Profit Magazine has crowned Shopify with a remarkable title: Canada's Smartest Company.
The Ottawa-based software company has zoomed from insignificant startup to full-fledged powerhouse not unlike how a Ferrari goes from zero to 60. Now with 142 employees and 40,000 clients selling $600 million worth of product in 90 countries, Shopify is positively killing it.
"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 Vancouver's Version One Ventures. "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."
Here's what Profit loves about Shopify.
1. Brains. "[Cofounder] Tobi Lütke is just kind of off-the-charts brilliant," says Mark MacLeod, who was Shopify's first chief financial officer.
In fact, the whole executive team consists of supersatrs. "It's pretty rare to see an entire founding team continue to be involved at the top level of a company that's growing at the rate and scale of Shopify," MacLeod told the magazine. "And yet, they're all at the top of their game and completely in charge of their functions."
The executive team includes chief platform officer Harley Finkelstein, who joined in 2010, and chief financial officer Russ Jones.
2. Culture. Shopify's headquarters occupy two floors of a building in Ottawa's ByWard Market, the city's hippest enclave. "Befitting a young tech shop, the workspace itself looks like a cross of a sci-fi movie set, an avant-garde art gallery and a Toys 'R' Us outlet," Profit writes. "Floor-to-ceiling chalkboards line the hallway and are covered with murals, doodles and slogans—whatever anyone wants to draw on any given day. The offices and conference rooms are named after video games and are elaborately decorated, employees receive annual allowances to tart up their spaces as they see fit, and individual expression is encouraged."
Shopify knows it has to be even better than Silicon Valley because Ottawa has comparatively brutal winters. "That's why I directed Daniel [Weinand], literally one of my biggest guns, to take the role of chief culture officer," Tobi explains. "The only thing he's working on is making sure people are happy here, that we do interesting events, that everyone feels part of this."
3. Engagement. Shopify tackles employee retention in two ways: the first is its unique bonus structure, "wherein literally every staffer is eligible for monthly bonuses based not on rank or job title but on how helpful they are to customers, partners and fellow workers," according to Profit.
The second initiative are Hacker Days, in which all staff get two days each quarter to form teams and work on projects entirely unrelated to their day-to-day jobs.
"Taken together, all the perks and programs have helped Shopify attract talent from around the world, with virtually zero attrition—just two employees quit in the past two years—compared with 30% average annual turnover for Silicon Valley companies," the magazine writes.
4. Build-a-Business. An annual contest that started off by offering $100,000—then a huge sum for Shopify—to a retailer who launches a new Shopify site and sells the most product over eight months. The contest gets bigger and better every year and does remarkable things in terms of encouraging potential clients to choose Shopify and push their own e-commerce limits.
5. Experts. The company has been building a network of thousands of "Shopify Experts," who are third-party web designers, developers and marketing gurus across the globe who help Shopify customers with basic setup for a flat fee.
Not only does this program allow retailers to create more sophisticated sites, Profit says, but it's turned out to be lucrative for the Canadian company as well. "These experts end up generating a lot of business because if a customer walks into one of their agencies and says he wants an online store, they're going to build it using Shopify," notes Finkelstein.
6. Apps. Shopify encourages third-party developers to build apps and extensions for the core product. 200 are already available through Shopify's app store. "Let's say you want something sophisticated to market your business or manage inventory," says Finkelstein. "You can buy that from the store and integrate it with a click of a button."
Shopify also employs a clever app financing solution that works similar to how traditional publishers pay authors. They offer a cash advance, usually around $5,000, for a third-party app. This is pulled from a $1 million fund dedicated to the task. Shopify then keeps all revenue from app sales until the advance is paid off, at which point developers earn a generous 80% of ongoing sales.
7. Mentorship. Ottawa used to have a very robust tech community that included companies like Nortel and Corel. It was even once considered the definitive "Silicon Valley North" before hubs like Vancouver, Toronto, and Waterloo matured. Ottawa is hardly a major startup hub anymore, but old talent has stuck around and this has given the city a tremendous pool of mentors to draw from.
Shopify attracts these mentors through events like their 52-Hour Entrepreneur contest, during which 100 developers, designers and other business hopefuls occupied Shopify's headquarters over a weekend, vying to see who could build the best company from scratch.
8. Big Dreams. Tobi wants to see Shopify go public on the New York Stock Exchange by 2015 at the latest. "It's an audacious goal," he concedes, "but to take Shopify public is a long-standing dream of mine. I love this idea of participating in the full spectrum of what capitalism has to offer."