Want to know whether going all-in on AI works for a large business? Watch Shopify.
Most established companies have come at AI with a dip-your-toes-in-the-water approach. They fear being disrupted by AI-infused competitors. But they are also wary of changing IT systems and business philosophies that have worked for decades.
Shopify and its chief, Tobias Lütke, have instead plunged in.
Shopify was quick to develop AI tools for customers, announcing an AI assistant called Sidekick in 2023. But the company has also looked inward at its use of AI. Early last year, Lütke wrote a memo to employees that explicitly made using AI a "baseline expectation" at the company, which makes software that helps retailers set up websites, process transactions and analyze their businesses.
That meant a few things. Employees' performance evaluations would include questions about their use of AI. The prototyping phases of new projects would be dominated by AI-aided exploration. And before hiring new employees, teams would have to demonstrate that they couldn't get the job done with AI instead.
Those moves may sound unremarkable now, but they were controversial at the time. The prevailing wisdom had been that companies should provide employees with AI tools to experiment with. Integrating AI deeply into daily work largely hadn't been a strict requirement.
So what have the results been?
Shopify's stock hasn't done well lately-it is down more than 15% this year, including a 7% fall in midday trading Tuesday amid a broader software selloff. And it is pricey, trading at around 57 times forward earnings.
From a business perspective, though, there have been gains. When AI began to take off in 2023, Shopify brought in about $7 billion of revenue. Analysts project revenue will reach more than $15 billion this year as the company grows its footprint in the U.S. and internationally. Shopify has also reduced its workforce over that time, from around 11,600 at the end of 2022 to 7,600 at the end of last year.
These days, Lütke is looking further into the future, preparing for a shift toward so-called "agentic commerce" where AI agents instead of humans search for and recommend products. Shopify is positioning itself at the center of that shift by offering a catalog of products offered by its merchants that OpenAI, Anthropic and other AI developers can easily tap in to for recommendations.
While it is still early days, Shopify President Harley Finkelstein said on an analyst call last month that AI-driven traffic and orders to Shopify stores had tripled year-over-year in the second quarter.
Lütke said in a post on X in April that his memo a year earlier on embracing AI was evident in the company's products and how fast they were moving. "Everyone has agents as exoskeletons for their own creativity now and knows how to use them," he said.
Whether Lütke's all-in approach continues to work looks like a good barometer of AI's business-transforming potential.
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About Us
WSJ AI & Business is a weekly look at AI's transformation of the business world. This newsletter was curated and edited by Asa Fitch. Reach him at asa.fitch@wsj.com (if you're reading this in your inbox, you can just hit reply). Got a tip for us? Here's how to submit.
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