“$100M dollar brands are being built for boring products” - Harley Finkelstein of Shopify

Key Concepts

Touchland, Purel, luxury product, Kickstarter, revenue, EBITDA, Shopify, e-commerce, Dyson, pencil vac, James Dyson, Steve Jobs, Ember mug, Duraf Flame, Flint, TAM (Total Addressable Market), Sequoia, AG1, reverse engineering, Method soap, Ritual, Seed, Prose, Prenova, Collison brothers, founder-led companies, Swiss Army knife, Dunbar's number, side quests, main quests, spiky objects, Roblox, Metaverse, George Mack, Enneagram, challenger, achiever, corp dev, IPO, 10B51, ASTP, COVID-19, Shopify Capital, AI, Chat GPT, Claude, reflexive AI usage, Prenova, Clearly scan, 29029, childhood milestones.

Touchland Case Study: From Utility to Luxury

The video begins with a discussion of Touchland, a hand sanitizer company, as a prime example of transforming a utilitarian product into a luxury item.

The Problem: Traditional hand sanitizers like Purel were perceived as purely functional, with an unpleasant smell and unappealing packaging.
The Solution: The founder of Touchland reimagined hand sanitizer as a sensory essential, focusing on pleasant scents, attractive packaging (described as "almost Johnny Ive designed"), and collaborations with brands like Hello Kitty and Disney.
The Process: The founder started with a Kickstarter campaign, raising $67,000 for an initial production run.
The Results: The company achieved $1 million in sales in its first year. During the COVID-19 pandemic, demand surged, leading to significant growth. In 2025, Touchland was acquired for $880 million, with projected revenue of $130 million and EBITDA of $55 million.
Key Takeaway: By applying high fashion and luxury principles to a commodity product, Touchland created its own category and commanded a premium price.

The "Boring Products Becoming Sexy" Trend

The discussion expands to a broader trend of "boring products becoming very sexy," citing Dyson's "pencil vac" as another example.

Dyson's Approach: James Dyson, the founder, focused on improving the functionality and design of everyday products like vacuum cleaners. He emphasizes the importance of even the internal wiring being aesthetically pleasing.
Modern Media Leverage: Dyson effectively uses platforms like YouTube to tell the story of his products, generating millions of views for a vacuum cleaner demonstration.
Ember Mug: The Ember mug, which adds a small heater to a mug, is mentioned as another example of a seemingly simple product that has been elevated through design and functionality.

Disrupting Existing Markets: Firebelly Tea and Beyond

The hosts discuss their own side project, Firebelly Tea, as an example of disrupting an existing market.

The Idea: Firebelly Tea aims to disrupt the Duraflame market by creating a more convenient and aesthetically pleasing fire starter product.
The Prototype: The prototype is made from Canadian softwood, kiln-dried, and branded as "Flint."
The Vision: The goal is to expand the market beyond traditional hardware stores like Home Depot and Lowe's, making the product available in convenience stores and bodegas.
Other Examples: The hosts suggest opportunities for disruption in other categories, such as karaoke machines and tools.

TAM (Total Addressable Market) and Market Growth

The conversation shifts to the concept of TAM (Total Addressable Market) and how companies can grow the market itself, rather than just taking a larger piece of an existing pie.

Traditional View of TAM: TAM is often seen as a static number, representing the total potential revenue in a given market.
Shopify's Experience: Sequoia Capital invested in Shopify based on the TAM of retail SMBs, but they underestimated Shopify's ability to grow the market by enabling new entrepreneurs.
AG1 Example: AG1, a supplement company, has achieved $600 million in annual revenue with a single SKU, demonstrating the potential to expand the market significantly.

Reverse Engineering Success: Brad Jacobs' Framework

The speaker shares his approach to identifying market opportunities, which involves researching and reverse engineering successful companies, a technique he learned from Brad Jacobs.

The Method: Instead of relying on random ideas, the speaker focuses on identifying gaps in the market and analyzing how successful companies have addressed them.
HubSpot Collaboration: The speaker collaborated with HubSpot to create a framework based on his research tactics and techniques.

Eric Ryan and the "Sexy" Transformation of Everyday Products

Eric Ryan, the founder of Method soap, is highlighted as another example of transforming a mundane product category.

Method Soap's Approach: Method focused on creating aesthetically pleasing packaging, using natural ingredients, and employing lifestyle-oriented marketing.
Other Ventures: Eric Ryan also applied this approach to other categories, such as Olly vitamins and Welly Band-Aids.
Additional Examples: The discussion mentions other companies that have successfully transformed boring product categories, such as Ritual (vitamins), Seed (probiotics), and Prose (personalized shampoo).

Personalization and the Future of Health

The conversation touches on the trend of personalization, particularly in the health and wellness space.

Personalized Shampoo: Prose, a company that offers personalized shampoo based on hair type, is cited as an example of this trend.
Personalized Supplements: The speaker expresses interest in personalized supplements that would provide the exact nutrients needed based on individual needs.
Prenova: The speaker discusses his use of Prenova, a full-body MRI screening service, for early detection of potential health issues.

The Billionaire Health Paradox

The hosts discuss the apparent paradox of wealthy individuals being unhealthy, arguing that access to resources like chefs and personal trainers should make it easier to maintain good health.

Founder-Led Companies and the "Give a [ __ ]" Factor

The discussion shifts to the importance of founder-led companies and the unique passion and dedication that founders bring to their businesses.

Shopify vs. Stripe: An unnamed billionaire investor believes that Shopify will be worth 10 times more than Stripe because Shopify's founder, Toby, is completely obsessed with the company.
Toby's Obsession: Toby's unwavering focus on Shopify is seen as a key driver of the company's success.
The "Immigrant to the Human Condition" Quote: Toby's self-awareness and unique perspective are highlighted as valuable assets.

The Evolution of Shopify: From Swiss Army Knife to Spiky Objects

The speaker describes the different phases of Shopify's growth, from a small team where everyone did everything to a larger organization with specialized roles.

Swiss Army Knife Phase: In the early days, employees had to be versatile and perform multiple functions.
Triple Threat Phase: As the company grew, employees could focus on a few key areas of expertise.
Spiky Objects Phase: The company reorganized around the strengths of its leaders, with Toby focusing on product and the speaker focusing on storytelling and communication.

Shopify's Mission and Hiring Philosophy

Shopify's mission is to increase the number of entrepreneurs on the planet. This mission influences the company's hiring philosophy.

Hiring Entrepreneurs: Shopify seeks to hire people who have been deeply affected by entrepreneurship in some way.
Personal Stories: The speaker shares his own family's history of entrepreneurship, as well as Toby's story of starting Shopify to solve his own challenges.

Toby's "Weirdness" and Leadership Style

The speaker shares insights into Toby's unique personality and leadership style.

Constant Learning: Toby is constantly learning about new technologies and reading the latest research papers.
Intuitive Product Vision: Toby has a strong intuition for how the product needs to evolve, which he communicates to the company in a detailed email every January 1st.
Talent Spotting: Toby is skilled at identifying talented individuals within the company and giving them opportunities to excel.
Pushing for Growth: Toby constantly challenges the speaker and the team to reach new levels of performance.

Acquisition Offers and the Decision to Go Public

Shopify intentionally avoided acquisition offers and chose to go public at an early stage to maintain its independence.

Avoiding Distractions: The company did not return phone calls from corporate development teams to avoid getting distracted by acquisition possibilities.
Early IPO: Shopify went public at a relatively early stage because it believed it was the best way to remain independent and that the company was ready for it.

Financial Philosophy and Risk Management

The speaker shares his personal financial philosophy, which involves taking some money off the table to ensure his family's security while still maintaining a significant investment in Shopify.

The Hardest Times at Shopify

The speaker identifies two particularly challenging periods in Shopify's history: the pre-IPO days and the post-COVID-19 hangover.

Pre-IPO Struggles: There were times when the company struggled to cover payroll.
Post-COVID-19 Challenges: The company faced challenges related to over hiring, unprofitable side projects, and a shift in market conditions.

The Evolving Nature of Entrepreneurial Challenges

The hosts discuss how the challenges of entrepreneurship change as a company grows.

No Magic Number: There is no point at which entrepreneurship becomes easy; there are always new challenges to face.
Finding Fulfillment: The speaker finds fulfillment in his current role at Shopify, where he can use storytelling to amplify the company's mission.

The Importance of Authenticity and Storytelling

The speaker emphasizes the importance of authenticity and storytelling in leadership.

Learning from Others: The speaker studies the communication styles of other leaders, such as Peter Thiel and David Rubenstein, but ultimately strives to be authentic.
Using AI as a Tool: The speaker uses AI tools like Chat GPT to refine his messaging, but he ensures that his communication remains personal and engaging.

AI Usage and Reflexive AI Adoption

The speaker discusses his personal use of AI tools and Shopify's approach to AI adoption.

Personal AI Tools: The speaker uses Chat GPT for tasks like analyzing blood tests and refining keynote speeches. He uses Claude for analyzing existing documents.
Reflexive AI Usage: Shopify is encouraging employees to reflexively consider how AI can be used to improve their work, even before considering hiring new employees.

Longevity and Biohacking

The speaker shares his interest in longevity and biohacking, focusing on strategies to reduce his risk of cancer and heart disease.

Prenova and Clearly Scan: The speaker uses Prenova for cancer screening and Clearly Scan for cardiovascular health assessment.
29029 Challenge: The speaker participates in the 29029 challenge, which involves climbing the equivalent of Mount Everest, to push himself physically and mentally.

Shopify's Scale and Impact

The speaker reflects on Shopify's scale and impact, noting that it is one of the largest companies in the world.

Public Market Benefits: The speaker emphasizes the benefits of being a publicly traded company, including increased stability and confidence for customers.

Conclusion

The video provides a comprehensive overview of Shopify's journey, from its early days as a small startup to its current position as a global e-commerce leader. It highlights the importance of innovation, customer focus, founder-led leadership, and a willingness to embrace new technologies. The discussion also offers valuable insights into the challenges and rewards of entrepreneurship, as well as practical advice for building and scaling a successful business.