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Shopify’s founder and chief executive is ‘a true national gem,’ one tech industry expert says
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In September 2013, BlackBerry Ltd., then Canada’s most recognizable tech company and for years the country’s greatest tech-sector success, announced it was cutting 4,500 jobs worldwide.
The company had already slashed more than 7,000 jobs in the previous two years.
Tobi Lütke, the founder and chief executive of Shopify Inc., whose online tools and services help its users manage retail businesses, expected many BlackBerry castoffs to join his growing company, which then had just 300 employees — a number Lütke expected to double within a year.
It was a literal shift in talent from Canada’s dominant tech player to an upstart. Today, BlackBerry makes security software and is a shadow of its former self.
Shopify, meanwhile, has rocketed forward, replacing BlackBerry as Canada’s tech darling, and “powering,” according to the company, more than 1.7 million retail businesses in more than 175 countries, with services to manage orders, shipping, payments and marketing. However, some, including noted short seller Andrew Left, have previously questioned how many of those businesses are legitimate, healthy enterprises.
More recently, the company has launched small business lending through Shopify Capital.
Shopify now says it has more than 7,000 employees and contractors, and boasted 2020 revenue of US$2.9 billion, an 86 per cent increase over 2019. Shopify had already exceeded that figure in the first nine months of this year, clocking in $3.2 billion in revenues, the company said in its earnings report on Thursday, although it warned that supply chain issues could crimp growth in the fourth quarter.
The company’s stock has also hurtled upward, trading on the Toronto Stock Exchange for nearly $1,800 a share on Oct. 28, up from $55 in Dec 2016, although down from its 52-week high of $2,075. The company’s stock has rocketed 3,327 per cent over the past five years, and a relatively more subdued 28.9 per cent year-to-date. The company is now Canada’s largest listed company, with a market cap of $226.7 billion.
Meanwhile, Lütke has become a multi-billionaire.
According to Forbes, his net worth was US$12.5 billion as of Oct. 28, up from US$11.7 billion the day previous, thanks to a seven per cent jump in Shopify’s stock price. In April, Lütke’s net worth was $9.8 billion, which put him in the #232 spot in Forbes’ global billionaire rankings. A Shopify spokesperson said Lütke was unavailable for an interview.
The story behind Shopify’s genesis is well worn. Lütke, who is originally from Germany, did not go to university. Instead, he took an apprenticeship in computer programming with Siemens, a multinational industrial manufacturer, and moved to Canada in 2002, when he was 22.
In 2004, Lütke built software to launch an online snowboard store called Snowdevil. As his corporate bio mildly notes: “It quickly became obvious that the software was more valuable than the snowboards.”
The company’s first office was above a coffee shop. “Our team was still small enough to sit around a table and share a pizza while we worked late into the night. We were solving problems that had never been solved before. The energy was exhilarating,” Lütke wrote in 2018.
“In those startup days, every waking hour was ripe with problem solving, bursts of creativity, iteration, and more progress than any one of us could keep on top of alone.” Lütke was initially Shopify’s chief technology officer. He’s been CEO since 2008.
Angela Mondou, president and CEO of Technation, a technology industry association, described Shopify’s evolution like this: “Once a unicorn, now a phenomenon and perhaps the only significant competitor to Amazon.” Lütke, she added, in an email, is a “true national gem.”
Colin Deacon, an independent senator for Nova Scotia and former tech company CEO, has used his senate position to champion Canadian technology innovation — an effort he says Shopify has aided immensely.
“The value Tobi creates is not just in Shopify, but it’s in empowering entrepreneurs globally to manage what is a huge burden in their business, which is the administrative side. No entrepreneur goes into business to manage the administrative burden. That’s the devil they’ve got to carry,” Deacon said in an interview with the Financial Post.
Shopify Capital, he added, is making money available to small businesses faster than Canada’s banks, using innovative tools for accepting applicants, including machine learning. “He is cutting paths left, right and centre to empower entrepreneurs,” Deacon said. “And I love the slogan they use: ‘arming the rebels’. They’re arming the new entrants into every market.”
Lütke holds seven per cent of Shopify, according to Forbes , and controls nearly a third of the votes attached to the company’s current shares. Since March 1, 2020, his base salary has been the figure he requested: $1, down from his previous $800,000.
He is cutting paths left, right and centre to empower entrepreneurs
The idea, according to a management information circular from earlier this year, is to attach his compensation to the long-term growth of the company. His total compensation in 2020 was $15.1 million, based entirely on option-based awards — the value in stock he received as compensation . In the case of termination other than for cause, Lütke’s total compensation would be worth $133.6 million.
Though founded and headquartered in Ottawa, Shopify now claims to be based in the “Internet, Everywhere.” It also prides itself on a worker-friendly culture. An email sent to the company by the Financial Post on a Friday in July generated this automatic reply: “Thanks for reaching out! Shopify employees are taking Fridays in July and August to rest and refuel. We are away from our desks right now and may be slow to respond…” Employees have even been encouraged to start their own side businesses using Shopify’s platform.
Lütke is married to Fiona McKean, a former Canadian diplomat, and has three children. He appears to live an immigrant dream. However, one aspect of Canadian culture has puzzled him: what he sees as the country’s hesitancy to highlight its accomplishments. As he wrote in 2018: “Turns out, the modern world is built on Canadian inventions. From canoes to lightbulbs, from telephones to stem cells, from velcro to the first radio transmission of the human voice. From fibre optic cables (the backbone of the internet) to machine learning (the backbone of the current tech industry), much of the foundation for these innovations was laid on Canadian soil. And yet, Canadians are too humble to tell anyone.” Lütke added: “It’s time to dial down the humility, Canada, and dial up the swagger.”
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