Shopify CEO Toby Lutke Exposes Common Post-Acquisition Error
Shopify CEO Toby Lutke has pinpointed what he calls the "biggest mistake" most companies commit after buying a startup and hiring its founders. In a recent interview, the head of the Canadian e-commerce giant explained that businesses frequently undervalue the experience and leadership these founders bring.
Founders Often Pushed to the Sidelines
Speaking on the "Founder's Podcast," Lutke expressed frustration with how companies handle entrepreneurial talent. He observed that instead of leveraging their unique skills, many organizations isolate these founders. They place them on the "outskirts" or assign them to less critical teams, sometimes referred to as the "skunk work team."
Lutke described the founder mindset as something special. "I feel like it's a very special thing. And companies reject it. Companies cocoon them," he stated. He sharply criticized this approach, comparing it to "daycare for people who tell you that your sh*t doesn't smell right. And your sh*t does smell." He emphasized, "I'm like, 'No, you don't get to put them in like founder day care.'"
How Shopify Implements a Different Strategy
Lutke revealed that Shopify itself faced a similar issue during the COVID-19 pandemic. Once he noticed founders being marginalized, he took immediate action. He made the founders of companies Shopify acquired more visible within the organization. In some cases, he even positioned them above other managers to ensure their voices were heard.
To maintain close communication, Lutke established a dedicated Slack channel with the founders from Shopify's acquisitions team. He regularly uses this channel to seek their advice and assistance. This practice helps integrate their expertise directly into Shopify's operations.
Examples of Shopify's Acquisitions and Their Outcomes
Shopify has made several key acquisitions in recent years. These include the logistics company Deliverr in 2022, the influencer marketing startup Dovetale in 2022, and the workplace messaging platform Threads in 2024. It is important to note that this Threads is not associated with Meta.
The founders of Dovetale and Threads continue to work in product roles at Shopify, contributing their insights and experience. However, the CEO of Deliverr left Shopify after a year to launch another logistics startup, highlighting the varied paths these entrepreneurs may take.
Identifying Talent Through Entrepreneurial Experience
During the podcast, Lutke shared his method for spotting employees who can adapt quickly and excel during crises. He asks a simple yet revealing question in interviews: "Have you started a company before?" This question helps him identify individuals with the resilience and innovative thinking that come from entrepreneurial backgrounds.
Lutke's insights underscore the importance of valuing and integrating founder talent post-acquisition. His approach at Shopify serves as a model for other companies looking to harness the full potential of the entrepreneurs they bring on board.
