E-commerce giant’s staff told to gird their loins.
At a town hall meeting today at Shopify, CEO Tobi Lütke told the company’s staff to gird their loins.
Employees heard that they should lower their expectations regarding company growth, and that hiring will slow.
Shopify had previously set aggressive hiring goals, specifically around engineers, attempting to hire 2,021 roles last year. Lutke told staff today the company no longer needs to target such numbers.
In the days before the town hall, a number of prospective Shopify employees expecting written offers had been sounding off on Blind about delays.
News of the hiring slow-down wasn’t entirely unexpected. In the days before the town hall, a number of prospective employees expecting written offers had been sounding off on Blind about delays. Blind offers an anonymous workplace network where verified professionals can connect.
But Shopify employees writing on Blind blamed the delay in offers on the forthcoming change in structure to Shopify’s compensation program.
While some speculated or feared that an imminent hiring freeze was taking place at Shopify, current Shopify employees responded by speculating that the hiring delays were a “generalized issue and not a case by case problem.”
But at least one person who expected to land a job at Shopify wrote that they’d been told an offer was on the way and to be patient because of a system freeze.
“I then received an email yesterday saying there is a hiring freeze and they are putting the role on hold,” the individuals wrote. “They will let me know if it becomes available in the future. Very frustrating that it happened this late in the process.”
However, a Shopify employee blamed it on the new compensation system coming in. “Instead of offering a fixed base salary + RSUs, we’ll be offering a TC number and let you choose your own split (within guardrails),” the employee wrote. ”When this comes into effect for new hires has been unclear, and some recruiters may be waiting on more news on that front before moving forward with written offers.”
Another Shopify employee on Blind firmly rebutted the rumours of a hiring freeze, writing: “I was literally told today my whole department/teams are opening even more roles so it’s definitely not a company-wide thing at all.”
And a soon-to-be-hire at Shopify said their recruiter definitely told them there was no hiring freeze, and that the slowdown was a result of the company restructuring its compensation system.
Shopify is in the process of overhauling compensation packages for its employees, giving staffers more choice between cash and equity, The Globe and Mail reported in early April.
“Previously, employees were provided restricted stock units in addition to base salaries at an allocation set by management,” according to The Globe. “Now, there will no longer be a fixed amount, so employees will receive a single total compensation number and have the choice to determine how much is cash versus stock.”
However, the changes in the compensation plan have not gone smoothly. At a May Shopify town hall, CEO Tobi Lütke told employees that the compensation overhaul was being delayed to September, which the company attributed to “regulatory” dependencies.
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Like most other tech companies, Shopify has not been immune from the recent market downturn. Shopify’s Q1 2022 results saw the e-commerce company’s revenue growth continue to slow, as the pandemic forces that drove the rise of e-commerce waned. While the company bought Deliverr to bolster its fulfillment network, Shopify’s year-over-year revenue growth slowed in comparison to 2021 even with an increase of about 21 percent.
Sources told BetaKit that Shopify recently cancelled several “bursts” as a cost-saving measure. Bursts are in-person get-togethers for teams at Shopify, which had gained a reputation internally for extravagant spending within some teams.
Nonetheless, Shopify has so far managed to avoid cutting its staff unlike many other startups and companies in the tech sector. Wealthsimple laid off around 13 percent of its employees following a hiring freeze. Other Canadian tech companies that have reduced staffing in the last couple of months include WonderFi, Thinkific, Bonsai, Legible, Proposify and BBTV.
The changes to employee compensation came as Shopify moved to protect Lütke’s position in the e-commerce company with a proposed change to its share structure.
Shopify shareholders ultimately voted in favour of giving Lütke a 40 percent voting stake. The vote at Shopify’s annual shareholder’s meeting, in June essentially entrenched Lütke’s control of the company through a special “founder share.”
The 40 percent voting stake gives Lütke, his family and his affiliates, 40 percent of the total voting power as long as he remains at the company in an official capacity. Should Lütke step away from the company, the founder share would have a sunset clause; the founder share is not transferable. However, even if the CEO’s equity stake is diluted to as low as 1.1 percent, he would not be obliged to give up the voting power as long as he remains with Shopify.
BetaKit has reached out to Shopify for comment.
With files from Douglas Soltys.
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