When AI agents do your shopping, everything changes

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JESS HERTZ: We power over 14% of the U.S. e-commerce market, and what’s incredible about that is you can sit at this kind of wide aperture of commerce and see how competition shakes out in real time. The barrier to entry because of AI has reduced, right? So the ability to start your own business and have your first sale, that time has compressed significantly. About 10% of new shops made their first sale within a single day of signing up, which is just incredible. What’s at stake is to grow entrepreneurs everywhere, and I think that is the bet, and we are going to win or die trying.

BOB SAFIAN: That’s Jess Hertz, COO of online shopping platform Shopify. As trade war erupts between the U.S. and Canada, I wanted to talk to Jess because Shopify is a Canada-based company with most of its customers in the U.S., creating a potentially tense dynamic. Jess also digs in on the impact of agentic AI on e-commerce, outlining what’s already real right now. She’s forthright about how chaotic the environment is, discussing when it makes sense to bring order to the chaos and when to let it ride, even addressing Shopify CEO Tobi Lütke’s controversial memo last year dictating that teams prove AI can’t do a job before hiring any new staff. It’s a fascinating guide to navigating change at the top of an internet giant. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

I’m here with Jess Hertz, COO of Shopify. Jess, great to see you.

HERTZ: So great to be here. Thank you for having me, Bob.

Copy LinkNavigating the trade war between the U.S. and Canada

SAFIAN: I have to start with the elephant in the room. Shopify is a Canadian company.

HERTZ: We are.

SAFIAN: Headquartered in Ottawa.

HERTZ: Yes.

SAFIAN: Most of its customers are in the U.S. You’re based in D.C. There’s this trade war going on between the U.S. and Canada. What’s the feeling about it within the company? Are you having to navigate that?

HERTZ: Let me say, as of next week, I’m actually going to be a Torontonian. I’ve finally decided to make the pilgrimage to Toronto, and I’m really excited about that. You asked about the feeling inside the company. I actually think it’s really more outside of the company, to be honest, and we definitely think of ourselves as a company rather than a country. But the tariffs are the big elephant in the room, and I think we’ve operated through lots of moments of uncertainty. Even when the first kind of tariffs came into place, we had a team spending the weekend building a duties and taxes calculator. So it is a moment to shine, even though there are lots of macro considerations happening in the world that really affect our merchants, particularly our smaller merchants, who may not be able to absorb that without the right kinds of tools to adapt as needed.

SAFIAN: You don’t necessarily talk about Shopify as being a Canadian brand because it’s a global business. But do you have conversations about that? If it were tariffs between any countries, you would be reacting the same way.

HERTZ: Tariffs between any countries, we would be reacting the same way.

Copy LinkWhy politics can prepare leaders for tech

SAFIAN: You served in the Biden White House for a year. Your background is as a lawyer. You were on the Biden-Harris transition team. All this political machination doesn’t make you think, “I should get back in there” and try to help fix things?

HERTZ: It doesn’t. But I will give you my pet theory, which is that people underestimate how similar politics and tech are, actually. Having worked in all these different places, I started my career working for a behavioral economist in the Obama administration, and I’ve had all these interesting experiences in politics. It really teaches you how to drive hard, how to develop pace, and how to compress enormous amounts of information in such a short period of time. I think that skill set has been incredibly valuable in tech, especially in this moment in AI, where everyone’s talking about compression of information and AI being able to reduce context and the need for human context. I find that being able to take what I’ve learned from politics and what I’ve learned from tech and really make it my own in this new operating model has been both incredibly rewarding and fun, and it’s an underdeveloped connection, I think. Sometimes people will get it in a negative way, but I actually think it’s quite positive.

SAFIAN: The prevailing story is that government is slow, and tech is always like, “We’ve got to get them to move at our pace.” Your experience is a little bit different.

HERTZ: My experience is different. My last job in the White House was as White House staff secretary, which people sometimes don’t know, but it’s basically the central nervous system of the West Wing and the White House. It’s an incredible position because you see so much breadth. Interestingly, most staff secretaries are lawyers, which I always thought was kind of an interesting trait of the role. But it moves incredibly quickly, and you have to be able to, as we were talking about before, have enough breadth to spot issues or put people together. That pace is real.

Copy LinkHow Shopify had drifted from its core

SAFIAN: When you became COO at Shopify last October, your first internal message to the staff said the company had drifted from its core. What had drifted?

HERTZ: That drift was in the context of our incentive compensation system for our sales team. My background is a little bit in the behavioral economics area, where I worked for a professor of mine in law school, and I’ve always been really interested in this idea of incentive systems and how you design compensation plans. How you set up systems really does impact outcomes. One of the first things I did when I came in as COO was look at our compensation plan for our sales team and say, “Actually, this is not aligned with what we want to do.” It’s not aligned with the merchant outcome and our business model at Shopify, which is that we only succeed when our merchants succeed. So that drift was really a reflection of the fact that we need to be more merchant-obsessed, and we need to make sure it’s not just in certain products or actions or things that we say. It’s actually how we compensate people and put our money where our mouth is and make sure that all of those directions point the same way, which is to make sure that our merchants are set up for success.

SAFIAN: We chatted a bit before we started recording about Shopify CEO Tobi Lütke, who’s called himself a chaos engine. How much of your job is reining him in on this quest for disorder from the top?

HERTZ: Oh, no. There is no reining in. I think it’s funny. There are sometimes chaos people and order people, and I think I’m a chaos person perhaps masked as an order person. Certainly on the AI side, he has been incredible in terms of being able to steer the company. One really nice example that I like is that everybody talks about his March 2025 memo on AI. When you really think about that, the memo made being reflexive in AI a baseline expectation for our employee base. What does that actually mean, and how do you encode that in a company, both from a systems perspective and a cultural perspective and in how people work? It was this great example of how you actually try to design a company like that. One of the ways that we do that is through our tools, and we have this amazing tool called River. River is basically an agent that lives within our Slack, and you describe a task in a public channel. It all has to be out in the open in public, so that’s a feature, not a bug. It can read code, it can run tests, and it lives in about 10,000 channels in the company. About 90% of employees have used it. It’s run 275,000 sessions, and it’s taken 15 million actions in five months, and it has this profound effect on how we work as a company. I really think the velocity that a company moves at can be judged based on how quickly information is moving within the company. This concept of River is that it can read everything in public channels at all times, and it can accelerate that pace because it can bring that transaction cost down, so you’re relying less on human context. The other piece of that is the network effects, because River gets better with every interaction. I think there are these interesting ways we can see all of these intentional decisions and tools being built, and culture being built, around the north star that Tobi is setting for the company. It is definitely one of the most fun parts of my job.

Copy LinkHow Shopify is building for agentic commerce

SAFIAN: Shopify just posted its, I think, fifth consecutive quarter of growth above 30%. How much of that growth is sort of stealing share to make that happen, like from Amazon or someone else, and how much is about AI? There is a lot of discussion around AI and agentic shopping, but how much business is it really?

HERTZ: The way I think about it is really in two pieces. One is our core business, which is incredibly durable, and the second is that AI is expanding our upside. On the core business piece, the best statistic I can give you to think about this is that almost 90% of our quarterly revenue is from merchants who’ve been on the platform for over a year. That growth compounds, and it really shows how strong the business actually is. But on the agentic side, while that agentic GMV is small, it’s definitely growing. We do have early signs that Sidekick is helping merchants sell more, and merchants who are a part of Catalog are really starting to make more money. For listeners who may not be as Shopify-versed, Sidekick is our AI-powered commerce agent that lives within Shopify. What we’re really seeing is that merchants are bringing Sidekick more and more into their business. On the Catalog piece, that’s our product layer for agentic commerce. That’s what makes products understandable, discoverable, and purchasable by AI. What we’re seeing there is that it is increasing conversion. When someone comes from an agentic channel, the conversion rate when an agent is using our catalog data is 2x compared to if it’s just using scraped data. So it’s really the combination of these persistent tailwinds in our base case and, as we enter the agentic era, even more upside.

SAFIAN: You’re building this sort of infrastructure layer for AI commerce. You have these agentic storefront integrations with ChatGPT and Gemini and Copilot, whatever. How much do you worry that the big AI platforms are going to build their own layer?

HERTZ: What I would say is I think we’re past that SaaSpocalypse moment. Shopify has certainly come out the other end of that. The way I really think about that is complexity is both the challenge and the moat for Shopify. As you mentioned, we’re building all of these products, but when you think about it, a complex world helps Shopify. We’ve always been a unified operating system for commerce. We’ve always acted as this aggregator of different ways to sell, whether that’s an online store, in-person retail, or agentic commerce. And with buyers across different channels, it helps Shopify actually do better because that complexity is hard. It’s hard for merchants to be able to manage that on their own. So I think what’s even more scarce in this AI world is that infrastructure that you’re talking about, right?

And building that complete stack for the merchant.

SAFIAN: Some of the talk about AI is, oh, it will allow smaller, more independent businesses and merchants to be able to compete better. But what you’re saying is it also makes it more complicated, and so the way they’re going to compete isn’t going to be by doing it on their own.

HERTZ: Yeah, I think the complexity of the commerce transaction is always going to exist, and the infrastructure in that world is just going to continue to compound. And because Shopify is that reliable infrastructure, that’s why we’re such a valuable player, and that’s why we can absorb all of that complexity for our merchants.

SAFIAN: And for these merchants who are looking at agentic shopping and this future of having an AI agent between them and a customer, they’ll be relying on Shopify to help them manage that, which is good for you, but might also make them feel a little more beholden, a little more trapped?

HERTZ: I don’t think they’ll feel trapped. I think the nice part about Shopify, even if you look at things like the Universal Commerce Protocol, which is the open commerce standard that we developed with Google, which is really the transaction layer of commerce, is that the merchant continues to be the merchant of record. So the idea is not that we’re trying to do anything in terms of disintermediating the merchant. It’s really facilitating for merchants the ability to have that one business and have it work everywhere commerce happens.

And so that is really at the core of what our products and partnerships are trying to accomplish for the merchant.

Copy LinkMeasuring AI payoff inside Shopify

SAFIAN: I was talking to Uber’s COO, Andrew MacDonald, a few months back. I don’t know if you know Mac, but he ignited this meme about the hidden costs of AI.

HERTZ: Yeah.

SAFIAN: You know, that, “Oh, I’m spending money on these tokens that maybe I’m not getting a return on.” And I’ve heard that your team can still access tokens mostly without restriction.

HERTZ: Yes. I think we see a very healthy ROI. Now look, the idea of adoption is never going to be the same thing as impact, so that is definitely true, and we are thinking through ways to measure impact. Headcount for Shopify has been flat for more than eight quarters, while revenue is growing 34%. So I think from an ROI, pure financial company perspective, we are doing quite well. I think the other piece to it is that we work carefully in terms of moderating that type of cost. We have a pretty open and flexible view, and we want engineers to be able to use the best models for the best circumstance. Obviously, we have thoughtful speed bumps built in along the way. We’re constantly monitoring it. We’re constantly making sure we’re providing the best tools that we can. But it is not something we take lightly. We are a fairly pragmatic company at bottom.

SAFIAN: To generate that higher productivity, which is basically what you’re talking about AI doing, doing more revenue with the same number of people, I heard you say that the ideal employee has evolved from being a T-shaped person to an X-shaped person. Can you unpack that for us?

HERTZ: It’s another one of my pet theories, so I’ve given you some of my pet theories today. When I joined Shopify, we had this idea of the T-shaped person, right? So you have lots of breadth, but you still have this one vertical that you go deep in, which is your craft, right? For me, that would be a legal craft or a regulatory craft. But what I think we’re starting to see is AI is really pushing toward what I’m calling X-shaped people, right? So you have multiple spikes of expertise, are able to absorb complexity much faster, learn new spaces and be a seven-out-of-10 designer if you want to be, right? Or I try to do my own data work now. So you’re able to move across domains faster. I’ve created this analogy in my head where now you see different slices, right? You have different vectors of expertise, and you’re really moving away from the expectation that you have to have depth in just one area. The other part is really how those different-shaped people actually intersect with each other. I think the idea of team composition and the different constellation of people will only become more and more important as we enter this AI world. It’s actually that team combination that becomes the accelerant to incredible amounts of work that you couldn’t even imagine. And some of that magic is trying to say, “Okay, where are people’s edges? How do they fit together? And how is this sort of shape of employee changing over time?”

SAFIAN: When you first started describing the X shape —

HERTZ: Yeah.

SAFIAN: I was thinking, “Oh, this is what we used to call a generalist, maybe a higher-level generalist.” But then when you talk about the teams, they’re generalist specialists because you’re fitting them together in different ways.

HERTZ: Exactly. I think a little bit about Tetris, maybe. It’s not that you’re a pure generalist and a pure athlete. It’s that you have the ability to go deep in different areas. You still might have specialized areas of expertise, right? So I still might have a legal background, some craft expertise in certain areas. It’s just that I can learn different areas much faster because I have different tools available to me. So now I not only have a legal or a talent sort of pie or quadrant to me, I’m now deep in commercial, so I’m able to generate these areas of expertise in a much different way than I was five years ago.

SAFIAN: I’m not sure if I’ve transitioned from a T shape to an X shape, but what Jess is saying here is that we all need to consider how we’re adapting to the skill-set profile that best meets the moment. After the break, Jess delves deeper into how agentic AI is transforming the e-commerce landscape, unpacks the pros and cons of being what she calls a deeply unsentimental person, and more. Stay with us.

Before the break, Shopify COO Jess Hertz shared how the company is reacting to chaotic change, from trade tensions to AI pressures. Now she shares signals she’s gleaning from within the Shopify ecosystem, how the company avoids having its fastest-growing merchants outgrow the platform, and why the culture at Shopify is overtly unsentimental. Let’s dive back in.

Copy LinkHow AI helps niche merchants get found

Shopify powers like one-seventh of all U.S. commerce, and your merchants are mostly smaller businesses. As you mentioned, those are the kinds of businesses that can be vulnerable to things like tariffs and trade wars and oil price spikes and things like that. Are there things you’re hearing and seeing among the merchants about how they’re faring? Are there things you at Shopify try to do to help small businesses that are under pressure?

HERTZ: You’re correct. We power over 14% of the U.S. e-commerce market, and what’s incredible about that is you can sit at this kind of wide aperture of commerce, and you can see how competition shakes out in real time. And I think a couple of things that we’re seeing: One is really that the barrier to entry because of AI has been reduced, right? So the ability to start your own business and make your first sale has just compressed significantly. Last year, about 10% of new shops made their first sale within a single day of signing up, which is just incredible.

And then on the SMB side, what I think is perhaps the most interesting is that we are seeing AI really help niche products and help the long tail. You had search that tended to reward things like popularity or spend, but what we’re seeing is actually agents rewarding precision and personalization, right? So 75% of AI-attributed orders last quarter came from categories outside of the top 100, which I find particularly interesting.

And really that’s the shift that we’re seeing, which is AI can understand the actual need and not just a keyword. I had this experience over the summer where my eldest daughter was going to sleepaway camp for the first time, and she was going to this camp in Wyoming. She was going to a ranch camp, which I knew nothing about. They sent a long list of things to purchase, and one of them was a trunk that would fit under her bunk. As every good mom out there is doing, I’m like, “Well, how am I going to find that?” So I used my AI to find this specialized merchant in Wisconsin that’s been doing this for 40 years. I didn’t know the specifications of her bunk, but I found this amazing trunk. And I think that’s exactly the kind of merchant that AI can really help people discover, and it’s incredible to see that coming to life.

SAFIAN: On the other end of it, service businesses often face pressure as they grow to move upstream from working with smaller businesses to working with bigger ones that provide more revenue. And if they don’t, they run the risk of their best customers growing past them, right? Moving to platforms that are more designed for them. Catering to the big guys can undercut things with the base. How do you navigate and think about those elements?

HERTZ: Yes. We want to be able to serve merchants starting around their kitchen table all the way up to Kim Kardashian at Skims. We really want to be able to serve the entire range of merchants. That is what our infrastructure is designed to do. We see incredible success from that perspective. And the simplicity of the platform and what it’s able to do, just in pure retention numbers, is clear: Over the last five years, merchants that reached a million in GMV had a 92% retention rate, and merchants that reached 10 million had a 97% retention rate.

SAFIAN: But if I’m a brand, I’m thinking, I met recently with a CEO of On.

HERTZ: Yeah.

SAFIAN: A running store, right?

HERTZ: Yeah.

SAFIAN: Now they’re up to, whatever, $300 billion in revenue.

HERTZ: Yes.

SAFIAN: They’re going to grow beyond what Shopify can do for them.

HERTZ: They’re a Shopify merchant, actually, and we’ve had great success with On as well. We actually don’t think they’re going to outgrow Shopify. When I think about enterprise, the choice of what a great strategy looks like today is really a function of architectural choices made several years ago. Part of Shopify’s ability is that we build one unified data model and make it extensible. It’s how a large brand can run 1,000 different campus stores, 1,200 storefronts, and six million SKUs on one stack. That ability to really serve that breadth of merchant is why I think we’ve had such great success over the last two decades.

SAFIAN: So you don’t worry about letting them grow away from you.

HERTZ: I think it’s a little bit reversed. We want to be able to help them grow.

Copy LinkWhy Shopify prizes an unsentimental culture

SAFIAN: I saw that you called yourself a deeply unsentimental person, and it sounded like you said it thinking it’s something that’s an asset, although maybe sometimes it’s a hindrance.

HERTZ: Yes. It is perhaps both an asset and a hindrance. It is very much based on these kinds of first principles, and one of the things I loved most about Shopify when I came in was this phrase: “Keep your identity lightweight.” It’s this idea that you can wake up smarter, you can wake up better the next day, and you don’t have to get so attached to ideas. You have to keep things nonpersonal in that way, and almost irreverent. I think that ability to separate and say, “OK, even if this was my idea, there’s a better one out there,” or that there’s not just one path in life, I’ve internalized that as being fairly unsentimental. It’s really allowed me to pivot a ton in my career without necessarily carrying the baggage that it has to be a certain way, or that we’ve done it a certain way over a decade and so that’s how we’re going to do it.

It’s a very unsentimental company in that respect, where you are able to make change if there’s a better trade-off out there.

SAFIAN: And it starts, as you said, with first principles. There is something that you are sentimental about.

HERTZ: Yes.

SAFIAN: That is your commitment.

HERTZ: Yes.

SAFIAN: I want to make sure I’m understanding this right.

HERTZ: Yes.

SAFIAN: Because in today’s world, the chaos puts a lot of people off. But if you have an anchor, I think what you’re saying is, how you get there can move around.

HERTZ: Exactly. I don’t actually feel like we’re a chaotic company. There is a deep focus, and I think it’s because of this purity of mission, which is really an alignment mechanism that is deeply held within the company. So I think that is really the anchor and the first-principles basis.

And you are able to make trade-offs based on that. So it doesn’t actually feel chaotic. It feels curious, open, and innovative for all of the right reasons, versus feeling attached to what others are doing in an industry or what you’ve internalized as best practice over time.

SAFIAN: So what’s at stake for Shopify right now?

HERTZ: Well, I think what’s at stake is the same thing as when we started. It is to be the 100-year company and to grow entrepreneurs everywhere. I think that is the bet, and we are going to win or die trying.

SAFIAN: And for you, moving to Toronto, leaving these beautiful United States of America is not a concern?

HERTZ: I’m actually really excited about it. I do get energy from being with people in person. It’s going to be such a great experience, and I’m not too worried about not having roots in the U.S.

SAFIAN: Well, Jess, this was great.

HERTZ: So fun.

SAFIAN: Thanks so much for doing it.

HERTZ: Thank you so much for having me, Bob.