diff --git a/src/compositor.c b/src/compositor.c
index 200e26c5..4a5e51c9 100644
--- a/src/compositor.c
+++ b/src/compositor.c
@@ -2117,12 +2117,12 @@ int main(int argc, char *argv[])
 	ec->option_idle_time = option_idle_time;
 	ec->idle_time = option_idle_time;
 
-	if (shell_init(ec) < 0)
-		exit(EXIT_FAILURE);
-
 	if (xserver)
 		weston_xserver_init(ec);
 
+	if (shell_init(ec) < 0)
+		exit(EXIT_FAILURE);
+
 	if (wl_display_add_socket(display, option_socket_name)) {
 		fprintf(stderr, "failed to add socket: %m\n");
 		exit(EXIT_FAILURE);
diff --git a/src/xserver-launcher.c b/src/xserver-launcher.c
index 5ff472f9..c7b8e983 100644
--- a/src/xserver-launcher.c
+++ b/src/xserver-launcher.c
@@ -1610,7 +1610,7 @@ weston_xserver_init(struct weston_compositor *compositor)
 {
 	struct wl_display *display = compositor->wl_display;
 	struct weston_xserver *mxs;
-	char lockfile[256];
+	char lockfile[256], display_name[8];
 
 	mxs = malloc(sizeof *mxs);
 	memset(mxs, 0, sizeof *mxs);
@@ -1649,7 +1649,9 @@ weston_xserver_init(struct weston_compositor *compositor)
 		return -1;
 	}
 
-	fprintf(stderr, "xserver listening on display :%d\n", mxs->display);
+	snprintf(display_name, sizeof display_name, ":%d", mxs->display);
+	fprintf(stderr, "xserver listening on display %s\n", display_name);
+	setenv("DISPLAY", display_name, 1);
 
 	mxs->loop = wl_display_get_event_loop(display);
 	mxs->abstract_source =