Overview of When AI agents do your shopping, everything changes, with Shopify’s Jess Hertz
This episode of Rapid Response features Bob Safian in conversation with Jess Hertz, Shopify’s COO, about how the company is navigating trade tensions, AI disruption, and the rise of agentic commerce. Hertz argues that Shopify’s edge is not just its e-commerce software, but its ability to absorb complexity for merchants—whether that complexity comes from tariffs, multi-channel selling, or AI-powered shopping assistants.
Key Topics Discussed
Tariffs, trade tension, and Shopify’s global posture
- Shopify is headquartered in Canada, but most of its customers are in the U.S., creating a potentially sensitive backdrop amid U.S.-Canada trade conflict.
- Hertz says Shopify’s response is not nationality-based; the company reacts the same way to tariff issues regardless of the countries involved.
- During earlier tariff disruptions, Shopify quickly built a duties-and-taxes calculator to help merchants adapt.
- The company sees itself as a business, not a country.
What her White House background brings to tech
- Hertz previously worked in the Biden White House and on the Biden-Harris transition team.
- She says politics and tech are more similar than people assume:
- both require pace,
- broad context,
- and the ability to synthesize large amounts of information quickly.
- Her White House experience, especially as staff secretary, helped her develop operational speed and cross-functional judgment.
Why Shopify “drifted” and how Hertz corrected it
- In her first internal note as COO, Hertz said the company had drifted in its incentive system.
- The issue was misaligned sales compensation: Shopify wanted the system to reflect its core belief that Shopify only wins when merchants win.
- Her fix was to realign incentives with merchant success, not just product or revenue goals.
Toby Lutke, “chaos,” and Shopify’s AI culture
- Hertz describes CEO Toby Lutke as a “chaos engine,” but says she is not there to rein him in.
- She sees Shopify’s culture as intentionally open, fast-moving, and built around first principles.
- Lutke’s 2025 AI memo made AI fluency a baseline expectation across the company.
- Shopify built internal tools to reinforce that culture, especially River, an AI agent embedded in Slack:
- available in roughly 10,000 channels,
- used by about 90% of employees,
- has run 275,000 sessions,
- and completed 15 million actions in five months.
AI commerce is real now, not theoretical
- Shopify says agentic commerce is already beginning to matter, even if it is still small.
- Key products and signals:
- Sidekick: Shopify’s AI-powered commerce assistant for merchants.
- Catalog: the product layer that helps AI systems understand, discover, and purchase products.
- Hertz says AI-driven traffic using Shopify’s catalog data converts at 2x the rate of scraped data.
- She frames AI as expanding Shopify’s upside rather than replacing its core business.
Why complexity is Shopify’s moat
- Hertz argues that AI will not simplify commerce—it will make it more complex.
- That complexity helps Shopify, because it is built to unify many selling channels:
- online stores,
- retail,
- and now agentic commerce.
- Shopify’s role is to help merchants operate across all of those surfaces without losing control.
Merchants, SMBs, and the long tail
- Shopify powers more than 14% of U.S. e-commerce.
- AI appears to be lowering the barrier to entry for new businesses:
- about 10% of new shops made their first sale within a day of signing up.
- Hertz says AI is helping niche products and long-tail merchants by rewarding precision and personalization instead of just popularity or ad spend.
- She gives an example of using AI to find a specialized trunk for her daughter’s camp supplies—an ideal use case for discovering obscure but perfect-fit merchants.
Shopify’s scale and merchant retention
- Hertz says Shopify can serve everyone from kitchen-table startups to huge brands like Skims.
- Even merchants that grow large often stay on the platform:
- merchants reaching $1M GMV had a 92% retention rate over five years,
- merchants reaching $10M GMV had a 97% retention rate.
- She argues that large merchants do not necessarily “outgrow” Shopify because the platform is architected to scale with them.
The “X-shaped” employee
- Hertz says AI is changing the ideal employee profile from a T-shaped person to an X-shaped person.
- T-shaped = broad skills with one deep specialty.
- X-shaped = multiple areas of depth, faster learning across domains, and the ability to contribute in several modes.
- She emphasizes that team composition becomes even more important in an AI-driven workplace.
Being “deeply unsentimental”
- Hertz embraces a company culture of being “unsentimental,” which she sees as a strength.
- She links this to Shopify’s principle of “keep your identity lightweight”:
- don’t get attached to one idea,
- stay willing to change,
- and let better solutions replace older ones.
- She says the company is not chaotic in a negative sense; it is anchored by a clear mission.
Main Takeaways
- Shopify is leaning into AI as a force that will reshape commerce, not just optimize it.
- The company believes merchant success, operational simplicity, and first-principles thinking are the right foundations for navigating uncertainty.
- AI is already changing how merchants are discovered, how employees work, and how Shopify measures its own value.
- Hertz’s message is that adaptability—not nostalgia—is the key leadership trait in this moment.
Notable Ideas and Quotes
- “We think of ourselves as a company rather than a country.”
- “Shopify only succeeds when merchants succeed.”
- “Complexity is both the challenge and the moat for Shopify.”
- “The ideal employee is becoming X-shaped.”
- “Keep your identity lightweight.”
Bottom Line
This conversation presents Shopify as a company using chaos as a strategic advantage: absorbing tariffs, scaling with merchants, and building AI-native infrastructure for a future where shopping becomes increasingly agent-driven. Hertz’s core argument is that the future of commerce will be more complex, and Shopify’s job is to make that complexity manageable for everyone else.