The Knowledge Project with Shane Parrish - Tobi Lütke: Calm Progress

Episode Date: November 15, 2022

My guest today is Shopify co-founder and CEO Tobi Lütke.  We discuss the differences between founders and professional managers, how he’s scaled with Shopify, the constant fight against bureaucracy, how he thinks about innovation in a large company, and how he manages to keep his head when everyone else is losing theirs.   A coder at heart who emigrated from Germany to Canada two decades ago, Lütke co-founded the e-commerce giant Shopify in Ottawa in 2006. The Globe and Mail named Lütke "CEO of the Year" in November 2014,  and in May 2021 the company reported that it had more than 1.7 million businesses in approximately 175 countries using its platform. As of July 2022, Shopify is among the top 20 largest publicly traded Canadian companies by market capitalization, and the company’s total revenue for 2021 was $4.611 billion. Lütke previously appeared on Episode 41 of The Knowledge Project.   --   Want even more? Supporting Members get early access, hand-edited transcripts, member-only episodes, and so much more. Learn more.   Every Sunday, our Brain Food newsletter gives you a mental edge in 5 minutes with timeless insights you can use. Add it to your inbox.   Follow Shane on Twitter.   Our Sponsors:   MetaLab: Helping the world’s top companies design, build, and ship amazing products and services.   Aeropress: Press your perfect cup, every time.   House of Macadamias: Nourish your daily routine, and nurture your lifestyle. Learn more about your ad choices. Visit megaphone.fm/adchoices

You are valuable because of the brain you've got. You have value because you make choices. You're valuable because as a front-end designer, not just that you are actually engineering, that you can program, but also that you can, you have an aptitude to work on build systems that are like great and easy and to use for people that are resilient

to random, people do very random stuff with user interfaces and you build something that we're paying now. It's your experience, it's your skill, it's your actual, it's your life story rolled up is your intuition, is your ability to make great decisions quickly. Welcome to the Knowledge Project. I'm your host, Shane Parrish. This podcast is about mastering the best of what other people have already figured out so you can apply their insights to your life. If you're listening to this, you're missing out. If you'd like access to the podcast,

before public release, private episodes that only appear in your feed, hand-edited transcripts, and more, you can join at fs.blog slash membership. Check out the show notes for a link. My guest today is Toby Luteke, co-founder and CEO of Shopify. Toby is a friend, listener of the Knowledge Project, and has had perhaps one of the hardest jobs in the world for the past few years. I'll warn you now, this conversation is wide and deep. We cover the the differences between founders and CEOs, how his job has changed, as Shopify has grown, fighting bureaucracy, and how he thinks about innovation in a large company. We also explore how he thinks about compensation, what businesses can learn from programming, and how he keeps his head

when everyone around him is losing theirs. We also discuss ideas that have left a formative impact on him, including Paul Graham's essay on conformism and the idea of the infinite game. But that's not all. We also cover the technology he's most excited about what he used to spend time on that he now sees as a waste and how he fixed his sleep. Long time listeners will note this is the second time Toby has appeared on the show. The first time was episode 41, which I think was like five years ago, which feels like generations ago. It's time to listen and learn. How do you lead through such a period of volatility? I mean, it was, I don't know if I did a very good job of it, but like I suddenly did

it. Like I suddenly had to deal with volatility. That's true. I think Shopify's have captured their imagination, like of everyone in this massive swing towards digital services. And market beta caused Shopify to be extremely exposed and, like, just, you know, on everyone's mind. And then the pullback was equally drastic, which was a fascinating experience eternally, right? Like, there's lots of discussions.

You get always everyone's gotten messages from their parents on a boat, like, hey, what's going on? I mean, I've never thought that companies are in their stock have that much. to do with each other, right? Like, it's, it's related, but not, like, no one in a company works on the stock if things are going well. I think if people start working on stock, things are actually, like, that should be a sign when things are going pretty poorly in the company.

And so, it's been, you know, it's been a challenging time for leadership because you kind of never knew what kind of puzzle box plan of would drop onto your desk in the morning and I think though the things are very important during that time

but the things that are important doing all times which is the most important thing is to keep the most important thing the most important thing and the most important thing in our case is like make a product that's really appreciated by entrepreneurs and can deal with not just the current but also the next

process of problems we adjusted quickly we shipped a bunch, like a lot of products that had in the early days with like curbside pickup and so on and then we just took it from there. How do you do that though? Like how do you keep the most important thing, the most important thing when the world around you is sort of going crazy? Yeah.

I would say like the, when you dig into the nuances of what the most important thing is, it's usually not like the current tactic, but it's actually the overall strategy and the North Star is the thing that you need to protect right like the end result of like the reason why company exists is a thing that needs to be protected right and and in our case this is very much like we love entrepreneurship we think entrepreneurship should be simpler but you think entrepreneurship should be simple on internet than it has been in in the past a physical world and we want to build software to make entrepreneurship just easier like at least make it so that the

technology cult side and the internet side and all these things are not something you have to worry about. We take care of all of them and you make great products and fighting market and the degree that we can have, we have the voice as well, but like basically show up there's something people want and we will do whatever we can to make you reach your audience. Because if that is your North Star, just because suddenly there's shelter in place and now I can reach stores and these things, you know, that's an obstacle which no one could see coming. But if you know in which direction you want to go, then you just know, okay, well, clearly we have to get around this obstacle.

So, like, as long as we keep going in the same direction, it's all fine. Right now, no one can reach retail stores, so make sure that we have the retail stores, get the catalog online, and these clips I pick up these kind of things. So you can run this constant, given what's going on right now, what's the best thing we can do. And you run this over and over and over like this. I actually think even concepts like roadmaps and just generally plan is actually overrated.

I think the best possible roadmap is have a very clear-eyed view of what matters to your merchants, have a super strong model of your own capabilities as a company, and then rerun the function of deciding what is the very best thing you can work on. Have the moment you have teams ready to pick the next task, instead of everyone sort of doggedly working off a thing

that, of course, gets interrupted by reality. Okay, so this is how you do it. Now, how this looks in actual practice is you look at everything that is being done in a company and you put things in two categories. Helpful and not helpful right now. Because reality changed. And I think we ended up stopping to work on canceling or not yetting.

60% of our things we were working on, which I think everyone was ready for because it was very obvious in first-outhing. of 2022 but we are going into very different times right so everyone was looking to see like how can we be most helpful and i think everyone really wanted um to you know all of us made life decisions we were not doctors we were not frontline workers um we were not essential workers but we worked in a technology industry the technology industry was probably amongst the least affected from a productivity perspective we had home setups and um so you know given us are being

able to be helpful with the primary objective that everyone had, which is health-related, we could at least nail it on what we could do. And so that's everyone rallied around this and we got cracking on that. I imagine it pulled you all together too because all of a sudden there's a lot of meaning and urgency to what you're doing. Ten percent. I mean, I wouldn't say it's like, I mean, it clarified the mission for everyone. And the mission, I know sometimes sounds,

everyone talks about the mission, and it's almost like one of those things you go and like, well, what's your mission statement and whatnot. But it matters. It's like it's a reason, like for, I mean, some companies might have mission statements that are kind of dissonant with what they actually want, and that's unfortunate.

But like, I think that's rare in founded companies. They tend to be coming from a particular observation or a particular reason why they needed to exist. And in some cases, that is a limited goal at some point you might accomplish this goal. And then you're looking for something else, I imagine, in our case, I don't think we're threatened by this. This is a forever mission, an infinite game, if you want.

And so it's really clarified. for us. Now, it was very difficult times, well. Like, I mean, like, man, so many people they hold up in tiny little apartments and didn't step outside for a year or more. There's a lot of mental health issues, you know, like, it's, it was, there was, everyone wanted to, had so much energy to want to do something. People were, like, upset with what they were seeing in so many different ways, not just COVID, but also, like, you know, other conversations. organizations like there's a lot of racial unrest for very good reasons and I think there was a lot of energy that couldn't be converted into productive means doing this time which

made things challenging as well and it it was a fascinating time it was a challenging time I think it was a clarifying time I think a lot of companies we connected really with what they are there for and what they like how they think about their own principles, how they think about organizing, or I think about talking, how they think about contributing, not just as a company,

but also as a community. And we had to go through this all in a hurry and all at the same time, and leadership for this was tricky, yes. Are there different roles that you see for founders and CEOs? I don't have a good word for non-founder-led companies. I sort of used to refer to them

as like fashionally managed companies. But the implication there's like that the founder-led companies are amateurishly matched, which is actually not true. So I'm sort of lacking a great moniker for non-founder-led companies. But if you've looked for both these types, they are very different internally. Completely like, like, let's keep going with a turn. Professionally managed companies are often, like the mental picture comes of my mind is like a riverstone, right? something that's like really smooth around all the edges.

It's like, it's a very similar skill level on everything. They usually, they're, like, if they have significant competencies, they're often about just operational excellence and very, very quantifiable things. Everything that can be measured, they tend to be very good at. The core competency of the CEO leadership team is stake in management. Like, there's a lot of, which is, like, I say with great respect because it's a very, very hard thing to do. It's extraordinarily hard to align the interests of, you know, very, very different groups

and bring them all to the same side of the table. You have share all the community, sometimes society, sometimes you're definitely, your local economies, your employees, your customers, of course, and the board of directors and taking everyone for a journey is a tricky thing to do. The way you do this in a professionally run company is by planning, right, like you, because, like, bad companies,

companies that people tend to not like to work for or companies that sort of were like a share-no of their form itself. How does this happen? What happens is revision to the meal, right? Like, it's, the tragedy of the comments is the active ingredient, entropy, you can call it.

Like, all these things describe the same thing. They all affect companies. Where a department or the entire company reverts to the sort of middle of the bell curve ambient industry competency for everything it does. That's, like, really bad, ambient industry like auto dogs quality is just quite low on it just it just is and so

what you're trying to do is like literally everything a company does is try to beat provision to a mean and um uh you your options there are like usually like you have a strategy uh that's that's the plan the plan by the people have us do the stakeholder management who have, will bring all the stakeholders on site, imbue the plan with a ton of legitimacy. And then the legitimacy that the plan has ends up being the thing that beats revision to remain. Because you can now go around saying, hey, you team, you are implementing, you are the engineering team, you're implementing the things on the plan. You, you're going to build the user interfaces for this. Sales learns what's going to happen when and when we have rich competency and how to explain.

product. And so this is a mechanism. Now, all this to say, a founder of a company doesn't need this, right, because there's another thing of legitimacy, which is the founder. And I'm not saying this is a person, it's actually the fact that the founder is in the company is a thing. I think legitimacy is one of the most underappreciated resources that exists. I think the only really good piece of writing I've found, and you probably might or 10 others, is Vitalik wrote an essay on the topic of legitimacy. More like in this blockchain world, but I think it brings true across. So where does this come from?

In every company there's a sort of founding story. Everyone sort of gets this clear sense that, hey, the reason why we have this job, the reason why we're on this mission, the reason why they're doing this thing, is because at some point someone took the first step, right? like the wrote first line of code. That story is imbued in the companies, in onboarding. It's like it's even if no one would actively talk about or something people eventually like a counter.

What happens when a story is told is that there is some sent like a little bit of legitimacy almost deposited into a bank account. That's like you can almost think about it as social credit of some kind. This happens in all companies, but if the founders are still there, they can still draw on this account of legitimacy.

And so my role I see very often is that I have the pretty humbling ability to like use the resources deposited into this bank account of legitimacy in the company make changes. And because I can speak for the entire story of the place. Now if I would leave Shopify, this bank account would only increase but no one could draw on it and therefore it can't be an active ingredient in a company. Okay, what does obviously mean? The best thing founders can do is subtraction. This is surprising, but like it's the, the reason, like it's much, much, much easier to add things than it is to remove things. Adding things is a lot more expensive than removing things,

actually. However, it requires some measure of bravery. and well, we're taking anyway. Saying yes to a thing is actually, like if you say no to a thing, you say no to one thing. If you say yes to a thing, you actually say no to every other thing you could have done with this period of time. And so as people are adding things,

the set of things that can be done becomes smaller and small and small. And a set of things that has to been maintained gets larger and larger and larger. And you end up with more and more people actually working on just maintaining of the status quo or maintaining co-basis and so on. So where does subtraction come in?

Very often some things build, like every individual addition was a very good idea, but where it builds to is actually a sediment layers of something that actually doesn't make sense in the end and that you have to walk away from. Like sometimes you're building for really, really good reasons, a product that actually will not make a difference. for the company. Or when reality changes, you actually have, like I just said earlier, I had to

subtract 60% of everything like the entire entity he was working on, which the reason why I could do this is because I could draw on the legitimacy of like, hey, I have seen every single version of his company. I have seen recessions. I have seen downturns. I've seen chaotic times and I've seen calm times. I know what to do. And so why does my mind? affect you negatively because like something your day-to-day job is changing, the thing you want to be working on, you're going to be prouder because it's going to help with, the corporate mission in a better way. And that is a form of subtraction. And then there's many, many others that, like, that we could go into. So I have actually very rarely, like the very,

very, very, very best non-founder CEOs can subtract. It does happen. Nadella has has done it at Microsoft in a phenomenal way, like potentially better than many founders CEOs can. But it's probably 10 times harder to do, or 100 times harder. And so that's almost a service rendered, like for the business. So in a way where you have Riverstone on one side,

you really have sort of volcanic ash kind of spiky object thing of a rock on the other side. Like, they, like some have very, very strong aptitudes, spiky object, sometimes surprising weaknesses. It's not a well-rounded thing in the end, but it's usually perfectly appropriate in terms of an ideal case it's appropriate in its aptitudes for the particular set of problems that the company saw.

And I think this is why they end up feeling so different internally. You mentioned risk-taking. I'm wondering how you think about risk-taking and sort of professionally managed just to use those terms versus, like, a founder-led company. Yeah, I mean, there's exactly one thing that doesn't take risk, which is do the same thing everyone else does. The number one thing that is very, very hard to teach, actually, or very hard to convince people of, but I'm pretty sure it's true, is that I just don't see value in doing the same thing as everyone else does. I just, I don't, I don't know who's, who grows up to say, I'm going to join in this, like, I'm going to become, I'm going to go into finance.

And then, I'm not the best example. I'm going to go into, let's let UX, let's go to design UX. And then I'm going to do work that corresponds to sort of, but generally everyone else launches around me, right? Like, I see why you might want to, because it, it, gives you more common ground with your peers in other places, it gives you, it's easier to appreciate sort of making a slightly different version of something else that someone does because then if you encounter those people who are behind that, you can now have a conversation

about the sort of slight changes you made. But I think that's just, but if everyone does this, that makes this planet simply spin too slowly. I think sometimes there's significant we still encoded in what everyone's doing. In those cases, go all in on it. But in many cases, just use, like, put everything you've ever learned together to make something that's just as good as possible, right? Like, because otherwise, I think you're holding your setback. And I think the company needs to derisks this for people.

Now, it's not, no one's intuition. Every single time you do anything that is different from best practices. Like, there are so many euphemisms for just basically doing undifferentiated work. It's a strong statement I'm making here, but best practices actually just simply means don't take risk and do with what everyone else is saying you should be doing. Best practices are not that good. They should be best, no, their average risk adjust.

Yeah, exactly. It's just average. And I don't think, I have no time for average. I don't think, oh, our shit, is that good. Around Plath Earth, I think we can do much better on everything. There's no chance that in 100 years, people are looking back and saying, wow, back band, we just nailed everything. Like, it's not going to, like, we barely nailed anything.

Like, I mean, you look back three years and we're like, wow, we just kind of had no idea how to do all these things. Right. Like, it's so, you know, like, all video contracts, the software was terrible. And like, it's this. No one had a home setup, home desk. And, you know, so on, and so on. So everything depends on innovation. The innovation depends on a very basic thing,

which is like to be innovative, you have to do things that are different. And if you do something different, you can either overperform or underperform stuff is cool and RBS. Now, sometimes you get one, some as you get the other. But like, again, if you can subtract, you can remove afterwards,

things that underperformed and give another go at it, and if you do that effectively over and over, then you are a company that's out competing what other people are doing. So is that the role of the company then to provide safety for that failure internally? Yeah, I think so. And I think it's, it's, I don't think anyone's craft a code on how to do this. I think where in like, I mean, school conspires to tell people, here's how to solve problems. Ideally, don't leave it, and you probably don't have to learn anything new after this. It's just like a joke, right?

Like, I mean, I don't know how you steal there in those arguments, but this is definitely what school will say. And then you are, like, you will, through your beginning of your career, you sort of put the lie to be statements, and you look around you, and some people will have vastly different career outcomes because they are just, like, walking away from, like, they be using orthodox as a major input. They learn everything they can out of it.

We use it as a starting point where they're not hamstrung by it. They will do things that could be described as risky. But like I have to say this is very, very hard to, again, get people to believe, but it's actually risky

to not try higher. But like a lot more people have, it's not risky. in the moment, though, right? To follow best practices, it's only risky as you fast forward time. Yeah. And I mean, we should acknowledge why. If you make, like, if you do what everyone else does, you are like, say, like, well, that's what industry does.

If you make it added to it, you will have a responsibility good or bad for that change. At least that's... If you risk avoidant, this is something you don't want. Now, of course, if it works, it's great. At Shopify, it's very clear, like, it's very important that we explain to people. Like, it's not failure. It's not, like, it's the successful discovery is something that they don't work if you underperform. It's, you know, actually, more data, and we'll try again.

It's people actually are performance mashed out, euphemism. to if they don't take risks. So it's actually for your career at job fair is actually more risky to not aim high. And I think that environment and the psychological safety to take this risk is very hard to produce. And I imagine there's going to be like 20 years from now there's going to be fantastic books on how to create these environments. I think that there might be a few, but it's a very hard thing to maintain in my experience. Two rabbit holes here.

One being typically what seems to happen in this case is risk can be taken outside of companies, not inside, so you leave your job, you have an idea. You can't do it internally or you fear doing it internally. Or you don't perceive enough upside to doing it internally and only downside. You go start a company that is the risk in that profile. Company succeeds, gets acquired. How do you think about innovating internally at Shopify versus acquiring to bring that in.

Yeah. I mean, sort of an ergonomic for a lot of companies in their end state is to become companies that maintain what they've got and then acquire all innovation. I think that's a, I mean, I would not be proud of, like, overseeing a company like this. If Shopify would turn under my watch into that, I think someone else could do my job better. I think companies ought, like, it's innovation is a lifeline. I think you want to innovate everywhere,

and I think every group in a company should be able to go to a conference and talk about how we are doing, like how our group is better than sort of a general implementation of this discipline or idea, and by us doing things differently and how we are thinking about this. First principle, thinking applies to... area can yield huge upside. And I mean, ideally, I think the best, like the way I would like to see this is actually that for our own purposes to build the best company that supports

it being extremely innovative for entrepreneurs in the retail space. We are innovating across all the disciplines across like we've recently done. a completely new comp system in HR, which is not usually an area that sees total innovation, but it has been very successful internally and generating a lot of interest externally as well. And this is just Shopify applied to a place that usually just simply doesn't see a lot of innovation, and therefore it's notable, but we want to have the same thing everywhere. The best then entrepreneurship is like actually get this, be innovative inside of Shopify, which has the balance sheet to support this kind of thing.

Failure is just not that fatal. Upside is massive because anything can be brought to market very quickly. And then, you know, if there is, like if Shopify with its focus on entrepreneurs, says, well, this idea, there's more value in this if it's brought to another segment, or maybe like this comp system might be productizable. Well, but that's not our main thing. Like, we are perfectly happy to yield this to others, and maybe people go and prioritize it and then make this a sellable product for other companies, which would like to take part

in some of these innovations. I think that's actually, I think that's probably a better way for entrepreneurship, in the phase we are going in. I think it's important, like, the stories around entrepreneurship are very much come from the same period of time. There was, like, a unique situation of like incumbent incompetence,

although it's too strong, but I think it's incumbent. It's just, you know what, it's a fairly new idea that you have to innovate at the pace and talk about, right? Like, it's actually, it fits into the times because the end times where everything changes so, directly all the time and therefore so much more compared every time new infrastructure comes online

every time you know i don't know like transformer models are like like just like we figured out how we're getting unreasonable value out of machine learning now like it's it's the perfect sort of midpoint between the academic ideas and the vocational like just just sort of get it done for it now, that's a huge, huge space for innovation. And now it's time for companies to apply this to their own problems and potentially for new companies to be formed around this. It's amazing that it exists. It's a great example which I'm giving.

These examples are not coming along at the pace anymore as early 2000s, right? Like, you know, a lot of a multibillion dollar companies in technologies come from There is a three, four, five-year period of startup creation, right? Which was this extreme goldilocks zone of everything was changing. The mobile, SaaS, internet, broadband, remember broadband? All these things happened at the same time. And it was just like easier. That's pretty like this.

So I think it's, you could take, like I did massive risk career. risk to just go fall in on an idea because the batting average of just having a good idea, given all the technological changes, if you just pick up natively, they're building an internet native, in my case, software as a service, e-commerce system rather than software that could sort of supply online stores, then that was just like so categorically different from what everyone else was going for, that there was just a clear obvious business opportunity. in there. That wasn't, like, it's not a craziest idea, right? Like, it was like,

but it was enough. I think it's more difficult and subtle now. So if you can basically, what I'm saying is I think a great entrepreneurship is actually extracting amazing innovative ideas out of now much, much, much more innovative, larger companies than existed previously, and bringing them to other fields. And I think that's a good form factor

forward to finish it. Coming back to the revision to the mean, one of the other ways. So best practices is a way to sort of start the path towards revision to the mean. Another way would be bureaucracy. How do you fight against that? Your 8,000 employees now, how do you fight against? It's good to more, actually. It's, well, I mean, yeah, like, I mean, subtraction helps a lot.

You know, sometimes, again, bureaucracy happens because people put sediment layers of proxies on top of each other. I have found people don't actually describe things that work really well as bureaucracy. I think bureaucracy and process are almost terms that are exclusive to things that did not work. So if top people talk about some area having a lot of bureaucracy, it's actually usually an area that if you apply some first principle thinking, you might actually find a way of just streamlining this enormously, right?

It's not all bad, you know, like, it is fundamentally extremely hard to build things in groups of people, right? Like, there's very few very, very important things that can be done by individuals anymore on, you just, we've almost mined the entire value space, like, basically all the mineral that they are like, like on the surface have been mined out, right? Like, so, like, minerals of value. The other, like, the valuable minerals are now fairly deep underground. For that, you need to organize groups of people

to build the infrastructure, the support in the tissue, the safety. Like, you have to, like, the automation, you have to build high-tech mines, mining operations now, so to speak. And that requires coordination, that requires incentive systems, that requires mission, that requires culture, that requires, like, every trick in a book to say, hey, we are going to do things that can only be done in teams. Very often there is conflict between different, like,

dissonant infinite games, right? Like, it's like, the infant game of Shopify is causing this, like, sort of, like, like getting towards the horizon behind which there's a lot of value for entrepreneurs, that's the journey Shopify as far. What you need to do is get as many groups and as many things, like parts of the company

to all be in alignment with this overall, overarching goal. It's very easy for a group to, end up with their, like, a disson and own goal. And I think what you sometimes encounter is lack of logic, like, I don't know, I don't know if it's a good example. I remember when I started to look into,

like how to do charity well, right? Like, you know, that's something I want to do. I'm very interested in sort of comprehensive, like how can I affect, For every means of energy I have, time, money, other resources, how can I be as beneficial to all the communities around me as I can? And so I'm like, the first thing you realize when you talk to people is like you have to make a choice between individual level and society level impact. And individual level is like you can do something for a person and that's deeply gratifying because it's very sort of immediate and and frankly, it's deeply popular with people.

It's very easy to point that almost all those are hero stories around a charity are of an individual level. But, like, the data, like, if anything, it actually causes problems because you usually then create dependence on charity, the things which is actually the opposite of, I think, the goals you are having. So you end up having to look a lot at society level of things. Like, what's for upstream problems for... the thing that you're trying to try and to solve.

Anyway, companies are just the same. You have this society level at the individual level experience. And company design only allows you to really try to, you know, gets to the large outcomes of a company, get to the alignment, and try to avoid bad individual level experiences to the degree, to the best degree possible, ideally to the like, just like uptime on servers, you want to get to a 99.99% SLA on people having good one-on-ones of their match. I usually get that would be great.

But of course, there's going to be bad ones. Like people will have, you know, maybe the same person that usually has good one-and-ones at some point has just a disastrous one. And one of the problems is, like, in terms of criticism, you know, like a lot of people then describe all of a company through their lens of their one individually bad experience which actually was an exceptional case and so on. And so, you know, you end up like with a story becoming an description of an exception which was actually rather expected, although unfortunate.

Anyway, with all that being said, proposes is very, very real and absolutely soul-crushing, horrible and mind-numbing if it happens. Like, last, like, I'd be... I do not want to build a company that causes people to have to go to Kafkaesque experience. However, there are instances

that what people describe as bureaucracy is actually good checks and balances which are like a way you are trying to solve a problem. You see a hole in a wall and what you would try to do is paper over it which might make perfect sense

in the sort of local context that you have. But actually, if the next person with a larger perspective says, actually, we use driver patches because that doesn't cause prompts of rodents. And the person, like, if they talk to the next person, they say, you know what, that wall, that is wholeness, it's actually a bad wall. It shouldn't be there.

Let's actually get rid of the entire wall. And, but, you know, some of even more perspective might say, you know, we are actually going to remodel this entire floor in this, hypothetical office that I'm just sort of spinning up for the purposes of this conversation. The entire floor is being redesigned, so that wall doesn't matter. It's like that hole is going to be

no one has to fix this right now and this is unnecessary work and the next person might actually say, hey, we're going digital by design and we don't even have offices anymore. And so what the culture you need is that ideas and action and proposals come for absolutely everywhere. Ideas must be

omnipresent, but decisions on the strategy should be like coming from the place of right perspective, which sometimes is for people that work close to frontline, and sometimes actually other people will have a really intuitive understanding of the long-term goals of the business. And so that's, you know, when things get mugged up there and not explained right, I have found that as people reach for a word bureaucracy in these cases, but I don't think that is bureaucracy. I don't know if this is a useful conversation, but, like, maybe.

I'm not a bureaucracy apologist. I do. If you ask anyone at Shopify, they will be able to cite many, many instances of me using my legitimacy to subtract bureaucracy in every instance. I can. However, it's not all over that, I guess. I like the visual of sort of sediment layers and how it builds up over time. And you end up with this outcome that nobody intended,

but you fast-forward time and nobody would have chosen this but it happens and it happens so incrementally that nobody notices. I think that's a road to all evil in businesses. Like very, very, very smart people

in groups sometimes do extremely entertainingly dumb things. Like it's like every individual killed it along the way. However, the result is something that absolutely

no one can steal man about quite it to be done this way and if you don't have some kind of system of removing those things and like I mean humor is by way very good

this is why one of the books I give to my executives is like it's Parkinson's Law which is a wonderful 80 page read on like how silly companies end up being in very often So being able to make fun of these kind of things and then just like, hey, let's replace

it with something better, so it's a good way of doing it. How is your thinking on compensation changed? A lot. I think compensation is, I mean, I'm very much in this because I've looked on this quite a lot, can last a little while. And I actually don't know if it's a super interesting topic. It's just sort of like a problem we had. I mean, actually, not one.

This is like the other thing. A lot of solutions, like, are multivariant. They, they solve, like, five things. I mean, I'm usually a believer that, like, if there's smoke somewhere, there's probably a fire. But, like, it's often, like, one of those smallering fires that's been going on for, like, 2,000 years in the root system. And, no, like, it's, like, these things exist, right?

Like, they're in real life as well. therefore the existing companies. I think the way technology industry ended up doing compensation is one of those many, many, many sediment layers of, I think, individually good decisions, which amount to a place that's just strange. For something as important as compensation, I think we should not press into service reflexively,

such highly financialized derivative, like the instruments of enormous complexity and huge variance of outcome without there being an agreement with between both sides of that that's something that they want now a lot of stock options and ours use these things are exist because it's a tax optimization system very often it's not actually true anymore in many places like in in Canada has a different tax system of Europe it never had really stock options in most places actually there, in some instances, it's now coming, which is sort of interesting.

I think Germany is creating some tax favorability for stock options. And so like the world is very different. I think these things should be available but not prescribed. And so, I mean, we switch to a very simple system where everyone gets a number. This is what you make every year. And so everyone agrees what like the ground truth is of compensation. And then you can say, we want this in cash, do you want this in stock options? And there's going to be other things like, like, we will hopefully get to a place where you can use, like, we have currently, I think, two or three sliders that you can choose how you want your conversation, and then, like, there hopefully will be 10 or so to give, as we build more capacity for different options.

Like, a charity bucket would be great. Maybe even a charity bucket for individual level action, society level action, would be, like, maybe make that decision. at this level would be wonderful. And so we now have a system that we control, that they can say, like, hey, we're making all compensation system and implementation of OOC, believe in what's actually the fairest, best, and most flexible, and treat people like adults that they can make choices.

And then if you want stock, you just simply get those. And if a stock market value of Shopify is a very low at this point, you get more shares. and it's very high, you get fewer shares, but presumably once you got previously have appreciated value, they have left for you kind of ahead in both ways. And the moment of joy, like, I mean,

this sort of gets into the weeds of previous compensation models. Like the thing that really, I think, is, it's a weirdest thing about the previous systems is you make these big grants four or three years. At some point there's a grant date. all these grants are created. Every single time before this grant moment, like, you actually have to look at the stock.

And because I'm like, man, like the individual outcomes of the people for getting this next set of grants is so different based on what's happening that week. Because, again, it's like, this has nothing to do with company. Right, like Shopify's real market value is going up, I think, very rapidly. all my amazing things we are building, that's what I'm working on. Shopify's stock price is like this crazy function over time

based on, again, sentiment, market value. So tying everyone's lifetime earnings really to this other thing, which is like wildly swinging compared to the thing that we are all working on. It feels like just such a pattern violation. Right, like, it's just like a steal man, why this, steal man me the argument that it should affect what, uh, uh, uh, you, like a, like a Shopify employee, uh, makes as lifetime earnings, whether or not Russia invaded the Ukraine, but week before the grant or not, right? Like, it's like that seems like, if someone wants to steal man this, like, let's do it over beers in a bar and I'm like all years because that would be fascinating conversation. But I don't think it's a silly thing to have to even discuss. Like, I feel like the answer should be no, and therefore you should design systems where that is not that big of a factor.

What do you think businesses can learn from programming? I think all of business has to be re-derived from programming principles. I had this intuition. I think we even had this situation on previous episodes, like we talked about this. Wherever I tried it, it worked better than all other approaches. I think people need to understand it. Why is this? Like, because it sounds random. I mean, I know, like, especially, in the technology industry,

we are sort of used to putting technology on treating it with deference. Like, if you go into, like, oil in gas or, like, into finance, their engineering and technology is almost like a cost center. It would be about as random to them to say, hey, we have to derive all of business from engineering principles, as it would be to come to a technology industry and saying, hey, you have to derive all your HR system from silver culture.

It's like it's a total random idea. Here's my theory and we can talk about examples. I think we ended up in a quite path-dependent, but very unideal treatment of what technology is and how people think of technology. And I actually, I think it's causal from the way campuses of universities are organized in the fifties. And like a big statement. Turing came up with the Turing machine and, you know, reading executions from tape and writing back to it.

And von Neumann formalized the architecture that we all are using. This sort of created this sort of conceptual Cambian explosion around this time. It took to the 60s for having reasonable implementations of these things. Of course, there was some example before. But where did everyone put that? If you actually, I'm well through the books that chronicle the history, even though it was obscure books that are like more people have to read. It's always a basement of some building.

or a rental off campus across the street from MIT or Harvard or something like this where they put people because it didn't fit into anything right? It's like what is this thing? It's like it has a lot to do with language really because I mean what's great about language

language is a concept of taking very complex concepts abstracting them behind new words You know, like, it's the concept of abstraction, which is, like, or is it mathematics? Well, mathematics is like, its goal is probability, it's like, it's goal is sort of, it's theoretical cohesion, a very equivalency sign

is like both two sides are exactly the same thing, not just reasonably similar. It acts on a very limited syntax, like a very few, like it's sort of a language, but it's actually, it doesn't have a concept of abstraction. It's like everything is just these formulas, which are. And so you end up with this new world of a touring machine, which is actually the midpoint between human language and mathematics. It has none of the theoretical parts of mathematics. It's all only the practical things. There is no such thing as a pi that is an infinite number

that you can calculate to the end of the universe. There is a very practical, like we can make a function called pi, and this function, you have to make the decision for how much compute you need to invest into it. At some point you should stop, because otherwise you end up an endless loop. So therefore, like what computation actually is is the practical parts of mathematics.

and the much more definable parts of linguistics. Basically, what Wittenstein was trying to do in Vitrocarus exactly 100 years ago. I think Wittenstein was actually probably the first hacker. And so you have a completely new field. What do we do? We put it, like we called it, what? Computer science, engineering.

We're still not sure. to put of it. But it's much larger. It's actually, I think we've taken a significant chunk out of all the fields and figured, hey, there's actually a unification of it. And all the practical people

for the next 50 years gravitated towards whatever the part of it was called, computer science, if you were, because that's where, and leaving behind, of theoreticists, this is why the philosophy group was only doing real physics, and physics basically only does like string theory. Like it's also, like, the topics that a lot going on in academia are basically the discipline

versions of a nerd snipe, where the things which are like, yes, let's discuss them, but like it's not clear that it will have be of practical value. I'm being somewhat critical with these groups here, because frankly, I am. I think we are just not thinking about all this stuff, right? Okay. With all this being said, where does this leave us? I think what this field is probably is some kind of applied computational philosophy, is the correct way of thinking about it.

It's like a little bit like game theory and economics added up being like sort of an extraction from people playing poker. You found like a practice where game theory was applied, and then a lot of ideas from game theory were sort of informed to this. Computers, like, computer science is a bad term because it's actually all applied. And therefore, it's the most applied field of systems design. It's the most applied field of architecture.

It's the most applied field of architecture. It's the most applied field of control theory. It's the most applied field of almost all these things. And it's sort of a practical, almost vocational side of academia, like extracting all the good bits. And so, but we left it, like we built that earth, left it to the nerds and said, hey, for most industries, you're a cost center.

You just sort of enable the things that others do. And the wrench of the nerds is actually that we now build all these companies, which have kind of outperforming everyone else. And frankly, everyone has to kind of understand that isn't because we can technical skills, but actually because we, and I'm including myself here in sort of this engineering discipline,

by being very loose with it because I clearly don't have an engineering degree. We spent our formative years designing systems that have to be resilient to, like, weird, non-deterministic, like the kinds of things that I've even, that you can't even really put into a mathematical formula, like, packet loss. And, like, you know, our word actually is one of chaos in which we are trying to pretend that it isn't, and then we have to put abstract systems almost in the heritage of linguistics.

This is an e-commerce system? Like, that word has, right now at Shopify alone, like, three and a half thousand, four, and a half thousand 4,000 people in R&D working on like every single day and has had so slightly fewer for years and years and years, 18 years of my life invested into it. And so there's a lot behind this. Okay, all this, why is this applies to business? Business is unbelievably complicated.

Business is a, your departments are trying to use silver, old way of the old imports to try to make most of it in most places. Like the old inputs are

processes, bureaucracy, and story. Like, the V7 means by which, and all of those leading to a culture.

You know, like that's your, your compensation team, for instance, had those mechanisms and by which

they went through a process to look up, okay, there's a new job, a new sub-discipline, what's the cost center, what's the comparables, what does the Redford or Compensia data say, is a comparable, what's octa-centile, here's the salary, let's use this as an input. Well, all this is data processing, right, and we should, you know, engineering discipline has a lot to say about how to build very resilient systems that can roam across a lot

more than just a few inputs like this and actually implement like a function that spits out the right results based on way more imports than this. And a function is auditable and can run every moment. And if you are thinking about making a change to your business, like what would look like when a certain discipline or job moves into a different part of the department of a company, well, now is I made all of this executable. I now go and just edit one file and then it rebuilds a model of a business. I think, and then if you like it, in an engineering-led, sort of engineering thinking company,

that becomes the new desired model and the goal of the HR discipline is actually not to make all these arbitrary decisions, but actually to look at what is the model of a company? What is the actual state of the company? What are the moves that get to the actual state as close to the model as possible? We have the biggest discrepancies. A company like that is, it retains its ability to evolve with a changing landscape because it's extremely hard to change bureaucracy, extremely hard to change the stories in the business. is extremely hard to figure out all these little arbitrary exceptions that have been created

and can still move fast, but also just leads to much more fair and observable outcomes. You can use all the systems-building advantages of like unit tests, of Lintas, of like, where are things weird? Data processing, observability, you know, dashboarding. And so these are the ambitions, I think, amongst the sort of most technically run engineering companies, and it allows you to think about what we have done, but it gives you a new tool, because at the end of the day, I think what Turing, like, invented is a, is, is not as separate as people make it out to be.

If you look at the cells that make all life, this is kind of what DNA is like, it's a reed head and a right head, and it creates more DNA, it creates more cells, it can, it's, it's like, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's not equal a sign in terms of mathematics, but like, by analogy, yeah, like, I think it's a lot more fundamental than we give it credit for. I think in 100, 200 years from now, when we talk about human history, like these books were like hackers by Stephen Levy and The Dream Machine and the code by Patshold. And all these kind of these books are actually going to be referenced works that show

the actual mainline history of our species, right? And currently, it's, like, it's sort of, like, relegated. Like, the newspapers talk about, I mean, current affairs, which we show, like, they are also important. But it feels like we are living on this, in this weird world that actually has not integrated its own mainline history track into the public consciousness. And I think this is why the word is so weird to so many people. Why is, like, why are things the way they are? Well, because we have a model. in our minds, it's a bit, propagate a model through,

I know, school, media, books. That's deeply rooted in the physical, which is easier for us to reason about it, to be fair. But it's not, it's, it's an extraordinarily lossy model. If you actually hold it up to what is happening in the world. Like, anyway, it's, this is a topic talk about for hours, I deeply, I never know if it's an interesting topic because I have no answers. I just, I'm trying to, like, I think it's worth, like, I think what's, I mean,

what's the TLDR? The TLD here is, just like poker taught economics a lot because it was applied game theory and people play many, many, many, many hands in the evening and therefore develop a more intuitive understanding of a part that's important to economics and the best parts of mathematics. I think engineering involves applied systems design. It has a discipline of systems design that is just vastly, like, we're not talking about slightly ahead. talking about 100 years ahead, to everything else.

It is not a contest when you hold it up to sort of industry orthodox thinking on these things. If that orthodox thinking is purely informed by the pre, like if a book is basically from the 80s, it will have interesting things to say because how to implement things with humans is going to be more better developed and potentially how to craft story and process. But it was a fairly minor support roles now

to the larger systems like. I think what makes it interesting is the fact that there's no answer, right? If there was an answer or definitive answer be a little bit less interesting. Yeah, I wouldn't do this. I'm only interested in you. I mean, I'm honest, no, I'm interested in the ideal.

And I'm actually uninterested in fields where the ideal is figured out. Because there's like, I have nothing to contribute there. Like, I, like, I sort of, I love and understand technology. I love and understand design and U.S. Why? Because I really, really care about people. Like, it's, I know it's a weird thing to say, but like, I am, I have sort of built my life around giving people superpowers due to technology. Right? Like, this is what I love delivering.

So these are the three pieces. Technology is where enablement. people are the point of the role and people are awesome and people are creative and people need to be all convinced with technology and I think that's the obligation of us technology industry to cause

this to happen instead of replacing people and what we should replace is toil and drudgery and bullshit right like this is like we both other things we replace sometimes there's jobs because we are mean

or because we didn't know better or we couldn't do better that are only toil, drudgery, bullshit. Let's replace all these jobs. Everyone locked into these jobs is a creative person and contributes significantly more if enabled with proper tools. And so, of course, U.S. is in the very middle. It's like UX makes all the world of technology and everything we have accomplished.

They're available and approachable by everyone. It's a fundamentally equalizer. And so, I think I, and I have a pay. concrete set of problems that I need to solve around organizing tens of thousands of people in like to do a highly innovative company with tens of thousands of people. I think this might be surprising to people. I don't think that has been attempted many times before. I don't think people like, you know, there are companies you can describe as being highly innovative that are hundreds of thousands of people because I think you're going to always get sort of a residue

of innovation out of it. And if you have a lot of people, that ends up being, you know, still significant in terms of innovation that comes. Of course, there are phenomenal companies that have succeeded this, but I think it's not unique, but it's probably single, maybe low double digits of companies have ever attempted it. Most companies are just trying to be, like, build, like, find their market fit their core competency and then play a defensive game around this, which

is a very, very different thing to do. Everyone pays a slip service to innovation, but innovation costs you a lot. Innovation is a, if you want this, every single, like solving any single problem in the company is to turnics as hard as it is if you don't. And so I don't think that would have signed up for this kind of headache, but I think it's intoxicating. One of the things that you sort of said was unleashing people with technology, which is, it's fascinating to me because small differences in skill technology can amplify or

leverage that ability to massively different results. You and I have the same iPhone. We have the same technology is available to us, but you can do a lot more with that than I can. Well, I'm not sure about that, but like, I, I, uh, yeah, like, I, I, uh, yeah, like, I, I, I, I, I mean, again, the tools we use is a multiplier, not an added, not something that adds. Like, I think until the computer around, the most powerful tool in the world, but at a probably a slight goal, it's actually an interesting conversation about what might have been the most, the highest sort of multiplier tool that existed before. probably sitting on top of hypocrisy, frankly.

There's probably a times 10. I mean, I'm sort of making this up right now. But like, I indicate a second. Let's say you would go back to pre sort of desk calculator times. You know, like the way they had to do the Manhattan project was rooms and rooms and rooms of people. A lot of what they did is, like at Los Almas was actually calculating, like calculus, doing the trajectories for artillery. And we had rooms and moves and rooms and rules of people doing this manually, right?

And so all these people were better at mathematics than I will ever be, and most of us will ever be. and what been locked behind writing tables for every particular artillery, every one of them was different, so you had to re-derive all the calculus, like look-up tables, basically, for different differences, but I think. And that sucks. So now you're living in a world where one of them could probably go on YouTube and learn enough programming in maybe a week from scratch,

because, again, people must be always to make how complicated it is to the programming. It's like you fire up Khan Academy, you sit down, clear your calendar, and by the next weekend you're programming some useful stuff, like this example. And you will write a function that you input some kind oferation numbers from the artillery that you okay about and the distance and maybe an elevation difference, and will spit out very quickly to, you know, exactly better pointed. Or you do it with a desk calculator. After that person, after you do this, this function, this thing, is going to always be correct.

Maybe you need to add, someone adds wind at some point because you forgot about it. But like, that's just one optional parameter you add to the function. That function will solve the word healed. It gets it done forever. The amount of productivity added to the world is not the utility value of a function. it is freeing all the best people at Calculus on Earth to do productive work and actually write these functions. It's flabbergasting in terms of a planetary productivity number.

By way, we are terrible at carbonating productivity. Also, this is because none of what I just said would actually be in productivity numbers that economists used to figure out if productivity is going up. So are we more productive now? on that we should be massively but it doesn't seem that way because um um but i i'm curious why it doesn't seem that way um i think it does about all like if you put a movie on from like there's a there's a funny list i've seen recently about like um all the movies you love

that could not exist in a world that has cell phones you're just like die hard um and obviously it's just like you know all the movies you watch most days So, like, it's like flat earth has changed a lot. It's just we all, we, we are all the frogs sitting in the slowly boiling water. We're the sentiment. Yeah. But the sentiment is, like, I mean, one of the most important things that I think everyone's overseeing is for, I'm great, but everything else is fucked effect. So this is actually like a metric.

You can look at per country. Basically, people have to answer a question, how are you doing? and how do you think everyone else is doing around you, right? And what do you get back, everywhere in the world? It's like, I'm doing great. Everyone's anxiety is based on their understanding of everyone else, which everyone else literally disagrees with. So you all think everyone else is doing bad

and everything else is getting worse, but it isn't. Like, the numbers don't bear it out. There's countries, I think South Korea was like 90-10. Like 90% people are doing fine, and they only think, like 10% think anyone else is okay. So our sentiment is it's an important thing. Like the sentiment tracks the actual experience of planet Earth in the same way a stock tracks the fair market value of company.

It's maybe eventually convergent, but sometimes vastly swinging up and down based on... And driven a lot by media, right, and what you're exposed to and the messages you're getting. Yeah, because, I mean, why? Because media, I mean, media has a grudge against technology for frankly understandable reasons. Like, everyone in media works for an institution that probably was negatively affected by tech. Now, I think media itself, like, if you show it out, it's actually doing great. Like, podcasts are doing great. Like, a builder-operated, founder-operated media is killing it.

Your founder-operated media. It is like, it's the golden age of. media along the other slides. I could never I would, like there's no chance I would like I am a like a delighted

customer for the product of the knowledge project but I don't think I would have been serviced in any other period of time, right? So and so founder, builder operated media is doing amazing.

Institution, let's see institution operation media. Some of them actually doing great. I mean, titles at higher inference break than they ever have been. But like, there is a prestige change to these jobs. And so I understand that people are fundamentally in the space are colored and pessimistic about the changes that technology wield. But what is

technology? Technology is progress. So if you have the people who to, like, own the airwaves, you know, like, every person on the planet ends up becoming so, well, everyone becomes sort of the average of the five people that spend the most time with, right? Like, that's just sort of a really well-documented or, oh, it's fundamentally true, but it's super useful as a mental model. And I think that, you know, one of those people is the media for most people, and so you're adopting a set of beliefs, which are, I think, extremely colored. And in this particular case, I think somewhat unfortunate, because you just recast the applied

field of human progress as something that is causing detrimental outcomes, which, you know, again, in the individual case, can happen, but clearly our society level isn't. And so we lost our ability to be optimistic in love for future and love progress. And I think that's, I mean, I think that's extraordinarily unfortunate. And it's, like, somewhere in the top five things that we really ought to edit. And because people actually think they are doing okay. And like, no, I'm so perfect. Like, you know, like, everyone has problems.

It would be great to get rid of all of those, too. But, like, overall, things are going in a really, really neat direction. And, you know, like books like Enlightenment Now and so on. Like everyone chronicles, hey, what was the past? like, will overwhelm you with evidence for how good we have it. Well, if you can go back in time, you definitely choose today. Like, I have incredible, I don't know, birth, the year and be with our kids. Like, it's just like, I, you know, I was born in 1980.

Probably one of the best sort of, like, like, it's, it's whatever better times to be born. Like, we saw, like, perfectly sort of dating to physical, like, like, like, with a handover and digital nativeness and all these kind of things. But, man, like, wow, is that going to be diminished compared to what our children will see? You hit on something interesting there, which is the search for accuracy over utility. So a lot of people dismiss ideas because they're not 100% accurate, even though they're useful. How do you think about that? Oh, man.

Like, I mean, this is like the real current topic that you, I think, teach extremely well. like what concept of like all models are used are wrong but some are useful like yeah i just like it's it's a right way to think like i think this is another one of those things that you learn in engineering adjacency like electrical engineering has this really well down um um um the sciences don't uh sadly um uh but but computer engineering is like you're carving a system that works out of before you got now that's good engineering good engineering, but like actually if you expose yourself to this, this is actually good thinking. You have to think of bets. Like you have to think in, like, you have to make choices

earlier, right? Like, you have to make a choice when you have, like, you can't wait for having a hundred percent of the influence because you will never have it. Sometimes after the fact you get to go back and give yourself a scorecard for how good job did you make, did you make, when you had to have make an important choice? How good of a job did you find, did you find, all the relevant inputs to connect to make a choice with. That's something you can really sort of review after the fact, like, hey, I made this choice this way. It was wrong choice.

Was it the wrong choice for chance, in which case you made no mistake? Was it a choice for a certain chance that could have been known and wasn't considered? That is something you had something. Was it invalidated because you didn't see the bigger picture? That's totally your thought, right? Like on making choice. As long as the bigger picture would have been available easily. My test is always like, where any 20 minutes I could have spent to pull this piece of information

that I didn't consider right into the set of things I used as inputs to make the decision. If so, I wasn't equal to the task of making the choice. at the time and I need to understand this better in the future and they're proof for. So accuracy is like, like accuracy very often is picking the right result, but that's actually independent of making good decisions. Like that's just, I think resulting is what poker players call this and I think it's not really the right thing to do. Let's talk about decision making a little, I mean, we sort of highlight the last two and a half years and all the ups and downs in that.

How do you keep your cool when everybody around you is sort of losing theirs? A lot of people end up getting really invested in their sort of job title as an identity. And they think they are valuable because the job

is valuable. Unfortunately, so much of a world is like, is a second order effect of self-confidence issues. people seem to have a fairly low opinion of observes, fundamentally, which I think it's just so sad because I think we should have a vastly higher opinion

of people's capabilities in general. I have a very, very high opinion. Sadly, actually, that makes me somewhat disappointed in Pup. In a funny way, at this funny exchange with Toby Shannon who I worked for 12 years, recently retired, a journal board. He told me, like, So one of the biggest differences between you and me is, like, you have an extremely

high opinion of people's ability, and therefore you're constantly disappointed in people, and I have a very low opinion of people, therefore I'm just utterly delighted when they do anything useful. It's like, he was offering this advice for me to change your mind. I think, like, I think I'm less confused about people's potential, and I think they sometimes are themselves. In many cases, I see it as one of my. major contributions from my career to have people actually reach their potential and have

a more clear idea about their capacity ahead of time. One of the ways how this low opinion reflects itself is that people think they are valuable due to more legitimate sources of like external accreditalization, I've botched this, but, I mean, external validation like having a degree is that I'm valued because I have his degree I'm valuable because I am a front end developer and most things are fundamentally incorrect I mean maybe in some of these sort of meandering middling companies that might be true you are valuable because of a brain you've got you're value because you make choices. You're valuable because as a front-end designer, not

just that you are actually engineering, that you can program, but also that you can, you have an aptitude to work on build systems that are like great and easy and to use for people that are resilient to random, people do very random stuff with user interfaces and you build something that work right now. It's your experience, it's your skill, it's your actual Well, it's, it's, it's your life story rolled up is your, is, is, is your intuition. It's your ability to make great decisions quickly. Wendy's most important deal of the day has a fresh lineup. Pick any two breakfast items for $4.

New four piece French toast sticks, bacon or sausage wrap, biscuit or English muffin sandwiches, small hot coffee and more. Limited time only at participating Wendy's taxes extra. And, um, so, so, so. often this anxiety that we're talking about, popping up the stack to your actual question, is that people confuse their own self-worth and their role in the world and their ability to, well, feed their family, frankly, with the continuation of jobs and the continuation of a role that they have. But the question you should have is like, how can it be valuable?

That's Shopify hired you as a person. The only reason why we create roles and rags is because they are like lures to create people. The interview process is not a process of figure. Can you do this role? Can we slot you into this role? It is, the chopper be better for you being here. Right? And so people shouldn't have us outside.

have those anxieties. People should figure out how to be valuable and show great flexibility in this. Ideally, develop range. Or, like, you should make a fundamental choice of, of, are you going all in a specialization for range? Most people should opt for range. Specialists will, like, everyone who knows that they should be a specialist knows they should. You know, like, it's like everyone should be a specialist now they should be. Like, this is a very particular set of character traits, which wants to dedicate itself to a very narrow kind of thing and go unbelievably deep, like to a degree

that's absolutely impossible to appreciate for the non-specialists. Like the depth, the true depth of true specialists up is incredible. What specialists don't understand is like how, how incredibly good, journalists can be at it at 50 things right like they think like a many people think a journalist is sort of like a jack-off or trades master of non like it's this is one

of the dumbest sentences I've ever heard that's like not like that's just usually someone who doesn't make a choice and it's not good at developing any kind of skills like they're fairly rare people um you're like Pareto principle alone tells you but first 80% of every field can be done 20% of time so like you you can you develop easily five fields to a degree of eight out of ten, while the specialist is just looking at primary topic, right? So, and frankly, this is even incorrect because learning the next thing is significantly faster than learning previous thing,

because the skill set of learning is itself a skill set, and it's actually your skill set of how quickly you are learning, which determines how long it takes. to pick up any kind of new field to a certain 8010 out of 10. Okay. Anyway, how do you keep your core? Like, no one matters, and humans are awesome, and humans are like with, like, every individual human

has more compute than all the computers could have a bit in that from together. So, therefore, there's a lot of roles for us to play. And especially when millions of variables change, software, technology, Pittsburgh's. Right, like, it's like, right now, the way engineering works, for a systems work, as great as they are and as flexible as they are these days,

they are still a little bit more, you pour a little bit of cement into your current approach. Like, refactoring and technology is tricky. So if a word changes, it's time for humans to shine. And so we should actually be very self-confident into our role. And then, again, again, You make decisions.

I think decision making is misstudied. Having decision making is easiest thing in the world. It is blindingly obvious how to make the decision, or any decision. What isn't is finding the inputs. Like, what is the context? What are all the things that affect the decision? Developing that is hard, right?

So knowing all things you should look at, knowing what to ignore, such as what everyone else is doing, I mean, you might use, when everything else is doing, it's actually a second-order import. It's an input, like, you should look at it, make a judgment on how much value there is, and use your judgment on that as a hit put into your decision-backing. So you're twice removed.

And then you build up the picture, and then honestly, everyone who looks at the inputs will kind of come to the same. I've actually never really seen this situation where people are truly making different choices. Like, there's always, if there are, like, people on different sides, you just have to, like, okay, let's take it from the top and, like, state all the unstated assumptions that are actually inputs into decision-making,

and once also flushed out, it becomes prey of this, I find. And then, after you make this decision, you don't just, I think, if it's an important decision, strategy or something. You don't like throw away this entire work. You actually capture it and you revisit it because again, the world keeps changing. And by way, your appreciation of the inputs that you considered end up evolving as well. And so you should actually at any moment rerun a function over the inputs and be fairly neutral to what that says. Like I did that with, I decided we built a lot of offices.

We did them extremely well. I think they got very good at building offices. But then a change happened in a world. And one of the variables was like, well, are people allowed to go to it? Like, the offices, I don't think I had better. There was an unstated input, like, wasn't a stated input, but it was one. The moment they flipped, they decided, like, okay, no offices anymore, right? And then another input was, like, where is our current staff?

like, are they all close to offices? And then we said, like, another decision was should be higher now outside of these places. And after we made that decision, the variable on, like, where people live changed. Not everyone was close to offices. And I think it just said, okay, well, you're going to go digital by design.

And like, these decisions actually went very quickly because you could see how one leads to the other and then we just called it early, for instance. It's something we did very, like 2000, like I think in May or so, I did like a, okay, Maybe you're done with officers. They're going to be probably the biggest room of company. And you were the first to come out, basically.

And we thought it was valuable to be the first because, again, I think removing bad ambiguity is a very important thing. And I think a lot of people want to know. Like, some people were, like, just waiting to get back to office, which I appreciate. But many people were saying, and people at Shopify were in this stage, should know that that's not something Shopify could buy it in the future or would not. And people in other places, which were clear that they would go back to offices and actually liked this thing, or like their ability to, you know, move wherever they want to live, like engage in more lifestyle design than what you can do when you have a desk job. For them, it was important for me to, like, for them to understand that job would be a fantastic

company to join, and I think that was very good for us. So I think it's fair to summarize what you sort of said about decision-making. as being easy in the sense that the source of all errors in decision making is basically blind spots or other blind inputs or you're blind to the effects of your decision. How do you think through the primary, secondary, third order effects of your decisions and then the broader impacts? Yeah, I mean, I think you would develop a little bit of an intuition

for the second and third order effects, but I don't think you can't plan for them. You tend to make the things on primary effects and you communicate them on primary effects. I think in a smaller team, you might talk about, okay, this by way will actually cause this other thing, the trend will cause this other thing. I think that sort of expert level decision making is being able to have a fairly high batting average idea of how this is going to continue because you're saving future headaches by being aware of them. But I would say this is like,

the stakes get really hard. Most people in really only concern with the primary effects, secondary effects are very, very hidden and opaque, although I think govern the world a lot more than people realize very, very, very often

the secondary effects are and tertiary effects are vastly more societal impact and the primary effects. Like, I mean, primary effect was people, like, people didn't like with their power. It's like, it's like, it's like a different conversation about how that might have happened. But I mean, I think, I mean, if you look at causal requirement, like, it's probably because all the green parties in the world, which I actually appreciate for

what they do, somehow ended up embedding nuclear power being bad as one of the founding myths. organized around this and therefore it was like also to get out of their platforms later on when this became sort of silly and um uh so there is like an import like which i mean maybe to the best of knowledge when these parties were created um in countries like germany um maybe that was thought to be true um like i mean i think sustainability and uh environmentalism and so it meant something different back then. We didn't really understand fully the raw carbon plate. In the air, it became a cute problem. And so anyway, what they then didn't do is like after they got more data, they reran the function of their position on nuclear power, and they just kept

with it because that was like convenient, I think. Or you don't rerun it. You just dismiss the change in variable. Well, it becomes just, I think that's actually more accurate. sadly, it's probably just, it's written into the set of, again, it's a founding myth. Founding myth can't be revisited. Like, I mean, this is like, this is why you better end up with a really good set of, you know, initials, like, rules. Because once the people who write the initial rules are gone, they often, there's going to be a great set of, like, great deference to them. Because again, no one will ever reach the legitimacy of them. the founding founders are like, I mean, there's an entire piece,

think about how few founding fathers there were, and how many constitutional lawyers there are now interpreting. This is like a crazy discrepancy. But this is one where it's super important that we find a way to rerun or get rid of or change. How do we do that? Yeah, I mean, we actually, so talking about secondary effects, sometimes we use, very often secondary effects are really dead with, like,

by opposite of the primary effects, right? Like, a lot of our carbon issue in a world comes from the environmentalists, convincing the world that even though we're building a economy that required nuclear power, we could somehow do it with coal instead at hand in oil. Now, I think we got the scorecard for that. This really worked very poorly.

And I don't, I still think it's an expense that Petriff needed to run, but like we did, And until maybe a year ago, it seemed like we actually were really not looking at this, because of this, I mean, what, I should make this explicit, this is the secondary effect of us not building nuclear power plants is that now we have climate change, right? So primary effect is environmental movement. Secondary effect has climate change, like chew on this for a bit. Again, everyone in this movement wanted to do what's best, through the best of their information, but like the secondary matter. Now, take another one. Russia invites Ukraine, which seems to be a recurring topic here.

Everything in primary is bad. Secondary effects, many, many, many of them are bad. Like, there's a secondary effect of everyone having to look at the energy policies and realizing, health should we probably need these nuclear power plants back. So, you know, we actually, in a really odd way, Europe's dependence on Russia for natural gas pipelines, plus the act of aggression by Russia may actually cause climate change to be solved. It's like an unbelievable story when you're looking at this. And honestly, this is the danger with secondary and third,

tertiary effect thinking is it really lends itself to cynicism because sometimes you see these connections which are like feel extraordinarily inconvenient for the main story we tell ourselves. But I also think facts are friendly. And also, what are not facts, they are effects. They are like compounding systems that feed into each other and loops and cycles.

All of this is just like, yes, and then a hundred things besides, but it's really good to take a good one. So you do the same thing, I hope, in a micro way in the company, right? Like it's, you know, like if you are in a company, everyone is allowed and actually encouraged to be an intelligent actor in their own sort of local incentive system. The system should be designed so that people sort of individualistic efforts level up to the society level benefits, like the roadmap, the mission, you know, bureaucracy very often ends up being the grinding between those things, like the local incentive system and the needs of a company or the needs of another. So designing things in such a way that they are in alignment, is really important, and for that you will have to go analyze. you know, these things. So I think that's, to me, those are interesting challenges. And again, it's interesting again,

because there are no right answers. No one is to get this stuff out properly. I think partly because we had to build every company before computation, really from their basic building blocks, which is policy rules. process and story. And those take the between, like, those are like software for humans.

Now with computation and actual computing, I think we can implement more complex systems that are more auditable, they'll be able to provide some of the analysis that things are going in the right direction in a more macro sense. And we'll actually make it much easier to implement, you know, more complex incentive systems. Or like, they'll make it easier for everyone to know if they're, like, doing work that's actually helpful to all the company and the mission.

I think that's completely underappreciated right now as a source of business thinking, value. and I find I find it's very very interesting. This is really what I mean with applied computational thinking and applied computational philosophy, being almost the higher-order academic department that should exist on a campus of by way should probably have a nicest building. And then this sort of computer science, hacking, technical engineering

are like sort of the super-applied versions of this. But I think a lot of other fields. should have moved into this particular faculty as well. Now, I'm not engaged in redesigning academia. It's not something I'm interested in in any shape before. I had never been in a university outside of giving talks there. So, I'm doing an, I'm a little bit outside of server there, although I am looking at what's going on with a little bit of exasperation,

because I think academia, fundamentally, is one of those areas where all the set of systems are incorrectly designed with societal, interests, and I wish we would have more founder-led academic institutions that could engage in some redesign into subtractions, or figure out some different means by which we could enable some good thinkers with legitimacy needed to make some changes there, because otherwise we are just going to get papers, citing papers, in rings. And I think progress has, from academia, is like slowed down too much, given the amount of sort of like of like resources if you if you sort of look at IQ dedicated to like

if you believe in IQ as a as a heuristic for potential which is not necessarily a discussion like I put my signature under but like for simplicity's take man we are diverting a lot of people into academia snud-sniving them thinking about the string theory and I just like man there's a lot of practical things. to solve you and I think we should go and like solve those. And you did some of that during COVID, right, with the rapid grants? Yeah, I mean rapid grants was great. I mean, there's an entire sort of emergent fields

led by a bunch of, like non-academics or sort of academic or sort of academic adjacent, sometimes founder-builder types called progress studies, which says a very basic thing about, hey, we should probably study how progress have to do that. study how progress happens, because it's probably slowing down a lot right now, and we should kind of have a theoretical framework by which to, like, you know, like meta-academics is probably almost a better term there, before Watchers, watchman, so to speak. And I don't, I think that's very nascent and probably not, like, university loved and potentially

I don't know if it can get off the ground, but we did some experiments with fast brands and some other things where we just said, like, hey, with enormous time pressure, give us a proposal and we'll tell you if you might get money for it in a couple of days, because Ben was really needed at the beginning of COVID, because the grand due process is too Byzantine

and Kafkaesque and broke it up, bureaucratic. And I don't think, and this was sort of, that is my opinion, proxies to society's goals very often. What have you learned so far about how progress does happen? I mean, like Fast Grants was incredibly successful. It's unbelievable. It was like the amount of times that things that made a real difference ended up being the

recipient of, like, it was like a clear mark of like, the people really want them, like, they're trying to make the system work, but like, they're stuck behind, various and I think that was good I don't know how reproducible it is and because it was a unique moment I think it was also unexpected springing like these ideas on people is very important sometimes because the problem is in any other case you reward the most prepared and the most prepared are usually filled with most time and the most time are not usually people working on important things right like as a sadly true so it's It's very hard to build academic environments or even processes that rewards the people

who can have to make the biggest difference. That's a very complex problem in, instead of system design and, again, systems design, especially once humans are part of it. It's sadly the people the most capable tend to be the busiest. You said in the past that I want to read this so I get it right. People should make decisions based on the decision they assume the company in 10 years from now wishes they would have done. Can you expand on that?

I love having this questions as one of a governing, like putting it as an input bear, or at least as a sort of a linting rule, if you will, on the quality of a decision. It's very easy to do what's popular right now. and commit yourself to more pain in future. This is almost, like almost every important decision that doesn't have a automatic ends up being a little bit of a, do we do what's right or do we do what's easy? Right?

What are the only real decisions that people get hung up on outside of the, hey, we see no path forward, we will have to eat shit, which is like, which is the pile we should start nibbling on. It's like that exists too, I mean, especially in times of crisis or sort of wartime. Both will also end up becoming discussions, but like usually it's in the form of are we allowing ourselves to do what's expedient or easy. And I want to have good heuristics for spewing towards best decision overall in the long term.

Ideally, again, especially of a strategy level and people systems levels, these things should be along the lines of the long-term benefits, inclusive of some of the secondary and tertiary effects that are predictable. And so this is why I tried to ask people, hey, I found this question to be clarifying for people. often, I mean, or, you know, on strategy, it's like a lot of what people call strategy is actually go to market. And a lot of go to market, it was trying to figure out if you want to pull future profits forward at a discount, right? And so. And how big that discount is. And sometimes

these discounts are enormous, right, like absolutely crazy, like 90% discount, but you can finish a quarter. Right. Like, I'm not talking about, like, here's a shop with a car for 90% off. I'm talking about you have a product called shop pay which I think a lot of people are familiar with because it's like I mean it's the kind of thing that makes checkouts good from makes it mix so you don't have to type your address with your thumbs and that thing is like increasing conversion rates to a degree that not having it simply makes it a mistake like like you're basically committing a strategy strategy like right now you make a strategic mistake by not using

Shopify if if you call this to sell products on internet because it's it's it's it's it's how high the number is I'm super it's super gratified to be we got to this point the attachment rate is massive the value is insanely high office there exists a lever inside of the company obviously it does I don't think really really anything but this like basically when you build products that extend it's only valuable you have like a dial which is like what your monetization dial it's like set to zero that exists in a room full of monetization dials or dials like that exists.

But as, like, your roadmap tries to build more diets for that room, your long-term strategy ought to be to use as few as problems as possible because I could walk up to the one attached to shop pay and just say, you know what, like you should charge for shop pay. You should just say, hey, you know, like cost an extra percent. It's like utterly worth it. It's like, again, like, from vision is like 20% better. Like, everyone in the world would probably pay this.

Yet. I think that would mean that people will, like, it would create always incentives for disintermediating the product. It will create competitive landscape things. It would, you know, it's just like, I think Shopify all in, like over the next 10 years, we would be a very diminished company for not giving our best feature, like, to everyone.

to make it like a fundamental, like, you know, like flag in the ground about, hey, you come to Shopify because we work on fix like this and then we have them, they become available to you. And because, again, for the period of time that involves us not, like, the web doesn't have identity built in in a good way. You don't have, like, there's auto-complete, but that's really. hacky solution to the problem. I think even pre-internets like BTX and other things had your identity

as part of what the platform just supported. It's like your name, had transactions built in. And our AOL, right, had all this. So it's kind of surprising that the internet doesn't, but it doesn't. And therefore

a certain period which is still ongoing, requires us to sometimes enter or just with our firms, and shop pay is the poorly filled for missing internet platform feature in a way, right? And so this is valuable for this period of time, and there will be something else super valuable if this is solved at some point, but we want to play the role of democratizing the best features to as many,

like, millions, millions, millions of small businesses, because we are pro- this. We want the small business to compete on equal grounds of the biggest companies. And so the mission, like, all is to say, this dial is not just a dial of monetization. This dial is a dial of how much the observable difference to the mission, you know, how much we invested into this.

And I think it's more valuable for us to build a reputation of doing this way, then it would be for us to, you know, absolutely kill it for a bunch of quarters, right? So, like, that's an example of a little bit. I want to talk with you about two ideas that have left an impression on you. The first one is Paul Graham's essay on conformism.

Can you talk to me about what insights you drew from that? Okay, so let me see if in river views this. I mean, probably, I have to say, like, Paul's essays are, they're kind of this wonderful, like, I find they're always insightful. Like, they're always gems. And I find even sometimes the same essay actually, like, this is valuable, reading at multiple stations. Like, I think, like, so, so, so, so, so his writing is brilliant. very often he does this thing

again he does the thing that's language is best at for like putting a couple of labels to things that are being observed in general but like afterwards they make them easier to reason about and he always like builds up these pretty arguments around them which can serve as almost onboarding the idea like it's like I mean mental bottle faking that's what I'm saying I find, so in this he draws, if I remember, it's right, like one of those four panel grads where one axis is how independent minded you are and or how conformists you are on the other side and then sort of a passive aggressive standard separation.

And, you know, I think it's valuable because I think you can sort of put a relation, density crowd, like, over this. And you would sort of, I think he makes the argument that most people are probably passive to begin with, and which I think makes, I mean, I think society would kind of, like, full of part of that's potentially not true. And then there's More people are Significant more people would be on the conformist Side which I mean one thing to acknowledge conformists

is a really like I mean maybe it's only to me But it seems like a very negative connotation in there Like this just means like people were willing to like work on great ideas really like it's like kind of like Especially passive conformness, it's like, it's something that, you know, some of the greatest people are probably, can be described this way. People who are like, also the specialists, right? People who are making a choice on, like, I'm going to really go super deep into this one topic. And I'm going to go, like, I will, I'm okay, like, working based on what I know on, like, company goal, right?

like this is like they sort of there's on the aggressive side the picture kind of changes right like and because both of people were trying to like I guess get everyone else to go to their sides and I think there's a you know like the aggressive

independence are clearly entrepreneurs like there's like they are sort of a little bit different and the aggressive conformist And I think that's what the essay gives at. I think it's important that we sort of talk about them and with a little bit of like, hey, there's probably a lot good in there

but we should also like really understand the downside effects on here because aggressive conformism is a thing that is going to make it very, very, very hard to iterate. It's going to be a thing that certainly makes a lot of people's notable people's life living hell on places like Twitter and you know they're a good deal of industries that are deeply

invested in this as sort of as an art type again I would say like generally but bureaucracy is like especially sort of the the sort of bad part of bureaucracy to Kafka as a part of the prophecy usually involves aggressive conformists. They're often the comic book villains, but like they blend in really well.

So like it's just like, I don't know. I don't know if one person is like one of those things always or in different contexts, but what I like is like, hey, this is useful. Like this feels like what's going on? Why are people like having so different approaches? opinion on looking at the same thing, like here's something that changes things, and some people automatically say, well, that's quote, and some people say that's clearly something I'm going to fight.

And I think it's important that companies kind of state what kind of groups they, like a company that makes no choices of what people they want to, though they make, I mean, again, you end of the full-on bell curve. and therefore you're going to end up with full-on-average results, because the potential for agreement is extremely tiny if you are fully an implementation of every set of ideas, right? Because if you combine every one's favorite color, you end up with mud-brown and that's sort of a thing you're going to end up with.

So if you are wanting to build an innovation in a company, you should not be very deliberate with where you put the conformist or aggressive conformists. Like they play a very important role in some groups, but you have to be clear about which rule because the consequences of that kind of thing are like they will cause a thing to happen that you need to want to happen because they will definitely make it happen. If not the output you want, then you should treat carefully. The other idea is the Infinite Game, which we've talked about a little bit earlier. That's a vague topic.

I find James Carr's book, Finan Infinity Games, to be really profound and underestimated. I think Paul Krab could do us all the service by making a single essay free page for packaging of the idea because he seems to be able to uniquely be able to simplify complex. ideas to this point. For everyone else, you have to read James Picasso's book, which is somewhat dense, but actually, I think it's wonderful. It gives you this real sense of, like, what, like, the difference between long-term, yeah, well, okay, let me take a step, but, okay? Yeah, go, yeah, yeah. It is important to delineate finite in finite games. What's the difference? Finite games are, like, things that have a goal, like anything that has a goal is not,

is not, it can't be an infinite, infinite game anymore. They have a winning condition, and the winning condition is usually met, then basically participants agree at the winning competition is met. This is sort of a convoluted way of saying, tennis is a very finite game. Tennis exists in a world of, like,

it's been defined, it's probably a governing body of aggressive conformists that keep tennis away tennis is. And, like, the match goes to a couple of sets, and, you know, there's a referee with a participant in the game that people forget about, but it's actually, like, the game is won because all the players, like, all the participants agree that the really condition has been met, which is what someone won three or two sets. And then it recurs, and it's the same game of tennis. that's played over and over and over and over again, right? So that's a finite game. An infinite game is something that has no goal.

It's actually interesting. Let's try to make this happen with tennis because that's an example I've used. An infinite goal game is actually, let's say, fitness. It's like this is not a destination. There's no winning foundation. It's a journey. It's like it's a, it's a, it's a,

There is no defined thing that happens there. Like, it's actually the goal of the game, the only goal of the games keep playing. It's the, you are trying to say, I'm going to go into some direction, the direction of fitness. You can make the opposite decision, you know, but you could make a decision

to go towards Slough, if you wanted, I guess. But you made that decision and that you have to compromise on this. Every single step along this way, it's going to be different. What you are allowed to do, though, along the way is play finite games. So, and this is where things get really, really interesting,

because people's, like, everyone should think about their infinite games. What is the infinite game they do? And maybe you have multiple ones that happen to be in reasonable alignment, and you should make your life decisions largely based on your infinite game. Like, again, I talked about my infinite game as, I love computing, I have computation and technology has huge potential. I really love people.

It's like they have huge potential. And frankly, we have people and therefore we should look out for each other. I was like, we should help each other reach our full potential as species and innovative level. And, you know, design and systems and organization. And like, my goal is all through everything I do is try to like get people as much power from technology. like via a little bit on that fridge. And so Shopify is awesome for me because, you know, like it's bad

and it costs resources. It's like my infinite game is in 100% alignment with all the final games I play within the company of like doing financial calls. And, you know, I don't know, like you're like, you know, build a company worth working for

And, you know, all these things are finite and have goals. Filling the role of CFO, you know, like it's a game that's recourse every, you know, hopefully not too many years. And so, so that's, I think, important. I think the word of, they often confuses this. Because, for instance, school is such a great example. I'm really down on academic, you're in school here, in this conversation, it's funny. We all have, I think, an infinite goal for being educated, right? Like, we want to be educated.

We want to acquire knowledge so that we can turn it into wisdom, right? Like, that's sort of, like, a pursuit, I think, everyone's on, I hope. But then we explain this to kids, the way we tell them to do this is, like, you play the game of grade one. and there's a test in the end and you are passing or not passing in the end at least so in the German system you repeat the entire class and then your book first prize is you play a grade again and this time it's called two and then you do this again and you do two and underneath there each subject is like math is like we start on page one

and we do a page of a book and we solve the current topic and then there's a and you solve the test, it's like, it's a fractal of finite games. And everyone's forgetting about the education. Because if you remember the education being the infinite game, I think there's a whole lot of final games we're playing even in schools that are not leveling up to the infinite game. We end up obsessed with testing, over testing, road memorization, random things that are just like kind of so beside the point.

side point. And I think very often my criticism of school and my observation, my biases before having kids and my observation at with having kids is that some of it is really, really good and some of it is totally random and just is something we're doing because you're doing that and we're falling out of alignment. Okay, so what does all this mean? If there are rubber hits the road, the finite and infinite games, it is the following. And actually we talked about this and this is actually potentially is a theoretical sort of framework and knowledge tree to hang these sort of leaflets of interesting ideas

from earlier on. The biggest difference is the attitude to change in between those two games. If you pull a lever somewhere and you change gravity down to .7g on planet Earth, if that would be a thing, the finite games of tennis cannot recoil. A tennis depends on gravity being 1G.

No, it's not something that is going to going to be edited, hopefully. But it is not possible to have a game of tennis ever again, if Planoville just doesn't have 1G of gravity. You can potentially invent a new game, but then maybe even one which is more fun than tennis, frankly. But you have to end forever this game, and you have to invent a new game.

It seems to me that the only people who seem to have ability to reinvent a game based on changed information, how the people were actually the infinite players along some other journey. Maybe the infinite begins of like just, again, fitness or self-plastery or something, or just actually sort of a need for physical entertainment. It's like whenever it is, but if you are on an infinite journey,

change is actually welcome. Change is clarifying, change is a new bit of information. Because you actually have no opinion to, like, you want to try to get a horizon. But, like, you're not because this is a goal. Like, there is no goal in an infinite game. But the only reason why you want, like, you have this vision of wanting to get towards your horizon

is to gain more vision from horizon for something else. And I think that's poetic, that's beautiful. And I think it's described, like, I feel, I, this. I read this book twice now, once when it sort of roughly came out, and once, like, 20 years later almost. And I realized maybe the first helped me in this way myself, but I feel I just always had more to do with the infinite game. And I've learned to translate the tasks that need to be done along an infinite game into finite, winnable, quantifiable, sort of higher. more fast-paced games because a lot of people asked me to, right?

It's like most people are just not okay on the full like sort of raw like we never know how you're doing. You sort of like even progress is not. It's a lot of ambiguity. It's not satisfying because like it's like there is no nothing you're working towards. It's just trying to. It's its own like it's progress for its own sake. It's not even progress for like an outcome that you're a whole.

hoping for. It's almost a little bit spiritual the pursuit of this. It's like you're doing this for your own purposes. And nothing in society tells people that this is anything both doing, or even that anyone else, like, you can't have a career unless you climb some kind of ladder, which is finite. And then one run and one job up and one title change and like, there's Therefore, people's identity gets tied into the finite. Like, I'm currently crushing the finite game of being a senior U.X developer. Or something like this. And you think that's your self-worth.

And if someone comes to you and saying, hey, we don't do U.S. developer because we just moved to U.S. DeBel... Like, that's actually an engineering job because it's part of the engineering discipline. We move them over there. That's like crushing to some people and delightful to others. And I was always wondering, trying to figure out, like, how to separate people. And I do find you can sort of spot it in the language that people use, talking about their own career. And, you know, Shopify hires through we talk about just your life story a lot.

And I feel like we can find a lot of predictive artifacts in the life story about which kind of type of pursuit you are on. But I think what key is just invite people. Like, I actually think this is one of those, like, a lot more people would say, holy hell, this such, just, that sounds like a lot more reasonable as a sort of way I'm going to structure my career and my life than this sort of mill to, like, to do the same thing over and over and just trying to like, I don't know, hit the quarter close slightly better with a slightly higher number. You do that if you actually want to become the most persuasive people.

or plet or if that's a thing you want to build or if this is your craft through which you make commerce better for everyone and make entrepreneurship more valuable through our products. You know like if you can find the alignment between the

infinite goals of the company and your infinite goals of the fix that you really want to acquire for yourself and then you pick your finite games as things that have a second order effect to help you along your actual journey. There's a harmony that's unbeatable.

And I think that you study really, really successful people, you invariably find people who are on some kind of intrinsic, sometimes unacknowledged to our third world journey of their own. And they structured their time management in such a way that they spent most of their time doing things that are I'm a valued by society, potentially for the purpose of the job, but actually spent, played dual duty towards their own goals. We'll switch gears to talk about a couple of personal questions,

one of which is you recently tweeted that you had fixed your sleep. I'm curious. What did you do to fix your sleep? You have to admit, one thing, one compromise I made and COVID started is I had a prescription for sleeping pills, which I had just for sort of international travel, I could, I just ended up, like, I was really worried about it initially because it's, like, that's, speaking, got a pretty slippery slope.

It's easy to create a dependence on. But, like, the other side was, if I can't do red eyes, then I can, we just lose one day with my family on each side of international travel, and I was just, like, that felt like an easy decision to make. So I had this. And when COVID started, I mean, as you can maybe spot, like, spools up chronologically here at the top, the things I shared about, you know, going for all roadmap and looking at and canceling a lot of things and doing a million other things besides. COVID, for me, meant 14, 16 hour days, every day, like seven days a week for probably a year and a half, two years.

actually two years, probably, almost. I think I started taking weekends off to a body and a half again. Or in this one day. It was just like lots of my executives turned over, who ended up just like, it wasn't for them to go into those times. So I, you know, for obvious reasons. Anyway, this is sort of not making excuses.

It's just, I'm like, I can work two free jobs, my time management skills, and background if I'm reliably sleeping six and a half hours I heat precisely. By way, I thought I needed much more. So then, so I took sleeping pills, all of this to say, I took sleeping pills. And I was like, OK, I got to get off this

because I'm not going to stay dependent on sick and pills. And so I imagine this is going to take me a very long time. But I'm saying like, one of my first questions I asked is like, if we know what in the world is good at this and what can I learn from there? I'm like, clearly a lot of people are good at sleeping. Like, this is some, this feels like a core skill for a lot of people, like, and, um, um, um, you know, what, you know what with, like, because when you go on to sleep hacking and you're like, okay, men and tonin plus like, uh, you know, red shift on your screens and like routine and all the same and temperature. You know, when you talk about people who are good at sleeping, they don't know of any of these things.

They just sleep. Like, it's like, it's very, like, it's actually almost annoying. to the simplicity there. Okay, that was a backdrop. I'm like, okay, what's the theory here? So I eventually found that there's, like, I mean, CBT is like a modern package, I mean, it's, if I might be clip here,

it's like a modern packaged stoicism, right? Like, you know, cognitive behavior and therapy that is. It's like sort of take stoicism plus, I think, a little bit of Alfred Adler and a little bit of yarn and then package it in a important system that you can study and then it's like brilliant it's exactly what we need so good stuff I'm unreasonably effective as a form of therapy has a lot of subferries one of them is CBDI CBDI is the sub part of that called insomnia it's actually it's awkwardly named but actually

is correct. I think the taxonomy is correct. So, finding out where this exists. I tried finding a doctor for it. I couldn't. Because there's only, like, I think all of the United States is a hundred certified

people that have been doing it since the 90s. Effectiveness rate is 90% as better as sleeping pills. They reliably fix everyone's exomnia in a bunch of sessions. and kind of somehow we don't talk about it. I'm like, okay, like, how do you, like, I found a book to read, like I think I read like two books on it.

They were like pretty sort of pop-sive, and I think you can pick any book because it's actually pretty basic. I actually found some apps that had, which I think is actually really great. Sort of entry point for app-based healthcare, Because I think what the practitioners do is very similar. They just put you on a program. They hold you rigorously to it.

But these apps actually do a very good job. On this, I actually have more data because I have wearing an aura ring, which was very useful to have data before I even started with this already. I highly recommend your aura rings or Apple Watches or these trackers, because having some data about your sleep is important. And then the apps can just help you interpret this. Okay. What have I learned?

I'm not going to go through the entire program because you just have to do it. a program because you just have to do it but um i thought this is going to take me a month of a grind i actually sort of pre-registered with shopify may have to take like full time off to do this um by day three i slept for a night i have been sleeping perfectly ever since i mean once a month i maybe like we walk me through this this is like what what are the steps to to do that what app do you Honestly, it's like, it's mental, unfortunately, or annoyingly. It's like, it's, I fought poorly about sleep. I have had bad stories that I told myself, like, such as, if I wake in the morning,

up in the morning and I feel drowsy, I had a bad night's sleep. That's incorrect. It's like, that just means you grew, you woke up in a different part of a sleep cycle. Right. You cannot judge your sleep. It's also, I had stories like, I need eight hours of sleep. I don't. In fact, you can, like, if you spend enough times forgetting to church your upper wash, you probably have enough data to figure this out.

You go into the sleep app, you look at all of history, you get us to pull the average of your sleep. Like, sleep is like hunger. Like, there is no need to train for it. Like, sleep will come. Your body takes it. Like, you probably, like, will tell you when you're hungry. And if there's no, your body will tell you when you're sleepy. If you're not sleepy, that means just exactly one thing, you're not sleepy.

There's a difference between sleepiness and fatigueness. Fatigueness is, like, you are running on too low sleep. Fatigueness can lead to sleepiness. They are often correlated. They're different things. You cannot sleep and you're just fatigued and not sleepy, but you can always sleep and you're sleepy. So what you do, firmly on an effective basis is you do.

you do create this routine. A lot of these tools are useful. But, and this is the hardest part, you do not do, basically, that's some minor allowances. Anything in your bed that isn't sleeping. It's you'll be your best for sleeping. You have a chair close by.

You take your book there. You read there. You do not bring your phone to bed ever, even in the afternoon, if it's like convenient and you're just like hiding from kids or whatever. And like it just, it's, it's, it's, it needs to be a little bit more profanobian, uh, to sleep to allow yourself to go, um, sleep like into a bed if you're sleepy, uh, you don't go there until you're sleepy. You learn how to figure out your sleepy. You will always get

sleep at the same time of a day. And if you don't sleep, you don't need to sleep. You're just like, I, I'm going to sleep at play out. I'm going, I'm going, I'm going, I'm going, at 10 every evening, basically. That's sort of like maybe sometimes a little bit earlier, depending on how good my book is. And then I go to my bed and I'm sleepy, and I sleep merely. I fell asleep.

The sleep effectiveness rating on my sleep trackers is basically 95% now. It's like, I just, that means like, on average, it's like five minutes in bed that I'm not sleeping. And then I, I, I, some nights there's more, some next night's it's fewer. After like over a course of week, it averages to exactly six and a half hours, which is exactly what my, what taught me the average amount of sleep that my body takes is now

you can be less lucky, like you can be more unlucky here and you might actually need eight, at which point that's your number. But this is, apparently there are people who need, who actually legitimately needs up to 12 hours of sleep. I, that sounds like, It's crazy. So, unbelievably, in compared with modern society, I really feel for those people. That should be treated as like, man, like, what a rough cut that would be to be dealt with. But there's also people who are fine with, you know, less. There's a book, which initially I thought was good, called Why We Sleep, which is actually

very bad from everything I'm now now. I mean, it's not that the book is incorrect in the macro sense, but it gave it. it gives you, I think the book itself is anxiety inducing because it makes claims on, which I don't think prove out on the importance of sleep and how everyone's goals should be to sleep eight hours and there is no variance. This is a bizarre claim to make given that they all are incredibly good trackers now and we have all the data and they just simply know that that's not true. And so I think there's a bit of damage caused by this and I think we should need to change

the story. Okay, so I don't know if that's like all content that needs to go on a podcast. I actually, I don't know what to do with this. I feel like it's just like it's silly that we have so many people who can't sleep and it's actually something that seems like maybe this can't help everyone, but like it ceased to have everyone I'm standing in this direction. Well, that's how I wanted to talk to you about it because everybody has problems sleeping. And it seems like the most common problem these days is like you go to bed. you don't have a problem falling asleep, but then you wake up at like 2 or 3 a.m.

And you're like wide awake and wire. Yeah, exactly. I mean, what you do is you get up to your chair for 15 minutes. You read and your body is sleepy and then you go back and after a while your body just doesn't do it anymore. Like it's, I know it sounds crazy, but like it's like takes two to tango and you need a brain and body for this. And like if one of those is like super not in on the job

or not aligned with the institution of sleep, then, like, you feel not sleep, I interfere. Yeah. Two final questions. What did you use to spend time on that you now see as a waste of time? A lot of travel. I think it's hugely pro spending time with people,

and I think travel is a sort of a tax on doing this, which is totally, like, easily worth it. But I think there was a lot of travel before that pandemic, I think, which was almost like, I don't know, feels like it was almost penance for meetings. Like it's just like, your sincerity had to be proven at some kind of alter of sincerity by you sacrificing days of travel and airports and cross-continent travel

and compromising your time with your children. Like, it's just like, see, it sounds insane now, but we did this, all of us. That shouldn't come back. What should come back is like, hey, deliberate time spent with people that are important, and then it works, nets out. I fell a little bit into this work-through org chart, treated as a trust fall, you know, like hire smart people and then get out of their way. I think that's a waste of everyone's time. It's not even good for the, like, it's a nice story, but it's like dumb.

It's like one of us would be nice if that would work but doesn't. If at least not, maybe again, if you're going for middle of a bell curve outcomes, then I think probably it works. But in some industries, that's all you need to do. But like not in mind. We are trying for class. So I have enormous perspective and ability for, again, found legitimacy to make things happen faster.

And it's not when I want to make decisions. I want to be part of the important decisions because that helps me for my mental model. And so now I work, again, on the old idea of a trust battery that we talked about in previous times, we talked about together, together, together. The trust battery builds, we work together, we work alongside, we make key decisions together.

As a team, everyone brings perspective, we listen to absolutely everyone, but the choice at some point has to be someone's. Yeah, it's not a good place for Faith. Like, it's like, when in the day, if you're trying to make a workers' product, it's all the details that matter, and for that, you need to have a team of people who are okay to go into all the details, or at least can talk to the trade-offs that are being considered

when we talk about the details. And so, I think that's, it's a way how I always worked on all technology. Like, I like understanding, like, many layers below the level I'm working at. But again, I feel very, I don't know why it took me almost a decade, but like it took me almost a decade to allow my, the way I've been successful in working with technology and software to actually fully come to fruition and outside of work on technology. Like maybe this is a sort of thing you're spotting in our conversation. I'm a lot more at ease with the integration of those two things. I think it's not even integration, it's actually on collision course, and I think maybe it's already happened.

I don't know, man, like, I'm looking at some... I think, like, there's a lot of good content and something like Harvard Business Report, and sometimes I read these things, I'm like, that is some kind of weekend at Bernie's kind of style party you guys are on, where you think they're still, Just, like, this is like everything that you're talking and taking as like statements and as this, as the mutual truths is utterly invalidated by things that we've figured out in engineering system design 10 years ago. And just because that's the nerds doing this kind of thing, we haven't been pulling out.

the lessons in the way like Nash pulled out the lessons from his poker evenings to then get a Nobel Prize for in Gabe theory right like it used to be that academia was better at pulling the lessons out of the practitioners and um I don't think that's happening anymore and um with academia not doing it we should at least the business leaders need to do it more and so I don't know. I've changed the way I work, mostly around self-confidence and in my intuitions. Again, I think your iteration is all of the mental models, all of your experience. The supercomputer in our brain is absolutely unsurpassed by all terrain machines combined,

coming to work to use everything you've ever seen to make the best decision in the moment. and continuing just to build out. Like the situations I can fold up models to or can say I've seen this before. And, you know, that's how I become better at my job. And I'm not putting engineering skills on speed dial anymore. They are now the core of how I make decisions. and I just, that's been just fascinating. Like, if I could travel back in time, like, and just give this as a, hey, this will happen,

I wouldn't, I would be extraordinarily surprised by this. I really was almost in a, like, hey, these skills took me here. They will not take me there. I actually need to go for a full change of identity and just, like, embrace me looking for strategy. end like a bit more of the sort of old school things a bit um i i thought this is gonna work it's blown up in my like i think it can work in peace time mm-hmm uh i think it cannot in and and i don't like war time i think crunch time and like they're they're like everything matters where all the slack is gone you know like they're they're they're like

where it's much more by high wire acts of like can you pull this off like it's just there's not enough slack in the system then and everything has to be more precise and the feedback loop is much

like we're in a recession time potentially it came out of COVID which was like a different like it's crisis into crisis in a way although the weirdest crisis is compared to previous ones

like just bizarre shape to them and therefore even less predictive than you can't even really look at previous ones because we just never had an economy that was also good but inflation but all this kind of place

so in these times there's like no margin for error but like very tight feet were clues as actually better times for this kind of decision making him and then again even more valuable very valuable and innovative in the new you seem a lot more comfortable i hope so what technology are you most excited about right now um well i would say i'll i mean look i'll say metaverse and emma's rolling in the eyes i think the metaverse

like they're having way um um limitation uh it's like nowhere and then suddenly everywhere and it's like how to predict where it's going to be. We definitely have a platform requirements around glasses, but like they are like the labs are yielding those. We know how to, I think we know how to make the lasers for the glasses now, mine is maybe red. And like this is really where academia shines and there's a lot of practical industry relevant work happening.

So that is going to happen, and I'm excited about it. I think that it'll just be clear that it's opening going to that word. It's not as far away as to think. Right now, you've got to say, machine learning. So machine learning has been unreasonably effective already, but all you'll transform our models change everything. It's another one of those, they transform models feel a little bit more vocational than academic. And like, they're probably not as good in analogy to the brain as maybe some of their other, like, approaches, or at least it's not as pure play as some of them.

But, like, it's crazy what's happening. Like, it's crazy. And another thing that I love about what's happening, machine learning, like, is... It feels like, I mean, Daly deserves, from our idea, deserves all credit here, but really, I have to say, as a sort of collapsed apprentice computer programmer slash hacker, I love that stable diffusion happens. And not even for what it can do,

of our best stunning, like who knew that so much of his human creativity could fit into 4.2 gigabytes of binary floating point numbers. I mean, that's another thing to send back in a bottle, like for a time machine and really, really stun people with. But we all live in that world where we know that's true, which is like also something that doesn't feel fully reintegrated with our mainline human history. And, but what is so profound, I think, stable diffusion is that it's gotten released as open source. And now what's happening with it is just a want to. It's like all acceleration has, but all, like, this is already probably maybe minus crypto,

the fastest progressing field in the world. And has just found two or three more gears there. Because if you track, like, I mean, we started like, I think first versions on top of the on your own machine, you can execute this, right, this open source. You could make an image in 15 seconds. I think they're down to three. And like, with no hardware changes. And just like, because the tooling behind machine learning was, again,

is a very academic field. It really feels academic. It's jankiest heck. Yeah. Not really an outcrop of the soundest engineering that I've ever seen, although it's unbelievable. unbelievable what they've enabled, but like it's coming from, again, mathematical purity rather than sort of developer experience, like this kind of stuff. So that's true.

And then you have, but now you have a lot of people who can contribute because we have an open source thing that we can all hack on. So suddenly you have the people who are good at developer experience. Suddenly you have people like John Kamak who are like, hey, everyone, we can probably do this with less precision. and here's like 15 ways no other use the computer. I don't know if he actually is saying this, but like he will say this because he's that kind of person. He's going to tell us how to make computers do this thing significantly easier. And a lot of people who grew up on Kamax contributions to video games

and have been inspired and want to do and bring the same thing to this field. So everything changes every time there's like a significant breakthrough in terms of speed and computation, because, like, it is extraordinary how many things we can do with language, large language models and diffusion models and transformers. And I just, like, I wish, like, in a more inspired world, yesterday's breakthroughs in the world of stable diffusion would be every single day of the last couple months.

at front-page news in the newspapers. We are just... We are spending our time thinking about very relevant and very important, but although there's more important things going on in the world that are like a lot more crazy, exciting,

cyberpunk and optimistic. And I think that's... I think that's incredible. I just can't wait to see that's kind of coming from there. I'm pretty optimistic about coming out of, like, whatever valuable things coming out of the crypto world as well.

Now as that went through a cycle, they're just shedding a lot of the froth that was a very obvious and easy to criticize for. And so I find that. I am extremely excited than ever things progress. I can watch three, four, five different fields right now or if I'm progressing at breakneck pace where, I mean, especially machine learning is the first time I think I found my total capacity

where I actually have to say, this progress is so fast, but I think my model of what's possible is falling behind, even though I'm trying to make that not true. Sometimes I just don't notice that something is accelerating and fall behind, but then I can catch up there. I'm actually having trouble staying on top of it. I mean, maybe that's a statement about me being very busy at work. Maybe it's a statement of me being in my 40s now.

But, like, I don't know, if it's a test, the machine learning model world is the first which is clearing it. The technical ram And I think very really deserve kourdes for a bet Because I think we have a lot of writing on this So that's awesome The best is yet to go It is It's man, the future is gonna be freaking amazing

There is no chance Like I'll take a long bet For a lot of money on this If anyone wants to take it It'll have to be a real long bet But like if I'm right I'll have to pay out That for rest of human history

the 20 years before this point and the 20 years after are going to be more studied and will be treated as the coming of ATA of our species. They are going to be treated as the formative years where we went through

the questions we had to ask ourselves, where we had to learn how to organize in a way that we save our planet or at least take the things that are available to us. and prioritize them based on something

that is clear prioritization for the global good. Like where we actually band together, Ivers had very high hopes this would happen around COVID. COVID felt the first time maybe since the plague as a, like, all humans got attacked by something and might be a binding experience. We all know that didn't work.

But I think we learned a lot about how information travels and how, you know, like the upsides and the downsides. We become a sort of mature in understanding what the world is like, given all these new possibilities we have. And so I think these are our formative years in a lot of ways. They involve the coming of age of, I think, one of the greatest bits of, like, if technology is progress, The Turing machine is the engine of progress.

And that almost all, like, net human progress is going to be built on because everything else is going to round to zero. And it was probably mainly needed for bootstrapping the Turing machine. And the, they're like the early sort of custodians and the explorers of this field. And I just, I have, man, like, there's no chance you would want to live through any different times. the future is fantastic and we'll probably become immortal relatively soon and all these kind of things

and maybe not us but our children definitely well and so a lot of what people will be preoccupied with in the future is clearly what's next and what's possible and many of the biggest questions will remain to be studied and to guide our

curiosity but like it's here where it all was like like pop on the table and it was molded the world thing and it just it seems it seems so incredibly great to be around you to study this stuff it's so fantastic to go and actually be a pretty like play a tiny little role like make the tiny little dent into it like again that the crazy possibility that that you know so many of us who made these choices to get into this industry or pick up these disciplines and these skills, which all really, really help making companies, which are the implementations of large-scale coordination, which again,

as I said earlier, it's like all the problems that are both solving now on large-scale coordination challenges, you know, we get to play our part in it and we get to make a dent into it, and I think that means we get to write into with like the most, the most lit up parts of a historical record. I think that's just, I think it's humbling and incredible. And we get to all play part on it and that's cool.

I think that's a great place to end this. Thank you. Thanks for listening and learning with us. For a complete list of episodes, show notes, transcripts, and more, go to fs.com.org slash podcast. Or just Google, The Knowledge Project.

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