How Shopify Bungled Its Latest Layoffs and Made Employees Feel Like NPCs

Shopify laid off 20% of its global workforce today – its second major employee cut after a 10% reduction announced last July. This latest downsizing also includes the wholesale divestment of an entire line of business: Shopify’s internal logistics arm, which sought to own more of the warehousing and fulfillment chain for its merchants.

Shopify CEO Tobi Lütke’s internal message to the entire company was shared as an external blog post on the company’s newsroom (which – disclosure – I helped establish when I worked for the company in 2018/19). The letter is a particularly egregious example of poorly done termination communications, but it accurately represents Lütke’s fundamental failure to understand the situation of a number of employees under his company’s responsibility.

Lütke describes the 20% cut as an effort to “give undivided attention to [Shopify’s] mission,” which itself already kicks things off on an odd footing, as it portrays those involved as effectively working on distractions and unworthy of the time and attention they “shared” with the main focus of the mission. ‘business. The letter expands on this — to even more insensitive effect — by quickly drawing an analogy between Shopify and video game mechanics, distinguishing between the company’s “main quests” and “side quests.”

In games, there is often a critical path – the main storyline – which focuses on a main goal. Open-world games, in particular, also include a wide range of side quests, which may be strongly, loosely, or not at all related to the main story and objective.

Lütke is an avid gamer who has incorporated that love into the business in many ways, including Shopify Rebellion, an esports team created in 2021. Shopify’s Executive Assistants are also known as “Expansion Packs” – a reference to add-on game content that is usually added after release to provide more gaming experience for the player.

Video game comparisons at Shopify can be helpful, in that they simplify and make obtuse business concepts relatable that might otherwise be unattainable. That’s helpful in a company that still prides itself on hiring from a variety of backgrounds, including beyond traditional educational or professional technology industry experience.

The downside, however, is evident in cases like today’s letter. Lütke describes deciding who was included in today’s layoffs by looking at side quests and determining which ones didn’t contribute to the main story of the company’s “game”. This included not only people focused on side bets like logistics that Shopify has been chasing for years, but also managers whose primary job included “heavy layers of processes, approvals, meetings, and… side quests,” according to Lütke’s characterization.

The letter also cites a major shift in direction brought about by technological development as the cause of a big shift in the company’s focus and priorities: namely, “the dawn of the age of AI” and the fact that “Shopify is privileged to be among the companies with the best chance of using AI to help our customers. What he fails to note, however, is that the existing management and all the different side quests that Shopify has invested heavily in over the years, including logistics, are bets made either directly by, or with the unqualified endorsement of, its CEO and Founder – Lütke himself.

I’m still in contact with many, many Shopifolk (yes, that’s a grumpy, but also oddly affectionate nickname) and there’s a pervasive sense that Lütke’s framing of this downsizing is incredibly insensitive. The subtext, taken from the video game to its logical conclusion, is that those affected by today’s layoffs are little more than NPCs – non-player characters, those digital beings that populate worlds. of the game only to fill it out and make it more engaging and believable for the only real person of consequence – the players themselves.

Shopify has done one thing right by offering a generous package that includes 16 weeks of severance pay, plus medical benefits and additional top-up compensation, including help fund a replacement laptop. But at a time when other CEOs have at least taken the time to express regret and reflect on past choices, this one instead chose to draw an elaborate comparison to an escapist hobby and get philosophical at about corporate institutional cruelty. At least some underrated NPCs now have the chance to become full players.

Note: I worked for Shopify from 2018 to 2019, but I don’t own any stock or financial interest in the company.

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