Ritual co-founders leave once-high-flying food takeout app provider for Shopify

Ritual Technologies Inc. was once one of Canada’s fastest-growing, globally minded technology companies. By late 2019, the food-takeout app provider’s revenues topped US$50-million and it was valued at more than US$300-million. Then the COVID-19 pandemic hit and its core office-worker customers stayed home. Revenues collapsed. Toronto-based Ritual never recovered.

Now, five years after the global health crisis wrecked its business model, co-founders Ray Reddy and Larry Stinson are leaving to join a company that soared during the pandemic: Shopify Inc.

On Monday, Mr. Reddy posted on social media that the pair, along with “several amazing members” of Ritual’s research and development team, are joining the Ottawa-based commerce software giant, Canada’s second-most valuable public company.

Several Shopify SHOP-T leaders warmly welcomed the new Ritual hires, including president Harley Finkelstein, who said on X he had known Mr. Reddy for years, calling him “an incredible founder” who is “a force for building great products.”

Shopify chief executive Tobi Lütke wrote on X: “Shopify is a company where founders come together to make software and markets which causes more founders. I’m super excited about Ray joining up, always admired his work.”

Mr. Reddy, who will become vice-president of retail working on Shopify’s point-of-sale product, said on LinkedIn that Ritual would continue to operate under new leadership and that he would remain a board member and adviser, but said nothing more about its future.

Three sources familiar with the matter said some Ritual investors described the move as an “acqui-hire” by Shopify, which typically means a company is purchased for its talent and the underlying business is closed down. The Globe and Mail is not identifying the sources as they are not authorized to discuss the matter.

However, Shopify is only picking up the co-founders and some of the engineers, and not the whole company. A a separate process is under way to sell Ritual as a going concern, two of the sources said. There are at least two buyers undertaking due diligence and no deal has concluded yet, they said.

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Shopify has brought on tech entrepreneurs in the past via several acqui-hire transactions, including head of engineering Farhan Thawar and Daniel Debow, vice-president partnerships, product, who joined Shopify six years ago when it bought their startup Helpful.com Inc. Shopify later dissolved the acquired company. Tech entrepreneur Satish Kanwar worked for Shopify for 10 years, including as vice-president of corporate development, after it made an acqui-hire purchase of his startup Jet Cooper in 2013.

Ritual was founded by Mr. Reddy and Mr. Stinson in 2014 three years after Google bought their prior startup PushLife Inc. in 2011. The pair, who had worked at BlackBerry Inc. during the smartphone pioneer’s heyday in the 2000s, quickly won over investors with their new startup. Ritual raised US$120-million in its first four years from venture capitalists, including U.S. giants Greylock Partners and Insight Ventures and Canadian financiers Mantella Partners, Mistral Venture Partners, Golden Venture Partners and Georgian.

By 2019, Ritual was used by more than 10,000 restaurants in 50 cities in North America, Europe, Asia and Australia, serving millions of consumers in dense urban zones typically within walking distance of offices. Customers would log on to Ritual, order and pay on the app, then pick up their food, skipping the line when they got to the restaurant. Ritual was on track to be profitable by 2021.

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The pandemic stopped that cold. Ritual’s traffic fell by 70 per cent or more in March, 2020. Within weeks, it pulled out of Europe and laid off 181 people, more than half its staff.

Mr. Reddy wasn’t sure Ritual would survive. But the team kept going, developing an app for local businesses beyond eateries and working with the City of Toronto to help food-service providers move their business online. It also raised US$22-million in the spring of 2020 led by Georgian at a lower valuation to keep going.

But the business continued to deteriorate and Ritual cut its ranks to fewer than 50 people. Revenue sagged to US$11-million in 2021, then to US$8.4-million in 2023 and was US$3.9-million in the first half of 2024, according to documents distributed by Georgian, which invested US$54.4-million in Ritual, to its investors. Meanwhile, the money-losing company’s cash dwindled to US$4.6-million by mid-2024.

Ritual had worked on product enhancements, including a recently launched food order fulfilment engine for online searches powered by artificial intelligence that covered hundreds of thousands of restaurants without requiring the company to sign them on as clients. That business had grown quickly in recent months, generating millions of dollars in revenues.

But by then the company’s ownership structure was so weighted down by investors in a loss-making position that attracting talent or fresh funding to rekindle the business would have proven a challenge, one of the sources said.