After all, this year’s fastest growing company and former OBJ Startup to Watch e-mailed us – in a pinch – a slightly blurred digital photo of its filled-out Fastest Growing Companies application form. Thanks to a recent office move to the buzzing confines of the ByWard Market, founder and CEO Tobias Lutke explains with a laugh, the company didn’t yet have a fully functioning landline and fax machine.
“We’ve gotten pretty crafty over time having to send forms to people, because only recently we got a landline to be able to send faxes,” he explains.
A programmer by trade, Mr. Lutke came to Ottawa from the Cologne area of Germany eight years ago. While his wife worked on a master’s degree, he says he and some business partners set up a rudimentary online snowboard shop to finance their riding habits.
The rest of the story has become something of a legend within Ottawa’s startup community. After burning out their original, off-the-shelf platform, Mr. Lutke says he began designing a custom stage on what was then an obscure open-source programming framework called Ruby on Rails. “And it took about two months until I had something,” he explains.
Shopify, an online sales platform that houses stores for thousands of clients including the Foo Fighters, Tesla Motors, Pixar and The Indianapolis Star, was born.
But things didn’t come easy for the fledgling retail host. Though it received an infusion of angel cash and family funding around the time of its launch in June 2006, Mr. Lutke explains the firm was originally started “on an unsustainable business model.” It originally took only a percentage of sales, without charging subscription fees.
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Now, the company charges both and doesn’t appear worse for it – indeed, Mr. Lutke says its international penetration is up to 60 countries and counting. “And that’s without doing any marketing there. It’s all word-of-mouth,” he explains.
And though he says the online universe is filled with competitors – giants such as Yahoo! Merchant Solutions, Amazon and even local company and 2010 Startup To Watch Gazaro are hungrily chomping at the e-commerce pie – he also says his main competitive advantage is the same as that of the funky downtown boutique with a personal touch.
“We actively encourage our customers to run their stores in a certain way, modelled on the principles of someone who has an offline boutique store,” he says. It’s all about a good-looking, personalized experience, he adds.
In the meantime, Mr. Lutke says financing is “available” to the company, though he won’t say whether it’ll bite. “We’ve been contacted by many VCs, especially in the last half year,” he says. “But we’ve gotten very good at making every dollar count.
“I’m not going to rule it out … but it would have to be under very favourable terms.”
Year founded: 2006
Head count: 24
Product/service: Online storefront platform
Revenue growth: 1,174%