Once a darling of Ottawa, Shopify increasingly distancing itself from city

Author of the article:

The Canadian Press

Tara Deschamps

Published Nov 12, 2023 • 5 minute read

The Ottawa headquarters of Canadian company Shopify is pictured on Wednesday, May 29, 2019. Photo by Justin Tang /THE CANADIAN PRESS

For its 19 yearsin existence, Shopify Inc. has been synonymous with Ottawa.

Founder and chief executive Tobi Lutke, who emigrated from Germany, built and grew the e-commerce software brand in this country’s capital and politicians just down the street on Parliament Hill never hesitated to sing its praises, often thanking Shopify for putting Ottawa on the map for tech innovation again.

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But these days, Ottawa is seemingly no longer the centre of Shopify’s universe. Many of its top-ranking executives, Lutke included, recently departed the city and several others never bothered to move there in the first place.

They instead sprinkled themselves across Canada and the U.S. _ the product of a pandemic-inspired permanent remote work evolution Shopify felt so strongly about that it dumped Ottawa as the headquarters on its press releases and replaced it with “Internet, Everywhere.”

Shopify watchers say the decentralization away from Ottawa signals the company is turning a corner.

“The centre of gravity of Shopify, I think, definitely seems to be shifting,” said Rick Watson, founder of RMW Commerce Consulting in New York.

It’s not an unusual phenomenon. Tech goliaths of Shopify’s size often mature to a stage where they want to be near like-minded entrepreneurs, investors and talent, Watson said.

“I think it’s no accident that many of (Shopify’s) new executives are not based in Ottawa,” he said, “because that’s what it takes to attract the talent.”

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Lutke relocated to Toronto to be closer to family and the company’s engineering team, while his No. 2, Shopify president Harley Finkelstein, moved to Montreal recently to be nearer to his aging parents, sister and wife’s family.

Finkelstein previously moved to Ottawa “because that’s where I needed to be for a long time and I loved Ottawa,” he said. His wife built a successful ice cream business there before it closed during the pandemic and the couple funded the Finkelstein Chabad Jewish Centre.

But he admits others weren’t drawn to the city.

“The one issue we had historically was executives … at Shopify would have to move to Ottawa and now we can hire anyone we want anywhere,” he said in an October interview.

Chief financial officer Jeff Hoffmeister and chief human resources officer Tia Silas are in New York, chief revenue officer Bobby Morrison is in Texas, general counsel Jess Hertz is in Washington, D.C., and head of engineering Farhan Thawar works in Toronto.

“I don’t know that it’s a shot across the bow to Ottawa,” Daniel Araya, a senior fellow at the Centre for International Governance Innovation, said of the large collection of senior staff who live and work elsewhere.

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“I think it’s just people today are looking at how to get out of the office, they don’t want to work in the segmented way that the past generations have worked in.”

Asked if its new remote ethos makes Ottawa less important to Shopify, Finkelstein said, “we have merchants everywhere, those merchants have customers everywhere and we also have employees everywhere.”

However, the emphasis Shopify put on being “everywhere” coincided with a wave of criticism for politicians in Ottawa.

When the federal government revealed in September a voluntary code of conduct meant to apply some interim guardrails to the use of artificial intelligence, Lutke was one of its most vocal critics.

He dubbed the code, which asks signatories to screen data sets for biases and assess their AI for potential adverse impacts, “another case of EFRAID.” The term “Existential Fatalistic Risk from AI Delusion disease” is used by some in the tech community, including deep learning pioneer Yann LeCun, as criticism of those who believe AI could lead to existential risk without regulation.

“I won’t support it. We don’t need more referees in Canada. We need more builders,” Lutke posted on X, the social media platform formerly known as Twitter.

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“Let other countries regulate while we take the more courageous path and say ‘come build here.”‘

He also commented on Canada’s Online News Act, which will require Google and Meta to compensate media companies for Canadian journalism they link to or repurpose on their platforms by the end of the year, and the Online Streaming Act, which is soon to require online broadcasters to contribute to the creation, production and distribution of Canadian content.

Lutke called the government’s approach to both “tragic.”

“It’s probably well meaning, but extremely bad,” he wrote on X.

Lutke and Shopify declined to comment for this story.

Araya sees such posts as Shopify “throwing down the gauntlet.”

“I get the sense that they’re a little pugnacious and I think that’s kind of part of their ethos,” he said.

But Finkelstein characterized speaking out on issues facing the tech community and his company’s merchants as a necessity that comes along with having the kind of status and power Shopify does.

“Not to quote ‘Spider-Man,’ but with great power comes great responsibility and Shopify is a big Canadian company,” he said.

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The company has the third largest market capitalization on the TSX, and with a booming stock price during the COVID-19 pandemic even eclipsed Royal Bank of Canada as Canada’s most valuable company. These days, it is widely considered to be the country’s most successful tech company.

Shopify’s relationship with the federal government was once much cosier.

Prime Minister Justin Trudeau has appeared at its once-annual developers’ conference Unite, and Lutke chaired the federal government’s economic strategy table for digital industries, which called on Ottawa in 2018 to help triple the number of Canadian firms earning $100 million in annual revenue.

The government even turned to Shopify during COVID-19, launching a contact-tracing app based on an open-source software code Shopify staff voluntarily built.

“There are times that we think what the government is doing is great. We jump on that, we help propagate that information and tell that story and there’s other times where with AI, for example, Tobi’s tweets speak for (themselves),” Finkelstein said.

“It’s important that we work with government because they have levers that we don’t have, but also we’re going to hold everyone accountable because they’re going to hold us accountable.”

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That goal extends to Shopify’s approach to Small Business Minister Rechie Valdez, who owned a bakery before entering politics, a resume point Finkelstein saw as a “breath of fresh air.”

Finkelstein met her for the first time in October just before a fireside chat attended by hundreds of merchants. He took the opportunity to highlight the need for lower credit card fees and more funding for small businesses.

“I’m going to hold them accountable,” he said.

“I’m not sure they’re going to do with what we say, but they take our meetings now.”

That meeting with Valdez was in Toronto.

This report by The Canadian Press was first published Nov. 12, 2023.

Companies in this story: (TSX: SHOP)

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