'No cuts coming': Shopify president says company has no plans for another layoff

'At some point, Canada's not an island' Colin Cieszynski of Sia Wealth Management discusses the layoffs at Shopify and how tech company layoffs could impact the Canadian economy.

TORONTO — As a growing number of tech companies carry out successive rounds of layoffs, Shopify Inc.'s president says there are no more cuts in the works for the Ottawa-based e-commerce company.

"There's no cuts coming for us," Harley Finkelstein told The Canadian Press.

"We're in a really good place."

His confidence that the company's reductions are done comes months after Shopify was among the first of the world's tech giants to lay off staff in a summer cut that impacted 1,000 workers -- roughly 10 per cent of staff. The company attributed the move to it misjudging the growth of the e-commerce sector.

Since then, few major tech companies have been unscathed by the fading investor exuberance, falling valuations and pressure to reach profitability in the event a predicted recession materializes.

Tech giants as big as Amazon, Meta, Microsoft, Intel and Zoom have culled staff from their workforces along with smaller Canadian brands like Wealthsimple, Lightspeed, Clearco and HootSuite.

After Shopify's cuts, Finkelstein feels the company is at the right size.

"I don't think we are going to grow our head count very much," he said.

"I think we can keep it pretty flat other than maybe a couple of key hires."

Asked what areas might garner hires, he said software and product staff are always in demand because there are fewer of them.

But retaining current staff is just as important. To keep workers, Shopify is leaning on Flex Comp, an initiative which gives staff a "total rewards wallet" and allows them to regularly choose between cash and stock options for their compensation.

It was implemented in the wake of Shopify's layoff and as its stock came under pressure, falling from a 52-week high of $113.43 to a low of $33.

In designing the program, Shopify completed an extensive benchmarking exercise to ensure salaries are competitive, but executives warned Flex Comp will likely weigh on its 2023 outlook.

Historically, allocations staff made sat at around 70 per cent cash and 30 per cent equity, Finkelstein said.

"I think Q4 allocations may be skewed slightly more cash than those levels, but it's sort of expected that it will vary each quarter," he said.

"Cash gives certainty, but if you understand the business, obviously, you know, equity is what a lot of people want because they want to be able to participate in the upside there as well."

The company is also hoping to remain attractive to talent with a "digital by default" focus it adopted in 2020 after chief executive Tobi Lutke declared "office centricity is over."

Since then, most staff have worked remotely and Shopify opted not to move into The Well complex at King Street West and Spadina Avenue in downtown Toronto. The company was initially slated to occupy 254,000 square feet at The Well, with the option to add another 433,752 square feet.

"We don't need that much space given the new digital by design," Finkelstein said.

Now, staff feel like they can move wherever and whenever they want (Finkelstein is in the process of shifting his family to Montreal) and travel on a whim.

For those that want to head into an office, Shopify is maintaining some sites, including one at the King Portland Centre, not far from The Well. Many people gathered at the company's properties in recent weeks when it held a series of summits and hack days. Others joined virtually or invited colleagues living nearby over to their homes.

"They hosted like watch parties... so I actually think it is working really well for us," Finkelstein said.

He credits that flexibility with helping the company appeal to new, prized hires like Jeff Hoffmeister, who led Shopify's initial public offering and worked for Morgan Stanley since 2000. Hoffmeister joined as chief financial officer but is able to work in New York, where Finkelstein frequently travels.

Around the same time as Hoffmeister joined Shopify, chief technology officer Allan Leinwand announced he will be departing the company with chief executive Lutke to take on some of his responsibilities.

Rather than replace Leinwand, Lutke is now overseeing research and development. He previously stepped in to take over chief product officer Craig Miller's responsibilities, when he left in 2020. At the time, Lutke said there were no plans to replace Miller.

The latest move isn't as big as it may seem to outsiders, Finkelstein said.

"He's been doing this for a long time and now we're just sort of documenting it officially."

This report by The Canadian Press was first published Feb. 16, 2023.