Kaz Nejatian: How Shopify Built a $90BN Business to Last 100 Years | E1189

Kaz Nejatian 0:00 (upbeat music plays) We say the job of a PM at Shopify is to build the right thing, the right way, at the right time. I think the book Lean Startup may have done more damage- (explosion) ... unintentionally to software than any other book. And as a result of it, we have a crap ton of bad software that should not be in production, in the hands of people. I think being remote is an exceptionally bad idea for most companies. I encourage almost everyone to not do it. People overestimate the importance of what, and then massively underestimate the importance of how. I'm not saying all PMs need to write code, but all PMs need to understand how code is written. That's an incredibly important thing.

Harry Stebbings 0:37 Ready to go? (upbeat music plays) Kaz, I am so excited for this, I heard so many good things. I spoke to Max Levchin before, I spoke to Harley. This is gonna be a great one, so thank you so much for joining me.

Kaz Nejatian 0:59 Thanks for having me, man.

Harry Stebbings 1:01 Not at all. But listen, you've worked with some incredible people, and I wanted to start almost with like a quick-fire

Harry Stebbings 1:06 on the people that you've worked with. If we start with Keith Rabois. I love Keith. Uh, what was your biggest takeaway from working with Keith?

Kaz Nejatian 1:14 I work a lot with both Keith and Max as partners, 'cause they both are in the Shopify ecosystem, and one of the things you realize about both of them, it's actually true about both of them, and I think it may come out of how they grew in tech, is that they are, I say this with ad- admiration, more aggressive than anyone you can imagine being. They're incredibly kind, but very aggressive, uh, in their execution and their ambition, but I have learned from both of them to be perpetually hungry, and it's very impressive watching them do that.

Harry Stebbings 1:48 (laughs) I'm just, sorry, I'm just thinking of Keith, thinking, "Yep, that's absolutely Keith."

Kaz Nejatian 1:52 (laughs)

Harry Stebbings 1:52 Yeah, it's, we mentioned the show with DeLeon before this, and DeLeon's biggest takeaway was Keith's view of company building as like a Hollywood movie-

Kaz Nejatian 2:01 Yeah.

Harry Stebbings 2:01 ... where there's a director who sets the script, recruits the actors-

Kaz Nejatian 2:05 Mm-hmm.

Harry Stebbings 2:05 ... and executes against-

Kaz Nejatian 2:06 Yeah.

Harry Stebbings 2:06 ... that vision. That's one way to do it, and then the other way is test, iterate, talk to customers.

Kaz Nejatian 2:11 Yeah.

Harry Stebbings 2:11 How do you think about those two very opposing views of company building?

Kaz Nejatian 2:15 I think I had written a note internally to our product managers about this at Shopify. I think the book Lean Startup may have done more damage unintentionally to software than any other book. I think it's a well-written book, but it's misunderstood by everyone who's read it, and as a result of it, we have a crap ton of bad software that should not be in production, in the hands of people. And this is just a really good way to churn everyone off from these products. Look, people don't want to be tested upon, and this culture we've developed of ship things that you're not proud of that you know are bad just to, like, get some people to react to it, it's just really bad.

Harry Stebbings 3:00 Mm-hmm.

Kaz Nejatian 3:00 We would never do it this way anywhere else. But I am not saying everyone should spend three years building something before shipping, but the goal is to ship things that you are proud of being in the world.

Harry Stebbings 3:11 Okay, can I just interject there?

Kaz Nejatian 3:13 Sure.

Harry Stebbings 3:13 I get you and agree, but if we apply that to content, my first episodes were shit. (laughs)

Kaz Nejatian 3:19 Sure.

Harry Stebbings 3:19 I was ter- I was terrible. You know, uh, content, you grow, you learn, you develop-

Kaz Nejatian 3:24 Yeah, of course.

Harry Stebbings 3:24 ... you au- And y- what I tell people now is, "Don't be afraid to do V1, just get it out, 'cause V2 will be better and V3 will be better."

Kaz Nejatian 3:32 So, Harry, there's, there's a difference here. When you look back at your work, you will always be ashamed of it. You'll always say, "Ew, I was terrible back then." That's true of like, I mean, I'm not super happy with past versions of Shopify that we have shipped. That's different. When we shipped it, they were complete products. Like, uh, you listen to your first podcast from start to finish, you can actually listen to it, enjoy it, and like as a, as a, as a, you know, as an audience member, but much of what software's being shipped today cannot be used or enjoyed because it is so incomplete. Like, there's a, there's a difference here, right? There's a, uh, and you had a vision, right? It's like, it is totally okay to ship a V1 of something which is constrained version of your final vision.

Harry Stebbings 4:18 Mm-hmm.

Kaz Nejatian 4:19 Right? That's totally okay. In fact, everyone should do that. But what a lot of people do is have zero vision. They just ship something to see what happens next, and that's not how good things are built, like, right? Software is, uh, much more similar to woodwork than people appreciate. Like, it's much more about building something complete that someone can enjoy. Imagine if someone shipped you a chair with three chairs just to test how it would work. Like, it just wouldn't... A, a chair with three legs just wouldn't work. And that's the, that's the difference between complete and incomplete, and I think this is what Keith is saying. Good software is like a good movie. It requires the whole thing

Kaz Nejatian 5:02 to work.

Harry Stebbings 5:02 Can I ask you a rather divisive question, which is, do you think visions are also dangerous? And the reason I say that is because when I actually started the show, my vision was actually to have, become an associate at a venture fund in London-

Kaz Nejatian 5:15 Yeah.

Harry Stebbings 5:16 ... and, you know, in the time that I allocated for that, I actually raised $150 million on my own.

Kaz Nejatian 5:21 Yeah.

Harry Stebbings 5:21 And if, but if I'd succumbed to my vision, I would've accepted that, and so visions can constrain you. Is vision always good?

Kaz Nejatian 5:27 I don't know. I, I don't think so, Harry. Like, let's, let's, I mean, let's look at Shopify. Kobi's original vision was to build a snowboard store, right? And he didn't, I mean, he built one, and now Shopify exists. Like, it is not... Like, it is very true that people learn and change their final goal. People learn and change their vision. But everything good ever created started with someone saying, "Hold on a second. The world is wrong about X. I will fix it." The initial thing of saying, "I have to create a thing to fix a problem for me or for someone else," requires you to know what you want at the end. Now, you may be wrong about that. You can change that, obviously, you know, like-Microsoft's first product was a bootloader for Basic.

Harry Stebbings 6:17 (laughs)

Kaz Nejatian 6:17 Microsoft is not a company that makes bootloaders anymore, right? That's a real thing. But Microsoft's first product wasn't, "Let me ship two lines of code and see what the third one looks like." There's a difference between, um, beautiful things are created with a vision, it is okay for that vision to change over time.

Harry Stebbings 6:35 You mentioned kind of Tobi there and building the, the snowboard store as the first vision. You've worked with Tobi now for several years. If we do the quick-fire on your lesson from Tobi, what's your biggest lesson from Tobi?

Kaz Nejatian 6:46 Two things that Tobi is exceptional in, um, and it's actually very impressive. The first is, um, Tobi has ingrained in the company a prioritization order that is very, um, meaningful to Shopify. We say at Shopify we only have three priorities: build great products, make money, use money to build more great products. And never reverse one and two, right? Priority one is build products, priority two is make money, priority three is never reverse one and two. And like, that is actually incredibly hard to hold as a publicly traded company of our size. That idea of like, hey, just never change those priorities, and spend most of your time on the first one. This is a real thing. The second thing is because of that prioritization stack, Shopify has a quality bar that is higher than most other software companies. So the, the, "We hold things back that almost everyone else would have shipped." And this was actually a jarring thing when I first got to Shopify, when I realized how much Shopify overbuilt before it shipped.

Harry Stebbings 7:58 Is that an effective use of resources? I don't ... Can I-

Kaz Nejatian 8:01 Depends on your timeframe. Depends on what timeframe you're thinking of, right? If you're thinking about a year, hell no. It's a really bad idea if you're t- if you're optimizing for one year to spend so much of your time overbuilding. If you're thinking the thing you're building will be around for 100 years, then for sure it was effective use of your, your resources, right? It's just a matter of like what discount factor you apply to value of time, right? Like-

Harry Stebbings 8:29 I really, I, I really couldn't get over it when you said about, uh, internal building of tools, and how you said like, "Hey, we built everything in compliance, HR, payroll, uh, you know, you don't have Linear or Jira, you have everything built internally." And I'm like, oh my Go- I was walking around the park and I was like, oh my God! Then you have to maintain it, you have to update it, you have to infuse AI into it to make s- Like, I still do not get my head around this argument of how across the whole stack of software tools, it is better.

Kaz Nejatian 8:57 Like Tesla spent a shocking amount of their time building robots to build Tesla cars. They could buy those robots off the shelf. Like they could actually go and buy off-the-shelf robots that everyone else buys to build those cars. But they spend a lot of their time building those robots, rather than buying off-the-shelf ones, right?

Harry Stebbings 9:15 Wha- Why?

Kaz Nejatian 9:17 Because this, uh, our tools shape us more than we realize. Like we buil- first we build our tools, then our tools build us. I think there's nothing wrong with using off-the-shelf software. In fact, we build off-the-shelf software for people to use. But if you're in the business of building software that people use for building things, which we are, it's incredibly opi- important to know where your opinions are coming from, right? There is no such a thing as opinion-free software. The fact that Google Sheets is built the way it is changes how you write, how you think, how you, like, imagine the world. Like our tools shape us in ways that we don't appreciate. So it's a real thing. Like, eh, we, look, we, we have a tool called the GSD, which is our, uh, stands for Get Shit Done, which is our internal stakeholder management and prioritization and project management tool. Like, I've shown it to people, and people are always amazed by how feature-rich it is. Now, building it for us isn't that big a deal, because this is, w- we do this all the time. We have an internal tool built for HR management. People look at it and they're like, "Whoa." Like the, uh, most companies, let me give you an example. Headcount planning. Uh, a lot of companies spend ... they do headcount planning once a year, they go into some Excel sheet, but I'm pretty sure Excel, uh, has done more damage to the world than any other software. They go into an Excel sheet, or they're, they're create some false certainty 'cause Excel doesn't have a column for certainty level, so they model the world and they come up with a headcount plan. And the only thing I am sure of about that headcount plan is that it is wrong (laughs) .

Harry Stebbings 10:56 (laughs)

Kaz Nejatian 10:56 Like I'm very sure the second hit send, it is wrong. At Shopify, we've built software that imagines a company and runs continuously based on a prioritization stack, based on what we're working on, based on the APIs we have built ourselves into our data systems, so we don't have to have people building these like Excel sheets.

Harry Stebbings 11:16 So it's like Rippling, but for internal tooling, which is like the benefits that come from having the synchronicity between all the tools on one platform means that-

Kaz Nejatian 11:25 Yeah.

Harry Stebbings 11:25 ... you can run simulations and models easily between your own tools.

Kaz Nejatian 11:29 Yeah. But I think Rippling actually is probably the best software th- for startups. It kind of like gets across the same thing. Like the fundamental problem of business software is that it is under-premised because it is under-dated (laughs) . Like the data you need to run the business doesn't really exist in, so like you have to do these like very weird like duct taping of different tools together to make your world work. Or in real world what happens is a CSV export from here into an Excel sheet there to make the decisions, so everyone's decisions regardless of how big you are as a company ends up being made in an Excel sheet. And like we're inc- we're incredibly opinionated about this. We think this is a bad way to run a company. Um, and...... I think everyone who comes to Shopify, their first instinct is, "What the heck? You guys have built a what internally?" And within three months, they're converted to why this is the way we do things.

Harry Stebbings 12:27 Have you ever questioned the approach that you've taken, and if so, what moment led you to question it?

Kaz Nejatian 12:33 I had a internal conversations where I said, "This idea is dumb as a bag of hammers." Um, we were-

Harry Stebbings 12:40 That would count as- that would count as questioning. (laughs)

Kaz Nejatian 12:42 Yeah, that was- we were- we were starting to build, uh, internal software. Shopify is a remote company. We were starting to build software to manage, uh, our culture remotely. I thought this was just the nuttiest thing to do. Uh, like, this is just, like, total waste of code, like which- this is a bad idea. And, like, six months after we started, luckily Tobi overruled me. Uh, six months after that, you could not rip this thing out of my hand. Like, I have found it is incredibly valuable. Um, so, look, I think the most important thing is, and this is a really true thing about how we work at Shopify, we are together on this search for truth. Like, our goal is to find, like, what the- what truth is, and we are not that offended about, like, telling someone they're wrong. I actually once looked at my Slack history, uh, with, uh, with Tobi, and the most common p- phrase I had told him was, "I disagree," over the course of the past, like- like- it was, like, over a 30-day period. Like, I'm- I'm generally a person, like, if you can do these tests that figure out how disagreeable you are, I'm generally very disagreeable.

Harry Stebbings 13:58 (laughs)

Kaz Nejatian 13:58 Uh, I think I'm pleasant, I'm just disagreeable. Like, there's a lot that happens inside the company where people genuinely honestly disagree with each other, and our job is to find out the truth.

Harry Stebbings 14:08 I totally agree, it's to find out the truth, and I- I too am disagreeable. And I was listening to you speak before, and you said about a learner's mindset being core to Shopify as kind of culture and one of your core values. And I think a value is something that you can either argue for or against.

Kaz Nejatian 14:25 Mm-hmm.

Harry Stebbings 14:25 No one's gonna argue against having a learner in the team, are they? I mean, everyone-

Kaz Nejatian 14:31 No, of course they are.

Harry Stebbings 14:31 No?

Kaz Nejatian 14:31 I think they are, Harry. No, I think- I think they are. This is a real thing. In fact, every job posting that says you require 10 years of experience is arguing against a learner's mindset 'cause the way the world works usually is one of two things, right? When you are young, your intelligence is fluid, you are learning things. When you get older in your career, you are now experienced, you're less learning things, you're now applying your experience. This is a real thing. It is actually perfectly reasonable to say, "I do not want learners, I want experienced people who have done things to do it again." I think that's a real- and actually- actually thing in most companies. I think the word learner is a good word, so people use it, like, free- more freely. But what we mean by learner is we want people who, uh, replace experience with the ability to learn a thing from scratch, which means that Shopify, on average, tends to do things differently than what experienced people would have done.

Harry Stebbings 15:31 Are they incompatible though? So, like, when I hire for my investing team-

Kaz Nejatian 15:35 Yeah.

Harry Stebbings 15:35 ... I say everyone needs to have invested for five years.

Kaz Nejatian 15:37 Mm-hmm.

Harry Stebbings 15:38 Yeah? But, I still want someone with a learner's mind. I am forever learning.

Kaz Nejatian 15:42 Yeah.

Harry Stebbings 15:42 I don't think they're incompatible.

Kaz Nejatian 15:44 I think it's actually th- there are businesses in which it is m- easier to make them not incompatible. Investing's actually one of those businesses. Um, poker's not one of those businesses, because, like, there is a- th- there are, like, businesses where you- what you- what- what your experience gives you is at-bats that help you learn better. Like, there are lots of businesses that are that.

Harry Stebbings 16:07 Is every business that? So, product management, you release a product, it's-

Kaz Nejatian 16:10 Oh, I think software could be like that, but software isn't mostly like that. Like, if you look at, like, the very large, um, traditional software companies, I'm not talking about, like, the- the FAANG companies, but the traditional software companies, like, the enterprise software companies, they are mostly not about that. Like, the thing they value mostly, it's- this is- this is a thing I actually used to do, um, I used to, um, I don't, like, I no longer do it, but I used to literally go on the career page of these companies and search for COBOL, which is a pro- an old programming language, and, like, re- see how many people w- with COBOL experience they were hiring. And there was always, always, like, dozens each of them. And you're like, "Okay, cool." Like, that's okay. It's totally okay to hire people with 10 years of experience in X. But you can't tell me someone who has 10 years of experience only coding in COBOL is a learner 'cause it's not a thing that you... Like, 'cause this is just, like, a decades-old language at this point. Now, the- like, I think- I think- I think it's actually very profitable, and I'm not judging people's business models, but it's incredibly profitable to build a business based on experience, rather than learning. In fact, most businesses in the world are based on experience, not learning. Now, I think if you're a growth company and a software company, that's your death. I think it is totally your death if you go that way. But let's be honest, most even growth companies just cosplay as learners. They have whole bunch of things you're not allowed to say. There are a whole bunch of companies have, like, wh- these- like, these religious things they believe that you're not allowed to question and once that exists, well, you're not learning anymore 'cause the thing you're supposed to learn about, you can't question, and, like, questioning things is how you learn about them.

Harry Stebbings 17:59 Kas, can I ask, what about the way, or the type of people that Shopify hires would you like to change? So, it could be the people their self, it could be the process-

Kaz Nejatian 18:08 Yeah.

Harry Stebbings 18:08 ... but what would you like to change about the way you do it?

Kaz Nejatian 18:11 I mean, I've gone through a few these, Harry, in my life at Shopify. Uh, in my first year, I tried to convince our, uh, recruiting team to put Shopify's career page behind the API. Like, i.e., it would not have a UX, like, you could not go-... to, uh, you could not go to shopify.com forward slash careers, you just have to literally, like, use the API. My argument back then was if you can't figure out how to do that, you probably shouldn't work in software. Um, it's actually a thing I actually still do a great deal of.

Harry Stebbings 18:44 Do you think that's an arrogant stance?

Kaz Nejatian 18:47 Sure man-

Harry Stebbings 18:48 Just because you-

Kaz Nejatian 18:48 ... of course. (laughs)

Harry Stebbings 18:49 Yeah. (laughs)

Kaz Nejatian 18:50 Like, but like-

Harry Stebbings 18:51 I like it personally, but I'm like, you know, in a, in a labor market that's incredibly competitive, it's like-

Kaz Nejatian 18:55 I mean, I'm glad we didn't d- I'm glad we didn't do it in hindsight, but to be clear, our goal is not to make it easier for people to work at Shopify, that's not the goal. The goal is to, um, find people who are incredibly mission-aligned and care about the thing we do and the way we do it and make sure they have the career of their lives here. It's different. Like, this is a professional sports team, it's not PV Soccer. My goal isn't for everyone to play. That's not the goal. Like, I don't want it to make it easy to register and show up and play. I want exceptionally good people who care about this thing to spend their time here and that's not, you know, it's, it's different. Let me give you, uh, I mean, we didn't do the API thing, but there's a real thing that is true. Um, most companies end up with content management systems, right? So their marketers end up with these templates, they create, they type the words in, put the pictures in, there, w- they're like this WYSIWYG thing, and then it creates a website for them. We don't have that at Shopify. At Shopify, if a marketer wants to create a new landing page, they have to go into GitHub, they have to know how to write some code. They ha- like, this is a real thing, and our, so our marketers learn how to write some code. Like, we expect pro- we expect people here to be able to, be able to do SQL queries, like this is a real thing. Like, like many of our salespeople write SQL. (laughs) This is not a, this is not... now, all of them don't, but many of them do, and this is a real thing. We actually care about this part of the job. Like, we care about the people being here who are the type of people that want to learn new things. Now, we'll gladly teach you SQL, we'll gladly teach you how to code, but you need to be able to want to do these things.

Harry Stebbings 20:44 I do wanna touch on, on one final important figure, uh, and that is Zuck. Uh, you obviously spent time at Facebook or Meta now. What was your biggest takeaway from Zuck, Kaz?

Kaz Nejatian 20:54 But Meta, Meta and, uh, Mark are both underappreciated, like incredibly underappreciated. It's for, like, I think that Mark's ability to, uh, understand risk adequately is just probably unparalleled in business history. Like, I just think that the guy's ability to, like, understand what it means to take risks is just incredible, and for, because of that, Meta has a much higher risk tolerance than most companies.

Harry Stebbings 21:23 What's the best risk he's taken and what's the worst?

Kaz Nejatian 21:25 I mean, newsfeed. Like, just think about, like, like it's actually, like, not like a, like there's no such thing as, like... when you take risks, sometimes they work out, sometimes they don't, and you don't judge the outcome, you judge the process by which you take risks 'cause the outcome doesn't really matter. Um, like if a process is good, on average you'll be right, or 99 re- risk adjusted you'll be right. But think about newsfeed, which is a thing that people think of as Facebook. It did not exist when Facebook launched. Paul Bakai built it as, as like friend feed and they just bought it and just rebuilt the entire thing, the Like button didn't exist. So these are substantial changes in a young product that people would never think of doing today. Like, most founders cannot imagine saying, "I'm going to change my product by this much." And this is, like, very early on. Like, ignore everything else that they've done that has just been amazing, like ignore their incredible bet they've taken on AR/VR, um, which I think people mocked and are starting to realize they were wrong about mocking.

Harry Stebbings 22:26 Why are they wrong about mocking it?

Kaz Nejatian 22:28 I mean, I think if you have used the new, uh, Ray-Ban glasses, you have seen what the future will look like. It is very clearly how it's going. Like, it's just very clear that, like, this is str- like, I think Ray-Ban glasses are just, like, not quite the iPhone moment, but they're, like, almost the iPhone moment. I think when the next Quest comes out, I have no insider information on when it will come out, but, like, some of it has leaked, people's minds are gonna, like, like, it's just gonna be, the promise of AR will be real and it's just, like, these people have just, like, like, it is... and imagine the amount of, um, backbone it took to keep investing in this thing and build a new paradigm of computing when everyone was shitting on it.

Harry Stebbings 23:16 What do you think was the worst bet that he took?

Kaz Nejatian 23:19 The worst decision Meta probably made was not being more publicly celebratory of Mark personally and Meta generally. I think Meta allowed... because the company was so focused on execution internally, it didn't spend that much time worrying about its reputation externally, and essentially allowed a lie to spread about it that has caused it significant pain. I don't think that will matter in the long run, to be honest, but in the short run, it's clearly been painful, right? This has been a real part of, like, you know, what's happening in much of the world regulatorily is just clearly very misguided and it's misguided because Meta didn't spend time educating people. And there's another thing about Meta that very, is, uh, is important to appreciate, more founders have come out of Meta than any other tech company. Th- this is, like, there was a point at which I actually, like, looked it up, it's a, it's like, it's like PayPal-esque, but at much bigger scale. Like, there was a point at which you would, I compared this a few years ago, of the number of $100 million companies that have started by ex-Facebook employees versus ex-employees of other major tech companies. All of them combined was less than Meta.

Harry Stebbings 24:33 Wow.

Kaz Nejatian 24:34 ... and it was like, this is a few years ago now, but yeah, it was a real, um, like Meta, Meta's impact on the world will be un- well, is unappreciated in ways that, like, it's hard to quantify.

Harry Stebbings 24:48 You mentioned there the potential comms challenge that they let slip and let permeate. One thing I thought was fascinating that you said the best PMs have inherent within them is you have to blame yourself for everything. Why do you have to blame yourself for everything, Cas, and is there ever a time when it's not applicable?

Kaz Nejatian 25:06 Product management is not a job that has traditionally existed in the world, right? It's not like a... you can't go and find a product manager skilled up to 1700s. That's not a thing. It's a rel- what we call product management is a relatively new thing. Like, it was basically invented by kind of like Netscape, kind of, kind of Google, kind of Meta. Like this is real. That's how old, like this is like early 2000s-ish type thing. Before then, by the way, if you actually read like c- uh, the story of Compaq or, uh, coming up, or Dell coming up, the people who did most of the job PMs do today were marketers. The VP of marketing was what would have been like kind of in charge of the roadmap. Uh, and there was a, there was a real change in essentially, I think Netscape was the OG here, but people give credit to Google and Meta too. What essentially the job is, is to understand and represent the user and the user's best, um, best outcome, not best wishes, best outcome for the user given the market you're in. That's the job, right? And if the user is not better off, only one person could have made the mistake. If the user is not better off, it's because we say the job of PM at Shopify is to build the right thing the right way at the right time. Most companies don't actually bl- care about the right way part or the right time part, they care about the right thing part, but we care about all three.

Harry Stebbings 26:49 If you were to trade off on one of them, what would you trade off?

Kaz Nejatian 26:52 The right thing, for sure the right thing. 'Cause like, uh, people overestimate the importance of what and massively underestimate the important of, importance of how. The people just massively underestimate the importance of how, uh, in ways that are just like shocking still. Like if you think of like most software, most people in most software companies spend their time arguing what should be built, but they really should be arguing where should we build it? Like where in the stack should this thing be built rather than what we should build? 'Cause that's like, if you get that decision right, you actually can end up building a lot more. This is why, by the way, more PMs need to be more technical. I'm not saying, um, all PMs need to write code, but all PMs need to understand how code is written. And like that's like incredibly important thing in like the stack of priorities.

Harry Stebbings 27:48 It's funny you said there about kind of most companies spend a lot of time talking about what. Uh, I had Gustav, the CPO of Spotify on the show.

Kaz Nejatian 27:55 Yeah.

Harry Stebbings 27:56 And he said, "You know, talk is cheap, so we should do a lot more of it." (laughs)

Kaz Nejatian 28:02 (laughs)

Harry Stebbings 28:02 And I still disagree. I believe in dictatorial regimes.

Kaz Nejatian 28:06 Mm-hmm.

Harry Stebbings 28:06 I believe in, uh, someone having a vision and then executing against it. I think most of the debates, brainstorming, fucking retreats that we do today are not right, actually-

Kaz Nejatian 28:16 Yeah.

Harry Stebbings 28:16 ... and ineffective.

Harry Stebbings 28:18 Do you agree with me or do you actually agree that talk is cheap and we should do more of it and communication amongst teams is the best way to build product?

Kaz Nejatian 28:25 So I actually disagree talk is cheap (laughs) 'cause most people actually miss, uh, like when they talk about talk is cheap, what they mean is I can say things without that much consequence to me. What they miss is people have to listen to you. So their time spent listening to you is very not cheap. In fact, we have this thing in sh- in Shopify where we calculate the cost of every meeting and put it in the meeting invite. I can tell you talk is very, very not cheap. It's incredibly expensive.

Harry Stebbings 28:54 Were you worried when you implemented that, that you would then disincentivize meetings that could create moments of magic? 'Cause I agree with you totally, but it almost reminds me of calories on menu, which is like, I get you if you continuously show me there's 1,200 calories in the apple pie, I'm not gonna eat it. But that apple pie might have been fucking sensational-

Kaz Nejatian 29:13 Yeah, I don't-

Harry Stebbings 29:13 ... and I just missed a moment to be happy.

Kaz Nejatian 29:15 I don't think so, man. I think it's o- obviously everything has risks. It's plausible we did that. But, you know, the way you do things matters more than the outcome. But I actually think this actually we've been... the world is tilting more in our direction, thankfully, from when we did this then to now. So Shopify, like the thing we want to do is for more things in Shopify to be communicated via words and code written down rather than in live meetings, right? That's what we want. We want to tilt the world more that way.

Harry Stebbings 29:48 Are you sure, are you sure that the world is going back to, to, well, going to your way of thinking, of discussion?

Kaz Nejatian 29:53 Well, I'm not sure if everyone's doing it, but I'm very sure that the outcome will be more favorable to us. Like if you think about how LLMs work, you need something to train the machine on. And the fact that we are, we, we had this discussion in paper, we wrote our thoughts down and they made an outcome, it's a very good thing for training machine.

Harry Stebbings 30:12 Unbelievable. I totally agree with you. The lost data and, you know, the future of AI is how you work, you know, show you're working at school-

Kaz Nejatian 30:18 Yeah.

Harry Stebbings 30:18 ... and we don't have any of that in, in data or within companies. I'm just speaking to, you know, 10 CEOs a week of billion dollar plus public companies and they're all saying, "Dude, it's so much better in person. It's so much better. We're, we're all back and trying to..."

Kaz Nejatian 30:32 I think being remote is an exceptionally bad idea for most companies.... it is-

Harry Stebbings 30:37 (laughs)

Kaz Nejatian 30:37 ... really, I encourage almost everyone to not do it. The reason it works for Shopify is because we have spent so much time and so much effort building systems and tools and software to make this work. Like, it is if you go YOLO remote without all the tools we have built, all the teams we have focus on this thing, you will 100% for sure fail. For most companies, they should not do it. It's a bad idea. Um, but that's, um, that's, by the way, that's a structurally true of Shopify. Like, if you go back and read the early memos on, like, investors in Shopify, they were all like, "No one should do this. It's a really bad idea." Like, serving e-commerce, which everyone thought was a small busi- a small town opportunity, for small businesses, which everyone thought was, again, gonna decline, high, insanely high churn. Like, it's a definition when you read Zero to One, uh, Piotr Tegel's book to, like, you know, don't open up a restaurant that's very churny. Shopify dedicated its core mission to serving people who are the most churny. They're, like, a million times more churny than restaurants, uh, pros. It's like, Shopify is very good at this thing where, like, it would be a really bad idea for everyone else, but it's an exceptionally good idea for Shopify.

Harry Stebbings 31:55 What makes that though? The process with which you approach it?

Kaz Nejatian 31:59 Yeah, I mean, I think, I, I, I honestly think this is goes back to, like, Shopify has two core values that are different than most companies, and I know this is like, uh ... but I think they're actually also embodiment of Tobi, uh, our founder, who, like, is very much like this. The first is, like, thrive on change. Now, thrive on change sounds good, but most companies actually don't wanna thrive on change. Most companies are built such that they do incredibly well in times where there are no change. Right? That's what most companies are. Like, if there is change, most companies are not handled, not built to handle it. Shopify is built such that it does better when there is change. When there's dramatic change, Shopify just does better. It's just that's how company's built. So we're, like, very thrive on change-y. Uh, the second is this sort of learner's thing we talked about, where it's like, Shopify is built such that normal things take us longer at Shopify than it would take most companies. Let me give you, like, an example. This is no longer true, but it was true when I got to Shopify. If you wanna hire a person at a regular company, you go to HR, you give them a r- like, "Hey, I have a empty headcount. Please go hire this person for me." And there's a process they run through that works. When I got to Shopify, there was no such process, so hiring someone was just a very weird, like, we had to discover, like, e- from the first time, how do we hire people? That's a real, like ... it, it took, so it took us longer to hire people than most companies, which meant our headcount grew far more slowly than most companies. That's a real downside, right? If you're, if you're optimizing for speed in something-

Harry Stebbings 33:35 It reminds me, actually, of FoundersFund's investment decision-making process, where they actually say you want to increase the friction to an investment decision being made, because it increases the requirements on the decision-maker's side to get it done. If you don't have an HR team, you can just throw it over the fence. Like, "Oh, shit, I've gotta do it? I've gotta source candidates?" That's the same thing.

Kaz Nejatian 33:53 See, look, that, that works for us. This works for us, really. But for most companies, that amount of ownership would be really hard for people to understand, right? Uh-

Harry Stebbings 34:00 What change

Harry Stebbings 34:01 did Shopify find hardest, and what did you learn from that? You said, like, Shopify actually thrives in change.

Kaz Nejatian 34:06 Uh-

Harry Stebbings 34:06 What change did you not thrive from, and what did you learn from that?

Kaz Nejatian 34:10 I mean, l- uh, two things. Going remote was incredibly difficult for Shopify. It took us a very long time to get right. I can honestly tell you for the first six to 12 months, it just straight up wasn't working. Like-

Harry Stebbings 34:24 How so? Just c- comms breaking down?

Kaz Nejatian 34:27 Shopify went from being incredibly in person, Shopify did not even have co-located teams, all teams had to be in the same pod.

Harry Stebbings 34:33 Mm-hmm.

Kaz Nejatian 34:34 So, like, we went from that to fully remote like that, and none of the cultural things that had made Shopify work translated. So that change was very difficult. It was just incredibly painful. I mean, th- there's been other ones that have been ... we made a change where Shopify pays people differently than most companies.

Harry Stebbings 34:57 Yeah.

Kaz Nejatian 34:58 Like, most companies you go to, say, "Hey, here's your salary, here's your equity, here's your bonus structure," whatever. At Shopify, we say, "Here's a pile of money. Here's a software you can use to allocate that pile to salary, equity," um, like, a bunch of other things. That change was a very weird change. Like, let me give you an example. Like, that change required Shopify to change its equity process, 'cause, like, literally what we wanted to do was illegal in most of Europe. Like, the ability to give people, the ability to take options or RSUs or, like, pick between them, was just, like, very ... so it took us many ... it actually ended up with Tobi personally writing a crap ton of code to actually make this thing work, because it was very painful. Now and, now, now that we are through it, um, and, and at the, during the time it was just very painful, 'cause it was just people were reasonably worried that, like, "What the hell is happening here?" But now that we're through it, I don't think any company does, um, this as well as we do. Um, but it was very painful.

Harry Stebbings 36:08 What are those discussions you have when it's not working? Did you talk about going back to fully in person? 'Cause there's gotta be a moment six to nine months in where you're going, "Shit, did we make the wrong decision?"

Kaz Nejatian 36:18 I mean, we burnt the bridges relatively well behind us, 'cause we knew it would be painful. So if, I think if we knew how painful it would be, I don't know if we would have done it.

Harry Stebbings 36:29 Hmm.

Kaz Nejatian 36:30 But once we committed to it, we burnt the bridges pretty well behind us. Like, we encouraged people to move, we, like...... like, gave up our leases in a bunch of places, took the write-downs-

Harry Stebbings 36:42 Mm-hmm.

Kaz Nejatian 36:42 ... gave up the furniture. Like, we made it, like... 'Cause a lot of companies that went remote during COVID, like, kept their offices pristine, did not give up the leases, managed like, like, like, did the whole thing so that you had the optionality to go back. We hired people in places that we, they were nowhere near our offices on purpose. So, we, we, um, made it very difficult for ourselves to go back.

Harry Stebbings 37:05 Do you think you make it difficult for yourselves with public markets because of your contrarian stance on remote, on, you know, how you thrive in change, on the way you hire? It's not an easy story for analysts to get their heads around -

Kaz Nejatian 37:19 No, I, I, I think-

Harry Stebbings 37:20 I mean, the hi-

Kaz Nejatian 37:20 I think Shopify is insanely difficult to model for analysts.

Harry Stebbings 37:24 Why?

Kaz Nejatian 37:24 First of all, our business is not a common one, right? This is, like, not a... We don't run a CPG, we don't run a traditional SaaS business, we don't run a... Like, we just don't... Our business is hard to model. Our growth is hard to understand. It's very hard to understand where Shopify's growth comes from and how it shows up for analysts outside, whereas it's not that hard for me. (laughs)

Harry Stebbings 37:43 I'm sorry to be naive, but the-

Kaz Nejatian 37:45 Sure.

Harry Stebbings 37:45 ... show thrives on basic questions. Why is it hard to understand your growth, and how do you simply explain your growth to your children or a 10-year-old or someone who does not-

Kaz Nejatian 37:54 Well, it's not hard to understand where our growth comes from. Our growth comes from people starting businesses, and those business succeeding and making lots of money, and we share in that upside. That's, like, basically where Shopify's growth comes from. So that's not hard to... It's not hard to say those words, but it's very hard to model those words. It's very hard for analysts to say, "Hey, this cohort of Shopify merchants will have next Allbirds." In the same way, it's actually difficult for analysts to model, uh, VCs, 'cause what Shopify is essentially is, like, we, we, we invest in cohorts of startups. Tens of thousands of merchants try to start a business on Shopify-

Harry Stebbings 38:30 Mm-hmm.

Kaz Nejatian 38:31 ... like, every, I won't, I won't say how frequently 'cause that's publicly, (laughs) but, but, like, very frequently.

Harry Stebbings 38:36 Mm-hmm.

Kaz Nejatian 38:37 And they grow, and some of them become very big and many of them don't. Many of them die. Some of them become very good lifestyle businesses, which is what people want, or side hustles.

Harry Stebbings 38:45 And you still make money from them, and it's kind of the portfolio approach. And eventually-

Kaz Nejatian 38:48 Yeah.

Harry Stebbings 38:48 ... you get where you're kind of ones and two axes. I tot- I totally get you there.

Kaz Nejatian 38:52 Yeah.

Harry Stebbings 38:52 But what you've done is you've realized, "Hang on a minute. Hmm. Allbirds is kinda great, but Supreme is probably better. And actually, the older, bigger commerce enterprises are great," and there's been a very clear shift in Shopify's strategy to enterprise into the core existing brands.

Kaz Nejatian 39:11 Yeah. I mean, I think because-

Harry Stebbings 39:11 Am I wrong with that?

Kaz Nejatian 39:12 ... I think we did it in a very different way than most people think. So, I was here at Shopify. I was a person who used to tell enterprises away. Like, one of the top 10 retailers in the world asked us to use Shopify a few years ago, and I said, "No, you may not." We don't sell PowerPoint ware at Shopify. Like, we don't show up at PowerPoint presentations that say, like, "Look at all the stuff we have," and then none of it works. But we have a product rule called "no party tricks," i.e. we don't show you a thing, and it's, that can work only in very specific instances. Like, if we show you a thing, it can just generally work. So, we don't do the party trick thing of, "Look at me doing this one thing," but as soon as you try to do it again, it just fails. So, what, we take great pride in s- in selling the type of software we do. So- but over the last couple years, it's not like we went upmarket at Shopify. We just kinda, like, stopped saying no to all the enterprises that wanted to use Shopify.

Harry Stebbings 40:10 Why?

Kaz Nejatian 40:11 Well, because the software's now very ready. The product is now very ready for them. And we don't, by the way, we don't treat... Like, Shopify is not a, um, enterprise software company. We build software that enterprises use.

Harry Stebbings 40:26 Uh-huh.

Kaz Nejatian 40:26 But we do not build, and, um, I think most enterprises that use Shopify appreciate this. We don't build bespoke software. There's no "if enterprise" line anywhere in Shopify's code base.

Harry Stebbings 40:37 But when you have enterprise clients, and again, I'm naive here, so correct me, but you need SOC 2, you need levels of compliance, you need permissioning, you need a ton of different product features which are a pain in the ass and normal, smaller businesses wouldn't have. You need customer service, you need customer success at different levels. An enterprise, it's a different company, no?

Kaz Nejatian 40:57 Luckily, because the way Shopify has worked is we have, you know, billion-dollar public companies that start on Shopify on day one, right? (laughs) Like, these are massive, massive companies, um, that just start on Shopify. Fashion Nova's a multi-billion dollar retailer. Figs is a public. Like, these are, like, very large companies that start on Shopify. So, we've been able to model the business as they've grown up. So, we needed SOC 2 for Figs to go public. Like, this is like... We didn't need it for, like, we didn't... What most people end up doing is doing this the wrong way, right? They go to SOC 2 saying, "What can I build?" And then they build the things SOC 2 says, "You shall build," (laughs) which is why all enterprise software ends up being shit.

Harry Stebbings 41:44 (laughs)

Kaz Nejatian 41:44 Right? Whereas what we had to do is we had to do a fr- a first principle. Pretend we have this piece of software. We have merchants who needs, you know, Sarbanes-Oxley compliant 'cause they're going public. How do we, from a first principle, make that work for them? That means a different software experience. Like, it just genuinely, honestly me, and I, like, look, there are many, many, many, many public companies that use Shopify. Like, many of them. Like, like, very large part of commerce in the world, right? Um, but I'm telling you, to them, it just looks different than, like, an ERP would. It just looks like good software. And I think that's not that, that different. Like, look, enterprises use Windows. Small business merchants use Windows. Like, how you build the operating system matters.

Harry Stebbings 42:33 I agree, how you build the operating system matters. Which makes me wonder, kind of going back to our cool conversation of, like, the internal tools you build-

Kaz Nejatian 42:41 (laughs)

Harry Stebbings 42:41 ... why do you still use Stripe?

Kaz Nejatian 42:44 ... 'cause they're exceptionally good at what they do. But I think this is, this is actually-

Harry Stebbings 42:48 But it's the one tool, but it's the one tool that you will take from someone else.

Kaz Nejatian 42:54 No, no, that's not true.

Harry Stebbings 42:54 And it's, and it's probably one of the core, the movement of money.

Kaz Nejatian 42:57 No, no, no, no. Shopify... This is actually real. So the reason we built internal tooling is because no one has built internal tooling this good and this opinionated the way Shopify wants it to be. Shopify is opinionated about how companies should built, be built. There are, there's no one else that shares those opinions that can build external toolings for us.

Harry Stebbings 43:14 I get even by outsourcing that decision-making on the future, they could change their perspective.

Kaz Nejatian 43:21 If Stripe and Shopify ever get to a point where, like, we don't think about the world the same way, then we'll have a conversation. But there's a real... So Sh- so let's level set. Shopify has over 700 payment providers integrated into it, right? So we have, like, lots of them. Stripe is just by far our biggest partner. We have more payment integration on Shopify than any other software platform in the world. Um, Stripe is just our biggest partner. And this Stripe-Shopify relationship is likely the most value creating relationship in the history of software. It would have been Intel-Microsoft before Intel and Microsoft had to... and divorce is too hard a word, but had, like, the thing they did.

Harry Stebbings 44:00 Separation.

Kaz Nejatian 44:01 Yeah. Well, but right now, right now, it's Stripe and Shopify, um, the amount of... Like, these companies were both started when they were both worth single digit millions of dollars, so they started working together, and now they're worth, uh, more than that. Like, that combined value is very, very high and it's because of each other, right? We like them, they like us. We're very happy to be, uh, their partners. But we have similar, like, relationships with Affirm, right? Shop Pay Installments is powered by Affirm. We have a sh- um, our billing product is powered by a company called Melio. Our, a managed markets product is managed by a company called, uh, Globalee. It is not that we can't partner. We partner exceptionally well. It's that we are incredibly opinionated about what good software looks like, and therefore, can only partner best with people who also have similar opinions.

Harry Stebbings 44:51 I get you, I just, I, when you're here, uh, like, you know, building for 100 years-

Kaz Nejatian 44:56 Yeah.

Harry Stebbings 44:56 ... there is an unknown future from an external party that they could change their perspectives or opinions on the world that is very likely.

Kaz Nejatian 45:03 Sure.

Harry Stebbings 45:04 And then you are-

Kaz Nejatian 45:04 Uh, maybe, dude. But, like, look, hear me out, Harry. Like, this is, like, the alternative here. The alternative is what most soft... Like, most software companies grow up in a very zero sum world. Like, they are incredibly jealous of their adjacencies. Like, every software... No, that's not gonna be more fair. Most software executives will spend their time thinking, "Which adjacencies can I go to?" Like, "Which of my..." Like, that's, that's a lot of what software is, right? And that means that they, like most software companies pick fights they don't need to pick. Like, they're incredibly complimentary c- complementary. And I think Shopify-Stripe, Shopify and Affirm, Shopify and Meta, Shopify and Google, Shopify and Apple, like, these are incredibly powerful partnerships. We have very deep partnerships with many tech companies and, like, and it's not because we're, like, you know, Switzerland. It's because we are very incredibly aware of what our job is and what other people's job is. So we don't really... Like, talking to banks, we don't think is our job. We think that's Stripe's job. We have 700 of these but, like-

Harry Stebbings 46:10 What fight do you think you did need to take?

Kaz Nejatian 46:12 It's just not the company's psyche that much. We're very, very glad that Shopify has this Shopify type of software won over the Yahoo Stores type of shop software, right? Like, this idea that, like, thanks to Shopify and companies like Shopify, commerce on the internet is slightly more weird than it would be if Yahoo had won, Yahoo Stores had won, which is like the, the Paul Graham product.

Harry Stebbings 46:38 Mm-hmm.

Kaz Nejatian 46:38 I like Paul, I like Paul Graham a lot, but I'm very glad that his software at Yahoo did not win. But I'm not sure that any... Like, like that was more of, like, a conflict of visions than it was like a conflict of companies. You know what I mean?

Harry Stebbings 46:54 Yeah. What was the most serious disagreement you and Tobi had?

Kaz Nejatian 47:00 Probably going over remote.

Harry Stebbings 47:02 He wanted to, you didn't?

Kaz Nejatian 47:03 Yeah.

Harry Stebbings 47:05 Hmm. (laughs)

Kaz Nejatian 47:08 Yeah. I mean, he was 100% right. He was 100% right.

Harry Stebbings 47:12 When was Tobi wrong? You've said before about, you know, Tobi is very-

Kaz Nejatian 47:16 I don't do that. Uh, I, that's not how I... Like, this is a very real thing, because I think I am wrong so goddamn often, like I, like I'm not, I don't actually attach that many, that much value to my opinion. I attach a great deal of value to having an opinion, but I don't attach that much value to my opinion. So, like, what ends up happening is I don't really keep track of whose opinion was right at the end of the day. Uh, I just... And that's very odd. I just don't.

Harry Stebbings 47:45 What is the most underappreciated

Harry Stebbings 47:47 element of Shopify's product roadmap vision today?

Kaz Nejatian 47:52 I think people underappreciate how broad the product is. Like, the surface area of the product is very, very, very big and people underappreciate how massive it is. In that way, Shopify is much more similar to an operating system than an application. Like, people, people underappreciate how, um, Shopify is not really a point solution. And this is, this is very hard, part of the reason why analysts have a hard time modeling it. 'Cause, like, it's just not... It's hard to model that, 'cause, like, you wanna build a bottom-up model of something, it's really hard to do it for a thing that's this... Like, the use cases of Shopify are incredibly diverse. And I'm like, "This is, like, perfectly good for us." Like, we are, we are tool makers, we are not application builders.

Harry Stebbings 48:42 I always remember Tobi talking about companies being worse around than World of Warcraft clans and, you know, the importance of tool makers in the world, and I always remember that. Uh, I, I do want to ask, you know, on a more personal side-I've heard you say before you have a hard time not saying things you think are true.

Kaz Nejatian 49:00 Mm-hmm.

Harry Stebbings 49:00 What do you think is true that you are having a hard time saying? So for example, I think that remote is terrible for 99% of people and for h- their mental health. I think that Kamala Harris is dangerous for the US future. I don't think Trump with JD Vance is much better, but I think he's better. I'm a bit nervous about saying both of those things. (laughs)

Kaz Nejatian 49:23 (laughs) I'm actually not that nervous about saying anything I believe, because I'm perfectly happy saying Kaz was wrong. Like I'm perfectly happy saying I was wrong. I have no problem saying... I do a post very frequently internally to, to the whole company saying, "Kaz's biggest mistakes over the last few months."

Harry Stebbings 49:42 What was the biggest mistake you posted internally that you did?

Kaz Nejatian 49:45 The biggest mistakes I have made in my career have all been of the same shape, unfortunately. And it's like just, just very... I'll tell you the shape. And I like... And it's a lesson I will perpetually learn and need to re-learn every single time. I have limited the information flow, made it go through the org chart. Like every single time that has happened, like all my biggest mistakes are of that shape. The information that someone needed to have didn't get to them because the org chart, like it went up the org chart rather than like dynamically. This is like the, that's like the biggest mistake. Now, one of these mistakes is very, very large. I won't tell you the specific of it, but like that shape of mistake is very painful.

Harry Stebbings 50:33 So just so I understand, what do you mean like the, the information flow didn't go the right way and you-

Kaz Nejatian 50:37 Let me give you an example, like, um, at most companies, the way it works is I have an idea. I tell... I write a note, I tell my boss about it, my boss likes it or doesn't like it and tells his boss about it and up the chain the information goes till someone says yes and it comes back down and I do it. That tree. That's a very common pattern. It's true at every company. Uh, it's true even at Shopify sometimes, but it's incredibly terrible. Like one of the things I tell my team is to share information publicly and it's perfectly okay for your boss to find out about something at the same time as the whole company. That's perfectly okay. Uh, but my biggest mistakes have essentially been when some... When information has gotten to me without being publicly shared such that opposing views haven't gotten their hands on it.

Harry Stebbings 51:28 Do you really think it is okay for bosses to find out at the same time as the whole company? Sometimes-

Kaz Nejatian 51:33 For most information, yeah, of course.

Harry Stebbings 51:34 ... sometimes morale needs to be managed, sometimes you need to control messaging, sometimes actually it could piss off sales to hear that and see, I, I, I think actually you need a lot more control on messaging.

Kaz Nejatian 51:45 No, no, this is... So some- sometimes yes, but those times almost always involve a lawyer. So like sure, sometimes information needs to be managed. But no, no, the default should be that all information should be shared publicly such that people in the company never think, "Oh, these people are just bullshitting me," when things, things are going well. They, people need to see the ups and downs, need to see the decision-making, need to build in the open such that they can benefit from information from everyone. Like the, this is a real, um... But right, the opposite is can... Like this is one of the benefits of values is that you only have a value if the opposite of it can also be true. Like Apple is a company that's very on the opposite side of the spectrum from Shopify on information flow, and Apple is an exceptionally good company, right? Most people at Apple don't know what other people at Apple are working on. It's a-

Harry Stebbings 52:36 Sure.

Kaz Nejatian 52:37 Yeah, it's a

Harry Stebbings 52:37 I totally agree. And so, and so you agree with me when you say you can't have like integrity as a value, because no one would want a low integrity value.

Kaz Nejatian 52:44 Yeah, sure. Exactly. 100%, yeah, it's dumb. Like values need to be things that a reasonable person can take both s- uh, the other side of. So the way it works for us and for me, that's why I work here, is, um, information openly shared from many other sources, people publicly disagreeing or publicly agreeing. Allowing sunshine to fix things is the best thing. Uh, and people being okay saying, "Hey, I was wrong. Hey, I was right. Hey..." Like, like that you want to build that collegiality. This is a real thing. I'm, I'm not a, I'm not an athlete, but if you look at great sports, like watch a, watch soccer or, uh, watch basketball, you'll see the players are literally always talking to each other. They're always giving each other feedback. "You should be here, you weren't there." Like that's always happening, and that can just not happen if they're all secretive about where they intend to be on the court, right? Like this is, this is a very similar thing to companies, and this is like, uh, this is what I'm saying, uh, where you build it matters more than what you build. If everyone in the companies knows more or less what everyone else is building, you will never have two versions of one thing. You will always say, "Cool, let's you and I work together and build this ??? both of us."

Harry Stebbings 53:57 Kaz, speaking about alignment, you, you write a lot about marriage-

Kaz Nejatian 54:01 Mm-hmm.

Harry Stebbings 54:01 ... which is a diff- which is a different type of alignment.

Kaz Nejatian 54:03 Mm-hmm.

Harry Stebbings 54:03 Um, uh, again, we're addressing the, the element of disagreement.

Kaz Nejatian 54:08 Yeah.

Harry Stebbings 54:08 But when we look at, you know, um, Google, when we look at Amazon, when we look at Microsoft, when we look at Elon Musk and you know, X and Tesla, and when we then extrapolate that out across everyone worth over $100 billion, there's a d- terrible start that basically I think it's like 84% are divorced.

Kaz Nejatian 54:27 Mm-hmm.

Harry Stebbings 54:27 Um, you espouse

Harry Stebbings 54:30 the value of marriage.

Kaz Nejatian 54:31 Mm-hmm.

Harry Stebbings 54:31 The world seems to point the opposite, actually.

Kaz Nejatian 54:34 Generally speaking, it's, uh, really terrible to model your life after people who are worth over $100 billion 'cause they're just such... They're rare, right? They're just not... Like what they... Their circumstances will almost never be your circumstances. I'm not saying you shouldn't desire to be a billionaire if you want to be.

Harry Stebbings 54:50 Do you think those divorce rates would be lower in the billionaire range?

Kaz Nejatian 54:53 I don't think that's also a good measure. I think what matters is this. First of all, divorce rates are lower than people think they are.... because, uh, what divorce rates count is the number of divorces and it is just true that people who get divorced frequently get divorced more than once.

Harry Stebbings 55:11 (laughs)

Kaz Nejatian 55:11 So there's a, there's a, there's a distribution problem, right? Most first time marriages do not end in divorce. Like most first time marriages do not end in divorce. Um, although significant number of second time marriages end up in divorce.

Harry Stebbings 55:28 Yeah, that's true.

Kaz Nejatian 55:28 So that- that- that's a real thing. Second, the data behind this is undeniable. Like this is- this is- there's, I mean, I wrote a book about this, but you don't have to read my book, you can read the academic research, uh, on this. The data behind this is undeniable. For men, specifically for men, graduating from high school, getting some job experience, and getting married, in that order, as soon as possible is, uh, more indicative, um, uh, it is more indicative of- of success, including health, wealth, and happiness, than any other thing. Like we can't find something that is more indicative of future happiness. The odds of bankruptcies go down, the odds of, uh, health events goes down. Uh, cancer survival rates for married men is significantly higher than single men. Like there's a real thing about like bankruptcy rates are lower, uh, for married men than single men. Um, there's a real thing here that is not... Now, there- it is true that-

Harry Stebbings 56:33 Would you argue, would you argue that marriage is good for downside protection but k- y- you know, a cap for upside maximization?

Kaz Nejatian 56:39 No. No, I wouldn't. Look, I think at any given point in your life you have to think about, like-

Harry Stebbings 56:45 When did you get married, Kaz? Or what age?

Kaz Nejatian 56:47 I got married relatively late. I got married when I was, uh, th- I got engaged when I was 29, married when I was, I think, 30. Um, so like later than like, I think, most people in the US would. I'm not American, but most people in North America would have gotten married earlier. Look, bad marriages are incredibly bad, but there are things you can do early in life and there are things you can do to make, to prepare yourself for a good marriage. Uh, and those things are worth doing regardless of getting married or not. And that once you do those things, a g- like, a good marriage is incredibly useful on every metric we can measure.

Harry Stebbings 57:22 Why is it then everyone says, "Oh, god, it's so good when my wife's away, or my husband's away 'cause I have time to work and I can focus on myself-"

Kaz Nejatian 57:32 Yeah, I mean-

Harry Stebbings 57:32 "... and I can really concentrate. And oh god they're back."

Kaz Nejatian 57:36 I think-

Harry Stebbings 57:36 And I mean, dude, we're- we're both humans, it takes time being in a relationship.

Kaz Nejatian 57:41 Sure, but it takes time to work out. Doesn't mean working out is bad for you. Like it takes time to, like, work, doesn't mean work is bad for you. There's a real thing here that is, um... First of all, there's two things. Uh, one, there are lots of things people believe that turn out to be not true. In fact, most human progress has happened because the thing that lots of people believe is true turns out to be not true. So that a lot of people believe it is not, like, an appeal to majority opinion is not a good sign that anything is true or not. Second, I- I- I think this is a place where popular culture has misled us greatly, um, where, look, I admit it is just, like it is funny to talk about, you know, "Oh, my wife is gone, I can finally have fun." It's just funny, but I'm telling you, the most fun I have in my li- days is with my wife.

Harry Stebbings 58:32 How long have you been married?

Kaz Nejatian 58:34 Uh, over 10 years now. Just over 10 years.

Harry Stebbings 58:36 And is- is she on the other side of your computer right now?

Kaz Nejatian 58:38 No, no. No, no, she is not.

Harry Stebbings 58:39 (laughs)

Kaz Nejatian 58:39 She's not. She's trying to get a kid somewhere.

Harry Stebbings 58:42 (laughs)

Kaz Nejatian 58:42 This is, um, this is a part that's like unc- well, uncomfortable to talk about publicly, but married men have more sex than single men do. Married men are richer than single men are. Married men, like it is very, like there's v- all the things that you think "I should optimize for by being single," data proves you're wrong. And you'll-

Harry Stebbings 59:03 I'm not surprised about, I'm not surprised about the sex. Um, I am surprised about the richer.

Kaz Nejatian 59:08 Yeah, it's- it's- it's- it's- it's not even close, it's not even close. It's not like a m- one standard deviation different, it may be like a two standard deviation different. Like there, I mean, the worst thing you can do for yourself economically is be divorced, obviously. Like being divorced is very bad economically. Um, just but being single i- like there are bad divorced, single, married.

Harry Stebbings 59:29 What do you know about marriage now that you wish you'd known when you got married?

Kaz Nejatian 59:33 When you are married, there are three parties you need to care about, not two. It's you, your wife, and the marriage. Like there's- like there's three entities that you need to care about, and they're, all of them are, need to be independently cared about. You need to take care of yourself, you need to take care of your wife, and you take care of your marriage, and those are three different things. And if you think about that, what ends up happening is, every once in a while, you realize that you're taking care of yourself and your wife but not the marriage, and that's incredibly important. Like my wife and I, like look, we have four kids, we have four young kids. We have date nights almost every week, uh, because we value taking care of the marriage.

Harry Stebbings 1:00:18 Should we do a quick-fire round?

Kaz Nejatian 1:00:20 Sure, man.

Harry Stebbings 1:00:21 Okay, let's do it. So first one, what is the best and the worst incumbent to hire leaders from? I- the reason I say this, I was walking around the park with a, uh, public company CEO and he said, "Never hire leaders from Google. They're terrible to invest into a company." Who are the best and who are the worst to hire from?

Kaz Nejatian 1:00:37 I have found that hiring people, uh, from Meta generally has worked out very well for most people I've- 'cause just th- as a training program, it's just exceptionally good. I don't know if there is one generic course, but j- but the c- but industry switching is very difficult. Like hiring marketers who are not from software into software generally doesn't work out. Hiring financial people who are not in software into software generally doesn't work out. So industry switching is very difficult.

Harry Stebbings 1:01:07 Okay, what have you changed your mind on in the last 12 months?

Kaz Nejatian 1:01:10 I changed my mind about, um, uh, the gold standard. Like I used to be, I used to mock it openly and I now think I was wrong. Um-So, this is one of the things my wife was right about and I was wrong about.

Harry Stebbings 1:01:22 What character trait do you like in yourself that you wouldn't want your kids to have it?

Kaz Nejatian 1:01:27 I'm a hacker. I'm a hacker's hacker, and I grew up hacking things. And my five-year-old son the other day, uh, found a way to get his, uh, password for his, uh, iPad, first time on his iPad. And at first I'm like, I'm so proud of him for hacking the system, but like about 30 seconds in I went, "Oh no, my son has unlimited access to an iPad." So that, that has been hard.

Harry Stebbings 1:01:57 (laughs) What one piece of advice would you give to a product leader starting a new role today?

Kaz Nejatian 1:02:03 Uh, optimize for it bats. Optimize your first few years in your career for shipping as many things as possible rather than, um, career progression.

Harry Stebbings 1:02:16 Will Kamala win?

Kaz Nejatian 1:02:20 I don't... I'm not American, so I don't spend that much of my time caring, to be honest.

Harry Stebbings 1:02:25 Huh. Do you not get absorbed in the politics and the Twitter...

Kaz Nejatian 1:02:31 No. No, not r- not really, to be honest. I, I find... I follow a bunch of like, like think tanks from across the political spectrum, um, and I'm like a capitalist at heart, and love, uh, the free market and liberty for all. I find that you are better off, uh, following political news as though it is not a horse race, so check in once a week rather than once a day. 'Cause if you check once a day, it just becomes kinda like, yeah, useless.

Harry Stebbings 1:02:59 Uh, final one for you. What recent company product strategy have you been most impressed by?

Kaz Nejatian 1:03:05 I'll give you two. I mean obviously I think everyone will say Microsoft and OpenAI, 'cause that's just like what they have done to search is just a- like str- admirable. But I'll give you a different one, outside software. I think what ExxonMobil has done, um, is just to be admired from the outside.

Harry Stebbings 1:03:27 So what've they done?

Kaz Nejatian 1:03:28 Just a whole traditional company, their business isn't that complicated theoretically, and I think their profits are up about 160%. Like, uh, and which is like unheard of in this world, right? Like it's a real thing.

Harry Stebbings 1:03:44 What's the change?

Kaz Nejatian 1:03:44 Uh, and they've ess- they've, they've essentially done it by like getting, uh, optimizing production. They're getting a lot more out of assets, uh, than people think they would, and they placed themselves in a position to benefit from surge in travel post COVID I think everyone kind of under appreciated. Like it's actually real. So if you think about it, um, the US produced more crude oil in 2023 than it had ever before. These companies have gotten very good at optimizing for production in ways that is just like very impressive.

Harry Stebbings 1:04:21 Wow. What's the second?

Kaz Nejatian 1:04:25 S- Second.

Harry Stebbings 1:04:25 Oh, the first was Mi- the first was Microsoft and OpenAI and second was ExxonMobil. I think Canva's is incredible.

Kaz Nejatian 1:04:31 Oh yeah. Yes. Yes. Yes. 100%. I mean, not just Canva for what it's worth, like the, the way Canva builds is to be admired. The, the product is just beautiful.

Harry Stebbings 1:04:43 Yeah.

Kaz Nejatian 1:04:43 Um, but I'll give you... Sorry, I'll give you a non-Canva one. Um, my third one would be Figma. Not that many company can survive what happened to Figma, right? Companies that usually like... usually mergers that fall apart or acquisitions that fall apart end up with... in a really bad place, because companies just typically have checked out by the time the acquisition happens. Figma is thriving, and I think they're thriving because when the acquisition happened, they decided that they were going to pretend as though it had not happened. They kept the pace of innovation and they kept shipping product, um, which I think is actually a very risky thing to do as a company, 'cause usually the acquisition happens and you have to undo all of it, but it worked out well for them.

Harry Stebbings 1:05:35 Kaz, listen, I so appreciate you putting up with my roaming between conversations on children, product, and all design. And so you've been a fantastic guest, and thank you so much for doing this, man.

Kaz Nejatian 1:05:45 Dude, my pleasure. Thanks for having me.