Shopify announces the layoff of 20% of its workforce and the sale of its logistics division
Today the blog of the eCommerce platform, Shopify, has published a letter by its CEO, Tobias Lütke. In it he announces two significant news for the future of the company: the dismissal of 20% of its workforce and the purchase of Shopify Logistics by Flexport.
All this is given by the intention to focus on the main mission of the company, assuming big changes in the way Shopify works in the coming months to improve and optimize results.
Shopify CEO’s letter to his employees
Far from trying to sugarcoat the news with nice words, Tobias Lütke decided to deliver the news directly and clearly to his team, implying that those affected would receive the news within minutes of the publication of this letter. Once the ice is broken, he recognizes that this decision is going to generate a great impact and that for that reason, it had not been easy to make.
He then proceeds to explain the reasons of this decision. In the last year they have worked to eliminate what distracted them from their main objective, “simplify trade”Although betting on those little distractions might pay off on some occasions, it had now begun to affect his efficiency. The constant evolution of the sector supposes a constant adaptation to new terms and to achieve it they need changes. In the same way, Shopify Logistics is affected, which was born as a solution for managing the logistics of its clients and with the intention of being independent in the future. Now, after the purchase of Flexport, as expressed by the CEO in his letter, Shopify Logistics will become part of a much larger project. more ambitious that will allow them to go further.
Finally, it goes directly to those who will be leaving Shopify today, to inform them of all their options in this situation.
“Today we are significantly changing the way we work at Shopify to focus our mission exclusively. This will have several consequences, and I don’t want to delay the news: after today, Shopify will be 20% smaller and Flexport will buy Shopify Logistics, which means some of you are leaving Shopify today. I recognize the crushing impact this decision has on some of you, and I did not take this decision lightly.
In the next 5 minutes they will receive a response that will inform them if they are affected.
Our main missions
At Shopify, it’s helpful to talk about the difference between core quests and side quests internally. The main mission of the company is its reason for being. Side missions are everything else. Side quests are always a distraction because the company has to divide its attention. Sometimes this can pay off, especially when involving the side quest sets the stage for the main quest to be more successful.
It’s often said that bigger companies are slower, but this isn’t because of their size, but because of all the side quests and distractions they pile up along the way. This happens because larger companies can afford to be somewhat inefficient, especially during times of stable economic booms. But once they need to adapt to some new paradigm, they can’t do it.
Over the past year, we’ve been removing everything that stands in the way of creating the best possible product. This is extremely important because we are heading into a decade of high speed and massive change. We will need speed, agility and a lot of innovation.
Shopify’s Core Mission is to simplify trade, make it easier, democratize it, make it more participatory and more common. I think we have built the best trading platform in the world for that. But now we’re in the dawn of the AI era and the new capabilities that are unlocked are unprecedented. Shopify is privileged to be among the companies with the best opportunities to use AI to help our customers. Now it is possible to have a co-pilot for the venture.
Shopify Logistics
Building logistics infrastructure is a secondary task that every eCommerce entrepreneur is eventually forced into due to the way the logistics industry works. Instead of each merchant individually taking on their own secondary task, Shopify decided to accept it on their behalf. We got to work building addressable logistics software that didn’t exist before.
logistics was clearly a valuable secondary task for us, and we begin to create the conditions so that our main task is successful. We iteratively build a solution that could one day be a standalone company. Shopify was the perfect place to start this zero-to-one effort, and we’ve done just that. The next step is to take what we have and take it from one to many as main task.
Today we are announcing that Flexport will purchase Shopify Logistics, becoming Shopify’s preferred logistics partner. Flexport, led by CEO Dave Clark and founder Ryan Petersen, is the best builder and operator in the world in logistics. Contributing our work to Flexport, under the leadership of Harish Abbott, allows everything about Shopify Logistics to be more ambitious and global in nature. make the global supply chains are efficient and software addressable is the core task of Flexport, so this is the perfect home for this part of Shopify.
Managers and crafters
Shopify considers itself a vocational company focused on crafters (technical personnel). It is the crafters who create the words, bytes, pixels and float weights that enable millions of entrepreneurs to build their businesses and hundreds of millions of buyers to transact on the platform.
The role of managers is different. Great managers take individuals and turn them into teams, removing obstacles, removing ambiguity, helping crafters do their best and most creative work, and most importantly, ensuring that the wonderful work they do aligns with the sheet. route and have an impact for merchants.
Management and crafting paths are maintained separately in Shopify. ANDhe balance between the number of crafters and managers is difficult to achieve. If there are too few, you risk misalignment in the most important things; if there are too many, heavy layers of processes, approvals, meetings and… side missions are added. Our numbers were unhealthy, as is the case in much of the tech industry. One of the insidious consequences of this is that it leads the company to celebrate more and more activities rather than results-driven crafters. With the numbers right we will focus entirely on results and impact.
A more fit-for-core Shopify has less scope drift, fewer meetings, and more great feature releases for our merchants.
For those who are leaving today
Everyone will process this in their own way, and it’s hard for everyone, affected or not.
For those who leave us today, you will receive a minimum compensation of 16 weeks plus one week for each year you’ve been with Shopify. The medical benefits and the access to our employee assistance program (EAP) will be covered during this same period. we will also offer outplacement services if you want them, all the office furniture we provide is yours to keep. We legally need our work laptop back, but we’ll help pay for a new one to replace it. If they choose to take an entrepreneurial path in the future, they will have Free ongoing access to the Shopify Advanced plan.
You will have a chance to talk more about this when you meet with a leader later today. We’ll also keep Slack and internal email open today so we can all say goodbye. My sincere thanks to each of you for everything you’ve done for Shopify and our merchants.”
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