Katie Perry (00:00):
When you hear the word e-commerce or even commerce, there's probably one company that comes to mind and that is Shopify founded in 2006, went public in 2015, amazing growth for this company, and they've actually expanded from empowering small businesses and smaller entrepreneurs to even serving some of the largest enterprise retailers around today. We have a very special show, just hours after releasing their Q2 earnings, we have Shopify's president, Harley Finkelstein on the show. He brought the energy, he brought a lot of great takeaways from their earnings. So with that, let's dive in. Harley Finklestein, welcome to After Earnings Big Day for Shopify. Big Day for you. You've been on the circuit already. You had CNBC, Bloomberg Social Media. Thank you for spending the time with us here. Now, how is your social battery doing?
Harley Finkelstein (00:51):
I'm a power extrovert, so no issue there. And frankly, these sort of quarterly earnings calls, obviously it's a great opportunity to tell the world about how Shopify's performing, but it also I think is a great opportunity to story tell about what's happening in retail entrepreneurship, commerce. And so it's this great sort of venue in which to story tell, which is my favorite thing in the world. I'm sort of Shopify's chief storyteller, and so I really look forward to these, the results or I should say the stock price results aren't always what they are today. Certainly that doesn't always happen, but it's a great opportunity to tell the story and to get people excited about what we're doing at Shopify.
Katie Perry (01:34):
Yeah, we'll throw up the chart there for our viewers and listeners, but yeah, the enthusiasm was palpable. I was streaming the call this morning when I was getting ready and I was ready to run through a brick wall. So I think that's the job of someone in your shoes. So we're definitely going to get into the nitty gritty of earnings. But before we do that, I'd love to reorient listeners. I mean, Shopify's a known brand. We've all experienced it, used it whether we're on the side of buying things or selling things. But I think you guys started out more on SMB entrepreneur and you're moving into include enterprise, so we'd love to hear the latest and greatest positioning of Shopify for people who haven't been following as closely.
Harley Finkelstein (02:16):
Yeah, so as you said, the history of the company, we started initially we built our own software to self snowboards on the internet, this is back in 2004. And very quickly realized that while the snowboard business was a good idea, the software that he had built to sell those snowboards was actually a great idea. And so in 2006, we launched what is now Shopify. And the original objective and mission was let's make it really easy for small businesses to build beautiful, elegant, scalable online stores. And we became a leader in that space and around, we've been public now for about nine years. We've been public in May, 2015. Around the time of the IP O2 things happened. First thing was some of those small businesses on Shopify got really, really big. I'm talking about the Gym Sharks of the world and the Allo Yogas of the world and these companies that were sort of homegrown stories that got really big James Purse brands like that.
(03:16)
And so we had this indication that maybe we can actually also help larger brands and larger retailers run their online store. And that brings me to the second sort of aha moment that we had around the IPO, which was that we think the future retail is not just online or just offline, but rather everywhere. And that every surface area where consumers spend their time, that is going to be a place where commerce can be conducted. And so when you sort of look at shop like today in 2024, we now have merchants of all sizes. Obviously small business is still a big part of our business, but Glossier Skims, dollar Shave Clubs, Spanx Daily Harvest, athletic Greens, Mattel, Supreme, I mentioned Barnes and Noble and QVC joined this past quarter. So now merchants of all sizes do Shopify and they're not just using to sell online.
(04:07)
We power physical retail stores all over the world. We make it easy to sell on social media platform like Instagram or Google Shopping or anywhere in between. But really what we're trying to create is this unified retail operating system so that when you're either starting a business or if you're selling, if you're right behind me, you see my skateboard from Supreme, Supreme has these massive Flash hills every Thursday, whatever the complexity is that you need from us, we're able to deliver. And we now have millions of stores on Shopify. We're about 11% of all US E-commerce just in the US alone, we're about 11% of all. So if you were to think about Shopify as a retailer, we would be the second largest online retailer in America. We're not a retailer or a platform, but it's a good way to sort of think about and visualize the size of our business. And about a month ago we crossed the 1 trillion with a T $1 trillion mark in QM GMV sold on Shopify. And we're trying to make it easier for people to build beautiful businesses and we're trying to make it easier for large companies to innovate and to be future-proofed.
Katie Perry (05:16):
Yeah, I mean the ubiquitous is crazy. You got QVC and you got kif. So if you can get those two sides of a spectrum, really, really impressive stuff. But
Harley Finkelstein (05:26):
Katie, they need the same thing. And that's the really interesting part about retail right now. So I dunno, I'm sort of a student of retail, I suppose In 1876, John Watermaker created water maker's department store in Philadelphia and it was sort of the first real department store, first time that a physical building how is a lot of different brands. And I think retail for the next 150 years after the creation of Wanamakers was kind of boring. It was the same thing, it was bigger stores. Some stores had slides or waters parks or DJs or coffee bars, but it's sort of the same thing. And it's only really been in the last 10 or 15 years that we're beginning to see this new evolution of retail where direct to consumer is no longer just a fad, but rather it's steady state consumers are connecting with their favorite brands in ways they never did.
(06:17)
I mean Kit, as you mentioned earlier, it's a great brand. Those are their sneakers right up there. They sent to me when they launched in Canada a couple of last year. Nice. But Kit is cultural Kit has this incredible the content, they produce the videos, they produce the interviews, you walk into their store and you're not sure if it's a museum or an ice cream shop or a great retail store, but it feels to me like right now some of the most exciting time of retail of the last couple of hundred years and Shopify's at the epicenter of that.
Katie Perry (06:45):
And you think about these modern commerce brands, retailers that are really innovating Kit comes to mind for sure. And it's almost like the other guys want to be there and you're sort of creating the tools that help them get there.
Harley Finkelstein (06:57):
Mattel is a great example though. Mattel, I'm going to get plus or minus one or two years here, but Mattel was created in 1946, I believe, husband, wife team. The first sort of Mattel products were Barbie and Hot Wheels. Barbie was named after their daughter. Ken actually was their son funny enough. But Mattel has been around for 80 years or so, about five years ago or so, they came to us and said, we want to create something called Mattel Creations, which are going to be limited edition drops, where to go into the Mattel Vault, literally like the Mattel Vault underneath their offices in Los Angeles. And we're going to bring all these brands. We have Uno for example, or some of the early Barbie designs and we're going to create new actual intellectual property and we're going to create Hollywood blockbuster movies. And it was actually Richard Dixon who was at the time, the president and COO of Mattel came to us and said, we want to create this thing called Mattel Creations. And they did built it on Shopify and now it's a brand new very substantial business unit that they have that didn't exist a decade ago, built entirely digitally on Shopify. So an 80-year-old company is also able to leverage this incredible technology to build their own businesses. And funny enough, Richard is now the CEO of the Gap. He just became CEO of the Gap a couple of months ago and hope to do more work with them there.
Katie Perry (08:18):
Yeah, I mean I definitely empathize with him. I have a famous name as well, so that can be rough, but it can be an advantage and personally would love to check out the vault. I've been waiting for the Barbie RV to make a comeback. Not sure where that fell off
Harley Finkelstein (08:32):
Or Real Hot Wheels, right? Yeah, an actual Hot Wheels you can drive would be really fascinating.
Katie Perry (08:38):
That's amazing. That actually reminds me, I saw today Airbnb built an actual poly pocket house, so I think there's, I saw, yeah. Yeah, so cool. There's ways to do those extensions. That's awesome. And I also know you brought up in the call speaking to just the dominance you guys have in commerce, agencies and companies are building entire practice areas or perhaps products around your ecosystem. So I'm curious how you think about that and how you're empowering all of these ancillary companies, agencies to be partners with you guys in scale.
Harley Finkelstein (09:10):
It is remarkable actually. One of the first things that I did when I got to Shopify about 15 years ago was to help build this partner program. And at the time, the real objective was what if Shopify was able to create what most people need most of the time. So let's say 80% of what every retailer requires, so great payment stack, great inventory, great analytics and reporting, order fulfillment technology, the stuff that everyone needs. Let's make that world class and then for the final 10 or 20%, we know that's going to be specific to the particular business needs that uses Shopify. So rather than try to be everything to everyone, what if we invited a community of developers from all over the world to build functionality and product and features on top of our APIs? And the end result is now we have one of the largest ecosystems on the planet of any software company where there's now more than 13,000 apps in their app store and every day, thousands of third party developers all over the world are finding ways to build new functionality for Shopify.
(10:11)
And if you think about areas of our business now that are sort of steady state, so an example is subscriptions. Now of course we offer subscriptions, we have Dollar Shave Club and BarkBox and all the major subscription businesses on using Shopify. But for a while we didn't do subscriptions ourselves. We relied on third parties to build that functionality and then eventually we realized that more people want to do subscriptions, so let's build it internally ourselves. And so we have this wonderful dynamic and ecosystem of reciprocity with these thousands of developers that build more functionality on Shopify. The same thing goes on the referral side. We have about 40,000 agencies all over the world that when you walk into the agency, maybe a big one like Deloitte or Accenture or WPP or in maybe a random small agency in your hometown, if you walk in and you say, I want to build an online store, by default they build it on Shopify. And that's allowed us to sort of have a distributed sales force all over the world long before we went into some of those countries ourselves. And that really creates this incredible flywheel of growth for us.
Katie Perry (11:17):
Yeah, it reminds me, we had a brass CEO on and we were talking about how I'm from the marketing world and if you want to get certain jobs in marketing, it's literally in the requirements that you need to know how to use braise. And I know the same is for you, and sometimes I think that doesn't come across, but what a signal that is that you actually can't work in certain spaces unless you're, yeah, we
Harley Finkelstein (11:37):
Don't care if you have an MBA or a bachelor's degree. We care if you know how to build Shopify stores is now on job descriptions all over the world. That is really cool. I mean as an entrepreneur myself, I have to say stuff like that or hearing that some other industry, someone is the Shopify of x, I can't believe that that's where we're at, that is not lost on us. We're very grateful and we really look fondly upon on our journey, but hearing those things is remarkable. So
Katie Perry (12:08):
Speaking of all this partner ecosystem that's so robust, has it ever been the case that you guys have acquired a company within there or what's your kind of approach to people who are building things that are proving to be more applicable to more people?
Harley Finkelstein (12:22):
So our m and a strategy historically has been to acquire great products and exceptional technical founding teams. We really haven't bought any large companies for revenue frankly ever. But when we do see either a company that's within our ecosystem or sort of on the periphery where they have great product and great technical founders, those are the types of companies we like to acquire. And actually if you think today about, I'll give you a couple examples. The shop app, which we should talk about at some point, one of the most popular shopping apps for consumers on the planet is ran by a founder, Carl, who is the founder of a tick tail that we acquired. Our core product is ran by Glen Coates, who's the founder of Handshake, which is a B2B product that we acquired Daniel Debo leads partnerships. We acquired helpful.com, which he led.
(13:13)
So actually Shopify is very much a founder's Paradise, specifically a technical founder's paradise. These are people who were working on their own companies and they were growing it and we invited them into join our to join our journey and now they're running big parts of our company and that is I get a chance to speak to a lot of my peers or run other companies that is very unique. A lot of companies try to do that. We've really created this sort of crafters or founders paradise here where people can come and join us and do their life's work here for a very long period of time, well beyond their earnout dates. And that's something we're very proud of.
Katie Perry (13:48):
Yeah, that's actually super insightful to hear. I mean, you're building for entrepreneurs, so it would make sense to build a team of people who are in that mindset and have been in their careers.
Harley Finkelstein (13:59):
I mean, right back here, that's my little tea company that I started during the pandemic called Fire Belly Tea. I mean we ourselves are entrepreneurs almost across the entire leadership team of Shopify. I've been selling T-shirts since I was a kid. Toby of course had a snowboard shop, was a founder who got acquired by Square. He's our chief operating officer. When you look across the Shopify leadership base, we're entrepreneurs first. And so in many ways this is a company building software and products for entrepreneurs built by other entrepreneurs. I think that's where you get, if you feel that there is real empathy within the products that we build where they're very practical, they're easy to use, they scale, that empathy comes from a place of experience and a place of context because we were in their shoes, we know what it's like to cover payroll ourselves and I think that matters that comes through in the product.
Katie Perry (14:48):
Yeah, absolutely. I want to pivot to speaking of the ecosystem and some of your bigger partners. In June you guys announced this partnership with Oracle, which seems very powerful. Data is one of those things that in the past was inaccessible to a lot of people, but I feel like it's being democratized. There's no code tools for data, there's better dashboards, better visualizations, where no matter how advanced you are in data analytics, you're able to use that. And so I'm curious about this data management partnership you have with Oracle and how that's benefiting your customers.
Harley Finkelstein (15:22):
Yeah, so I said earlier when we were talking that we started with SMBs and now we have some of the largest brands on the planet using Shopify, Proctor and Gamble and Nestle and companies like that. Staples. One of the things that we also understand is that in some of those companies, they're also using existing softwares from other enterprise software companies. And so what we're trying to do, whether it's our partnership with Oracle or it's what we're doing right now with IDC where we're putting out a lot of content to show how e-commerce and how Shopify has higher converting rate, whether it's working with Gartner or Forrester, what is required to sell into the enterprise is different than what's required to sell into the SMB sort of segment. And so when you hear about these partnerships, I mean we have a partnership with Prime with Amazon now or you hear what we're doing with a firm with Buy Now pay later or globally with Cross Border, what we try to do in every area of the business and the product is find someone that is working on an area of commerce that we ourselves don't do at our core and partner with the best people in that particular space.
(16:28)
And in this case, we felt that Oracle on the data sharing side was a really important partner because a lot of the brands that want to use Shopify also use Oracle too. And then this way we can sort of collaborate when we go to market together, when there's a big merchant that is looking to migrate that's already using Oracle or already using Shopify but wants to use Oracle, it allows us to effectively extend our reach in the enterprise and it's working. We have a B2B product, for example, business to business, which is a whole sub product which frankly didn't really exist three, four years ago and it, it's growing leaps and bounds now. And so what's happening is companies like Carrier, for example, are coming to us and saying, we want to sell our industrial heating and cooling systems on Shopify's B2B product. So now we're even beyond just direct to consumer.
(17:13)
Now we're also able to sell to B2B wholesale customers as well. Now what's really neat is back to the point of unified commerce, A lot of the direct to consumer brands also sell, like Brooke Linen for example, or Mama Fuco, they have a great direct to consumer packaged goods business, but they have a huge wholesale business also. More and more we're trying to do is the metaphor is like a browser with a bunch of tabs. We're trying to collapse the tabs into having one centralized place to run the entirety of it. And that requires partnerships with companies like Affirm and Stripe and globally and more recently Oracle.
Katie Perry (17:49):
Yeah, I love the carrier. Shout out. I'm from Syracuse, New York carrier used to be there, carrier Dome
Harley Finkelstein (17:55):
Suse, not too far from Canada actually.
Katie Perry (17:56):
Yeah, I'm basically borderline Canadian I would say. Yeah, but I think, yeah, the data piece too, when you're talking, it's interesting when you think of Shopify in the past you'd think e-commerce and now it's kind of just straight up commerce and it's sort of like what we saw in the marketing world where there was digital marketing and marketing. It's all marketing. So that data piece must be incredibly important for people looking at insights across multiple ways they're selling things. I think,
Harley Finkelstein (18:25):
Well to the example I gave you earlier, the John Watermaker guy who built his store in Philadelphia, he's also credited with the guy that came up with the expression 50% of my marketing works. The problem is I don't know which 50%. Have you heard that expression?
Katie Perry (18:39):
Oh yeah, I heard it literally two weeks ago.
Harley Finkelstein (18:42):
Okay, so I believe that's also John Wanamaker, just coincidentally, we were just talking about him and I'm sure your listeners are going to fact check me on this, but I think it was him. It was Michael Scott,
(18:53)
Right, exactly. Of course, Michael Scott for John Wanamaker. But that is a great thing to think about because that is no longer the case. The millions of stores that use Shopify today, they have far more, even if they're a one person operation at their mom's kitchen table, the sophistication they have with reporting and analytics and data and feedback loops that are sort of iterative and low latency, this is what the biggest companies on the planet had 15 years ago and no one else had it. And so this idea of a democratization of great information and insight to make better decisions, that's where this gets really good. And so one of the reasons that we talked a lot about on the call shop pay, which is the highest converting checkout on the internet, it's doing really, really well. Part of the reason that we want more people to use shop pay is one, the conversion rate converts 36% better than competitors, 15% on average.
(19:50)
But also it allows you as the merchants, as the business to better understand what your consumer's purchasing so you can actually deliver to them much more relevant on time and proper offerings. I think the days of just throwing spaghetti at the wall and hoping something sticks is over. And the cool part is we get to do that for the biggest brands on the planet, the Barnes and Nobles. We also get to do it for someone who's just sitting down while we're talking right here, Katie at their mom's kitchen table to start a jewelry company. These tools have changed dramatically the face of retail and commerce.
Katie Perry (20:26):
That's awesome. I love that. Let's shift to earnings. The market was loving what you guys were putting out this morning, so let's hear some of the highlights from what you guys shared. Maybe dig into some of the areas you think retail investors in particular might want to pay attention to.
Harley Finkelstein (20:44):
Yeah, I think that these results in particular demonstrate a trend that we can do two things at the same time. We can create this very meaningful combination of both growth and profitability. And I'll start with growth and I want to talk about some of the growth drivers because I think they're really interesting. And then I'll talk about profit too on growth though revenue was up, if you exclude the logistics business revenue was up 25% year on year to 2 billion. That is the fifth consecutive quarter of at least 25% top line growth. I mean that is remarkable. At the same time you saw gross profit was up 25% to a billion dollars in Q2. Now that grew faster than revenue and operating expenses were actually down quarter over quarter. So when you kind of zoom out, what matters and what we care a lot about is free cash flow and our free cash flow margin this time last year was about 6%.
(21:39)
It's now 16%. We generated about 333 million in free cash cashflow for this particular quarter. So you're seeing revenue consistently above the 25% mark and you're seeing free cashflow. You're seeing, I think it was four consecutive quarters of double digit free cashflow margin. So that is, for us at least, that is exactly what we want to run our business high growth, but also a focus on having really great operational discipline. So it carries down to the bottom line. And in terms of some of the areas of growth, obviously e-commerce is growing. Generally we are getting more market share, but look at new areas of growth. For Shopify point of sale, for example, offline GMV was up 27% year on year and we've now surpassed a hundred billion dollars in Q-M-G-M-V for the offline aspect of our business. Again, if you go back to the IPO, our point of sale, our physical retail business was almost not existent and now it's growing 27% year on year with a hundred billion in Q International.
(22:43)
Traditionally Shopify really focused on the core English speaking markets and for the quarter over 50%, five 0% of merchants that join in the quarter were from outside our core non-English speaking countries. And then I mentioned B2B a little bit, but B2B had our single largest month ever. B2B GMV grew 140% year on year in Q2, and we saw 34% increase in merchants getting orders with B2B from wholesale customers in the quarter as well. So when you put all those things together and then you add the fact that Allo Yoga Mattel, ToysRUs tops away, Casper, both these traditional companies that are large, but also these native digital companies, I mean Casper and Tonal in a way, these are sort of the first gen DTC companies, they all built their own stacks originally. They're also going to Shopify. And so I think that the pipeline and all these on-ramps on Shopify to Shopify are really firing in all cylinders now, and the result is top line growth that's also trickling down to the bottom line. This is the best version of Shopify, and I think the reason that the markets are reacting the way they have today is because it was a reminder that we can balance both growth and growth and profit.
Katie Perry (23:59):
Yeah, I definitely clocked that comparison between the top line growth rate and the profitability numbers, and I thought that was really helpful context, just to see those things side by side and showcase how you're kind of tackling both sides of the balance sheet. I'm curious about international. Is there any specific region or any trends there that are moving the needle?
Harley Finkelstein (24:19):
Yeah, certainly Europe is doing really well for us in particular. I think we've always had a really good product for the European market, specifically for Western Europe markets, but we didn't always have merchant solutions that were there. Our point of sale starts initially launched in the US and then went to Europe. Shopify payments started in the US and then went to Europe, Shopify Capital. A lot of our merchant solutions started in the us, north America, Australia as well in the uk, but we now really have product market fit in Europe. I think a couple of things are happening there that's leading to outsized growth in Europe for Shopify. One is generally I spent most of the month of May in France, meaning with the largest fashion houses on the planet. And you think about Ami a MI, ami Paris or Isabelle Haw, these are global amazing fashion houses that are so well known, but historically were not selling online.
(25:13)
Or if they do, it was a bit of a hobby. They really wanted their consumers to come into their store first and foremost, that's changing. As they become larger, more global brands, they want to have an incredible in-store experience and incredible online experience as well. They want to cross-sell on marketplaces, they want to sell into social media platforms. And so there's this opportunity for us to go to these fashion houses and say, let us help you modernize your sales channels. And it's working really well. Obviously we also have some great homegrown stories. I mean, I was around when Ben Francis started Gym Sharkk out of his dorm room in the uk gym. Sharkk is now one of the most important companies on the planet. I mean, they're competing with the likes of Nike and Lululemon, and that's a company that is, I dunno, 10 or 12 years old.
(25:59)
The growth rate of some of these amazing brands is unlike anything we've ever seen. And we're sort of helping them to make sure they can continue this, but international is important for us. The other side of international, which is also fascinating is cross border selling. I think for a long time most businesses looked at their total addressable market as their current domestic geography. If I was a Canadian company, I sold to Canada. If I was US companies. I think that's over. I think that there is now more of these brands that are grown really rapidly that are inspiring to all of us that consumers love. They are default global, and that means that their expectation of the software they use is also default global. So when they go to their Shopify admin, they click markets and they say, I want to active in a new market.
(26:49)
They expect that language, currency, taxes, duty, merchandising, all of that works seamlessly well for the new market. And that is an area that we're investing a lot in because we think there's huge opportunity and a very simple example, but that is e illustrative, is that in Japan, the way that UX patterns in Japan for online stores is very different than the US and the US right now. The trend is a lot more minimalist white background, not a full page. Very, very different in Japan. And so now we actually just created a new free theme that if you're a Japanese merchant and you want to create an online store on Shopify for the Japanese market, you can use a theme that is specifically tailored and designed for the Japanese consumer. Things like that on their own may not seem like a big deal, but when you layer on all these different things, you begin to see why we're winning internationally and it's a huge part of the future of this company.
Katie Perry (27:43):
Yeah, I mean that does sound like a big deal to me. Everything is global now with social media. I just saw a pair of camo sweatshirts on TikTok and I think it was a shop pay situation. They're shipping from Australia. It's all the same to me. So I could see how on the other side of it, as a merchant, you need a really frictionless way to be able to just quickly transact no matter where the buyer's coming from.
Harley Finkelstein (28:07):
It is remarkable. I mean, I'll just take off my Shopify hat for a second. Put on my consumer hat. There are brands, I'm not a huge shopper, but there are brands that I love. I love James Purse. I think James Purse makes the best black. I was saying earlier, master Dynamics. I love what they're doing on headphones and Kit of course, and Supreme, a lot of my favorite brands behind me. But as a consumer, when I see the shop pay logo, it means that the conversion's, the check's going to happen fast, it's going to be safe. And more and more when I don't see that logo and I have to start putting in my address and filling out these large multi-page forms, I just don't necessarily want to complete the transaction. And I mentioned this on the call, but Shoppe process 16 billion in GMV in the quarter, and there's about 150 million consumers, buyers that have opted into shop pay now. So it is the highest converting checkout, but it's becoming one of the most prevalent, or it's becoming the checkout that I see the most on the stores that I love the most. I'm very proud of that.
Katie Perry (29:09):
Yeah, you're right about shop pay. I mean, as a consumer you see that logo, you're like, okay, this is going to be done and dusted in about two seconds. I have no time. It's going to be easy to even think about this purchase. I have one more question about earnings. Generally just being on the side of a company, you guys are prepping this earnings call. You're going to have great things to share, and then earlier this week the market takes a turn and there's a correction situation. I'm just curious on your side, does that happen? And obviously it's rebounded a bit, so that worked out, but earlier in the week, were you guys like, damn, we're at all this great news. You can't control what's happening.
Harley Finkelstein (29:43):
Yeah. And then the Bank of Japan does something. Yeah.
Katie Perry (29:47):
Were you guys worried about that at all or is just like, yeah, we have a good story to tell. Whatever happens, happens.
Harley Finkelstein (29:53):
We've been at this for a long time. We celebrated recently our 20th anniversary of Appify. I've spent more than a third of my life here. Obviously Toby's been here for even longer. We've been public for nine years now. We've done, I dunno, 37 earnings calls. The key to this is really to create great products that merchants love, that they find value in, to find this meaningful combination of finding new growth levers, but also ensuring profitability to invest in the areas that are super meaningful to the future and to build the most impactful products to merchants. And I said this on the call, but this is the best version of Shopify. And I think the key is you lay out plans, you stick to your plans. Sometimes the macro headwinds do shift somebody in your favor, sometimes not. But the key is, I think if you're leading and you're operating a high growth, large scale, publicly traded company, is to just focus on what matters and the things that you can affect.
(30:53)
And for us, that's how we run the business. That's how do we have operational excellence and efficiencies, what products we put out there. And I know on the macro side, I know a lot of other companies are talking about softening consumer spend, but it seems like our merchants seem to be outperforming and doing better than most others. We have obviously merchants across a whole swath of verticals. You have fig selling scrubs on this side, and then you have BarkBox selling pet products on this side, and then you have Nestle and Heinz and Mattel and Staples. So we try to be thoughtful about running our business and sometimes the macro headwinds and sometimes the macro tailwinds affect the day to day. But in the long run, I think the best companies can stay focused and they can stay disciplined on the things that they can affect. I'm so proud of what Shopify has done over these last 18 or 20 years, and I'm really proud of this quarter.
Katie Perry (31:49):
Awesome. That's a great mentality. I have a couple more questions pivoting to you actually. Not to put you on the spot, but you have a huge following on social media, as does Toby, and I'm curious, there's definitely a trend of using executives building their brands. Studies show that investors are looking for trusting competency and leadership when they're making decisions. Was this an organic thing where you guys just like being on social media or is this a strategy that the company has to connect with more people?
Harley Finkelstein (32:21):
Look, I think companies are, there's no longer the separation between I, I'm a customer of this company or I am a fan or a supporter or an investor. It seems like the lines of demarcation have been blurred a little bit. And although we're a large scale publicly traded company, we still believe that we are the entrepreneurship company. And we believe it because one, entrepreneurship is, I self-identify as an entrepreneur. I said this earlier, but I started my first company when I was 13, started a little DJ company. I started a teacher company when I was 17.
Katie Perry (32:56):
Wait, what is a DJ company?
Harley Finkelstein (33:00):
I'm Jewish. And when I was 13 years old, I went to a lot of bar bat mitzvahs and I thought the DJs were just the coolest people in the world. And I applied to be a DJ at a bunch of local companies and no one would hire me. And my mom and dad didn't have a lot of money growing up, but they did give me the sort of audacity to go and they said, Hey, just why don't you go start your own DJ company and hire yourself? And I started my own DJ company when I was 13. I ended up DJing like 500 events between 13 years old and 19 years old or 20 years old. But entrepreneurship for me is this incredible way for humans to solve problems, whether it's because it's passion-based, like DJing or when I was in college, my mom and dad went through some really tough financial times and I had to support myself and my sisters.
(33:45)
And I started teacher business to pay for school and help my mom and sisters. I think entrepreneurship is the greatest equalizer. It's the greatest tool for humans to find their own versions of success. And so I don't think it's enough that a company puts out just a press release explaining their place in the world. I think the leaders of those companies have a responsibility to be the storytellers for their businesses. Obviously Toby and my style is very different. I'm a lot more extroverted. Toby obviously one of the smartest product engineers, technical people on the planet. I don't think there's any more technical CEO on the planet other than maybe Zuck. I'd sort of put those two in the same category. And so we both have our own soap boxes and we use those soap boxes to share the story of Shopify, to share the stories of what we're working on.
(34:36)
But I believe that for me at least, I think unlike 90% of executive comms out there, I really want to explain what we are doing to my mom, to people like my mom so they can understand. It can be inspired by all the incredible things we are doing. And I find that going direct to the audience like we're doing right now is far more approachable. It's transparent, but this wasn't like a plan. It just sort of happened organically. I think that if you have an audience, even a small audience, if you have 200 people following you on social media, that is a wonderful opportunity for you to story tell, for you to tell great anecdotes and explain what you're working on and allow people to follow in your journey. The unfair advantage I have is that I have millions of stories. I want to tell the story.
(35:26)
It's great to talk about Kit, but I want to tell the story of Ronnie and how he built Kit. It's great to talk about Jim Shark, but I actually think the story of Ben and how he started it, or Trina, who started Figs, why did she start this company? So I'm able to sort of blend all these things into this, what I think is a really interesting story that showcases what Shopify does, what entrepreneurship is able to do. And I think more and more you're going to see this. I think historically we played a little bit Canadian at Shopify, meaning we were kind of behind the scenes, but more and more, I mean, we've played this massive role in bringing businesses online and helping them survive. Things like Covid sort of important that we share our story and their stories. And I think it's a huge, for me, it's a huge honor and privilege that I get to be the storyteller for Shopify. Yeah,
Katie Perry (36:13):
It's such a good point. There's definitely no dearth of inspo for your content on board there. Definitely not. And we appreciate you getting out there, sharing things, Toby, sharing things. I think it serves the benefit of helping people understand what's going on at the company, but also a lot of it is educational. So really appreciate the time you guys put into that. And also today's show. I know today is a very busy day, so thank you so much for slotting us in your schedule. Pleasure, Katie.
Harley Finkelstein (36:39):
Thank you for having me, Katie. This is really fun. Congrats on what you're doing. I mean, you're building your own thing, your own entrepreneurial venture, and I'm entrepreneur obsessed, so I'm glad to support you and I'm really grateful that you invited me on the show.
Katie Perry (36:51):
Thanks so much. What a great conversation we just had with Shopify's president, Harley Finkelstein. Just hours after the company dropped a very strong Q2 earnings report. Some of the things we covered talking about their move into enterprise solutions, they started out kind of really serving SMBs, smaller entrepreneurs that's still core to their business, but through partnerships like the one they have with Oracle, they're building new features and functionality to support large retailers as well. He also talked about their international growth. And what was really interesting about that is when you think about global retail sales, a lot of that is being fueled by social media. You might see something on TikTok or on Instagram, and the merchant could be in Australia, they could be in France, they could be in the United States. So they're building these tools on the backend that really helps the companies easily transact anywhere in the world.
(37:45)
One great example he shared was special UX layouts that are actually tailored to different markets. Finally, we talked about exec personal branding. Harley is pretty big on social media ads is their CEO. Toby and I asked about that. Harley really believes there's a lot of crossover between customers uses a product investors. And so using these direct channels is really helpful for the company to tell its story in ways that resonate with all audiences. So thanks for listening. My name is Katie Perry. This was After Earnings, the show brought to you by Morning Brew and Stakeholder Labs. Every week we bring you up close and personal with the people behind the world's most interesting publicly traded companies. And if you liked what you were listening to today, take a look at our past shows. We've got interviews with CEOs and CFOs from Kava, from El Beauty, from ServiceNow, from Bark. Dozens more. Check those out@afterearnings.com or anywhere you listen to podcasts. And with that, we'll see you next time.
