Shopify Goes Soul-Searching

Hey, folks. Ready for a wet, hot summer? Better keep the Paxlovid handy. When I spoke to Shopify’s CEO and founder, Tobias Lütke, earlier this month, I was the first to tell him about an unfortunate headline that had just appeared: “Is Shopify the next WeWork?” Lütke, who goes by Tobi, was talking to me about a big rollout of new features for the platform, which provides tools for merchants to digitally sell their wares directly to customers.

He built the company into an e-commerce behemoth somewhat under the radar, powering more than two million online stores, from literal mom-and-pop operations to Chipotle. You have almost certainly used it without knowing it, as its branding is subtle. Its growth eventually tripped the collective radar, and late last year the CEO’s shiny domed punim graced the cover of Bloomberg Businessweek , which dubbed him the Anti-Bezos .

But this year 16-year-old Shopify hit a wall, thanks to supply chain shortages, a post-pandemic return to actual stores, and a looming recession. Its stock tanked, losing 73 percent of its value. Even the Bloomberg writer, my former colleague Brad Stone, felt compelled to note the irony, wondering if he had cursed Lütke with his lavish attention.

The timing of all this was particularly awkward, as Shopify was about to split its stock—10 shares for each current one. That’s not something companies usually do when the price is tumbling. Another corporate maneuver that suddenly seemed questionable was Lütke’s plan to change the firm’s rules for voting shares so that his control of the company would be virtually unassailable.

All of this led to The Street asking that alarming question in its headline, which, of course, I mention to him during our chat. “Oh, Jesus, I did not see that,” Lütke responds, his voice slightly accented by his German roots. (He moved to Canada in his early 20s, and the company was based there until 2020, when he declared that it would thereafter be virtual.

) Pause. “Yeah, OK, that’s funny,” he finally says, though he’s not laughing. But he is fighting, and he’s eager to talk about the new features Shopify is rolling out to make itself even more influential in international commerce.

The stock dip, he says, doesn’t reflect the business’s performance or prospects. “We said internally, over and over, when stock went up 50 percent, we did not get 50 percent smarter in that time. So when it went down 50 percent, we didn’t get dumber.

” Presumably, even a 73 percent nosedive doesn’t indicate a lower IQ. As for boosting his voting shares, Lükte says he always intended to have minority control, and the current change is due to technical reasons, in part because of Canadian and US rules. “It’s not actually my voting,” he says.

“This is a defensive mechanism against, like, hostile takeovers. ” Not all shareholders were happy with this move, as the measure squeaked by with only a 54 percent majority. Lükte also points out that new power ends with him and can’t be passed down to his successor.

All of this is noise, he argues. The signal is how Shopify is not only providing merchants with tools for their own website, but also extending the depth of their connections by being part of the larger confederation of Shopify sellers. Lütke sees this as a rebel alliance.

After all, he’s the anti-Bezos! “We see Shopify putting together millions of small merchants,” he says. “Collectively, the second-biggest retailer in the United States would be all Shopify stores, which is cool. ” But ironically, some of the most enticing elements of the company’s new initiative, called Shopify Editions, involve doubling down on partnerships with the Empire itself.

The theme is something called C2C, or Connect to Consumer—that means developing a deeper bond with customers, even if they just want to buy a blouse or a ceiling fan from a store. Inevitably, making those connections involves arrangements with giant services. Shopify is already deeply involved with Instagram, TikTok, and Pinterest.

Now there’s a deal with Twitter that puts its shops on the platform, and also allows sellers to reach customers directly through their profiles. Shopify is also amping up its relations with Google by “turning browsers into local buyers,” aided by a feature that tells shoppers whether an item is in stock at their neighborhood emporium. And in an attempt to expand Shopify’s reach in the brick-and-mortar world, it will work with Stripe (and compete with Square) to facilitate easier on-site iPhone payments.

(There’s also a scheme to get merchants on the NFT bus, but I’ll hold my fire on that one. ) Lütke tells me these partnerships are nothing new—in fact, he says, Shopify even works with Amazon. “You’d be surprised how often when you buy something on Amazon, the order flows into a Shopify store,” he says.

Shopify is also addressing the long-held complaint that it doesn’t handle the fulfillment side of the business. Last year, it spent $2. 1 billion to buy the shipping service Deliverr .

The ideal, Lütke jokes, would be to invent teleportation, but “physics is the current bottleneck there. ” Matching Amazon’s extensive shipping operation is just as unlikely, but Shopify does hope to eventually handle the last mile for merchants, maybe even establishing warehouses where its customers can store some inventory. That would bind sellers to Shopify even more deeply.

Can Shopify exploit the mojo of a platform without adopting the questionable tactics of Big Tech’s Bond-villain leaders? Is Lütke’s stock-voting move a simple power grab? The CEO insists that the answers are yes and no, respectively. And as we talk, it becomes clear that his confidence stems largely from areas that don’t really have to do with business tactics. It’s about his soul.

Lütke, you see, accepts being a CEO of a (formerly) $100 billion company, but really sees himself as a coder who subscribes to the righteous values of open systems. He chose me as the only journalist he’d speak to this month because I wrote a book t hat described the idealistic ethic among the early hackers. Lütke told me that growing up as an outsider, he was drawn to the welcoming vibe of open source, and how the digital world changes rules to challenge the calcified ways that people did business.

Shopify itself grew out of Lütke’s efforts to internet-ize his small business selling snowboards. “The idea that people improve each other’s ideas is wonderful; it’s idealistic,” he says. “So when I built a company, I wanted something participatory, that everyone can kind of bring their best things, the things they love.

” Also, he still insists on doing some coding. “Just to not get too rusty,” he says, “I just love it. ” “I’m a builder,” he adds.

“I’m not thinking about this from the perspective of domination. I think about this from the perspective of: Wouldn’t it be neat if this is the most available, well-distributed way for people to reach for independence? ” Shopify is all about power to the people. But not its shareholders.

In 1999, buying on the internet was just becoming mainstream. In a Newsweek story that year about the business models of Amazon, eBay, and Jay Walker’s digital enterprises (including Priceline), I charted Jeff Bezos’ rise. Amazon.

com and its model has quickly become a standard—and competition is everywhere, from catalog-based sellers, as well as B&M retailers. But conventional wisdom has it that in any given retail category, there’s going to be only two or three big-time winners in cyberspace. Rather than go head to head with a giant, competitors must specialize, and even then it’s a struggle.

“On the Internet,” says Chris MacAskill, CEO of Fatbrain. com, which focuses on technical books, “you’re across the street [from your competition], whether you like it or not. ” Bezos thinks that the entire economy will benefit from ripple effects of e-commerce.

In the not terribly distant future, we’ll have vans circling the suburbs with hardcover best sellers, CDs and grocery items. Within hours of logging your order on a website, the van drops off the loot. Or maybe the order will be logged from a palmtop computer or a cell phone.

The direct-selling model is still evolving, but it’s the bedrock of e-commerce. “It all has to do with the balance of power shifting away from companies and toward consumers,” says Bezos. Andy writes, “There is a very simple answer to the question of whether AI chatbots are sentient: Require that they name their source.

Alexa already does this, saying ‘according to x’ when you ask it a question. What do you think?” Thanks, Andy. Here’s what I think.

I got a lot of reader comments about potentially sentient AI . Most, if not all, of our current chatbots make gaffes that indicate that they are parroting human speech rather than generating it the way a person would. While Blake Lemoine says he’s convinced that LaMDA is sentient, most of us look at, for instance, the chatbot’s claim that it likes to hang around with friends and family as an indication that something’s off here.

What friends and family? Nonetheless, LaMDA’s responses do display a sophistication that goes beyond a simple connection between a remark and a single source, or even multiple ones. An advanced chatbot’s “understanding” of our world is a product of computation-heavy machine learning that makes it impossible to isolate many comments from sentences and sentiment found elsewhere. When it describes the themes in a book, the AI might not be parroting a CliffsNotes summation, but rather extracting the important points from its own analysis of the text.

You or I can’t attribute everything we say to a single source. So we’d expect a sentient bot to express itself in the same way—influenced and educated by what it sees, hears, and reads, but not simply repeating those things. Even if a chatbot does that, though, it doesn’t mean that it’s sentient.

That’s a much more difficult determination. You can submit questions to mail@wired. com .

Write ASK LEVY in the subject line. OK, it’s summer. But 37 degrees Celsius … in Winnipeg ? That’s 98.

6 Fahrenheit. And that’s not normal. My interview with Blake Lemoine , the Google researcher who insists that an AI can have a soul.

It was like talking to a real person! Hello, sunshine. Are you going to kill us ? Fighting to extend the life of the Mars Helicopter . Fed up with too many Zoom meetings? Wait until you’re in 10 Slack Huddles a day.

Next week Plaintext is off to celebrate independence. See you in July. Don’t miss future subscriber-only editions of this column.

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