The Death of Shopify’s Start-up Dream, One Layoff at a Time

“It didn’t feel like a real company,” says Jessica, a former Shopify employee. It was 2016, about a year after Shopify had one of the best-performing tech IPOs in North America. At the time, the Canadian-founded company, which helps businesses from mom-and-pop shops to Mattel manage their online storefronts, was growing as fast as its share price was climbing. So Shopify upgraded its marketing and product teams into a 35,600-square-foot office in a century-old heritage building in downtown Toronto and imported the requisite trappings of Silicon Valley: ping-pong tables, free lunches catered by local restaurants, an all-dogs-welcome policy, barista training, a “rec room” with guitars beckoning jam sessions. Here was an open-plan, amenity-laden paragon of work-is-play-is-life start-up culture, where bespectacled, skinny-jeaned “Shopifolk” Slacked each other from adjacent couches, laptops burning their thighs from overuse. If you’ve shopped online, you’ve used Shopify. The platform makes it easy for anyone, from solo entrepreneurs to billion-dollar businesses, to launch and run their online stores, helping with everything from payment processing and inventory management to website design and promotion. Setting up an e-commerce shop once required real technical know-how before Shopify simplified the process and gave everyone the tools to do it. In a sector full of self-styled gods and their armies of acolytes, few tech companies have as fervent a workforce as Shopify. And for good reason: the company’s stated mission is to make commerce better for everyone. To “democratize entrepreneurship” by giving anyone the tools to start their online business, be they your grandmother selling knit scarves or your old roommate cashing in on the market for rare Beanie Babies. To “arm the rebels” and claw back dollars from faceless behemoths—especially Amazon—by empowering fledgling entrepreneurs. It was a pitch so successful that the IPO valued the company at about $1.27 billion (US). Shopify had so much cash and talent that, to Jessica, it often felt like that the company didn’t know what to do with either. (She, like all other current and former Shopify employees interviewed for this story, asked that her real name not be published.) The atmosphere sometimes felt less like a focused tech firm and more like a place inventing positions just to spend money. “People were getting jobs that I was just like, what? Why does the company need this? How is this going to actually help?” she says. In these immediate post-IPO halcyon days, employees were joining every week and teams were expanding. “We literally only want the best people in the world,” CEO Tobias Lütke would say of his recruitment strategy. But some, like Jessica, thought the company was growing for growth’s sake, straying from the core business of helping small merchants manage their online stores. Shopify’s mass graveyard of shuttered projects includes a stock photography website and an app to sell limited-edition streetwear that restricts bots from buying up the stock. Then there’s the 2019 launch of Shopify Studios, a production company that developed I Quit, an ill-fated reality series tracking aspiring entrepreneurs who ditched their day jobs to pursue their business dreams. In 2022, the company faced another stumble: in a long-running attempt to compete with Amazon, Shopify acquired Deliverr, an e-commerce fulfillment company, only to sell it a year later. The company shed about $118 million in market value that year. By July 2022, Shopify began walking back the utopian promise of its glory years. Gone were the ping-pong tables, lavish employee retreats, and the “freedom to play around.” Post-COVID, the company embarked on a series of mass layoffs after scrapping plans for a second Toronto office and turning to remote work instead. Layoffs to this day are ongoing. (Shopify has denied multiple requests for interviews.) A track record of innovation and technical prowess once made Shopify a revered homegrown success that could compete on a global scale. But as the e-commerce boom busted, Shopify committed a cardinal sin: it overpromised and underdelivered. According to one former staff member, the company aggressively sold an impossible dream to aspiring entrepreneurs, knowing the chances of long-term success were far lower than promised. After COVID, Shopify shifted its focus to enterprise merchants—multimillion-dollar brands far less likely to collapse overnight. It ditched your grandma in favour of Glossier. As Shopify prioritizes big businesses, the rebel merchants with less than $10 million in annual sales, many with far less, have had their customer service downgraded from a Shopify employee to an AI-powered assistant. When the cost of rallying rebels proved untenable, Shopify started cozying up to the behemoths. Now the company has a new battle cry: if you can’t beat ’em, join ’em.

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In 2004, Lütke and Scott Lake set up an online store to sell snowboards from small companies. At the time, Lütke, a computer programmer, was frustrated by the e-commerce tools available. So, he built his own solution from scratch. Two years later, that custom software became the backbone of Shopify: a user-friendly platform for entrepreneurs to sell products online. “For me, and I think for a lot of us, it was so cool to build things for merchants,” says Kevin, who worked at Shopify for eight years. “Because merchants could be your aunt who wants to start selling knitted stuff. But the big success stories on Shopify—the ones going from nothing to tens of millions—they may be a team of two or three people.” Kevin recalls the “magic” of the pre-IPO days. Back then, “there was a huge aversion to structure,” he says. The company wasn’t trying to hire “fancy people from Amazon,” and early employees weren’t being poached by Facebook or Google. “We were all pretty young and we didn’t have experience in e-commerce,” says Kevin. “We were just bloody smart.” Start-ups often see hierarchy as the enemy of innovation. But no structure means no accountability, leaving room for some ambitious employees to game the system by spearheading flashy projects without a business case. Say, for example, you wanted to lead a multi-year project with a vague goal. You’d have no problem securing a budget to hire ten people or travel to different markets for whatever reason. If it never launched, no harm, no foul: your job was to solve big problems with big ideas or fail fast while trying. If it did launch and generated no profit, Shopify would shut the project down a year later, and you got to travel on company time and dime. “[Leadership] was like, ‘We just want people who seem innovative, who can come up with the next big thing,’” says Jessica. “If you were the type of person who wanted to work on flashy, high-profile things and go on free trips,” Shopify was for you. On the flip side, employees felt like they were set up to fail by inadequate leadership that blamed employees for not meeting expectations that were always changing or never made clear in the first place. “I constantly felt impostor syndrome,” says Jamie, who worked as a data scientist at Shopify from 2015 to 2021. “You’re supposed to be creative, but you never know what you’re doing. It’s always a risk.” Post-IPO, head count tripled to 1,900, and more than 133,000 new merchants signed up to sell on the platform. Lütke instilled his ethos into his growing workforce: if you came here to help entrepreneurs, you need to learn to think like one. Employees say that Lütke encouraged them to start their own businesses or launch what became almost internal start-ups. “But most entrepreneurs, their ideas fail,” Jessica says. “Failure here was expected and accepted, and there was always budget to try, try again. And [leadership] didn’t care. They encouraged it because there was no budget constraint.” Most start-ups shutter, so the entrepreneurial mindset requires some blind faith—or delusion. But it also formed the foundation of tech culture in the aughts and helped spur true innovation at Shopify—until it didn’t. “I see on my LinkedIn that all these people have been laid off, and these projects don’t exist,” said Jessica. “When I was there, these were big projects, and they had teams and leaders and project managers and VPs. And now they’re just not there.” Shopify’s low costs and user-friendly platform attracted waves of entrepreneurs and small businesses. But that ease of entry didn’t guarantee staying power. Shopify doesn’t disclose their customer retention numbers—how many merchants stick around—but in 2022, the Globe and Mail reported that most new sellers don’t make it past their first year on the platform. One merchant segment, however, had an exceptionally high survival rate: enterprise clients. These are large-scale organizations that pay for a Shopify Plus account—a tier with with access to advanced tools and white-glove support. While Shopify kept promising to “arm the rebels,” it was quietly doubling down on the customers who needed the least help and brought in the most money. Before going public, venture capital money allows scrappy start-ups to focus on innovation and experimentation—the magic that lays the foundation of the myth. The mantra, according to Rick Watson, an e-commerce strategy consultant, was “‘We’re gonna have fun, we’re gonna break things. Don’t worry about making money,’” But when a tech company goes public, Wall Street becomes its most valued customer. “You can have fun, but these are the guardrails,” says Watson. “And by the way, these guardrails are not fucking moving.” When the pandemic shuttered brick-and-mortar stores in early 2020, small businesses signed up for Shopify in droves to launch their online stores. To meet expected demand, Shopify doubled head count to more than 10,000 and eventually eclipsed Royal Bank to become Canada’s largest public company, valued at $177 billion—a rarity in an economy that relies on oil and big banks. But the pandemic also exposed fissures in Shopify’s culture and shed a harsh light on the company’s flimsy commitments to social equity. During the George Floyd protests, some employees expressed their frustration with how Shopify handled communications addressing the social and racial issues flaring at the time. In August 2020, Lütke responded to these internal tensions in a lengthy missive in which he reminded managers that Shopify “cannot solve every societal problem” and that the company is a sports team, not a family. As a for-profit company, he continued, “The dangers of ‘family thinking’ are that it becomes incredibly hard to let poor performers go.” At the same time, Shopify launched several equitable commerce programs to support Black and Indigenous entrepreneurs. Now that enthusiasm for programs that promote diversity, equity, and inclusion is waning, it’s perhaps no surprise that, according to The Logic, the company quietly shuttered these social impact initiatives and laid off the team responsible for implementing them. Shopify had vastly overexpanded in the pandemic. And in 2022, a post-pandemic return to in-person shopping, rising inflation and interest rates, and falling tech stocks slowed the growth of e-commerce. Stakeholders demanded a return on their investments, and Shopify did what companies do: lay people off. In July of 2022, Shopify cut 10 percent of its workforce, about 1,000 people. In his mea culpa, Lütke took the blame for misreading the market and publicly apologized for the layoffs. The company’s stock price hit a pandemic low in 2022 just as the new CFO, Jeff Hoffmeister, was brought on from Morgan Stanley to give Shopify “a new shape.” “This is almost code for, ‘We have too many people on too many projects,’” says Watson. Before the first round of layoffs, Shopify seemed invested in keeping employees connected and motivated. The company paid for professional development coaches and “bursts,” where “Shopifolk” could meet their remote colleagues in person, for example, at a castle in France or a barge in San Francisco. “One-on-ones with all of your team were encouraged, [we had] accountability buddies, all of these things,” says one employee, Mark. But in Shopify’s leaner model, those initiatives didn’t make the cut. In December 2022, it scrapped plans to move into a 254,000-square-foot office in downtown Toronto to go fully remote. The following May, Shopify cut another 20 percent of its staff and sold off its in-house logistics unit. (At the time, the company was hit with a $130 million class-action lawsuit for allegedly breaching the severance contracts of about 2,000 laid-off employees, but the case was dropped.) To right the course, Shopify spent more its time courting multi-million-dollar companies like Everlane and Staples. One former employee, Ashley, who was laid off in 2023, says that as Shopify scaled and became less devoted to helping small businesses grow, its “brand image” and internal goals diverged. “It’s now, how do we win the big enterprise clients? How do we make more and more money? How do we please our stakeholders?” She says. Lütke used to encourage every employee to start a side hustle on Shopify. “A lot of people who worked at Shopify had a side store, some did really well,” she remembers. But after she lost her job, Ashley heard that Lütke went back on this. “Tobi was like, ‘I just found out that people have these side hustles. We didn’t hire you for your side hustle. This is your full-time job.’” (Shopify did not respond when contacted about the claim.) Mark says employees today are checked out and that the environment has become more cutthroat. “It’s incredibly discouraging,” he notes. “We all joined with this idea that we would be in this company that focuses so much on professional development and focuses so much on a mission [to help] small- to medium-sized businesses finally claw back dollars from the conglomerates and big sales channels like Amazon. And now that’s just not the case.” He still thinks Lütke is a visionary CEO and an “incredible, very intelligent” person. “I think [Shopify] just grew into something bigger than himself,” Mark says. “And now he kind of reminds me of a state head. He’s like our king.” Shopify is still one of the largest e-commerce platforms in the world, and, as of this writing, the second most valuable company in Canada. It powers roughly 12 percent of all US e-commerce and operates in more than 170 countries. The company’s reputation hasn’t been marred by a salacious scandal; there is no studio film in the works about a corrupt founder. Individual accounts of high-pressure or downright dysfunctional workplaces will always vary. And Lütke is right; Shopify is a business, and businesses must be profitable to keep people employed. Shareholders don’t care whether a product manager or account director is a “culture fit.” They care about making a healthy return on their investment. Work sucks, I know. Why, then, does it seem like so many employees feel betrayed, like a jilted lover left wondering why a love-bombing boyfriend suddenly went cold? In a 2022 piece for Mother Jones, writer Lora Kelley deconstructs the tech world’s obsession with “democratizing” everything, from design to health care. Democracy “suggests that a good or service . . . is for the people,” she writes. “But despite lofty mission statements, companies have in the end hewed closely to traditional pathways for their purpose: making a profit. ‘Democratize’ offers a synecdoche for an optimism that tech’s social goals and financial imperatives are aligned.” Shopify exemplifies the paradox at the heart of mission-driven tech companies: once they scale past a certain point, purpose and profit become incompatible. But it’s the people who bear the brunt of the breakup. In an internal memo in 2023, Lütke compared Shopify to a video game and framed recently laid-off employees as having distracted the company from its “main quest” (gamer parlance) to pursue “side quests,” namely, a failed foray into logistics. In the first round of layoffs, Lütke publicly apologized and took responsibility for overhiring and miscalculating growth targets. This time, his robotic callousness reflected what Shopify’s one-time head of communications, Darrell Etherington, referred to, in TechCrunch, as Lütke’s “basic inability to empathize with the situation of many employees under his company’s charge.” Etherington sees Lütke as reducing employees to non-player characters (NPCs): people who can’t think for themselves and blindly follow others. But, per Etherington, “all the various side quests that Shopify has invested in heavily over the years, including logistics, are bets made either directly by or with the full-throated endorsement of its CEO and founder—Lütke himself.” Not only has Lütke appeared to have walked back on promises to democratize both tech and his workforce, he’s helped steer Canadian tech in a more conservative direction. He has joined Canada’s tech leaders, including Shopify’s far-right COO Kaz Nejatian, to launch Build Canada, an anti-regulatory platform aimed at influencing federal policy issues like immigration, taxes, and health care—an initiative, despite their insistence otherwise, that keeps drawing comparisons to DOGE. After Lütke criticized then prime minister Justin Trudeau’s decision to impose retaliatory tariffs on the US imports, Robert Gillezeau, an economic professor at the University of Toronto, told the website BetaKit that the Shopify’s CEO’s “decision to align with the Trump administration, even in the face of this reckless and economically illiterate attack on our country, puts us all at greater risk.” The fear that Lütke and his peers may be embracing a milder shade of the American broligarchy’s authoritarian streak feels like a surprising turn when you consider that Shopify grew into a global player in a pastel-hued era of millennial optimism. The company was rooted, in part, by a generational belief that advancements in technology, and the men in charge of it, are inherently good. Tech workers joke that Shopify is a cult, that a deep devotion to the mission blinds employees from corporate machinations. Shopify touted its mission to recruit talent in a competitive sector, to distinguish itself from other companies whose goal was only to make us more productive consumers. The guiding idea was that if people are motivated by a higher purpose, maybe they’ll work like their lives depend on it. When that illusion is shattered, you’re left questioning what purpose you served, if any. Morale might be down at Shopify, but stock is up. The fantasy of “equitable commerce” is a footnote in the Shopify story. “Shopify doesn’t ‘arm the rebels,’” one whistleblower posted on X in 2023. “It crushes them. The writing has been on the wall since 2016.” It’s nothing personal—just business.The post The Death of Shopify’s Start-up Dream, One Layoff at a Time first appeared on The Walrus.