Shopify CEO regains billionaire status
Founder Tobi Lutke helped company bounce back from last month’s short-selling attack
An unapologetic computer nerd with a penchant for tweed caps has become one of Canada’s newest billionaires by helping small merchants sell online.
Tobi Lutke, a 37-year-old German immigrant who built Shopify Inc. into one of tech’s hottest stocks, was worth $1.1 billion from company shares, options and sale proceeds at the close of trade on Friday, according to the Bloomberg Billionaires Index. He owns almost 9.7 million shares and options in Shopify, equal to about 11 per cent of the business.
Lutke, who founded the company in 2004, regained his status as a billionaire after Shopify bounced back from a short-selling attack in October. A spokesperson for the Ottawa-based company declined to comment on the chief executive officer’s wealth.
Lutke stands out among the handful of Canadian billionaires, most of whom hail from family firms built over generations. The CEO, with vivid blue eyes, has cultivated an image as a direct, evenkeeled leader who has said he still codes for fun at home. He joins other Canadian billionaires including grocery kingpin Galen Weston and heirs to the Thomson media fortune, including Sherry Brydson and David Thomson.
The Shopify founder is one of the few billionaires in the country to get rich from Canadian-made tech. BlackBerry’s Jim Balsillie and Mike Lazaridis were billionaires before the smartphone maker’s value imploded.
Others like Uber Technologies co-founder Garrett Camp and Alibaba Group Holding co-founder Joseph Tsai made their billions outside the country. Lutke now leads a pack of entrepreneurs striving to build the next wave of Canadian tech companies.
Shopify, which employs about 260 people in an office in Waterloo and is expanding into a second location in the city, helps small and medium-sized companies set up online stores, and provides tools to make e-commerce as smooth as possible, including payment options, cash advances and integrating into Amazon.com’s marketplace. The company has beat revenue estimates like clockwork quarter after quarter for its first two years as a public company. It employs 2,000 people and says more than 500,000 businesses use its platform, from well-known brands such as Nestlé SA to proprietors flogging ugly Christmas sweaters.
Still, questions about Shopify’s rocketlike growth are starting to emerge. In October, short seller Andrew Left alleged many of the company’s users weren’t successful on the platform and that growth would eventually fall off a cliff. Investors were spooked and the stock dropped 12 per cent in a single day. When the company reported in October that growth of the total amount of goods sold through its platform was slowing, the shares fell a further 14 per cent.
Lutke, ordinarily soft-spoken, hasn’t hesitated to strike back. He called Left a “troll” whose claims were “preposterous” but declined to give new metrics to show how many users left the company every month. The shares have since rebounded as Shopify heads into the busy holiday season and equity analysts encourage investors to buy.
Lutke is taking others along on the company’s share surge. His father-in-law, Bruce McKean, a former Canadian civil servant, is one of the largest shareholders with about a four per cent stake that was worth about $388.5 million at Friday’s close, according to Bloomberg data.
When Lutke was building Shopify and expecting his first child with his wife, Fiona McKean, Bruce offered them a place to stay to save money, according to a Globe and Mail profile. McKean wrote cheques for Shopify to meet its payroll when cash flow was tight, the story said.
McKean, who keeps a relatively low profile save for a LinkedIn picture that shows him surrounded by his grandchildren, served as an early chair of Shopify from 2007 to 2010. He worked for the Canadian government overseas including in India, Thailand and Egypt.