David Senra - Tobi Lütke, Shopify

Starting point is 00:00:02 One 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 as founders. I'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.

Starting point is 00:00:25 Who are the founders they most admire? And your goddamn 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 they use the word singular a lot. So I want to kind of 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.

Starting point is 00:00:52 What do you mean about that? In a lot of ways, like, I mean, like take the social angle. Like a lot of, the companies are social technology in the sense that they allow. us to go all in. Like, the only time you're really allowed to spend, I don't know, eight, I'm going to say eight because that's the right number to say, really, like, fucking 14 hours a day, right? Just singularly pursuing a thing is like, I mean,

Starting point is 00:01:19 we want kids to spend this time in school and that's okay. And then university, you know, dedicate yourself. Other than that, like, you can't just, like, not have a job, but just be, like, really, really into, of 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 you get to explore things. Well, a company fundamentally allows you to do it's like just run the counterfactual to the world you see around you, right? Like you get to try to build

Starting point is 00:01:50 a thing that you think ought to be there. And then you means test it against the market. And if a market agrees with you, but this thing needs to exist, it, it, it, it, it, it, it, energy in the form of money back to you so you can do more of the thing that 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 gonna be like have this very big market and along the way it just like the market's toward like pulled Shopify out of the project I started essentially you know that's an incredible intelligence to to tap into so you put all these things together and

Starting point is 00:02:28 you say like well look companies The concept of companies is not that old. It's like we're on a 500-year run and sort of kind of extracted from things called companies which were actually more like quasi-governments like the East India company. And so the modern company is not that old. I find that if you take that mindset

Starting point is 00:02:46 that like companies are just sort of a path-dependent solution to social and somewhat legal problems. They allow thousands of people to join your project And it's called a job, and therefore everyone accepts this. And obviously you can make money, so it's a good deal. And then you can figure out if this counterfactual of yours might be correct or needs updating along the way or any of these kind of things. And you could, at the end of the day, if you are lucky,

Starting point is 00:03:18 you work with other people who are really all in and, like, inspiring and, like, taking it further than you ever think. And it's just like the war thing. It's just like, I marvel at the institute. of a company in a way, like, because if it wouldn't exist for some reason, and someone would propose a war idea now, it would sound insane. Like, from first principles, none of this makes sense, really. Well, I heard you say something that was fascinating.

Starting point is 00:03:42 Really piqued my interest when you're like, we do not know how to build companies yet. All companies are terrible. Yes. Including mine, which you said, and, you know, that's hilarious when somebody's, you're running a $200 billion-plus 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?

Starting point is 00:04:04 Because it's like everything else. I'm sure when you listen to your first podcast, you're like, oh, my God. Please don't. But like it's honestly, this should be seen as the most joyous of moments. You should actually do it if you haven't done it. No, I do it all time. Okay, good. Because what you, the difference between that and what you would do today is you progress.

Starting point is 00:04:26 And as a computer programmer, I, I, I, experience this all the time. I looked at Old Corden and was like, what for hell? Like, this is terrible. Why would I do this? It was way too abstract and complex. And then I made it better because I now have the skills to do so. And 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 that. That's one of the saddest days. Really saddest day in my life because I mean like, holy shit, the implication of this just hit me like a train, right? Like, um, um, and you weren't progressing. Exactly. It figures because I wasn't programming all day. I was like trying to, you know, uh, build a company instead, which honestly is very, very similar. This is one of the things Daniel Eck told me about you. Yeah. Here's what I'm observing. Like you, I read a lot of books.

Starting point is 00:05:08 I try to figure out, like, you know, I think someone, like if you don't read books, you live a lifetime. If you read books, you live a thousand, right? So it's... I'm going to interrupt you real quick because I took notes on this podcast six years ago. This is the first time I came across you. And you said, books are the closest thing you ever come to find. finding cheat codes for real life.

Starting point is 00:05:30 You can access the entire learnings of someone else's career in a few hours. It tracks, doesn't it? Yeah. I mean, I dedicate my life to this. Of course I'm going to agree with that. Absolutely. I mean, you know,

Starting point is 00:05:39 pre is supposed to agree with me, but like I really think we need to shout this more from a rooftop. Right. Like it's, you know, like, the one weird trick seems to be just like great books, right? Like it's,

Starting point is 00:05:49 and it kind of doesn't matter. Let's make a habit of reading books and, like, ideally change Gera every three books or so, at least for one book. and then that'll learn they'll give you a range that you can draw on for basically everything you'll ever do.

Starting point is 00:06:04 So, look, I read lots of books, lots of them, you know, just like, you know, especially when I went from programmer to a business, like realizing after just learn business really quick, I got really dismayed with the quality of a business books pretty quickly because frankly, I think the business books are largely written by the people who have time, well, not the people who are actually but companies, frankly.

Starting point is 00:06:33 So you read between the lines as well. Depends on, like, if a person who started a company or a person writing book is a salesperson, every problem can be solved with sales. If 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?

Starting point is 00:06:52 So I was determined to not be the engineering type founder who was going to see everything as an engineering problem. Because that would be called blindness and like I would, that's what kept my capabilities. So I really tried everything and learning like, you know, just how to, you know, build the team in such a way that I delegate everything and I have my different business lines and, you know, arrange things. This is sort of after the IPO and I realized I have to be a very serious public company CEO.

Starting point is 00:07:24 And so it almost killed the company, honestly. How did it almost kill the company? It was actually COVID that saved it at this point. Like, I had the inclinations that something was really, really going poorly. It was a time we didn't have a lot of competition, so which is also really, really hard for businesses. It's not a good thing at all because, again, you don't get, you don't have good rivalry and you can't sort of,

Starting point is 00:07:49 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. Yeah. You think competition is one thing. Rivalry is really good. I mean, it's the same, but it depends. It's a mindset change.

Starting point is 00:08:02 It's like, like, I think if you, again, if you compete with another company, like, there's a lot of, we need also a version of what they have copying, like you do the Xerox strategy very quickly. Companies tend to get obsessed. Like, there's companies which have very, like, their most active channel in their Slack is their competitive analysis channel, where people just bring everything everyone else is doing. And I think that while that has some merit, I think the problem is it makes companies very reactionary. Like in the arts, part of everyone's art studies is

Starting point is 00:08:41 or lay some fine arts. You copy the great pieces. Like you make copies of great books. Your next painting is not at the course. or the Vangor, you just copy it. Right? So mimicry is actually not an excellent way of getting to excellence. And companies end up falling very much into this. Whereas if you treat someone like other companies in your space as rivals,

Starting point is 00:09:10 much easier to have a positive sum outcome there because rivalries inspired the best. Like Agassi could not have been Agassi without Samperus being there, right? And he very, very clearly states this in his book. the Sempris that existed during the Agassi area that Agassi, like, understood, wasn't a real person. Then you read Samfuss's biography. He just liked tennis. Yeah. And Augusti hated it.

Starting point is 00:09:35 I guess he hated it. And so the rivalry he created for himself, created him in a very real way. In the last dance, which I loved, like Michael Jordan, like, he admits that he might made up a slide at some point. To me, it's like one of the most profound moment. Sometimes I play the last dance in the background while it work. It's my favorite documentary. My second favorite one is the defiant ones. It's about the partnership between Dr. Dre and Jimmy Iveen,

Starting point is 00:10:01 multi-decade partnership. That's the description. That's not what it's about. It's not what it's about entrepreneurship. It's, hip-up rap history is incredibly entrepreneurial. It's fantastic. So we just recorded with Jimmy Iveen,

Starting point is 00:10:12 who's a star of the documentary two days ago, or whatever this is. I don't even know what day it is. And that's exactly what he said. It's like they understood the business of music before anybody else. That makes perfect sense and totally tracks. You can see it from the outside. We actually, we see it from the inside.

Starting point is 00:10:27 Like, it was the first category of music that just, like, killed it on Shopify. It's like, there's just like so, like opportunities converted into products like that. And it's like they made different. It's really, really cool. This is a beautiful thing about Shopify. It's a front row seat to just seeing how high agency the different industries are and how quick they absorb new ideas. And it's just like, anyway, it's like a different topic.

Starting point is 00:10:55 But like almost like in video game, like a God-level view of entrepreneurship. Because how many entrepreneurs on the shop product platform? It's like millions, right? Yeah. And 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. But I want to come back to that. I want to go back to like, so you were thinking, okay, right after the IPO,

Starting point is 00:11:16 I'm going to approach everything. This is like an engineering problem. I'll be a, I'll be a, I cosplay a public company CEO, like 60 year old guy in a suit, like legal background, right? Like that's sort of what everyone emulates for whatever reason. And it just worked really poorly for me from a product perspective. A company did fine, right, all the way through. COVID happened, though, and I'm like, okay.

Starting point is 00:11:42 So what my company needs here for me is like five different things. One of them is all plants are invalidated. fundamentally. Like, everyone who has a plan, just please throw it out. We need to go and go for everything we're doing and rederive it because, again, everything is based on a very long tree. Like, you start with axioms and then you make a huge amount of decisions on top and then you get to a conclusion and that means this is how you spend your day-to-day

Starting point is 00:12:11 building this thing because of these things. If any variable along this way is invalidated, what you should be doing is redirect the entire thing. on top, right? Like, you should always prune back the decision tree all the way there and go forward. People 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 told that we can't do this anymore and it ended up being quite long during COVID, at least in California and Canada and some places. So we need to redirect everything. And that was kind of clear to me and sort of what I, you know, that's how.

Starting point is 00:12:49 how you structure computer program, frankly. I went through the entire roadmap 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, has just a lot of boondowls going on. It's just like random projects by random people

Starting point is 00:13:08 that I would never found out about it. Like, it's like... Why did you not know that it was going on in your own company, though? Because the company was, like, I'll say, like, four or five thousand people. You know, it's sort of quasi-distributed. We started an order work and we had Toronto office and Montreal office and so on. And so it just turned out that like, you know, in Toronto office, there was a fairly big project to build the features to add to Shopify.

Starting point is 00:13:33 So you could use it for running a supermarket because, you know, just they decided that supermarket industry is very large and we should go and capture one percent of audit like in the Dilbert Comexam. And so, you know, and frankly, like I'm not saying. those were wrong decisions. The sort of really surprising thing about building a business, or just in decision making general, is that making the right decision is actually child's play, usually.

Starting point is 00:14:02 Like, it can make wrong calls which end up because the world changes ended up being a wrong call later and so on. That's a different thing. But, like, most of the time, if you're, like, the bad options in front of you just prune themselves away. They just don't make sense.

Starting point is 00:14:17 It's expensive. or like off mission or whatever. 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 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,

Starting point is 00:14:48 especially in an engineering project like the best solutions are always modular and components you build one thing and it will work with everything else you did lots of the bad software that people use are things which are just like hairballs inside

Starting point is 00:15:03 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 if you look at the project brief the team killed it probably everyone made their bonus, they delivered the thing.

Starting point is 00:15:20 It just, it's like an island upon itself now that, and after it's delivered, nothing else in the product works. So you were looking at things as like, cosplay like a CEO or a business person as opposed to an engineer? I was trustfully. I was like saying, okay, cool. You seem passionate and you seem to know what you're doing. I trust you to do the right thing.

Starting point is 00:15:42 And then I hear, obviously, we're going to keep talking. You give me updates on things. People learned pretty quickly what of the projects that I'm interested in talk me about both and nothing else. People learned how to direct my attention to the things that they wanted to have my attention. So how did you fix that?

Starting point is 00:16:02 The moment I went through absolutely every project I did myself, took like 60-hour days. I canceled probably 60% of the projects, and over the course of the year, I turned over every one of my executives. This is basically the consequence of this because I just realized that in many cases, the core skill was, well, I mean, I don't want to be unfair, right?

Starting point is 00:16:23 Like, it's just that trust was broken in many cases. And in a real crisis like COVID, again, COVID was hard, hard, hard, hard, hard, hard, hard. Hardest time of my life for sure. And in a crisis, if everyone is a one before, some people go to zero in a crisis, some people go to 100. And I found it's almost unpredictable. In fact, if I would have been betting before COVID about who's going to be contributing the most,

Starting point is 00:16:54 I would have been wrong, I think, entirely. Why do you think that is? I've been thinking about it for a long time, and I still 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

Starting point is 00:17:19 actually quite self-identify. Now I would be able to predict it. Very simple, have you started a company before? So Shopify is by a founder, by founders, for founders, causing more founders. Right. Like it's a celebration of entrepreneurship. We believe entrepreneurship is glorious and people who reach for their heroes and doing more than day heroics, go on a hero's journey with lots of nays,

Starting point is 00:17:44 has overcome incredible odds and lots and lots and lots of headwinds. That conviction runs really deep. Sometimes we buy companies, of course. Many of the people we purchased are still in at Shopify. People don't stay for a very long time because I think it's such a place for founders and for high-agentity people. So I always had a Slack channel with all founders of our companies that we purchased. I did a founder of SAC with them once a year.

Starting point is 00:18:14 they're just like, because I find their advice just to be so good. They all have been responsible for people's livelihoods, and that changes you. So I went to the founders channel and said, guys, I need help. Right. Like, this is, the places. It's crazy here. Had you already started turning over your executives? Yeah, once I realized that I was like, and it wasn't like one moment.

Starting point is 00:18:35 It was just like, how did you know that instinct to go to the founder's channel and ask her help? I think that at a moment of like, where the fact do I go? who do I have most in common with and who can actually relate to the types of problems here? Because again, my relation to Shopify is different, right? Like I started it. 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.

Starting point is 00:19:04 In some cases, I took people from individual contributors in an engineering team and put them in charge of a very large thing. And you know what? At all, every one of those things worked. And it was like really remarkable because it really fed into an intuition I had anyway. And what I found is during corporate 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.

Starting point is 00:19:33 They talk about absolutes. If something is shit, they say so. It doesn't matter if everyone has agreed to move on or something. It just narts on them in a way that's deeper than this other thing. And that's exactly what you have inside of you. Exactly. And so I feel like this is, it's a very special thing. And it's companies rejected.

Starting point is 00:19:55 Companies cocoon them. Sometimes they find, sort of the outskirts, like the skunk work team. It's like, just like it's daycare for people who otherwise tell you that your stuff, your shit doesn't smell. Right. And shit does smell. So once I'm like, no, you don't get to put them in like founder daycare. I'm going to put them right in front of you, like in fact, in top of you. And so, you know, the difference that made to this business is nuts.

Starting point is 00:20:25 And so this is what I'm saying, COVID safe Shopify, because I needed to take a move that was like very much, okay, I build this company, I got to this point. It's important. It's actually maybe even more important doing COVID than before because it was kind of like, for millions of small businesses, their livelihood for this time, an only way to make likelihood. And I'm super proud of what we did, because I think the businesses that started in Shonfang came early, like, actually grew and did better.

Starting point is 00:20:53 Some of them grew faster than you. You said somebody beat you guys to a billion dollars. Yes, which is the craziest thing. Which businesses ever raised their customers, like that started on the platform for, it's the greatest, I love this thing. And so, I mean, again, like, they're fantastic, their heroes, they're glorious,

Starting point is 00:21:09 They're wonderfully disconcunded. My customers have the same irritation with my software. And like I tell me, it's perfect, right? It's exactly what I want. And so this was one of those moments saying, you know, what Toby? Like maybe you didn't build a shop for completed by accident, and your intuition might have been actually helpful. And cosplaying someone else is probably not what you need to do.

Starting point is 00:21:31 So at that point, you were running Shopify for how long? 15 years. No, it's, yeah, about. So that you were 15 years. 15 years. This is very common biographies. I think it would be surprised people like, oh, why it takes so long to figure it out?

Starting point is 00:21:44 It's like, no, it takes a long time to actually build the skills. And then the important thing about intuition has to be refined. Yeah. So 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 no one is born with intuition for building businesses. Because first of all, building businesses are completely, every decade is different. Like some problems are persistent.

Starting point is 00:22:08 like I laughed. I listened to I think the episode you did on Larry Ellison you were describing his frustration with problems in his sales team which literally I had to

Starting point is 00:22:20 like it's like you know what I didn't actually have to live that horror I could have actually like there if I would have read the right if you read software any of the biographies

Starting point is 00:22:29 or listen to founders the incentive problems around commercial teams but that's an amazing part I'm glad you just you picked that up because he's like I'm fucking embarrassed

Starting point is 00:22:38 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. They almost went out of business. I usually listen to podcasts when I'm sitting in my racing simulator to practice for one next race. And like, it got to that post, and I had to like, okay,

Starting point is 00:22:58 I have to stop and just listen to this because I'm just feeling so much empathy for Larry Ellison, of all people, how funny is less. So anyway, is that an epic thing? Before you move on, because I love where you're going. I can't help myself, because you know this. It's like when I hear you saying, like, I'm getting me with the executives, I'm going to build an executive team of founders.

Starting point is 00:23:16 That's not a new idea. Rockefeller was doing that 150 years ago. It's interesting how the building blocks that largely Rockefeller invented. I mean, we call these things trusts because it was, you know, like that was a term they first used there. Toby'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.

Starting point is 00:23:45 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. Kareem is running one of the most talented technical teams in finance and they use rapid, relentless iteration to make their product better every day.

Starting point is 00:24:10 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 the greatest possible product experience for our customers. That sounds a lot like the approach Toby uses.

Starting point is 00:24:37 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. Make 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. That is what I'm trying

Starting point is 00:25:09 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 to the most difficult point in your life. Yeah. And you realize, oh, I'm cosplaying. I'm going to go lean into my intuition. Yeah. 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. I was like, okay, I need to try something.

Starting point is 00:25:42 Like, different, you have to do things differently, axiomatically. Like, obviously, axiomatically, if you do the same thing, you get the same results. Differentiation requires new ideas. You are, instead of figuring out, like, spending the next 10 years of my life, figuring out how well I can cosplay someone else. what would the company look like if it just taps entirely into my intuitions, like in my biases. I'm doing literally the opposite now as I did before because this didn't work,

Starting point is 00:26:11 so maybe the opposite works. And the worst case, I triangulate the midpoint between those things. So enabled by the very clear, fast and obvious success of asking people from Founders Channel to step up and run company with me, my real set of intuitions here, again, intuition is your entire life's story rolled out for you to make a snap decision in a moment. What does my intuition say about what the company actually should look like? Let's forget about the path dependence. Let's go full tabular rasa and go up from axioms.

Starting point is 00:26:45 And I started with really, really, really nothing. Like I started like a project on GitHub, literally. So engineering tools, my intuitions again. what is the first principle of a company? Like what is like what are the inputs? How, what are our decisions? Like put in config files, what titles exist? What levels exist?

Starting point is 00:27:10 How, you know, I asked for all the sales, like compensation data, all the market data, and put them into the repository. I turned them into machine readable files because they got them as PDS and so on, so on. So I built a thing that then created, like at the end, I had all the information to create a model of the company. Like literally this is Python code, which takes configuration files that we agreed on, things like how many people should report to a manager,

Starting point is 00:27:43 all these bits, and then computes them, uses something called a solver, like a set solver specifically. And then with all these constraints, all these inputs, what should shop fare look like? what departments exist, what level exists, how many people are there in which group and everything. And of course, the first version was utterly incorrect. And then I realized, are you doing this so long? I started it and then I got like two, three other people in it to help me this and really, really got into it.

Starting point is 00:28:13 And so this is called Shopify OS, the shop for operating system. It's really a lot being part of Shopify now. What it did is it became irrefutable. that we didn't know all the principles. We had like something, there was 8,000 people in a company, and there was 5,500 different titles in a company. And it's like, so, I mean, some of them are just senior and senior staff,

Starting point is 00:28:40 but in some groups, senior staff was lower than director and some above. And it's just like, it just, when I tried to make something software addressable and tried to reproduce it, it showed every crazy, unviable choice in the company very, very easily. So there's a system in engineering, not actually a well-understood partner, but I think it should call desire-state systems. And what desire-state systems are is it's a thing where you say, okay, here's what should be.

Starting point is 00:29:14 You hold that up to what is, like 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 steps I take to get this to there. And that's what you see on the web browser. I need a design state system for this company.

Starting point is 00:29:32 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, or change what we have in this system to approximate what we actually want. So this is very technical.

Starting point is 00:29:52 Here's the effect of it. Think about how much politics this removes. Then my head of sales comes to me and says, hey, I need 50 new salespeople. I can put this now into the system and says, well, that means you have to either make these changes or you're going to lose some of your engineers because the system, based on our agreements,

Starting point is 00:30:11 recomputs everything. So we can always look at the counterfactual. And then it's not like, yes, as boss agreed while playing golf to hire 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

Starting point is 00:30:33 because your budget doesn't allow anymore because, but you did make the decision to hire salespeople, 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 such a legibility, legibility for us in such a simplicity. It also just told us that so much was undecided. Like for instance, we took the concept of, in engineering,

Starting point is 00:30:56 this was already around individual contributors is a really, really excellent career track, right? Like you can make as much money in good companies as an individual contributor as you can as a VP or manager or like the best paid people in many companies are now individual contributors at this point in history, especially in machine learning. like at least in the machine learning labs like Open AI.

Starting point is 00:31:20 But no other discipline really had that. You had to become a manager to progress in your career. And so I think one of the consequences was that when I really looked at 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 really well respected because they're good engineers. So maybe.

Starting point is 00:31:43 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 know, every job has this ability to stay. 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 decided like this. Why would you not? So they can stay individual.

Starting point is 00:32:14 Yeah, like take an example, in engineering. If you're 100 times better than other people in this discipline, usually, you can make more money than a vice president. Now, that depends on the value you can bring, but it is possible. And just like, I kind of hated the way we did like compensation in the industry, right? Like, again, these are boring topics. No, they're not boring to me and to the people listening. Wait, why do you hate the way that they were doing compensation in the industry?

Starting point is 00:32:42 What I love about entrepreneurship is the, is the, is the, level of responsibility, personal responsibility people take. I said as much earlier when we talked about the founders who have been responsible for people's likelihoods, it changes you. It does. So like I don't work myself well in an environment where sort of like everything is pre-described. I don't like joining other people's games and so on. All these kind of things are my biases.

Starting point is 00:33:06 And again, you're implementing my biases here. So in COVID, like this is 22, I think or 21, suddenly shop with her then down 80% of stock value. Like, that's a, like, again, I didn't think that was a problem because, like, I think the stock market is basically like polymarket, it's sort of a betting market on a future value, right? Like, it's like it's not like you guys, then you guys are wrong, when you're 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 don't know. So like, there's such a discrepancy from the way I see people talk about stock price and how I or have ever, or inside of companies is perceived.

Starting point is 00:33:48 But what was going on in your head when it drops by 80% though? Well, I'm like, well, my head, I'm relief because I'm like, you know, I mean, where the stock was? Relieved? Yeah, yeah, of course. That's a normal reaction. I was like, I was not about to like raise money. I did I had enough money in a bank.

Starting point is 00:34:08 I'm, you know, German. So like I don't take that like much and so on. were the internal metrics strong? They thought they didn't deserve. The unit economics are amazing. However, like, at the, 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,

Starting point is 00:34:28 I think we were trading at beyond 50 X of revenue and stuff like this. I'm like, yeah, that's not exactly value investing here. Right, like guys. And so I get it like. But you weren't worried about the fundamentals of the business. No, but like what? when it is 50 times revenue,

Starting point is 00:34:43 I see it as my obligation to do that. Like, it's my, like, my job, my job is to build the best company I can. The betting market says that I can deliver that kind of thing. And I'm like, yeah, maybe, but you go ahead and give me a moment here. Like, I need a moment here for doing this. So the reason I bring this up is because, again,

Starting point is 00:35:03 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 the time when Amazon stock, He took, Bezos talks about this in his shareholder large. It went from like something like, you know, 180 down to six or 120 down a six. And he's like, yeah, but they were, they were focused on something else.

Starting point is 00:35:21 I saw the actual fundamentals of the business. And I was like, this thing's going to work. And so eventually, I think Buffett always repeats that thing where like 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 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.

Starting point is 00:35:41 by 80 or 90%. That really tracks. And so, but like one of the facts was, and this is right, like, well, people got stock options at the level up there. And they rightfully say, well, how about it? Right. Like, it's like, even if you say, like, okay, well, I'm super game here to get us back there, like this is going to be going to take some doing, I realized the psychological problem with

Starting point is 00:36:07 everyone being so underwater and having, you know, to spend years getting to basically basically the zero point there, the stock options are worth like even a penny again. And of course, they were like, well, but that's the company. Like the company gave me both things at the time. It's like I received them. 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 mean, I'm not necessarily see it this way because like,

Starting point is 00:36:37 like the risk was there and like these kind of things. And like, again, it's like other people voting. that's causing this price. I didn't set it. However, I do receive a point. They had no agency in the process. So we rebuild our compensation system to completely work for opposite

Starting point is 00:36:52 of what everyone else does. 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 say, how much do you want in stock? How many do you want in RSU?

Starting point is 00:37:04 How much office you want in shop cash, actually? And how much do you want in cash? And you can change it every quarter. It's like you, side, like how much money you want. And you can even use a couple, like a tool that's been able to lock in the value of the stock you received for three years. Like it's like, again, sometimes orthodoxy can come back on the table if you get there

Starting point is 00:37:27 from good principles. Like you can actually join Shopify and get exactly the same stock option deal that companies get at other places by using the tool we give you, but you have full agency and you make this choice. The consequence of this conversation system, is kind of beautiful because what happens is, first of all, it's super predictable. Second, you know, if you go stock and the stock appreciates and you hold them, you make more money. If, like, the stock goes down, you now get more stock options in your next quarter.

Starting point is 00:37:56 So, like, it's rebalanced against the actual value every quarter. So it works really, really well, it's very popular. It was kind of hard to do because doing this worldwide with people in many different countries was, like, kind of a legal nightmare because, like, that's, like, all sorts of rules around how to change around changing of salaries. We figure it all out. So we have a blueprint of how people want to do it. It works really well for us. But we're kind of proud of it because it's like it's just like, again, it's a point

Starting point is 00:38:24 of differentiation and we believe it works much better. And again, I want people at the company to also feel like this is a company that is like never sleepwalks into anything, right? We kind of be deliberate about things. When 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 stock's dropping? No, it was already bare.

Starting point is 00:38:46 That was a 2020, early 21 project, I think. And then I think the stock market then ended that change, like 21 late. These years are totally running together for me because it just was, I mean, there was no weekends. There was no 15 minutes. I can't remember who said this. I was talking to a much, I talked to a lot of older founders. I'm obsessed with like people think I'm obsessed with old people. It's not that.

Starting point is 00:39:08 It's like this guy's got 50 years as a. Yeah. As an entrepreneur, experience is an entrepreneur. Turns out they know some shit. They've seen some shit. Surprise. Yeah.

Starting point is 00:39:16 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's just like glars together. Yeah. So he's saying you should document it more.

Starting point is 00:39:24 I totally agree. Lots of years are totally running together. I have reasonable record keeping on this. So I, and especially with all this AI-led 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.

Starting point is 00:39:43 But so my understanding though, like you thought you're now looking at running a company as like an engineering project. That's right. So I'm like, let's engineer a company, be a company engineers, as taught my team. That applies for every single department in like do you engineer marketing? Do you engineer everything? Everything. I require my executives to, I mean, at least tell me, but actually do it, go to do it.

Starting point is 00:40:09 to a podcast, some international conference, and talk about how Shopify does the thing the conference is about differently and why that's better. If they don't have a good answer for how they're doing this right now, or how they would, that's what I'm working on with them to crystallize that message.

Starting point is 00:40:26 And there's a couple of reasons why I do it this particular way that we can get into the psychological, but like it's also just like to- Now, what's the psychological? I study with brain quite a bit and you know, the main conclusion you get to about the brain is really, that the brain is a retrospective narrative alignment mechanism.

Starting point is 00:40:48 It's actually terrible record keeping, but it mostly attempts to take the most salient version of our self-identity and reconcile the history with it. And it so rewards you for actions that are directly congruent with this identity, and it disways you 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 significantly.

Starting point is 00:41:21 What do you mean by change your identity? Like the way you view yourself? Literally affirmations work. Right? Like affirmations work, which is the dumbest trick that works. I'm so glad you're saying this, because people from the outside, like, this guy's, like, very logical engineering. No, it's like...

Starting point is 00:41:33 But you're all about intuition. Now you're talking about affirmations. You're speaking to the choir, just so you know. I'm a toolmaker. Like, I always project. very idealistic, but I'm actually not that idealistic. I'm super, I'm like a craft person, toolmaker person. My entire life was making tools.

Starting point is 00:41:48 I literally, my prop, my prop, I chop as a tool. I make tools very often for tool makers. My hobbies is making tools where engineers were people who make tools. So like it's a fract, my life's a fractal of toolmaking. It's all about toolmaking aesthetics. It's all about the craft behind it. but also not because of craft for its own sake, although I appreciate that too.

Starting point is 00:42:13 But even that's not for idealistic reasons because appreciating the craft behind the toolmaking happens to be pragmatically an excellent way to get really good at Brunez. Everything is about outcomes. What's the affirmation part, though? The affirmation that, like, if you tell yourself or write down 100 times something about yourself,

Starting point is 00:42:33 that writes it into the neural frontal cortex at such a deep level that your brain will start with consulting you to that. It just works. I've used that very often to... Like, I was terrified of public speaking until I just sat down for like a week and every day I spent like 10 minutes

Starting point is 00:42:52 just writing that I like public speaking. I love public speaking. You wrote that down? I know, yes. And now you love it. Yeah, like a week later, and I knew it's not... This works when you know what you're doing.

Starting point is 00:43:04 But 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 neural frontal cortex in this moment. So I use this often. I sort of write to myself, message in the bottle, this kind of things. That's all a different topic. But like it's the point is like I tell the topic there. Hold on.

Starting point is 00:43:24 You write messages to yourself. Yeah. Affirmations or just? No, it's just like like generally when I feel like something is like, hey, there's something I've figured out that I really like. I know I have to write a scheduled message to myself. to remember it because I need space to reputation on the idea. What's an example of that? I mean, for instance, like you have a company keynote for like kind of thing, like a company get-together summit once a year and for a week.

Starting point is 00:43:52 And so usually I did a keynote there and like then I write a message in a bottle to myself what was good about the process, what was better about the process, what it to do next differently and all the topics are left in the cutting board, cutting board just so like to get a head start so that's a random example of that how did you learn this that you could change identity that affirmations work that writing these things to yourself i think trial and error but like i think the hints are like everywhere right like it's i mean affirmations are one of those things that like i mean there's a reason why the like society called creates rituals right because rituals end up being largely affirmations uh on on repeat right so what do you think

Starting point is 00:44:32 of visualization like so manifestation these kind of things i i uh probably books too. You know what? The funny thing, I think everything works. If you just do it, the question is what's effective and quick. It sounded to me before, like, I started reading all these biographies. I was like, this is some willy-foo-foo-nonsense. And then you see very smart, analytical, logical, many-case inventors and engineers.

Starting point is 00:44:56 And it appears over and over again. People didn't know each other. They worked in different industries, different times, they've done 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. And so, yeah, I'm personally, I mean, in the self-department,

Starting point is 00:45:15 I'm extremely taken with a stoic philosophy. Control what is under you control. Know what is. And then do the best possible job. It's the job is the thing. Like the world project in life has just tried to become very good at something and ideally cultivate some significant skill, create potentially services products and then share them with as many people.

Starting point is 00:45:38 You do this because that's what you're on Platter 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 the most interesting in places as long as you remember what your job is within them. So in this way, like I love the current times and I love it. technology industry. I have a role inside of it, which is like I'm taking care of me and so of entrepreneurs and small businesses that, you know, are trying to use the world of technology, use the world of retail through their own work then. That's actualized. And that

Starting point is 00:46:23 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, I work at Open AI and it's like, I mean, everything would be interesting, but you know what? That's really cool. Pursuing the same problem in a changing landscape, right? Like now I get to reinvent everything I've already done. How fun is that, right? Because I really care about these problems.

Starting point is 00:46:48 Anyway, back to the affirmations and sort of the brain sort of self-gymastics. Going to my team and just saying, look, you know, just tell me what you will talk about on stage is bad. It's like afterwards, you. need to internalize this as something that you have committed to me as imagining, I imagine that something that care about, they care about reconciling and so they have to do it, you know, because otherwise they, you know, said something untrue to me, right? And like they don't see themselves as someone who says unto things. And therefore, you know, you can actually make the reconciliation work for your own benefit

Starting point is 00:47:27 in this kind of way. It also just means like it emphasizes like difference, right? Difference is so important. It's so, like, orthodoxy just really needs to be off a table from the beginning of a project or like a, from the beginning of decision-making. Have you ever studied James Dyson? No, no. If I could only recommend one book ever. It's his first autobiography.

Starting point is 00:47:46 But one of the, he has a crazy line about this. So this is also very common with great entrepreneurs. And you hit on your other talks. Like, well, if you want to, I'm trying to chase excellence, trying to be the best in the world or make the best tools possible. Like, therefore, that demands difference. That, that path, that mission on day. I can't do it. Literally, it can't be the best.

Starting point is 00:48:02 It's the same. Right. Like, just think about this. And so, like, Edwin Land, who is Steve Jobs here on the founder of Polaroid. He had a personal motto. He says, my personal motto is very personal, and it may not work for you, but he said it is, don't do anything that somebody else can do. He just would not.

Starting point is 00:48:15 I'm not making a Me Too product. But the reason I bring up Dyson, because 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 year of revenue, not a bad business, but a very small business compared to the size that it compounded. to over the next four decades or three decades.

Starting point is 00:48:34 And he says in that book, even at that time, he's like differentiation and retention of total control. And he goes, you make it different, even if it's worse. Yeah. That's one of the craziest sentences I've ever read. I totally agree with that.

Starting point is 00:48:49 It has to be different, even if it's worse. I completely agree. I see it all the time. Because, again, it gets back into the copying of a painting problem. Like, you can make a 7 out of 10 solution to everything by copying the 7 out of 10. that already outside in the market.

Starting point is 00:49:05 But if you make from tabular arrasor axioms, your own version of it, you have mastery over, even if this is a six out of ten, you can iterate on this. You can take this past the seventh afterwards. Like, so very often, especially in technology, the world belongs to the fast, the people who iterate,

Starting point is 00:49:24 but people would adjust, the people who understand what's costly and what's unnecessary, and will prune array the rest. And I find actually we're probably net, like pixel for pixel, the most inspiring picture that I think exists. But I've ever come across is the SpaceX, Raptor, Rocket, Evolution. Like, do you know what I'm talking about?

Starting point is 00:49:49 I use that as a image for the Dyson episode I made. That's perfect. Exactly. It's perfect, right? Like, you look at this and say, yeah, that's, that's today's Picasso, right? It's just like, this is it. Like, this is, we're not at a point of time

Starting point is 00:50:07 there are the great works and the masterpieces are being done by one person. They are done by 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 beautiful in that way. You have to do things different.

Starting point is 00:50:24 You have to make them your own and you have to have mastery over the first version if you want to take this further. I mean, this is, we talked earlier about the podcasts I do inside of a company called context. And it's about that. It's like, how did we make the decision? It's like everything around the decision is more interesting than a decision.

Starting point is 00:50:41 Is this podcast constantly updated? So it's internal, only for Spotify. God damn it, only for Shopify. I mean, especially when we talk about podcasts, that makes sense. Well, they have, it's funny, I looked at my end of year wrap 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 Spotify, a product story.

Starting point is 00:51:05 And it's because, you know, everybody else, I think one of the reasons that we have a mutual friend, obviously, in Lulu, she's on your board, and the importance of telling your own story. Like, we went to dinner tonight and I was like, Lulu, what I love about you is like, you're repackaging old ideas. Like Napoleon told his old story.

Starting point is 00:51:21 Julie Caesar told us home story. Like all these people did it. It's a very valuable idea. And so everybody was trying to tell the company history outside of the company. You're like, no, you got all this other wrong. We're going to make it ourselves. And it's like, I think, a 10-part pie guest.

Starting point is 00:51:34 But they originally, I think they built it for themselves. And then they, like, publish it. I didn't know about this. I love this. You should listen to it because it's narrated by Gustav, who was head of product, who's now COCO. And they take it in chronological order. And so, like, if Sean Parker played a big role at the very beginning,

Starting point is 00:51:52 right, he'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 things that they'd deal with. Well, just go listen to what the company did at the time. Executives and founders, but not only what they did, why they did it.

Starting point is 00:52:11 And why is so much more interesting. Like, one of the tour, like, the tourney of Toby said is real inside of Shopify, right? Like, it's like, people just throw these things around. Like, well, Toby said, be doing it this way, right? And I just, like, try to get people to, like, always ask when. When I said, exactly, do you change your mind all the time? Yeah, and this is not even, I learn about this because something is like really, really odd decisions. Like, that was easier ways available.

Starting point is 00:52:38 Like, how did we get to there? It's like, well, it's like, everyone said that you wanted it this way. It's like, I'm 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. What's a typical episode? It's just you explaining the thinking of what's going on currently in company? Yeah, yeah.

Starting point is 00:52:57 It's like taking people back. to major decisions. Are these short episodes? No. Like initially, I went to phases. There was a sort of, for the first maybe 50 episodes, we said like, we had a, we have to mix it down to 23 minutes because we calculated that that was the average commute in Shopify.

Starting point is 00:53:19 Like, so we checked that everyone lived compared to the offices. We ran the data and there was 23 minutes. And so we made it 20 minutes because that seemed like as good. We needed a reason. And you like designing your constraints. You talk about it's a lot. Exactly. So, you know, just like, well, I also just don't like picking 20 minutes because it sounds good.

Starting point is 00:53:36 Like, I want, like, I need a better reason. So 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 it's just like, you know, with a nice thing with podcasts, is like people can skip, move. It doesn't matter. Like, you can just keep going for hours and hours.

Starting point is 00:54:02 And do you have any ones that are, like, long? I think there's one which we had to cut over a couple of episodes that ran, like, if you ran it four, it's like five hours. It's like, what was that one about? That was like the philosophy of engineering with a bunch of our distinguished engineers. Like, like, how, you know, like, it's, you would. not believe how immature engineering is as a discipline. It's just like, there's so many good ideas and so many bad ideas,

Starting point is 00:54:35 and it's so hard for people to sort through them in a way that's like way harder than any other industry because it has a weird property. Like software has a weird property. 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 it's like you can, you know, we build Shopify, first person signs up, you make money, second person signs up, uses exactly the same. same thing. And it's like, you know, the second instance of it is not, it's the same piece of

Starting point is 00:55:02 software. So hence the margins of software are incredible. The same thing causes a lot of problems for the creation of software because you just don't know how much dead weight is in the system. If you compare this with electrical engineering, there's a very clear cost of manufacturing, right? Like the bill of materials is like the thing that dominates the success of a product because it dominates then the costs, which then dominates the product market. fit. It also, manufacturability is a huge component in electrical engineering. It's like, is the board laid out in such a way that it's prone to defects? Did you choose all the right components? Are they like, it's like one chip get really hot next to a soldering thing, but like,

Starting point is 00:55:42 you know, I remember the original Xbox, he sorted 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. It's like in the numbers and everything. Everyone's trained on costing, waste into the system. Software engineering just throws away so much of a capability of these incredibly powerful machines, partly because it just doesn't cost anything. However, at a certain scale, it starts costing.

Starting point is 00:56:12 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 consequences of bad decisions in software the engineering, an externality that doesn't accrue back to the engineers who caused it in almost all instances. So it's like a little bit like a factory is polluting the environment. It's just like it doesn't cost back to them. And so anyway, so therefore, it's a very tricky industry to move forward. It actually quite often moves backwards significantly. Computers got much

Starting point is 00:56:51 faster and we threw a huge amount of a couple of days away, making like these very, very heavy client-side JavaScript applications that took over everything. They were just got awfully slow and very arrow-prone and took forever to load, especially in e-commerce where people visited sites rarely. Some of our customers went out of business because they got talked, they talked themselves into their own stack. They 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

Starting point is 00:57:21 has the most interesting conferences and the most interesting places, then they deploy it and, you know, like it sort of works in the demos, but the problem is when you're going to a website for the 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 and you might be on a train right now. You're sitting there a minute and a half for this thing for this online store to load. Guess what the conversion rate of that all?

Starting point is 00:57:51 and stories. Zero. Yeah. I'm quite annoyed by this, although we are, that was a real, real, real, real problem in 2023 especially, then like I think a bunch of, frankly, as, you know, older engineers had to like take the kids to the side and just like have a good conversation. And that was the context of the episode of context. At least that's what led to this particular thing.

Starting point is 00:58:16 I don't know if he actually succeeded there, but like I think we didn't need to because I I think the world just changed. Like, moment zero interest rate phenomena, where they're gone, people actually wrote better code out of a sudden. Like, it's like amazing how much, like how consequential, like the zero interest rate, absence of zero percent interest rates actually ended up being,

Starting point is 00:58:40 you could feel it in the engineering team being less prone to accepting random waste into their stacks. It's unbelievable. That's interesting. I don't know if I've heard any way else make that point. I think this idea of hearing directly from the founder in an audio way is underutilized. Totally. I did this episode on the founder of Kinkos.

Starting point is 00:58:59 He was dyslexic. Yeah. So am I? Yeah, I heard, which surprised me. So he, actually a lot of great founders are dyslexic. It's very common. Yeah, it's very common. So he's like, I can't read your goddamn email.

Starting point is 00:59:14 And I'm not, he was also, I think he said he had like ADHD so he couldn't sit down at a desk. So he, his job was like, what 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. 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 stores. And he'd be fined me because of all these people during different trial and error good ideas.

Starting point is 00:59:36 Yeah. And so what he would do, this is back in the day, he would call into a corporate voicemail. And so he'd at the end of 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 Kinkle employer. the next morning and you could play Paul's voicemail. I love it. And then this was an interesting thing that you might agree with, though. After doing this a while, he's like, you're resurfacing all these great ideas, right?

Starting point is 01:00:01 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, which kind of relates to what you just said. He's like, listen, there's probably 100 different good ideas or right ideas. And if I stop here and don't keep tinkering going right to that word that you like, then that's the best it will ever be. If you need something and you tell people what to do, you might get it or you probably will get it.

Starting point is 01:00:28 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 actually a really, really important thing. It's much more important to create the environment in which people can be their most excellent self that is to prescribe here's a precise, moves to do. So how do you create an environment that people can be the best version, the excellent version of themselves? I heard you say, is this related to your idea where you're like, you said something that made

Starting point is 01:00:56 me chuckle? You're like, I don't do corporate baby proofing? Yeah, yeah, exactly. I mean, exactly, absolutely. It's the same idea. Like, the baby proofing thing is real. Like, what is internal policies, right? Like processes, what are they?

Starting point is 01:01:10 They are like, do this thing different from the way your iteration tells you to. Okay. Why are you wanting? people to behave differently from their intuition. Like, like, let's look at a higher order bit there. It's like, what other opportunities do you have? Well, you could change the environment such a way that doing the right thing is intuitive.

Starting point is 01:01:33 That's pretty good, because now you don't have to post a policy. You could also, you know, hire people whose intuition is better honed. They often, policies and processes are sort of downside protection. you're trying to make hard to avoid the people who do things wrong to be of causing so much damage. That's like the downside protection, but you're also really limiting what the best people can do. So I think in creating 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 this problem I need you to solve. And right now, my world, in commerce world, is attempting to figure out what Agenda Commerce

Starting point is 01:02:21 is, how it works, how all the companies are working together, like how the research labs work with everyone else, how to expose product catalogs from the entrepreneurs, how to make sure that transactions can be met, what the large language models need in terms of information to do a fantastic job as a, when people ask them to be their business. personal shoppers. You know, that's a box. Like, inside of this, somewhere, somewhere in it. It's all dark.

Starting point is 01:02:50 It's the most beautiful solution. What tools do we have to explore this box? It's like dark. Like, I don't know. I can take a step 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, they need to make your own decisions.

Starting point is 01:03:07 And I 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 a building like this, right? But what I can make a decision of like this, like help them really want to be on this journey, help them fall in love of a problem and see the potential. And I can make sure it's the right team and everyone has the right skills.

Starting point is 01:03:27 And I can make sure that they know what they have decision power over and like how to at some point, because, you know, people are only willing to take so much risk, how to transfer that risk to me, ideally, or to a company, right, in a form of our projects work in phases, a prototype phase is what I just described, where you explore the problem. Then you think of, like, when you've learned what you need to learn and think you have something that you can build, you make a proposal and 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 a phase transition in our project system.

Starting point is 01:04:17 There's software that manages all this kind of thing. They can use AI to preview what the transition will be like because it's trained on all the other reviews I've ever done. So they can sort of mock do it and figure out what I will probably say. That saves me a lot of time. And then you have an actual meeting. and, 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, okay to transition.

Starting point is 01:04:50 There's some engineering leads, design leads, give okay one. I give okay two. And then they are in a build phase, and then a new phase starts. That's a new box. They have agency to make decisions in there. At this point, I assume the risk. This is, it's like a trade of, accountability for autonomy.

Starting point is 01:05:14 And so that's how we found we can almost operationalize this system. Because what I'm finding is like, I mean, all the biographies you read, what you find is, I'm sure, is that the moment of insight, often the product that started all or the artworks that are defining the careers, they were not really coming out of an office building environment, where someone had OKRs, but of a precise metric to hit. And then, like, Da Vinci probably did not have one Vesuvian men as an OKR given to him, right? It's like you kind of have to create like a box for them,

Starting point is 01:05:59 sometimes a physical space as well. Like he was in an attic that just ended up being where he did most of his creative work, I believe. And so you try to figure out what is this sort of environment where excellence and creativity can come together and then collapse it to saying,

Starting point is 01:06:19 okay, now the company needs what it needs because we need to make resource allocation decisions. I mean, you're putting more people onto a project at this point. There's a couple of things that need to be decided. And then autonomy is regained

Starting point is 01:06:30 until the next phase is releasing, at which point we do that review. And sometimes we say, okay, we're not ready to transition because we need things need to do differently. But that's the way Shoppa orchestrates now. These are all things that exist today based on the days during COVID 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 the beginning of COVID very, very quickly? Given that I wasn't and now I aspire to be what needs to be created. And so whatever the answer to that is, we worked hard on.

Starting point is 01:07:13 And I think they just discovered some extraordinarily powerful systems, mechanisms in this journey. That was the prompt. Like what would a competent CEO do in this situation? I love to take the view that I'm a corporate raider. And so before I went bankrupt and I bought it on a fire sale. and I'm like marching in on day one here and previous management was crazy and we need to turn this place around. Right? Like that's my favorite.

Starting point is 01:07:42 I love playing this game every year, figure out what I would do differently and then like it's like, let's go. I have my to do this. And I asked a lot of teams to do this a lot. Like it's like when we have systems that just don't work. One of the most powerful, you know, maybe for affirmations, maybe for experience things you can do is just just don't be prideful about the prior book too much. You're allowed to have pride in it, but like you want to wake up better every day, right? You want the performance version to be better than today.

Starting point is 01:08:14 And for that, you have to kind of downgrade what's there. Like you can't, like the SunCost fallacy is so powerful. But 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 just in your monologue? I literally write hit pieces on the past, right? It's just like, I hit. piece. Yeah. Like, I just like all the things that are wrong with the thing, I somehow

Starting point is 01:08:38 am really proud of. You are so much like some of my favorite founders, Dyson's like this, my friend, who's one of my closest friend, 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 winds, do something great and then do it again. Steve Jobs said this. He's just like, well, what's the proper response when you make something wonderful? He's like, do it again. Yeah, let's go. A lot of these great people, they don't really have rear-veer mirrors. They'll obviously learn from what they did, but they're not like, wow, look, look at my trophy room.

Starting point is 01:09:09 They don't think that way. Look, nostalgia was put on death certificates in the 1800s, right? It's like people died of nostalgia in their minds. I mean, they really died of something else. I've never heard of that before. It's like we used to know that nostalgia is not a good thing. It's like it was one of bad indulgences. now it's barely a vice.

Starting point is 01:09:30 So I think nostalgia needs a little bit more scrutiny. Overcoming sunk cross fallacy is one of those things that, like, any path that you can take to get there is going to be enormously beneficial. Well, I think playing the game of corporate raiders are great with it. Exactly. So when 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, that was somebody else's.

Starting point is 01:09:55 Yeah. This is a new company now. So one of the things that is unpopular when I do it inside of a company is like I really shit-top a past, especially if I did it. You know, there's still like systems that I build inside of the system. So I like, I should talk to the past publicly. Yeah, I trash. Like I make fun of all the ways in this is hilariously wrong in funny ways. And I need to remind myself, especially when I do this in an area I didn't look on.

Starting point is 01:10:27 that like I got a, like, I have to proviso it or like I have, I need these like corporate raider, like, I'm collecting these now. It's almost like dishinges 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 are all to like expect. Well, you are passing judgment on the prior work. You're not passing judgment on them as a personal.

Starting point is 01:10:47 This is what Rick Rubin talks about his book all the time. But it's not theirs anymore once it's out there, right? Like, this is the thing. Like, say more about that. They need to disconnect from, like the work is collected. is the moment the pull request is accepted or the okay two is accepted. You've converted like your craft into something the company is like it's in a company's comments. A company is a collaborative project where everyone contributes and there's a process by which it's contributed at which point.

Starting point is 01:11:18 The company accepts it as being on quality and says like this is now part of, you know, like the company's embodiment, essentially, so the product, you've contributed it. You deserve the credit for this 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 word ownership

Starting point is 01:11:44 over parts of the co-base or so. We only allow stewardship as a work, like just as a proxy term, because sometimes you need to be able to talk about it. In this way, the cook, if I think so, It's more like an open source project. You can't be putting it into the comments.

Starting point is 01:11:59 People talk about Wikipedia and not about the particular editor of the Wikipedia page. You know what I'm saying. I have a selfish question before you move on. Yeah. So you're looking at all past work. There's this guy named David Ogilvy, who is one of the greatest advertising agency founders. And he says that we have a divine discontent with our work. It's a perfect anecdote to smugness.

Starting point is 01:12:19 Yeah. Right? Because he's like, you don't want to rest in your laurels. Yeah. I talked to James Lison 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 this entire life. He's been an inventor and engineer for 55 years now. He's just like, I see his product and I say, ask myself, how can this product be better? Yeah. Then I make it

Starting point is 01:12:39 better. And then I put it down. And then I short a time after, pick it back up. How can this product be better? I make it better. I put it back down. And he goes, I just, he goes, I see the bad in everything. Yes. 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. Yeah. I just look at it as like, this is a problem. That problem is an opportunity?

Starting point is 01:13:01 And I want to work on that. What is your inner monologue when you're critiquing your past work? Are you harsh? I get excited. Yeah, no, no. No, no. I get excited by finding problems. Like, I just like, I love, like, I mean, look, at this point, I'm such a,

Starting point is 01:13:14 I'm such a long-term veteran of tech company building. I love figuring out with people at stuff. Because, like, we have a pretty good thing going on. Like, by all intents and purposes, this thing is very, And when I figure out what, like, we are actually bad at something, I'm like, holy shit. Like I have an obvious proof of now how to become a better company now, which is like actually my job, my craft, right? Like this is all opportunities.

Starting point is 01:13:38 Things go into comments. They are being hopefully judged by everyone. I get grumpy than things that are shitty are not identified as such and improved and then make people go do it. And sometimes I do it by trying to create. energy by just like roasting the things current state about just like I want I want people to feel no deference to it I don't want people to respect the piece of code that exists and that are a system that I want them to improve and I want people to you know just find their sort of energy

Starting point is 01:14:13 source because I what I'm asking them is like go into a 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 be highly authentic and, you know, for a lot of problems and just like find better solutions than what, you know, industry usually produces and so on, right? That's the entire point. It's unpopular when people aren't in the right headspace for it. And it's incredibly effective if they are.

Starting point is 01:14:40 So the difference very often is just a couple of words and a bit of framing. And I just find that's like that's one of the most powerful sort of tools you pick up, I think, along, you know, along the journey. It's like the five words to say at the beginning of a sentence would change everything. My co-founder actually gave me one of those very early, which probably why I tuned into this kind of thinking and this collecting these kind of things.

Starting point is 01:15:08 Wait, what did you mean by the five words you say at the beginning of sentence? I used to go, again, engineer. That's always like an interesting experience with four other engineers working for me. And like, I stay pretty current. With engineering, I still do not a ton of production, production engineering, but like I do,

Starting point is 01:15:32 I sometimes start new projects with people, like, and the first 20, 30 pull requests or commits in many repositories for things that we use come from me. So like I like doing this. It's part fun, part, I sometimes need happen to my craft. Anyway, so that's a surprising thing for people, 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

Starting point is 01:16:03 was a fact because I've built this thing before, so let me go to a right whiteboard and just, like, we architect this. And so at some point, and that like, now, you know, Daniel, microphone, I'd like explain to me, well, look, you get people pretty pretty pretty pretty. defensive then because they just came to show you basically you know what was objectively their best work because you 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 the drop of the hat they are like 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 say like what do we mean

Starting point is 01:16:50 And now, like, I tried this and it works perfectly. So instead of just telling them, hey, you know, instead of doing this, like, here's the architecture that you should use. Just say, like, I could think of doing this a couple other ways. Maybe it's something you want to consider. For example, what about this? And then just do it. Now you're on the same side. You know, you're on a team.

Starting point is 01:17:12 We all working together on the same problem. I'm just adding input. Now, like, everything is the same. It's five words. or so in the beginning, I just find the magic of these five words. It's not this specifically. It's like things like this. Like just frame things slightly different and life's easier.

Starting point is 01:17:32 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 eight hours of sleep a night. And as a result, his mood, his energy, and his decision making is improved. His point was that you get paid to make high quality decisions and you can't do that if you're sleeping terribly. And the product that has made the biggest impact on my quality of sleep for years is 8 sleep. I'm lucky enough to be friends with the founder of 8Sleep Mateo and we live in the same city. A few months after I started using 8Sleep, I randomly ran into Mateo at a restaurant and I was with some friends. So I go over and say hi. When I got back to my table, my friend asked me, who was I talking to?

Starting point is 01:18:10 And I said, that's Mateo, the founder of 8Sleep. And my friend replied, he looks like he gets good sleep. Mateo is living and breathing his product. I had never had the ability to change the temperature of my bed before I had an eight sleep. I had no idea how much that would improve the quality of my sleep. I keep my eight sleep ice cold. It's cold before I get into bed. So I fall sleep faster and wake up less during the night. That feature alone is worth 10 times the price. There are very few no-brainer investments in life and I believe eight sleep is one of them. That is why elite founders like Mark Zuckerberg and Elon Musk have all said publicly that they use. 8Sleep. I would recommend getting the Pod 5, which is the newest generation of their signature

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Starting point is 01:19:23 Make sure you get yours at eightsleep.com forward slash Senra. One of the things that Daniel from Spotify, I almost said Shopify now for him. David Spotify told me. He's like, you should ask him, like, what were some of the advantages of starting with Silicon Valley? I think there's just too much cross-pollination. You kind of have to sync with companies towards, like, Entrophy creates equilibrium

Starting point is 01:19:47 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

Starting point is 01:20:01 and you have to like tell them to behave differently where if you are outside of a place where like Silicon Valley where people just move along between companies I mean, first of all, especially early, I traveled to Silicon Valley a few times a year, but I tried to just take it all in and learn 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 the aspirations, usually, or the highlight reel.

Starting point is 01:20:32 People wanted to seem smart, right? So they gave me the best version of what they think the answer should be or what their company ought to be doing. And so, which is great, because then. I took that back home with me, three flights in, and sort of took the ideas that are relevant, tried to always put like a shop for spin on it. Like, I don't like taking ideas as you clearly can tell and never did.

Starting point is 01:20:58 Sort of like just like figure out how to localize them to our problems. And ideally try to do something better. And so only very many years later, I did I realize, I was always for my career was comparing my and our average to everyone else's aspirations and highlight real. And just like that alone is a really, really good thing. And if you then try to do better than that, you know, sometimes like just ignorance is an incredible way of actually just doing better. And so that helps the process of having to translate being able to translate things. Like we had no one, like when Shopify IPOed, we had one.

Starting point is 01:21:41 member of executive team whoever worked for a public company. That's it. Wow. We had no one who took a company public we had no one was an executive at a public company. We had one executive who worked at a public company once. I think that's cool,

Starting point is 01:21:57 right? Like it's like, I've had a real sense of accomplishment about that because like it meant we could, we became our own thing. Our entire motto becoming a public company was we are not going public. We are creating a public version of Shopify. And so that was like...

Starting point is 01:22:13 What's the difference is that between those huge... Again, becoming something else. It's like we don't want to... Like, a lot of people are worried when they're a public company, we're going to be different because like people sort of expect public companies to be a certain way, at least for people who work the job if I did. I felt it was important to be different and do things differently. One thing we did, like you will appreciate this is, you know,

Starting point is 01:22:38 we looked at the requirements. We talked about Formula One. Formula One is fun. Sorry, it's a little bit of a VIA, but, like, Formula One, I love because it's like, there's a rulebook. It's the opposite of every other rulebook on planet Earth. People read it so that they can comply.

Starting point is 01:22:50 But Formula One rulebook is a rulebook that is read so that you figure out how to beat it. Right. And it's like, it's, it's no engineer in Formula One has anything to do with the central casting engineers. Central casting engineers actually usually want to get requirements and then comply to them. They're like, the people go into Formula One,

Starting point is 01:23:10 other people who would underbeat the system, right? Like, this is very important to them. So I count myself as of the archetype of the ladder. Like the group of, like, I would have liked being engineered Formula One. I like beating the systems, but other people tell me to abide by. I heard a story one time that somebody had hacked your compensation system to get more money than, you know, essentially they just studied the rule book, found this loophole, and you're like, good for that person. And then you'll fix the loophole.

Starting point is 01:23:40 right of the cases, but that's exactly the kind of person I'm out working for me. Exactly. 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 mean, I don't want to give too many provisors, but generally, like, people who are, like, looking around to figure out, like, I never begrudge anyone being an intelligent actor

Starting point is 01:24:07 and a local incentive system. That is just, like, everyone's a lot. That's pretty much my morality at this point, like it's like, or at least big part of it. You're allowed to do this. I own the incentive system. It's not you get too much out of the incentive system or it's it's a system tells you to behave in a way that is not congruent with the company, the company's goals.

Starting point is 01:24:33 That is my skills issue in designing the conversation, not your job. Not their fault for taking advantage of it. But really appreciate if you're doing it. give me a heads up. Like, so because we are still the same team here. So, like, you know, maybe you raise your hand at some point saying this is fine. Yeah, not like 10 years later. Yeah, yeah.

Starting point is 01:24:48 Yeah. So back to the IPO. Like in the IPO, 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 IPO Roadshow video. Like, it's like a horrible video player, the IPO Roadshow website. It's like an, like, and every other IPO we could find was just, you know, CEO standing in front of a screen camcorder and just sort of going through the same slides. You're like, there's no rule for that.

Starting point is 01:25:25 Let's shoot a fucking documentary here. Like, 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 hold people in to full screen the video? in the first 20 seconds and actually watched the entire thing. And we heard so much about this on the road. Like so many people were like, I was look forward to meeting you.

Starting point is 01:25:48 What you guys did with this video was insane. I didn't even know you could do this. Every video after this was like our way. So it was like a nice little moment of putting a bit of like agency into process, which was pretty. I heard this story one time. I think it was like the founder of serious exam. I forgot who the person is.

Starting point is 01:26:05 But they were like, well, how do you make annual reports? And there's like no rules around there. You have to present certain information. So 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, because I think I heard you say this as well.

Starting point is 01:26:23 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. Some people were saying stay private longer. Yeah, yeah, I get you. But advice was always, like, don't. Right. Like, it's like. Who was telling you, other founders?

Starting point is 01:26:39 Founders, Silicon Valley orthodoxy definitely is to avoid it. And I don't know, I can tell you the story of my decision, but it's just like, basically,

Starting point is 01:26:51 it's like, I mean, 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.

Starting point is 01:27:01 It's just like, embedded personality. I just find plan B usually is a better one. Everyone puts plan B I think for many, many, many people on planet Earth, always doing their plan B would lead to a better experience. It's just like plan B gets the ambitious one. If this event happens in my life, fuck it, I'm just going to build a company.

Starting point is 01:27:24 It's like such a common plan B. That might be what you actually want, but you're lying to yourself or you're scared or whatever. Yeah, and also, again, you are a human being. Therefore, you have, you come, your firmware comes preloaded with a problem called the SunCost Foul. We just do, right? It's like you've got to operate that out of yourself a little bit.

Starting point is 01:27:43 You've got to be able to like discount what has happened more to make good choices. Because otherwise you just chase bad with good money all the time or chase bad plan with your hours in the day. Yeah, I think humans are flexibly scared of change. 100%. They'd rather be in a boring or like even miserable environment than actually change because the fear of change. So great. Yeah. So wait.

Starting point is 01:28:10 So people are telling you stay private longer. So being private is better. Like friends of mine, like, you know, Stripe are running this experiment. Like they managed what they put off in terms of figuring out how to stay private for such a long time. It's actually remarkable. I just think they spend a lot of time figuring out how to stay private.

Starting point is 01:28:31 And like, I don't think that's the most valuable way to spend time. Right. Like it's like I think you could. So you went public 2050? Yeah. What were the arguments for staying private longer in 2013 and 2014 when you're having these discussions? We were tiny. We had, we were 800 people, a Canadian. So they're saying you're too small?

Starting point is 01:28:50 Yeah. Like, I mean, when Shopify's first trades happened at, I think, a billion, one point five billion dollar valuation, right? Like, 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 stock market returns over the last 10 years or whatever. And like, yeah, like I own that list, right? Like, just because I decided to take, like, I did the old school thing. That was normal.

Starting point is 01:29:22 That's what everyone did. That's what people went public fast. And by way, this is kind of important. Like, you know, public market needs to have growth because where else is prosperity coming from for people who don't have? Like, these are these accredited investor laws and stuff like this. All they do is like make it so that like when you're rich, you can invest in private company stock. Yeah. And then you're not, you can't.

Starting point is 01:29:52 And well, where are the returns? Like, of course, it's such a fucking conspiracy to keep everyone private because that just like sequesters all the growth exposure to institutional and investors. and people who are already accredited. And so I just really dislike that whole thing. I think, like, man, like, again, it's about building things and sharing what you've figured out. And, like, people buying a ticket to write the Shopify because I like what they're building is, like, please, like, that's clearly what we want.

Starting point is 01:30:26 So I just think the institution of public companies is good. I mean, my beef is with the whole notion of, like, influence over. companies, again, path dependence. Like one vote, one, one, one, one, one, one, one, one, one, one, one, one, one, one, one, yeah, but, like, no. Like, everyone who studies, like, decision-making knows that you want to move towards, like, people who has most context should make a decision. That's, like, doesn't say the leadership of a company, this is literally what I'm talking

Starting point is 01:30:58 about creating space for creativity, because I want the decisions to be made locally on the ground. So were the arguments for staying private back then just memetic? They were just repeating what everybody else was saying at the time? I think people are generally right. It just doesn't, it washes out. Like, again, people have problems with the concepts of, like, 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?

Starting point is 01:31:26 Like we live fundamentally. Most of people spend their entire life, sadly, in a vitocracy, right? Like, where you need everyone to agree to do something, but you're only one person to vote against it, to not do something. And again, good companies overcome this in important ways. And so similarly, one good argument dismisses the entire idea is a very common way to evaluate options. What people very often don't do is re-formulate other arguments against the status quo.

Starting point is 01:32:00 The thing you're doing right now also is flawed. It's 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, 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. So I think it's incredibly undisciplined because you need to think in propensities, you need to think in chances.

Starting point is 01:32:33 And sometimes you need to really, really load up a decision for all the pros and cons that can be articulated and make it a little bit in your mind, like look at where the scale comes out. For a company that's trying to sell, like the e-commerce platform for everyone, especially for many American companies, being a Canadian private company that's tiny and it's not ideal.

Starting point is 01:32:57 So, you know, like people don't usually go public because of marketing or, like name recognition, but, you know, super valuable. Anyway, put 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. And so on, so on, and so on. And the end, it's like not even close. It's just, you know, the downsides were like a couple annoying phone calls.

Starting point is 01:33:20 I have to do a couple of quarters at least for the first 10 years, I suppose. And I thought actually most of the process was actually quite valuable. So like I learned a lot about my own business having to explain each other. Exactly. There's been a few previous guests on the show, Brad Jacobs, John Mackey, Daniel, obviously running public companies. And Brad Jacobs and John Mackey's case, they both said, like, Jacobs makes that point. Well, one, he thinks it's like wonderful, free marketing and advertising.

Starting point is 01:33:50 Two, you have a currency. 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. But Brad Jacobs' 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,

Starting point is 01:34:08 this is what I'm saying to do in the company, and this is our results. And I want somebody to say, oh, like, there's a big disconnect here. And I want the pressure to, like, to actually perform in, like, and have some of these expectations externally. We talked about the environment that you're building at Shopify.

Starting point is 01:34:25 I'm curious about how you think about the talent that's inside the environment. Yeah, of course. I mean, automatically, I really, really believe in the sort of stoic, maybe Adlerian idea of separation of tasks. What have I control over and what I don't? I always love the particular formulation about 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 that.

Starting point is 01:34:57 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 fucking problem. So it's a really freeing way to think about it. Talent. My job is to make a company worthy for the best and brightest to work for.

Starting point is 01:35:12 This is the part everyone skips. Everyone's like, oh, we need to hire better recruiting team. Well, maybe you need to also just be worthy of a kind of talent that you would like to have. So I mean, this goes from like office space, If you have any to company, like the amount of bullshit people have to deal with to how much, you know, bullshit politics can you subtract from a whole thing? And can your large company feel like a small company with lots of resources and lots of impact?

Starting point is 01:35:45 You know, it's more fun to ship software to millions of people that you really respect than to a few people who you when try to make a sale for at some point. or like it's just like impact matters. In a way, this is likely going to be misquoted, but I think the talent eventually takes care of itself. They're not that many good companies to look for. They're not meant companies that many good companies that deserve the attention of people who can be of

Starting point is 01:36:14 by the most capable people because they have an option to start their own companies. That's a very interesting idea. There'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 what are these people look like though? The reason why I didn't move to Silicon Valley is because I knew how to create geographical consensus

Starting point is 01:36:34 in the Eastern Sea board at Shopify is the best company to work for full 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 work for. And I think given that I estimated I will need somewhere between 1,000 people or something like this back in those days,

Starting point is 01:36:52 I'm like, I'm going to find another 1,000 people that thing like me about how good a company needs to be 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 up for their skills issue by just overcompensating. Yeah, it's called compensation because you kind of have to compensate people for the shit. You have to ask them to do. And, you know, like if there's a lot of shit, you have to compensate people for,

Starting point is 01:37:18 but you have an enormous amount of resources you can make up for skills issues by money. And so in, in the East Coast, which was much more hedge fundy and much more high clients and for the kinds of hackers I wanted, I knew how to do this. But 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.

Starting point is 01:37:38 Oh, yeah. That's on one in the spectrum, which is great. You also had this thought experiment that I heard you say before, which is like one of the worst things that could happen on the other intersection was 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. It's like, that's dystopian.

Starting point is 01:37:55 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 more? You just should build a company that's worth working for. Yeah. Like, again, you should take pride in your work, like, in the inputs and how you, like, did you accomplish your things you set out for in the aggregate? Right. Like, be easy on the path, but like the outcome does, should matter to you. And like, man, I just.

Starting point is 01:38:24 shake my head sometimes with like how people overcomplicate these things. It's just like it's kind of man people know what they're looking for. Like 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 in some of a rarest skills and like a like combining this with an enormous drive like it's like there's like a couple of different attributes that all have to come together to be one of those people who can command like hundreds of thousands of millions of dollars of compensation package that you can make in this industry, partly because you're worth it, right?

Starting point is 01:39:02 Like, you're contributing more than that to a mission, like this and therefore you can command this kind of competition. 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. Your product is what you can do and what you can accomplish. your market is for companies that exists and you are selling a exclusive subscription that's the institution of employment right it's a it's a two-sided

Starting point is 01:39:37 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 competition you know like it's like you know like be better you're making this amount you would like to make this amount And in which way have you become so good that you can add that amount of increase to, you know, just like the collaborative project we all work on? And so I think that's just sort of clarified and simplifies things, right? So, I mean, all this said, I don't want to sound it, 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 lag. And I'm out there recruiting and telling people about the company a lot.

Starting point is 01:40:24 What helps me a lot is people are curious about the company and I've heard about the company and so on now. That is because of things that were under my control. I tell people that it's an unshared attention company. 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 make great money, but we attempt to never be the highest compensation bit because we have found that the people who are not.

Starting point is 01:40:54 optimize for that, above all else actually don't do well at a company. Because Shopify is a mission-driven company. Exactly. And the thing I'll promise is like in terms of your own skill set, partly by 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 I think at any other place. Therefore, the compound return to your career is going to be vastly higher here than anywhere else. Because you get to a potentially higher compensation level earlier in your career because you're with it.

Starting point is 01:41:37 The entrepreneurial story is very fractal in Shopify. It's just like, what is your product, what's the market and does it fit? It's just a clarifier that I think is worth talking about. I'm going to quote David Ogilie again because I think it's interesting. He says, like, talent is most likely to be found amongst nonconformist. 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?

Starting point is 01:42:02 There is two ideas I got from two separate entrepreneurs. I mentioned both them already, but I like, because they use the same terminology when they're looking for talented people to hire in their company, Daniel from Spotify and Kareem from Ramp. And they both said the same thing to me. They hire for spikes. Spiking it. So a lot of big corporations, they want you like well-rounded.

Starting point is 01:42:22 Like, no, no. this guy might be a bipolar alcoholic or this guy might, you know, have some other, not shower. Yeah, yeah. Like Steve Jobs, he was hired at Atari. Everybody's like, Nolan, Nolan Bush and 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.

Starting point is 01:42:43 Do you agree with the idea? 100%. It's like, exactly. It's like we never look at the credentials and stuff like this. I, again, I'm a high school shop around. it would be like rich if I would start making everyone want to have PhD. The path by which we do it is we go for a life story. We ask you like, hey, give us your story and this is a very important ingredient in our hiring process.

Starting point is 01:43:05 And frankly what we're looking for is like high agency experience. We look at like something went wrong and you're like in your story at some point. Well, now let's zoom in. How do you react? Give me a minute by minute. This is what we're not to know, right? Because a lot of us are entrepreneurs. Even everyone, like I talked about the founders of companies you purchased, but like most of people just in general, in Shopify entrepreneurs, many started Shopify stores, build a business and then fell in love for a company and applied for a job and got them.

Starting point is 01:43:31 You know, it's like, so this is a huge amount of building, company building background. And we want to be surrounded by people we admire. That's, I think, the biggest product any company can deliver to where employees is so is that every day they're surrounded by people they deeply admire and can learn from. So it's a very important part of this. So lots of entrepreneurship, lots of entrepreneurial impulses. And then, so we look for this high agency behavior. And then, you know, obviously did you drive a particular craft that you're applying for to excellence?

Starting point is 01:44:07 How do you think about this kind of thing? Can you just sort of talk about the excellence or actually perform it? And then, you know, this is really what we feel. our buildings with and, you know, just like, again, create the space then and that can be creative and this is how it always works and 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, really zero. I didn't take a salary for four years.

Starting point is 01:44:42 I heard your father-in-law covered your payroll when you couldn't make That's right. So yeah, we were living with my parents-in-law, Fiona, my wife's old to a bedroom. From a which I also added, I put a Kia desk and I built a lot of Shopify from there. And, you know, like, I mean, just kept cost low, but that was the main thing. Make every dollar count is something that's, I'm so glad. Like, this is what I've worried. Sometimes with all these really, really big seed rounds.

Starting point is 01:45:16 Like money, with mainly money, it gets you, I mean, sometimes it do wheels, but usually it just like makes you get a whole lot more of what you got before. And people did raise early, probably because they were not tight with money. Then you get a whole lot more tight, not tight with moniness at a larger scale and it gets really, really bad. You're making my heart sing because I feel like I'm

Starting point is 01:45:43 like on an island by myself about this, because I've spent 10 years reading 410 of these biographies. All of them control their costs are crazy. They'll tell you whenever again, constraints to your best friend. And then I talk to these young founders. I usually don't meet startup founders because I'm not an investor, but a good friend of mine is like, hey, meet this young kid.

Starting point is 01:46:01 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. And I go, go look at like, where did Apple start?

Starting point is 01:46:14 Look at Microsoft. Microsoft started working in a strip mall in Albuquerque, New Mexico. And you need a triplex in Soho? Like, what are you talking about? That's so true. And the question, what I pointed to him, it's like, okay, how does this make your product

Starting point is 01:46:28 better for your customers? 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 are not increasing goals. You built a $200 billion company in your wife's childhood bedroom. That's where you started.

Starting point is 01:46:43 Yeah. 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. Like, they were in a shitty office building. Yeah, yeah, yeah. Like, I think they had three, like, three separate rooms. Oracle, that's where Oracle started.

Starting point is 01:46:59 I think, I mean, there's a well-documented effect of when companies build monuments to themselves. They usually decline right after, right? So that has a long-running history and business history. I do think there's an art, like, I do think that companies underinvested into office space for a very long time and it actually was a mistake. I think space around us is actually extremely important, but it doesn't need to be expensive. Like that's probably an aside, but like, oh, let's go down there. What does that mean?

Starting point is 01:47:36 It's just like, so again, we didn't have a lot of money, but we wanted a nice office space. this was the decades where there was a lot of open concept versus own room office spaces where it was sort of a kind of fight. My co-founder is a Daniel Wynandh, he's a polymaph. He learned programming when I asked him

Starting point is 01:47:59 that I needed some help with programming and just like it was good immediately, which was annoying as hell. And before it was our designer and just like literally everything else to know a DJ and before that he won poker tournaments. So it's like it just like, It keeps going.

Starting point is 01:48:11 It's like one of these. It's actually really, really helpful to have someone like Daniel as a childhood friend because it really, really misleads you about human capabilities. Like this is just your buddy who does stuff like this.

Starting point is 01:48:22 Anyway, he at some point, like, he really, really tapped into this. No one can be more creative than the space around them. And no one can care more

Starting point is 01:48:35 than the person they look for. That's the way he, like, sort of created this, philosophy around this. I told me, look, here's max budget, and we are getting like B office space that's like kind of cool.

Starting point is 01:48:50 And you need to figure out how to create spaces that are like a 10 out of 10 on doing the class work. But inexpensively. But like you need to figure out how to make it cheap. Right. Like so, man, I mean, we built a bunch of offices in a row.

Starting point is 01:49:05 And they were insanely good at this. How many years into shop? This is like 2010 was the first one. There's six years and founding, four years after Shopify launched. We went out of like sort of a ball for coffee shop, which was like really nothing to our first office. So how do you do this? He said like first of all, the economy is wrong. It's not between open office and like closed office spaces.

Starting point is 01:49:35 There's like perfect midpoint. midpoint because and it has to come from your strategy of these projects. Shopify loves the five-person team. We increase to aid sometimes, but we think the best team size is one because like a single offer can do things that is impossible to do for teams and hit high notes that are unreachable. But I think PlayaDerve has rather played the field of what can be done a solo project actually changing again because of AI but like which is exciting bit but like most projects worth doing need to be done in teams then there's a magic number at five is sort of what the military ends up like figuring out too like they test these things and come

Starting point is 01:50:20 to the same conclusions you can sort of temporary go up but then at some point you have to split teams and pass a lot of the tasks each of these gradations is like a figure 10x loss of productivity so Shopify is like of all engine like R&D team is in three and a half thousand It's really lots and lots and lots of small teams. And this is also why we need this legibility coordination layer that they talked about earlier. Okay, so pods. They figured out how to make pods that are like exactly they are private enough while being open enough. They never make the office feel dead, but they also draw you around.

Starting point is 01:50:56 It's like... What's a pod? What does that mean? It's just like a... It's a room that just like sits up to... Like, when you put the... seventh person in, it's uncomfortable. Like, it's like, again, think about how much policy you don't have to post. If the environment just makes you do the obvious thing, you can play the uncomfortable

Starting point is 01:51:18 too many people in this area. Like, 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 self-organize into five-people teams because that's the most comfortable thing to put in a part. So not meeting rooms. Meeting rooms go in the middle on our limited floor space because we don't want people to spend all day in meetings and then get out of the dark rooms. We put like everyone sits around the windows in pots and they are like structured in such a way that you know is all works.

Starting point is 01:51:51 The coffee area is on the other side to create certain deputy. We cut through every floor eventually to create stairs that we move teams in such a way that certain teams. that have to work together but work on infrastructure, separated them out in floors so that they going to each other would run into other people who are using the infrastructure and so on and so on. So design being super conscientious about this is really important. Daniel did an amazing job. I think we open source the floor plans and I think lots of models. This is not interesting anymore when you look at what they look like

Starting point is 01:52:29 because I think that work has gotten up so up into the tech industry as a right midpoint. And, but many people, cargo culled it. Like, they just Csiox copy it, essentially, instead of understanding. So they make pots too big or whatever. You know, these kind of things. We talked about car refoulting a few times. You observe that behavior in other companies. I'm curious what internally you have caught your own company car carolting.

Starting point is 01:52:57 Oh, we actually, we are in a Toronto office here. the Toronto office actually has a few floors that are clearly mimicry of these ideas that they figured out but are not they don't understand where they these come from like again pots too big it is like more the nice meeting room is right at on the window has lots of light you know just like again maybe this is okay to have a few but like I went with the teams through it because we then changed some of the floor plans after they moved here and realized like,

Starting point is 01:53:38 holy shit, this is like, oh, Norman doors everywhere. Fuck, that's the craziest thing. Wait, what? Fundamentally allergic to Norman doors. What's that? Doors that you push, then... You can't tell. You can't tell.

Starting point is 01:53:50 Yes. Yeah. The most fundamental design error that you can possibly make is like create affordances on a product that make people predictably do the wrong thing. Like, like, this is such a, like,

Starting point is 01:54:08 like literally everyone who's ever involved in a process of designing a Norman door should, you know, revoke their design license, like, being facetious, obviously, that isn't a thing. But like, it's like, it's just like, man, 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 are up in place very fast.

Starting point is 01:54:31 Like, I mean, the funny thing is you can usually turn a normand door into a non-nomon door by cutting things away and, like, putting a push plate somewhere, you know, so that helps. So I make a big deal all of these kind of things. Like, it's just like this needs to, like, I cannot surround people the things that are underperforming the quality of engineering we want to do. And that's down to the detail of the doors in the office. Yes. Wow. Yeah. Yeah, of course.

Starting point is 01:55:01 Yeah, I mean, because product is not a thing. Product is an abstraction. Product is a name, like a handle that you put on some totality of a body of work. From perspective of the people who are creating product, the product 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 make a bloody mess if they don't, right?

Starting point is 01:55:26 So from the inside perspective, you have to sweat all the details. The way you do anything is how you do everything. And that is absolutely down to the floor plants and, you know, the ambient noise levels and so on. Just like, you're going to room is like that, like silent. It's just like you notice when you're talking while going to a meeting room, at least on the floor is fixed based on previous specs. It's kind of uncomfortable to talk in the hallway because of so echoey. And you walk in a meeting room and immediately like it's just a different noise level because, because it's just like diffused.

Starting point is 01:56:02 We have enormous amounts of like, in fact, 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. It's a little fun. And so, in fact, like, everything in our offices is from Shopify stores, right?

Starting point is 01:56:19 Because again, like, if anything we are doing is not mission aligned, we just didn't align to a mission, axiomatically. So, you know, just you can go pretty far in these kind of things. When we need something for office spaces and it's not on Shopify, we usually put a call out for someone to start that thing. So it's on Shopify and we help them get started and build the thing. And then we can maintain our 100% Shopify quarter.

Starting point is 01:56:48 It's also fun. That's incredible. We did at least one enterprise sale with a supplier because we really wanted their floorboards. And for something, they really look great and we're at the right price level. And like, yeah, but we can't place for order unless you come to our product. So sometimes you know, maybe teaching. That's actually a good way to get a customer. Yeah, it's also a funny way of the way enterprise says.

Starting point is 01:57:10 I want this thing, but you just need to migrate over to our platform first. All of the founders and extreme winners that I have studied have this one trait in common. They have excessively high energy levels. If you're going to be the best at what you do, you need to maximize your energy and output. And that's why I've partnered with Function. I signed up for Function long before. They were a sponsor of this podcast. and when you sign up, they ask you what your health goals are, and my response in all capital

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Starting point is 01:58:41 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. He 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 talking to a bunch of people or reading much books.

Starting point is 01:59:02 But 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. Okay, so that's the example he gave me. I haven't played the game. Can you elaborate on this? I completely agree. So again, this is like, man, the world has such a weird way of like somehow changing itself around me

Starting point is 01:59:24 to make this stuff that I thought was irrelevant, relevant. or later in life. It's like absolutely amazing. It's just like, okay, so video games. Video games are best thought. I mean, this depends very much on a video game. But in the aggregate, very often see the good video games are simulations. They are word upon itself and you are an high-agency actor

Starting point is 01:59:44 and you modify things. You perform actions. You make decisions. And then the game rearranges themselves giving you a feedback loop of, usually a very quick feedback loop because otherwise it's unfun. but you learn about consequences of your action. So, like, competitive multiplayer games are very obvious there, and StarCraft and strategy games.

Starting point is 02:00:07 They're not that popular as a category of games anymore, but, like, you know, when I was going from my teens in the 90s, like StarCraft was the biggest game. And, you know, I loved it because it was really, really hard. It was, like, easy to learn how to master, which is exactly, I think, a hallmark of everything that's worth doing, for motorsports, for kiteboarding, for my hobbies, tennis, all these things are like this.

Starting point is 02:00:32 But it specifically is like honest in a way that like there's like two people on the map mirrored. Everyone has the same potential every single game. And one person wins at that. It's like it's additionally, it's a game of imperfect information. It's not like chess. You don't see the moves. You see only some information.

Starting point is 02:00:55 that you, like, in fact, you have to invest, you have to use one of the things that could get your 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're learning this game is information is everything. Like, there is no right decision, there's only context in which decisions turn out to be correct.

Starting point is 02:01:16 And while resource management is extremely important, you have to understand that resource management is not just quantifiable. It's not just minerals and 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 a game of Starcraft

Starting point is 02:01:39 than it is to actually attack their base. Because if you overtax their ability to pay attention to things, they will make mistakes. How do you overtax their ability to pay attention to things? You can do an early attack. You can do only any number of things, especially if you play against the same person, And then you get a very high level, you will play the same people over and over again.

Starting point is 02:01:57 And they get a sense for how you play. So at that moment, like, there's always been the people who are just, like, incredibly prepared. Right. Like, they're just like, they, they're affected playing a single way, which my play was always different, chess, dark craft, all the same. It's like I disrupt the other person's play. Like, I do moves that aren't in books, right? Which are, they're not in books because they're not good.

Starting point is 02:02:20 But other people can't deal with it because they need their preparation. That's like their skill set is their ability to play chess is a crystallized intelligence, not the fluid intelligence to deal to roll with the punches. And so, you know, like I learned a lot about myself doing this, but I also learned a lot about, you know, how do you, like, you know, just like how to approach a game? Like, how do you get better?

Starting point is 02:02:47 How do you get more out of every game you play? Because, like, I never, ever in my life had as much time as some other people could to invest in something like this. So I always had to like, how can I get more skill progress units out of the time I have than other people out of less constrained Canada? I'm talking very fondly of StarCraft. It might just have been oddly the right teacher from here at that moment and a student was ready.

Starting point is 02:03:15 And so I could have maybe learned the same lessons from any number of things. But I think it was specifically good because of it being a simulation. You start a new game. It had skill-based matchmaking. So you should play against other people off your skill set based on, you know, E-low rating. And so you had a very, very clear sense. We started winning more games when you lost.

Starting point is 02:03:41 That means you were progressing. If you started losing more games, if you were regressing on an absolute scale compared to all other players in the world. And I think that was a perfect little sandbox to explore how to, 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 I think it was perfect place to spend time for me in my teenagers years, forgiven what I did afterwards. So back to your AI question. I just find that working with AI agents, especially for like, I mean, recording this, this is like week three of 26. If you would have recorded this in week 52 of 2025, it would even be different, right?

Starting point is 02:04:36 Like I might not even make this analogy so strongly, but that's how much is happening that the world changes every three weeks right now. weeks right now. We figured out some new harnesses for agentic loops that are much more autonomous and frankly supported by models which didn't exist at the beginning of December even that 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. And so, you know, just like, I'm like, man, this is starting to really look like, StarCraft, my attention is paid. Like, this one is currently working on a module for what I really, really need.

Starting point is 02:05:19 So I'm zooming in, paying attention, doing a little bit of micro, giving a little bit extra, double check sort of the output of the critic, which looks at all of them all the time to figure out if they're still on task. It's the exact same thing, right? Like it's like, it is a fascinating time. It's just like, I can't describe how fast progress is right now. I just like, you know what I tell my team is like, you know, 21 years now, starting compil is really, really, really hard. Right?

Starting point is 02:05:49 So first year's, let's like, just like, that's interesting. And everything's urgent because like you're getting to a margin. You got like within a week of running out of money so many times. And sometimes you were bailed out. Many times it was like just like, like the clearance of the one time try hurdles that shop went to was like millimeters at times. Like, I bet you if we run the first six years simulation 10,000 times, we would not succeed in most of them, right?

Starting point is 02:06:20 So, like, in a way, like luck is a big component, timing or these kind of things, people luck, especially. After that, you know, IPO, you think that's probably the most interesting thing, a period of the company. I think it was hard and maybe not terribly interesting, right? Like, it was financing event at the end of the day. Maybe some aspects were interesting, like figuring, but like there were aspects of how we make it our own as a process. Like that, partly this is why I did it.

Starting point is 02:06:48 This is why we made changes 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 I wanted to have in my own. Then there's COVID, which was very, very hard, definitely not interesting, actually fucking annoying, mostly. And so I'm like just trying to figure out like 2026, man, that 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 this complex history, probably in everyone. I think literally everyone's career.

Starting point is 02:07:20 Just everything is lined up. It's like, doesn't matter what you've got. 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? How quickly can you readjust? How quickly can you readarive everything? You put out this internal memo where you're just like, I think it's a skill set up.

Starting point is 02:07:38 just like, I think it's, you know the language better than I do, but it's basically it's a company expectation that you, the first thing, when you have a problem, you reflexively try to use AI. When did you put that out a year ago? Yeah, no, maybe not quite, but like something along the sense. And people were just like, this is ridiculous. There was like some pushback.

Starting point is 02:07:57 And now, to your point about how fast everything moving, it's like, of course you would. Yeah, exactly. People will look at that memo in two years and just like, he didn't say anything. It's like saying the sky is blue. Yeah, exactly. So this excite you?

Starting point is 02:08:09 Oh, yeah. Man, I love that. This is what I'm here for. Like, it's just like I, if I wouldn't have happened, I don't think I would run for anymore. It's just like too, like, it's much better leaders if in times, like, if times is stable. Yeah, but I thought you were in love with this problem. Yeah, but unsolvable problem. So you'd still work on, but you wouldn't be running it?

Starting point is 02:08:28 What do you mean? I mean, I think I would be, no, I might try my hand at a different aspect of helping people self-actualized. Like, I mean, my personal mission is to cause more entrepreneurship, right? Like, that's like, I'm going to judge my own career, but have I, the thing I discovered that was meaningful to me, have I, have the maximum amount of other people do this thing. When did you realize that was your mission? So, I know exactly because it was, like, preparing for one of those internal events, summit talks, which I was like, it's always a bit of a, like, soul. Like, I do a lot of this, like, message in a bottle reading and, like, self-interpections. And it was like, it was 2014.

Starting point is 02:09:10 I was preparing for my summer talk and I'm like, my biggest struggle was 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, I was like, but I like engineering. I really want to spend my day hacking on stuff and building things, not managing. And so I, again, I used my trick partly to give a talk on something that I was sort of come to realization, but maybe not fully internalize. Basically, I said, I loved engineering because it turns out that was the way how I, as a kid, when I started doing it, could build things.

Starting point is 02:09:59 What I actually loved doing as building things. And specifically, I love doing, like building things, but share a thing that like I have experience this is a moment of becoming an entrepreneur, getting your first sale. And so I made a talk about combining those two things and just saying like my mission in life, my craft is actually building things in general.

Starting point is 02:10:23 I built, I started with products like code, I then create products, and now I create companies that create products. And I engineer those. and that caused more of this kind of thing. So I kind of wrote that as a personal mission for me and said, like, I will attempt to run Shopify and try to be the best CEO I can be

Starting point is 02:10:46 until someone taps me on the shoulder and say other people could be better for this company as long as it's cohesion with my personal mission. But I'm also, like, I'm perfectly fatalistic about this kind of thing. I don't do a job for money. Like, I do it because I feel like I can contribute a lot.

Starting point is 02:11:02 I love this idea that you view entrepreneurship as a way to get self-actualized. Oh, 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 to get that. But 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 enable.

Starting point is 02:11:27 It's not like the crony capitalistic. There's like a lot of like dirty part. I'm just a capitalist as they come. So I understood with that comment, out of every single note that I took from all the talks that 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.

Starting point is 02:11:43 And you said, focus on craft and giving a shit. And you said, it doesn't matter that a bunch of this stuff isn't quantifiable. It's exactly how I feel. It's such a basic thing, but it's like, why? Like, it's so simple, but it's just not easy, right? Like, in any which way, like companies hate the unquantifiable effect.

Starting point is 02:12:00 It's amazing to see it. Like, man, you hire the first team together. And like if you get to talk about building a company on podcasts, that means you were successful. So the first team clearly did this. And therefore the first team was very good. And first team, you hire based on your gut. You just knew. These were people you need it.

Starting point is 02:12:21 You make mistakes, but you're correct. And that's all just sort of like judgment, 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 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 decisions. And then everyone wants you to write it down.

Starting point is 02:12:55 And you know what happens when you write it down? Like, here's the things that you are looking for. Here's the thing. Well, the people read it are the people who are very, very good at following lists. So the people that you probably describe, not the people who go look for the cheat sheet. The people you are trying to avoid hiring are the people who will study the cheat sheet very well. So you just gave everyone a way of performatively doing the thing that you want to see without being intrinsically like this, right?

Starting point is 02:13:36 And so you end up very quickly losing your company once you systematize things. However, everyone is telling you to do it. There's a giant conspiracy against these things, taste, quality. If it can't be put in numbers or can't be written as a list, companies hate it, yet almost everything you have to do to build a great company is these things. you shouldn't write down. Actively avoiding to write something down is sometimes the most important thing you can possibly do.

Starting point is 02:14:10 Do you think it's also related to the way you brought up sunk costs a bunch of times? Yeah. Where it's like, well, I wrote this down. I might change my mind, but there's some kind of human element where it's like, I don't want to contradict this because it's in writing. Yeah, exactly. Again, people like to be consistent over time. I just don't find that important.

Starting point is 02:14:26 I found 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 a point that you have to make decision, that means you will wind up with a right one. It's like if you do not stop at some point to incorporate new information, right? Like even if you were wrong and if I figure it out, you know, again, what do you do? Like you have two, you have one momentarily chance to steer your concern to the best possible outcome. Are you going to take it?

Starting point is 02:15:00 or you're going to be the person who just like leans into the comfort of like somehow character consistency what like why for what like again what's the job you want to do is like want to look good or be good right so you're going to like just change um like it's it needs to be okay to uh change your mind when better information comes 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 just ask me i to do it it will probably point out various contradictions inside of what I'm saying about what you do. I'm like in this I'm probably on multiple sides. The reason is actually, this is the almost most important thing.

Starting point is 02:15:39 It's everything comes in layers. There's like just so many different, like what's the operating, the optimal operating system in some frame of reference is often contradictory on the opposite of a larger frame of reference. Because, you know, I like this box talking about, boxes because like inside of a box, it is, after a while you can have a map of it, you can illuminate all the corners and you understand what's there. You may decide the wasn't the right box to pursue. Maybe they need to like figure out, like maybe you need to abandon it and say, okay, actually

Starting point is 02:16:13 the problem is actually an aspect of an other problem. And maybe if they put a larger box, if you solve that and this problem 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 world. way you problem solve because you're starting to work much more on, with much longer timelines. You need to actually make bets at a high level, but you shouldn't make bets with like infrastructure

Starting point is 02:16:39 because you can, like in engineering again, you can run benchmarks figure out if something is fast enough and it'll be a yes or no, right? You don't need to bet on the trajectory of, you know, databases are going faster at a certain thing. It's just like, you don't need to, you can matter. 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,

Starting point is 02:17:02 how's how you're going to change that market? Right? Like it's because you need to figure out to join market or you. Is that market going to be a temporary, unnecessary aspect of something else we are already doing and will be absorbed into a different category of products in this fiscal value for you to do and so on? And, you know, what are humanoid robotics going to do

Starting point is 02:17:21 to the world of logistics? And, you know, you got to work with trend lines mostly, right? which is not important in many other decision making. So I think there's probably like four or five different levels by which you have to look at a problem. And that is actually a lot of the skill of a good executive is to be able to meet the team where they are and help them talk about the outside world, quote unquote.

Starting point is 02:17:48 Like here is how their work relates to all the other frames of reference or 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. Like, it's not, like, you work on customer support. Well, you're helping people literally not giving up on being entrepreneurs, right? Like, it's not even subtle.

Starting point is 02:18:12 It's actually easy exercise to do for people when you ask them to do it. But it's distressing in how many companies, it's actually kind of unstated. The company mission is some kind of set of platitudes or something. that aren't actionable. Those are enforced errors, and I think things go better than you get them right. Hey, real quick, I need a favor from you. Right now, I'm conducting a survey to better understand the listeners of this show. So the survey is entirely anonymous.

Starting point is 02:18:40 It's going to ask you things like what your position is at your company, what your household income is, things like that. This information is going to help me both keep and attract the best possible sponsors for the show, which then in turn allows me to create the best possible conversations for you. Now, I don't want to just ask for something without giving you something. So as a thank you for completing the survey, I'm going to host a live stream on YouTube where I talk about some of the most important things I've learned from spending hours with the guests on this show and some of the best ideas that they have shared with me after our conversation.

Starting point is 02:19:11 So please do me a huge favor and complete the survey. It takes just five minutes, probably less than five minutes for you. But after you complete the survey, I'll email you a link to the live stream. A link for the survey is in the show notes of this episode and is also available on David Senra.com. I 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.

Starting point is 02:19:32 I've printed out some of them. And I'm sure people are going to tell me about all the contradictions. And this is the fun bit. You know, I find contradictions in my belief systems all the time because we are like balls of contradictions. I'll get messages. I'm like, I'm listening to this episode you did in 2019, and you said this.

Starting point is 02:19:49 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? stay the same? Like, that's the point. 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 of more entrepreneurs.

Starting point is 02:20:14 I'll tell you one thing. I just, I'm not sure if I, maybe I've shared this publicly, but like I think you were going to get more mileage out of this than anyone else. when we did surveys with our customers about, because we wanted to like, I mean, we need to identify where our customers, what they do, whatever we eat, these kind of things. What we have found, this is long time ago before your podcast existed, it was like almost 80% of the high 70s, a percent,

Starting point is 02:20:40 people check the box saying they have someone who if they send a entrepreneurial question to would respond to the email in 24 hours. And I initially thought that was, insanely cool how many people have such a resource. It's not like it in the general population though, right? And eventually I clued in. I think it was probably on Wikipedia.

Starting point is 02:21:02 I read about survivorship bias. And I realized, fuck, 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. And the concept of entrepreneurship is so under-exposed. and under-explained, it's sort of got better in the 10 years, 15 years since these surveys. But I love what you're doing because you're just bringing this constant.

Starting point is 02:21:31 Like 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 signing up for? Because the people who don't know it exists, the people have no relation to it or the people who don't happen to have some in the family or friends who have at some point started anything, well, they just won't try. It's not part of their toolbox. And just putting this part into more people's toolbox is going to be so loudbearing.

Starting point is 02:22:05 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 just-in-time manufacturing and 3D printing and additive and raisin printing. And obviously, like, products just humanoid robotics, dreadnought, lights off factories, making anything on demand, and 3D printers in every home, or at least very, very commonly at homes now.

Starting point is 02:22:36 You know, in that world, more people will realize and working with their eyes about learning the skills of figuring out how to make the better cup, and how to design a better version and not having a norman door. It's capitalism the best parts, and I think it would be much more common and much more exciting. And I just like it's so fun to work on. And like in that way, like you and I work on the same project,

Starting point is 02:23:04 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 it's so important for people to then try and hopefully when they might use Shopify and then hopefully we can push them behind. I love that. I appreciate you saying it. Appreciate the time. Thank you so much, Toby. Awesome, man.

Starting point is 02:23:22 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.

David Senra - Tobi Lütke, Shopify

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