The CEO of a $15 billion tech giant explains his decision to keep the company in Canada when VCs told him 'move or no deal' (SHOP)

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When Shopify CEO Tobi Lütke started looking for VC funding, investors told him he would have to move the company from Canada to Silicon Valley.
But Lütke kept his company planted in Ottawa.
Today, Shopify has a market cap of $15 billion and has over 3,400 employees.
Lütke told Business Insider he decided to stay in Canada because he could widen his search pool for talent across Canadian cities and New York.

Unless you run an online store or work in tech, there's a good chance you've never heard of Shopify, the Canadian software maker that helps small-business owners run their shops across a variety of platforms, including web, social media, and brick-and-mortar.

But the "quiet, sleepy" e-commerce giant has a market cap of $15 billion and is one of the top 100 most valuable tech companies in the world. Shopify has over 3,000 employees across Canada, the US, Germany, and Lithuania, with over 90% of its workforce based in the Canadian cities of Ottawa, Toronto, Montreal, and Waterloo.

Shopify has also redefined the possibilities for startups based outside Silicon Valley.

Tobi Lütke moved from Germany to Canada nearly two decades ago and started a business to sell snowboards online. When spring arrived and sales fell, he and his business partners realized that the real product was Lütke's software. He launched Shopify in 2004.

"When I first started looking for VC funding, the term sheets all stated that I'd have to move the company to Silicon Valley," Lütke told Business Insider in an email.

"It really makes sense from their perspective. They might believe in the company, but if I'm just a work in progress, proximity really helps them feel like they can help you."

There's a widespread assumption in the tech industry that, at some point in the path to becoming a successful tech company, you will need to move the company to the San Francisco Bay Area. It is the world's premiere hub for innovation and tech finance. Between 35% and 40% of all venture funding in the US flows into Silicon Valley every year, according to a 2012 study by the Bay Area Council Economic Institute and Booz & Company.

Going against the grain, Lütke decided to keep Shopify based in Ottawa.

"I've just had this consistent experience in my life that if people tell you to do something, and you do the opposite, it works better," Lütke said of his decision.

When he considered the investment offers from venture firms that wanted him to move, he did some homework on what it takes to build a successful company.

His analysis found that "hyper-successful companies happen very infrequently — but when they do happen, it's usually because one company created a geographical consensus that they are the preferred place for the smartest people to work," Lütke said.

"Silicon Valley obviously has a deep talent pool, but I started to look around and I realized that it wasn't just Ottawa that we could draw from," he went on. "There's also Montreal. And Toronto. And the University of Ottawa. Even New York and Boston. They're all in the same time zone, and about an hour's flight away."

"I thought to myself, 'I should create that geographical consensus right here in Ottawa. That would actually be a better way of shooting for the stars,'" Lütke said.

He added: "That's why I ended up saying, 'Thanks, but no thanks' to moving to Silicon Valley. And that was the end of that."

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