill of applying AI in your craft; you are welcome to try, but I want to be honest I cannot see this working out today, and definitely not tomorrow. Stagnation is almost certain, and stagnation is slow-motion failure. If you're not climbing, you're sliding.
AI must be part of your GSD Prototype phase. The prototype phase of any GSD project should be dominated by AI exploration. Prototypes are meant for learning and creating information. AI dramatically accelerates this process. You can learn to produce something that other team mates can look at, use, and reason about in a fraction of the time it used to take.
We will add AI usage questions to our performance and peer review questionnaire. Learning to use AI well is an unobvious skill. My sense is that a lot of people give up after writing a prompt and not getting the ideal thing back immediately. Learning to prompt and load context is important, and getting peers to provide feedback on how this is going will be valuable.
Learning is self directed, but share what you learned. You have access to as much of the cutting edge AI tools as possible. There is chat.shopify.io, which we had for years now. Developers have proxy, Copilot, Cursor, Claude code, all pre-tooled and ready to go. We’ll learn and adapt together as a team. We’ll be sharing Ws (and Ls!) with each other as we experiment with new AI capabilities, and we’ll dedicate time to AI integration in our monthly business reviews and product development cycles. Slack and Vault have lots of places where people share prompts that they developed, like #revenue-ai-use-cases and #ai-centaurs.
Before asking for more Headcount and resources, teams must demonstrate why they cannot get what they want done using AI. What would this area look like if autonomous AI agents were already part of the team? This question can lead to really fun discussions and projects.
Everyone means everyone. This applies to all of us—including me and the executive team.
The Path Forward
AI will totally change Shopify, our work, and the rest of our lives. We're all in on this! I couldn't think of a better place to be part of this truly unprecedented change than being here. You don't just get a front-row seat, but are surrounded by a whole company learning and pushing things forward together.
Our job is to figure out what entrepreneurship looks like in a world where AI is universally available. And I intend for us to do the best possible job of that, and to do that I need everyone’s help. I already laid out a lot of the AI projects in the themes this year- our roadmap is clear, and our product will better match our mission. What we need to succeed is our collective sum total skill and ambition at applying our craft, multiplied by AI, for the benefit of our merchants.
-tobi
CEO Shopify
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Wrap-up
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