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Dawn Calleja, editor of ROB magazine, Dec. 2021.Steph Martyniuk/The Globe and Mail

Back in December 2014, the cover of this magazine featured a man with clear blue eyes and a plaid newsboy cap, along with the line, “Programming genius. Introvert. Crusher of executive egos.” Online, the story’s headline was less enigmatic: “Our Canadian CEO of the Year you’ve probably never heard of.”

As you might’ve guessed from the hat alone, the man was Shopify founder and CEO Tobias Lütke—then a largely unknown German savant running a growing Ottawa startup with 500-odd employees. “Congratulate yourself if you’ve heard of Shopify, but don’t worry if you haven’t,” Trevor Cole wrote. “The company actually prefers it that way. Despite becoming a darling among venture capital firms, drawing a total of $122 million in VC investment, and despite attracting a spate of recent coverage…Shopify likes to remain hidden, like plumbing. It wants its customers to be the name brands.”

The eight-year-old company had already garnered a $1-billion valuation, and Shopify-powered retailers—120,000 of them—had surpassed $5 billion in total sales. As Cole wrote, “in the wake of Nortel and RIM, it may be the next great hope of Canada’s high-tech sector.”

Shop ‘til you drop: Is this the beginning of the end for Shopify – or just the end of the beginning?

Our choice raised some eyebrows. There were letters—lots of letters. And I vividly remember a business journalist from a rival news outlet descending on me at an event not long after the CEO of the Year issue came out, screeching about the sheer idiocy of our pick. Shopify was bleeding money! It was doomed to fail!

Within a few years, however, our choice was looking pretty prescient. The business journalist even apologized. By the time the pandemic hit, Shopify was practically a household name. With e-commerce soaring, Shopify’s revenue increased by 86% in 2020 and by 57% the following year. Its headcount exploded, reaching 10,000 by the end of 2021—nearly double what it was pre-pandemic. Its market valuation followed suit, knocking Royal Bank of Canada off its perch as the country’s most valuable company.

But it turns out there’s a limit to e-commerce uptake. With stores open once again, online shopping has hit a plateau—which has investors very, very worried. Shopify’s stock has dropped 84% off its peak roughly a year ago (when its market cap hit $210 billion), and it has laid off more than one-tenth of its employees.

Amid the torrent of dismal news coming out of Shopify’s Ottawa headquarters, we started to wonder: Were we wrong after all? Tim Kiladze set out to determine whether Shopify’s comedown is systemic (in other words, the business model is fundamentally wobbly) or simply part of growing up. Lütke wouldn’t talk to us—he’s not doing much of that these days—but his longtime lieutenant, Harley Finkelstein, did. So did lots of other people. We’ll let you decide on Shopify’s long-term prospects yourself after reading “Shop ‘til you drop.”

But if you disagree, no screaming, okay?

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