Shopify's company was registered in September 2004 as a snowboard shop. The founder letter in its IPO filing never gives the shop's sales

The filing Shopify submitted in 2015 to list in the United States gives the company’s founding date this way: incorporated under the Canada Business Corporations Act on September 28, 2004. That is two years before the Shopify service began.

The same filing contains a letter from founder Tobi Lütke. In 2004, it begins, we took something we loved, snowboarding, and built a business around it. The idea was to set up an online store and create a snowboarding empire. The company that listed was, in other words, a company originally registered as a store selling snowboards.

Yet the letter never once says how much that store sold. What follows sets the store’s unwritten sales beside the tool’s written ones. Listed companies fall outside this site’s criteria for cases, so only the move from store to tool and the figures just before the listing are covered, as a column.

From registration in September 2004 to 160,000 stores in March 2015

The rows for the two years as a snowboard shop carry not a single figure. Numbers appear only after the store was dropped and the tool was sold.

The failure the letter wrote, and the numbers it did not

The letter is clear about why the business moved from store to tool. Existing software was not designed with the new entrepreneur in mind, so they rejected the existing models and created their own. That custom software met their needs so well that they took everything they had learned, shifted away from snowboards, and turned to the glaring hole in the e-commerce market.

This part of the letter is unusual as a failure story, written by the founder himself inside a listing document. The failure, though, comes without numbers. How many snowboards sold, how much the store brought in, appears nowhere in the letter or anywhere else in the filing.

The desk reads this gap less as concealment than as numbers with no reason to be told. What a listing filing wants to show investors is not that the store failed but that the tool succeeded. The store’s figures were needed as the starting point of a story, not as an explanation of the business.

The store earned on the margin of boards, the tool on a few percent of others’ sales

How the business earned after moving to the tool shows in the numbers. In 2014, GMV passing through Shopify was $3.8B, and Shopify’s own revenue was $105M. Revenue came to about 2.8% of GMV.

Had it stayed a snowboard shop, earnings would have been capped at the margin on boards it sold itself. Moving to selling the tool tied earnings not to its own store but to the sales of other people’s stores using the tool. At the end of March 2015 merchants numbered 162,261, and the letter says more than 165,000 stores use Shopify. One store turned into a business receiving a share of the sales of 160,000. The letter also says cumulative GMV through the platform had passed $8B, with the most recent quarter alone over $1B. Set beside the $3.8B for all of 2014, that shows the flow still accelerating just before the listing.

What should be stated plainly is that what moved was not the product but where the earnings sat. A business selling boards earns on its own inventory, and a business selling tools earns on other people’s sales.

The loss widened along with the growth

Lay out the three years in the filing and revenue roughly doubles each year: $23.7M, $50.3M, $105.0M. The net loss widened too, from $1.2M to $4.8M to $22.3M. The 2014 loss was more than four times the previous year’s.

A shape where losses grow with growth is not unusual for a company before listing. Still, it is on the record in numbers that a company registered in 2004 as a snowboard shop listed ten years later carrying losses of this size.

Small businesses also record tools built for themselves becoming products

Records of a tool built for one’s own work becoming a product exist at much smaller scales. Podcast Clout began as a PR firm’s internal tool and was sold after tripling its revenue. AI Directories turned the automation of its own submission work into a product and reached $10,000 a month.

The list setting Shopify beside other legendary companies is in the column tracing 22 founding legends to their sources.

What could be confirmed

The limits need stating. The name Snowdevil and its three founders were checked against an encyclopedia compiling press reports, and the store’s name does not appear in the IPO filing. No figures for the store’s sales or inventory appeared in any source read. The roughly 2.8% from dividing revenue by GMV is the desk’s own calculation, not a fee rate shown in the filing. The merchant count is 162,261 at the end of March 2015 in the filing’s main text and “more than 165,000” in the letter, at different points in time.

The store’s sales went unwritten, and the store’s tool’s sales were written

Follow Shopify’s founding years through documents and what remains is the registration date, the founder’s letter and the tool’s revenue. Only the snowboard shop’s numbers are nowhere to be found.

The legend loves to begin with the snowboard shop. But what the listing documents preserved in numbers was not the store but the tool built for it. A company that began trying to sell what it loved became a company selling the tools for selling. That transition is visible inside the filing as the boundary between the side with numbers and the side without.