Shopify has seen a sudden rush of departures despite massive growth. Insiders say CEO Tobi Lütke's temper and 'robotic' personality are partially to blame.
- Shopify is facing a string of executive departures amid stellar growth.
- Employees say there has been turnover in the middle ranks of the company as well.
- They described CEO Tobi Lütke as a gifted tech mind who struggled with interpersonal issues.
- See more stories on Insider’s business page.
As Shopify grows, it’s facing an exodus of veteran employees.
CEO Tobi Lütke announced in a Shopify blog post on April 14 that the company’s chief technology officer, chief legal officer, and chief talent officer would be leaving the company in the coming months. The announcement came just months after its chief product officer left the e-commerce platform, which is the most valuable company in Canada. Together, the four made up more than half of Shopify’s C-suite.
At the same time, former and current employees say there’s been a “wave” of turnover in the middle ranks of the company as well.
Throughout Shopify’s rise and turbulence, Lütke has remained the public face of the company. He is revered by much of the Canadian tech community and highly regarded within Shopify for his technical expertise.
But his management style — while effective at creating shareholder value, serving Shopify’s 1.7 million clients, and keeping 7,000 people employed — has fallen flat for some employees.
Specifically, people say he has a problem with this temper, calling him “Tobi the Tornado.” Some employees brought into the company via acquisition reportedly say he can be a micromanager. Others say he’s struggled to connect with employees about social issues, at a time when employers are being asked to engage on topics of social justice.
Lütke’s problem in particular is that he sends mixed messages. One current employee says he can switch rapidly between “polarities,” weeping in front of employees about the death of George Floyd at one moment, and sending out an email to managers that declares Shopify is not a “family,” and that “poor performance and divisiveness cannot be tolerated” the next.
Insider spoke with nine former and current Shopify employees about Lütke and his contributions to Shopify’s workplace culture. These employees’ identities are being kept anonymous because they fear potential reprisals. Each of the former employees has left the company within the past nine months.
These employees described a first-time CEO who was known for being a brilliant tech mind but who struggled to learn how to lead thousands of employees.
When reached for comment, a Shopify spokesperson declined to respond on the record.
Canada’s version of the ‘PayPal Mafia’
Shopify looms large in Canada’s tech community. One former employee compared Shopify’s influence to the US tech community’s “PayPal Mafia,” the group of early PayPal employees who went on to found Tesla, LinkedIn, Founders Fund, and Affirm.
“In Canada, working at Shopify is such a big deal,” one former employee who left the company last summer said. “They do such a good job of making you feel like there’s no better place on the planet that you could ever work.”
Lütke is, according to employees, a highly respected tech leader and thinker. Before he cofounded Shopify with Scott Lake and Daniel Weinand in 2006, Lütke helped create Ruby on Rails, a programming language that’s the backbone of major internet players like Airbnb, Groupon, and Kickstarter.
“He was one of the main reasons I wanted to join,” a former employee who departed in March said. “I feel like he really, truly cares about the company and really wants it to grow.”
All of the employees we spoke to agreed that Lütke is a gifted tech visionary with both expertise and passion, and that people will readily rally behind him. One current employee said they had the sense that Lütke could engage in deep conversations about work with nearly anyone at Shopify.
“I think he’s really talented as a tech lead, as someone who has a vision and knows how to build a platform,” a former employee who left in early 2021 said. “He can think really deeply about commerce.”
‘Tobi the Tornado’
But Shopify is Lütke’s first time leading a major company, a fact that he has discussed publicly before.
“Of the initial team of us that started the company, none of us had any kind of experience of building a company or managing,” he said in an interview with The New York Times in 2016. “But we are all supercommitted learners, ferocious readers and personal-growth junkies. So we really committed to giving each other feedback, and we’re trying to expand that to the entire company.”
According to some former employees, Lütke could struggle with the softer skills of interpersonal communication. Two former employees said Lütke is known among some at the company for his temper and that those workers even have a nickname for it: “Tobi the Tornado.”
One current employee said Lütke is often perceived as “robotic.”
“It’s like two polarities: One second he’s addressing the company after George Floyd died and he cries in front of the company, and the next one he’s writing letters that are very distant and cerebral in a sense,” they said.
Another current employee said: “His way of thinking is very holistic, which could be truly frustrating for people who specialize in a field,” like those working to make Shopify’s products accessible, for example.
This way of thinking could also be frustrating for people advocating for social issues at the company, who would have preferred a more empathetic response from Lütke.
“They’re trying to fight the good fight, and then all of a sudden, they hit a wall where it almost seems like it’s not that important,” this current employee said.
Lütke has also promoted the use of the Enneagram, a personality test that identifies nine distinct types of behaviors. He said in a podcast interview with Tim Ferriss in 2019 that Shopify’s internal systems display employees’ Enneagram types and “tell you what nuances that means for how to work together,” though employees weren’t required to take it.
Lütke said his results reflect that he can sometimes be contentious with his workers.
“I play the role of challenger, personally. I find that the Enneagram helps me remind myself that with different people I have to talk about the same things in different ways,” Lütke said in an interview with The Observer Effect. “I think it allows you to skip some time which would otherwise be touch and go at the beginning of a relationship and helps build trust better. In short, it enables us to have fruitful and effective conversations.”
High turnover among staff
The departure of more than half of Shopify’s C-suite sent shockwaves through the company and those watching it. Analysts questioned what it meant for a company with a five-year plan to build out a fulfillment network as good as or better than Amazon’s, and Lütke was directly grilled about the shake-up in an earnings call, in which he said he was “very grateful for everyone who joined me on this part of the journey.”
According to reporting by The Information, Lütke’s management style was at least partially responsible for the departure of some of the Shopify execs, all of whom joined the company before its IPO in May 2015. His hands-on approach, particularly when it came to software engineering and product work, reportedly also drove away those brought into the company via acquisition.
But employees say there has been high turnover in the company’s middle ranks as well. One former employee, who left in early 2021, said: “I think I was just in front of the wave of people quitting. Since the beginning of the year, all the LinkedIn posts I see are people leaving, mostly without a plan of what’s next.”
A current employee said that, much like other startups that grow rapidly, Shopify’s culture has become more corporate as it has outgrown its startup roots — which might be a reason for longtime employees to look for a change.
“It was a lot of people’s first jobs,” a current employee said. “They treated everything as if it was like hanging out with friends.”
The turnover is also spurred by the fact that many longtime employees have likely become wealthy as their shares have vested.
A former employee who left in March said that it was natural, after working at a place for 10 years, growing it, and seeing their equity in the company explode in value to think, “I’ve done a great job. I’ve had enough.'”
‘Commerce as freedom of expression’
Lütke is also known for being outspoken on topics related to freedom of expression.
In 2017, when Shopify was facing calls to take down the online store for the conservative news site Breitbart, Lütke wrote a Medium post about why he believed it was right to keep the store up, even though he considered himself to be a liberally minded leader.
“Commerce is a powerful, underestimated form of expression. We use it to cast a vote with every product we buy. It’s a direct expression of democracy. This is why our mission at Shopify is to protect that form of expression and make it better for everyone, not just for those we agree with,” he wrote.
“We don’t like Breitbart, but products are speech and we are pro free speech. This means protecting the right of organizations to use our platform even if they are unpopular or if we disagree with their premise, as long as they are within the law.”
Shopify did take down sites affiliated with former President Donald Trump after a group of pro-Trump rioters stormed the US Capitol on January 6. It also took down sites selling goods related to the QAnon conspiracy theory, as well as a donation fund for Kyle Rittenhouse, the teenager who was charged with killing two people at a Black Lives Matter protest in Kenosha, Wisconsin, in August 2020.
“Shopify believes in making commerce better for everyone, and we take concerns around the goods and services made available by merchants on our platform very seriously,” a company spokesperson said in May. “Shopify’s Acceptable Use Policy (AUP) clearly outlines the activities that are not permitted on our platform.”
‘Poor performance and divisiveness cannot be tolerated’
In July 2020, after debate erupted over an internal video some felt was in poor taste and the discovery of a noose emoji in the company’s Slack, Lütke abruptly shut down a Slack channel called #belonging, which was dedicated to discussions of diversity and racial justice.
One current employee defended the move, saying it had more to do with the fact that the #belonging team would need to moderate the channel if the conversation were to continue and that it was taking place on a Friday night. This person said that Lütke takes family time seriously and sticks closely to a 40-hour workweek, so he wouldn’t want Shopify employees to be forced to monitor the channel after hours.
In a letter sent to Shopify managers in mid-August 2020, Lütke outlined his perspective on the role that companies should play in employees’ lives. He likened the company’s workforce to a sports team, emphasizing that they are not a family.
“We will always have compassion for team members in truly difficult situations. For example, those who find themselves suddenly becoming primary caregivers or those who are struggling with mental health issues. There are also second chances, especially for those who have been top performers before. Outside of those cases we need to remind everyone that like any other competitive (sports) team, it matters how you show up every day and contribute to the team’s success,” he wrote.
He continued: “Beyond straight performance output, everyone that engages in endless Slack trolling, victimhood thinking, us-vs-them divisiveness, and zero sum thinking must be seen for the threat they are: they break teams. Teams survive and thrive on the actions of the collective, and the cohesiveness of the whole. Poor performance and divisiveness cannot be tolerated.”
Echoes of other tech controversies
Two former employees said they found Lütke’s email reminiscent of the one written by Coinbase CEO Brian Armstrong in September 2020 that said the company would not engage on societal issues “unrelated to our core mission, because we believe impact only comes with focus.” Coinbase offered severance packages to employees who did not agree, and 60 people took the company up on it. The software company Basecamp also instituted a ban on political discussions in April, which led to the departure of at least 18 employees.
Lütke and the Basecamp cofounder used to work together on Ruby on Rails. Heinemeier Hansson was the creator of the framework, while Lütke was a core member of the team that built it before he cofounded Shopify. One current Shopify employee said Lütke and Heinemeir Hansson are friends.
In their 2018 book “It Doesn’t Have to Be Crazy at Work,” Heinemeir Hansson and his fellow Basecamp cofounder and CEO Jason Fried also discussed a leadership concept that Lütke refers to as the “trust battery.”
Lütke referred to the “trust battery” in explaining his own management style in an interview with The New York Times.
“It’s charged at 50 percent when people are first hired. And then every time you work with someone at the company, the trust battery between the two of you is either charged or discharged, based on things like whether you deliver on what you promise,” he said.
Still, a Shopify spokesperson said in May that the company was not trying to emulate Basecamp in its handling of political issues and that it welcomes discussion of current events.
Shopify has a tradition of recommending things for employees to read, including with a curated list of books called the Book Bar, which can be expensed. Company leaders also occasionally make their own personal recommendations.
According to a former employee who departed this spring, Lütke asked managers to read Jonathan Haidt’s book “The Coddling of the American Mind.”
Haidt is a social psychologist, and his writings are a favorite of critics of cancel culture, as he calls into question the use of terms like “microaggression” and “trigger warning” and argues that too many objections make people weaker. His writings are also frequently used to describe social-justice advocates as overly sensitive.
Lütke and Shopify’s chief operating officer, Toby Shannan, are fans of Haidt, and Shannan once invited Haidt to speak at one of the company’s annual all-hands meetings. Shannan also interviewed Haidt on his podcast in April 2020. According to one current employee, Shannan handles a lot of Shopify’s companywide discussions about issues like the pandemic and social justice.
One former employee who left in early 2021 said that Lütke and his team championing thinkers like Haidt strikes the wrong tone.
“They may like Haidt and his ‘coddling of the American mind’ rhetoric, but I can’t think of a more deeply coddled group of people than these execs right now,” they said. “And they’re very powerful and very rich. But employees are now voting with their feet. They can’t force anyone to work for them.”
In May 2020, amid the COVID-19 pandemic, Shopify announced that it would be going remote permanently. But one current employee said they felt Shopify was not prepared for what that change would mean for its handling of difficult topics, especially when it comes to discussions on Slack or Google Hangouts. The past year, with renewed discussions of racial and social justice amid the pandemic, highlighted those challenges.
One current employee, who has worked at Shopify for more than four years, said they didn’t think those conversations would have gotten so heated if they had taken place in person instead of on Slack.
“A lot of people don’t even necessarily use their own image or photo of themselves on there. With that anonymity, sometimes they get a little bit out of control,” they said.
But some current employees are optimistic that the company will grow out of these issues, especially as the challenges of the pandemic recede and some workers can get together in person, albeit on a smaller scale than before.
There’s also hope that the high turnover at Shopify could ultimately help change the company’s culture.
“That would be my take on a lot of these executives,” said one current employee. “Shopify is getting to a size that maybe requires new skills and needs new, fresh vision that’s beyond the scope of some of the leaders that have been there from the beginning.”
Are you a Shopify employee with a story to tell? Contact this reporter at [email protected] or on the secure messaging app Signal at (646) 889-2143 using a non-work phone.
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