Shopify: 365 days after the IPO
Article originally published in May edition of Private Capital Magazine
The year since the e‑commerce star’s IPO has hardly been a cakewalk. In fact, says Chief Financial Officer Russ Jones, it’s just the beginning of the company’s grander plans.
By Carolyn Goard
Senior Communications Manager, Canadian Venture Capital and Private Equity Association
If you ask Shopify’s Chief Financial Officer, Russ Jones, what the company’s initial public offering roughly one year ago – May 21, 2015 – means to him, he’ll tell you that it was just one exciting chapter of the company’s overall growth story.
“Some companies view the IPO as the end event, but our view here is that we’re going to be around for hundreds of years, so we saw the IPO as just one part of our company’s journey,” Jones says.
When describing the IPO process, Russ uses the analogy of a triathlon, explaining that meeting with the bankers is much like the initial swim event, while the filing of the IPO with Ontario Security Exchange Commission and US SEC was much like the bike portion of a triathlon. The roadshow and meeting with the investors: the final marathon.
Throughout each stage of the IPO – pre-IPO, IPO, and post-IPO – Russ relied on relationship building, effective communication and the ability to influence. All of which, Russ says, are key skills for CFOs – particularly those at the helm of an IPO.
But in reflecting upon the last year as a publicly-traded company, Russ says the most exciting part of the experience has been that Shopify has been able to maintain – and will continue to maintain – this notion of “creating a public version of Shopify”, rather than falling victim to the conventional public company structure, which Russ explains happens to many companies after they IPO. Shopify, on the other hand, is all about subverting the publicly-traded company stereotypes, and is keen on maintaining a super close-knit community and spunky office culture.
At the end of the day, the company is all about “getting shit done” – together – as one unified, energetic, creative, hardworking and determined team of staff, Jones explains, while chuckling over the fact that Shopify is likely the only SEC filing that references a profane word. Admittedly, though, he says, “It’s how we think. We’ve got huge ambitions and we want everyone to be focused on that.”
There are no outliers at Shopify. Every single member of the team – which has doubled in head count since the IPO last year – plays a key role in driving future growth.
“We’ve always really wanted to involve our employees. We’re very transparent and open and even as a public company, we want to maintain that,” Jones says. “We want people to act like an owner and therefore have an ownership stake.” He adds that he can see firsthand the staff benefit from working within this type of culture. They’re engaged, energetic, and extremely committed to helping the company drive growth.
For the Shopify team, the IPO was all part of a bigger objective. And, that’s where Russ played his role in the IPO – ensuring that the company’s close process was strong so that once the IPO was achieved and the bankers disappeared, Shopify could continue to efficiently and successfully move up the growth ladder and move on to its next big objective: increasing its user base and growing internally.
One of the biggest highlights in the last year, since the big IPO – a significant moment in Canada’s VC success story – has been the growth that Jones has witnessed the company undergo in only twelve short months. The fact that they’re growing at such an impressive and rapid pace has provided the team with a newfound confidence, which in turn drives an eagerness to continue growing and raising the bar.
“I think that’s an important thing. I think another thing that makes us unique is that we spend as much time thinking about how you build a company as we do thinking about building the business.”
When Jones joined Shopify in 2011, the company had just over 50 employees. Today, Shopify employs more than 1,200 people.
It’s not hard to see that Jones takes great pride in Shopify’s hardworking staff. You can see the genuine zeal he exudes when he talks about his excitement in continuing to see the team get bigger and stronger, expanding alongside the company. For Russ, who speaks on behalf of his staff, it’s all about working diligently and passionately to exceed expectations.
“At the rate we’re growing and when you’re developing systems and processes, you need to be thinking about this,” he explains, adding how important having a strong internal culture is in the grand scheme of corporate success. “Because, if you don’t have this, by the time you get to these big events, you’re two steps behind.”
If anything keeps Jones up at night, it’s thinking about the exciting growth that lies ahead for Shopify and ensuring the company maintains the utmost calibre of security among its client base. “We’re a tech company where people are trusting us to run their businesses on Shopify and we take that quite seriously. At this large of a scale, you worry about potential operational, privacy and security issues and we always want to ensure we don’t reduce that trust that we have with our merchants.”
Looking ahead, the Shopify team is wholeheartedly driven to continue growing the company. While Shopify presently serves over 275,000 merchants, they’re striving to see one million merchants running their businesses on the Shopify platform. The IPO has allowed this to be a realistic and achievable goal.
More merchants using Shopify brings with it increased profitability. Jones says the company is extremely focused on hitting profitability. “We see that as another key step in the journey. This event itself will be another milestone for us,” Jones adds, much like the IPO was one year ago.
The company is targeting reaching this milestone in quarter four of 2017.
A big component in the Shopify IPO success story was, and continues to be, preparedness and comprehensive due diligence in all respects. While the success itself presented a big learning experience for Jones and his colleagues, he says much of the lessons learned came from knowledge gained from the trials and tribulations experienced by other companies going through similar processes, such as companies that missed on their initial earnings. Jones says he’s also leaned on other CFOs for information regarding aspects they’d wish they’d done differently.
Ultimately, it’s all about not repeating other peoples’ mistakes.
As such, Jones says the team was particularly thoughtful in how they executed their processes leading up to the event. They demonstrated good discipline and great forecasting, and had strong systems in place to ensure they’d achieve what they set out to achieve.
Jones attributes all of the above to good, trustful relationships with investors. “Part of being a growth company is continually learning.”
Inspired by the fact that many CFOs were willing to help him during the IPO process, Jones speaks and participates at industry events as a way of giving back.
The National Picture
The Shopify story is undoubtedly a very important narrative for the Canadian private capital ecosystem. Jones admits it can be a disappointment to see that, more often than not, the press tends to shine a negative spotlight on Canadian private capital happenings, often focusing on Canadian losses, which in turn causes the industry to be wildly underrepresented and not given the credit it deserves.
Jones says he hopes in due course that Canadian media will be more supportive of Canada’s success because by doing so, it would help drive more successes.
Having spent a handful of years in California prior to joining Shopify, Jones maintains that there’s no particular “magic” with respect to private capital and growth in the Bay Area. He explains that there’s a degree of confidence amongst Silicon Valley companies that Canada unfortunately doesn’t have, but that Shopify is committed to demonstrating that Canada can indeed build exemplary, high-performing companies.
Ultimately, Shopify is a testament to the fact that Canada has what it takes to make it big.
*Russ Jones is the Chief Financial Officer of Shopify Inc. Prior to joining Shopify in 2011, Jones resided in California, but he is originally from Ottawa, Ontario. Jones was at the helm of Shopify’s 2015 IPO.