This Week in Startups - Tobi Lütke on Shopify’s impact on the creator economy, COVID forcing focus, early Internet breakthroughs, evolving as a remote manager & much more | E1184

Episode Date: March 14, 2021

Check out Shopify: https://www.shopify.com FOLLOW Tobi: https://twitter.com/tobi FOLLOW Jason: https://linktr.ee/calacanis

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Toby from Shopify is back on the program. I'm not sure when you were last on the program, but I know we were up at your HQ in... In Ottawa. Ottawa, right. And this was 2000, like 2013. 2013, I have it here, yeah. August of 2013, episode 375.

You were not a public company. I don't know. How many... What was the footprint of shopping? back in 2013. Oh, that's hard to say. Like less than 100 people, maybe? Yeah.

Something about where. Yeah, and we just sat in the lobby of... It's like 200 something. Like, it was, but smaller. And at the time, this was a kind of, you had a very strange thesis. If I remember correctly, the idea was Amazon would not win it all.

And merchants would want to have a direct relationships with their customers. and that if you focused like a maniac on servicing those stores, you might be able to build, you know, a modest, moderate building, a business. How did it go, Toby? It went okay. You know what? Like, the funny thing is honestly, I mean, first of all.

Did I describe it correct, by the way? Yeah, you're exactly right. Exactly right. And you know what? I actually, I remember the setting. So this was, we were at a conference, right? like it was called Accelerate Ottawa. And I think you were there because various reasons.

I think you were interviewing Shamath on stage, right? Yeah, Chimath at that time decided he wanted people to know his name. And he was like, you're the best interviewer I know. Let's go places. And you interview me. And I was like, okay. And that was like one of the stops. We went there, Waterloo and Harvard Business School.

That was like a little tour we did back in 2013. So I remember us sitting down and we were having this conversation about Shopify. And the funny thing is, you're making this almost sound too deliberate because when you said earlier that I had some kind of a thesis about how to build something of any significance, I don't think I did. I honestly, I was just sort of following. Like, I found this need to start to make it easier to make online stores relatively early

in 2004 doing my own. And then I was like, someone needs to really just make this more accessible because, Because the only reason I could do it was because I was a programmer. And then it's really just been one step at a time since then. It's no incredible, like how, you know, like how the story continued. But I don't think I knew this. I do remember that you in an interview where Merckling also, like, you had some statements in there about the potential size of a company and the hundreds of millions.

And I was like, I'm going to revolve with this, but I'm not entirely sure that Jason is, you know, being serious. I was just, so no, I saw it very clearly. You know, in interviewing, you know, thousands now of founders in my career, first as a journalist and then as an investor, I was just struck by how laser-focused you were on this very specific problem. And I was like, yeah, you know, there's got to be like, I don't know, a hundred thousand people out there with the store. And if they each gave you $1,000 or maybe they gave you $200 a month, like,

that's like a lot of money. It could be like $20 million or something in revenue. It could be huge. I was just like, I do this back of the envelope. Give me an idea of the trajectory over those, you know, eight years since we last spoke, basically. Were there moments along that journey that you uncovered things that made you realize, wait a second, this is a bit of a big opportunity, even bigger than, you know, what I originally thought? What were those like seven? moments. Do you remember? Yeah, I mean, it's basically an unbroken chain. I have an unbroken track record of underestimating how the potential of my own company, which is, I hope, will continue. I think a couple of, like, I mean, we got lucky in the way that the words have rearranged

itself around the thing we were building, right? Like, it's, people are talking a lot more about entrepreneurship now than they suddenly did in 2013. People are, like, everyone realized, that the internet is kind of just the thing, right? Like, I recently heard that something like 85, 90% of all the money on the planet actually only exists in databases, right? Like, the world economy is digital. There is no such, like the world concept of e-commerce is kind of not, I think, the right idea.

And so that became clear. And, you know, COVID accelerated things enormously, like afterwards, because everyone realized just how important it was to, you know, even if you had an existing store, like sometimes you have to, like you are not accessible anymore if the streets are shut down. And especially if small and medium businesses

mattered a lot. Yeah, I mean, the most entrepreneurial thing you could do historically, I think in the history of humanity, it's open up a store and give somebody goods in exchange for coins. I mean, that's basically the history of modern humanity. is that people would go to a market, show their wares, and try to provide value to people.

So this idea that it would go away or that one person would win it all seemed strange. So it does seem like this constant tension of like, well, why wouldn't people just put their stuff on Amazon and the third party sellers never came to pass? And since the time you've been on, I've had multiple direct-to-consumer brands say, being on Amazon is, the kiss of death. It's a waste of time. You get ground down to the bottom. We want to have a direct relationship with our customers. We want to know who they are and we want to have their contact information. Is that the core dynamic that sort of created these two different ecosystems, the Shopify ecosystem and then this like Amazon third party seller race to the bottom ecosystem? Yeah, and I wouldn't even necessarily put it in such stock contrast. I think the

I think the right idea is that if you're direct to a consumer brand, you need a home base somewhere. And ideally, you do this on the open web. Why? Because it's the one place you can actually own, like on the entire internet. Every other service you pay for the impression or you're renting it from someone. And so once you have that, you can go out from there. Like I think Amazon is a very good sales channel for certain products. And people should use it if it's appropriate.

It comes to upsides and downsides, and I think that's, you know, just that might be a good fit. In many cases, people use Facebook to find an audience and advertising on Google Adverts or TikTok now at any of the channels. And I think this is the key. Different products work in different channels, different messages are moved different. And to your point, commerce is extremely related to human history. It's very hard to figure out what came first, the cities or the trading posts, right? The shop at the crossroad was probably the founding event of any of the modern cities. And so people have been trading with each other forever.

And then the entire relationship of I'm making a thing that some people find extremely valuable and therefore they give me something of value back, either barter or currency, has just been part of human history for a very long time. And this is hugely important to bring with us to the Internet. And I think so everyone has something, like everyone can add to this. Everyone who wants to add new products should be able to. And how important was payments and getting that built in? Because we just talked about bartering coins.

When you started, did you have payments in? Or did people have to bring their, I believe they had to bring their own. they believe they had to bring their own merchant account, right? Yeah, right. I actually built a really popular open source library called Active Merchant, which just does nothing else than make it so that you can connect, like, to 80 or 100 different payment gateways that I built initially with Shopify. I think what became apparent eventually is the thing that really,

people don't tend to realize this, but like friction shapes a world, a lot more than policy in most cases. And what we found, this was like an hypothesis initially and became something which we confirmed through building Shopify is that whenever, because initially, so to set the setting, first times I went around Silicon Valley trying to raise any kind of money for Shopify,

I got a very similar, like you got a good pushback of, you know, do we really need to be lots of online stores? Isn't there going to just be sort of one of them? Or like maybe there's like, let's say, 10,000 or 40,000 or something. And I think 45,000 was a number that I got in one rejection letter. There was just no agreement that there was value in making it easy for people to start stores because there was a limited term. And I think that is actually, that was good pushback.

I think that was actually right. But the reason why there was only 45,000 online stores on the web of last decade in early 2000s, was that it was just too hard. So what we've realized eventually the hypothesis we had is like every time we make it simpler, what we actually get is just more consumption because the demand was very high, but the ability to overcome the friction along the way was simply not that well distributed. So payments in a very roundabout way, payments is like the perfect example of this because even I almost gave up when I started my snowboarding store.

at a very beginning of this journey, because I didn't have credit history in North America, moving from Germany, and it was just really, really hard to get one of these merchant accounts, and there's a lot of gatekeepers involved. And I only ended up doing it by, like, it was very hard, and it would have been easy to give up. And so what Shopify has attempted,

and with payments especially, is just to remove all these barriers and make ideally everything happen only once you need to. once you have a bunch of sales and want to get the money paid out, you will then be able to tell us where to send it, and then we can do all the provisioning of the merchant accounts for you. How much money does your startup spend on all these different software products and how much time does it take you to integrate them all together? Let me guess. Too much time, too much money. Well, O-D-O-D-O-O.O. It's a suite of business apps that runs your entire company on

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O-D-O-O-O-O-com slash twist. Take the $1,000, put it in your account, and then use it when you're ready. But get it now, because I don't know how long the offer is going to last. It really is a reoccurring theme as you watch what happened from, you know, the inception of the web in 95, 96, when it started to get commercialized, all the way to now is it was so hard to get anything done that it was causing a very small number of people to do. And every time an entrepreneur makes it easier, more people participate. And I think

one of the great examples when you were talking about this was just thinking about like web publishing. And I was just thinking about I just had Matt Mullenweg on the pod and Evan Williams has been on the pod. We've got to have them on again. But it was like just putting up a web page was so hard. You had to get Dreamweaver. and build it or before that put up a server. And now if you want to put up a web page, you can go to Squarespace or WordPress or even if you want to say something,

you can kind of just do a tweet. Like, boom, it's up on the web. And now, of course, everybody participates. Everybody publishes stuff all the time, whether it's photos and Flickr was like this nice waypoint, right? If you think about the history of photos online, we all remember when Flickr came out and they created like an upload tool.

Do you remember the upload tool they have? You could download and upload tool and be like, okay, we're going to get your camera off of that camera and your memory card and put it on the internet. And now we all have these incredible devices. The App Store was the other piece, right? I mean, at some point you added an app store and let other people build plugins. Was that another major reflection point on the journey? It absolutely was. It's a, I mean, again, commerce is complex.

it's very, very hard to build software that can address a lot of different use cases. And the inspiration there was really the operating systems. Like, you have to, like an operating system that does a good job modeling the primitives can then be used for everything. Again, like in many, in many you invoked the 90s. The 90s, like, it was very hard to do anything with the Internet, but it was also very idealistic in this way. Explain to people who weren't around

what it felt like for guys like us and everybody else who started joining this, what that revolution was. I mean, I would love to know your story there too, but like, I'll give you, give me yours, yeah. Yes, I remember when the internet came to town. Like, I mean, the whole concept is funny. It's like the first ISP, basically,

at the local university. And, I mean, I sometimes think about this, I don't, I'm trying to figure out at the point before that happened, what would be the one way how I could have communicated with people who weren't, who I didn't know?

Like, I guess I could have caught in some kind of live radio show or something like that. But that would have been the only way how you can stand deputies communicate with people who you didn't know a phone number of. And so it's hard to take people back to the times when that was ordinary, but like it was profound to see the internet, right?

and realize that you can go in a chat room and talk to people or put up a website, which then you don't even have to be there and people could interact with if you had the technical abilities to do with. And I think a favorite pastime was what would the world look like in which doing these things that we now are possible are going to be everyday things that everyone could do and in which ways would that change the world. And I think there's a good deal of idealism that came from this. some companies, I think, are really born out of this, like out of this world and are trying to

kind of like make something significantly simpler, but then also build a platform for everyone to make it even even simpler. And I think this is, like Shopify fundamentally is an implementation of these ideals. And we want, like, we want to make sure that people could like for the, could solve a problem that it was very, very hard to build software that helped small and medium businesses. Right? So because the dynamic of, I mean, usually when there's a really valuable market somewhere and people look at it and say, okay, I mean, not everyone's service, but search. Like, it's really, really valuable. And then you can, you know, like, you build a company

that is the search engine. I mean, that was the one I was thinking about when you said, like, it was so idealistic. And Google came along and said, Well, what if we index the world's data and everybody had access to everything? People don't remember that if we wanted to get information, we'd be like, I wonder if there is a book about, you know, C++ or Pascal or whatever, you know, thing we wanted to learn about. And then you go to a bookstore or a library and you would ask people, is this, does this exist in the world?

And online was originally like, you could ask other people for information. And people might be like, yeah, I have a file on my hard drive. I can give you a file. I have something about chess. I have a document about that. It's really idealistic when Google said it. We want to index the world's information and make it freely available to everybody. Now we just take that for granted.

Yeah, and it was profound. It was a profound experience than at first time. What was the first time you got to see that? I mean, probably different experience from it coming to town given from where you. I was on bulletin board systems in the 80s, like PC board, etc. And so we were using modems. My first modem was a 300 bod Ventel. Then I got a 1200 board Haze modem.

And I was like an assistant cis admin on a PC board. And it was very interesting about that is there was no internet there, but you could plug in two modems into one computer if you had enough slots or maybe even three or four. And then four people could be online at the same time and chat with each other. And then we just basically used message boards like forums. And you would be get a busy signal. you would post it and then you just let it keep getting busy signals

and you'd war dial it until you got online when you did you would post a bunch of comments and then you were supposed to get off as a courtesy to everybody else and you would download

all those messages read them offline and then go and upload them and that was my first and we were trading software like chess master and stuff like that we were just trading

wares at the time hacked software but then I went to Fordham in 88 and they had the internet and I remember this guy Jose was like the night manager and we would be in the computer room

and he was using the send command to talk to this woman he had met in like Brazil or something and they were going to meet each other in person and there was a send command and then there was like gopher and FTP and this is all before the web existed and people were trading files and then you would send a message

and my distinct memory was it said hopping from Fordham to Duke University to Miami to Mexico City to here to here to hear to hear and then we wait and 60 seconds later, we would get a message back. And so it was literally like a 30 to 60 second delay

chatting with his girlfriend he never met in Brazil. And my mind just melted. I was like, how much does that cost? And he was like, zero dollars. I'm like, what? And it was called Bitnet. And he was like, well, there's ARPANET and this bitnet. We're only on bitnet, but there's a bridge over to ARPANet.

It's like, how do you get on that? I'm like, oh, we can't get on that. we're not supposed to be on there. But this is before it was commercialized. That was my first kind of moment, long before the web browser existed. I mean, all of what you just talked about is like a sirens call of just never coming out of this particular, like part of a history. Because this was just so, like BBSs and ASCY. And I remember being able to tell the make of a modem on the other side just from the handshake sound, right?

Like, you could always tell the six of modems. But anyway, I think you have to, like, unfortunately, like, no one's interested in. This is, you know, this podcast exists for me to have an interesting conversation. And if anybody else happens to like it, that's fine with me. Perfect. But let's keep peeking out on this. What was your first computer? I got an Amstrat CPC, which I don't know, it's a basic, like a basic computer,

but it was a European make. Really good device. Wow. Would it have cartridges or a tape? What did it use for storage? It had one of the first hard disk drives, which was mind-blowing. I even had color screen or at least some colors. And it was a good machine. There wasn't a lot of games for it, partly because the games were made for C-64s and so on.

But it was great because, you know, back when it was like Bight Magazine had like, it had like game listings. in Basic on the bag. And so you typed all those. And this is basic. You can make your own snake game. Yeah. Yeah. So exactly, these kind of things. And then, you know, like people forgot that.

Like in order to play a game, you would be given a piece of paper by your teacher. And they'd say, type these in. And you would type the code in. And then you'd run it. And then you'd be able to play the game. So you do like an hour of typing. And then the game would run because it didn't exist anywhere. And then eventually floppy disks, hard drives came.

You didn't have to actually do that. but it could take, you know, five minutes to load a piece of software and to get it to run. Oh, easily. Easily. My first computer was called an IBM PC Jr. And it had one of the first floppy disks and then two cartridges and a modem. And it was really cool. You could stack these cards onto the side.

You'd slap these cards onto the side and connect them. And then eventually I had a hard drive and, you know, then I became like an IT guy and I just would make 15 bucks an hour when I was 15 years old. 1985 when the minimum wage was $250, I had like jobs for $10, $15, $20 an hour doing like databases and building stuff for, you know, medical offices and stuff like that to keep track of their patients. It was pretty cool, like that moment in time. I imagine you had a very similar experience there because, again, I don't know the people around you, but like in my case, again, I'm from a little city in Germany and I, this all existed to me,

but I didn't really know anyone else who had computers. And I remember at some point in my teenage years, I don't know what particular event it was, but at some point I had this sort of, it might have actually been first experience around the internet, where I had this sort of like this experience of now seeing, I know everything around me is going to change. And very quickly throughout my lifetime.

Because just like it was so clear that, you know, you go through a normal day, and I, you know, you went with my parents to some kind of passport office to then, you know, wait in line and fill out a form. And, you know, on the other side, the person was just sort of typing something in a typing machine and that was filling out another thing. And I had all these questions about how this works. And at some point, I had this realization of, you know, at the end of all us people doing all these things, it's just going to be typing a database again. And I know that we can end to end this really. really, really simple.

And it was something along those lines, maybe not quite so detailed. But I had this experience, and I think other people who came in touch with technology in during this time had this probably as well, but you just knew that you knew something about the world that is hard to explain to everyone. Listen up, everybody. I got an amazing offer for you. LinkedIn is going to give you a $100 credit. That's right, $100 a hundi toward your first LinkedIn advertising.

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and they'd be like, yeah, I know I have a computer too and you'd be like, whoa. And then you would just spend 10 hours talking about all the different things you're doing. And I actually, you know, when I get that sense again is looking at the crypto folks, it's almost like they know that, okay, the arc of history is going to this like distributed system. It's going to be on a blockchain. Nobody's going to control it. There's going to be hashes.

That's how you're going to do it. And it's going to change everything. They kind of see a future that if you're not writing that code or you're not involved in it. And I feel like the biotech people, like people working on like synthetic biology, like it's almost like they can see the future and none of us actually understand what they're working on until they make the vaccine for the pandemic in two days. And MRI is just like, you know, we got you. Here it is.

And then we spend a year trying to figure out if it worked. And they're like, no, it works. We made it in 48 hours. MRNA is like a real technology. And everybody's like, how do we know it works? And they're like, it works here. Here's the code. Yeah, I mean, that's just crazy, like profound as well, right?

like we now can modify cells in a software addressable way, basically. Like that's not exactly it, but like you can actually compress it into the sentence. Yeah. How does this plan look different in 20 years based on this? I mean, like, how is it looking differently by the end of this year already? Right. Like, it's not like it's not even theoretical at this point. I mean, I think it's, we're pretty safe to say this is the last pandemic.

Like if we have another pandemic and the, M and RNA people are going to sequence this stuff. They're going to have the solution. And then it's really just a matter of looking at our process of these like multiple phases and going, you know what? Just do a challenge trial. I don't know if you know what a challenge trial is. So it's very simple.

It's really interesting on an ethical basis. I'd be interested in your thoughts on it. You can either give 30,000 people a placebo and 30,000 people your vaccine and then see who gets COVID and who doesn't and then study it six months later, right? or we can get 100 volunteers, give 20 of them one vaccine, 20 of them another vaccine, 25 of them another vaccine, and the fourth group, a placebo, and then give all of them coronavirus on purpose, expose them to it on purpose. This is considered the height of unethical in medicine. But we do send astronauts to space, and then if there is a new airplane, somebody's got to do the experimental flying on. it and people ride motorcycles 200 miles per hour on the auto bond and do all kinds of we send people

to war to fight over oil or whatever like the idea that we wouldn't do a challenge trial is just crazy like i don't understand the ethical dilemma here if people are informed and they have consent we could we could have saved the the 10 million people who died or you know in COVID could have been half of them 90% of them 90% would have been saved if we had just done a challenge trial and now there's a bunch of scientists who are saying, we need to rethink this concept of challenge trials and they're actually doing them in the UK right now with volunteers who are young

because obviously COVID doesn't thankfully, you know, impact the young like it does, the obese or the old. So anyway, the MRNA stuff, if we do challenge trials, we could basically kill the next pandemic before it ever gets on a plane or we even become aware of it.

I mean, this is what I love optimistic take out on. I agree with you, like, we really, really, really need to learn for this. There's tools you didn't have here.

And, you know, like we can build a much, much, much, much better society on top of the lessons

that came through this because I think it's like, it, I think it really gave us a sense for the kinds of, like, just challenges that, on one side,

we can see on our other side, the kind of challenges that we can overcome by especially things to technology, like, well, or science. Yeah, science. Yeah. Yeah. What do you think the big lessons are coming out of the pandemic?

What realizations did you have? Because it's, it becomes this, when you pause society for a year, and we're taping this literally in the week, we're 50, we're literally exactly 52 weeks from when San Francisco was shut down, like in the March. 10thish time frame. What did you learn from all of this? Like, what's your takeaways now that were kind of in the endgame?

It's hard, I mean, it's hard to make it, like, like even put the bullet point list up. It's, it's, I think, I think almost every model and theory, but I, I had about how to work together, how to build things, got either invalidated or got, significantly higher resolution. Like, for instance, I believe that there was like no way to replace proximity as a factor in

building fantastic products. Like you kind of like proximity of a team is just so powerful and so multidimensional and the osmosis effect of just people talking about the problem and the third person like say, like listen to it, learning from it

or even having an idea. and, you know, all these kind of things. I didn't think it was replaceable, but clearly is incorrect because incredible software and things are being no. 100% correct.

We were wrong. Matt Mullenweg, Envision, and 37 signals, Jason Freed, they were right. The problem was, I think, you need to have 100% participation in buy-in. And it was very hard to get that, but when everybody basically has a gun to their head

And it's like, you have to work from home and we have to figure this out because there is no choice. You can't get on a plane. You can't sell this software by being in a meeting. You can't. There's no whiteboard. Figure it out. Get a camera at home. This company, we're not pausing the company.

We have to move forward. Yeah. And so I guess one learning on the other side there is that the thing that was important for high quality product creation is high fidelity. team work. And I think it's one of those things you get automatically by proximity, but you don't need proximity to do. So, like, as long as everyone has, like, good internet hookups,

like, reasonably good cameras. And it's just like, it's not like, you know, the angle, like, you get on a call with everyone and everyone's like, sort of, it looks sort of up into the nose. And, you know, like, if you can, if you can actually get a small team together, where everyone has the right kind of setup and the software is there to support it.

And you have some, like, fin-angled way of having something that works almost as well as a whiteboard that people have sort of, like, I mean, this is the worst the software will ever be for remote work right now. And like this moment, it will only get better from here. And it's quite, you can,

with all the right kind of boundary conditions, you can put some really, really high, fidelity, high-context teamwork together. And that works really, really well. So that's been fascinating. What does you learn as a manager of people remote? Because my superpower was my ability to sit with somebody or take them for a walk or have dinner with them. And my also superpower, like doing an interview was to be in the same room and be able to connect with somebody by looking at them in the eyes.

I said, I will never interview somebody over Zoom or go to meeting or Skype because it's just I felt like I couldn't have a real conversation. Here we are. this is like one of the best conversations I've had all year. Like, and we figured, we seem to have figured it out. But I'm wondering like in the, as a manager of what do you have 10,000 employees now? I mean, it's got to be 1,000. Not quite. Yeah.

Yeah, something, um, six, seven thousand. Seven thousand employees. So it's like you used to. Yeah. Yeah. I mean, you, you, you have some number of direct reports, some number of meetings you used to do with groups. Like, how did you adjust as a manager?

What best practices have you, adopted, created, or improvised? I think, I mean, and the book on this is still being written, right? Like, this is, it is an extremely challenging time to, for, for all leaders. I mean, for absolutely everyone, but the leaders especially, because I think the bottom dropped out on a lot of the tools we've had. Like, I, a lot of situations that just arise, then, you know, people disagree with each ever got resolved by, you know, everyone getting in a room and starting from the top and saying,

hey, all of us agree that planet Earth is a pretty good place to live. And then, you know, like, you just sort of take it from big picture. And then you walk down the list and say, okay, and here we arrive. You think we should do the package management of our application this way. And you think we should, you know, like, after this, everyone's like, you can do this in one room, but like doing in a Zoom call feels real. And so I think this is a interesting thing. I think we just like at least I

can't speak for myself, but I've heard with some other people, so maybe it's general. Like the culture hasn't built correctly around video chat before, right? And people who study the history of other communication device like the telephone actually point out that this is a very ordinary

thing. Like people used to calling someone ended up, I mean, saying things like, this, you know, this is a litigal residence or something like this after, you know, and there was an entire formality. Like, it's, so I think, I think the interesting thing is, eventually people realized, you know what, let's do telephone, kind of a way we just talk to each other.

And I think a lot of people realized, hey, there's no other way to go. So let's just do video chats, kind of a way we used to do things together. And all these assumptions about what works, not doesn't. Like, I mean, maybe we had to adjust a bit in certain things, but it kind of worked. It worked.

You know what I did? I just put my foot down with people and I said, you have to have an Ethernet connection on your computer. You have to have a proper microphone because I'm a podcaster, so I know it a proper microphone. You should have a proper microphone. You got to get that goddamn Ethernet cable, no Wi-Fi, because it's garbage. You need to have a proper processor. So you need to have a computer from the last 12 months, 24.

minimum. And you get a digital SLR and a proper light ring. And you and I have these perfect setups. And then, of course, Zoom and other platforms have really revved on the software to make it really tight. And now here we are. And then people also know how to use their mute key when they're not talking. And they know the quick key, alt-a, you know, toggle your sound on and off if you're not talking and how to run an agenda. But I had to learn how to manage people. I just told everybody, listen, I don't want to manage anybody anymore. I don't actually get enjoyment out of it. If everybody could just put, here's an idea, and I basically gave everyone an idea, just at the start of the day, put in Slack what you're working on, one bullet or three. I don't care what it is. And at the end of the day,

when you're done, reply to that same one with what you got done and if you need help with them. That's not. I call it the SOD and the EOD. Start of day, end of day. And then I say on Friday, and it should take no more than five minutes. That's the key. And then, then on Fridays, just give me your EOW and share it with the entire group transparently. And don't put in silly stuff like did email or had lunch. Just put the major points that impact the business. And it's not a contest for whose is the longest. It's a contest of, you know, if anything, how productive you want to be in the company,

what kind of contribution you make. But then also tell us, it's a contest to see who can inform everybody and how in sync we can be with the least amount of meetings, right? So it's almost like a video game of how. Can we just do less, but be more informed, right? And it's worked. Some people that doesn't work. You know what I found too is some people weren't actually doing a lot.

And then there was this like pervasive fear like, oh my God, I'm a great culture person in the office. Like I'm, you know, very affable and people like me. And, you know, I'm great by the water cooler having a cup of coffee. but am I actually plowing through stuff to get us to a goal? No. And so it kind of actually made people aware of who in the organization was actually carrying the bricks and who was building the wall. And then other people were kind of sitting on the side like getting coffee for everybody, which could be a value of pursuit.

Don't get me wrong. But I did find this has become a great, it makes things more. I don't know if you find this, but it kind of levels the playing field. for a lot of the newer employees because everybody's the same. Like you and I have the same Zoom window as CEOs as the same size as everybody else. It's not like it's proportional as opposed to an in-person meeting. Yeah. Hey, everybody.

I thought I would bring Christina Casiopo. I pronounced it correct. I'm hoping. You got it. Yep. All right. You're the founder of Vanta. People have been hearing your ads on the pod for the last year.

And I thought it would be fun to have you on and you to explain why you, create Vanta and what SOC2 is and why it's important people get it right. So let's start with what is SOC2 for people who are just realizing they have to become SOC2 compliant? For sure. So SOC2 is at a high level. It's sort of a customer asking you to prove your security. So if you've heard about one, it probably comes, you're probably a B2 company and you're doing sales. And somebody asks you, hey, can I have your SOC2 report? Or, you know, hey, can you go through security review? Or they usually don't phrase it like this. But, hey, I'm going to put a bunch of data in your product, and I want to know if you're actually

going to be secure or leak it over the internet. So they ask you to get a stock to a report. We know it's 20,000, 50,000, maybe even 100,000. You know, if you roll your own, you do it manually. What does the average Vanta customer spend? Yeah, so the average Vanta customer spends less, so kind of 10,000 on up from there. But then even in terms of the cost savings, it's a ton of time savings. So rather than kind of giving up an engineer or two for a year, which is just super painful. No matter how large your company is, it cuts it down to can be 20, 40 hours on the low end. All right. Fantastic. Well, thanks so much for coming on and you've been very nice to our audience, giving them $1,000 off, which is a really significant and generous offer. Go to vanta.com

slash twist. V-A-N-T-A.com slash twist to get $1,000 off your stock too. Thanks, Christina. Appreciate it. Thank you so much. No, I think it's fascinating. Again, it's going to be hard to assess off the second-order effects of this. I think I'm really optimistic on the like all remote book. I think the best companies in the world will be built completely remotely. Really? Like at least no stated headquarters. I don't, I think they've like being together in person is still going to be very important, but more deliberate, I think. How do you plan on doing it when you get out of this? I know Canada's been a little slow on the vaccine. I don't know what you guys are doing up there. What is that about?

Like, how does, how does, how did can, I mean, you guys seem to do a great job of controlling the virus, but you didn't plan ahead to buy the vaccines. And then we did a horrible job in America at controlling the virus. And we did three million people yesterday, which I think, what do you have 30 million people in Canada? Yeah, something for, yeah, something else. We did 10% of Canada yesterday. Yep. Like, we're going to hit six million a day. We can do Canada in a week at the, at the pace we're going. What happened in Canada? I mean, I don't know. I'm not an expert on like at this.

But I mean, leverage certainly helps the United States. Like, you know, once the US really, really, really, really wants vaccines. I think a lot of vaccines go to the US. We have a lot of money and tanks. Lots of people to call who will really react to a very strong inquiry. I think that really helps with getting. getting a lot of vaccines. So I don't know if that's a big factor.

I don't have a line on the truth fund. Well, putting that aside, let's assume everybody gets vaccinated. This thing goes away in the next couple of months, which is what's happening here in America, thankfully, finally. What are you going to do? Let's say we're in September and there's zero cases or close to zero and zero deaths. What's your first, you know, sort of move as the CEO. of this giant company. Do you bring everybody together for a big party and do you start

thinking about letting people come back to the office? How do you, or have you even started that planning or is it just better just heads down and not even think about it? Yeah, I mean, lots of conversations about it. It's not clear to us right now exactly how to do it. It's, we will definitely, I mean, it's so easy for us tech companies to work remotely together with everything we've built for ourselves. So we should not rush to be the first, ones back together because, I mean, that comes with risks. Now, if a risk is zero, it's a different situation. So I'll find out.

You have some giant headquarters. You're paying tens of millions of dollars a year for, I'm assuming, if you were housing thousands of people, have you gone back to it? And how depressing is it to write that check every month for this giant office space that is empty? It's got to be infuriating or is it like just some weird, like, you know? And some cost. Sun cost, I guess.

Yeah, you've got to be fatalistic about it. It's certainly not helping us much right now, but it's, yeah. I don't want to think too much about it. I'm sorry, Tray for you. I mean, some people were like, think about, like, I think it was Pinterest in San Francisco, like decided to build an HQ, right? Which is like, what do you do when you go public and you get a big, you know, war chest of capital? you're like, I should build some awesome place for us all to get together.

They build the mothership for Apple. And they just paid like $100 million to cancel it. They paid a kill fee to cancel it. Crazy. And it's probably saved a lot of money doing that. I mean, I think so. That's a way they want to go.

Can you imagine writing that check? He's $100 million for me never to set foot in this office. That's got to be the worst speeding ticket you'd ever pay. I know. Here's a hundred million dollars. to buy the right for me to not get the thing. Yeah, I'd like to cancel my water for my Ferrari. Here's a million dollars.

Don't bring it. Oh, well. Actually, to be fair, though, like, I mean, that shows a significant, like, the SunCross fallacy thing is a real thing, right? Yeah, for sure it is. If you're able to put that off, like, make that hard choice. If it's the right thing, then, like, I mean, that's a really good indication. That's a very well-run company because, you know, again,

it's hard to do these things. I mean, the Sun-Cost fallacy is so, so real, isn't it? You face it as a developer all the time, right? And you start it as a developer. Do you still write code ever? Sometimes, yeah. Yeah. You miss being, you know, 12-hour-a-day coder?

Yeah, it's a really good question. I think the 12-hour-day coding has never been a goal, but sometimes happened just because there wasn't anything more interesting going on on planet Earth. and figuring something out, right? Like it's, so in a way, that's not the objective, but I love coding. I find, I think we are all, I think the narrative around programming is more interesting

than people realize, just because really since blacksmithing, we never really had a craft that makes, where the craftsmen actually make their own tools, right? And I think there's, um, um, um, You know, who said it? Like, first we make the tools and then the tools make us. Yeah. I mean, toolmaking is, I've heard it, yeah.

Yeah, I think. I mean, primates make tools, right? Like, you see these Dorillas take sticks and stick them into the antel to get the bugs out to eat, to get the ants out to eat. It's a thing. It's purely cause and effect, though, like, for primary purposes. I think what we do is, I mean, but we are genetically no different in the last 70,000 years, right? we went like so the difference between us back then and now is really the tools we have available and the stories we tell each other right and it's amazing that you can put people on the moon

or you know go to space on reusable rockets and do all these things and have internet based on just tool building upon tool building and then of course software is like an automotive play of leverage because you have this zero marginal cost copying infrastructure that everyone on planet Earth can add to and constantly come up with, trying to come up with better ideas. So I'm like, this is a thing that I'm really, really excited by and why I love being a programmer because the leverage you get as an individual being able to build something that then is available to everyone is just enormous, right? Like, obviously Shopify is a good example of that.

And, you know, I think that's like, that's really, really important. There's so many stories about, you know, what you said earlier is totally true about, you know, Ethernet plus DSLR camera and an SM7B microphone. But in a way, we need technologies to come in and make it so that someone can buy a single thing and then plug it into one thing. And then all of this needs to work well, right? And we need to marshal the complete infrastructure that we've built around machine learning to take teeny microphones and make them sound good. And we need to, you know, like all of this, like there needs to be like significant movement to, make the setup you and I have here,

which we can do because we're tinkerers, available to everyone. This kind of democratization of good things is important. Well, I mean, it's really interesting. I love the thought of the compounding nature of software, and it's also happening in hardware now. If you just think about what happened with the smartphone revolution, if we hadn't,

and Apple hadn't produced, and Android phones, billions of smartphones, and billions of batteries and billions of charging stations and got obsessed with how fast can we charge these phones, it would have never trickled down

into your Tesla, and that would have never trickled into your quadcopter. And now the quadcopters, I don't know if you said, Jobi is going public. Reed Hoffman's taking a public Mark Pinkis,

and I said read on the pod, talking about it, that would have not been possible if Elon haven't made a million cars with those battery packs because now the battery management and fast charging allows you to have a V-Tol

So you're going to be able to go from Ottawa to the airport and a veto, you know, and it's going to have eight rotors and it's going to like, I would never get in a helicopter. Those things are death traps. But a veto with eight rotors and two go out and it's just the software's like, oh, two rotors are out. Just redeploy the energy and it's done. And it feels like that's happening with software so quickly. I mean, startups today, I had a startup that built a million dollar business basically on Slack, like just charging people, subscribe. to go into a Slack room. And I was like, there's no, you don't have any developers.

No, no. We just charge people on this Stripe account to go to this landing page. And then they are in a Slack instance and we built some glue with, you know, Zapier or this and that. The no code startups I'm seeing, which actually is what Shopify is right, too. And people can build an online store with no work. What's the story with your international expansion? Is that where the growth is coming from now for you?

Or is it just in continuing to add products and services? is for the existing base. I mean, the growth is just, again, I think it's, it's digital retail time on planet Earth because of COVID. So it's really kind of everywhere. And I mean, a lot of a reason why people use Shopify now is because of this idea around multi-channel,

which really just, like, we've worked with Facebook and TikTok and everyone, right, to help bring commerce into these channels. But there's a lot, there's a lot. of things going on. I think to, like, the theme that you talk about with hardware, like, there's sort of a commoditization of particular units of hardware, which makes them cheaper and then they can be used. But there's almost a more, maybe not more interesting, but to me, like, it's a really tangible story. I want making more, more things software addressable. Like this is, like, MRNA makes something software addressable or quasi-software

addressable. I think TSM, the company, is made, basically made hardware chips, software addressable. Like, you can buy a license from, from Arm and a couple of methods, and you can get a chip made, stamped out pretty quickly. And it's just, we are doing a lot of this around fulfillment warehouses. Like, we are building software to make fulfillment warehouses, software addressable in a proper standardized way. Do you have warehouses? Do you, yeah, so you have warehouses, and then I guess there's all these companies doing shipping robots that move the pallets around and pack the boxes. Yeah, exactly.

Exactly, exactly. This is the kind of thing we ought to do and broke with a lot of other people who are doing these kind of things. Because we really think that a lot is going to happen once the various fulfillment warehouse, which there are a lot of, can be addressed by API in general. And then you can build very, very intelligent systems on top of that to, like, we have something called the sharehouse. job of a film and network that basically abstracts the entire, like, just like payments, it abstracts the entire world, like logistics away from people, right, in such a way that you just send products to nebulous product cloud and then they show up there that they are ordered.

And that's kind of, that's a degree by which entrepreneurs want to think about logistics. You know, it's interesting. You say this. The number of people doing direct-to-consumer product companies has gone 100x since five years ago. I used to see like, you know, Dollar Shave Club and Casper, Warby Parker, whatever. And now, every time we do a new accelerator class, I get like 20 of them. And I'm like, how are you doing this? Like, well, I have like somebody in China makes the hoodies and then they send them to this fulfillment center that my Shopify store. And then I put it on Facebook and I connected. And yeah,

I sold 70,000. I was starting to somebody who sold 60, 70,000 dollars with a hoodie in a month. I'm like, how do you do it? She's like, well, I contacted like five influencers. And then I, you you know, ordered them and they shipped them to a fulfillment center one of yours. And boom, they're in business. And I'm like, wow, that's fascinating. So then by making all of that, transparent, this woman was able to focus just on what the hoodie should be. And now she's got a hoodie that's got like a, her innovation was to put silk in the inside of the hoodie so it doesn't mess up your hair. And women have gone crazy for these. And she makes whatever, 40 bucks a hoodie. And she's just printing money. And she doesn't need to.

know anything about fulfillment or payments or building a website or even making the hoodie. She just needs to know like this is what the hoodie should be. Yeah. Pretty wild. So we- It's pretty wild and it's like it's almost again, the jumping around in time here, but like, do you remember the, I think Kevin Kelly wrote it, but the essay around a thousand true fans? Of course, yes.

It was one of the seminal ones that broke our brains. He was like, if you just have a thousand fans in the world, you'll never be poor. you can always make a living. Like comedians can go if you're Joe Rogan. If Joe Rogan lost everything and just had 1,000 true fans who he could charge 10 bucks to come to a comedy show, he can make $10,000 anytime he needs to. Right.

And that's a, that's very, very, very different vision for like the direction the internet could go, right? And in somewhat, like, depending on how you observe the internet, and in some cases, in some ways it went against that idea. right? Like it's very much, it ended up like most parts of the internet sort of got, ended up aggregating together to one player. And I think, I think it's really, really, really, really important that we preserve the opportunities based on it so that this 1002 fans thing can work its magic because I think it's really, really important for economies

and so on. Well, also, I mean, people having the ability to have fulfillment in life and to not be, you know, a wage slave or just be worried about their future. I'm really fascinated by what's going on with like Patreon only fans. And now Twitter's like, you know what? Jack's like, I don't know if I like advertising. I think I'm just going to let you subscribe to people. I don't know if you've seen this on YouTube, but a lot of YouTube channels now, it's like every other video you have to be a member.

And you can subscribe or you can join. And there's two buttons on YouTube now. I don't know what's going on with creators on YouTube, but back to the 1,000 true fans. And substack's another great example. You get 1,000 fans to pay you $10 a month as a journalist. You're making $120,000 a year. You're giving $12,000 to substack.

You net $108,000, and you're getting paid $70,000,000 by TechCrunch. Who's not going to be free? Who's not going to take that deal? I mean, it's sustainable, right? It feels sustainable. I think so. I mean, it depends on always what you do.

But again, like, this is the beautiful thing that with a thousand true fans is like, you're not going to make a fan out of someone unless you provide them of significantly more value. Like, I mean, higher utilitarian value than I think, I guess, for $10 a month. So that's the exchange. And it's kind of, there's a purity to transactions that is. there's a simplicity to it. Like, it's a thing we have been doing, like exchanging something for via transaction for, for cash,

is something we've been doing for tens of thousands of years. Everyone gets it. It's, it's, if it's not too disintermediated through like a channel ownership and merchandises and limited shelf space, like someone saying, hey, I want you, I am, this thing you have, I'm buying this from you. and I'll do it again, especially, is,

like, it's an extremely potent way for you to vote for something needs to exist more in the world, right? And I think that's really, really, really, really, really important. It's so powerful, as you're saying, because back, you know,

to, to, you know, you have skin in the game, right? I'm sure you've read some of his books, but this act of saying, this has value in the world, here's the $10. Even if the object is not worth $10,

You give people $10,000. I watch this channel on YouTube after every Knicks game. That's the basketball team that I follow in New York. And this guy CP does a live stream after every Knicks game. And between 2,000 and 6,000 fans coalesce, and they listen to him talk about the game. And then we ask him questions. And I kid you not, in the chat room,

they have these like super stickers. And people give $2, $5, $10. And I've seen people giving $100. $500 once, $200 tickets. And I talked to him about it. And he's like, yeah, you know, I could almost quit my day job working at this big financial firm if I wanted to. And they're not, they're just doing it optionally.

It's not like you have to do it in order to even consume the content. It's not a requirement. It's a tip. And that's like the next level of this is like, wait a second, everybody's going to be like a Manditsi family. Like I just want this. art to exist in the world. I'm going to sponsor it.

And Angel investing is the next piece, I think, to fall. If you just think about startups, what was your first round of funding? Do you remember? Yeah, I remember it well. First round of anyone external was, I mean, six years after the company started like $7 million investment, like round with SME leading. And so Bessamer put $7 million in. The company's worth at the time $10 million, $20,000?

Maybe $50 million. Yeah, $20 something. Right. So they buy a third of the company. for 7 million, that's worth $30 billion today or something.

Something like that. Pretty good investment. Well done Bessemer. I think you returned every fund in the history of Bessamer for them. Do those guys, did they send you? I don't know,

a bottle of wine or something? I mean, I don't think I would have made it to this point without, like I really, like, especially Jeremy and Trevor who they made a huge,

difference. So I know it's like unpopular too. I don't know why I'm saying this. I think actually that is the right take, which is if somebody supports you early and it pays off, I mean, any founder I've ever talked to has been thrilled to see the bet pay off. It's like, thank you. We wouldn't be here if we didn't have that capital. But the point I was about to make is as we make software and networks that just make it

frictionless to vote with your dollar. And this is why I think the one piece of crypto I really love is the frictionless voting. Imagine if that 7 million was 700,000 people for $10,000, and they got the 10x return, the 10,000 X return. And you made each one of them a million or something. I mean, that would have been even more wonderful or equally wonderful. And that's where I think the world's going to get to is, imagine somebody post a startup idea, like on a Kickstarter, Indiegogo or the syndicate or Angelist, and people could vote globally, but will be limited to $10 per vote. We could vote every day on ideas we want to see in the world.

And big ideas don't, you know, many hands makes for light work. This ability to make small bets is just so powerful. I'm so encouraged by group work. I love that vision. I hope you're building this. I mean, the problem in the United States is, I am building it with this thing called the syndicate, but the problem is you have to be an accredited investor right now.

And there's all kinds of caps and limits. So we're really trying to protect people. But we're limiting the arc of humanity. And I think ICOs were just this. It was people making these crazy bets. Unfortunately, the people involved in it were maybe less than upstanding. Or they actually weren't builders. They were more just charlatans.

in most of my cases. So the company, if I remember correctly, when we talked, was making 20, 30, 40 million bucks a year. 2020, you did $2.9 billion, is that right? Yeah. Oh, my Lord. And profit, right?

Yeah, profitable. Like 1.7 million merchants. Wow. I mean, talking about the 40,000 that people assumed would be existing. It's a big thing. like on Black Friday, Seven Monday is our busiest weekend, sort of our, you know,

I mean, our Super Bowl, basically. It's, uh, they did five, over five billion dollars of, uh, sales. Like in those,

in those couple days. I've, that was super gratifying just because, again, like, there's a lot of very small businesses behind this. And, um,

it's, it just was really, like, it's such a meaningful thing to be able to help so many, like, building a business model around helping others, it feels really good. It's very grateful for that. It makes it easy for you to hire people and have people stay

at the company because you're enabling all these people to make money every day and make a living, just like eBay did, or I think Airbnb has that same kind of feeling every day. It's like, wow, we empowered these hosts to pay their mortgage every month in some cases or, you know, if they got laid off and they were doing this as any job. but literally doubled revenue from 2019 to 2020. Is that right? Yeah. The entire retail sector got pulled, like, pulled forward in time five years or ten years

or something between both two things. It's like you look at the curves and it's a straight jump right with COVID. And so that will taper off a bit or it will level, has that leveled off now or is it just still going parabolic? It's hard to know. way at which direction it's going. Yeah. Yeah.

I mean, I watched, I don't know if you saw Disney today hit an all-time high. It's like the idea that it's so interesting what happens during a pandemic is it, it forces people to get so focused. Disney's like, well, I guess our North Star is now Disney Plus. There's really no discussion. People are stuck at home. There's no movie theaters. There's no, I mean, I guess people could buy merchandise, but they can't come to parks.

They can't go to movie theaters. Everything has to be Disney Plus now. the entire company got reoriented Disney Plus, and I think they hit 80 or 90 million members. In a way, that's what happened with you, too, correct? Yeah, exactly. By the way, I think this is another, we talked earlier about the, you know,

sort of the lasting changes of COVID. I mean, there's an entire conversation around cities losing the monopoly on the best jobs in the world, which is, again, a fascinating thing that'll make a lot of changes. But, like, I think one thing it did for at least the companies, that I mean for a lot of companies is everyone had to kind of re-derive all the things they were doing

from first principles at the beginning of this right like everyone you know I don't think Disney Plus would have gotten to get the primacy but it now has with Disney without COVID at least so quickly you know there's a lot of shenanigans going on in large companies

especially one thing is sort of threatening another but you know in our case we really we we said let's zero budget, everything we are doing, let's throw all the plans, let's re-derive the projects we've got going. It was actually kind of amazing. I went back to the list of things they cut

at the beginning of COVID about a year ago. And I now realized, like, I thought we were focused, but we kind of weren't, right? It's amazing how many small things made sense when you sort of organically, like we did this and then we did this and we did this and we did this,

and we did this. And I know how we got there, but like that doesn't actually help merchants anymore, which is the only thing that matters, right? To, like, in our case, we're like, this is one thing we want to, like, we want to make entrepreneurship trivial on the internet. And that's, that's important.

So, yeah, it really helps. It really helps. It's, I mean, it goes back to, you know, but it goes back to Taleb's other book, anti-fragile, which I think is overlooked. I think it's his best book. Oh, it's fantastic. I mean, you figure out what's anti-fragile

in a moment like this, for sure. Exactly. And home delivery, you know, I mean, then God, you know, Uber is anti-fragile. Uber was the penultimate example for me, or maybe Disney as well, because if people can't go to a theme park or the movies, they have to stay home.

And we now have Disney Plus. If people don't take an Uber to go out to dinner or go take an Uber to the airport to go somewhere, they order Uber Eats. It's like, wow, which, I mean, you thrive no matter what happens in chaos. And your business is anti-fragile as well. I mean, if people go out, they need to buy their camping year to go camping.

If they stay home, they need to buy something to entertain themselves or keep their house clean or cook. And then on the other side, if you have a business and no one can get to your store anymore, then you need a way to like help. I mean, in our case, there's amazing stories of people getting together to actually get. get all their local businesses online so that people could purchase from them on the Cubside pickup and home delivery fronts just so that we could actually help their local businesses survive. And there was a huge move to buy local again. And I mean, I think this actually really worked in our favor or at least this really

consonant with a story we want to tell because, you know, if you want to buy it's from your local business, but local business go away. And then you don't have that ability anymore to walk there and purchase things even in the best of times. And it's hard enough to make a small business work in normal times. So helping them through the pandemic was really important. Think about how anti-fragile they are coming out of this. They had mastered how to run an in-person store. Then they were forced to master doing online when they probably didn't even have an email address for their business.

They barely knew how to keep their Yelp profile open. Now they come back to the table and say, well, we could open up the store again. Do we want to do that? Or we would rather just grow this business 10% a month because the store was growing 10% a year. And an online store can easily grow 10% a month, but an in-person store cannot grow 10% month over a month. That's just not possible. It's just you can't change the demographics of the area. You might be able to grow 1% a month or something like that, but you're not growing 10%.

And now they have both options, right? That's what's going to be. What do you think happens to all these storefronts, if physical storefronts, all these restaurants, and all these office spaces, because we're talking about cities here, how do we redeploy office space in the world that people are not going to use or they're going to use, you'll probably go back to work,

but use 10 or 20% of it, right? Yeah, I think the storefronts, I think they stay. I mean, this is my hope. Anyway, I think what I think would be the best if we could eliminate the either-or decision because, and I think software has some, like, role in this. They're keeping multiple systems up to date is really really hard, but if it can all be powered,

like if it's all kind of perfectly in sync everywhere, like, then it's actually not that hard to run a physical location outside of a, you know, being able to staff it and and so on. And I think people will expect businesses to show up in everywhere. Like you, like people want you to have like a Facebook shop if you click on something on Facebook or Instagram and then, you know, like a physical store and an online store and all these kind of things, like meet people where they are is important. And I think now small and medium business are actually really well set up for this.

On the side of corporate real estate, I really don't know. I think it will be fine because it got underbuilt. It got really tight. I mean, and only in other cities I was, we were growing in like Montreal and Toronto and Ottawa and Waterloo and so on and like

we were struggling finding space everywhere and so I think I think it'll be fine it'll be a pressure valve like I'll take the pressure off in San Francisco it's it's basically over I mean we have so much office space and rents went down

a third basically or more and I think it's going to keep going down I mean, it's really, I moved to San Francisco and the Bay Area five years ago because I was like, I want to see if I could be the best angel investor ever. I think I need to be there. I've invested in more companies remotely. I've never met the founders. And I feel like I'm making better decisions by not meeting them in person because it's all due diligence and no showmanship.

So you eliminate the sizzle from it and everything just immediately gets to. down to breast tax. What's the growth? Who are the customers? How much you charge? And nobody wants to be on Zoom for more than 15 or 20 minutes. So you can see three times as many companies. People are like, I've got to get off this call. This is like making me mental being on Zoom all day. It's really going to, the other thing I find super interesting, you benefited being in Canada with a different salary structure. But people were getting paid typically 30, 40% more to locate in San Francisco, and in the venture community, it was getting impossible to get some top flight, you know, management team member to join your startup and come, because they say, I just don't want

to be in San Francisco. I'm sorry, I just don't want to pay, you know, I want to have a house and have a backyard. I can't afford to live there no matter how much you pay me and it's just too arduous and painful and private schools and everything. Now, this whole concept of like, somebody in San Francisco gets paid $100,000 and somebody in, you know, Ottawa gets paid $50,000 for the same work, I think it just all levels off to 60K, you know, or 75K, whatever the number is between these things. How do you deal with that salary? Do you have the salary differential by city?

And have you had to deal with that yet? I mean, this is a complex conversation. And in some cases, you just had to kind of, like, we had to pay some additions, like, almost it depends on top for. Like in San Francisco, for instance, just because it just wasn't possible otherwise. And I think the salary thing is sort of a sideshow. I think this is going to, I think you're totally right. It will normalize globally.

I don't know exactly where it's going to meet. Well, globally too, right. I didn't even think of that. I would just think of the U.S. and Canada. I think this is going to be very, like, again, the second order effects, even not that are kind of fascinating to, to consider that. People living in Costa Rica with a cost of. living a $500 a month for their renting a house versus $15,000 a month in the Bay Area versus

$4,000 a month, you know, in Canada. Yeah, I mean, if you want to go into further future, think about Atlantic Ocean with a Starlink hook up like in international waters. So I think the next 10 years will be sufficiently weird for all of us nerds to just kind of like it keeps things interesting. We will see people do things that are like completely sci-fi right now. I mean, literally Peter Thiel could buy an old cruise ship or an aircraft carrier, put it in the middle of the Pacific or Atlantic or dock it somewhere,

make his own sovereign state like he was. Didn't he have plans like this? There was a sea island company he invested in. that was going to try to find an oil rig. Yeah. That was no overused. There's a thing called Sealand. Sea land, that was it.

It was in wired like a decade ago. So that actually is going to happen now because of Starlink. Yeah. Well, I don't know, but it could. Right. It's because you can get the hookup. But apart from that, like, again, cities are going to lose. Cities had a, since the Industrial Revolution run with a monopoly on the good jobs.

And cities are very valuable. So this is something we probably shouldn't, like, we shouldn't lose because they are really important networked cultural institutions of, you know, great progress. However, being able to work from, like, on your own terms for as good of a job as you can, you can find or find the right. Like, you know, product market fit is a real thing. that like I think you've talked about found a market fit before which I loved but there's really like

a person company fit like it's this sort of alignment of worldview like the the externalities of success in this company do things that are meaningful to me like where you kind of like can let yourself like really really be into the company you work for

and that's really depending on your own values and like how often does this line up that that particular company happens to just be in the city that you also happen to have build your life or your family is and then people have to compromise between different variables. Why? Like it's, it's, I think people are going to make much more, like, better, like, setups for themselves. I think that's going to be just a big, uh, well, I mean, rest in peace, Tony Shea, my good friend who died last year. I don't know, were you friends with Tony? Or, you know him? Yeah. It's really, I mean, really tragic.

and I think the pandemic had a big part of it. It's a very sensitive individual. And you just think about his philosophy of joy and happiness. And he built a company around that concept. He's truly a pioneer on so many levels. You know, first in terms of customer support and just saying, we have to be ultra-focused on those customers and make them love us and go. Any amount of customer service you can do is allowed.

Like I remember him telling me that that was his basic, like, contest to see how crazy a customer service person could go. And he told me the story one time, I'll never forget it, that like UPS or FedEx or whoever lost some shoes for a wedding. I don't know if they ever told you this story. And they were going to come on a whatever, a Wednesday or Thursday. The dinner is on Friday night, the wedding Saturday. And they're panic. They're trying to find them now. It's Thursday. Still missing. It's Friday. They're still missing. and one of the employees just takes his corporate card, takes the shoes from the warehouse,

gets on the next flight out of Vegas, shows up at the wedding, puts the shoes on everybody, and then goes to the wedding, and then comes back. They lost, you know, $1,000 on setting those shoes, but the greatest story in the history of the company

and what an amazing message to send to the rest of the company that there's things that are more important than just the, the unit economics, right? Totally. I think this is something that all the best companies have in common. Like, there isn't, like, everyone has to build a priority list of things that are meaningful to them.

And money and revenue will have to show up somewhere because, like, their companies. But, like, I think putting it number one spot is incredibly overrated. It's big. There's, we talk about this, quote, internally. Like, we have like, number one priority is, let's go build the best product we can possibly build. And then, you know, priority number two is let's make some revenue so that we can do more of priority number one. And then actually priority number three is never mix one and two, right? And so I think that's if you really like look at, like, because that seems to be the commonality, right?

It's like there's a reason why this is done, like why the company is built and why it's standing for. and yeah there needs to be an engine like like but you don't drive a car just to burn fuel you burn right yeah you're not in a combustion engine we're not opening the hood and be like wow look at how it's burning gas yeah yeah where did it take us yeah I mean I guess I guess there people who do even bad like but like it's there are people who love those engines yeah it's like to rebuild them yeah yeah well no it relates to um investing in that I was trying to explain this other day. I said, when I look back on my career, there'll be five companies that were 99% of the returns.

And then there'll be 500 companies that I will have put more time into than the top five, much more time. And of those 500, 450 will return zero. And those are the ones that will build my reputation. And that's what I'll be remembered for is when those companies imploded, when they didn't work out, when the founder was sitting there in the wreckage of their dream laying everybody off, who called them on the phone and who took them to dinner that night? You know, who took them for a walk and talk when it was over, right, or when they were struggling? That's really how, you know, and that really is separating one and two, right? One is how supportive can you be of the founder? And two is, okay, we do need to get a

return for our LPs. It's such a, and then three, don't mix those two. Right. This is the best part of the podcast. See, this is why I do the podcast, Toby, is because I've learned something every time, that just changes my thinking and it's the power of a great conversation. I love podcasts. I think there's just... You do an internal one, right? Yes, I do.

Tell me about it. Are you ever thinking about releasing a public? My God, I'm like, can I get in private RSS feed for that? What do you do on the internal Shopify pod? I did. It's bi-weekly. Like, every two weeks I release an episode. It's called Context.

And it's just, it's literally about this. It's like the story you just told about that Tony shared is a good example. There are these sort of touchstone moments in a company's history where it's really valuable to just talk about which ways could we go, which ways did we go, and why did we do it, what was considered, what did we get right?

It's not obvious like this, but this is sort of ambition that I take people back into these high-context situations because I think through that, people can get a much better sense for the process of the company building. And it gives me an opportunity to, because there's a thing called Chasterton's Fence, which is also a fun story. But it basically, I shouldn't have invoked it right now.

It's kind of hard to explain. But it basically, like, it's a mental model that says like, it's second order thinking. Second order to thinking, exactly. Before, like, before you remove a fence. try to figure out why it was put there. Because maybe it was put up in a hurry and it's really not necessary and you can just like change it. Or maybe there's a really good reason for it to be there

which you should figure out before you take it down, right? And so, but a startup company, like a company of any company is full of fences that people look at and say, that doesn't make a lot of, you know, are we sure this should be there? Let's actually move this thing. And you know what?

All of a sudden all the tigers come in to the crowd. Yeah, yeah, exactly. Put the fence back up. But, but like, it's a bit random to people. Yes. Like, which are the fans that we put up in a hurry because we were, like, just trying to go 1,000 miles a minute, or which fences we were very deliberate and very careful about.

So, and you don't want to be a company that no one changes any fence because when you're, like, that's stasis. That's putting cement in a company. So having people, like, taking people who weren't there for the journey. of, you know, what parts of this did we consider which parts we did, did we have in a rush, I think is valuable.

And so I'm making the sound to grant. Sometimes we just also talk about like some random things. Mental models and thinking about thinking is really the art of scaling these businesses is to write, to be able to go back and say, how did I make that decision? And what were the, you know, in investing, it's the anti-portfolio. And what do you call? Counterfactual, I guess, would be, you know, what would happen, you know, if you killed Hitler the baby or if you, you know, if the Nazis had one in the world, whatever happened. Like, oh my God, what's the counterfactual here?

And in really understanding the archaeology of a company, now that you're 10 years old, people need, or you're more than 10, right? You're like more like 15. Like, how did we get here is a really important discussion. And then I remember you talking about, I heard on some other podcast. you were talking about how everybody who comes to the company is like, hey, why don't we build a portal like Amazon and put all the stores together? And it's like, that's not our customer. That's their customer. Our customer is the store and the merchant.

And if we start focusing on their customer, we just change customers. So you don't do that, right? But does that fence ever get, do you ever think about that fence in a different way? Well, I mean, well, a lot because I'm trying to make sure that I got this right. But like, I mean, the answer to the, hey, let's build a marketplace thing, which is really like it's an obvious suggestion. Like I know where we keep getting it. It's hard to explain, hey, this is like, yes, this is also e-commerce, but that's an adjacency. It's an adjacent thing to the thing that we're trying to accomplish.

there may be a path where we are going down exactly the way on this journey we are on where we build something that people can use in some way but we're going to arrive there from a very different perspective of saying, hey, let's make another internet version of this idea, right? Like we have to come there. The path dependence matters a lot.

But it's like the answer is very subtle and the statement is very simple. It's a fortune cookie versus a textbook essay. And I think taking the textbook essay, compressing this into a conversation at a 15-minute, 20-minute podcast, and say, like being able to refer to it, when people come up with idea again, is actually really valuable.

And so this is why I do it. I think it's like other people have podcasts within the company as well, which I love listening to as well. So it's a good medium. Amazon bought your competitor sells. They tried to, Bezos tried to buy you at, some point, yeah? Maybe.

Well, well, I don't know. Not a story you want to tell. Not a story you want to tell. You declined, I guess. Let's take Bezos out of it. Shopify never got bought, yes. Shopify never get bought. We know that counterfactual.

We know that factual. Yeah. Why didn't you sell to anybody? Because there were many times that people wanted to buy you. I'll take Bezos out of this, even though I might have some information. So, yeah, just because it didn't feel like that would be the right move in the journey, like, we were on. And again, because money was never like number one anyways, so like, which seems like that's, but, but like, this is something I discuss whenever I talk with founders of companies that Jobifyvon might look at buying. Because I tend to, there's a funny dynamic where I tend to try to talk them out of it, which is not actually a good approach.

It leads to a lot less M&A than probably. other sales pitchers would. But I'm always very careful because I tell them the only way we should do this deal when I'm buying your company is if both of us agree that your job as a founder of a company

will be better the day after the purchase than before. And this can be true, right? Like YouTube, YouTube, Twitch, yeah, exactly. YouTube, Twitch are good examples of companies that could not, like, the way interchange, so not interchange, the way,

peering agreements between ISPs works, they could have never run the services. And they couldn't fight the legal battle. I mean, it was going to be literally $100 million in legal bills. It would just never have worked. Your problem reason is probably your primary reason. I was thinking too technical about it.

No, no, is that reason as well. I mean, in another era, if you think back to that era of startups, we didn't actually think startups could be worth more than $10 billion or $20 billion. Because it isn't intuitive that they should, right? Because pattern recognition, well, pattern recognition just, well, I mean, at least looking at history, right? Pattern recognition didn't send everyone astray because we did not have software.

Like the unreasonable leverage that comes with software, especially software that enables more software, is just like what's the analogous of that? There isn't any, right? There isn't no such thing. It didn't exist prior industry. So it's a completely rewriting evolution was so slow that we couldn't

I think we look at evolution as our archetype like okay humans evolved from monkeys monkeys evolved from these things and then we all came out of like tadpoles and that takes a hundred years or a thousand years or a hundred thousand years we never thought like these things could just compound so quickly

and everybody trying to compound all listen I took you for 80 minutes which we're to keep it to an hour this is a problem you and I haven't seen each other years and we love talking to each other. So we'll do it again in a year. Anything, you're obviously hiring, lots of jobs.

Who do you like to come work at Shopify? Who should come work at Shopify? We talked before about alignment and your life's work. Who should come and be part of the mission at Shopify? And who do you like to have in the company? What type of person? Yeah, I mean, we love curious people who really care. We love people who, I mean, I think,

especially people who actually build stores are amazing, you know, like, I mean, obviously this is not a CV I'm trying to put together, but like, it's, it's a place for people who are lifelong committed learners, right? Like, it's sometimes Shopify is sort of referred to ingest as a book club, um, masquerading as a, as a public company. And it's, um, uh, it's, it's a fascinating thing just because, I mean, for all sorts of reasons, but I'm very biased anyway. If people consider Shopify, I'm grateful.

And so, but... All right, listen, if you're a considered person who likes to think about thinking and you like to be of service to others, Shopify is a great place to work. Toby's a really considered guy. You're playing any video games for poker or what are you doing? You got a new video game you're playing? I know you're a StarCraft guy like me. I'm Protas.

I'm pro-toss. Are you ZER? You seem like a Zerg guy. Yeah, I'm an Amazon guy. Yeah. I knew you were a Zerg guy. I want to hold it against you. No, that's fine, man.

I'm going to turtle. I'm going to put a bunch of cannons there. You can bring as much heat as you want. But once I get my cannons locked in, you're going to lose a lot of resources trying to get past that turtling. Got it. I literally, like, my wife comes in and she's like,

you're 50 years old. You're playing StarCraft. I'm like, yes. All day long, all I do is talk to people for a living. And then I play StarCraft, and I put on a podcast, or I put on some dire straits, live, obscure, you know, album from when he's playing in Munich or Paris or Barcelona or Buda Khan.

And I just lose myself for, you know, 20 minutes, 40 minutes playing a game that I've been playing for 20 years. Yeah, totally. And it's just like games, it's, anyway, maybe cricket talk for a long time about, about games. I, I'm a very pro and a pro, pro view games. That's what I mean. Not a pro player. I'm terrible.

No. But, no, these young kids are, they're a whole different level. I tried playing that game they all play. That's like a real-time strategy and with the characters. So it's like Dungeons and Dragons. I forgot the name of it. God, it's the one they all play.

But the number of quick keys, I couldn't even get through them. The more you're saying about why you love them. Finish with that. Well, you've thought about video games. Video games are good. And again, I think one of a unifying themes of our conversation here,

as sweeping as it was, going through various parts of time, is important things of a future look like toys today. Like the Internet of the 90s, crypto, sometimes it probably doesn't look as much as a toy anymore, but like I think some people think it's a toy. NFTs? NFTs, probably biohacking looked like toys and just looked like toys. It's really, really, really, really important.

Like if you want to understand the future, you have to understand today's toys. And if you want to find the most caring, like, I don't know, like a great. It's probably wrong because of negative connotation, but it's like, the hungry is better term. The hungriest, most interested in progress people are probably in the video game world or in a crypto world. That's where they are right now. And it's just, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, for kids anymore for sure.

All right. All right. Listen, brother, I'll let you get back to work. I look forward to seeing you after this is all over. Let's go get some ramen or maybe me and shabhap all come up and the, um, and You'll see you will do like a besties podcast. Yeah, old, old, old, old for some of too. Yeah, yeah, like, it's super fun.

That would be super fun. All right, brother. Continued success. And we'll see you all next time on this week in startups.