Shopify will be smaller by about 20% and Flexport will buy Shopify Logistics

I&#x27;ll tell you a personal anecdote about Shopify and why I dislike the company.<p>Back in 2019, I was contacted by Shopify for a job opportunity. After acing multiple remote interviews, their recruiter couldn&#x27;t contain their excitement. They promised me an onsite interview to simply meet the team and potentially secure an offer.<p>Imagine my surprise when, after enduring a 15-hour economy class flight with barely any time to recover, I received a call from the recruiter. They casually informed me that the team had decided to put me through five grueling back-to-back interviews, including a whiteboard session and a pair programming assignment. Despite my lack of a laptop, they assured me one would be provided.<p>What followed was an unmitigated disaster. The first interview bombarded me with ecommerce questions, completely unrelated to my field of expertise. The pair programming session was a nightmare, as I was handed a barely functional laptop that delayed the start by 20 minutes, and then given just 30 minutes to complete the task without any assistance.<p>Bear in mind, I was already physically and mentally drained from the arduous journey.<p>While the remaining interviews were passable, they were nothing to brag about. After being sent home with the promise of a call, I received a cold rejection a week later, citing a lack of experience based on the onsite interviews.<p>Looking back, I&#x27;m grateful I didn&#x27;t sacrifice everything for a company with a track record of questionable practices and frequent layoffs.

Things changed quite a bit since this quote from February 17:<p>&gt; “There’s no cuts coming for us,” Harley Finkelstein told The Canadian Press. “We’re in a really good place.”<p><a href="https:&#x2F;&#x2F;globalnews.ca&#x2F;news&#x2F;9494197&#x2F;shopify-outlook-no-layoffs-coming-president&#x2F;" rel="nofollow">https:&#x2F;&#x2F;globalnews.ca&#x2F;news&#x2F;9494197&#x2F;shopify-outlook-no-layoff...</a>

&quot;We are changing the shape of Shopify significantly today to pay unshared attention to our mission.&quot;<p>What a way to lead, and what an absolutely grotesque euphemism (not to mention a barbaricly tortuous use of English). Why do companies write like this? It&#x27;s just awful.<p>I&#x27;m only half-joking when I suggest that if they&#x27;d taken this text and asked GPT-4 to rewrite it in a compassionate tone they&#x27;d have got a better result. (I say this having used GPT-4 quite regularly in recent weeks, although not for these kinds of purposes. It&#x27;s quite impressive, along many axes, and I&#x27;m confident would have made a decent fist of this piece.)<p><i>EDIT: All right, I have to give some credit here. I&#x27;ve now had chance to read the full release and, whilst I don&#x27;t love the RPG-esque references, I understand that this is fundamentally a piece of internal comms sent to a group of people who are probably used to discussing things in those terms (Lord, preserve us - not my bag). That aside, I thought a lot of the rest of the release was decent and the severance terms seem good, so I have to give props for that. I&#x27;ve left my first impression unedited because, if nothing else, it&#x27;s an honest reaction to some quite poorly composed introductory remarks and on that basis certainly not entirely unfair.</i>

I know the reality is more complicated, but it&#x27;s always jarring to read a &quot;company X had a great! quarter, is firing 20% of employees&quot; headline. Very dystopian.<p>It seems like these two facts should at least go out in different press releases on different days.<p>For Shopify, does anyone know whether the 20% figure includes the people leaving with the sale of SFN to Flexport?<p>Edit: just heard in the earnings call that the 20% headcount reduction does _not_ include the logistics teams going to Flexport.

I worked at Shopify until the Fall.<p>Shopify was just a really fun place to work. And in part this was because they did a really good job of interviewing. Technical, yes, but in particular behaviorally.<p>So I can honestly say that many of the colleagues I know being let go are truly great colleagues. They were some of the most impactful people I worked with in my org (discovery) and they are a great get for any company.

Is this the same CEO who decided to double the engineering team in a single year?<p><a href="https:&#x2F;&#x2F;techcouver.com&#x2F;2021&#x2F;01&#x2F;06&#x2F;shopify-to-double-engineering-team&#x2F;" rel="nofollow">https:&#x2F;&#x2F;techcouver.com&#x2F;2021&#x2F;01&#x2F;06&#x2F;shopify-to-double-engineer...</a><p>Aren’t CEOs paid ludicrously well to make long term decisions, rather than just flail around?

“We will also keep Slack and internal email open today for everyone so we can share farewells.”<p>That’s drastically different. Most orgs that’ve run layoffs over the last few years have terminated access immediately, or even before informing those losing jobs.<p>This feels more human, and I hope it goes well for them.

I&#x27;m impacted. And it sucks.<p>It sucks because I really liked the company. I liked the culture. I liked the leadership style. I liked the mission. I genuinely think that company is doing good for the world, and making money in the process.<p>The challenge now is that the leadership have burned a lot of trust with the employees. They repeatedly said no more layoffs were coming, but with this move <i>they</i> all benefitted financially quite well- the stock is up 25%.<p>The move deeply undermines the company culture that they worked so hard to build. I hope Tobi has a plan for how to repair that damage.

I was unfortunately affected by this (in the Data Organization).<p>Shame - Shopify is a fun place where I&#x27;ve learned a ton. We were just getting a cool Data product off the ground.<p>Well, if anybody&#x27;s got a need for a Staff&#x2F;Lead Data Engineer (Remote EST) with experience in Scala (+cats&#x2F;fs2), Python, go who has spent the last 10+ years building Data Products on BI, then Hadoop, then GCP (+ the Apache Zoo, lately namely Kafka&#x2F;Iceberg&#x2F;Beam), my email is in my profile. :)

Last time I read a very reassuring and cogent letter by the CEO of Shopify about the layoffs . But at no point did the letter hint at further layoffs no less 20% which is huge. Wondering what the explanation is this time. I understand everyone has their worth and price but I fail to see how management and leadership at companies still have jobs and huge bonuses.<p>Reaganomics has had 35 years. Maybe we need a new vision for our society.

Does anyone have a sense of how bad things really are for the US economy and what the next 12&#x2F;18 months are going to look like? Seems like every day all I see is doom and gloom, I&#x27;ve not seen a bright spot in quite some time... it&#x27;s becoming increasingly difficult for me to get a sense of where things are. People keep saying things are going to get worse, I keep reading things are going to get worse, friends are literally committing suicide. Feels like twilight zone.

I was impacted. I still will speak highly of the company.<p>Good people. Very few assholes. The mission feels good, like it&#x27;s not a net negative on the planet. Lot of churn internally, but often handled in a positive way.<p>I&#x27;m fortunate that I&#x27;ve got a decent nest egg set aside, and I can afford to spend the rest of the summer just being with my wife and daughter. It sucks that it&#x27;s happened but I&#x27;m not worried about the future (yet).

Referring to &quot;main quests&quot; and &quot;side quests&quot; in a mass layoff notice is extremely cringeworthy

Once again a company that prides itself on being a follower rather than a leader. It drives me insane<p>&gt;Our numbers were unhealthy, just like it is in much of the tech industry.<p>Ok, can we consider this in your compensation discussions this year? That you mindlessly followed the crowd and left your company structurally weak? Or do we think you&#x27;re going to shoot for record compensation this year?

This all sucks, and I hate that CEOs can continue to lie about layoffs, hire uncontrollably, then completely 180 and lay tons of folks off.<p>That said: where do I sign up for 16 weeks of severance pay?

Well yeah, cutting workforce seems like it only has upside to these companies. Expenses go down, profit margin and share price go up.<p>What&#x27;re the workers gonna do? Protest? Strike? Hah. No, the remaining employees will pick up the extra responsibility and thank the employer for continuing to employ them.

This is not surprising Shopify has had an identity crisis and lack of focus for years now. To name a few:<p>- Alienating marketplace partners by trying to absorb their functionality - Trying to break into the logistics space - Failing to develop and make headway into the Enterprise space.<p>Shopify needs a reality check and new leadership if they want to continue being relevant

They forgot to mention that the C-level exec still get their bonuses.

&gt; But now we are at the dawn of the AI era and the new capabilities that are unlocked by that are unprecedented. Shopify has the privilege of being amongst the companies with the best chances of using AI to help our customers. A copilot for entrepreneurship is now possible. Our main quest demands from us to build the best thing that is now possible, and that has just changed entirely.<p>Most recent layoffs have been framed around needing to focus the company due to economic and market headwinds. This reads like AI has transformed the mission.<p>What does &quot;A copilot for entrepreneurship is now possible&quot; mean here?

&gt; We legally need the work laptop back, but we’ll help pay for a new one to replace it.<p>What law? I’m not criticizing Spotify at all for this decision, I’m just genuinely curious. A few other companies recently are giving away the laptops so I’m wondering what is different here.

As a Shopify user, I am conflicted about the Flexport acquisition.<p>On one hand, it was really nice having a fulfillment partner directly related to the webstore. It gave a sense of harmony for future growth of services. From a stock perspective, it was a money suck, but hey, look at Amazon.<p>On the other hand, the Shopify web platform feels a little neglected and I hope this will allow them to re-focus. From a stock perspective, maybe this will help get their immediate finances in order.<p>They&#x27;ve made some solid improvements and additions, but there are a lot of little things that need attention. One of my quibbles is that you can&#x27;t make private or unlisted products. They&#x27;re either visible to everyone, or disabled. There are a lot of people asking for that feature, and it&#x27;s not a hard one to implement. There are a lot of things like this that probably wouldn&#x27;t take a lot of resources to implement but would significantly improve the merchant experience.

It seems all companies are expecting the great AI windfall. I think this is mostly wishful thinking with today&#x27;s technology. Unless CEOs have access to secret tech that no one else does, this feels like more of a hype driven forecasting exercise.

I guess we can begin burying those stories about how the rebound in tech equity means more layoffs in the sector are unlikely

I feel like people don&#x27;t understand how similar these huge corporations are to seed stage startups, and I&#x27;m sure people would be fine with a seed stage startup doing layoffs at this point of time<p>Most of these companies have 1-2 areas generating 90%+ of the revenue. They are the rich VC giving unprofitable teams money to find PMF. When those teams can&#x27;t find profitability faster in this environment, the VC rightfully stops the funding.<p>Some people will&#x2F;have moved to the profitable teams, but you can&#x27;t just double or triple their size and expect their income to grow accordingly

I was hired in Aug 2022, laid off yesterday.<p>Looking at it from their perspective, I would have made the choice to lay me off (or fire me). The reality is that I just did not get enough meaningful project work. I talked to my manager frequently and it was always something &quot;just around the corner&quot;. My manager went on parental leave 3 months after I started. Pretty much everybody took most of December off. Our division did a re-org which shook everything up, wasted more time. I didn&#x27;t get any meaningful projects until the start of February, my 6th month of employment at Shopify. I was doing really well there, felt good about my work and my contribution, whereas I&#x27;d been floundering for 6 months with impostor syndrome and existential crisis.<p>But it was just too late. I got the axe. I don&#x27;t feel too personally bad about it, although I hate interviewing and have performance anxiety when it comes to technical interviewing stuff. I want to take time off to rest but I&#x27;m afraid I&#x27;ll use all my savings up and still not have a job.<p>I wasn&#x27;t there long enough to really know for certain, but I feel like part of the problem is the monolithic nature of the codebase. Getting projects greenlit required a bunch of political wrangling and convincing of the senior leadership team by the product folks. Things just moved really slowly. The &quot;Get Shit Done&quot; (I kid you not, that&#x27;s what they call it) process of shipping projects seemed interesting but nobody really followed the documented process. I got the feeling it was a lot of back channel conversations, gate keeping by higher up folks, with people every step of the chain asking themselves, &quot;Will this decision make me look more impactful in my upcoming review?&quot;. Kinda feels like the way I imagine the bureaucracy of the Soviet Union operated.<p>I don&#x27;t know. I have a lot of feelings about all of it, I&#x27;m personally really sad because I feel like I really had something to offer, something to contribute, but I spent most of my time just fucking around. Scale that up to a company the size of Shopify and it&#x27;s just a tragic waste of human potential. But they will just pat themselves on the back, congratulating themselves on &quot;making difficult decisions&quot;.<p>The 16 weeks severance is nice though. Takes the edge off.

Revenue up, but it was barely profitable by share... So I think it is reasonable something is done.

Shopify shares up 25% today, which explains most of what&#x27;s happening here.<p>I agree with all the other comments criticizing the CEO&#x27;s leadership of furiously hiring and now making massive cuts, but I think that is missing the context that the CEO does not answer to you or me, or to business professors, or to his employees. He answers to the board, which typically care about stock price and not much else. Today is a massive success in that regard.

So there is a 20% layoff <i>and</i> the sale of the logistics unit to Flexport, if I understand this right?<p>Is this on top of the layoff they had a few months ago? That means Shopify is really about 30% smaller all told.

Seems like a huge miscalculation by management if their abandoning their expansion into logistics so quickly. Tobi should step down.

&gt; The balance of crafter to manager numbers is a tricky one to strike. Too few and you risk misalignment on the most important things, too many and you add heavy layers of process, approvals, meetings and… side quests. Our numbers were unhealthy, just like it is in much of the tech industry. One of the insidious consequences of this is that it leads to the company increasingly celebrating activities rather than crafter driven outcomes. With the right numbers we’ll fully focus on outcomes and impact.<p>Am I reading this right that they decided they had too many managers, and are laying off some? They don&#x27;t say it clearly in which direction they thought they were unbalanced, but I think that&#x27;s the implication of &quot;activities rather than crafter-driven outcomes&quot;, or just what is supposed to be the obvious answer when anyone says this is unbalanced?

&gt;Logistics was clearly a worthwhile side quest for us, and started to create the conditions for our main quest to succeed. From the beginning, we worked with lots of partners on all aspects of this same problem: warehouses, robotics, transportation, crossdock, freight. We iteratively built a solution, step by step, through software, leases, and M&amp;A deals, that could be an independent company one day. Shopify was the perfect place to bootstrap this effort from 0 to 1 and we have done this. The next step is to take what we have and take it from 1 to N as a main quest.<p>I don&#x27;t understand the point of a statement like this. Why not just admit logistics turned out to be a sunk cost and you&#x27;re abandoning it, rather than say &quot;We actually killed it!&quot;

Left Shopify just a few weeks ago, so I guess I missed out on the severance and on the surprise.<p>Big part of what drove me off was that the software project management (at least for my team) felt like someone was mashing on the control panel, figuratively.

Shopify also bumped their prices 33% earlier in the year.<p>As a small-business Shopify merchant, I would appreciate more competition in the market.

<i>Shopify was the perfect place to bootstrap this [logistics] effort from 0 to 1 and we have done this. The next step is to take what we have and take it from 1 to N as a main quest.</i><p>Then he says they&#x27;re selling to Flexport, an act which doesn&#x27;t sound like a &quot;main quest&quot; at all ... it sounds like it&#x27;s a difficult side quest being offloaded to someone else.<p>For Shopify customers: What does this mean for shops using Shopify Fulfillment Network?

It&#x27;s amazing the impact this had on the stock value of the company: +25% at the moment.

&gt;16 weeks severance per year of tenure.<p>I know this sounds insensitive but I am slightly envious<p>Edit: am dumbass. plus one week per year of tenure as corrected below. Still not bad IMO

Can we change title to &quot;Shopify lays off 20% of it&#x27;s workforce. Flexport acquires its Logistics sub-division&quot;.

I love how they don&#x27;t want to bury the lede, but they also will use the passive voice: &quot;after today Shopify will be smaller by about 20%&quot;. &quot;some of you will leave Shopify today&quot;. It&#x27;s not at all that those people are being laid off!

I was caught in this layoff. My team was Ruby Dependency Security, focused on supply chain security in the Ruby space. I guess seen as being too far from the core mission.<p>I enjoyed working there, but especially the people I worked with. I will miss working with them.

Smart! This was a bet that I think made sense in theory for Shopify, but in practice became too hard to manage and execute given their M.O.<p>Would imagine Shopify is taking a loss in offloading, but will prevent future hemorrhaging of cash from a business decision that clearly did not pay off like anticipated.<p>Unlike some people, I don&#x27;t think this experiment was necessarily a bad one for Shopify. I would have to know inside info as to whether it made sense at the time to do, but barring that I would give the benefit of the doubt to Shopify to try, if the reward was high enough if they pulled it off...

What is an healthy manager-to-ic ratio?

Does this mean Flexport is looking to become ther non-Amazon Prime&#x2F;Logistics operation for the rest of the internet?

Shopify is trash. Don&#x27;t use it. It&#x27;s like they sledgehammered the customers and then robbed them.....

&gt; Shopify finds it useful to talk about the difference between main quests and side quests internally. The main quest of the company is its mission, the reason for the company to exist. Side quests are everything else.<p>The main quest &#x2F; side quest analogy works so so well!

I was one of the teammates affected as well. Production engineering which is already spread thin as is. Really disappointed in this move but I have nothing but good things to say about the company and the people who work there.

I&#x27;ve seen little evidence that a company can thrive after 20% workforce cuts. Whatever successes Shopify has had, it&#x27;s safe to say those days are done.

Why do the stocks of tech companies grows every time the do layoffs? Is it a sign that the management is ready to do bold and unpopular decisions, or what?

Why is HN letting Shopify&#x27;s headline preserve its soft-pedal?<p>Expected: &#x27;Shopify lays off 20%&#x27;<p>Actual: &#x27;Shopify will be smaller by about 20%&#x27;

The 20% number is a bit ambiguous. How many are being laid off and how many are moving over to Flexport?

They say they don&#x27;t wanna bury the lede but the statement still confuses me:<p>&gt; don’t want to bury the lede: after today Shopify will be smaller by about 20% and Flexport will buy Shopify Logistics;<p>Does that mean layoffs AND part of their company being sold off.<p>Or does it mean employees being reassigned because part of the company is being sold off?<p>Granted I don&#x27;t know much about Shopify.<p>But when I read things on the face of it ... it sounds confusing.

Stock is up 26%, just bonkers.

How good was Shopify Logistics? Is a competitor viable?

Oh how I love this shit. Fire 20%, Stock up 18% pre-market already. Well done. Fire 100%, your wealth might skyrocket. Wealth trumps ethics, morals and employment.

WOW! That&#x27;s a change!