Key Takeaways

  • Go public early to earn trust, not just raise capital. Tobi Lütke took Shopify public in 2015 with roughly $200 million in revenue, framing it as a strategic move to build investor trust over time, rather than waiting for peak valuation or maximal financing.
  • Investment bankers have misaligned incentives. Lütke found bankers prioritize getting the cheapest possible deal for their 'book' of clients, often at the expense of the company's long-term valuation.
  • Your fiduciary duty starts before day one. Even before the IPO bell, Lütke adopted a CEO's fiduciary mindset, actively optimizing for Shopify's long-term health rather than accommodating immediate banking gains.
  • Build the company, ignore the ticker. The stock ticker is a market's guess at your company's value; Lütke advises founders to focus obsessively on building actual fair market value through operations, not just managing market perceptions.
  • "Trusted public company" is the ultimate position. Lütke believes that earning the trust of public markets by consistently delivering value and being transparent is the most powerful competitive advantage a company can achieve.

The Counter-Intuitive IPO: Going Public While Small

Most founders are told to wait: grow large, hit massive revenue, then go public. But Tobi Lütke, CEO of Shopify, did the opposite. When Shopify IPO'd in 2015, its revenue hovered around $200 million. Many might consider this a relatively small scale for a public offering, but for Lütke, it was a deliberate, strategic choice. He views the IPO not just as a financing event, but as an opportunity to start building trust with public market investors from an earlier stage.

Lütke argues this approach is a "much safer strategy." It avoids the immense pressure of a single, massive liquidity event, instead allowing the company to mature under public scrutiny. His philosophy is simple: “there's nothing better in the world than being a trusted public company.” By starting small, Shopify had more runway to prove its model and earn that trust over years, rather than risking everything on a single, high-stakes debut.

Fiduciary Duty: Drawing the Line with Wall Street

The IPO process often puts companies and their investment bankers at odds. Lütke didn't mince words about the misaligned incentives he encountered. He states plainly that the bankers' primary job is “to get everyone in the book the cheapest possible deal.” Their goal is to make the stock easily marketable to their network, often leading them to push for a lower initial price than the company might believe it's worth.

This tension became a critical moment for Lütke. He recalled confronting bankers directly, acknowledging their desire for bonuses but firmly stating his own priority: “I'm becoming a public company CEO, so I'm going to start my fidiciary duty t-minus 10. So, I'm like I'm I'm I'm I'm going to optimize for a company, not for you.” This was Lütke's way of declaring his ultimate responsibility to Shopify's long-term value, even before the stock began trading. It's a stark reminder that even trusted advisors have their own interests, and founders must be ready to draw a hard line.

Focus on Value, Not the Ticker

For many public company CEOs, the daily stock ticker becomes an obsession. Not so for Lütke. He separates the daily gyrations of the market from the underlying reality of the business. “the ticker has nothing to do with the company I'm building,” he asserts. Instead, he sees the ticker as merely “guessing at the fair market value of a company.”

Lütke's focus remains squarely on what he can control: building the actual fair market value of Shopify through its products, services, and operational excellence. This distinction is crucial. It frees founders from the tyranny of short-term market sentiment, allowing them to make decisions that truly serve the company's long-term health and, in turn, its ultimate value. By focusing on fundamental creation, Lütke believes the market will eventually catch up and reflect the true value being built.

What to Do With This

  • Audit your advisory relationships: Pull your contracts with VCs, lawyers, and especially investment bankers. Identify specific clauses or compensation structures that create misaligned incentives. Discuss these tensions openly with your advisors and establish clear boundaries on whose interests come first.
  • Re-think your IPO timeline: If going public is on your roadmap, don't just optimize for the highest valuation. Consider Lütke's strategy: going public smaller to intentionally build a foundation of trust with public markets over a longer period, rather than waiting for one massive, high-pressure event.
  • Embrace fiduciary duty now: Begin acting like a public company CEO today. Anchor every major decision – from hiring to product launches – in the long-term, fiduciary best interest of your company, not just immediate gains or market perception.