You must be aware of Shopify as it has become one of the biggest names in the e-commerce industry off-late thanks to its service which is to provide e-commerce software to businesses so that they don’t have to develop their own software and can simply turn to Shopify for all their needs such as product listing, inventory management as well as handling transactions and other things as well. This means that Shopify is a complete package and even their CEO says that it is their “main quest” which tells you that the maximum focus of the company is on providing its software and making improvements to it since its their core business.
However, Shopify does have a lot of “side quests” or secondary businesses as well and now the company has announced that they are selling one of them and even reducing their workforce. Today, Shopify revealed that it is reducing 20% of its workforce which means 2000 of its employees will be affected. Prior to this, Shopify has already laid off 1000 of its employees which was 10% of its workforce at that time. Also, the layoffs are being made because Shopify is selling its logistics business to Flexport for roughly 13% in an all-stock deal.
Shopify’s Tobias Lütke says that “Side quests are always distracting because the company has to split focus. Sometimes this can be worth it, especially when engaging the side quest creates the conditions by which the main quest can become more successful. In the beginning, as a small startup, companies are intensely focused. It’s often said that larger companies are more sluggish but this is not because of their size, it’s because of all the side quests and distractions they accumulate along the way. This happens because larger companies can afford to be somewhat inefficient, especially during stable economic boom times. But once they need to adapt to some new paradigm, they can’t. They will get replaced by more focused competitors, or collapse outright.” referring to their decision to sell its logistics and freights division to Flexport which had become a “side quest” for them. Tobias hints that the AI revolution is also the reason why Shopify is focusing on its core business.
