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Tobi Lutke: Everyone Tries to Build a Platform First. That's Really Hard. Extract It Instead.

By Tobi Lutke · Leadership · 2 min read

So many businesses lend themselves to being turned into platforms later. The problem is everyone tries to build a platform first. And that's really, really, really hard. It's much better to extract a platform out of working software people are already using.

Key Points

Two-sided marketplaces are tricky — but if you pull it off, they're self-sustaining
Everyone tries to build a platform first. It's much better to extract one from working software.
Shopify's platform emerged from what users were already doing — trading themes as zip files, building on the APIs

Everyone tries to build a platform first. And that's really hard. It's much better to extract a platform out of working software people are already using.

Don't Build a Platform. Extract One.

Lutke: Putting up any two-sided marketplace is tricky. You have to overcome the chicken-and-egg problem. But if you manage to do it, it's also really self-sustaining afterwards.

Everyone tries to build a platform first. It's much better to extract one from working software.

Shopify Extracted Its Platform

Lutke: That helped us. People were already trading themes as zip files — and we said, okay, we can help with that. People were already building things for themselves on the APIs, integrating their own systems. All these things ended up being incredibly valuable for the community.

It's definitely one of the coolest aspects to build.

People were already trading themes as zip files. We said — we can help with that.

Build Software First, Then Build the Game on Top

Lutke: At the end of the day, what all of this is — you build really good software that solves real problems very, very quickly. Then you build a bit of a game-theoretical system on top, in which people being selfish about wanting to build something accrue a huge amount of value to the community, to Shopify, to the merchants.

Build good software that solves real problems. Then build a game-theoretical system where selfishness creates community value.