May 12, 2017 · 30m · 20vc
20VC: Building Shopify From $5m To IPO, Why The Future Of Retail Is Not Online vs Offline & Why Law School Is Like Finishing School For Entrepreneurs with Harley Finkelstein, COO @ Shopify
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, host Harry Stebbings interviews Harley Finkelstein, Chief Operating Officer at Shopify, exploring Shopify's scaling from $5 million to over $600 million in revenue, its May 2015 IPO, and the evolution of modern omnicommerce and direct-to-consumer retail.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 26.9% of the talking time here. How this is scored →
Harry as informed peer 2.7 Guest teaching 4.1 Guest disagreement 1.0 Harry pushing back 1.6
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:54 Harley corrects premise on revenue chasing
Harley immediately pushes back against the premise of chasing revenue growth, emphasizing that Shopify is product-first and explicitly warns off investors looking for quick wins.
Hardest push from Harry ▶ 25:38 Harry calls out Harley's Medium answerHarry directly rejects Harley's answer during the quickfire round when Harley names Medium, calling it 'absolutely a cop out.'
Biggest teaching moment ▶ 15:10 Harley explains commoditization of retail distributionHarley provides a comprehensive breakdown of how the internet commoditized distribution and why physical stores must add tangible value beyond simply carrying product inventory.
Harry holds his own ▶ 21:03 Harry presses on public market trust metricsHarry demonstrates keen financial understanding by probing beyond superficial IPO metrics to ask specifically what creates public market trust and low volatility.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Harley's Entrepreneurial Journey and Path to Shopify | 2 | 3 | 0 | 0 | Harry introduces Harley using questions provided by mutual investor Aydin Senkut and chimes in on their shared background in law school. Harley shares his origin story as a young entrepreneur and how he joined Tobi Lutke at Shopify. | |
| Consistent Revenue Growth and Product-First Mindset | 2 | 4 | 1 | 1 | Harry asks about key strategic decisions behind Shopify's consistent revenue growth. Harley gently reframes the premise, clarifying that Shopify is product-first rather than revenue-obsessed. | |
| Evolving Beyond E-Commerce: Retail Everywhere & Omnicommerce | 2 | 5 | 2 | 1 | Harley outlines Shopify's pivot toward omnicommerce around 2013, contrasting their approach with conventional retail CEOs and criticizing fragmented point solutions that turn merchants into human synchronization tools. | |
| The Evolution of Physical Retail & Direct-to-Consumer | 3 | 6 | 1 | 2 | Harry introduces the VC perspective that retail must transition from transactional to experiential. Harley expands on this by explaining how direct-to-consumer models and internet distribution commoditized traditional retail margins. | |
| Building Modern Consumer Brands & Celebrity Merchandising | 3 | 4 | 0 | 1 | Harry prompts Harley to define brand in the modern age. Harley explains how high-profile artists like Drake and Kanye West build direct consumer brands rather than cheap promotional merchandise. | |
| Going Public: Shopify's IPO Journey & Public Company Trust | 4 | 4 | 1 | 3 | Harry presses Harley on why Shopify chose to IPO during a quiet period for tech listings and asks him to define what makes a trusted public company. Harley explains their commitment to long-term consistency and transparency. | |
| Quickfire Round: Lessons, Management, and Best Shopify Stores | 3 | 3 | 2 | 3 | In the quickfire round, Harry banteringly pushes back when Harley names Medium as his favorite blog platform, calling it a cop out. Harley takes it in good humor while sharing management and reading reflections. |
Statements from this episode (14)
Shopify targeted over $600M revenue with 400,000 merchants in 2017
“Today, the company has targeted this year for over six hundred million dollars, with over 400,000 merchants on the platform.”
Finkelstein: Law school acts as finishing school for entrepreneurs
“In many ways, I think law school was a little bit like finishing school or etiquette school for entrepreneurs. I teach you how to write really well, which of course is really important when you're running a company. It teaches you how to be articulate and teac…”
Finkelstein: Early e-commerce forced a choice between million-dollar software and marketplaces
“And at the time in 2004, 2005, there really were two ways to sell a product online. One way was you would pay some agency a million bucks to do some sort of IBM Webster integration or some sort of Magento or, you know, some sort of Hybris integration. These bi…”
Finkelstein was store number 137 on Shopify before becoming COO
“I ended up signing up for Shopify as one of their first customers. I think I was store number 137 or something like that.”
Finkelstein: Shopify warned IPO investors against expecting short-term revenue chasing
“In fact, if you read our Toby's letter to shareholders when we filed our IPO, we made it very clear that if you're looking for sort of quick wins, and you're looking for a company that is going to chase revenue, we're probably not the right company. To invest …”
Harley Finkelstein: The future of retail is omnicommerce, not online vs offline
“But around 2013, 2014, it became increasingly clear to us that the future of retail is not binary. It's not online versus offline. Despite what you may hear from the CEOs of major malls and major retailers, the best spies and the, excuse me, the JCPenney's of …”
Finkelstein: Bundling point solutions for retail creates an inefficient 'Frankenstein' system
“If you don't use Shopify and you don't want to use our platform to sell in all these different places, you can bundle up a bunch of different single point solutions. You can do just e-commerce plus just point of sale plus, you know, maybe a card reader from li…”
Harley Finkelstein: Physical retail stores must add value beyond location
“These physical retailers fundamentally need to understand that they have to add value and just being there, just having a store on its own is not enough.”
Harley Finkelstein: The internet has commoditized retail distribution
“Because distribution is no longer, it's commoditized now, and the internet did that.”
Finkelstein: Drake's OVO and Kanye's Yeezy rival top fashion companies
“If you look at OVO or you look at Yeezy, this is really high quality stuff that rivals the likes of the best fashion companies on the planet.”
Shopify aims to build an independent 100-year company
“We want to stay a large, independent business for a very long time. We want to build a hundred-year company, and at some point, being a publicly traded business, it makes it easier to be a long-term company, and so it just made sense for us.”
Neither Shopify's founders nor CFO had public company leadership experience
“Myself and Toby, we've never ran a publicly traded company before. Even our CFO, who has a lot of experience as a CFO, he's never really ran a public company either.”