Tobi Lütke, Shopify

27:20I turned them into machine readable files because I got them as PDFs and so on and so on. So I built a thing that then created like at the end, had all the information to create a model of the company. Like literally, this is Python code, which takes configuration files that we agreed on. things like how many people should report to a manager, all these bits, and then computes them, uses something called a solver, like a set solver specifically. And then with all these constraints, all these inputs, what should Shopify look like? What departments exist? What level exist? How many people are there in which group and everything?

28:00And of course, the first version was utterly incorrect. And then I realized... Are you doing this alone? I started it and then I got like two, three other people in it to help me with this and really, really got into it. And so this is called Shopify OS, the Shopify operating system. It's really not been part of Shopify now. What it did is it became irrefutable that we didn't know all the principles. We had like something, it was 8 ,000 people in a company and there was 5 ,500 different titles in a company. And it's like, so, and some of them are just senior and senior staff, but in some groups, senior staff was lower than director and some above.

28:44And it's just like, it just, when I tried to make something software addressable and try to reproduce it, it showed every crazy, unviable choice in the company very, very easily. So there's a system in engineering, not actually a well-understood partner, but I think it should, called desire state systems. And what desire state systems are is it's a thing where you say, okay, here's what should be. You hold that up to what is, like you click on a website on a link and your React library behind it, what it does is it says, okay, I compute what it should be. I see what it is. And now I figure out what is the minimum amount of steps I take to get this to that.

29:28And that's what you see on the web browser. I need a desire state system for this company. So we have this model. we create it and then we hold it up to the company and the job of HR is to be this reconciler. Like how do you take the minimum steps to get from here to there or change what we have in this system to approximate what we actually want? So this is very technical. Here's the effect of it. Think about how much politics this removes. Then my head of sales comes to me and says, hey, I need 50 new salespeople. I can put this now into the system and says, well, that means you have to either make these changes or you're going to lose some of your engineers because the system, based on our agreements, recomputes everything.

30:13So we can always look at the counterfactual and then it's not like, yes, boss agreed by playing golf to hire 50 more salespeople and now someone has to carve, like you have to find a pound of flesh somewhere in the engineering team and suddenly you don't actually work on innovation anymore because you never actually made the decision to not hire engineers because your budget doesn't allow anymore because, but you did make the decision to hire salespeople. And maybe this is the right decision, but now we can actually look at the consequences of every one of those things. So it was hugely successful because it just created such a legibility for us and such a simplicity.

30:50It also just told us that so much was undecided. Like for instance, we took the concept of, in engineering, this was already around individual contributors as a really, really excellent career track, right? Like you can make as much money in good companies as an individual contributor as you can as a VP or manager or like the best paid people in many companies are now individual contributors at this point in history, especially in machine learning, like at least in the machine learning labs like OpenAI. But no other discipline really had that. You had to become a manager to progress in your career.

31:26And so I think one of the consequences was that when I really, really looked at it, like, hey, I need more great engineers. The best place to recruit them from was my own management team. And, like, that seems silly. And especially because they're actually great managers. They're really well-respected because they're good engineers, so maybe. But, like, don't they want to code? Like, it's like, and, you know, so we created like this sort of mastery system, we call it, where every job has this ability to stay. You can get these basically level upgrades frequently and at any set of responsibilities you can, if you're insanely good at it, you can make lots of money.

32:08And like, that just seems like, of course you decided like this. Why would you not? So they can stay individual. Yeah, like take an example in engineering. If you're a hundred times better than other people in this discipline usually, you can make more money than a vice president. Now, that depends on the value you can bring, but it is possible. And just like, I kind of hated the way we did like compensation in the industry, right? Like, again, these are boring topics. No, they're not boring to me and to people listening. Wait, why do you hate the way that they were doing compensation in the industry?

32:42What I love about entrepreneurship is the level of responsibility, personal responsibility people take. I said as much earlier when we talked about the founders who have been responsible for people's likelihood, it changes you, it does, right? Like, so, like, I don't work myself well in an environment where sort of, like, everything is pre-described. I don't like joining other people's games and so on. All these kind of things are my biases. And again, you're implementing my biases here. So in COVID, like this is 2022, I think, or 21, suddenly Shopify went down 80 % of stock value. Like, again, I didn't think that was a problem because I think the stock market is basically like polymarket.

33:25It's sort of a betting market on a future value, right? Like, it's not like you guys, when you guys are wrong, then you're just bad at betting. Like, in fact, so I work on a real market value of a company, which you guys are betting on, but I don't know. So, like, there's such a discrepancy from the way I see people talk about stock price and how I or have ever, or inside of companies, this is perceived. But what was going on in your head when it drops by 80%, though? Well, I'm like, well, in my head, I'm relieved. Because I'm like, you know, I mean, where the stock was. Relieved? Yeah, of course.

34:01What do you mean, of course? That's not a normal reaction. I was not about to raise money. I had enough money in a bank. I'm German, so I don't take that much. Were the internal metrics strong? You felt they didn't deserve... The unit economics are amazing. However, I don't want to say this right, but I honestly don't remember the exact numbers. like at the high point of our stock price, I think we were trading at beyond 50x of revenue and stuff like this. I'm like, yeah, that's not exactly value investing here, right, like guys. And so I get it like - But you weren't worried about the fundamentals of the business.

34:40No, but like when it is 50 times revenue, I see it as my obligation to do that. Okay. Like it's my job. My job is to build the best company I can. The betting market says that I can deliver that kind of thing. And I'm like, yeah, maybe, but you've got to give me a moment here. Like, I need a moment here for doing this. The reason I bring this up is because, again, everything, I talk to another entrepreneur and I just run it through this whatever the hell's in my head from all these books. And when I hear you talk about that, I think of the time when Amazon stock, Bezos talks about this in his shareholder.

35:13It went from something like 180 down to 6 or 120 down to 6. And he's like, yeah, but they were focused on something else. I saw the actual fundamentals of the business and I was like, this thing's going to work. And so eventually, I think Buffett always repeats that thing where like in the short term, the stock market's a voting machine and in the long term, it's a weighing machine. You just want to build a heavy ass company. And he's like, and Jeff's like, I'm building a very heavy company. Amazon will be a heavy company. So I'm not worried about this like short term drop by 80 or 90%. That really tracks.

35:43And so, but like one of the effects was, and this is right, like, well, people got stock options at the level up there. and they rightfully say, well, how about it? But like, it's like, even if you say like, okay, well, I'm super game here to get us back there. Like this is going to be, it's going to take some doing. I realized the psychological problem with everyone being so underwater and having to spend years getting to basically the zero point where the stock options are worth like even a penny again. And of course they were like, well, but that's the company. like the company gave me those things at the time it's like i received them i was i was i was passive in this interaction therefore the company has some kind of responsibility to kind of make me whole here and i think that's actually you know i i mean i not necessarily see it this way because like like the risk was there and like these kind of things and like again it's like other people voting that's causing this price i didn't set it however i i do receive a point like they had no agency in the process.

36:47So we rebuild our compensation system to completely work the opposite of what everyone else does. We give people, here's your annual salary. Here's an internal system. You go in, you look at it. This is a number. Now you get sliders. You can say, how much do you want in stock? How many do you want in RSUs? How much of this do you want in shop cash, actually? And how much do you want in cash? And you can change that every quarter. it's like you decide like like how much money you want um and um you can even use a couple like a tool that's there to lock in the value of the stock you receive for three years like it's like again sometimes orthodoxy can come back on the table if you get there from good principles like you can actually join Shopify and get exactly the same stock option deal that companies get at other places um by using the tool we give you but you have full agency and you make this choice the consequence of this compensation system is kind of beautiful because what happens is first of all it's super predictable second you know if you go stock and the stock appreciates and you hold them you make more money if uh like the stock goes down you now get more stock options than um in your next quarter so it like it's it's rebalanced against the actual value every every quarter so it works really really well it's very popular it's kind of hard to do because doing this worldwide for people in many different countries was like kind of a legal nightmare because like there's like all sorts of rules around how to change around changing of salaries.

38:15We figured it all out. So we have a blueprint of how people want to do it. It works really well for us. But we're kind of proud of it because it's like, it's just like, again, it's a point of differentiation and we believe it works much better. And again, I want people at the company to also feel like this is a company that is like never sleepwalks into anything, right? We kind of, we are deliberate about things. When you started this, I'm going to do it my way. I'm working with the founder executive team. You were in the process of that and the stocks dropping? No, it was already there. Like that was a 2020, early 21 project, I think.

38:51And then I think the stock market, when did that change, like 21 late? These years are totally running together for me because it just was, I mean, there was no weekends. There was no everything else. I can't tell, I can't remember who said this. I was talking to a much, I talked to a lot of older founders. I'm obsessed with like, people think I'm obsessed with old people. It's not that. It's like this guy's got 50 years as an entrepreneur, experienced as an entrepreneur. Turns out they know some shit. They've seen some shit. Surprise. Yeah. And he's just like, man, you're going to remember the beginning of your company.

39:18You're going to remember the end. And like so much in the middle is going to, he said exactly what you said. It's just like glurs together. Yeah. So he's saying you should document it more. I totally agree. Lots of years are totally running together. I have reasonable record keeping on this. So I, and especially with all this AI led agentic, like reprocessing of nodes and press and so on, you can actually reconstruct these histories and timelines. And I'm fascinated with this right now, but. So my understanding though, like you thought you're now looking at running a company as like an engineering project.

39:51That's right. So I'm like, let's engineer a company, be a company engineer, as I taught my team. That applies for every single department in, like, do you engineer marketing? Do you engineer everything? Everything. I require my executives to, I mean, at least tell me, but actually do it. Go to a podcast, some international conference, and talk about how Shopify does the thing the conference is about differently and why that's better every year. If they don't have a good answer for how they are doing this right now or how they would, that's what I'm working on with them to crystallize that message.

40:26And there's a couple of reasons why I do it this particular way that we can get into. They're partly psychological, but it's also just like to— Now, let's get into it now. What's the psychological— I study the brain quite a bit, and the main conclusion you get to about the brain is really that the brain is a retrospective narrative alignment mechanism. It's actually terrible record keeping, but it mostly attempts to take the most salient version of our self-identity and reconcile the history with it. And it sort of rewards you for actions that are directly congruent with this identity. And it disways you from dissonance with your own identity.

41:15but you can actually like change your identity quite a bit. And that actually makes this whole process work for you significantly. What do you mean by change your identity? Like the way you view yourself? Literally affirmations work, right? Like affirmations work, which is the dumbest trick that works. I'm so glad you're saying this because people from the outside are like, this guy's like very logical engineering. No, it's like... But you're all about intuition. Now you're talking about affirmations. You're speaking to the choir just so you know. I'm a toolmaker. Like I always project very idealistic, but I'm actually not that idealistic.

41:43I'm like a craft person, toolmaker person. My entire life was making tools. I literally, my shop for as a tool, I make tools very often for toolmakers. My hobbies is making tools. Engineers were people who make tools. So my life's a fractal of toolmaking. It's all about toolmaking aesthetics. It's all about the craft behind it, but also not because of craft for its own sake although I appreciate that too. But even that's not for idealistic reasons because appreciating the craft behind the toolmaking happens to be pragmatically an excellent way to get really good at pruning. Everything is about outcomes.

42:24What's the affirmation for it though? The affirmation that like you are, if you tell yourself or write down a hundred times something about yourself, that writes it into the neurofrontal cortex at such a deep level that your brain will start reconciling you to that. It just works. I've used that very often to, like, I, you know, like, I was terrified of public speaking until I just sat down for, like, a week. And every day I spent, like, 10 minutes just writing that I like public speaking. I love public speaking. You wrote that down? I know, yes. And now you love it? Yeah, like, a week later. And I knew it's not, this works when you know what you're doing.

43:04Right? Like, you don't even, it's like, it's not like a placebo. It's like, it's actually like, you just actively change your neurofrontal cortex. in this moment. So I use this often. I sort of write to myself, message in a bottle, and this kind of thing. That's sort of a different topic. But like, so the point is like, I tell you. What's the topic there? Hold on. You write messages to yourself? Yeah. Affirmations or just? No, it's just like, generally when I feel like something is like, hey, there's something I figured out that I really like. I know I have to write a scheduled message to myself to remember it.

43:39Because like, I need space to repetition on. on the idea. What's an example of that? I mean, for instance, like you have a company keynote for that kind of thing, like a company get-together summit once a year and for a week. And so usually I did a keynote there and like then I write a message in a bottle to myself of what was good about the process, what was bad about the process, what to do next differently, and all the topics are left on the cutting board just so like to get a head start. So that's a random example of that. How did you learn this, that you could change identity, that affirmations work, that writing these things to yourself?

44:16I think trial and error, but like I think the hints are like everywhere, right? Like it's, I mean, affirmations are one of those things that, like, I mean, there's a reason why the, like, society creates rituals, right? Because rituals end up being largely affirmations on repeat, right? So what do you think of visualization? Like, so manifestation, these kind of things, I, probably books too. You know what? The funny thing, I think everything works if you just do it. The question is what's effective and quick. It sounded to me before I started reading all these biographies, I was like, this is some willy-foo-foo nonsense.

44:51And then you see very smart, analytical, logical, many-case inventors and engineers, and it appears over and over again. People didn't know each other. They worked in different industries, different times, lived in different parts of the planet, and they all talk about doing this. And it's parallel construction. they all come to the same conclusions in different worlds. Yeah. And so, yeah, I personally, I mean, in the self department, I'm extremely taken with a stoic philosophy. Control what is under your control, know what is, and then do the best possible job. It's the job is the thing. The whole project in life is just try to become very, very good at something and ideally cultivate some significant skill, create potentially services products and then share them with as many people right like you do this um because that's what you're on planner for right like it's like do things that matter in the world that are under your control but also sign yourself up for like it's okay to sign yourself up for most interesting in um places um as long as you remember what your job is in within them.

46:01So in this way, like I love the current times and I love the technology industry. I have a role inside of it, which is like, I'm taking care of millions of entrepreneurs and small businesses that, you know, are trying to use the word of technology, use the word of retail through their own work, then self-actualize. And that is a worthy goal and worthy job. And so like, you know, AI comes out and I'm like, people are like, well, should I start an AI lab or whatever? Or should I like, don't you want to, you know, look at open AI? And it's like, I mean, everything would be interesting, but you know what, that's really cool.

46:38Pursuing the same problem in a changing landscape, right? Like now I get to reinvent everything I've already done. How fun is that, right? Because I really care about these problems. Anyway, back to the affirmations and sort of a brain, sort of self gymnastics. Going to my team and just saying, look, you know, just tell me what you will talk about on stage is bad. It's like afterwards, you need to internalize this as something that you have committed to me as imagining, I imagine that something they care about reconciling and so maybe they have to do it, you know, because otherwise they, you know, said something untrue to me, And they don't see themselves as someone who says untrue things.

47:22And therefore, you can actually make the reconciliation work for your own benefit in this kind of way. It also just means it emphasizes difference. Difference is so important. Autodoxy just really needs to be off the table from the beginning of a project or from the beginning of decision making. Have you ever studied James Dyson? Not enough. If I can only recommend one book ever, it's his first autobiography. But he has a crazy line about this. So this is also very common with great entrepreneurs. And you hit on your other talks. You're like, well, I'm trying to chase excellence, trying to be the best in the world or make the best tools possible.

47:57Therefore, that demands difference. That path, that mission I'm on, I can't do it. Literally, it can't be the best if it's the same. Just think about this. And so Edwin Land, who is Steve Jobs' hero and the founder of Polaroid, he had a personal motto. He says, my personal motto is very personal and it may not work for you. But he said, don't do anything that somebody else can do. He just would not, I'm not making a Me Too product. But the reason I bring up Dyson, because now he owns one of the most valuable privately held companies in the world, right? But he's writing that book when the business was fine, but he had one product in like one or two markets.

48:27It was doing like 300 million a year of revenue. Not a bad business, but a very small business compared to the size that it compounded to over the next like four decades or three decades. And he says in that book, even at that time, he's like, differentiation and retention of total control. And he goes, you make it different, different even if it's worse. Yeah. That's one of the craziest sentences I've ever read. I totally agree. It has to be different even if it's worse. I completely agree. I see it all the time because, again, it gets back into the copying of a painting problem. Like, you can make a 7 out of 10 solution to everything by copying the 7 out of 10 that are already outside in the market.

49:04But if you make from tabular rasa axions your own version of it, you have mastery over, even if this is a 6 out of 10 you can iterate on this you can take this past the 7 afterwards like very often especially in technology the world belongs to the fast the people who iterate the people who adjust the people who understand what's costly and what's unnecessary and will prune away the rest and I find actually we're probably net like pixel for pixel the most inspiring picture that I think exists but I've ever come across is the SpaceX Raptor rocket evolution. Like, have you, do you know? Yes, I know exactly.

49:50I use that as a, as a image for the Dyson episode I made. That's perfect. Exactly, it's perfect, right? Like, you, like, you look at this and say, yeah, that's, like, that's, that's today's Picasso, right? Like, it's just like, this is, this is it. Like, this is, we're not in a point of time where the great works and the masterpieces are being done by one person. they are done by teams, very few teams can move forward by subtraction. That is like, does not exist in industry usually. Very, very, very rare. So it's beautiful in that way. You have to do things different. You have to make them your own and you have to have mastery over the first version if you want to take this further.

50:30I mean, we talked earlier about the podcast I do inside of a company called Context. And it's about that. It's like, how did we make the decision? It's like everything around a decision is more interesting than a decision. Is this podcast constantly updated? So it's internal, only for Spotify. God damn it, only for Shopify. I mean, especially when we talk about podcasts, that makes sense. Well, they have, it's funny, I looked at my end of year rap on Spotify. And one of the podcasts I listened to the most, which was shocking to me, was they have the internal company history. It's called Spotify, a product story.

51:05and it's because, you know, everybody else, I think one of the reasons that we have a mutual friend, obviously, and Lulu, she's on your board and the importance of telling your own story. Like, we went to dinner the night and I was like, Lulu, what I love about you is like, you're repackaging old ideas. Like, Napoleon told his own story. Julie Caesar told his own story. Like, all these people did it. It's a very valuable idea. And so everybody was trying to tell the company history outside of the company. They're like, no, you got all this other wrong. We're going to make it ourselves. And it's like, I think, a 10-part podcast.

51:34Yes, but they originally, I think they built it for themselves. And then they like published it. I didn't know about this. I love this. You should listen to it because it's narrated by Gustav, who was head of product, who's now co-CEO. Yeah. And they take it in chronological order. And so like if like Sean Parker played a big role at the very beginning, right, he's obviously not there now. But he's on like episode one or two. And then they interview the people that made the decisions. And that's the whole point. Like we were making, think about all the crazy shift that he had to go from, you know, desktop to mobile, all the things that he had to deal with.

52:03well just go listen to what the company did at the time executives but not only what they did why they did it it's and why is so much more interesting like one of the like the turn of toby's set um it's real inside of shopify right like it's like people just throw these things around like well toby said we're doing it this way right like and i i just like try to get people to like always ask when when i said exactly do you change your mind all the time yeah and this is not even i learn about this because something is like really really odd and like really odd decisions like there was easier ways available like how did we get to there it's like well it's like everyone said that you wanted it this way it's like i'm like under which context when did i say this like clearly we've never talked about this so it's like it's very common thing so what's a typical episode it's just you explaining the thinking of what's going on currently yeah yeah Yeah, it's like taking people back to major decisions.

52:59Are these short episodes? No. Like, initially, I went through phases. There was a sort of, for the first maybe 50 episodes, we said, like, we had a, we have to mix it down to 23 minutes because we calculated that that was the average commute in Shopify. Like, so we checked that everyone lived compared to the offices, ran the data, and it was 23 minutes. And so we made it 24 minutes because that seemed like as good, like we needed a reason. And you like designing your constraints. You talk about it a lot. So, you know, just like, well, I also just don't like picking 20 minutes because it sounds good.

53:36Like I want, like I need a better reason. So I might say I want something to be like 20 minutes sounds right, but let's find an actual good reason why it's 20 minutes. And then we found 23 minute reason. So sometimes you're allowed to like just parallel construct the thing you want to do anyway. Then at some point we abandoned it because just like, you know, the nice thing with podcasts is like people can skip, move. It doesn't matter. Like you can just keep going for hours and hours. Do you have any ones that are like long? I think there's one which we had to cut over a couple of episodes that ran.

54:10Like if you run it full, it's like five hours. It's like, what was that one about? That was like the philosophy of engineering with a bunch of our distinguished engineers. Like how, you know, like you would not believe how immature engineering is as a discipline. It's just like there's so many good ideas and so many bad ideas. And it's so hard for people to sort through them in a way that's like way harder than any other industry. Because it has a weird property. Like software has a weird property. I mean, the best thing and why the business model of software is so insane is because of zero marginal copying of software is free, right?

54:50It's like you can, you know, you build Shopify, first person signs up, you make money, second person signs up, uses exactly the same thing. And it's like, you know, the second instance of it is not, it's the same piece of software. So hence the margins of software are incredible. The same thing causes a lot of problems for the creation of software because you just don't know how much bad weight is in the system. If you compare this with electrical engineering, there's a very clear cost of manufacturing, right? Like the bill of materials is like the thing that dominates the success of a product because it dominates the cost, which then dominates the product market fit.

55:28It also, manufacturability is a huge component in electrical engineering. It's like, is the board laid out in such a way that it's prone to defects? Did you choose all the right components? It's like one chip gets really hot next to a soldering thing, but I remember the original Xbox desordered itself if you just played certain games too long. So there's real constraints like this. So excellence is obvious in a way. It's like in the numbers and everything. Everyone's trained on costing waste into the system. Software engineering just throws away so much of the capability of these incredibly powerful machines, partly because it just doesn't cost anything.

56:09However, at a certain scale, it starts costing. But at this point, it's being fixed by operations teams getting more servers rather than engineering teams going back to fixing those things. So the consequences of... bad decisions in software engineering are an externality that doesn't accrue back to the engineers who cost it in almost all instances. So it's like a little bit like a factory is polluting the environment. It's just like it doesn't cost back to them. And so anyway, so therefore, it's a very tricky industry to move forward. It actually quite often moves backwards significantly. Computers got much faster and we threw a huge amount of capabilities away, making like these very, very heavy client-side JavaScript applications that took over everything.

57:00They were just god awfully slow and very error prone and took forever to lord, especially in e-commerce where people visit sites rarely. Some of our customers went out of business because they got talked, they talked themselves into their own stack. They hired a CTO who brought in their own team. They used a set of technologies that they wanted to use because they are currently the in thing that has the most interesting conferences and the most interesting places. Then they deploy it and, you know, like it sort of works. and in the demos, but the problem is when you're going to the website for the first time, you have to load it all, and you don't have an up-to-date MacBook, perfect hardware with much memory like everyone has who spoke on engineering teams.

57:41You might have an Android device and you might be on a train right now. You're sitting there a minute and a half for this thing, for this online store to load. Guess what the conversion rate of that online store is? Zero. I'm quite annoyed by this, although that was a real, real, real, real problem in 2023 especially. Then like I think a bunch of, frankly, us, you know, older engineers had to like take the kids to the side and just like have a good conversation. And that was the context of the episode of Context. At least that's what led to this particular thing. I don't know if we actually succeeded there, but like I think we didn't need to because I think, like I think the world just changed.

58:23Like moment zero interest rate phenomena, they're gone. People actually wrote better code all of a sudden. Like it's like amazing how much, like how consequential, like the zero interest rate, absence of zero percent interest rates actually ended up being, you could feel it in the engineering team being less prone to accepting random waste into their stacks. It's unbelievable. Oh, that's interesting. I don't know if I've ever heard anybody else make that point. I think this idea of hearing directly from the founder in an audio way is underutilized. I did this episode on the founder of Kinkos. He was dyslexic.

59:00Yeah. So am I. Yeah, I heard, which surprised me. So he, actually a lot of great founders are dyslexic. It's very common. Yeah, it's very common. So it shouldn't surprise me. So he's like, I can't read your goddamn email. And he was also, I think he said he had like ADHD, so he couldn't sit down at a desk. So his job was like, what I like to do best. And he's like, I just go around and all the Kinkos at the time were owned by individual people. So it wasn't like one cohesive corporate structure. And so therefore there's a lot of experimentation going around. So he would just travel the country and then he'd spend all his days in the stores.

59:33And he'd be finding because all these people during different trial and error, good ideas. And so what he would do, this is back in the day, he would call into a corporate voicemail. And so he, at the end of the day, he'd give like a three minute update about all the good ideas that he saw. and then you'd come in as a Kinko employee the next morning and you could play Paul's voicemail. I love it. And then this is an interesting thing that you might agree with though. After doing this a while, he's like, you're resurfacing all these great ideas, right? This guy in Memphis found the best way to do X.

1:00:04Why don't you mandate that everybody in the company does X this guy's way? He goes, because if I do that, that's the best way it will ever be, which kind of relates to what you just said. He's like, listen, There's probably 100 different good ideas or right ideas. And if I stop here and don't keep tinkering, going back to that word that you like, then that's the best it will ever be. If you need something and you tell people what to do, you might get it or you probably will get it. If you don't tell them what to do, you might get something you cannot possibly imagine if you have good people. And so this is like actually a really, really important thing.

1:00:36it's much more important to create the environment in which people can be their most excellent self than it is to prescribe here's precise moves to do. So how do you create an environment that people can be the best version of the excellent version of themselves? I heard you say, is this related to your idea where you're like, you said something that made me chuckle. You're like, I don't do corporate baby-proofing. Yeah, exactly. Like, I mean, exactly. Absolutely. It's the same idea. Like, the baby-proofing thing is real. like what is internal policies, right? Like processes, what are they? They are like, do this thing different from the way your intuition tells you to.

1:01:16Okay, why are you wanting people to behave differently from their intuition? Like, let's look at a higher order bits there. It's like, what other opportunities do you have? Well, you could change the environment in such a way that doing the right thing is intuitive. right that's that's pretty good because now you don't have to post a policy um you could also um you know hire people whose situation is better honed they often policies and processes are um sort of downside protection um you're trying to make hard to make um uh to to avoid the people who do things wrong to be of uh you know causing so much damage that's like like the downside protection but you're also really limiting what the best people can do right so i think in creating like an environment almost as a box for people like here's the space and i want you to follow like inside of the space is um this problem i need you to solve right now my world in commerce world is attempting to figure out what authentic commerce is how it works how the all the companies are working together, like how the research labs work with everyone else, how to expose product catalogs from the entrepreneurs, how to make sure that transactions can be met, what the large language models need in terms of information to do a fantastic job when people ask them to be their personal shoppers.

1:02:46That's a box. Inside of this, somewhere, somewhere in it, it's all dark, is the most beautiful solution. What tools do we have to explore this box? It's like, Doug, I don't know. I can take a stab at it. I can paint a picture of what I think is good, but that's just like sending people into the room with a couple of tools. Afterwards, they need to make their own decisions and I want them to do this. I'm not there. I don't want to control every decision. The company makes millions of decisions every day, right, like in a building like this, right? But when I can make a decision of like, help them really want to be on this journey, help them fall in love with a problem and see the potential.

1:03:23And I can make sure it's the right team and everyone has the right skills. And I can make sure that they know what they have decision power over and how to, at some point, because people are only willing to take so much risk, how to transfer that risk to me, ideally. or to a company, right? In the form of our projects work in phases, a prototype phase is what I just described, where you explore the problem. Then you think of, like when you've learned what you need to learn and think you have something that you can build, you make a proposal and you transition out of the prototyping phase. That's a meeting, right?

1:04:11Like that's a, you know, that's what we call, like it's a phase transition in our in our project system there's software that manages all this kind of thing they can use an AI to preview what the transition will be like because it's trained on all the other reviews I've ever done so they can sort of mock do it and figure out what I will probably say that saves me a lot of time and then you have an actual meeting and you know So then they tell me what they're planning to do, what they've learned. That helps me a lot. And then I say, okay, okay to transition. There's some engineering leads, design leads give an okay one.

1:04:54I give an okay two. And then they are in a build phase and then a new phase starts. That's a new box. They have agency to make decisions in there. At this point, I assume the risk. It's like a trait of accountability for autonomy. And so that's how we found we can almost operationalize this system. Because what I'm finding is like, I mean, all the biographies you read, what you find is, I'm sure, is that the moment of insight, Often the product that started all of the artworks that are defining the careers, they were not really coming out of an office building environment, right? Where someone had OKRs that offer precise metric to hit.

1:05:47Like Da Vinci probably did not have one Vesuvian man as an OKR given to him, right? It's like you kind of have to create like a box for them, sometimes a physical space as well. like he was in an attic that just ended up being where he did most of his creative work, I believe. And so you try to figure out what is this sort of environment where excellence and creativity can come together and then collapse it to saying, okay, now the company needs what it needs because we need to make resource allocation decisions. I mean, more people onto a project at this point, there's a couple of sort of things that need to be decided.

1:06:28And then autonomy is regained until the next phase is releasing, at which point we do that review. And sometimes we say, OK, we're not ready to transition because we need some things we need to do differently. But that's the way Shopify orchestrates now. These are all things that exist today based on the days during COVID where I reviewed every project and couldn't. And like, well, what should I be able to do if I would be like, if I would be a competent CEO? What would I have put in place so I could do this thing I need to do here in the beginning of COVID very, very quickly? Given that I wasn't and now I aspire to be, what needs to be created?

1:07:09And so whatever the answer to that is, we worked hard on. And I think we just discovered some extraordinarily powerful systems, mechanisms in this journey. That was the prompt? Like what would a competent CEO do in this situation? I love to take the view that I'm a corporate raider and Shopify went bankrupt and I bought it on a fire sale and I'm marching in on day one here and previous management was crazy and we need to turn this place around. That's my favorite. I love playing this game every year, figure out what I would do differently and then it's like, let's go. I have my to-do list. and I ask a lot of teams to do this a lot like it's like when we have systems that just don't work one of the most powerful you know maybe through affirmations made for experience things you can do is just don't be prideful about the prior book too much it's a lot you're allowed to have pride in it but like you want to wake up better every day right you want tomorrow's version to be better than today and for that you have to kind of downgrade what's there like you can't like The Suncross fallacy is so powerful.

1:08:21But how is that an affirmation? Like, how does that represent, like, how do you, when you're actually talking to yourself or you're writing this down or just in your monologue? I literally write hit pieces on the past, right? It's just like... A hit piece? Yeah, like, I just like, all the things that are wrong with the thing, I somehow am really proud of. You are so much like some of my favorite founders. Dyson's like this. My friend Kareem, who's one of my closest friends, he's the co-founder and CTO of Ramp. It's like, nothing's ever good. The way I describe him is just like, no resting on laurels, no sleeping on winds, do something great and then do it again.

1:08:53Steve Jobs said this. He's just like, well, what's the proper response when you make something wonderful? He's like, do it again. Yeah, let's go. A lot of these great people, they don't really have rear-view mirrors. They don't obviously learn from what they did, but they're not like, wow, look at my trophy room. They don't think that way. Look, nostalgia was put on death certificates in the 1800s. It's like people died of nostalgia in their minds. I mean, they really died of something else. I've never heard that before. It's like we used to know that nostalgia is not a good thing. It's like it was one of the bad indulgences.

1:09:29Now it's barely a vice. So I think nostalgia needs a little bit more scrutiny. Overcoming sunk cost fallacy is one of those things that, like, any path that you can take to get there is going to be enormously beneficial. Well, I think playing the game of corporate raider is a great way to do it. Exactly. So when you develop tools. You kind of separate yourself because that was your decision. You might be like, oh, well, like, I feel a little sensitive about that. It's like, no, no, that was somebody else's. This is a new company now. So one of the things that is unpopular when I do it inside of a company is, like, I really shit talk the past, especially if I did it.

1:10:05You know, like, you know, there's still, like, systems that I build inside of a system. So I, like. You shit talk the past publicly? Yeah, I trash, like, I make fun of all the ways, and this is hilariously wrong in funny ways. And I need to remind myself, especially when I do this with an area I didn't work on, that, like, I have to proviso it, or, like, I need these, like, corporate radar, like, I'm collecting these now. It's almost like dissing yourself. I need to help people not think that what I'm doing is I'm passing judgment on their prior work, because I'm not. but we are all to expect everyone.

1:10:44You are passing judgment on the prior work. You're not passing judgment on them as a person. This is what Rick Rubin talks about in his book all the time. But it's not theirs anymore once it's out there. This is the thing. Say more about that. They need to disconnect from the work is collected. The moment the pull request is accepted or the OK2 is accepted, you've converted your craft into something the company is in a company's commons. A company is a collaborative project where everyone contributes. And there's a process by which it's contributed, at which point the company accepts it as being on quality and says, like, this is now part of, you know, like the company's embodiment, essentially, so the product.

1:11:29You've contributed it. You deserve the credit for this and so on. But the company could have had someone improve it at any point of time, right? it's not yours it's like we don't allow people to use word ownership over parts of a code base or so um we only allow stewardship as a work uh like just as a as a proxy term because sometimes you need to be able to talk about it in this way the shop if i think of itself more like an open source project you can't be putting into the comments um people talk about wikipedia not about the particular editor of a wikipedia page you know what i'm saying i have a selfish question before you move on.

1:12:08Yeah. So you're looking at all past work. You have, there's this guy named David Ogilvie, who is one of the greatest advertising agency founders. And he says that we have a divine discontent with our work. It's a perfect anecdote to smugness. Yeah. Right. Cause he's like, you don't want to rest on your laurels. Yeah. I talked to James Lyson about this though, because he has a very interesting organizing principle. So we're going to take this cup right here. This is a product. He goes, this is organized his entire life. He's been an inventor and engineer for 55 years now. And he's just like, I see his product and I say, ask myself, how can this product be better?

1:12:38Then I make it better. And then I put it down. And then a short time after, I pick it back up. How can this product be better? I make it better. I put it back down. And he goes, I see the bad in everything. But the interesting part is he's intellectually and emotionally mature enough. He goes, you have to understand. It doesn't, like, I'm not a miserable person. I just look at it as like, this is a problem. That problem is an opportunity and I want to work on that. What is your inner monologue when you're critiquing your past work? Are you harsh on yourself? I get excited. I get excited by finding problems.

1:13:10Like, I just, like, I love, like, I mean, look, at this point, I'm such a long-term veteran of tech company building. I love figuring out what we're bad at stuff because, like, we have a pretty good thing going on. Like, by all intents and purposes, this thing's working, right? So, and, you know, when I figure out what, like, we're actually bad at something, I'm like, holy shit, like, I have an obvious blueprint for now how to become a better company now, which is, like, actually my job, my craft, right? Like this is all opportunities. Things go into comments. They are being hopefully judged by everyone.

1:13:42I get grumpy when things that are shitty are not identified as such and improved. And then I make people go do it. And sometimes I do it by trying to create energy by just like roasting the thing's current state. I want people to feel no deference to it. I don't want people to respect the piece of code that exists and that or system that I want them to improve. And I want people to, you know, just find their sort of energy source because what I'm asking them is like, go into a particular box that contains this problem and do the best possibly better than anything I could possibly ask you right now for solving it.

1:14:22Because I expect people to be highly agentic and, you know, fall in love with problems and just like find better solutions than what, you know, industry usually produces and so on. right that's the entire point it's unpopular when people aren't in the right headspace for it and it's incredibly effective if they are so um the difference very often is just a couple of words um and a bit of framing and uh i just find that's like that's one of the most powerful sort of tools you pick up i think along um uh you know along the the journey it's like the five words to say at the beginning of a sentence would change everything um my co-founder actually gave me one of those very early, which is probably why I tuned into this kind of thinking and this collecting these kind of things.

1:15:08Wait, what did you mean by the five words you say at the beginning of the sentence? I used to go, again, engineer. That's always like an interesting experience with four other engineers working for me. And like, I stay pretty current with engineering. I still do not a ton of production engineering, but I do. I sometimes start new projects with people. The first 20, 30 pull requests or commits in many repositories for things that we use come from me. So I like doing this. It's part fun, part... I sometimes need to tap into my craft. anyway so that's a surprising thing for people of course so my intuition was always like okay well this is not the right architecture for this kind of thing and I know this for a fact because I've built this thing before so let me go to a right whiteboard and just like re-architect this and like and so at some point and that like now you know Daniel Michael Foner like explained to me well look you get pretty defensive then because they just came to show you basically you know what was objectively their best work because they presented it to you and that matters to them so and then you just like it doesn't matter if you go and make a much better system here on top of the head um they are like um if i truly ever did this um they're going to be defensive and try to say face.

1:16:44So just put, for example, in front of every sentence. And so like, what do we mean? And now, like, I tried this and it works perfectly. So instead of just telling them, hey, you know, instead of doing this, like here's architecture that you should use, just say like, I could think of doing this a couple of other ways. Maybe it's something you want to consider. For example, what about this? And then just do it. Now you're on the same side. You know, you're on a team. We are all working together on the same problem. I'm just, I'm adding input. Now, like everything is the same. It's five words or so in the beginning.

1:17:21I just find the magic of these five words. It's not this specifically. It's like things like this, like just frame things slightly different and life's easier. I read something Jeff Bezos said that changed my perspective on the importance of high quality sleep. He said that he makes sure he gets eight hours of sleep a night. And as a result, his mood, his energy, and his decision-making is improved. His point was that you get paid to make high-quality decisions, and you can't do that if you're sleeping terribly. And the product that has made the biggest impact on my quality of sleep for years is 8sleep.

1:17:55I'm lucky enough to be friends with the founder of 8sleep, Mateo, and we live in the same city. A few months after I started using 8sleep, I randomly ran into Mateo at a restaurant, and I was with some friends. So I go over and say hi. When I got back to my table, my friend asked me, who was I talking to? And I said, that's Mateo, the founder of Eight Sleep. And my friend replied, he looks like he gets good sleep. Mateo is living and breathing his product. I had never had the ability to change the temperature of my bed before I had an Eight Sleep. I had no idea how much that would improve the quality of my sleep.

1:18:26I keep my Eight Sleep ice cold. It's cold before I get into bed. So I fall asleep faster and wake up less during the night. That feature alone is worth 10 times the price. There are very few no-brainer investments in life, and I believe 8sleep is one of them. That is why elite founders like Mark Zuckerberg and Elon Musk have all said publicly that they use 8sleep. I would recommend getting the Pod 5, which is the newest generation of their signature product. It is a smart mattress cover that you place on top of your existing mattress, and it is next-level sleep tech. It automatically regulates your body temperature throughout the night, independently for each side of the bed.

1:19:02The result is you get up to a full hour of additional quality sleep per night. Make the no-brainer investment in your sleep by going to 8sleep.com forward slash Senra and use the code Senra to get$350 off. You can try it for 30 days at home and return it if you don't like it, but I'm confident you will love it. I will never let anyone take my 8sleep from me. Make sure you get yours at 8sleep.com forward slash Senra. One of the things that Daniel from Spotify, I almost said Shopify. Now for him, Dave Spotify told me. Let me be fair. He's like, you should ask him, like, what were some of the advantages of starting with Silicon Valley?

1:19:38I think there's just too much cross-pollination. You kind of have to sync the companies towards, like, entropy creates equilibrium. And so you end up, like, with the companies just being very recognizably similar to each other. And the activation energy for being very different is super high because that means people come with the wrong ideas into your company, behave incorrectly and you have to like tell them to behave differently where um if you are outside of um a place for like Silicon Valley where people just move along between companies I mean first of all especially early I I traveled to Silicon Valley a few times a year but I tried to just take it all in and learn as much as I could but of course what I got from everyone was not actually the answers to my questions about how to do things.

1:20:27I was getting the aspirations, usually, or the highlight reel. People wanted to seem smart, right? So they gave me the best version of what they think the answer should be or what their company ought to be doing, which is great because then I took that back home with me, free flights in, and sort of took the ideas that are relevant, tried to always put a shop-for-a-spin on it. like I don't like taking ideas as you clearly can tell and never did um sort of like just like figure out how to localize them to our problems and um um ideally try to do something better and so only very many years later I did I realize I was always like always for my career was comparing my and our average to everyone else's aspirations and highlight reel and just like that alone is a really, really good thing.

1:21:21And if you then try to do better than that, you know, sometimes like just ignorance is an incredible way of actually just doing better. And so that helps the process of having to translate, being able to translate things. Like we had no one, like when Shopify IPO'd, we had one member of executive team who ever worked for a public company. That's it. Wow. We had no one who took a company public. We had no one who was an executive at a public company. We had one executive who worked at a public company once. I think that's cool, right? I've had a real sense of accomplishment about that because it meant we became our own thing.

1:22:04Our entire motto, becoming a public company, was we are not going public. We are creating a public version of Shopify. What's the difference between that? Again, becoming something else. It's like we don't want to, like a lot of people avoid when they're a public company, they're going to be different because like people sort of expect public companies to be a certain way, at least for people who work at Shopify did. I felt it was important to be different and do things differently. One thing we did, like you will appreciate this, is, you know, we looked at the requirements. We talked about Formula One.

1:22:40Formula One is fun. Sorry, it was a little bit of a veer, but like Formula One, I love because it's like there's a rulebook. It's the opposite of every other rulebook on planet Earth. People read it so that they can comply. The Formula One rulebook is a rulebook that is read so that you figure out how to beat it. And it's like there's no engineer in Formula One has anything to do with central casting engineers. Central casting engineers actually usually want to get requirements and then comply to them. They're like the people going to Formula One are the people who want to beat the system, right?

1:23:12Like this is very important to them. So I count myself as of the archetype of the latter, like the group of, like I would have liked being an engineer in Formula One. I like beating the systems that other people tell me to abide by. I heard a story one time that somebody had hacked your compensation system to get more money than, you know, essentially they just studied the real book, found this loophole, and you're like, good for that person. And then you'll fix the loophole or whatever the case is, but that's exactly the kind of person I want working for me. Exactly. I mean, yeah, especially if it's, I mean, there's a way, I mean, what happens next ends up mattering, right?

1:23:49Like, so, okay, this goes on. Like, at some point this becomes, well, you're just exploiting a weakness fully. I mean, I don't want to give too many provisors, but generally, like, people who are, like, looking around to figure out, I never begrudge anyone being an intelligent actor in the local incentive system. That is just like everyone's allowed. That's pretty much my morality at this point, or at least a big part of it. You're allowed to do this. I own the incentive system. It's not you get too much out of the incentive system, or the incentive system tells you to behave in a way that is not congruent with the company, the company's goals.

1:24:33That is my skills issue in designing the conversation, not your job. Not their fault for taking advantage of it. But really appreciate if you give me a heads up. Because we are still the same team here. So maybe you raise your hand at some point saying this is fine. Yeah, not like 10 years later. So back to the IPO, we just looked for ways how to, like within the constrained rules by the SEC, do we have agency where we can do different things? We sort of honed in on the IPO Roadshow video. Like, it was like a horrible video player, the IPO Roadshow website. And every other IPO we could find was just, you know, a CEO standing in front of a screen camcorder and just sort of going through the same slides.

1:25:23We're like, there's no rule for that. Let's shoot a fucking documentary here. Like, let's go through the history of why this company exists and why it's important. and he said like what video can be put onto this space when no one expects it that will somehow hook people in to full screen the video within the first 20 seconds and actually watch the entire thing and we heard so much about this on the road like so many people were like i was looking forward to meeting you but you guys did this video was insane i didn't even know you could do this every video every video after this was like our way so it was kind of like a nice little moment of putting a bit of like agency into a process, which was pretty.

1:26:00I heard this story one time. I think it was like the founder of SiriusXM. I forgot who the person is. But they were like, well, how do you make annual reports? And there's like no rules around there. So you have to present certain information. So they made a book and like the book would be illustrated. And she's like, no one said we couldn't do it. It's like, we're just going to do it our own way. Let me ask you a question, though, because I think I heard you say this as well. you were getting what you felt was bad advice or incomplete advice, or maybe advice not from first principles about like whether to go public or not.

1:26:31Some people were saying stay private longer. Yeah, yeah, I get you. But advice was always like don't, right? Like it's like - Who was telling you this? Other founders? Yeah, founders. Silicon Valley orthodoxy definitely is to avoid it.

1:26:46And I don't know. I can tell you the story of how I made this decision, but like, it's just like basically it's like, I mean, I suppose I'm predisposed also when everyone agrees with something to take the counterfactual just to hold it up to see if I potentially like it better. Just a personality, embedded personality. I just find plan B usually is a better one. Everyone puts plan B. I think for many, many, many people on planet Earth, always doing their plan B would lead to a better experience. It's just like plan B gets the ambitious one. if this event happens in my life fuck it i'm just gonna build a company it's like such a common plan b that might be what you actually want but you're lying to yourself or you're scared or whatever yeah and also again you are a human being therefore you have uh uh you come your firmware comes pre-loaded with a problem called the sunk cost fallacy we just do right it's like this you got to operate that out of yourself a little bit you got to be able to like discount what has happened more to make good choices because otherwise you just chase bad with good money all the time or chase bad plan with your hours in the day or whatever.

1:28:01I think humans are reflexively scared of change too. 100%. They'd rather be in a bored, boring or like even miserable environment than actually change because the fear of change is so great. So wait, so people are telling you stay private longer. Like being private is better. Like friends of mine, like Stripe, running this experiment, like they managed what they put off in terms of figuring out how to stay private for such a long time is actually remarkable. I just think they spent a lot of time figuring out how to stay private. And like, I don't think that's the most valuable way to spend time.

1:28:34So you went public 2015? Yeah. What were the arguments for staying private longer in 2013, 2014, when you're having these discussions? We were tiny. We had 800 people, we were Canadian. So they were saying you're too small? Yeah, like I mean when Shopify's first trades happened at I think a billion, 1.5 billion dollar valuation, right? It's pretty wild that, you know, the public market almost got like venture, could have got venture, if you bought Shopify. Yes. You essentially had venture returns in the public market. Every once in a while, someone puts together a list of best stock market returns over the last 10 years or whatever.

1:29:14And like, yeah, like I own that list, right? Like just because I decided to take Shopify, like I did the old school thing. That was normal. That's what everyone did. That's what people went public fast. And by the way, this is kind of important. Like, you know, public market needs to have growth because where else is prosperity coming from for people who don't have? Like, all these accredited investor laws and stuff like this, all they do is make it so that when you're rich, you can invest in private company stock. And when you're not, you can't. And where are the returns? Like, of course, it's such a fucking conspiracy to keep everyone private because that just like sequesters all the growth exposure to institutional investors and people who are already accredited.

1:30:08And so I just really dislike that whole thing. I think, like, man, like, again, it's about building things and sharing what you've figured out. and like people buying a ticket to ride with Shopify because they like what they're building, it's like, please, like that's clearly what we want. So I just think the institution of public companies is good. I mean, where my beef is, is the whole notion of like influence over companies. Again, path dependence, like one vote, like one stock, one vote is like, yeah, but like, no. Like everyone who studies decision-making knows that you want to move towards like people who have most context should make a decision.

1:30:54That's like, doesn't say the leadership of a company. This is literally what I'm talking about, creating space for creativity because I want the decisions to be made locally on the ground. So were the arguments for staying private back then just mimetic? They were just repeating what everybody else is saying at the time? I think people are generally right. It just doesn't, it washes out. But like, again, people have problems with the concepts of like, very often a new idea is dismissed because someone can formulate an idea, like a reason against it. And somehow that dismisses the entire thing, right?

1:31:26Like we live fundamentally, most of people spend their entire life, sadly, in a vitocracy, right? Like where you need everyone to agree to do something, but you only need one person to vote against it, to not do something. And again, good companies overcome this in important ways. And so similarly, one good argument dismisses the entire idea is a very common way to evaluate options. What people very, very often don't do is reformulate all the arguments against the status quo. Like the thing you're doing right now also is flawed. It's just we really understand the upsides and downsides. the new thing might have way higher upsides or actually maybe not maybe the upsides are obscure but like um or hard to know for sure but the downsides are clear and they can be formulated therefore the usual default position is not do it so this is i think it's incredibly undisciplined because um you need to think in uh you know propensities you need to think in and chances And sometimes you need to really, really load up a decision for all the pros and cons that can be articulated and make it a little bit in your mind.

1:32:42Look at where the scale comes out. For a company that's trying to sell the e-commerce platform for everyone, especially for the many American companies, being a Canadian private company that's tiny is not ideal. So, you know, like people don't usually go public because of marketing or like name recognition. But, you know, super valuable. Put it on the pro side and then put everything else on the pro side too. We might get better people working for us because some people really want liquid stock. And, you know, so on, so on, so on. And in the end, it's like not even close. It's just, you know, the downsides were like a couple of annoying phone calls I have to do a couple of quarters, at least for the first 10 years, I suppose.

1:33:27And I thought actually most of the process was actually quite valuable. Like I learned a lot about my own business having to... Explain each other. Exactly. There's been a few previous guests on the show, Brad Jacobs, John Mackey, Daniel Ek, obviously running public companies. In Brad Jacobs and John Mackey's case, they both said like, Jacobs makes that point. Well, one, he thinks it's like wonderful, free marketing and advertising. Two, you now have a currency. currency, Mackey said the same thing, like it benefited Whole Foods being public fast because then he used that currency to acquire a bunch of other competitors and accelerate his growth.

1:34:01But Brad Jacobs' point was just like, he likes the pressure of that check-in where it's like, this is what I'm trying to do with the company. This is what I'm saying to do with the company. And this is our results. And I want somebody to say, oh, like there's a big disconnect here. And I want the pressure to like, to actually perform in like, and have somebody, these expectations externally. We talked about the environment that you're building at Shopify. I'm curious about how you think about the talent that's inside the environment. Yeah, of course. I mean, ultimately, I really, really believe in the sort of stoic, maybe Adlerian idea of separation of tasks.

1:34:37What have I control over and what I don't? I always love a particular formulation about thinking about how other people think about you. Again, you need to make yourself a person worthy of being liked. If someone then dislikes you, that's up to them. It's not your job to make people like you. It's your job to be likable. And if they make the category mistake, it's their own fucking problem. So it's a really, really freeing way to think about it. Talent. My job is to make a company worthy for the best and brightest to work for. This is the part everyone skips. Everyone's like, oh, we need to hire a better recruiting team.

1:35:17Well, maybe you need to also just be worthy of a kind of talent that you would like to have. So, I mean, this goes from office space, if you have any, to a company. Like, amount of bullshit people have to deal with, to how much bullshit politics can you subtract from the whole thing? And can your large company feel like a small company with lots of resources and lots of impact? You know, it's more fun to ship software to millions of people that you really respect than to a few people who you then try to make a sale for at some point. Or like, it's just like, you know, impact matters. In a way, this is likely going to be misquoted, but I think the talent eventually takes care of itself.

1:36:05There are not that many good companies to work for. There are not many good companies that deserve the attention of people who can be the most capable people because they have an option to start their own companies. That's a very interesting idea. There's actually not that many great companies. It's your job to make one of your companies one of those companies that the best people in the world will want to. What do these people look like, though? The reason why I didn't move to Silicon Valley is because I knew how to create geographical consensus in the eastern seaboard that Shopify is the best company to work for, full stop.

1:36:39And I just knew I had the ability to do it because I knew how to build a company that I would want to work for. And I think, given that I estimated I would need somewhere between a thousand people or something like this back in those days, I'm like, I'm going to find another thousand people that think like me about how good a company needs to be to book for. And I can dislodge all of them. So if I go to Silicon Valley, I can't pay what Google pays potentially or like someone else makes up for their skills issue by just overcompensating. Yeah, it's called compensation because you kind of have to compensate people for the shit you ask them to do.

1:37:15and you know like if there's a lot of shit you have to compensate people for but you have enormous amount of resources you can make up for skills issues by money and so in in east coast which was much more hedge fundy and much more high finance and like for the kinds of hackers I wanted I I knew how to do this but wait I want to pause there I love this idea where you're like I'm gonna build a company that I would want to work for oh yeah that's on one end of the spectrum which is great. You also had this like thought experiment, uh, that I heard you say before, which is like one of the worst things that could happen on the other end of the spectrum is you wake up 10 years from now and you built a company you don't want to work at.

1:37:52And then you have this great line I want to pull. It's like, that's dystopian. There's so many companies I wouldn't want to work for. Why did I use my life to build a company to build another one that I wouldn't want to work for? You just should build a company that's worth working for. Yeah. Like again, And you should take pride in your work, like in the inputs and how you, like, did you accomplish the things you set out for in the aggregate, right? Like, be easy on the path, but like the outcome does, should matter to you. And like, man, I just shake my head sometimes with like how people overcomplicate these things.

1:38:28It's just like, it's kind of, man, people know what they're looking for, right? And I'm talking about very, very, very fortunate people here, like people who have a lot of choices, who have incredible competency in some of the rarest skills and combining this with enormous drive. There's a couple of different attributes that all have to come together to be one of those people who can command hundreds of thousands, millions of dollars of compensation packages you can make in this industry. partly because you're worth it, right? Like you're contributing more than that to a mission like this. And therefore you can command this kind of competition.

1:39:10And that's like the way this all fits together. I think of everyone as an entrepreneur, really. Your capabilities, you are the entrepreneur of your own work output. Your product is what you can do and what you can accomplish. Your market is the company that exists. and you are selling an exclusive subscription. That's the institution of employment, right? It's a two-sided opt-in relationship. Whenever people come to me and say, hey, how do I earn more money? It's like, well, be too good to ignore when we increase compensation. You know, like, be better. You're making this amount. You would like to make this amount.

1:39:54And in which way have you become so good that you can add that amount of increase to, you know, just like the collaborative project we all work on? And so I think that just sort of clarifies and simplifies things, right? So, I mean, all this said, I don't want to sound like it's inevitable that if you just do all the right things, you end up like there's always an information gap and reputation lag. And I'm out there recruiting and telling people about the company a lot. What helps me a lot is people are curious about the company and I've heard about the company and so on now. That is because of things that were under my control.

1:40:32I tell people that it's an unshared attention company. There's no part-time jobs. You will have to put a lot into it. You're going to get even more out of it. You will make great money, but we attempt to never be the highest compensation bid. because we have found that the people who optimize for that above all else actually don't do well at the company. Because Shopify is a mission-driven company. Exactly. And the thing I'll promise is like in terms of your own skill set, partly based by demand, partly by osmosis and partly based on culture that's surrounding you, you will advance vastly faster at Shopify, building capabilities, skills, and correct ways of thinking and mental models and these kind of things than I think at any other place.

1:41:23Therefore, the compound return to your career is going to be vastly higher here than anywhere else, because you get to a potentially higher compensation level earlier in your career because you're worth it. The entrepreneurial story is very fractal in Shopify. It's just like, what is your product? What's the market? And does it fit? So it's just a clarifier that I think is worth talking about. I'm going to quote David Ogilvie again, because I think it's interesting. He says, like, talent is most likely to be found amongst nonconformist dissenters and rebels. So when I asked the question about, like, hey, we know the environment.

1:41:58We have a description of the environment. What are the people in the environment? There was two ideas I got from two separate entrepreneurs. I've mentioned both of them already, but I like, because they use the same terminology when they're looking for talented people to hire in their company. Daniel from Spotify and Kareem from Ramp. And they both said the same thing to me. They hire for spikes. Spikiness. Spikiness. So a lot of big corporations, they want you well-rounded. Like, no, no, this guy might be a bipolar alcoholic. Or this guy might have some other, not shower. Like Steve Jobs, he was hired at Atari.

1:42:32Everybody's like, Nolan, Nolan Bush, the founder of Atari, like you can't hire this guy. He stinks and he wants to sleep at the office. and no one's like, yeah, but he's really talented. So he's going to sleep at the office and you just got to hold your nose when he's around. Do you agree with the idea? 100%. It's like exactly, it's like, we never look at the credentials and stuff like this. Again, I'm a high school shopper. It would be like rich if I would start making everyone want to have a PhD. The path by which we do it is we go for a life story. We ask you like, hey, give us your story. And it's a very important ingredient in our hiring process.

1:43:05And frankly, what we're looking for is like high agency. experience. We look at like something went wrong in the story at some point. Well, now let's zoom in. How do you react? Give me a minute by minute. This is what we want to know, right? Because a lot of us are entrepreneurs. Even everyone, like I talked about the founders of companies you purchased, but like most of the people just in general in Shopify are entrepreneurs. Many started Shopify stores, built a business and then fell in love with company and applied for a job and got a million. So this is a huge amount of company building background.

1:43:37And we want to be surrounded by people we admire. That's, I think, the biggest product any company can deliver to their employees is that every day they're surrounded by people they deeply admire and can learn from. So it's a very important part of this. So lots of entrepreneurship, lots of entrepreneurial impulses. And then, so we look for this high agency behavior. and then you know obviously did you drive a particular craft that you're applying for to excellence how do you think about this kind of thing can you just sort of talk about the excellence or actually perform it and then you know this is really what we fill our buildings with and you know just like again create the space then and that would be creative and this So this is how it always works.

1:44:26And it's worked really, really well. We couldn't do anything other than this in the beginning, right? Like in the beginning, we had no money, really zero. I didn't take a salary for four years. I heard your father-in-law covered your payroll when you couldn't make it. That's right. So, yeah, we were living with my parents-in-law, Fiona, my wife's older. bedroom from which I also added I put a key desk and I built a lot of Shopify from there and you know like I mean just kept cost low but that was the main thing make every dollar count is something that's I'm so glad like this is what I worry sometimes with all these really really big seed rounds like like money the main thing money does is it gets you I mean And sometimes it reveals, but usually it just like makes you get a whole lot more of what you got before.

1:45:31And people did a race early probably because they were not tied with money. Then you get a whole lot more not tied with moneyness at a larger scale and it gets really, really bad. You're making my heart sing because I feel like I'm on an island by myself about this because I've spent 10 years reading 410 of these biographies. All of them control their costs at crazy. They'll tell you whenever we're getting constraints to your best friend. And then I talked to these young founders. I usually don't meet startup founders because I'm not an investor, but a good friend of mine is like, hey, meet this young kid.

1:46:01I met him. And one of the things he was talking about, he's like, yeah, let me show you pictures of like this beautiful office we're moving into. And he was showing me everything. And I was like, this is stupid. Like you haven't done anything. You don't deserve this. And I go, go look at like, where did like Apple start? Look at Microsoft. Microsoft started in a strip mall in Albuquerque, New Mexico. And you need a triplex in Soho. Oh, like, what are you talking about? And the question, what I pointed to him is like, okay, how does this make your product better for your customers? And his answer was, well, I'll be able to recruit better talent because office is nicer.

1:46:33Then you don't have a mission. It can work. But like, I feel like you're not increasing goals. You built a$200 billion company in your wife's childhood bedroom. That's where you started. Yeah. Like, maybe we should repeat that over and over again. Like, just go look at where these companies work. You mentioned the Larry Ellison episode I did earlier. Like, they were in a shitty office building. Yeah, yeah, yeah. Like, I think they had three separate rooms. Oracle, that's where Oracle started. I think, I mean, there's a well-documented effect of when companies build monuments to themselves, they usually decline right after.

1:47:06So that has a long-running history and business history. I do think that companies underinvested into office space for a very long time, and it actually was a mistake. I think space around us is actually extremely important, but it doesn't need to be expensive. That's probably an aside. Oh, let's go down there. What does that mean? It's just like, so again, we didn't have a lot of money, but we wanted nice office spaces. This was the decades where there was a lot of open concept versus own room office spaces, where it was sort of a kind of fight. My co-founder is Daniel Weinand. He's a polymath.

1:47:56He learned programming when I asked him that I needed some help with programming, and just like was good immediately, which was annoying as hell. and before he was all a designer and just like literally everything else too. Now a DJ and before that he won poker tournaments. So it's like, it just like, it like keeps going. It's like one of these little, it's actually really, really helpful to have someone like Daniel as a childhood friend because it really, really misleads you about human capabilities. Like if this is just your buddy who does stuff like this. Anyway, he at some point, like he really, really tapped into this.

1:48:28No one can be more creative than the space around them. And no one can care more than the person they look for. That's the way he sort of created this philosophy around this. I told him, look, here's Max Badgett, and we are getting B office space that's kind of cool. And you need to figure out how to create spaces that are like 10 out of 10 on doing word class work. But inexpensively. But you'd need to figure out how to make this cheap, right? Like, so, man, I mean, we built a bunch of offices in a row, and I was insanely good at this. How many years into Shopify? This is, like, 2010 was the first one.

1:49:12It was six years in founding, four years after Shopify launched. We went out of, like, sort of a bottle of coffee shop, which was, like, really nothing, to our first office. So how do you do this? He said, first of all, the dichotomy is wrong. It's not between open office and closed office spaces. There's a perfect midpoint. And it has to come from your strategy of projects. Shopify loves the 5 % team. We increase to 8 sometimes, but we think the best team size is 1 because a single offer can do things that is impossible to do for teams and hit high notes that are unreachable. But I think Planet Earth has rather played the field of what can be done as solo projects, actually changing again because of AI, which is the exciting bit, but most projects worth doing need to be done in teams.

1:50:14Then there's a magic number at five. It's sort of what the military ends up figuring out too. They test these things and come to the same conclusions. You can sort of temporarily go up, but then at some point you have to split teams and parcel out the tasks. Each of these gradations is like a figure 10x loss of productivity. So Shopify is like, of all, our R &D team is 3 ,500 people. It's really lots and lots and lots of small teams. And this is also why we need this legibility coordination layer that I talked about earlier. Okay, so pods. Dale figured out how to make pods that are like exactly, they are private enough while being open enough.

1:50:52They never make the office feel dead, but they also draw you around. It's like, what's a pod? What does that mean? It's just like a, it's a room that just like sits up to, like when you put the seventh person in, it's uncomfortable. Like it's like, again, think about how much policy you don't have to post. And if the environment just makes you do the obvious thing, you can play with uncomfortable too many people in this area. Like when you know what you're doing, now you don't need to post the policy about how many people you want in a pod. And people self-organize into five people teams because that's the most comfortable thing to put in a pod.

1:51:32So not meeting rooms. Our meeting rooms go in the middle on our limited floor space because we don't want people to spend all day in meetings and then get out of the dark rooms. We put like everyone sits around the windows in pots and they are like structured in such a way that, you know, it all works. The coffee area is on the other side to create serendipity. We cut through every floor eventually to create stairs that we move teams in such a way that certain teams that have to work together but work on infrastructure separated them out in floors so that they going to each other would run into other people who are using the infrastructure and so on and so on.

1:52:15So design and being super conscientious about this is really important. Daniel did an amazing job. I think we open sourced the floor plans and I think lots of models. This is not interesting anymore when you look at what they look like because I think that work has gotten absorbed into the tech industry as a right midpoint. But many people, Cargo called it properly. They just Xerox copy it, essentially, instead of understanding. So they make parts too big or whatever. You know, these kind of things. We talked about Cargo holding a few times. you observe that behavior in other companies i'm curious what internally you have caught your own company carter holding oh we actually um we are in a toronto office here um uh the toronto office actually has a few floors that are clearly um mimicry of these ideas that daniel figured out, but are not, they don't understand where these come from.

1:53:18Like again, port's too big. It's like more, the nice meeting room is right on the window, has lots of light. You know, just like, again, maybe this is okay to have a view, but like, I went with the teams through it because we then changed some of the floor plans after they moved here and realized like, holy shit, this is like, oh Norman doors everywhere fuck that's the craziest thing I'm fundamentally allergic to Norman doors what's that doors that you push then and then you can't tell yes yeah this is like the most fundamental design error that you can possibly make is like create affordances on in a product that make people predictably do the wrong thing like like this is such a like like literally everyone who's ever involved in the process of designing a Norman door should, you know, revoke their design license.

1:54:16Like, I'm being facetious, obviously, that isn't a thing. But like, it's like, it's just like, man, it like, yeah, skills issues as a door is like a very common occurrence, I think, in places that are not conscientiously designed. And like, all those doors are replaced very fast. Like, I mean, the funny thing is, you can usually turn a normal door into a non-normal door by cutting things away and like putting a push plate somewhere, you know, so that helps. So I make a big deal, all of these kind of things. Like, it's just like this needs to, like, I cannot surround people with things that are underperforming the quality of engineering we want to do.

1:54:55And that's down to the detail of the doors in the office. Yes. Wow. Yeah. Yeah, of course. Yeah. I mean because product is not a thing Product is an abstraction Product is a name Like a handle that you put on some totality of a body of work From the perspective of the people creating product Product doesn't exist It's what other people call your work A product is just details It's millions and millions of little details That are appreciated if they compose right And make a bloody mess if they don't So from the inside perspective You have to sweat all the details So where you do anything is how you do everything.

1:55:33And that is absolutely down to the floor plans and, you know, the ambient noise levels and so on. Just like you're going to a room, it's like that, like silent. It's like, it's just like you notice when you're talking while going to a meeting room, at least on the floors we fixed based on previous specs. It's kind of uncomfortable to talk in a hallway because it's so echoey. and you walk in a meeting room and immediately like it's just a different noise level because it's just like diffused. We have enormous amounts of like, in fact, we actually worked with companies on Shopify to create the products of sound dampening that are now really, really like supply all companies, tech companies, which is really fun.

1:56:14And so, in fact, like everything in our offices is from Shopify stores, right? Because again, like if anything we are doing is not mission aligned, we just didn't align to our mission. axiomatically. So, you know, just you can go pretty far in these kind of things. When you need something for office spaces and it's not on Shopify, we usually put a call out for someone to start that thing. So it's on Shopify and we help them get started and build the thing. And then we can maintain our 100 % Shopify recorder. So it's also fun. That's incredible. We did at least one enterprise sale with a supplier because we really wanted their floorboards and for something they were really like look great and were at the right price level and like yeah but We can't place for order unless you come to our process.

1:57:05So sometimes you have maybe teaching. That's actually a good way to get a customer. Yeah, it's also a funny way of doing enterprise sensors. I want this thing, but you just need to migrate over to our platform first. All of the founders and extreme winners that I have studied have this one trait in common. They have excessively high energy levels. If you're going to be the best at what you do, you need to maximize your energy and output. And that's why I've partnered with Function. I signed up for Function long before. They were a sponsor of this podcast. And when you sign up, they ask you what your health goals are.

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1:58:41I mentioned my friend Kareem a few times. I went to his house last week and I was like, dude, I'm talking to Toby. He's also obsessed. He has an engineering mindset like you. He's obsessed with playing video games. And you've mentioned a few times where like, you know, you thought you learned more about building a company from like Starcraft than almost then you know but talking a bunch of people or reading which books but then his whole thing was just like he's got to feel like it's even building with ai now is even more like a video game like completely what's the factor factorio yes okay so that's the example he gave me i haven't played the game can you elaborate on this i completely agree so like uh so again this is like man the The world has such a weird way of like somehow changing itself around me to make the stuff that I thought was irrelevant relevant late in life.

1:59:29It's like absolutely amazing. It's just like, okay, so video games. Video games are best thought. I mean, this depends very much on a video game. But in the aggregate, very often, the good video games are simulations. They are word upon itself and you are a high agency actor and you modify things. You perform actions. You make decisions and then the game rearranges themselves, giving you a feedback loop of, usually a very quick feedback loop because otherwise it's unfun. But you learn about consequences of your actions. So like competitive multiplayer games are very obvious there and Starcraft and strategy games, they're not that popular as a category of games anymore.

2:00:09But like, you know, when I was going for my teens in the 90s, like Starcraft was the biggest game. and you know I loved it because it was really really hard it was like easy to learn how to master which is exactly I think a hallmark of everything that's worth doing for motorsports for for kiteboarding for my for my hobbies tennis all these things are like this but like it specifically is like honest in a way that like there's like two people on the map mirrored everyone has the same potential every single game and one person wins at the end right like it's it's like it's additionally it's a game of imperfect information um it's uh not like chess you don't see the moves um you see only some information that you like in fact you have to invest you have to use one of the things that could get you resources instead to go to the enemy base to figure out what he's building and then you need to interpret this so all these kind of things is like what you learn in this game is uh information is everything like there's no right decision is only context in which decisions turn out to be correct.

2:01:17And while resource management is extremely important, you have to understand that resource management is not just quantifiable. It's not just minerals and gas that you have to manage, which allows you to build units. It's also your attention. And frankly, attacking other people's attention is much more profitable very often in a game of StarCraft than it is to actually attack the base. because if you overtax their ability to pay attention to things, they will make mistakes. How do you overtax their ability to pay attention to things? You can do an early attack. You can do any number of things, especially if you play against the same person.

2:01:54When you get a very high level, you will play the same people over and over again. They get a sense for how you play. So at that moment, there's always been the people who are just incredibly prepared. They perfected playing a single way, which my play was always different. chess, dark craft, all the same. It's like I disrupt the other person's play. Like I do moves that aren't in books, right? Which are, they're not in books because they're not good. But other people can't deal with it because they need their preparation. That's like their skill set is, their ability to play chess is the crystallized intelligence, not the fluid intelligence to roll with the punches.

2:02:32And so, you know, like I learned a lot about myself doing this, but I also learned a lot about, you know, how do you like you know just like how to approach um a game like how do you how do you get better how do you how do you get more out of every game you play because like i never ever in my life had as much time as some other people could uh to invest in something like this so i always had to like how can i get more uh skill progress units out of out of the time i have than other people out of less constrained calendars, right? I'm talking very fondly of StarCraft. It might just have been oddly the right teacher for me at that moment and the student was ready.

2:03:16And so I could have maybe learned the same lessons from any number of things, but I think it was specifically good because of it being a simulation. You start a new game, it had skill-based matchmaking, so you should play against other people of your skill set based on ELO rating,

2:03:37and so you had a very, very clear sense if you started winning more games when you lost, that means you were progressing where if you started losing more games, if you were regressing on an absolute scale compared to all other players in the world. And I think that was a perfect little sandbox to explore how to, you know, think about when it's time to build infrastructure, when it's time to invest in resources, when it's time to prepare, when it's time to reveal your hand, when it's not time to reveal your hand. And I think it was a perfect place to spend time for me in my teenage years, given that I did afterwards.

2:04:14So back to your AI question. I just find that working with AI agents, especially like, I mean, we are recording this. This is like week three of 2026. If we would have recorded this in week 52 of 2025, it would even be different. I might not even make this analogy so strongly, but that's how much is happening. The world changes every three weeks right now. We figured out some new harnesses for agentic loops that are much more autonomous and, frankly, supported by models which didn't exist at the beginning of December even that can perform at this level. And so I look at my computer and I have like six different agents going, all coordinating between them.

2:05:04They send emails to each other, which I think is hilarious. And so, you know, just like, I'm like, man, this is like starting to really look like stuck, stuck, my attention is paid. Like this one is currently working on a module for what I really, really need. So I'm zooming in, paying attention, doing a little bit of micro, giving a little bit of extra, double check sort of the output of the critic, which looks at all of them all the time to figure out if they're still on task. It's the exact same thing, right? It's like, it is a fascinating time. It's just like, I can't describe how fast progress is right now.

2:05:40I just like, you know what I tell my team? It's like, you know, 21 years now, starting complex is really, really, really hard, right? So first year is like, just like, that's interesting. And everything's urgent because like, you're getting to a margin. We got like within a week of running out of money so many times. and sometimes you build out many times it was like just like like the clearance of the one-time try hurdles that shop went through was like millimeters at times like there's so like i bet you if you run the first six years simulation 10 000 times you would not succeed in most of them right so like like in a way like luck is a big component timing of these kind of things people luck especially after that you know ipo you think that's probably the most interesting thing period of the company i think it was hard and maybe not terribly interesting right i guess financing event at the end of the day maybe but some some aspects were interesting like figuring but like there are aspects of how we make it our own as a process like that that probably this is why i did it is why we made changes of to the process or why we wanted to have our own stamp on it because I didn't want to join someone else's process.

2:06:55I wanted to have it in my own. Then with COVID, which was very, very hard, definitely not interesting, actually annoying mostly. And so I'm just trying to figure out, like, 2026, man, this is going to be hard and interesting. Those are the things you're most attracted to, hard and interesting? Year 21 is like, this is going to be the most interesting year in this company's history, probably in everyone, I think literally everyone's career. Just everything is lined up. It's like, doesn't matter what you've got. Like, everyone's going to be measured against how well did you prepare yourself? Like, what's your skill set?

2:07:31How quickly can you react to everything that's happening? How quickly can you readjust? How quickly can you re-enrive everything? You put out this internal memo where you're just like, I think it's, you know the language better than I do, but it's basically, it's a company expectation that the first thing, when you have a problem, you reflexively try to use AI. When did you put that out? A year ago? Yeah, no, maybe not quite, but like something along those lines. And people were just like, this is ridiculous. There was like some pushback. And now, to your point about how fast everything's moving, it's like, of course you would.

2:08:01Yeah, exactly. People will look at that memo in two years and just like, he didn't say anything. It's like saying the sky is blue. Yeah, exactly. So this excites you? Oh, yeah. Man, I love that. This is what I'm here for. Like, it's just like, if I wouldn't have happened, I don't think I would run a job for anymore. It's just like, there's much better leaders in times. Whoa, what? If time says stable. Yeah, but I thought you were in love with this problem. Yeah. This unsolvable problem. So you'd still work on, but you wouldn't be running it? What do you mean? I mean, I think I would be, no, I might try my hand at a different aspect of helping people self-actualize.

2:08:36Like, I mean, my personal mission is to cause more entrepreneurship, right? Like, that's like, I'm going to judge my own career, but have I, the thing I discovered that was meaningful to me, have I helped the maximum amount of other people do this thing? When did you realize that was your mission? So I know exactly because I was like preparing for one of those internal events, summer talks, which I was like, it's always a bit of a like soul. Like I do a lot of this like message in a bottle reading and like self-introspection. And it was like, it was 2014. I was preparing for my summer talk and I'm like, my biggest struggle was with my own identity.

2:09:17Like, again, I think I was mentally preparing for the cosplay period, which I, again, wish I wouldn't. But, like, I was like, but I like engineering. I really want to spend my day hacking on stuff and building things, not managing. And so, again, I used my trick, partly, to give a talk on something that I was sort of come to realization, but maybe not fully internalized. to basically, I said, I loved engineering because it turns out that was the way how I, as a kid, when I started doing it, could build things. What I actually love doing is building things. And specifically, I love doing, like, building things that share a thing that, like, I have experienced.

2:10:10This is a moment of becoming an entrepreneur, getting your first sale. And so I made a talk about combining those two things and just saying like my mission in life, my craft is actually building things in general. I started with products like code. I then create products and now I create companies that create products and I engineer those. And that caused more of this kind of thing. So I kind of wrote that as a personal mission for me and said, like, I will attempt to run Shopify and try to be the best CEO I can be until someone taps me on the shoulder and say other people could be better for this company as long as it's a cohesion with my personal mission.

2:10:52But I'm also like, I'm perfectly fatalistic about this kind of thing. I don't do a job for money. Like, it's like I do it because I feel like I can contribute a lot. I love this idea that you view entrepreneurship as a way to get self-actualized. Oh, yeah. I mean, what's more honest? But it's also your form of entrepreneurship. I was reading, I never read comments of podcasts and YouTube videos. I highly recommend to get that. But people are saying, like, this is like one of the good entrepreneurs. This is like what you're building and the other entrepreneurs you're trying to enable. It's not like the crony capitalistic.

2:11:29There's like a lot of like dirty part. I'm just a capitalist as they come. So I understood what that comment meant. Out of every single note that I took from all the talks that I've seen you give before, the one that was at the top of my list is exactly how I feel about what I'm trying to do. And you said, focus on craft and giving a shit. And you said, it doesn't matter that a bunch of this stuff isn't quantifiable. It's exactly how I feel. It's such a basic thing, but it's like, it's so simple, but it's just not easy, right? Like in any which way. Like companies hate that quantifiable. in fact it's like it's amazing to see it like man you hire the first team together and like if you get to talk about building a company on podcast that means you were successful so the first team clearly did this and therefore the first team was very good and first team you hired based on your gut you just knew these were people you needed you make mistakes but you're correct and that's just sort of like judgment taste maybe even bias like i think we need to move nostalgia into the bad category of words and bias into the good category of words because bias is actually perfectly fine it's like it's like without bias you actually have no convictions like you you should try your convictions this is really what i learned for the thing so you make the first team as a pure play this is the best i know how to make decisions and then everything want everyone wants you to write it down.

2:12:55And you know what happens when you write it down? Like, here's the things that you are looking for. Here's the thing.

2:13:04The people who read it are the people who are very very good at following lists. So the people that you probably described, not the people who go look for a cheat sheet. The people you are trying to avoid hiring are the people who will study a cheat sheet very well. So you just gave everyone a way of performatively doing the thing that you want to see without being intrinsically like this. And so you end up very quickly losing your company once you systematize things. However, everyone is telling you to do it. There's a giant conspiracy against these things, taste, quality. If it can't be put in numbers or can't be written as a list, companies hate it.

2:13:55Yet almost everything you have to do to build a great company is other things that are these things. And you shouldn't write down. Actively avoiding to write something down is sometimes the most important thing you can possibly do. Do you think it's also related to the way you brought up sunk costs a bunch of times? Yeah. Where it's like, well, I wrote this down, I might change my mind, but there's some kind of human element where it's like, oh, I don't want to contradict this because it's in writing. Yeah, exactly. Again, people like to be consistent over time. I just don't find that important.

2:14:28I found the cheat code to always being right. It's just like change your opinion every time you get better information. Because as you get closer to the point where you have to make decisions, that means you will wind up with the right one. It's like if you do not stop at some point to incorporate new information. And even if you are wrong and try to figure it out, again, what do you do? You have one momentarily chance to steer your concern to the best possible outcome. are you going to take it? Or are you going to be the person who just leans into the comfort of somehow character consistency?

2:15:05Why? For what? Again, what's the job you want to do? Do you want to look good or be good? And so you've got to just change. It needs to be okay to change your mind when better information comes along. And again, here's the crazy thing. I think if you go through the transcript of this podcast, you will find, or just ask an AI to do it, it will probably point out various contradictions inside of what I'm saying about what you do. Like I'm like in this, I'm probably on multiple sides. The reason is actually, this is the almost most important thing. It's everything comes in layers. There's like just so many different, like what's the operating, the optimal operating system in some frame of reference is often contradictory on the opposite of a larger frame of reference.

2:15:52because, you know, I like this box, talking about boxes, because like inside of a box, it is, after a while, you can have a map of it, you can illuminate all the corners and you understand what's there. You may decide what was in the right box to pursue. Maybe you need to like figure out, like maybe you need to bend it and say, okay, actually the problem is actually an aspect of another problem. And maybe if they put a larger box, we solve that, and this problem doesn't even need to be solved, that happens. But this is exactly what I mean. As you zoom out, you actually need to completely change the way you problem solve because you're starting to work with much longer timelines.

2:16:33You need to actually make bets at a high level, but you shouldn't make bets with infrastructure because in engineering, again, you can run benchmarks, figure out if something is fast enough, and it'll be a yes or no. You don't need to bet on the trajectory of databases are going faster at a certain thing. You don't need to. You can measure. So there, you want to be super quantifiable. When you try to figure out which market to go into, you need to figure out, well, right now you have to figure out how is AI going to change that market. It's because you need to figure out if a joint market or you, is that market going to be a temporary, unnecessary aspect of something else we are already doing and will it be absorbed into a different category of products.

2:17:17And is this still valuable for you to do? And so on. And, you know, what are humanoid robotics going to do to the world of logistics? And, you know, you've got to work with trend lines mostly, right? Which is not important in many other decision making. So I think there's probably like four or five different levels by which you have to look at a problem. And that is actually a lot of the skill of a good executive is to be able to meet the team where they are and like help them talk about the outside world, quote unquote, like here is how their work relates to all the other frames of reference, all the other abstraction and how it like sits as a part in the larger company and everyone should be able to connect their day-to-day work back to the mission.

2:18:02Like it's not like you work on customer support. Well, you're helping people literally not giving up on being entrepreneurs, right? Like it's not even subtle. It's actually an easy exercise to do for people when you ask them to do it. But it's distressing in how many companies. It's actually kind of unstated. The company mission is some kind of set of platitudes or something that aren't actionable. Those are unforced errors. And I think things go better than you get them right. Hey, real quick. I need a favor from you. Right now, I'm conducting a survey to better understand the listeners of this show.

2:18:38So the survey is entirely anonymous. It's going to ask you things like what your position is at your company, what your household income is, things like that. This information is going to help me both keep and attract the best possible sponsors for the show, which then in turn allows me to create the best possible conversations for you. Now, I don't want to just ask for something without giving you something. So as a thank you for completing the survey, I'm going to host a live stream on YouTube where I talk about some of the most important things I've learned from spending hours with the guests on this show and some of the best ideas that they have shared with me after our conversation.

2:19:11So please do me a huge favor and complete the survey. It takes just five minutes, probably less than five minutes for you. But after you complete the survey, I'll email you a link to the live stream. A link for the survey is in the show notes of this episode and is also available on davidsenra.com. I love the idea of tying everything back to the mission. I do hope people go through the transcript of this conversation. I think it's going to be incredible. I printed out some of them. And I'm sure people are going to tell me about other contradictions. And I think this is the fun bit, right? Like, you know, I find contradictions in my belief systems all the time because we are like balls of contradictions.

2:19:45I'll get messages. I'm like, I'm listening to this episode you did in 2019 and you said this. And on the new one, you said this. I'm like, I've read 250 of these things since then. Like, what do you think I'm doing this to stay the same? Like, that's the point. I had high expectations of this conversation. Toby, you exceeded them. I hope we do this at least once a year. And I think the next time we do this, we design with the constraints which you like, and we just evangelize entrepreneurship and the fact that it's one of the most important things in the world. And I think you're creating a lot more entrepreneurs, and I'm trying to create a lot more entrepreneurs with my life as well.

2:20:15I'll tell you one thing, because I'm not sure if I, maybe I've shared this publicly, but I think you're going to get more mileage out of this than anyone else. When we did surveys with our customers about, because we wanted to, I mean, we need to identify where our customers, what they do, whatever we eat, these kind of things. What we have found, this is a long time ago before your podcast existed, it was like almost 80 % of the high 70s of percent. People check the box saying they have someone who, if they send an entrepreneurial question to, would respond to the email in 24 hours. And I initially thought that was insanely cool how many people have such a resource.

2:20:56It's not like it in the general population though, right? Eventually I clued in, I think it was probably on Wikipedia, I read about survivor bias, survivorship bias. And I realized, fuck, the reason why they are my customers is because they have someone who responds to these questions in 24 hours. It's the other way around. It's causal. And the concept of entrepreneurship is so underexposed and underexplained. It's sort of got better in the 10 years, 15 years since these surveys. But I love what you're doing because you're just bringing this constant, like you're rolling this out for people to introspect, like an entire life story of entrepreneurship.

2:21:37Giving people the thing that is implied by the question is like, do you have any exposure to the world of entrepreneurship in some way that you actually know what you're signing up for? because the people who don't know it exists, the people who have no relation to it or the people who don't happen to have someone in a family or friends who have at some point started anything, well, they just won't try. It's not part of their toolbox. And just putting this part into more people's toolboxes is going to be so load-bearing because I think actually in this world of AI, there's going to be disruption and so many more people than people believe have a plan B of entrepreneurship.

2:22:13And I think making things will be much simpler in the world of just-in-time manufacturing and 3D printing and additive and resin printing and obviously like products just humanoid robotics, dreadnought, lights off factories making anything on demand and 3D printers in every home or at least very very commonly in homes now. You know in that world more people will realize and working with AIs about learning the skills of figuring out how to make the better cup and how to design a better version and not having a Norman Doar. Is capitalism the best part? And I think it would be much more common and much more exciting.

2:22:59And I just like, it's so fun to work on. And like, in that way, like you and I work on the same project, which I think is super, super cool, right? Like, it's like, because the information gap is getting the stories out, telling people that's possible. And it's so important for people to then try and hopefully then we might use Shopify and then hopefully we can push one behind. I love that. I appreciate you saying it. Appreciate the time. Thank you so much, Toby. Awesome, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders.

2:23:28For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.