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Naval’s AI-infrastructure pick anchors a reading stack on leverage, pressure, and craft
1 day ago
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5 min read
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118 docs
A high-signal stack of organic recommendations led by an unusually clear AI-infrastructure conversation, then moving through leverage, leadership, differentiation, work, and craft.
Naval’s standout recommendation is Patrick O’Shaughnessy’s conversation with Neil Movva: he calls it “one of the best recent podcasts on AI,” praises Movva’s ability to explain jargon simply, and explicitly says he was not involved. The original description presents it as a detailed but accessible tour of inference from software through chips and power.
Standout recommendation
Patrick O’Shaughnessy’s conversation with Neil Movva
- Type / creator: Podcast/video conversation posted by Patrick O’Shaughnessy, featuring Neil Movva, who began his career at Nvidia working on GPUs and kernels and now runs Sail Research.
- Link:Open Patrick O’Shaughnessy’s post
- Recommended by: Naval, who calls it unusually educational.
- Key takeaway: The discussion covers latency versus throughput, chip pricing, kernel engineering, new architectures, compute and power, and open versus closed AI. O’Shaughnessy says the conversation is unusually detailed while remaining easy to follow.
- Why it matters: This is a rare recommendation that connects the model-inference story to the physical and economic stack beneath it—a useful map for anyone trying to understand where AI costs and bottlenecks actually come from.
Leverage and operating pressure
“Leaders Must Manufacture Discomfort”
- Type / creator: X thread by @gokulr summarizing Frank Slootman’s conversation with Nakul Mandan for Knuckle Up with Nakul.
- Link:Read the thread
- Recommended by: Keith Rabois, who shared it with the endorsement “Wisdom.”
- Key takeaway: Slootman’s operating playbook is concrete: compress timeframes, hire for innate aptitude rather than experience, use back-channel references, prefer an empty seat to a poor fit, set aggressive goals, move quickly on decisions, and make cultural standards real through consequences.
- Why it matters: It turns “urgency” into a set of inspectable management choices—who gets hired, what target is set, how long decisions take, and what behavior the organization actually tolerates.
James Dyson’s first autobiography
- Type / creator: Autobiography by James Dyson; the exact title is not specified in the source.
- Context:Tobi Lütke’s conversation
- Recommended by: Tobi Lütke, who identifies Dyson’s first autobiography as the one book he would recommend.
- Key takeaway: Lütke highlights two ideas from the book: differentiation and retaining total control. The memorable formulation is to “make it different even if it’s worse,” rather than copy an existing seven-out-of-ten product.
- Why it matters: It is a useful founder test for me-too products: an original solution may start below the market standard, but ownership of the underlying idea creates room to iterate and surpass the copy.
The 80/20 Principle
- Type / creator: Book; the author is not specified in Ferriss’s recommendation.
- Context:Tim Ferriss’s recommendation
- Recommended by: Tim Ferriss, who says to reread it after asking which task would make the others easier or irrelevant.
- Key takeaway: Ferriss adds two further filters: which undone task would liberate the most personal energy, and whether the item avoided longest is the “antelope” worth pursuing.
- Why it matters: This is a compact triage method for separating consequential work from activity that merely feels productive.
What not to optimize away
Bullshit Jobs
- Type / creator: Essay by David Graeber.
- Context:DHH’s interview
- Recommended by: DHH, who calls it a “wonderful piece.”
- Key takeaway: DHH uses Graeber’s work to question how much employment produces worthwhile outcomes, connecting it to the “fake email jobs” he sees around him. He distinguishes this from pandemic overhiring while arguing that AI may expose roles that are not productive ways to spend human time.
- Why it matters: It is a guardrail against treating every efficiency gain as an AI story: first ask whether the underlying work created value at all.
“The pursuit of excellence deserves no explanation”
- Type / creator: X post by Mitchell Hashimoto, quoted and endorsed by DHH.
- Context:DHH’s interview
- Key takeaway: Hashimoto’s line is followed by a simple standard: systems should be as good, fast, and beautiful as possible, and wanting that needs no further justification.
- Why it matters: For software builders, it is a reminder that speed, quality, and delight can be design objectives in their own right—not polish to add after the “real” work is finished.
The Banishment of Beauty from Everyday
- Type / creator: Article by Ted Gioia.
- Link:Read the article
- Recommended by: David Perell, who calls it a great piece and says he took his carnival and Japanese-train-ticket examples from it.
- Key takeaway: Perell’s accompanying reflection argues that optimizing for efficiency can displace personality, artistic expression, and craftsmanship from ordinary objects; individually small losses can make the world less charming.
- Why it matters: Read it as a design check on the Hashimoto principle: an efficient product can still be worse if it strips away the character that makes people want to use or remember it.
A broader watchlist
Tim Ferriss’s seven-documentary list
- Type / curator: Documentary watchlist curated by Tim Ferriss.
- Link:See the list
- Recommended by: Ferriss says these films have shaped his thinking and changed his behavior over several years, and that he revisits them often.
- Key takeaway: The rationales are personal rather than generic: Roadrunner for its nuanced portrayal of Anthony Bourdain, Sour Grapes as a case study in deceit and hubris, The Work for its combination of pain and hope, and Dealt for its unusual rewatchability.
- Why it matters: It adds emotional range and attention to human vulnerability to a day otherwise dominated by operating systems, inference economics, and product design.
Naval’s AI-infrastructure pick anchors a reading stack on leverage, pressure, and craft
Research extraction
The recommendation is verified as context for prioritizing high-leverage tasks: after asking which to-do item would make the others easier or irrelevant, Ferriss says to reread The 80/20 Principle.
- The supplied material does not identify the book’s author; it names only The 80/20 Principle.
- The direct resource link provided is an Amazon URL: https://www.amazon.com/80-20-Principle-Secret-Achieving/dp/0385491743/?tag=offsitoftimfe-20. Because it points to Amazon and includes a tracking tag, it is not a non-commercial resource link.
- The page is substantively a discussion rather than a bare advertisement: it explains the antelope/field-mice analogy and applies it to reviewing one’s calendar and to-do list. However, it is not strictly non-commercial because it includes the tagged Amazon book link and links to Ferriss’s own book; the latter also offers a free read/listen link to the adapted chapter.
tobi lutke
Profile
- Books — reading practice: Tobi Lütke strongly endorses making book reading habitual, changing subject matter roughly every three books to build range. He describes books as a way to access another person’s career learnings in a few hours.
- James Dyson’s first autobiography (book; exact title not specified): Lütke singled it out as the one book he would recommend, emphasizing its lessons on differentiation and retaining control—including the principle of making a product different even if it is worse.
- Larry Ellison podcast episode (title and URL not specified): Lütke endorsed the host’s episode on Larry Ellison, saying its treatment of sales-team incentive problems affected him enough to stop his racing simulator and listen closely because he felt strong empathy for Ellison.
David Heinemeier Hansson (DHH)
Profile
- The Fourth Turning — book; author not named in the source. DHH recommends checking it out, saying its main value is the idea that history moves in cycles and that crises which feel unique often repeat earlier patterns.
- “Bullshit Jobs” — essay by David Graeber. DHH calls it a “wonderful piece” and uses it to frame the idea that a significant share of workers believe their jobs produce no worthwhile value for society.
- Mitchell Hashimoto’s X post, “The pursuit of excellence deserves no explanation” — social-media post. DHH calls it a “great post” and endorses its lesson that making systems as good, fast, and beautiful as possible needs no further justification.
- A William F. Buckley interview clip, apparently from Firing Line — video. DHH highlights a roughly 25-minute discussion with a Black Panther as an example of how people with sharply opposed views can still explore each other’s arguments, contrasting it with today’s more confrontational discourse.
David Sacks
Profile
- Whiplash — film/video. David Sacks calls it “one of my favorites” and uses its demanding, unforgiving standard of excellence—“he’s not handing out tissues”—as a reference point for why exceptional work may require a highly rigorous environment.
Tim Ferriss
Tim Ferriss says these seven documentaries have shaped his thinking and changed his behavior over several years, and that he revisits them often.
- Roadrunner: A Film About Anthony Bourdain(documentary) — Ferriss praises its nuanced portrayal and archival and outtake footage, calling Bourdain’s story inspiring, incredible, and tragic.
- Searching for Sugar Man(documentary) — He calls it “SPECTACULAR” and notes that dozens of friends had recommended it to him, alongside its major critical recognition.
- Bird by Bird with Annie(documentary; associated with @ANNELAMOTT) — Ferriss’s long-standing appreciation for Lamott and deeper engagement with her work led him to value the film’s blend of humor, humanity, and insight for processing difficult emotions.
- Sour Grapes(documentary) — He describes its story and cinematic telling as fantastic, calling it a hilarious and nearly unbelievable case study in deceit, hubris, and human vulnerability.
- The Work(documentary) — Ferriss says it tore his heart apart while giving him tremendous hope; he considers it particularly important for men or people seeking to better understand men, while warning that its intensity is not for everyone.
- Dealt, directed by Luke Korem(documentary) — The film “absolutely blew” Ferriss’s mind; he avoids spoilers and says it made him want to watch it again immediately.
- RBG(documentary) — The recommendation focuses on Ruth Bader Ginsburg’s legal legacy, unexpected pop-culture-icon status, and personal journey to the nation’s highest court.
Naval
Naval shared Daughters Who Will Never Be Mothers, a Compact article describing sociologist Susan Pickard’s choice of career over motherhood and her writing about being the last of her line. He paired the link with an ancestral-continuity takeaway: “Don’t be the first one to miss the branch.”
David Perell
- Ted Gioia’s “The Banishment of Beauty from Everyday” — article from Honest Broker: David Perell calls it a “great piece” and says he drew his carnival and Japanese-train-ticket examples from it. Perell uses those examples in a reflection on how efficiency can displace personality, artistic expression, and craftsmanship from everyday design. URL: https://www.honest-broker.com/p/the-banishment-of-beauty-from-everyday
scott belsky
Scott Belsky shared a link to a “much deserved spotlight” on BoxGroup, calling it one of the most collaborative investors and supporters of the NYC startup ecosystem. The linked @ajs post recommends a Fortune profile of David Tisch and BoxGroup as a “Great profile” of an early-stage investor who wins by going against the grain; it highlights a reported $750,000 Cursor investment turning into a ~$1 billion return. Fortune profile
Naval
- Naval recommends the linked AI podcast episode/conversation with Neil Movva: https://x.com/patrick_oshag/status/2092226959711334544. He calls it “one of the best recent podcasts on AI,” praising Movva’s ability to explain jargon and insights simply; Naval says he was not involved and found it unusually educational.
- The discussion covers inference across software, chips, and power, including latency versus throughput, chip pricing and architectures, kernel engineering, AI data centers, and open versus closed AI.
Keith Rabois
- “Leaders Must Manufacture Discomfort” — X thread summarizing a Knuckle Up with Nakul interview with Frank Slootman. Keith Rabois shared Gokul R’s thread with the endorsement “Wisdom” and linked directly to it: thread. The resource distills Slootman’s operating principles: compress timeframes, hire for innate aptitude rather than experience, use back-channel references, prefer an empty seat to a poor fit, set aggressive goals, prioritize decision velocity, and make cultural standards real through consequences. It also argues that leaders should deliberately maintain urgency and attack doubt through full commitment.
Tim Ferriss
- The 80/20 Principle — book recommended by Tim Ferriss. He suggests rereading it while prioritizing tasks by asking which one would make all others easier or irrelevant, which would free the most personal energy, and whether the longest-avoided task is the highest-leverage “antelope” to pursue.
Sam Altman
- OpenAI technical report and accompanying blog post on the Hugging Face incident (technical report/blog post; OpenAI) — Sam Altman called it “a good report about a bad thing.” The report reconstructs the agents’ activity, explains why existing safeguards failed, and details how OpenAI is preventing recurrence. Read the report.
Conversation with Tobi Lütke (@tobi), co-founder and CEO of Shopify.
1 of 3
highlights
0:02One of the things I admire most about you is like you've been running your company for 21 years, something like that. I love people that do things for a long time. People that chase excellence that try to be great. My entire life is founders, right? So during the day, I read biographies of history founders.
0:15I've read like 410 of them. And then at night, I hang out with founders. I don't think I have a single friend that's not an entrepreneur. And then I'm always asking the founders I most admire.
0:25Who are the founders they most admire?
0:27and your godamn name comes up over and over and over again and what they talk about is that you have very unique ideas on company building and management and you're they use the word singular a lot.
0:40So I want to kind of like lay out how you think about building companies, building products, building technology and then you know spreading the gospel of entrepreneurship. I want to start with one thing that you said. You said companies are technologies themselves.
0:52What do you mean by that? in a lot of ways like I mean like take the social angle like um a lot of like companies are social technology in in the sense that they allow us to go all in like the only time you're really allowed to uh spend eight I'm going to say eight because that's the right number to say really like 14 hours a day right um just singularly pursuing a thing is like um I I mean we want kids to spend this time in school and that's okay and
1:21then university you know, dedicate yourself. Um, other than that, like you can't just like not have a job and but just be like really really in into into things. It's socially not acceptable. So like company building turns out to be the perfect excuse. Once you call it a company, it's not like tinkering around anymore with your ideas and um you get to you get to explore things. What a company fundamentally allows you to do is like just run the counterfactual to the world you see around you, right?
1:47like you you you get to um try to build the thing that you think ought to be there and um then you means test it against the market and if if a market uh um agrees with you that this thing need to exist and it it it moves energy in the form of money back to you so you can do more of the thing that uh you you were pursuing all along and not only that it's like self financing like if you find out like again I started a company which I didn't think was going to be um uh like have this very very big
2:16market and along the way it just like the market to like pulled Shopify out of the project I started essentially you know that's an incredible intelligence to uh to to tap into. So you put all these things together and um you say like well look companies the concept of companies not that old it's like um we on a 500 year run and sort of kind of extra extracted from things called companies which weren't which were actually more like quasy governments like the East India Company and so um the modern company is not that old. I
2:45find that if you take that mindset that like companies are just sort of a path dependent solution to a social and somewhat legal problems. they allow thousands of people to join the thing your project and um it's called a job and therefore everyone accepts this um and uh um uh obviously you can make money so it's a good deal and um then um you can figure out if this contextual of yours might be correct or needs updating
3:14along the way or any of these kind of things and you could at the end of the day if you are lucky you um work with other people who are really all in and like inspiring and like taking it further than you I think and I just like the wall thing is just like I I just like I marvel at the institution of a company in a way like because if it wouldn't exist for some reason and someone would propose the wall idea now it would sounds insane like from first principles none of this makes sense really.
3:41Well I heard you say something that was fascinating really piqued my interest when you're like we do not know how to build companies yet. All companies are terrible.
3:49Yes. including mine, which you said, and you know that that's hilarious when somebody's you're running a 200 billion plus dollar company and you think that in the next 20 years, we're going to look back at what we were doing at this point and be embarrassed by what we were doing. Why do you think that?
4:05Cuz it's like everything else. It I'm sure when you listen to your first podcast, you're like, "Oh my god, please don't."
4:12But like it's honestly, this should be seen as um the most joyous of uh like moments. You should actually do it if you haven't done it.
4:20No, I do it all the time.
4:21Okay, good. Because what you the difference between that and what you would do today is your progress, right?
4:26And as a computer programmer, I I experience this all the time. I looked old code and was like, what the hell?
4:31Like this is terrible. Why would I do this? This is way too abstract and complex and then I made better because I now have the skills to do so. And um one of the saddest days of my life was when I opened old code and was like really impressed with how good it was like really saddest day of my life because I like holy the implication of this just hit me like a like a train right like um that you weren't progressing you weren't exactly it figures because I wasn't programming all day I was like trying to you know uh build a company instead um
5:00which honestly is very very similar.
5:02This is one of the things Daniel E told me about you.
5:04Yeah. Here's what I'm observing like you I I read a lot of books. I I I I try to figure out um like you know I think uh someone uh like if you don't read books you live a lifetime. If you read books you live a thousand. Right. Um so it's I'm going to interrupt you real quick because I took notes on this podcast 6 years ago. This is the first time I came across you and you said uh books are the closest thing you'll ever come to finding cheat codes for real life. You can access the entire learnings of someone else's career in a few hours.
5:34It tracks, doesn't it?
5:35Yeah. I mean I dedicate my life to this. Of course I'm going to agree with that.
5:38Absolutely. I mean, you know, pred supposed to agree with me, but like I I I really think we need to shout this more from the rooftops, right? Like it's, you know, like the one weird trick seems to be just like read books, right?
5:48Like it's um and and it kind of doesn't matter. Just make a habit of reading books and like ideally change every three books or so at least for one book and then that that alone will give you a range that you you can draw on for basically everything you'll ever do. So like look I I I I read lots of books, lots of them, you know, just like you know especially uh when I went from programmer to a business um uh like realizing I have to just learn business
6:17really quick. Um I um I got really dismayed with the quality of a business books pretty quickly because frankly I think the business books are largely written by uh well the people who have time well not the people who actually build companies frankly. Um so um so you read between the lines as well depends on like if if a person who start a company or person writing book is a salesperson every problem can be solved with sales.
6:44If a person is a marketer clearly every problem can be solved with marketer and I mean at least that I can take away to as a trap to not fall into right. So I was determined to not um be the engineering type founder who is going to see everything as an engineering problem because that would be called blindness and like I would this would cap my capabilities. So um I really tried everything and including like the you know just how to you know build the team in such a way that I delegate everything
7:12and I have my uh um different business lines and uh you know arrange things. This is sort of after the IPO and I realized I have to be a very serious uh public company CEO and so um it almost killed the company honestly.
7:27How did it almost kill the company? It was actually co that saved it at this point. Like I I had the inclinations that something was really really going poorly. Um um it was a time you didn't have a lot of competition. So which is also um really really hard for businesses. It's not a good thing at all because um again you you don't get you don't have good rivalry and you can't you can't sort of like even if something seems really good you don't know because there's no one else to keep you honest about it. you have a distinction between a competitor and a rival and you think
7:57rival competition is one thing, rivalry is really good.
8:00I mean it's the same but it depends.
8:02It's a mindset change. It's like like I think if you um again if you compete with uh another company like there's a lot of um we need also a version of what they have uh copying like you you do the zero the Xerox uh strategy uh very quickly. companies tend to get obsessed like there's companies which have very very like the most active channel in their Slack is there is a competitive analysis channel um where people just spraying everything everyone else is doing and I think that um
8:30while that has some merit um I think the problem is um it makes companies very reactionary right like um I you know that like in in in in the arts part of anyone everyone's art studies is um uh or at least some fine arts you you copy the great pieces like you make uh copies of great works. Your next painting is not at the quality of a van. You just copy it, right? Like so um mimicry is
8:59actually not an excellent way of uh getting to excellence. Um and companies end up falling very much into this.
9:05Whereas if you treat someone like other companies in your space as rivals, much easier to have a positive some uh uh outcome there because rivalries inspire you to be best like Agassi could not have been Agassi without SARS being there, right? Like and he very very clearly states this in his book. The SES that existed during the Agassi area that Agassi like understood wasn't a real person. When you read San Francisco's biography, it he just liked tennis.
9:34Yeah. And August hated it.
9:35I guess he hated it. And so um the rivalry he created for himself created him in a in a very real way in the last dance which I loved. Um like Michael Jordan like he admits that he might made up a slide at at some point which to me it's like one of the most profound moments.
9:53Sometimes I play the last dance in the background while at work. It's my favorite documentary. My second favorite one is the defiant ones. It's about the partnership between Dr. Dre and Jimmy multi-deade partnership. That's the description. That's not what it's about. It's one of the best documentaries about entrepreneurship.
10:07Interesting. Hip-hop rep uh history is incredibly entrepreneurial. Um it's it's it's so we just recorded with Jimmy I who's the star of the documentary two days ago or whatever. I don't even know what day it is. Uh and that's exactly what he said. It's like they understood the business of music before anybody else.
10:21That makes perfect sense and totally tracks. Um uh you can see it from the outside. It's um um we actually we see it from the inside like it was the first uh category of music that just like killed it on Shopify. Um it's like they're just like so like opportunities converted into products like like that and it's it's like they made different it really really cool like this is beautiful thing about Shopify is a front row seat to um just seeing how high agency the different industries are and
10:50how uh um you know quick they absorb new ideas and it's like it's anyway it's like a different topic but like almost like in video game like a god level view of entrepreneurship because you how many how many entrepreneurs on the shop platform it's like millions Right.
11:03And you're drawing like insights for your own work from the entrepreneurs on your platform. One of them we'll talk a lot about today was like the importance of differentiation. Uh but I want to come back to that. I want to go back to like so you were thinking okay right after the IPO I'm going to approach everything. This is like an engineering problem.
11:19I'll be I'll be a cosplay uh company public company CEO like 60 year old guy in a suit like okay legal background right like that's sort of what everyone emulates for whatever reason. and and it just worked really poorly for me uh from a product perspective. company did fine right all all the way through co happened though and I'm like okay so my what my company needs here for me is like five different things one of one of
11:47them is all plans are invalidated fundamentally like everyone who has a plan just please throw it out um we need to go and like go through everything we're doing and rederive it because again everything is based on a uh very long tree like you start with axioms and then you make a a huge amount of decisions on top and then you get to a conclusion and that's means this is how you spend your day-to-day building this thing because of these things. If any
12:14variable along this way is invalidated, what you should be doing is rederive the entire thing on top, right? Like you should always prune back the decision tree all the way there and go forward.
12:23People not being able to go out of their houses. It's one of those things like I don't think we all knew that was a core assumption we had that people could just freely move around in the world. But we got uh told that that we can't do this anymore and it uh ended up being quite long and during co at least in California and Canada and some places.
12:44So we need to rewrite everything and that was kind of clear to me and sort of what I you know that's how you structure a computer program frankly. I went through the entire road map and what I figured out is first of all that was really really hard to get and people were fighting even like very much resisting talking about everything that's going on and I found out why because like there's just a lot of boondoggles going on there just like random projects by random people that I would never found out about it like there's like why did you not know that was going on your own company though
13:13because the company was like let's say like um four or 5,000 people you know it's sort of quite distributed we start in order Canada we we had like Toronto office and Montreal office and so on.
13:23And so it just turned out that like you know in the Toronto office uh there was a fairly big project to build the features to add to Shopify. So uh you could use it for running a supermarket because you know just they decided well supermarket industry is very large and we should go and uh capture 1% of it like the in the Dilbert comics right and so uh you know and and frankly it like I I'm not saying those are wrong decisions the the the sort of really surprising
13:52thing about building a business or just in decision- making in general is that um making the right decision is actually child's play usually like can make wrong calls which end up because the world changes end up being the wrong call later and so on. That's a different thing. Um um but like most of the time if you like the bad options in front of you just prune themselves away. They just don't make sense. Is that too expensive or just like off mission or
14:20whatever you the problem is and I think school unfortunately accidentally drills this into people is that there's one right answer is sort of what people think and um once they find a right answer that could plausibly accomplish the goals that they set out they go with it but that's like well there's probably hundreds of great answers and one of them is like far less work far more um
14:48especially in an engineering project like the best solutions are always um modular and components you build one thing and it will work with everything else you did. Um, lots of the bad software that people use is are things where which are just like hairboards inside where like none of the pieces fit together and a huge amount of code has to be written to extend the new thing, make it usable from everything else. And like I'm not going to bore you with those kind of details. But um, if you look at the project brief, the team killed it. Probably everyone made their
15:18bonus. They delivered the thing. it just it's like an island upon itself now that uh um and and and and after it's delivered it nothing else in a product works.
15:28So you were looking at things as like cosplaying a entrep like a CEO or business person as opposed to an engineer.
15:34I was trust falling. I was like saying okay cool. Um you you seem passionate and you seem to know what you're doing.
15:40um I trust you to do the right thing and um um uh when I hear you know obviously we're going to keep talking you give me updates on things people learn pretty quickly what are the projects that I'm interested in told me about those and nothing else people learned how to direct uh my attention um to the things that they wanted u to have my attention so how did you fix that the moment I went through absolutely every project I did it myself took like many like 16 hour days that I cancelceled probably
16:0860% of the projects And yeah, over the course of a year, I turned over every one of my executives. Like this is basically the the consequence of this because I just realized that the in many cases the core skill was um well I mean I I don't want to be unfair, right? Like it's just that um trust was broken in many cases. And in a real crisis like CO again CO was hard hot hard um hardest time of my life um for sure. And um in a crisis
16:37if everyone is a one before some people go to zero in a crisis some people go to 100. And um I found it's almost unpredictable. Um in fact if I would have been betting before co about who's going to be um contributing the most I would have been wrong I think entirely.
16:56Why do you think that is? I have been thinking about for a long time and I I still haven't haven't gotten a good answer. I don't think they would have known. This is the interesting thing. I think a real crisis tests you in a way that nothing else does and nothing prepares you right for it. I think at the end of the day the thing that I have found is people who can adopt the fastest actually quite selfidentify and now I would be able to predict it very simple. Have you started a company
17:26before? So Shopify is by by a founder by founders for founders causing more founders, right? Like it's a celebration of entrepreneurship. We we believe entrepreneurship is glorious and people who reach for our heroes and uh doing modern day hero heroics go on a hero's journey with lots of naysayers overcome incredible odds and um lots and lots and lots lots of headwinds. That conviction runs really deep. Sometimes you buy companies of course um um many of the
17:54people we purchased um are still in at Shopify. People like people don't like stay for very long time because I think it's such a place for uh founders and for high agency people. So I always had a slack channel with all founders of all companies that we purchased. Um uh we always uh I did a founder offsite with them once a year where just like because I find their advice just so good. They all have been responsible for people's livelihoods and that changes you. So I went to the founders channel and said
18:23guys I need help right like this is this place is there it's crazy here.
18:30Had you already started turning over your executives?
18:32Yeah once I realized that I was like and it wasn't like one moment it was just like how did you know that instinct to go to the founders channel and ask for help?
18:39I think that in a moment of like where the do I go? who do I have most in common with and who can I who can actually relate to the types of problems here because again um my relation to Shopify is different right like I started it right like it's like it's just like it's different from everyone else but the second best thing is talk to people who have had this type of relationship with the thing they created you know I asked a lot of the founders to become my executives in some cases I took people from individual contributors
19:08in in an engineering team and put them in charge of a very large thing you know not at all every one of us fixed and it was like really remarkable because it really fed into an intuition I had anyway and what I found is uh during co is the founders of company were actually not doing well because they were like similarly managed they were like irritants what does that mean they don't settle they they they talk about absolutes they they if something is they say so it doesn't matter if
19:38everyone has agreed that to move on or something it just it ns on them in a way that's deeper than uh this other thing.
19:45And that's exactly what you have inside of you.
19:47Exactly. And so I I I I feel like this is um it's a very special thing. Um and it's um companies reject it. Companies cocoon them. Sometimes they find such they give outskirts like the skunk work team. It's like just like it's daycare for for people who otherwise tell you that your stuff your doesn't smell, right? And um uh uh does smell. So once I'm like, "No, you you you don't get to uh put them in like found a
20:15daycare. You you I'm going to put them right right in front of you, like in fact on top of you." So um and so um you know, the difference that made to this business is nuts. And so this is why I'm saying co saved Shopify because I I needed to take a move that was like very much okay, I built this company, I got to this point. It's important. It's actually maybe even more important during co than before because it was kind of like for millions of small businesses their livelihood for this
20:43time and only way to make livelihood. Um and I'm super proud of what we did because I think the businesses that started in Shopan came early pro like actually grew and did better doing some of them grew faster than you. You said somebody beat you guys to a billion dollar which is the craziest thing.
20:58business has ever raised their customers like that started on the platform for it's it's the greatest I love this thing and um so I I mean again like they're fantastic heroes they're glorious they're they're wonderfully discont my my customers have the same irritation with my software and like they tell me it's like it's perfect right it's exactly what I want and so this was one of those moments saying you know what Toby like like maybe you didn't build completely by accident and your intuation might have been actually
21:27helpful and cosplaying someone else is probably not what you need to do. So at that point you were running Shopify for how long?
21:34Uh 15 years.
21:35No, it's yeah about.
21:37So that you were 15 years in 15 years.
21:40This is very common biographies. I think it would surprise people like oh why did it take so long to figure it out? It's like no it takes a long time to to actually build the skills. And then the important thing about intuition it has to be refined.
21:50Yeah.
21:50So it's like maybe in 2005 you shouldn't have been trusting your intuition. Trust your gut is sometimes good advice but it really depends on your gut. So it's like um no one no one uh is born with intuition for building businesses because first of all building businesses are completely every decade is different like some problems are persistent um uh like I laughed I listened to um I think the episode you did on Larry Ellison you were describing his frustration with problems in his sales
22:18team which literally I had to like it's like you know what I I didn't actually live I have to live that horror I could have actually like if I would have read right if you read software any biographies or listen to founders the incentive problems around commercial teams it's like but that's that's amazing part I'm glad you just you picked that up because he's like I'm embarrassed he's like I'm 40 something years old I've been running this company forever and I didn't understand that incentives with my sales team mattered and they almost destroyed his company
22:48they almost went out of business I usually listen to podcasts when I'm sitting in my uh racing simulator to practice for next race and like it got to that point and I had like okay I have to stop and just listen to this because I'm I'm I'm just feeling so much empathy for Larry Ellison of all people how funny is that? So anyway question before you move on cuz I love where you're going I can't help myself cuz you know this it's like when I hear you saying like I'm getting rid of the executives I'm going to build an executive team of
23:15founders that's not a new idea. Rockefeller was doing that 150 years ago. It's interesting how uh the building blocks that uh largely Rockefeller invented um I mean we call these things trusts because it was you know like that that was a term um um they uh first used there.
23:36Toby's relentless dedication to improving his company reminds me of my friend Kareem who's the co-founder and CTO of RAMP. Kareem is one of the greatest technical minds working in finance. I spend a lot of time talking to Kareem and every single conversation centers around his obsession with crafting a high-quality product and using the latest technology to constantly create better experiences for his customers. Like Toby, Kareem believes that nothing is ever good enough and it can always be improved.
24:02Kareem is running one of the most talented technical teams in finance and they use rapid, relentless iteration to make their product better every day. So far this year, Ramp has shipped over 300 new features. Ramp is completely committed to using AI to make a better experience for their customers and to automate as much of your business's finances as possible. In fact, Kareem just wrote this. AI is all I think about these days. It is our duty to be first movers and push limits so we can make
24:31the greatest possible product experience for our customers. That sounds a lot like the approach Toby uses. Both Kareem and Toby never rest on their laurels and use rapid iteration to invent new products for their customers. Many of the fastest growing and most innovative companies in the world are running their business on Ramp, including Shopify.
24:52Make sure you go to ramp.com to learn how they can help your business save time and money. Let AI chase your receipts and close your books so you can use your time and energy building great things for your customers. Because at the end of the day, that is what this is all about. building a product or service that makes someone else's life better.
25:08That is what I'm trying to do. That is what Toby has dedicated his life to doing. And that is what Ramp has done, too. Get started today by going to ramp.com. So now you have the executives. You're going through the most difficult point in your life.
25:22Yeah.
25:22And you realize, oh, I'm cosplaying. I'm going to go lean into my intuition. This is another thing why I think that decision you made six, seven years ago, however long it was, is why so many founders like study you, respect you, take pieces of like your philosophy as well because you're like, "God damn it, I'm just going to do this the way I want to do it."
25:39I was like, "Okay, I need to try something like a different you have to do things differently exatically." Like if obviously exumatically if you do the same thing, you get the same results. Um, differentiation requires new ideas.
25:51um you are um instead of figuring out like spending the next 10 years of my life figuring out how well I can cosplay someone else, what would a company look like if it just like taps entirely into my intuition like in in my biases? I'm I'm doing literally the opposite now as uh I did before because this didn't work. So maybe the opposite works and worst case I triangulate the midpoint between those things. So enabled by the uh very clear, fast and obvious success
26:20of um asking people from founders channel to step up and and and run company with me. My real set of intuitions here um again intuition is your entire life's uh um uh story rolled out for you to make a snap decision in a moment. What does my intuition say about what a company actually should look like? Like let's let's forget about the path dependence. Let's go full tabular raza and go up up from axioms. And I started with really really really uh
26:49nothing like I started an like a project on GitHub literally. So engineering tools myations again what is the first principle of comp of of a company like what is like what are the inputs how what are our decisions like put in conflict files what titles exist what levels exist how you know I asked for all the sales like compensation data all the market data
27:18and put them uh into the repository I turned them into machine reader able files because they got them as PDFs and so on so on. So I built a thing that then created like at the end had all the information to create a model of a company like literally this is Python code um which takes configuration files that we agreed on things like how many people should report to a manager all these bits and then computes them uses
27:46something called a solver like a set solver specifically and then um with all these constraints all these imports what should Shopare look like what departments exist, what level exists, how many people are there um in in which group and everything. And of course the first version very utterly incorrect and then I realized are you doing this alone?
28:05I started it and then I got like two three other people in it to help me uh this um with this and uh really really got into it and so uh this is this is called Shopify OS. This Shopify operating system is really not being part of Shopify now. What it did is um uh it it became irrefutable that we didn't know all the principles. We had like something there was 8,000 people in in a company and there was um 5 and a
28:34half thousand different titles in a company and it's like so in some of them was just senior and senior staff but in some groups senior staff was uh lower than director and some above and it just like it it just when I tried to make something software addressable and try to reproduce it it showed every crazy unviable choice in the company very very easily.
28:58So there's a system in engineering, not actually a well understood part of but I think it should called desire state systems. And what desire state systems are is um um it's it's it's a it's a thing where you say okay here's what should be you hold that up to what is like um you click on a website on a link and your React library behind it. What it does is it says okay I compute what it should be. I see what it is and now I figure out what is the minimum amount of
29:26steps I take to get this to that and that's what you see on your web browser.
29:31I need a desired state system for this company. So we have this model we create it and then we hold it up to the company and the job of HR is to be this reconciler like how do you take the minimum steps to get from here to there um or change what we have in this system to uh approximate what we actually want.
29:50So this is very technical. Here's the effect of it. Think about how much politics this removes. Then Mike, head of sales, comes to me and says, "Hey, I need 50 new uh sales people." I can put this now into the system and says, "Well, that means um you have to either make these changes or you're going to lose some of your engineers or look because the system based on our agreements recomputes everything." Um so I have um we can always look at the counterfactual and then it's not like yes boss agreed while playing golf to
30:20hire 50 more salespeople and now someone has to carve like you have to find a pound of flesh somewhere in the engineering team and suddenly you don't actually work on innovation anymore because you never actually made the decision to not hire engineers because your budget doesn't allow anymore because but you did make the decision to hire um sales people and maybe this is the right decision but now we can actually look at the consequences of every one of those things. So it was hugely successful because it just created um such a legibility for for us
30:49and such a uh simplicity. It also just told us that so much was undecided. Like for instance, we took the concept of in in engineering. This was already around individual contributors is a really really excellent career track, right?
31:01Like you can make as much money in good companies as an individual contributor as you can as a as a as a VP or manager or like the best paid people in many companies are now individual contributors at this point uh in uh in history. um especially in machine learning like at least in the at the machine learning labs like open AI but no other discipline really had that you had to become a manager to to uh progress in your career and so I think one of the consequences was that um then
31:29I really looked as like hey I need more great engineers the best place to recruit them from was my own management team and like that seems silly and especially because are they actually great managers they're really well respected because they're good engineers so maybe but like don't they want to code? like it's like and you know so we created like this sort of mastery system we call it where you every job has uh this ability to
31:57stay um you you can get these basically level upgrades frequently and at any set of responsibilities you can if you're insanely good at it you can make lots of money and like that just seems like of course you design it like this why would you not like so they can stay individual yeah like take an example in engineering if you're ins like If you're 100 times better than other people uh in in in this discipline usually um you can make more money than a uh than than a vice
32:25president. Um, now that depends on the value you can bring, but it is possible.
32:30And just like like I I kind of hated the way we did like compensation in the in the industry, right? Like again, these are these are boring topics and you need No, it's not they're not boring to to me and to the people listening. Wait, why do you hate the way that they were doing compensation in the industry?
32:43What I love about entrepreneurship is the is is the level of responsib personal responsibility people take. I said this much earlier when we talked about the founders who have been responsible for people's livelihoods. It changes you. It does, right? like so like I I don't work myself well in an environment where sort of like everything is predescribed. I I don't like joining other people's games. I and so on. All these kind of things are my biases and again you're implementing my biases here. So in co like this is 2022
33:11I think or 21 suddenly Shopify went down 80% of stock value right like that's a like again I didn't think that was a problem because like I think the stock market is basically like poly market it's sort of a betting market on the future value right it's not like you guys when then you guys are wrong then you just bad at betting like in fact so I work on a real market value of a company which you guys are betting on but I even don't know. So
33:38like there's such a discrepancy from the way I see people talk about stock price and uh uh and and how I or have ever or inside of companies this is perceived.
33:48But what was going on in your head when it dropped by 80% though?
33:51Well, I'm like well my head I'm relieved because I'm like you know I I mean where the stock relieved?
33:59Yeah. Yeah. Of course. Because what do you mean? Of course. That's I don't know. I was like I was not about to like raise money. Yeah, I did. I had enough money in a bank. I'm, you know, German, so like I don't take debt like much. And so you like, so were the internal metrics strong? They You felt they didn't deserve you didn't deserve.
34:17The unit economics are amazing. However, like um at the I I don't I don't want to say this right, but I honestly don't remember the exact numbers. Like at the high point of our stock price, I think we were trading at beyond 50x of revenue and stuff like this. I'm like, "Yeah, that's not exactly value investing here, right?" guys. Um, and so, um, I get it like, but you weren't worried about the fundamentals of the business.
34:40No, but like what then it is 50 times revenue. I see it as my obligation to do that.
34:46Okay.
34:46Right. Like it's my like my job my my job is to build the best company I can.
34:51Um, the betting market says that I can deliver that kind of thing. And I'm like, yeah, maybe. But you got to give me a moment here. Like like I I need a moment here for for doing this, right? So I I the reason I bring this up is because again everything I talk to another entrepreneur and I just run it through this whatever the hell's in my head from all these books and when I hear you talk about that I think of that the time when Amazon stock he took Bezos talks about this in his shareholders it went from like something like you know 180 down to six or 120 down to six and he's like yeah but they were they were focused on
35:20something else. I saw the actual fundamentals of the business and I was like this thing's going to work. And so eventually cuz I think um Buffett always repeats that thing where like uh in the short term the stock market's a voting machine and the long term it's a weighing machine. You just want to build a heavy ass company. And he's like and and Jeff's like I'm building a very heavy company. Amazon will be a heavy company. So I'm not worried about this like short-term drop by 80 or 90%.
35:42That that really tracks. And so um but like one of the effects was um and this is right like well people got stock options at yeah the level up there and they rightfully say well how about it right like it's like um um even if you say like okay well I'm super game here to you know get us back there like this is going to be it's going to take doing I realized the psychological problem with everyone being so underwater and having you know to spend years getting to basically the
36:11zero point where these stock options are worth like even a penny again. And um of course they were like well but that's um the company like the company gave me those things at the time. It's like I received them. I was I was I was passive in this interaction. Therefore the company has some kind of responsibility to kind of make me whole here. And I think that's actually you know I I mean I not necessarily see it this way because like like the risk was there and like these kind of things. And like again it's like
36:40other people voting that's causing this price. I didn't set it. However, I I do receive a point like they had no agency in the process. So we rebuilt our compensation system to completely work the opposite of what everyone else's does. Um we we give people here's your annual salary. Here's an internal system. You go in, you look at it. This is a number. Now you get sliders. You can uh say how much do you want in stock? How many do you want in RSUs? How much of this do you want in shop cash actually? Um and how much do you want in cash? And you can change that every
37:10quarter. It's like you decide like like how much money you want. Um and um you can even use a couple like a tool that's there to lock in the value of the stock you receive for three years. Like it's so it's like again sometimes orthodoxy can come back on the table if you get there from good principles. Like you can actually join Shopify and get exactly the same stock option deal that companies get at other places um by using the tool we give you. But you have full agency and you make this choice.
37:39The consequence of this compensation system is kind of beautiful because what happens is first of all super predictable. Second, you know, if you go stock and the stock appreciates and you you hold them, you make more money, if uh like the stock goes down, you now get more stock options than um in your next quarter. So it like it's it's rebalanced against the actual value every every quarter. So it works really really well.
38:01It's very popular. It was kind of hard to do because doing this worldwide for with people in many different countries was like kind of a legal nightmare because like there's like all sorts of rules around how to change around changing of salaries. We figured it all out. So we have a blueprint of how people want to do it. Works really well for us. But we're kind of proud of it because it like it's it's it's just like again it's a point of differentiation and we believe it works much better. And again, I want people at the company to
38:30also feel like this is a company that is like never sleepwalks into anything, right? We we kind of we are deliberate about things.
38:37When you started this, I'm going to do it my way. I'm working with the founder executive team. You were in the process of that and the stocks dropping. No, it was already bare like that went so that was a 20 20 early 21 project I think and then I think I think the stock market when did that change like 21 late some years are totally running together for me because it just was I mean there was no weekends there was no I can't tell I can't remember who said this I was talking to a much I I talked to a lot of older founders I'm obsessed with like people think I'm obsessed with
39:07old people it's not that it's like this guy's got 50 years as a yeah as an entrep experience as entrepreneur turns out they know some they've seen some surprise.
39:15Yeah. And he's just like, "Man, you're going to remember the beginning of your company, you're going to remember the end, and like so much in the middle is going to He said exactly what you said. It just like blurs together." Yeah.
39:22So, he's saying, "You should document it more."
39:24I totally agree. Um uh lot lots of years are totally running together. I have reasonable record keeping on this. So, I I I and um especially with all this AI agentic like reprocessing of nodes and press and so on, you can actually reconstruct these histories and timelines. And I'm fascinated with this right now. Um, so my understanding though, like you thought you're now looking at running a company as like an engineering project.
39:51That's right. So I'm like, let's engineer a company, be a company engineer. I told my team that applies for every single department in like do you engineer marketing? Do you engineer everything?
40:00Everything. I require my um uh executives to uh um I mean at least tell me, but actually do it. go to a podcast, some international conference and and and and talk about how Shopify does the thing the conference is about differently and why that's better every year. if they don't have a good answer for how they're doing this right now or how they would that's that's what I'm working on with them to crystallize that message and um um there's a couple of reasons why I do it this particular way
40:29um that we can get into um that are part of psychological but like it's also just let's get into now what's the psychological it's I study the brain quite a bit and you know the main conclusion you get to um about the brain is really um that the brain is a um uh retrospective narrative alignment mechanism Not it's it's actually terrible record keeping, but it it mostly attempts to uh take the most
40:56salient uh version of our self identity and reconcile the history with it. And um it rewards you for actions that are directly uh uh um congruent with with this identity and it uh dissuades you um from dissonance with your own identity. But you can actually like change your identity quite a bit and that actually makes this whole process work for you um significantly.
41:21What do you mean by change your identity like the way you view yourself?
41:24Literally affirmations work, right? Like affirmations work which is dumbest trick that that that works.
41:29I'm so glad you're saying this cuz people from the outside like this guy's like very logical engineering and but you're all about intuition. Now you're talking about affirmations. You're speaking to the choir just so you know.
41:37I'm a toolmaker. Like I always project very idealistic but I'm actually not that idealistic. I'm super um I'm I'm like a craft person, toolmaker person. I I my entire life was making tools. I literally my pro my chopper is a tool.
41:52Um I make tools very often for tool makers. I my my hobbies is making tools where engineers who are people who make tools, right? So like it's a fra like my my my life's a fractal of tool making.
42:03It's all about tool making um uh aesthetics. It's all about the craft behind it. But also um also not because of craft for its own sake although I appreciate that too but even that's not for idealistic reasons because appreciating the craft behind the tool making happens to be pragmatically an excellent way to get really good at printing like everything is about outcomes.
42:24What's the affirmation part though? the affirmation that like you are if if you tell yourself or or write down a 100 times something about yourself um that writes it into the neurontrontal cortex at such a deep level that your brain will start reconciling you to that. It just works. Um I I've used that very often to uh like I you know like I I was terrified of public speaking until I just sat down for like a week and every day I spent like 10 minutes just writing
42:53that I like public speaking. I love public speaking.
42:56You you wrote that down.
42:57I I know. Yes.
42:58And now you you love it.
43:00Yeah. Like and a week later and I knew it's not this works when you know what you're doing, right? Like you don't even it's like it's not like a placebo. It's like it's actually like you just actively change your neurop frontal cortex in this moment. So um I I I use this often. Um I I sort of write to myself message in a bottle and these kind of things. That's all of a different topic, but like it's so the point is like I I tell what's the topic there? Hold on. You write messages to yourself?
43:26Yeah.
43:26Affirmations or just No, it's just like like generally when I feel like something is like, hey, there's something I figured out that I really like and now I have to write a scheduled message to myself um to remember it because like I need space to repetition on on on the idea.
43:43What's an example of that?
43:45I mean, for instance, like we have a company um um keynote like kind of thing like a company get together summit once a year in Toronto for a week. And so um you usually I uh did a keynote there and like then I write a message in a bottle to myself of what was good about the process, what was better about the process, what to do next different differently and all the topics are left in the cutting board just so like to get a head start. So that's a random example of that.
44:10How did you learn this that you could change identity that affirmations work that writing these things to yourself?
44:16I think trial and error but like I think the hints are like everywhere, right?
44:19Like it's I mean affirmations are one of those things that like I mean there's a reason why we like society creates rituals right because rituals end up being largely affirmations uh on on repeat right so what do you think of visualization like so manifestation these kind of things I I uh um probably books too you know what the funny thing I think everything works um if if you just do it the question is what's effective and quick it sounded to me before like I started doing all reading all these biographies
44:48I was like, "This is some willy fufu nonsense." And then you see very smart, analytical, logical, many case inventors and engineers, and it appears over and over again. People didn't know each other. They didn't they worked in different industries, different times, lived on different parts of the planet, and they all talk about doing this and it's parallel construction. They all come to the same conclusions in different words. Yeah.
45:09And so yeah, I'm I'm I personally I mean in the in the self department I'm extremely uh um taken with a story philosophy. Control what's under what is under your control. Know what is um and then um do the best possible job. It's the job is the thing like like the the whole project in life is just try to become very very good at something uh and ideally cultivate some significant skill create potentially service products and then share them with as
45:38many people right like you do this um because that's what you're on plan for right like it's like do things that matter in the world that are under your control but also sign yourself up for like it's okay to sign yourself up for most interesting in um places um um as long as you remember what your job is in within them. So in this way like I I love the current times and I I love the technology industry. I have a role
46:07inside of it which is like I'm taking care of millions of entrepreneurs and small businesses that you know are trying to use the world of technology use of retail um through their own work then um that's actualized and that is a worthy goal and worthy job and so like you know AI comes out and I'm like people are like well should I start an AI lab or whatever or should I like don't you want to you know work at open AI and it's like I mean everything would be interesting But you know what that's
46:37really cool? Pursuing the same problem in a changing landscape, right? Like now I get to reinvent everything I've already done. How how fun is that, right? Because I really care about these problems. Anyway, back to the uh affirmations and uh sort of a brain um uh sort of self gymnastics. Um going to the my team and just saying look um you know just tell me what you will talk about on stage is bad. It's like afterwards you need to internalize this as
47:05something that you have committed to me um as imagining I imagine that's something they care about they care about um reconciling and so they have to do it you know because otherwise they uh you know said something untrue to me right and like they don't see themselves as someone who says untrue things and therefore you know you can actually make the reconciliation work for your own benefit in this in this kind of way it also just means like it emphasizes like difference like difference is so important. It's so like orthodoxy just
47:34really needs to be off the table uh from the beginning of a project or like from the beginning of decision-m have you ever studied James Dyson?
47:42Not if I could only recommend one book ever. It's his first autobiography but one of he has a he has a crazy line about this. So this is also very common with great entrepreneurs and you you hit on your other talks like well if you want to I'm trying to chase excellence trying to do the best in the world or make the best tools possible like therefore that demands difference that that path that mission I'm on I can't do it literally it can't be the best if it's the same like just think about this and so like Edwin Land who's Steve Jobs hero and the founder of Polaroid he he had a personal motto he says my personal motto is uh very personal and it may not work for
48:11you but he said it is don't do anything that somebody else can do he just would not he I'm not making a me too product but the reason I bring up Dyson cuz now he owns one of the most valuable privately held companies in the world, right? But he's writing that book when the business was fine, but he had one product in like one or two markets. It was doing like 300 million of revenue.
48:29Not a bad business, but a very small business compared to the size that it it compounded to over the next like four decades or three decades. And he says in that book, even at that time, he's like uh differentiation and retention of total control. And he goes it, uh, he goes, you make it diff different even if it's worse. Yeah, that's one of the craziest sentences I've ever read.
48:48I totally agree with that. It has to be different even if it's worse.
48:50I completely agree. I see it all the time because again, it's gets back into the copying of a painting problem. Like you can make a seven out of 10 solution to everything by copying the seven out of 10 that already out there in the market. But if you make from double raza um axons your own version of it, you have mastery over even if this is a six out of 10, you can iterate on this. You can take this past the seven afterwards.
49:17Like so very often, especially in technology, the word belongs to the fast, the people who iterate, the people who like adjust, the people who understand what's costly and what's unnecessary um and will prune away the rest. And um I find actually the probably net like um pixel for pixel the most inspiring picture that that I think exists that I've ever come across
49:43um is the SpaceX Raptor rocket evolution like have you do you know I use that as a as a image for the Dyson episode I made this perfect exactly it's perfect right like you you like you look at this and like yeah that's Um yeah like that that's that's today's Picasso right like it's just like this is this is it like this is we not in a point of time where the great works and the masterpieces are being done by one person they are done
50:11by teams very few teams can move forward by subtraction that is like does not exist in industry usually very very very rare so it's it's beautiful in that way you have to do things different you have to make them your own and you have to have a mastery over the over the first version if you want to take this file further. I mean this is we talked earlier about the podcast I do inside of a company called context and um it's about that it's like what how did we make the decision? It's like everything around a decision is more interesting
50:40than a decision.
50:41Is this podcast constantly updated? So it's internal only for Spotify. God damn it only for Shopify.
50:48I mean especially when we talk about podcasts that makes sense.
50:50Well, they have um it's funny. I looked at my end of year rap on Spotify and one of the podcasts I listened to the most which was shocking to me was they have the internal company history. It's called uh Spotify a product story and it's because you know everybody else I think one of the reasons that uh we have a mutual friend obviously in Lulu she's on your board and the importance of telling your own story like it's what I we went to dinner the other night I was like Lulu what I love about you is like you're repackaging old ideas like
51:19Napoleon told his own story Julie Caesar told his own story like they all these people did it's very valuable idea and so everybody was trying to tell the company history outside of the company are like no you got all this other wrong we're going make it ourselves and it's like a I think a 10- part uh podcast, but they they originally I think they built it for themselves and then they like publish it.
51:39I didn't know about this. I love this.
51:40You should you should listen to because it's um narrated by Gustaf who was head of product who's now coco and they take it in chronological order and so like if like Sean Parker played a big role at the very beginning, right?
51:52He's obviously not there now, but he's on like episode one or two and then they interview the people that made the decisions and that's the whole point like we were making. Think about all the crazy shift they had to go from, you know, desktop to mobile, all the all the things they had to deal with. Well, just go listen to what the company did at the time and founders, but not only what they did, why they did it.
52:11It's and the why is so much more interesting. Like one of the like the turnly of um Toby said um is real inside of Shopify, right? Like it's like people just throw these things around like well Toby said we doing it this way, right?
52:23Like and I I I just like try to get people to like always ask when when I said exactly you change your mind all the time.
52:31Yeah. Yeah. And this is not even I learn about this because something is like really really odd and like really odd decisions like there was easier ways available like how did we get to there and it's like well it's like everyone said that you wanted it this way. It's like I like under which context when did I say this? Like clearly we've never talked about this. So it's like it's very common thing. So what's a typical episode? It's just you explaining the thinking of what's going on currently in Yeah. Yeah. It's like taking people back to major decisions.
52:59Are these short episodes?
53:01No. Like initially we went through phases. There was a sort of for the first maybe 50 episodes we said like we we had a we we have to mix it down to 23 minutes because we calculated that that was the average commute in Shopify. Like so we we checked where everyone lived compared to offices. We ran the data and it was 20 minutes and so um we made it 20 minutes because that seemed like as good like we needed a reason and you like designing constraints you
53:31talked about.
53:31Exactly. So so you know just like I well I also just don't like picking 20 minutes because it sounds good. Like I want like I need a better reason. So I I I might say I want something to be like 20 minutes sounds right but let's find an actual good reason why it's 20 minutes and then we found 23 minute reason. So sometimes you're allowed to like just parallel construct the thing you want to do anyway. Then at some point we abandoned it because just like you know the nice thing with podcast is like people can skip move it doesn't matter like you can just keep going for
54:01hours and hours and um do you have any ones that are like long?
54:06I think there's one which we had to cut over a couple of episodes that ran like I if you run it for it's like 5 hours.
54:13It's like what was that one about? That was like the philosophy of engineering um with a bunch of our uh distinguished engineers like like how how you know like it's you would not believe how immature engineering is as a discipline. Um it's just like um there's so many good ideas and so many bad ideas and it's so hard for people to sort through them in a in a way that's like way harder than any other industry because it has a weird propert has a
54:43weird property. Um I I mean the best thing and why the business model of software is so insane is because of zero marginal copying of software is free right like I it's like you can you know we build Shopify first person signs up we make money second person signs up uses exactly the same thing and it's like um you know the second instance of it is not it's the same piece of software so um hence the margins of software are incredible the same thing causes a lot of problems for the creation of software because you just
55:11don't know how much dead weight is in the If you compare this with um electrical engineering, there's a very clear cost of manufacturing, right? Like the the bill of materials is like the thing that dominates the success of a product because it dominates then the cost which then dominates the product market fit. Um it also manufacturability is uh a huge component in electrical engineering is like is is a board laid out in such a way that it's prone to defects. Did you choose all the right components? So they're like is like one
55:39chip get really hot next to a soldering thing but like you know I remember the original Xbox disordered itself if you just played certain games too long. So you know there's real constraints like this. So excellence is obvious in a way.
55:52It it it's like in the numbers and everything and everyone's trained on costing waste into the system. Software engineering just is throws away so much of the capability of these incredibly powerful machines. um partly because it just doesn't cost anything. However, at a certain scale it starts costing but at this point it's being fixed by operations teams getting more servers rather than engineering teams going back to fixing those things. So the um
56:21consequences of uh bad decisions in software engineering are an externality that doesn't acrue back to the engineers who caused it in almost all in instances. So it's like a little bit like a factories polluting the environment. It's just like it doesn't cross back to them. And so anyway, so therefore it's a very tricky um industry to move forward. It actually quite often moves backwards significantly. Computers
56:51got much faster and we threw a huge amount of capabilities away making like these very very heavy client side JavaScript applications that took over everything. They were just god awfully slow and very errorprone and took forever to load especially in e-commerce where people vis visit sites rarely. Some of our customers went out of business because they got talked they talked themselves into their own stack.
57:14They had a CTO who brought in their own team. They used a set of technologies that they wanted to use because they are currently the in thing that that has the most interesting conferences and the most interesting places. then uh they deploy it and uh you know like it sort of works and in the demos but the problem is when you're going to web first time you have to load it all and you don't have an up-to-date MacBook perfect hardware with much memory like everyone has who spoke on engineering teams you might have an Android device
57:43and you might be on a train right now you're sitting there in a minute and a half for this thing for this online store to load guess what the conversion rate of that online store is zero yeah I'm quite annoyed by this. Although we are that was a real real real problem in 2023 especially when like I think a bunch of frankly us older engineers had to like take the kids to to the side and just like have a good conversation and that was the that was the context of
58:13the episode of context at least that's what led to this particular thing. I don't know if we actually succeeded there, but like I think we didn't need to because I think uh like I think the world just changed like moment zero zero interest rate phenomena um where they're they're gone.
58:29People actually wrote better code out of sudden like it's it's like amazing how much like how consequential like um the zero interest rate um absence of zero uh um percent interest rates actually ended up being. We could feel it in the engineering team being le less prone to accepting random waste into their stacks. It's unbelievable.
58:48Oh, that's interesting. I don't know if I've ever heard anybody else make that point. I I think this idea of hearing directly from the founder in a audio way. Yeah.
58:55Is underutilized. I did this episode on the founder of Kinkos.
58:59He was dyslexic. Okay.
59:00Yeah.
59:01So, so am I.
59:02Yeah, I heard which surprised me. Um, so he actually a lot of great founders are dyslexic. It's very common.
59:08Yeah, it's very common. I shouldn't surprise me. So he's like I can't read your goddamn email and I'm not he was also um I think he said he had like ADHD so he couldn't sit down at a desk. So he his job was like what do I like to do best and he's like I just go around and all the Kinkos at the time were owned by individual people like so it wasn't like one cohesive corporate structure and so therefore there's a lot of experimentation going around. So he would just travel the country and then he'd spend all his days in the stores and he'd be finding because all these people doing different trial and error
59:36good ideas. And so he what he would do, this is back in the day, he would call into a corporate voicemail. And so he at the end of the day he'd give like a three-minute update about all the good ideas that he saw. And then you'd come in as a Kingo employee the next morning and you could play Paul's voicemail.
59:52I love it.
59:53And then he, this is an interesting thing that you might agree with though.
59:57They after doing this a while, he's like, "You're resurfacing all these great ideas, right? This guy in Memphis found the best way to do X. Why don't you mandate that everybody in the company does X this guy's way? He goes, because if I do that, that's the best way it will ever be.
1:00:13Which kind of relates to what you just said. He's like, listen, there's a probably 100 different good ideas or right ideas. And if I stop here and don't keep tinkering, going back to that word that you like, then that's the best it will ever be.
1:00:23If you need something, you tell people what to do, you might get it or you probably will get it. If you don't tell them what to do, you might get something you cannot possibly imagine if you have good people. And so this is like actually a really really important thing. It's much more important to create the environment in which people can um be their most excellent self than it is to uh prescribe here's the precise um uh moves to do.
1:00:49So how do you create an environment that people can be the best version of the excellent version of themselves? I heard you say is this related to your idea where you're like you said something that made me chuckle. You're like I don't do corporate baby proofing.
1:01:00Yeah. Yeah. Exactly. I mean exactly absolutely it's the same idea like the baby proofing thing is real like what's what is internal uh pro policies right like processes what what are they um they are like do this thing different from the way your intuition tells you to um okay why are you wanting people people to behave differently from their intuition like like let's let's look at a higher order bits there it's like like what other opt opportunities do you have
1:01:29well you could change the environment in such a way that doing the right thing is intuitive, right? That's that's pretty good because now you don't have to post a policy. Um you could also um you know hire people who whose intuition is better honed today. Often policies and processes are um sort of downside protection. Um um you're trying very hard to make um uh to to avoid the people who do things wrong to be of uh you know causing so much damage. that's like like the you know downside
1:01:58protection but you're also really limiting what the best people can do right so I think in creating like an like an environment almost as a box for people like here's the space and I want you to fall like inside of the space is um this problem I need you to solve right now my world in commerce world is attempting to figure out what aentic commerce is how it works how we all the companies are working together like how
1:02:26Yeah, the research labs work with everyone else, how to expose product cataloges from the entrepreneurs, how to make sure that transactions can be met, what the um uh large language models need um in terms of information to you know do a fantastic job as a uh when when people ask them to be their personal shoppers. Um you know that's a box like inside of this somewhere somewhere in it. It's all dark. Um is the most beautiful solution. Um what tools do we have to explore this box? is
1:02:56like duck like like I I don't know. I I can take a stab at it. I can paint a picture of what I think is good, but that's just like sending people into the room with a couple of tools afterwards.
1:03:06They need to make their own decisions and I want want them to do this. Like I'm not there. I don't want to like control every decision. The company makes millions of decisions every day, right? Like in in a building like this, right? But when I can make a decision of like this like help them um really want to be on this journey, help them fall in love with a problem and see the potential and um I can make sure it's the right team and everyone has the right skills and I can make sure that um um that uh they know what they have decision power over and like how to um
1:03:36at some point uh because you know people are only willing to take so much risk um how to transfer that risk to to me ideally uh or to a company right in in a form of our projects work in phases a prototype phase is what I just described um where you explore the problem um uh then you think of I like when you've learned what you need to learn and think you have something that you can uh uh
1:04:05build um you make a proposal and uh you transition out of the prototyping phase that's a meeting right like that's a you know that's what we call like it's it's a phase transition in our in our product system. Um there's software that manages all this kind of thing. U they can use an AI to uh preview what the pre what what the um uh transition will like be like because it's trained on all the other reviews I've ever done. Um so they can sort of mock do it um and figure out
1:04:34what I will probably say. Um that saves me a lot of time. And then we have a actual um uh meeting and um you know then they tell me what they're planning to do, what they've learned. That helps me a lot. And then I say okay well okay to transition um there's some engineering leads design leads give a okay one I give okay two um and then they are in a build phase and then a new phase starts that's a new box they they have a agency to make decisions in
1:05:02there. At this point, I assume the risk. This is it's like a trade of um accountability um for autonomy. And so um that's how we found we can almost operationalize this this um system because what I'm finding is like um I mean all the biographies you you you read what you find is uh I'm sure is that the moment of insight often the product that made that started it all or
1:05:34the artworks um that are defining the careers um they were not really coming out of an office building environment right, where someone had OKRs that of a precise metric to hit and then like Dainci probably did not have um uh one Vizuvian men as an OKR given to him, right? Like it's like you you kind of have to create an like a box for them sometimes a physical space as well. Um like he he was in an attic that just
1:06:04ended up being where he did most of his creative work to I believe. And um so you try to figure out what is this sort of environment in which uh where excellence um uh and creativity can come together um and then collapse it to saying okay now the company needs what it needs because we need to make resource allocation decisions. I mean you bring more people onto a project. At this point there's a couple of sort of things that need to be decided and then autonomy is regained um until the uh
1:06:32next phase is releasing um at which point we do that review and sometimes we say okay we're not ready to transition because we need there's some things we need to do differently. Um but that's the way Shopify orchestrates now. These are all things that exist today based on the days during co where I reviewed every project and couldn't and like well what should I be able to do if I would be like if I would be a competent CEO what would I have put in place so I could do this thing I need to do here in
1:07:02the beginning of co very very quickly given that I wasn't and now I aspire to be what needs to be created and so like whatever the answer to that is uh we worked hard on and we I think we discovered some extraordinarily powerful uh systems mechanisms in in in this sort of journey.
1:07:20That was the prompt like what would a competent CEO do in this situation?
1:07:24I love to take the view that like I'm a um um corporate raider and uh um Shopify went bankrupt and uh I bought it on a fire sale and I I'm like marching in on day one here and previous management was crazy and um we need to turn this place around, right? like that's my favorite like this I I I love playing this game every uh like year um figure out what I would do differently and then like it's like let's go I I have my to-do list and
1:07:51um I asked a lot of teams to do this a lot like it's like when when you have systems that just don't work um one of the most powerful you know maybe through affirmations maybe through experience things you can do is just don't be prideful about the prior book too much it's allowed you're allowed to have pride in it but like you want to wake got better every day, right? You want the tomorrow version to be better than today. And for that, you have to kind of downgrade what's there. Like you can't like the
1:08:20sun cost fallacy is so powerful.
1:08:22But how is that an affirmation? Like how does that represent like how do you when you're actually talking to yourself or you're writing this down or is this in your monologue?
1:08:30I literally write hit pieces on the past, right? It's just like a hit piece.
1:08:34Yeah. Like I just like all the things that are wrong with the thing I somehow am really proud of. who are so much like all some of my favorite founders. Dyson's like this. Uh my friend Kareem, who's one of my closest friends, he's the co-founder and CTO of Ramp. It's like nothing's ever good. The way I describe him is just like no resting on laurels, no sleeping on wins. Do something great and then do it again.
1:08:53Steve Jobs said this. He's just like, well, what's the proper response when you make something wonderful? He's like, you do it again.
1:08:59Yeah, let's go. Um I know a lot of these a lot of these great people, they don't really have rearview mirrors. like they they'll obviously learn from what they did, but they're not like, "Wow, look, look at my trophy room." They don't think that way.
1:09:11Look, nostalgia um was put on death certificates in the 1800s, right? Like it's like it's people died of nostalgia in their minds. I mean, they really died of something else, but like I have never heard that before.
1:09:21It's like we used to know that nostalgia is is is not a good thing. It's like it was it was one of the bad um indulgences. Um now it's belly of ice. Um so um I I think nostalgia needs a little bit more um um scrutiny.
1:09:36Overcoming Sunkos fallacy is one of those things that like any path that you can take to get there is going to be enormously beneficial. Um well I think playing the game of corporate raid is a great way.
1:09:47Exactly. So so then you you develop tools you kind of separate yourself because that was your decision. You might be like oh well like I feel a little sensitive about that. It's like no no this that was somebody else's. This is a new company now. So, so one of the things that um is unpopular that I when I when I do it inside of a company is like I I really talk the past especially if I did it. Um you know like um you know there's still like systems that I built inside of the system. So I like I I I talk to the past publicly.
1:10:12I I trash uh like like I I make fun of all the ways and this is hilariously uh wrong in in funny ways and I I I need to remind myself especially when I do this with an area I didn't work on that like I I I got to like have to provise it or like I have I need these like corporate radar like like I'm collecting these now.
1:10:34It's almost like dissing yourself. I need to help people not think that what I'm doing is I'm passing judgment on their prior work because I'm not. We all to like I expect you are passing judgment on the prior work. You're not passing judgment on them as a person. This is what Rick Rubin talks about in his book all the time.
1:10:50But it's not theirs anymore once it's out there, right? Like this is the thing about that. they need to disconnect from the like the work is collected is the moment the pull request is accepted or the okay two is uh um uh accepted um you've converted like your craft into something the company uh is like is in a company's commons it's a company is a collaborative project where everyone contributes and there's a process by which it's contributed at which point
1:11:18the company accepts it as being on quality and uh says like this is now part of you know like my like the company's embodiment essentially. of a product, you've contributed it. You can um you you deserve the credit for this and and so on, but the company could have had someone improve it at any point of time, right? It's not yours. It's like we don't allow people to use the word ownership over parts of the codebase or so. Um we we only allow
1:11:47stewardship as a work uh like just as a as a proxy term because sometimes you need to be able to talk about it. In this way, it the Shopify thinks of itself more like an open source project.
1:11:57you contributing into the comments. Um, people talk about Wikipedia not about the particular editor of a Wikipedia page. You know what I'm seeing?
1:12:06I have a selfish question before you move on.
1:12:08Yeah.
1:12:08So, you're looking at all past work. You have there's this guy named David Olga who's one of the greatest advertising agency founders and he says that we have a divine discontent with our work.
1:12:17It's a perfect anecdote to smuggness.
1:12:19Yeah.
1:12:19Right. Cuz he's like, you don't want to rest on your laurels.
1:12:21Yeah.
1:12:22I talked to James about this though because he has a very interesting organizing principle. So, we're going to take this cup right here. This is a product. He goes, "This is organized his entire life." He's been an inventor and engineer for 55 years now. And he's just like, I see this product. And I say, "Ask myself, how can this product be better?" Yeah.
1:12:38Then I make it better. And then I put it down and then I short time after I pick it back up. How can this product be better?
1:12:46I make it better. I put it back down.
1:12:47And he goes, I just, he goes, I see the bad in everything, but the interesting part is he's intellectually and emotionally mature enough. He goes, "You have to understand it doesn't like I'm not a miserable person. I just look at it as like this is a problem. That problem is an opportunity and I want to work on that." What is is your inner monologue when you're critiquing your past work? Are you excited? Yeah. No. No. Like I get excited by by by finding problems. Like I I just like I love uh like I mean look at this point I'm um such a I'm such a
1:13:15long-term veteran of of tech company building. I love figuring out that we're bad at stuff because like we have a pretty good thing going on like like all by all intents and purposes this thing is working right. So um and uh you know when when when I figure out what like we actually bad at something I'm like holy like I have an obvious blueprint for now how to become a better company now which is like actually my job my craft right like this is all opportunities things go into commons they are being hopefully judged by everyone I get grumpy when things that
1:13:44are shitty are not identified as such and improved um and then I make people go do it and sometimes I do it by um uh trying to create um energy by just like roasting the things current state about just like I want I want people to feel no difference to it. I don't want people to respect the piece of code that exists in that or system that I want them to improve. Um, and I want people to um um, you know, find their sort of energy
1:14:13source because I what I'm asking them is like go into the particular box that contains this problem and do the best possibly better than anything I could possibly ask you right now for solving it because I expect people to um be highly agentic and uh, you know, fall in love with problems and just like find better solutions than what uh, you know, industry usually produces and so on, right? That's the entire point. it's unpopular, then people aren't in the right headsp space for it. And it's incredibly effective if they are. So,
1:14:40um, the difference very often is just a couple of words um, and a bit of framing. And, uh, I just find that's like that's one of the most powerful sort of tools you pick up, I think, along um, uh, you know, along the the journey. It's like the five words to say at the beginning of a sentence that change everything. Um, and my co-founder actually gave me one of those very early, which like probably why I tuned into this kind of thinking and this collecting these kind of uh things because Wait, what what did you mean by the five
1:15:10words you say at the beginning of sentence?
1:15:12I used to go again engineer. Um, that's always like an interesting experience with um uh for the engineers working for me. And um like I I I stay pretty current um uh with engineering. I still do not a ton of production uh um production engineering, but like I do um I I sometimes start new projects with people like uh and and the first 20 30 p requests or commits in
1:15:41many repositories for things that we use are come from me. So like I I like doing this. It's it's part fun, part I I some need help in my craft. Um anyway, um so that's a surprising thing for people. Um uh of course so my intuition was always like okay well this is not the right architecture for this kind of thing and I know this for a fact because I've built this thing before so let me go to a right um uh whiteboard and just like
1:16:09rearchitect this and like and so at some point um and that like now you know Daniel my co-ounder like explained to me well look you get people pretty defensive then because they just came to show you basically you know what was objectively their test work because they presented it to you and that matters to them. So, and then you just like it doesn't matter if you go and make a much better system here at drop
1:16:35of a hat. Um they are like um if I truly ever did this um they're going to be defensive and try to say face. So, um just put for example in front of every sentence and like what do you mean? And now like I tried this and it works perfectly. So instead of just telling them, hey, uh, you know, instead of doing this, like here's a, um, um, uh, architecture that that you should use, just say like, I could think of doing this a couple
1:17:04other ways. Maybe something you want to consider. For example, what about this?
1:17:07And then just do it. Now you're on the same side. You know, you're on a team. We all working together on the same problem. I'm just I'm adding input now.
1:17:17Like everything is the same. It's five words or so in the beginning. I just find the the magic of these five words is uh or not this specifically. It's like things like this like just frame things slightly different and life's easier. I read something Jeff Bezos said that changed my perspective on the importance of high quality sleep. He said that he makes sure he gets 8 hours of sleep a night and as a result his mood, his energy and his decisionmaking is improved. His point was that you get
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1:19:27One of the things that Daniel from from Spotify almost said Shopify now for him. there for Spotify totally be fair.
1:19:34He's like you should ask him like what were some of the advantages of starting with Silicon Valley.
1:19:38I think there's just too much cross um pollination. you you you kind of have to sync the companies towards like um entrophy creates equilibria and so you end up like with the companies just being very recognizably similar to each other and the activation energy for being very different is super high because that means people come with the wrong ideas into your company behave incorrectly and you have to like tell them to uh behave differently where um
1:20:05if you're outside of um a place like Silic Valley where people just move along between companies. I mean, first of all, especially early, I I I traveled to Silicon Valley a few times a year, but I tried to just take it all in and learned as much as I could, but of course, what I got from everyone was not actually the answers to my questions about how to do things. I was getting uh the aspirations usually or the highlight reel. People wanted to seem smart, right? like and so so they give me the
1:20:35best vision of what uh they think the answer should be or where what their company ought to be doing. And so which is great because then I took that back home with me three flights and um and uh sort of took the ideas that are relevant. Um tried to always put like a Shopify spin on it. Like I don't like taking ideas as you clearly can tell and never did. um sort of like just like figure out how to localize them to our
1:21:00problems. And um um ideally try to do something better. And so only very many years later I did I realize I was like always for my career was comparing my and our average to everyone else's aspirations and highlight reel and just like that alone is a really really good thing. And if you then try to do better than that um you know sometimes like just ignorance is an incredible um way of actually just doing
1:21:28better. And uh so so that that helps uh the process of having to translate being able to translate things like we had no one like when Shopify IPOed um we had one um member of executive team who ever worked for a public company. That's it.
1:21:46Wow. We had no one who took a company public. we've known was an executive at a public company. We had one executive who worked at a public company once and it's just like I think that's cool, right? Like it's like that's that's I I felt a real sense of accomplishment about that because like it meant we could we became our own thing. Our our entire motto becoming a public company was we are not going public. We are creating a public version of Shopify.
1:22:11And so that was like what's the difference between that between that those two again becoming something else. It's like we don't want to uh like a lot of people avoid when when when we are public company we're going to be different because like people sort of expect um public companies to be a certain way at least the people who worked at Shopify did I felt it was important to be different and uh do things differently.
1:22:34One thing we did you will appreciate this is um you know we looked at the requirements um we talked about Formula 1. Formula 1 is funny is sorry little bit of a V but like Formula 1 I love because it's like there's a rule book.
1:22:46It's the opposite of every other rule book on planet Earth. People read it so that they can comply. The Formula One rule book is a rule book that is read so that you figure out how to beat it, right? Like and like it's it's like it there's no engineer in Formula 1 has anything to do with with the central casting engineers. Central casting engineers actually usually want to get requirements and then comply to to them.
1:23:08They're like the people going to Formula 1 are the people who want to beat the system, right? Like this is um very important uh to them. So I I I I um uh count myself as uh of the archetype of the latter like like the group of like I I I would have liked being an engineer in Formula 1. I I like beating the systems but that but I'm uh that other people tell me to abide by. I heard a story one time that somebody had hacked your compensation system uh to get more money than you know essentially they just studied the rule book found this
1:23:37loophole and you're like good for that person like and then you'll fix the loophole or whatever the case is but like that's exactly the kind of person I want working for me.
1:23:43Exactly. I mean yeah especially if it's I mean there's a way I mean what happens next ends up mattering right like so okay this goes on like at some point this becomes well you're just exploiting a weakness fully I I mean I don't want to give too many provisors but generally like people who are like looking around to figure out like I I never begrudge anyone being an intelligent actor in the local incentive system that is just like everyone's allowed that's pretty much my morality
1:24:13at this point like it's like um or or at least big part of it. You're allowed to do this. Um I own the incentive system. It's not um you get too much out of incentive system or incentive system tells you to behave in a way that is not congruent with the company uh the company's goals. That is my skills issue in designing the conversation. not not not your not their fault for taking advantage of it but really appreciate if you give me a heads up like so because we are still
1:24:43the same team here so like you know may maybe you raise your hand at some point saying this is fine yeah not like 10 years later you know so back to the IPO like in the IPO IPO we we just looked for ways how to like within the they constrained rules by the SEC where we do we have agency where we can do different things we sort of honed in on the uh IPO road for video like a horrible video player. The IPO road show
1:25:09website like an uh like and every other IPO we could find was this um you know CEO standing in front of a um a screen camcorder and uh just sort of going through the same slides. We're like there's no rule for that.
1:25:25Let's shoot a documentary here.
1:25:27Like let's like let's let's go through the history of why this company exists and why it's important. And he said like what video can be put onto this space where no one expects it that will somehow hook people in to full screen the video within uh the first uh 20 seconds and actually watch the entire thing. And we we heard so much about this on the road. Like so many people were like I always look forward to meeting you. What you guys did with this video was insane. I didn't even know you could do this. Every video every like our way. So, it was kind of like a
1:25:55nice little moment of put putting a bit of uh like agency into a process, which was pretty uh I I heard this um this story one time. I think it was like the founder of SiriusXM. I forgot who the person is, but they were like, "Well, how do you make annual reports?" And there and there's like no rules around there, so you have to present certain information.
1:26:11So, they made a book and like the book would be illustrated. And she's like, "No one said we couldn't do it." It's like we're just going to do it our own way. Let me ask you a question though cuz um I think I heard you say this as well. you you were getting what you felt was bad advice or incomplete advice or maybe advice not from first principles about like whether to go public or not.
1:26:31Some people were saying stay private longer.
1:26:34So yeah yeah I get you the advice was always like don't right like it's like um who was telling this other founders?
1:26:39Yeah founders Silicon Valley orthodoxy definitely is to to avoid it. Um, and um, I don't know. I I I can tell you the story of how my decision, but like it's just like basically it's like I mean I I suppose I'm predisposed also then everyone agrees with something to take the counterfactual just to hold it up to see if I potentially like it better.
1:27:02Personality embedded personality. I just like I just I find plan B usually is a better one. Um, everyone puts um, plan B like if if if I think for many many many people on planet Earth always doing their plan B would lead to a better experience, right? It's just like plan like plan B gets the ambitious one. The the if this event happens in my life, it. I'm just going to build a company. It's like such a common plan B.
1:27:26That might be what you actually want, but you're lying to yourself or you're scared or whatever.
1:27:30Yeah. And also again, you are a a human being. Therefore, you have uh uh you come your firmware comes pre-loaded with a problem called the sun cost fallacy.
1:27:40We just do, right? It's like this. You got to operate that out of yourself a little bit. You got to be able to like discount what has happened more to make good choices because otherwise you just chase um bad with good money all the time or or chase bad plan with your hours in the day or whatever.
1:28:01Humans are reflexively scared of change too. They'd rather be in a bored boring or like even miserable environment than actually change because the fear of change is so great. So wait, so people are telling you so long like being private is better.
1:28:15Like friends of mine like at you know Stripe are running this experiment like they matched what they put off in terms of figuring out how to stay private for such a long time is actually remarkable. I just think they spend a lot of time figuring out how to um stay private and like I don't think that's the most valuable way to spend time, right? Like it's like I think so you went public 2015. Yeah.
1:28:39What were the arguments for staying private longer in 2013 2014 when you're having these discussions?
1:28:44We were tiny. We had um we were 800 people Canadian.
1:28:49So they're saying you Yeah. Like I I mean when Shopify's first trades happened at I think a billion $ 1.5 billion valuation, right?
1:28:58Like so that's pretty wild that you know the public market almost got like venture could have got venture if you bought Shopify you essentially had venture returns in the public market. Every once in a while someone puts together a list of best uh stock market returns over the last 10 years of like whatever and like yeah like I I own that list right like just because I decide to take prop Shopify like I did the old school thing that was normal that's what everyone did that's what people people went public fast and and by the way this is kind of
1:29:27important like you know public market needs to have growth because where else is prosperity coming from for for people who don't have like these all these accredited investors um accredited investor uh laws and stuff like this. Um all they do is like make it so that like like when you're rich you can invest in private company stock. Yeah. And when you're not you can't and well where are the returns? Like of course it's such a conspiracy to keep everyone uh
1:29:57private because that just like sequesters all the growth exposure to uh uh institutional and um investors and um people who are already uh accredited.
1:30:08And so I I I just I just really dislike that whole thing. I think like man like again it's it's about building things and sharing what you figured out. and like people buying a ticket to write um with Shopify because they like what they're building is like please like that's clearly what we want.
1:30:26So um so I I just think the institution of public companies is good. I mean where my beef is is with the whole notion of like uh influence over companies again path dependence like one vote on one uh like one one stock one vote is like yeah but like no like every everyone who studies cont like uh like decision- making knows that you want to move towards uh like people who has the most context should make a decision that's like doesn't say the
1:30:56leadership of a company this is literally what I'm talking about creating space for creativity because I want the decisions to be made um uh locally on the ground.
1:31:04So were the the arguments for staying private back then just mimetic? They were just comp they were just repeating what everybody else is saying.
1:31:12I think people are generally right. it just doesn't it it it washes out, right?
1:31:16Like again people have problems with the concepts of like um very often a new idea is dismissed because someone can formulate an idea like a reason against it and somehow that dismisses the entire thing, right? Like you like we live fundamentally most of people spend their entire life sadly um in a in a in a vetocracy, right? Like where um you need um everyone to agree to do something but you only one person to vote against it to not do something. And um uh again
1:31:44good companies overcome this in in in important ways. And so similarly um one good argument dismisses the entire idea is a very common way to evaluate options. Um what people very very often don't do is reformulate all the arguments against the status quo. Right?
1:32:00Like the thing we're doing right now also is flawed. It just we really understand the upsides and the downsides. the new thing might have way higher upsides or actually maybe not. Maybe the upsides are obscure but like um or hard to know for sure but the downsides are clear and they can be formulated. Therefore the usual default position is not do it.
1:32:25So that just I think is incredibly undisiplined because um you need to think in uh you know propensities, you need to think in in chances like and sometimes you need to like really really load up um a decision for all the pros and cons that can be articulated and make it make it a little bit like in your mind like like look at where the scale comes out for a company that's trying to sell like the e-commerce platform for every everyone especially for the many American companies being a Canadian private company that's tiny and
1:32:54um is is it's not it's not ideal. So um you know like it's people don't usually go public because of a marketing or like name recognition but like you know super valuable anyway.
1:33:05Put it on the pro side and then put everything else on the pro side too. We might get better people working for us because some people really want liquid stock. Um like and you know so on so on so on and in the end it's like not even close. and just you know the downsides there like couple annoying phone calls I have to do every couple quarters at least for the first 10 years I suppose.
1:33:24Um and um the um I thought actually most of the process was actually quite valuable like like I learned a lot about my own business having to explain it to others.
1:33:35Exactly. There's been a few previous guests on the show. Brad Jacobs, John Mackey, uh Daniel obviously running public companies. In Brad Jacobs and John Mackey's case, they both said like uh Jacobs makes that point. Well, one, he thinks it's like wonderful free marketing and advertising. Two, you have now have a current like you have a currency. Uh Mackey said the same thing like it benefited Whole Foods being public fast because then he used that currency to acquire a bunch of other competitors and accelerated his growth.
1:34:01But Brad Jacob's point was just like he likes the pressure of that check-in where it's like this is what I'm trying to do with the company. this is what I'm saying to do the company and this is our results and I want somebody say oh like there's a big disconnect here and I want the pressure to like to actually um perform in like and have somebody these expectations um externally we talked about the environment that you're building at Shopify I want I'm curious about the how you think about the talent that's inside the environment yeah of course I mean automatively I
1:34:31really really believe in the sort of stoic maybe uh adarian idea of separation of tasks um what have I control over um and what I don't. I I always love the um particular formulation about um uh thinking about how other people think about you. Like again, you need to make yourself a person worthy of being liked. If someone then dislikes you, that's up to them.
1:34:58It's not it's not your job to make people like you. It's your job to be likable. And if they make the category mistake, it's their own problem, right? So, it's a really really freeing way to think about talent. I um my job is to make a company worthy for the best and brightest to work for. Like um this is the part everyone skips. Everyone's like, "Oh, we need to hire a better recruiting team." Well, maybe you need to also just like uh be worthy of the kind of talent that you would like to have. Um, so I mean this goes from like
1:35:26office space if if you have any to uh company uh like amount of people have to deal with to how much um uh you know uh politics can you subtract from a whole thing. Um and can your large company feel like a small company with lots of resources and lots of impact. But um you know it's more fun to ship software to millions of people that you really respect than to uh um a few people who you try to uh make a sale
1:35:55for at some point or like it's just like it's like you know impact matters in a way this is likely going to be misqued but I think the talent eventually takes care of itself. There are not that many good companies to work for. They're not meant companies that that many good companies that deserve um uh the attention of people who can be of by by the most capable people um because they have option to starting idea.
1:36:20There's actually not that many great companies. It's your job to make one of your companies one of those companies that the best people in the world were one of what do these people look like though? The reason why I didn't move to Silicon Valley is because I knew how to create geographical consensus um in the eastern seabboard that Shopify is the best company to work for full for stock and I just knew I had the ability to do it because I knew how to build a company that I would want to book for and um I think given that I estimated I will need
1:36:49somewhere between a thousand people or something like this back in those days.
1:36:52I'm like, I'm gonna find another thousand people um that think like me about how good a company needs to be to to book for and I can dislodge all of them. So if I go to Silicon Valley, I can't pay what Google pays potentially or like someone else makes makes up for their skills issue by just overcompensating. Um yeah, it's called compensation because you kind of have to compensate people for the you have to you ask them to do. And um you know, like if if there's a lot of you have to compensate people for, but you have enormous amount of resources, you can make up for skills issues by money.
1:37:22Um and uh so uh in in East Coast, which was much more hedge funy uh and uh much more high finance and uh like for the kinds of hackers I wanted, I I I knew how to do this.
1:37:33But wait, I want to pause there. I love this idea where you're like, I'm going to build a company that I would want to work for.
1:37:38Oh yeah, that's on one end of the spectrum, which is great. You also had this like thought experiment uh that I heard you say before which is like one of the worst things that could happen on the other end of the spectrum is you wake up 10 years from now and you built a company you don't want to work at. And then you have this great line I want to pull.
1:37:54It's like that's dystopian. There's so many companies I wouldn't want to work for. Why did I use my life to build a company to build another one that I wouldn't want to work for? You just should build a company that's worth working for.
1:38:04Yeah. Like again in your you you should uh like take pride in your work. um um uh like in in in the inputs and how you like did you accomplish the things you set out for in the argument, right? Like um like be easy on the path, but like like the outcome does should matter to you. And like man, I just shake my head sometimes with like how people over complicate these things. It's just like it's kind of man people know what they're looking
1:38:32for, right? like and and some you know I'm talking about very very very fortunate people here like people who have a lot of choices who have like incredible competency and uh in in some of the rarest skills and like like combining this with enormous drive like like sort of you like there's like like a couple of different attributes that all have to come together to um be one of those people who can command like like hundreds of thousands millions of dollars of uh um conversation packages you can make in in in in this industry
1:39:00but partly because you're worth right?
1:39:03Like you're contributing more than that to a mission uh um like this and therefore you can command this kind of um compensation and that's like the way this all fits together. I think of everyone as an entrepreneur really your capabilities that you are the entrepreneur of your own work output.
1:39:21Your product is what you can do and what you can accomplish. Um your market is the companies that exists and um um you are selling a uh exclusive subscription um uh in that's the institution of employment right it's a it's a two-sided mark um opt-in relationship whenever people come to me and saying hey how do I earn more money it's like well be too good to ignore then we increase compensation you know like it's like uh
1:39:49you know like like be better you you're making this amount you would like to make this amount in which way have you become um so good that you can add that amount of increase to you know just like the the the collaborative project we all working on and so I think this just sort of clarifies and simplifies things right so um I I mean all this said I don't want to sound it's like make it sound like it's inevitable that if you just do all the right things you end up like there's always a information gap and reputation
1:40:18lag and um uh I'm I'm out there recruiting and telling people about the company um uh a lot. What helps me a lot is people are curious about the company and I've heard about the company and so on now, right? That's that is because of things that um were under my control. I tell people that it's an unshared attention company. Um there's no part-time jobs. You will have to put a lot into it. You're going to get even more out of it. you will you will make great money but we'll we attempt to
1:40:45never be the highest uh compensation play um um bit um because we have found that the people who optimize for that above all else actually don't do well at the company um because Shopify is a missiondriven company.
1:41:01Exactly. And um the thing I'll promise is like in terms of your own skill set, partly based demand, partly by osmosis, and partly based on culture that's surrounding you, you will advance vastly faster at Shopify, building capabilities, skills, and correct ways of thinking and mental models and these kind of things than uh I think at any other place. Therefore, the compound return to your career is going to be vastly higher here than anywhere else
1:41:29because you get to a potentially higher compensation level earlier in your career because you're above it. The entrepreneurial story is is very fractal in Shopify. It's just like what is your product? What's the market? And does it fit? It's a it's just make is is a clarifier that I think is worth talking about.
1:41:47I'm going to quote David Ogy again because I think it's interesting. He says like talent is most likely to be found amongst non-conformist desenter dissenters and rebels. So when I asked the question about like hey we know the environment we have a description of the environment. What are the people in the environment? There was two ideas I got from two separate entrepreneurs. I've mentioned both them already but I I like because they use the same terminology when they're looking for talented people to hire in their company. Uh Daniel from Spotify and Kareem from Ramp. And they both said the same thing to me. They
1:42:16hire for spikes. Mhm.
1:42:19Spikiness. So a lot of pe lot of big corporations, they want you like wellrounded like no no this guy might be a bipolar alcoholic or this guy might you know have some other might not shower.
1:42:29Yeah.
1:42:30Like Steve Jobs he was hired at Atari.
1:42:32Everybody's like Nolan Nolan Bushner the founder of Atari. Like you can't hire this guy. He stinks and he wants to sleep at the office. And Nolan's like yeah but he's really talented so he's going to sleep at the office and you just got to hold your nose when he's around. Do you do you agree with the idea?
1:42:44100%. It's like exactly it's it's like we never look at the credentials and stuff like this. I I again I'm a high school. It would be like rich if I would start making everyone want to have PhD.
1:42:56Um the path by which we do it is we we go through a life story. We we ask you like hey give us your story and this a very important ingredient in our hiring process. And frankly what we're looking for is like high agency uh experience.
1:43:08We look at like something went wrong in your um in in in the story at some point. Well now let's zoom in. How do you react? Give me a minute by minute.
1:43:16This is what we know and know, right?
1:43:17Because a lot of us are entrepreneurs.
1:43:19Even everyone like I I talked about the founders of companies we purchased, but like most of the people just in general in Shopify are entrepreneurs. Many started Shopify stores, built a business and then fell in love with company and applied for a job and got you know it's like so this is um there's a huge amount of building company building uh background and we want to be surrounded by people we admire. That's I think the biggest product any company can deliver to their employees is so is that every day they're surrounded by people they deeply admire and can learn from right
1:43:48like so it's very important part of this. So lots of entrepreneurship uh lots of entrepreneurial impulses um and then so we look for this uh high agency behavior um and um then um you know obviously did you drive the particular craft uh that that that you applying for to to excellence? How do you think about this kind of thing? Can you just sort of talk about the excellence or actually perform it and then um you know this is
1:44:17really what we fill our buildings with and uh you know just like again create the space then and I think we creative and this sort of this is how it always worked and it's it's it's worked really really well. We couldn't do anything other than this in the beginning, right? Like in the beginning, we had no money. Z really zero. Um I didn't take a salary for I think four four years. Um and I heard your father-in-law
1:44:45covered your payroll when you couldn't make it.
1:44:48That's right. Um so yeah, we were living with uh my parents-in-law um Fiona, my wife's old bedroom. Um u from which I also added I put put a I a desk and I built a lot of Shopify from there. Um and uh you know like I mean just kept cost low but that but that was the main thing. Um, make every dollar count is something that's I'm so glad like this is what I worry sometimes with all these really really big seed rounds like like
1:45:17money main thing money does is it uh gets you I mean it sometimes I do wheels but usually it just like makes you get a whole lot more of what you got before. Um and um if people did raise early partly because they were not tight with money then you get a whole lot more tight not tight with moneyiness um at larger scale and it gets really really bad.
1:45:40You're making my heart sing because I feel like I'm like an on an island by myself about this cuz I've spent 10 years reading 410 of these biographies. All of them control their costs like crazy. They'll tell you and over again constraints are your best friend.
1:45:53And then I talk to these young founders.
1:45:54I I usually don't meet startup founders cuz I'm not an investor, but a good friend of mine's like, "Hey, meet this kid. Meet this young kid." Uh I met him and one of the things he was talking about was like, "Yeah, let me show you pictures of like this beautiful office we're moving into." And he was showing me everything. And I was like, "This is stupid. Like you haven't done anything. You don't deserve this."
1:46:11And I go, "Go look at like what where did like Apple start?
1:46:14Look at Microsoft. Microsoft started in a strip mall in Albuquerque, New Mexico. Like and you need a a triplex in Soho.
1:46:21Like what are you talking about?" And the question I what I pointed to was like okay how does this make your product better for your customers right and his answer was well I'll be able to recruit better talent because office is nicer then you don't have a mission it can work but like I feel like you're you built a $200 billion company in your wife's childhood bedroom that's where you started like maybe we should repeat that over and over again like just go look at where these companies were you mentioned the Larry Ellison episode I did earlier
1:46:50like they're in a shitty office building.
1:46:52Yeah. Yeah.
1:46:53Like in like I think they had three uh like three separate rooms. Oracle that's where Oracle started I think. Um I mean there's a well doumented uh effect of when companies build monuments to themselves they usually decline right after. Right. So um that's that's has a long running history and business history. Um I do think there's an art like I I do think that um compromisinvested into office
1:47:20space. um for a very long time and it actually was a mistake. I I think space around us is actually extremely important but it doesn't need to be expensive like like um uh that's probably an aside but like um oh let's go down there. What does that mean?
1:47:37It's just like so again we didn't have a lot of money but we wanted nice office spaces. Um there was uh this was the decades where there was a lot uh of open concept versus own room office spaces right like was sort of a kind of fight.
1:47:52My co-founder is a Daniel W and he's um he's a polymorph he learned programming when I asked him that I needed some help with programming and just like was good immediately which was annoying as hell and um um before he was our designer and did like literally everything else too.
1:48:07Now a DJ and before that he won poker tournaments. So, it's like it just like it like keeps going. It's like one of these little It's actually really really helpful to have someone like Daniel as a childhood friend because it really really um misleads you about human capabilities like if this is just your buddy who does stuff like this. Um anyway, uh uh he uh at some point like he really really tapped into this. No one can be more creative um than the space around them and no one can care more than the person they work for,
1:48:36right? the way he like sort of created this um uh philosophy around this. Um I I told him look here's here's max budget and we are getting like B office space that's like kind of cool and you need to figure out how to create spaces that are like a 10 out of 10 on doing worldass work because inexpensively but like you need to figure out how to make this cheap, right? Like so um man I mean we built a bunch of offices in a
1:49:05row uh and yeah I was insanely good at this.
1:49:08How many years in uh into Shopify?
1:49:10This is like 200 I think 10 was the first one. This is six uh six years in founding four years after Shopify launched. Um um we went out of like sort of above a coffee shop which was like really nothing um to to our first office.
1:49:24So how do you do this?
1:49:25They like he said like first of all the the economy is wrong. It's not between open office and um uh like like closed office spaces um there's like a perfect midpoint um um because and and it has to come from your strategy of projects.
1:49:44Shopify loves the five person team. We increase to eight sometimes, but we think um the the best team size is one um because like a single offer can do things that is impossible to do for teams and hit high notes that are unreachable.
1:50:00But I think PL has rather played the field of what can be done as solo projects actually changing again because of AI but like which is the exciting bit but like um most projects worth doing need to be done in teams. Um then there's a magic number at five is sort of what the military ends up like figuring out to like they test these things and come to the same conclusions.
1:50:21You can sort of temporarily go up but then at some point you have to split teams um and parcel out the tasks. Each of these credations is like I think a 10x loss of productivity. So Shopify is like of our like R&D team is I think three and a half thousand people. It's really lots and lots and lots of small teams. Um and this is also why we need this legibility coordination layer that I talked about earlier. Okay. Um, so pods, um, they figured out how to make pods that are like exactly they are
1:50:50private enough while being open enough.
1:50:52They never make the office feel dead, but they also draw you around. It's like, what's a pod? What does that mean?
1:50:58It's just like a it's a room um that just like sits up to like when you put the seventh person in you, it's uncomfortable. Like it's like again think about how much policy you don't have to post and if the environment just makes you do the obvious thing you can play with uncomfortable too too many people in this area like when you when you know what you're doing now you don't need to post the policy about how many people you want in a pot and people
1:51:27self-organize into uh five people teams because that's the most comfortable thing to put in a pot. So um not meeting rooms. Meeting rooms go in the middle um on our limited floor space. Um because we don't want people to spend all day in meetings uh and then get out of the dark rooms. Um we put uh like everyone sits around the the windows in in pots and they like structured in such a way that you know it's all works. The coffee area is on the other side to create serendipity. We um cut through every
1:51:56floor eventually to create stairs that um um we we move teams in such a way that um certain teams that have to work together but work on infrastructure separated them out in floors so that uh they going to each other would run into other people who are using the infrastructure to you know and so on and so on so on. So um design being super conscientious about this is really important. Daniel did an amazing job. We we I think we open sourced the floor plans and I think that lots of lots of
1:52:25mo like this is not interesting anymore when you look at what they look like because I think that work has gotten absorbed into the tech industry as a right midpoint and um uh but many people um cargo it like they just zox copy it essentially uh instead of understanding so they make pots too big or whatever look you know these kind of things we talked about cargo holding a few times you observe that behavior in other companies. I'm curious what internally
1:52:55you have caught your own company caring.
1:52:58Oh, we actually um we in a Toronto office here um uh the Toronto office actually has a few floors that are clearly um mimicry of the these ideas that Daniel uh figured out um but are not uh they don't understand where the ideas come from. like again pots too big is is like more um the nice meeting room is right at uh on the window has has
1:53:27lots of light um you know just like again maybe this is okay to have a view but like um I went with the teams through it because we we then changed some of the floor plans after I moved here and realized like holy this is like um oh Norman doors everywhere that's the craziest thing I I I fundamentally allergic to Norman doors um what's that doors that you uh push Uh then and then you realize you can't tell.
1:53:51Yes.
1:53:51Yeah. This is the most like the most fundamental design error that you can possibly make is like create affordances on in a product that make people predictably do the wrong thing. like like this is such a like like literally everyone who's ever involved in a process of um designing a uh a nom door should uh you know revoke their design license like I'm being facicious obviously that isn't a thing but like
1:54:19it's like it's just like man it like yeah skills issues as a door is like very common occurrence I think in places that are not conscientiously designed and like all those doors have been replaced very fast like I mean the funny thing is you can usually turn a Norman door into a non-nomen by uh cutting things away and like putting a push plate somewhere, you know? So that helps. Um so I I I I make a big deal out of these kind of things. Like it's just
1:54:47like this needs to like I cannot surround people with things that are underperforming the quality that we of of of engineering we want to do.
1:54:56And that's down to the detail of the doors in the office.
1:54:58Yes.
1:54:58Wow.
1:54:59Yeah. Um yeah, of course. Um yeah I mean because product is not a thing. Product is an abstraction. Product is a name that like a handle that you put on some on some totality of a body of work. From perspective of people creating product.
1:55:14Product doesn't exist. It's what other people call your work. A product is just details. It's millions of little details that are appreciated if they compose right and uh make a bloody mess if they don't. Right. So um so from the inside perspective you have to sweat all the details. The way you do anything is how you do everything and um that is absolutely down to the floor plans and you know the ambient noise levels and so on. Just like you go in a room it's like that like silent. It's like it's just
1:55:43like you you notice when you're talking while going to a meeting room. Um uh at least on the floors we fixed um based on previous specs. Um it's kind of uncomfortable to talk in a hallway because it's so echoey. Then you walk in a meeting room and immediately like it's just a different noise level because it's just like diffuse. We had an enormous amount of like in fact um we actually worked with companies on Shopify to create the products of sound dampening that are now really really like supply all companies tech companies
1:56:13which is really fun. Um and so um um in fact like everything in our offices is from Shopify stores, right? Because again like if if if anything we are doing is not mission aligned, we just didn't align a mission exatically. So you know just you can go pretty um far in these kind of things. When you need something for office spaces and it's not on chify um we usually put a call out for someone to start that thing. So it it's on chopfy and we help them get
1:56:42started and build the thing and then um we can maintain our 100% chop shop quarter.
1:56:48So it's also fun.
1:56:49That's incredible.
1:56:49We did at least one enterprise sale with with a supplier because we really wanted their floorboards and uh for for something they were really like look great and were at the right price level and like yeah but we can't place for order unless you come to our so sometimes you maybe that's actually a good way to get a customer. It's also a funny way of doing enterprise sessions.
1:57:11I want this thing, but you just need to migrate over to our platform first.
1:57:14Yeah.
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1:58:36All right, I got to talk about we I want to talk about video games. I want to talk about AI. I want to talk about them being related. Uh I mentioned my friend Kareem a few times. I went to his house last week and I was like, "Dude, I'm talking to Toby. He's also obsessed.
1:58:48He's has an engineering mindset like you. He's obsessed with playing video games." And you've mentioned a few times where like you know you thought you learned more about building a company from like Starcraft than almost than you know but talking to a bunch of people or reading a bunch of books.
1:59:02But then his whole thing was just like he's got to feel like it's even building with AI now is even more like a video game like completely factorial. Yes.
1:59:13Okay. So that's the example he gave me.
1:59:14I haven't played the game. Can you elaborate on this?
1:59:16I completely agree. So like uh so again this is like man the world has such a weird way of like um somehow changing itself around me to make this stuff that I thought was uh uh irrelevant relevant or late in life.
1:59:29It's like absolutely amazing. Um it's just like okay so so video games video games are best thought I mean this depends very much on the video game but in the aggregate very often. The good video games are simulations. They are wor upon itself and you are an an high agency actor and you mod modify things.
1:59:46You you you take you perform actions. Um you make decisions and then the game rearranges himself giving you a feedback loop of usually a very quick feedback loop because otherwise it's unfun. Um but it it you you learn about consequences of your action. like um uh competitive multiplayer games are very obvious there and and Starcraft and strategy games, they're not that popular as a category of games anymore, but like um you know, when I was going through my teens in the '90s, like Starcraft was
2:00:15the biggest uh game. And um you know, I loved it because it was really really hard. But it was like easy to learn, hard to master, which is exactly I think a hallmark of everything that's worth doing for motorsports, for for um kiteboarding, for my for my hobbies, tennis, or all these things are like this. But like it specifically is like honest in a way that like there's like two people on a map mirrored. Everyone has the same potential every single game. Um and one person wins at the end,
2:00:45right? like it's it's like it's it's unditionally it's a game of imperfect information. Um it's uh not like chess. You don't see the moves. Um you see only some information that you like in fact you have to invest. You have to use one of the things that could get you resources instead to go to the enemy base to figure out what he's building and then you need to interpret this. So all these kind of things is like what you learn in this game is uh information is everything every like there's no right decision. And there's
2:01:13only context in which decisions turn out to be correct. And um while resource management is extremely important, um you have to understand that resource management is not just quantifiables.
2:01:25It's not just minerals and vasping gas that you have to manage which allows you to build units. It's also your attention. And frankly, attacking other people's attention is much more profitable very often in in a game of Starcraft than it is um to actually attack their base because if you overtax their ability to pay attention to things, they will make mistakes.
2:01:47How do you overtax their ability to pay attention to things?
2:01:50You can do an early attack. You can do any number of things, especially if you play against the same person. Anyway, you get a very high level. You will play the same people over and over again.
2:01:57They get a sense for how you play. So um at that moment like there's always been the people who are just like incredibly prepared right like they just like they they they perfected playing a single way which my play was always different chesscraft all the same like I I disrupt the other person's play like I I do moves that aren't in books right which are they're not in books because they're not good but other people can't deal with it because they need the preparation that's like their their their skill set is um their ability to
2:02:27play chess is uh the crystallized intelligence not with fluid intelligence to deal to roll with the punches. And so um um you know like I I learned a lot about myself doing this. Um but I also learned about a lot about um you know how do you like you know just like how to approach um uh a game like how do you how do you get better? How do you how do you get more out of every game you play?
2:02:50Because like I I never ever in my life had as much time as some other people could uh to invest in something like this. So I always had to like how can I get more uh skill progress units out of out of the time I have than other people out of less constrained uh calendars. Right. I'm talking very fondly of Starcraft. It might just have been oddly the right teacher from here at that moment and the student was ready. Um and um so I could have maybe learned the same lessons from any number
2:03:19of things. But I think it was specifically good because um of it being a simulation.
2:03:26You start a new game. It had skill-based matchmaking. So you usually played against other people of your skill set um based on you know ELO rating. Um uh and um so you had a very very clear sense if you started winning more games than you lost that means you were progressing there if you started losing more games if you were regressing in on an absolute scale compared to all other players in the world and um I think that was perfect little sandbox to explore how to
2:03:53um um you know think about when it's time to build infrastructure when it's time to invest in resources when it's time to prepare when it's time to reveal your hand when it's not time to reveal your hand and um um I think it was perfect for perfect place to spend time for me in my teenagers years for what I did afterwards.
2:04:14So um back to your AI question, I just find that working with uh uh AI like agents especially the like I mean we recording this this is like week three of um 2026 um if you would have recorded this in week 52 of 2025 um uh it would even be different right like I might not even make this analogy so strongly but that's how much is happening that the world changes every 3 weeks right now Um
2:04:44we we figured out some new harnesses for aentic loops that are much more autonomous and frankly supported by models which didn't exist at the beginning of December even um that uh can perform at this level. And so I look at my computer and I have like six different agents going all coordinating between them. They send emails to each other which I think is hilarious. Um um and so uh you know just like I'm like like man this like is starting to really
2:05:11look like start Starcraft my attention is paid like this one is currently working on a module 4 that I really really need. So I'm zooming in paying attention doing a little bit of micro giving a little bit of extra um double check sort of um the output of a critic which looks at all of them all the time to figure out if they're still on task.
2:05:31It's the exact same thing, right? Like it's like it it is a fascinating time.
2:05:36It's just like I I can't describe how fast progress is right now. I just like you know what I tell my team uh it's like you know 21 years now starting com is really really really hard. Um right so so first years let's like just like that's interesting and everything's urgent because like you're getting to a margin. I we got like within a week of running out of money so many times and sometimes you build out many times it was like just like like the clearance of
2:06:06the one time try hurdles that shop went through was like millimeters at times like there's so like I bet you if you rerun the first six years simulation 10,000 times we would not succeed in most of them right so like like in in a way like luck is a big component timing all these kind of things people luck especially after that you know IPO you think that's probably the most interesting thing period of the company I think it was
2:06:34hard but maybe not terribly interesting right I guess financing event at the end of the day maybe but some some aspects were interesting like figuring but like there were aspects of how we make it our own as a process like that that probably this is why I did it this is why we made changes of to the process or why we wanted to have our own stamp on it because I didn't want to join someone else's process as I wanted to have in my own then there's co which was um very very hard definitely not interesting actually annoying mostly um and
2:07:04um so I'm like trying to figure out like 2026 man this is going to be hard and interesting those are the things you're most attracted to hard and interesting year 21 is like this is going to be the most interesting year in our in in in this comics history probably in everyone little I think literally everyone's career um just everything is lined up it's like doesn't matter what you've got. Like everyone's going to be measured against how well did you prepare yourself? Like what your skill set, how quickly can you react to everything that's happening,
2:07:33how quickly can you readjust, how quickly can you rearr You know the language better than I do, but it's basically it's a company expectation that you the first thing you when you have a problem, you reflexively try to use AI. When did you put that that out? A year ago.
2:07:52Yeah. And maybe not quite, but like something along those and people were just like, "This is ridiculous." There was like some push back. And now to your point about how fast everything's moving. It's like, "Of course you would."
2:08:01Yeah. Exactly. People will look at that memo in two years and just like he didn't say anything.
2:08:06Saying the sky is blue.
2:08:07Yeah. Exactly. But excite you. Does it What's it like?
2:08:09Oh yeah, man. I love that. This is what I'm here for. Like it's just like I I if I wouldn't have happened, I don't think I would run top anymore. It's just like too I like there's much better leaders if in times like Whoa. If times is stable.
2:08:22Yeah, but I thought you were in love with this problem.
2:08:24Yeah.
2:08:25Unsolvable problem. So, you'd still work on but you wouldn't be running it. What do you mean?
2:08:28I mean, I think I I would be No, I pro might try my hand at a different aspect of helping people self-actualize. Like I I mean, my my personal mission is to cause more entrepreneurship, right? Like that's like I I'm going to judge my own career by have I the thing I discovered that was meaningful to me. Have I um helped the maximum amount of other people do this thing? When did you realize that was your your mission? So um I I know exactly because I was like prepare preparing um for one of those internal events summit talks which I was
2:08:58like it's always a bit of a like soul uh like I I do a lot of this like message in a bottle reading and like self introspection and it was like I it was 2014 I um was preparing for my summer talk and I'm like my biggest struggle was um with my own identity like again I was I think I was mentally preparing for the cosplay period which I again wish I wouldn't but like um I was like but I like engineering I really I want to
2:09:28spend my day hacking on stuff and building things not not managing and so um I uh again I used my trick partly um to uh uh give a talk on something that I was sort of come to realization but maybe not fully internalized um to to basically I that I loved engineering because turns out that was the way how I as a kid when I
2:09:57started doing it um could build things.
2:09:59What I actually love doing is building things. Um and specifically I love doing uh like building things that share a thing that like I have experienced this moment of becoming an entrepreneur getting your first sale. And so I I made a talk about combining those two things and just saying like um my mission um uh in life my my craft is actually building things in general. I built I started with products like like code I then create products and now I create
2:10:28companies that create products um and I engineer those um and uh that that caused more of this kind of thing. So I I I kind of wrote that as a personal mission for me and said like I will attempt to run Shopify and try to be um the best CEO I can be until someone taps me on the shoulder and say other people could be better for this company as long as it's in cohesion with my personal mission. But I'm also like I'm perfectly fatalistic about this kind of thing. I I
2:10:55I don't I don't do the job for money. Like like it's like I I do it because I feel like I can contribute a lot. I love this idea that you view entrepreneurship as a way to get self-actualized.
2:11:08Oh yeah, I mean what's more honest, but it's also your form of entrepreneurship. I was reading I never read comments of podcasts and YouTube videos. I highly recommend against that.
2:11:20But people are telling like this is like one of the good entrepreneurs. This is like what you're building and the other entrepreneurs you're trying to to enable. It's not like the crony capitalistic. There's like a lot of like dirty part. I'm as capitalist as they come. So, I understood what that that comment meant. Uh, out of every single note that I took from all the talks that I' I've seen you give before, the one that was at the top of my list is exactly how I feel about what I'm trying to do. And you said focus on craft and giving a And you said it doesn't matter that a bunch of this stuff isn't
2:11:49quantifiable. It's exactly how I feel.
2:11:52It's such a basic thing, but it's like why? Like it's so it's it's it's it's so simple, but it's just not easy, right?
2:11:57like in any which way like companies hate bad qualifiers. In fact, it's like it's amazing to see it like man you hire the first team together and like if you um get to talk about building a company on podcast that means you were successful. So uh the first team clearly did this and therefore the first team was very good and first team you hired based on your gut. You just knew these were the people you needed. um you make mistakes but you correct and that's all just sort of like
2:12:25judgment taste maybe even bias like I think we need to move nostalgia into the bad category of words and bias into the good category of words because bias is actually perfectly fine it's like it's like without bias you actually have no convictions like you you should try your convictions this is really what I learned for the thing so you make the first team as a pure play this is the best I know how to make decision s and then everything want everyone wants you to write it down and
2:12:55you know what happens when you write it down like here's the things that you are looking for here's the the the thing well the people read it are the people very very good at at following lists.
2:13:10So um the people that you probably described not the people who go look for the cheat sheet. The people you are trying to uh avoid hiring are the people who will study the cheat sheet very well. So you just gave everyone a uh like a way of performatively doing the thing that you want to see um without being intrinsically like this, right?
2:13:36And so you end up like very quickly losing your company once you systematize things. However, everyone is telling you to do it. Every there's a giant conspiracy against um these things. Taste, quality. If it can't be put in numbers or can't be written as a list.
2:13:54Companies hate it. Yet almost everything you have to do to build a great company is are the things that are these things and you shouldn't write down. actively avoiding to write something down is sometimes the most important thing thing you can possibly do.
2:14:10Do you think it's also related to the where you you brought up sunk costs a bunch of times?
2:14:14Yeah.
2:14:14Where it's like, well, I wrote this down. I might change my mind, but there's some kind of human element where I was like, I don't want to contradict this because it's in writing.
2:14:21Yeah. Exactly. Again, people like to be consistent over time. I just don't find that important. I um uh I will I found the the cheat code to always being right. It's just like change your opinion every time you get better information, right? Like so because as you get closer to the point where you have to make decision, that means you will wind up with the right one. As long if you not stop at some point to incorporate new information, right? Like and if even if you're wrong and figure it out, you know, again, what do you do?
2:14:48where you have two you have one momentarily chance um to uh steer your concern to the boss possible outcome. Um are you going to take it or you want to be the person who just like leans into the comfort of like somehow character consistency? Like why for what? Like again what's the job you want to do? Is want to look good or be good, right? So, you're going to like just change um uh like it's it needs to be okay to uh change your mind when better information
2:15:17comes um comes along. And again, here's the crazy thing. I think if you go through the transcript of this podcast, you will find uh or I just ask an AI to do it. It will probably point out various contradictions inside of what I'm saying about what you do. Like I I'm like in this I'm probably on multiple sides. The reason is actually this is the almost most important thing. It's everything comes in layers. There's like just so many different like what's the operating the optimal operating system
2:15:46in some frame of reference is is often contradictory on the opposite of a larger frame of reference because um you know I I like this box talking about boxes because like inside of a box it it is you after a while you can have a map of it you can illuminate all the corners and you understand what's there. um you may decide what wasn't the right box to pursue. Maybe that you need to like figure out uh like maybe you need to bend it and say okay actually the problem is actually an aspect of a other
2:16:15problem and maybe if I put a larger box we solve that then this problem isn't doesn't even need to be solved that happens but this is exactly what I mean as you zoom out you actually need to completely change the way you you problem solve because you're starting to work much more on um with much longer timelines. You need to actually make bets at at a high level where you shouldn't make bets with like infrastructure because you can like in in engineering again you can run benchmarks figure out if something is
2:16:43fast enough and it'll be a yes or a no right you don't need to bet on the trajectory of uh you know databases are getting faster at a certain thing you like you don't need to you can measure so there you want to be super quantifiable when you try to figure out which market to go into like you need to figure out well right now you have to figure out how's AI going to change that market, right? Like it's it's because you need to figure out the joint market or you is that market going to be a temporary unnecessary aspect of
2:17:12something else we already doing and will be absorbed into a different category of products um uh and is this still valuable for you to do and so on and you know what are humanoid robotics going to do to the world of logistics and you know you you got to work with trend lines mostly right which is not important in uh many other decision making so I think there's probably like four or five different um levels by uh by which you have to look at a problem.
2:17:36And that is actually a lot of the skill of a good executive is to be able to meet the team where they are and like help them um talk about the outside world quote unquote. Like here is how their work relates to all the other frames of reference, all the other abstraction and how it like sits as a part in the larger company and everyone should be able to connect what their day-to-day work back to the mission. Um like it's not like you work on customer
2:18:04support. Well, you're helping people literally not giving up on being entrepreneurs, right? Like this like it's you're it's not even subtle. It's actually easy exercise to do for for people when you ask them to do it. Um but it's distressing in how many companies it's actually kind of unstated. Um the the company mission is some kind of set of uh platitudes or something um that aren't actionable.
2:18:27Those are unforced arrows and I think things go better than when than when you get them right.
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2:19:26I love the idea of tying everything back to the mission. I do hope people go through the transcript of this conversation. I think it's going to be incredible. I printed out some of them and I'm sure people are going to tell tell me about all the contradictions and I think again this is the fun fun bit, right? Like you know I I I find contradictions in my belief systems all the time because we are like balls of contradictions.
2:19:45I'll get messages. I'm like I'm listening to this episode you did in 2019 and you said this and on the new one you said this. I'm like I've read 250 of these things since then. Like what do you think? I'm doing this to stay the same. Like what's the point?
2:19:56Um, I had high expectations of this conversation. Toby, you exceeded them. I hope we do this at least once a year. And I think the next time we do this, we design with the constraints which you like. And we just we just evangelize entrepreneurship and the fact that, you know, it's one of the most important things in the world. And I think you're creating a lot more entrepreneurs and I'm trying to create a lot more entrepreneurs.
2:20:14Can I tell you one thing I just I I because um I'm not sure if I maybe I've shared this publicly, but like I think you going to get more mileage out of this than anyone else. the um when we did surveys with our customers um uh about like because we wanted to like like I mean we need to identify where are our customers what they do what do they read these kind of things what we have found this is long time ago before your podcast existed it was like almost 80% or 7 high7s of percent people uh check the box saying they have someone
2:20:43who if they send a entrepreneurial question to would respond to the email in 24 hours um and I initially thought that was Um, insanely cool how many people have such a resource.
2:20:56It's not like it in the general population though, right?
2:20:58Eventually I um clued in. I think it was probably on Wikipedia. I read about survivor bias um um survivorship bias and like I realized the reason why they are my customers is because they have someone who responds to these questions in 24 hours. It's the other way around. It's causal. um uh and um the concept of entrepreneurship is so underexposed and underexplained. It's sort of got better in the 10 years, 15
2:21:27years since these surveys. But I think I love what you're doing because you're just bringing this con like you you you're rolling this out for people to introspect like an entire life story of entrepreneurship giving people the thing that is implied by the question is like do you have any exposure to the world of entrepreneurship in some way that you actually know what you're what you're signing up for cuz the people who don't know it exists the people who have no relation to it or the people who don't happen to have someone in the family or friends who have at some point started
2:21:56anything well they just won't try. It's not part of their toolbox. and just making putting this part into people more people's toolboxes because it's going to be so lordbearing because I think actually in this world of AI there's going to be disruption and so many more people than people believe have a plan B with entrepreneurship and I think we can I think making things will be much simpler in the world of uh just in time manufacturing and 3D printing and additive and raisin printing and all these like products
2:22:23just humanoid robotics dreadnot lights off factories making anything on demand and 3D printers in every home. Um or at least very very commonly at homes now. um you know in that world um more people will realize and working with AI is about learning the skills of figuring out how to make the better cup um and how to design a better version and not having a norm door is capitalism the
2:22:52best parts and um uh I think it will be much more common and much more uh exciting and I I I just like it's so fun to work on and like in that way like you and I are working on the same project which I think is super super Cool, right? Like it's like because the information gap is getting the stories out, telling people that's possible and and and is so important for people to then try and hopefully then they might use Shopify and then hopefully we can push them behind.
2:23:18I love that. I appreciate you saying it. Appreciate the time. Thank you so much, Toby.
2:23:21Awesome, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review and make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.
Insights
tobi lutke
Profile
- Books — reading practice: Tobi Lütke strongly endorses making book reading habitual, changing subject matter roughly every three books to build range. He describes books as a way to access another person’s career learnings in a few hours.
- James Dyson’s first autobiography (book; exact title not specified): Lütke singled it out as the one book he would recommend, emphasizing its lessons on differentiation and retaining control—including the principle of making a product different even if it is worse.
- Larry Ellison podcast episode (title and URL not specified): Lütke endorsed the host’s episode on Larry Ellison, saying its treatment of sales-team incentive problems affected him enough to stop his racing simulator and listen closely because he felt strong empathy for Ellison.