In the continuing tradition of interviewing entrepreneurs, I had a chance to speak with Tobias Lutke. Tobi's list of accomplishments is already long, an includes being the creator of the popular Shopify e-commerce platform and Typo weblog engine. He also co-founded jadedPixel, a technology company in Ottawa, Canada where he now lives.

Tobi has been part of the Ruby on Rails core team since its interception in 2005. He has released a series of popular open source projects such as Liquid template engine and ActiveMerchant, two core technologies of the Shopify project and smaller Ruby programming gems like Paypal-lib, login_generator and Hieraki.

I have always been impressed with both the style and substance of Tobi's work and that he faces the same challenges those outside of Silicon Valley do in terms of building startups. Here is an excerpt of our conversation on October 31st 2008:

Erik Levy: Can you tell me about what you are doing now?

Tobias Lutke: Sure. I am the CEO of jadedPixel. We have about 3,000 customers using Shopify, our e-commerce platform.

Erik Levy: Was jadedPixel your first venture?

Tobias Lutke: Yes. Though my business partner and I originally started a snowboard business called Snowdevil. We couldn't find an e-commerce product that we could customized to the level we wanted, so I decided to write one and that was what became Shopify.

Erik Levy: Was your partner involved or was this all your own effort?

Tobias Lutke: Yes, after we made the decision to turn what we learned with Snowdevil into a product (Shopify) my partner became the CEO and I the CTO.

Erik Levy : How long ago did that happen?

Tobias Lutke: We split responsibilities down the middle; in reality the bulk of the work in the first years is clearly with the technical team - my partner kept a day job until the software was essentially written which took me about a year and a half. We launched Shopify in June 2006

Erik Levy: What were some of the harder experiences you had during that time?

Tobias Lutke: I think the hardest lesson to learn was that "split down the middle" is flawed. In a small company everyone has to wear many hats. This means that programmers need to learn about finances and business development and so on. I personally treated "business development" as a kind of black box; For all i knew some people would dance around a fire and make business happen

Erik Levy: Do you think that coming from a technical background in some ways was a hindrance since programming is most productive when you don't interact with others?

Tobias Lutke: No, precisely the opposite. In essence programming is the science of learning things quickly. No other profession re-invents itself as often as programming does. These days my business partner left the company and our team is stacked to the brim with technical people who also do all aspects of business development, marketing and so on.

Erik Levy: Then, for you, the technical needs for adaptability makes technical personnel more likely to succeed?

Tobias Lutke: There are a lot of components to why I think that technical people excel at other tasks. One big reason is that they are fundamentally lazy. A typical accountant for example would be perfectly content to transcribe hundreds of records every month from invoice print outs into an accounting software. A technical person and especially a programmer would immediately set out to automate the task. 2 hours later there may be an automated export of invoices to the accounting software. This is the essence of how small companies can compete and even beat large companies. They gain leverage by using better tools.

Erik Levy: How do you select the people that work for you?

Tobias Lutke: So far we are still fairly small. Twelve people work at jadedPixel now. Most of our hires have been personal recommendations. I like to hire young people who haven't worked too much for large companies already so the damage isn't permanent. We have great relationships with all the universities in town and often professors let us know when they encounter an especially talented student. The main thing we look for in candidates is creativity. Degrees don't matter at all.

Tobias Lutke: We find that creative programmers always end up beating hard core propeller heads. The hard core programmers may produce code a lot faster but the creative people manage to find clever ways to avoid 80% of the work before they even start.

Erik Levy: Do you find being in Canada an advantage, disadvantage or neutral in terms of building a business?

Tobias Lutke: That's an excellent question. I haven't tried building a company anywhere else but Canada has been an enormous help in many ways. First of all universal health coverage helps the early stages a lot because it's fine to go without employment for years while building a product. There are also some great sources for funding in government programs. Lastly, the people up here are amazingly talented.

Tobias Lutke: However getting founded is a lot harder when you are "off the beaten track". It's also harder to find people who have actual experience taking a small company global. Those people tend to cluster around areas like Silicon Valley. I think every area has its strengths. Silicon Valley's strengths are very well documented so it's easier to tap into them.

Erik Levy: Do you find there are many startups where you are?

Tobias Lutke: There is a healthy community of startups in Ottawa and a large one in Toronto. We have regular get-togethers and there is good cross-pollination going on.

Erik Levy: You seem to use and support open source technologies - a lot of startups do - how do you think open source has helped you?

Tobias Lutke: It's more binary than that. Open source is the only reason why we can exist. There are two components to our open source use: All the software that runs our servers is open source and if we had to pay for licenses it would never have been possible to build the company without Venture Capital funding. The more exciting component of open source is that we run a lot of open source projects from our offices. For example, I was involved in writing the Ruby on Rails framework as part of the Ruby on Rails core team. This means that we had direct influence on the technology we used to build our business. If you were using a solution by some vendor you would never have this kind of influence. Today Ruby on Rails is the perfect tool for writing Shopify -- it fits like a glove.

Tobias Lutke: We also took some key components of Shopify and released them as open source. For example: Shopify communicates with Payment Gateways to charge credit cards. Every customer's bank uses a different Payment Gateway. When we launched we only supported the three biggest ones in the States and one Canadian. At this point we decided to create a library to make dealing with Payment Gateways easier and released it as open source. Since then we added another 15 gateways to the library based on customer requests but even more importantly is that third party developers liked our library and enhanced it with their own picks. Shopify now supports about 50 gateways but only half of those were written by us.

Erik Levy: Was releasing components open source a way to promote the business?

Tobias Lutke: It was. We got a lot of good will from the community because we did share some of our "cool tools" with others. Indirectly and unexpectedly this has proven to be a great business move: It turns out that when people want to sell online they ask the geek in the family. Those geeks more often than not have heard about us and recommend us. A sizable chunk of our customers came to Shopify this way. Ultimately, we did it for leverage though: We are a small team and tapping into open source means that people who are not on payroll contribute some work to Shopify.

Erik Levy: Have you taken any Venture Capital funding at this point?

Tobias Lutke: We have not taken Venture Captial funding. Shopify grew very organically. We are currently in talks with some Venture Capitalists about our options though.

Erik Levy: Is there anything else that you think entrepreneurs or those thinking about starting a business would benefit from knowing?

Tobias Lutke: Yes, build something you need yourself. Above all things this is what made Shopify a success. Today, Shopify is the software I dreamed of finding in 2004 when I started my Snowboard store.