Coder in Tweed Cap Is New Canada Billionaire, Shopify Soars

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  • CEO Tobi Lutke rides stock’s rebound from short-selling slump
  • Father-in-law and early backer McKean goes along for the ride

Tobias Lutke

Photographer: Richard Drew/AP

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 percent 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 spokeswoman 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, even-keeled leader who has said he still codes for fun at home. He joins other Canadian billionaires including grocery kingpin W.G. 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 Ltd. co-founders Jim Balsillie and Mike Lazaridis were billionaires before the smartphone maker’s value imploded. But others like Uber Technologies Inc. co-founder Garrett Camp and Alibaba Group Holding Ltd. 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’s shares jumped 4.4 percent to $116.75 at 10:52 a.m. in New York on Monday for a market value of $11.6 billion, after the company reported record Black Friday sales. They’ve gained 588 percent since their trading debut in May 2015, compared with a 36 percent gain for the Nasdaq Composite Index over the same time frame. The company is the second-best performing stock on Canada’s S&P/TSX Composite Index this year.

Read More: Which Tech Stock is Up 500% Since its IPO?

Lutke’s stake in Shopify consists mostly of Class B multiple-voting shares that give him more than triple the voting power of common shares in company affairs, according to the Bloomberg index. And he’s probably made about $40 million after taxes from selling more than 200,000 Shopify shares since the company went public.

Shopify 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 Inc.’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 Nestle SA to proprietors flogging ugly Christmas sweaters.

Short Sellers

Still, questions about Shopify’s rocket-like 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 percent 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 percent.

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 4 percent 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 checks for Shopify to meet its payroll when cash flow was tight, the story said.

Fatherly Support

McKean, who keeps a relatively low profile save for a LinkedIn picture that shows him surrounded by his grandchildren, served as an early chairman of Shopify from 2007 to 2010. He worked for the Canadian government overseas including in India, Thailand and Egypt. He’s volunteered at mental health associations and Cuso International, a development organization that aims to reduce poverty globally. McKean declined to comment for this story.

Lutke is also involved with a few non-profit ventures, including some related to coding such as Canada Learning Code, an organization that helps women and other groups who are under-represented in tech learn digital skills. In a Globe and Mail opinion piece last summer he argued that it’s “about damn time” kids learned how to code.

That maxim has certainly paid off for him.

— With assistance by Brendan Coffey

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