Shopify CEO Lutke keeps close watch on NDP’s stock options promise

WATERLOO, Ont. – Shopify Inc. chief executive Tobias Lutke is keeping a close watch on an NDP election pledge that could change the way stock options are taxed, despite reassurances from Tom Mulcair that technology startups wouldn’t be impacted by the new rules.

Lutke said Thursday that he wants to ensure Canada’s burgeoning startup community doesn’t get sideswiped by new taxation on stock options, described by Mulcair as a “loophole” used by the wealthiest Canadians which he has pledged to close if the NDP wins power in the Oct. 19 federal election.

The co-founder of the Ottawa-based e-commerce startup said stock options were one of the crucial ways Shopify was able to attract employees when it was getting off the ground and money was tight.

“(Stock options were) a reason why many amazing people ended up joining Shopify and that made a big difference for the success of the business,” Lutke said.

A potential clash between Mulcair and tech entrepreneurs like Lutke was quickly extinguished last week after they expressed concerns about the taxation plan. The party leader sent a personal letter to Lutke and fellow Canadian startup founder Ryan Holmes of HootSuite saying that “early stage companies” would be excluded from the new taxes.

The NDP has also proposed to raise corporate taxes, which Lutke considers less of an issue.

“Canada has really low taxes for companies to begin with so (taxes) going up doesn’t make a lot of difference,” he said.

“Everyone should pay their fair share,” he added.

Shopify has been growing in leaps and bounds this year after listing on the public markets in May.

The company has about 780 employees across its existing Canadian operations and plans to add hundreds more with the opening of a larger office in Waterloo, Ont., a hotbed of the country’s technology startups.

The bigger space, located in the former Seagram’s Distillery building, can house up to 300 employees, which the company hopes to primarily attract from local universities and other tech companies.

It’s an unconventional office for technology company, but it leaves a big impression.

Walking inside the front doors of the new Shopify office, guests are greeted with shelves upon shelves of old wooden kegs which stretch from the floor to the ceiling.

Company executives say the space will become even more stunning when it undergoes renovations throughout the winter. An official opening date is set for April 2016.

Shopify, which built its business on helping other companies launch their own web stores using Shopify software, already has offices in Ottawa, Montreal and Toronto, as well as a small operation in Waterloo that has about 20 employees.

The new office will be mostly focused on Shopify Plus, its higher-tiered service for heavy-volume merchants.

In the wake of BlackBerry’s (TSX:BB) financial troubles, other companies have moved into Waterloo in a big way, either by buying up old facilities that were often part of the manufacturing sector, or through new buildings.

Over the past two years, the city has come alive with widespread road construction and new condos which are reshaping areas that were once rundown or vacant.

Among the companies placing bets on the region is TD Bank (TSX:TD), which said Wednesday that it would beef up its local staff by adding more than 120 jobs over the next year dedicated to improving digital platforms for its clients.

Earlier this month, news and data company Thomson Reuters announced plans to open a research space in Waterloo where it would experiment with new ways to deliver information to its customers.

Lutke said he’s encouraged by the growing awareness of Canada’s young startups and the fact that politicians are discussing the future of the industry.

“Startups are not obvious things to talk about,” he said.

“It’s much easier to talk about the manufacturing jobs that are going away, rather than the startups which would create the equivalent amount of jobs.”

Shopify (TSX:SH) stands as one of Canada’s most recent startup success stories.

Since going public, the company has seen its market value soar to about US$2.6 billion. Its stock began trading on the Toronto Stock Exchange on May 21 at C$35.03 and closed Thursday at $46.38, a gain of 32 per cent.

This month alone, Shopify has secured a new partnership with Seattle-based e-commerce giant Amazon for its web store merchants and reached an agreement with Twitter that allows retailers to post one-click purchase buttons on the social media platform.

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