BUSINESS

Tobias Lutke, Shopify Founder, Is Canada's Latest Billionaire Thanks To Black Friday

Investors are loving Shopify this week, despite a controversy over its business model.

11/27/2017 14:47 EST | Updated 11/27/2017 14:47 EST
Hannah Yoon/Canadian Press
Shopify CEO Tobias Lutke checks out the new Shopify office space in Waterloo, Ont. on Oct. 1, 2015. Shopify's rising stock price has made Lutke Canada's newest billionaire.

Shares of retail-related companies have been soaring in recent days, on news of a strong start to the holiday shopping season in North America.

Reports that Amazon alone took nearly half of online sales on Black Friday helped make the company's founder and CEO, Jeff Bezos, the first person to reach a net worth of $100 billion since Microsoft founder Bill Gates performed that trick back in 1999.

Here in Canada, the holiday shopping frenzy is minting billionaires as well — or at least one: Tobias Lutke, the steel-blue-eyed, tweed cap-wearing founder of Ottawa-based Shopify.

Watch: Shopify live-streams Black Friday and Cyber Monday sales frenzy

According to an estimate from the Bloomberg Billionaires Index, Lutke was worth US$1.1 billion (C$1.4 billion) on Monday, after the company's shares jumped more than three per cent in early trading.

Shopify says its platform saw its best Black Friday ever last week, with merchants pulling in more than US$1 million in sales per minute at one point.

Shopify offers a platform for retailers to sell their goods online. It says it has more than 500,000 participating retailers.

But the nature of some retailers who use the Shopify platform has been the source of controversy in recent months.

An analyst at Citron Research last month accused the company of running a "get-rich-quick" scheme, saying Shopify attracts new merchants to its platform with promises of million-dollar incomes.

The analyst suggested that many of Shopify's clients would not meet the standards set out by the U.S. Federal Trade Commission. Though it's based in Ottawa, Shopify trades on the New York Stock Exchange as well as on the Toronto Stock Exchange.

The Associated Press/Richard Drew
Shopify CEO Tobias Lutke, center wearing hat, is celebrated as he rings the New York Stock Exchange opening bell, marking the Canadian company's IPO, Thursday, May 21, 2015.

Lutke defended the company against the claims, calling them "preposterous" and referring to Citron Research as a "short-selling troll."

During an earnings call late last month, Lutke said Shopify sells a retail platform, not business opportunities.

"Implying that these businesses are somehow illegitimate is an insult to their hard work," he said, as quoted at CBC News.

Shopify shares were under pressure for weeks during the controversy, but news of a strong start to the 2017 holiday season got investors into a good mood in recent days, and Shopify followed other retail stocks to new heights on Monday.

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The company, which went public in 2015, was valued at C$14.6 billion as of Monday, and according to Bloomberg News, Lutke owns about 11 per cent of that.

A German immigrant, Lutke came to Canada in 2002 and co-founded Shopify in 2006, building it into Canada's first billion-dollar tech startup since the dot-com boom of the 1990s.

Now 37 years old, Lutke says he has been coding since he received a Commodore 64 as a present as a child. He says he still writes codes in his spare time.

Like some other famous tech entrepreneurs — Bill Gates and Mark Zuckerberg come to mind — Lutke dropped out of school to pursue his digital passion. He left school at 17 to take on apprenticeships at tech companies.

Bloomberg notes that Lutke "stands out among the handful of Canadian billionaires, most of whom hail from family firms built over generations."

And even among Canadian tech billionaires, Lutke is fairly unique because he didn't leave the country to make his fortune — unlike Uber co-founder Garrett Camp or Alibaba co-founder Joseph Tsai, Bloomberg notes.

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