Shopify CEO Tobi Lütke: Remote Work vs In-Person; The Benefit of Setting Constraints | E997

1. 0:00 – 0:51

   Intro

   1. TLTobi Lütke0:00

      I think happiness is a temporary thing, but it's a terrible goal. Like in fact, it's, it's, it's a goal that's sold to people to keep them miserable. What you want is contentment, which is very different. If people would start making this differentiation, what we will figure out is, like, vastly more people currently live in a state of contentment than, uh, uh, uh, at many other pla- times in history. Now, the thing that can mess with contentment is, uh, we are comparators. Like, no one wants the worst house on the street, so, um, and we just... The street, it became the entire world because of, you know, social media.

   2. HSHarry Stebbings0:32

      (instrumental music) Tobi, I'm so excited for this. I had so many great things from Glenn, from Luke, from Jeremy at Besima, from so many others. So thank you so much for joining me today.

   3. TLTobi Lütke0:42

      Oh, it's an absolute pleasure. I was looking forward to this.

   4. HSHarry Stebbings0:45

      Now, I thought (laughs) we'd start with something a little bit off the bat, to be honest, (laughs) Tobi.

   5. TLTobi Lütke0:49

      (laughs) .

   6. HSHarry Stebbings0:49

      And so I thought we'd start with, think

2. 0:51 – 8:31

   Who is Toby Lütke?

   1. HSHarry Stebbings0:51

      back to when you were a child. What did you wanna be when you grew up?

   2. TLTobi Lütke0:54

      (laughs) Hey, so I got lucky. I got really, really, really lucky. My parents got a, got a computer for me when I was... uh, for the house, um, when I was six years old. Um, and it was like a, like a basic computer, like a sort of... if you think C64, then you sort of get the right idea. It's a German product, uh, called an Amstrad. Um, and, um, I knew that there was noth- nothing else, like, that would be more interesting than... Like, I, I, I, I, um, I, I learned programming before I knew that was a thing or term or that re- it was called some f- uh, programming, uh, just from, uh, you know, following listings on magazines and so on. So I, uh, I very, very, very early made for this... you know, I must, I must have been like 12 years old or so, but, you know, there's just no chance I'm gonna do anything other than program all day. Now, I failed (laughs) .

   3. HSHarry Stebbings1:47

      (laughs)

   4. TLTobi Lütke1:47

      But in this particular, uh, frame of reference, um, uh, it, it was only a, uh, a period of my life where I did that all day long. Um, but I never stopped programming. I, I, I, I... so it's, it's been with me ever since.

   5. HSHarry Stebbings2:01

      Can I ask, what captivated you so much? You mentioned six when you got your first computer. What was it about it that made you so interested?

   6. TLTobi Lütke2:08

      Oh, man. I, I just like... I, I, I know this sounds so wrong now, but like even just, you know, first time sitting in front of it and just typing, um, like any letter and seeing it appear on a screen was just magic. Um, and, um, remember, that was like... I mean, so you ty- before that that was... uh, even this was '80, mid, early '80s, so mid '80s, um, and, um, you know, typewriters were around.

   7. HSHarry Stebbings2:32

      Yeah.

   8. TLTobi Lütke2:32

      Um, um, uh, also like in a small town, so like, you know, if you would have been in Silicon Valley, you would have encountered computers more. Um, but I wasn't. And, um, there was this sort of just magic, and then you're like, "Okay, well, how does a computer actually do that?" And then, um, I'm curious about everything. I hate black boxes. I don't... I really, really dislike black boxes. It's actually like a, um, like a parenting principle in our house. Like ev- the, the... uh, we talk about this with my, with my kids. It's like, "We do not like black boxes in the house." Everyone... ev- everything is understandable, and everything is way more interesting than it seems. And so, so I, I just wanted to understand these machines, and, um, again, like even when you're... look, maybe six is a bit early. But like, uh, when you're a 10-year-old boy growing up in a, in a, in a, in a somewhat rigid, um, uh, uh, schooling system like Germany's, um, like, we, we, you know, had hours of Latin a day and these kind of things. Um, like, I mean, you have a lot of things. You might even have some free time, but what you don't have is agency and, like, leverage. Like, there's nothing in the world that you can absolutely control in a way that, like, it does this thing and it will do it forever. Like, it just... e- it doesn't fit into, um, the rest of life experience for anyone who didn't end up, uh, spending time. So these fairly primitive computers. And so, um, you know, making things, um, and then figuring out the utility. And like in, in many cases, when you, when you, when you did a thing, like, you might have actually done something that other people haven't (laughs) , you know, yet. And, um, I, I, I think people need frontiers or some people need frontiers. Um, I think entrepreneurs need frontiers. Like there, there, there's, um, there's a need for reaching for something that could l- lead to, you know, value in the world around us. Um, and, and, and, and so I just... I, I, I, I just absolutely loved w- especially once I got into programming and tinkering. Um, I call it tinkering, really, um, th- with code and machines to, um, you know, build things on my own, share them with others, like some pranks and so on. Like I, I... there are so many things I could do because I had this set of skills that was rare during this time. Um, and, and I just... anyway, like I... it's, it's, it's hard for me to answer your actual primary question other than with like, uh, anecdotes because, um, it was never a question in my mind as like when I was basically like spending time on a computer was 10X to 100X more interesting than literally anything else that could possibly happen in my life, um-

   9. HSHarry Stebbings5:11

      (laughs)

   10. TLTobi Lütke5:11

       ... during... for, for, for the first 10, 15 years of my life, 20 years.

   11. HSHarry Stebbings5:15

       You mentioned, you mentioned not growing up in the Valley and being in, you know, in the, you know, German school system and hating black boxes. I always think we, we're kind of all functions of our histories. So to speak. I'm secretly an armchair psychologist, even though I actually never got a psychology degree-

   12. TLTobi Lütke5:29

       (laughs) .

   13. HSHarry Stebbings5:29

       ... um, (laughs) to, or any degree at all actually, Tobi. Uh, but my, my question to you is, what do you think you were running from when you reflect on that all being the functions of our history?

   14. TLTobi Lütke5:39

       What I'm running from? Um, well, I, um... boredom is something I (laughs) like to avoid. Um, I... uh, ignorance. Um, I, I actually, um... it's more magnetic for me, honestly. It... like there's more magnetism in the direction of where I'm going than there is, uh, uh, like, um, a reverse polarity of... in, in the place I'm coming from. I just... you know, there are certain-... uh, schools of philosophy that do a much better job of, uh, articulating what I'm about to say because this is sort of my own and home- homegrown life philosophy, but I just have this strong sense that the t- th- th- the, the, the goal in life is, um, is, is, is really try to become the best version of yourself. I know it sounds like super fortune cookie, but like I, I describe it like I, uh, you know, it's just that it's as if at the end of life you meet the person you could have become and the, the, the, the, the work of life is really try to minimize the diff between that person and the one that actually showed up.

   15. HSHarry Stebbings6:36

       (laughs)

   16. TLTobi Lütke6:36

       And, um, I find, uh, not understanding a thing feels... I, I, I, I, I... almost amoral to me. Like it, it just feels like I, I, I, I... we've got these incredible brains, um, and, and, and it... we, um... these brains run a model of planet Earth, which we then constantly interrogate. And, um, I want that model to be right. Like and, and therefore, every single thing, every single time I c- I get to dig into something, into, uh, learning, uh, something, I can update this model. And the nice thing is, um, first of all, that's super fun. Second, that model is the one I walk around with, I, I go into every one of my meetings with, I go into every... I encounter every situation, I hold up to every problem that I need to solve. And the quality of all decisions is simply, um, how correct, how close to the truth is, um, that model of a world that I've been developing. I want to be able to reason like right now, like I, I, I nee- uh, uh, reason about the late- the newest things that exist in the world. I need to not treat transformer models as black box.

   17. HSHarry Stebbings7:45

       (laughs)

   18. TLTobi Lütke7:45

       I don't need to treat, uh, um, uh, embeddings as, as, as, as the black box. I need... like, I need to understand first because otherwise, I cannot show up to a meeting with my teams and say... a- a- a- and, and, and have a good, uh, chance of reasoning with them about not just what is sort of a convenient next task but what's very best thing we could be doing, what is the new thing that all of this unlocks. And that's been driving me every step of the way.

   19. HSHarry Stebbings8:10

       I mean, you just gave me so much there. I, I would love to (laughs) break it down into kind of three steps though, which is like selection of learning, process of learning and, and decision-making post-learning. If we think about selection of learning, I, I, I heard you say on a different show that actually when it comes to kind of great founders, the best founders, what they can do is subtraction.

3. 8:31 – 11:49

   How to Choose What to Learn

   1. HSHarry Stebbings8:31

   2. TLTobi Lütke8:31

      (laughs)

   3. HSHarry Stebbings8:31

      When you think about focus and deciding what you choose to learn, how do you determine what you should choose to learn versus bluntly maybe interesting but a distraction?

   4. TLTobi Lütke8:43

      I... You know, there's, there's a thing called product-market fit. Um, I actually think a more sometimes important thing in this context is actually founder-market fit, um, but there's, there's actually... uh, like I think you can play this game at more layers. Um, probably have something weird like curiosity/times fit. (laughs)

   5. HSHarry Stebbings9:05

      (laughs)

   6. TLTobi Lütke9:05

      I am interested in literally everything that can add value. Like it's, it's very... it's a very bizarre thing. Um, I... my, my, my cur- like I don't need to think about what... like when... like it's actually when I get interested in something, I know there's value hidden in it. Like I've, I've basically never not brought lessons back from something. Um, and so I trust my... uh, I, I, I follow my curiosity. I think that's the term you'll hear. Um, I think it's used mostly... like there are people who use it from first principles. Other people who have something which I, I think maybe luck gives them, which is that, um, their curiosity itself ends up being the product of a probably fairly hot... like, like, like a, like a, uh, intrinsic ability to spot value around corners, um, which is hard to put into words.

   7. HSHarry Stebbings9:51

      Can I ask you, what do you do when the value's ambiguous? And I think about Obviously, I create content. When you're debating on a new content strategy, the, the kind of terminal value is actually ambiguous. It may work, it may not work. How do you think about dedicating time when ambiguous terminal value is a potential outcome?

   8. TLTobi Lütke10:11

      Yeah. I think, I think it just you, you... well, time is a finite resource, attention's a finite, finite resource. So, so you kind of have to... you, you have to create like an evaluation function-

   9. HSHarry Stebbings10:20

      Mm-hmm.

   10. TLTobi Lütke10:20

       ... that you run over your, your ideas, right? Like, uh, I think, um, you know, effort is a big, um, uh, factor. Uh, also re- reversibility is a big factor. Like if something is easy to reverse and not a lot of effort, um, to, to, to try it, give it a go because the fact that you think the value is ambiguous is a hole in your model of the planet Earth, right? Um, so, so filling that hole means that you like afterwards can avoid similar paths because you will encounter the same idea over and over again, um, when you're developing a piece of content. Y- you know, like... um, you, you thi- this could be... you, you could make a decision to commit yourself to a, uh, deep research, uh, uh, subject about having many, many meetings, many conversations, maybe reading some books, or it could be a, um, uh... you, you could say, "Well, I'm trying to... trying this new channel and maybe I'm going to reuse some, uh, some, some, some content or maybe a book in this channel or something I can do in an afternoon," and then you time box it. So this is... usually when, when, when I'm... when my objective is to find out if something is of value, I try to figure out with everything I already got and an afternoon of time, how can I, uh, get, um, basically a scorecard, um, for this before, before, before you go deeper into this. I think that helps a lot.

   11. HSHarry Stebbings11:44

       Can I be... sorry, I would... I'm so glad-

   12. TLTobi Lütke11:46

       Of course, yes.

   13. HSHarry Stebbings11:46

       ... you didn't put time on the schedule because it's not on the schedule at all.

4. 11:49 – 13:51

   How to Set Goals

   1. HSHarry Stebbings11:49

      (laughs) I find like goal setting very difficult because a lot of goals can be gameable. You said about kind of the scorecard there. You know, you can give, uh, most things a, a goal that is en- entirely gameable. How do you tie true outcomes to the goals that you set to ensure that you are actually moving the ball down the field, not just hitting a goal?

   2. TLTobi Lütke12:11

      Yeah. That's a- that's a- that's a- that's a- that's a right question. I tend to think that, um... I mean, first of all, I think I- I- I- I- I'm pretty... I'm more of a craftsperson than a scientist. Like, uh, I- I- I don't think s- any... Like, it's sort of a real artist ship, um, is- is- is what Jobs said. Like, I like to think that wisdom, and again, mental model, whatever you call it, knowledge, um, that should be pretty intrinsically motivated. So like I- I- I- it's actually okay to work on something to just update, like- like to- to- to find something out. But the key is afterwards to take, to take that and- and- and create something that other people can, uh, you- you, like, consume, judge or so. Like if you, if you just ivory tower some- some- some- some new kno- knowledge, then I think you don't actually add a lot in the world, you consume. And, uh, I think, um, I- I- I, I like building (laughs) . I like, I like creating, uh, and, um, I- I think going on a, um, journey to ga- uh, gain some knowledge, uh, fi- figuring out something new, but then turning it immediately into something that other people, that- that you can share with other people, like- like- like- like, is the key. If there isn't a clear path of how to... Like, if this hypothesis is right, then I get to do a thing that then, like, many, many more people can appreciate, if y- if y- if you can't do the n- the- the end of a sentence, then it's probably, uh... Like, it- i- I would downgrade it quite a bit. But I have been surprised. Like, so- so just, like, on- on... To take another side of this, um, at some point I was like, "I need hobbies again," because I've like been-

   3. HSHarry Stebbings13:45

      I mean, like-

   4. TLTobi Lütke13:45

      ... basically doing like 20, like 15 years of... Of working all day on Shopify. Um,

5. 13:51 – 23:34

   How to Set Constraints

   1. TLTobi Lütke13:51

      so picked up, uh, gui- uh, like- like learning an instrument, guitar, and like I- I played with a- a- a band poorly. You know, that sa- seemed entirely, um, uh, intrinsically motivated for my own purposes. Um, but I actually learned a lot about how to f- make... How to form great teams from the way a brand works, you know, how to... Like, I learned a lot about creativity, like, just, um, improvisation-

   2. HSHarry Stebbings14:14

      Let's-

   3. TLTobi Lütke14:15

      ... of like all key.

   4. HSHarry Stebbings14:16

      ... whoa, whoa. What did you learn about building great teams from being in a band and learning music again?

   5. TLTobi Lütke14:21

      I- I- I learned a lot of lessons about leadership because like, um, I- I- I mean, this is, uh, most pronounced in jazz, uh, som- somewhat in blues as well, that like in, there's a basic contract. Like, it's... Like, artists, real artists will always talk about the tyranny of a blank canvas, right? Like, this is actually not what leads to creativity. Creativity always comes from constraints. Constraining the space is- is- is- is- is a, is not just... Like, uh, I've been in many, many meetings where people say, "I wish you could do this thing where if... And you'd be completely unconstrained by like, I don't know, budgetary or time." And I'm like, "Yeah, but that's hallucination. That's not... You know, that's not, that's not, that's not craftsmanship. That's not, um, that's, that's not engineering." I think the older, um, crafts, um, have this totally figured out. Like in- in- in- in- in- in blues, you would, um, uh, you know, you would set- set a meter, like you would set a tempo, um, uh, you would presumably set a beat and you would set a key. And then afterwards people improvise over that. Um, different people might do a solo, different people... Like, you- you're creating a new piece of music, uh, with every note. Like, it's- it's- it's- it's- it's deeply creative, but the creativity comes out of the constraints that were set. And then if you really know what you're doing, and this is where it gets really fun, you get to violate some of those constraints. Like, you- you can do a key change. You- you- you can go from minor to major, uh, uh, like, uh... And, um, if everyone's good at what they're doing, they'll follow. And, um, uh, it's... Uh, or create some dissonance on, uh, like in- in- in- in- in the scale, which actually leads... If you resolve it right, it leads to, uh, uh, it leads to interesting things. This is, I think, what the best teams do everywhere. They are, uh, greedy for constraints. They want to understand what is... Like, how can we restrict our space so that we get to f- uh, get started, develop something, feel each other out, have, um, uh, develop an appreciation for each other's, uh, uh, aptitudes and skills, right? Like, it's a different piece of music depending on who shows up to your band. Um. Uh-

   6. HSHarry Stebbings16:25

      Can I ask, when you hear about constraints in this way, is it purely financial constraints or are there other types of constraint?

   7. TLTobi Lütke16:30

      No, I... No, no, no. Um, uh, it's, uh, you know, like- I- if you take, let's take an engineering, uh, uh, like project. Um, time is the be- is- is one of the best constrain- time boxing. Like, in Shopify, like, uh, every project goes through multiple phases. There's a prototype phase, there's, uh, like there's a proposal phase for- before that. If proposal is accepted, you go to prototype phase, build, and then releasing. Um, the, um, prototype phase is ideally, uh, time constrained and people constrained. You- you- you can only do it with three people, and you can... You've gotten maximum of... It's six weeks. It should actually be less. Like, it's- it's sort of meandered upwards, um. Um, and, uh, um, in fact, it should probably be a week, and then next week you should start from scratch to try something else, um, um, and do this multiple times. That- that is like... Some of the best code I ever wrote, I wrote, um, with, uh, my, uh, our, uh, my- the first engineer we hired, Cody, who was the CTO of company at the time. We did this in pair programming, and, um, we set ourself constraints, like every single day we have to throw away all source code other than the unit tests, um, and we would ship the feature the day we could implement the entire feature in that day. And, um, you really, really, really, really get code, code if you do that. So, um, in fact, I think one of the best applications of creativity, um, in the world of creation is actually creating creative constraints. Um, and so, uh, I- I think this is, uh, a, like, a very big topic with lots and lots and lots of, lo- lots of ideas.

   8. HSHarry Stebbings18:07

      I'm so glad that we do th- throwaways. What's a creative constraint and how does that differ from a non-creative constraint?

   9. TLTobi Lütke18:14

      I think all... Uh, it- it's... This is just a mindset. I- I- I've... I think this is, this is the, um, this is how you react to constraints. I think, I think every constraint is a creative constraint. Um, and I think, um-... people who complain about constraints have, um, an incomplete mental model about the creative process.

   10. HSHarry Stebbings18:32

       How do you impose constraints now in a world where, bluntly, you have much less? When you are a startup running out of cash, you have real constraints on time, you have runway. When you have, like, time restraints on engineers, it's 'cause you can't afford any more engineers, you have no money to hire someone. Bluntly, you're not running out of money-

   11. TLTobi Lütke18:50

       (laughs)

   12. HSHarry Stebbings18:50

       ... yet you don't have necessary restraints, but you can't hire an incremental engineer. How do you create artificial constraints and make them real?

   13. TLTobi Lütke18:59

       I think, um, that there are many ways to it. Like, it's, it's, um, uh... I mean, culture is the best, honestly. I have a story I just said about how we built, um, uh, features early is a story about people we know in Shopify, and they know that that's valued. Um, the project management system that Shopify has, um, which manages the phases, um, of these projects and is sort of a central roadmap, places constraints on, um, uh, different phases. Um, you know, how staffed they can be and, uh, and, and so on. So some of them can be totally reinforced. Some of them, uh, can be culture, uh, uh, like in- induced. Um, I think we just have a bad story. Like, we have a bad... I mean, humans have infinite amount of bad stories, like, we, we keep finding, um, uh, like, we, we, we... our, you know, our, our brain is loaded up with a firmware that is, like, developed for (inaudible) 　 right? Like, so, like, basically, like, everything we are doing on planet Earth we have basically managed to, like, um, awkwardly do operations against human nature. Um, uh, sometimes our environment does it for us, sometimes our, uh, sort of self-development can help. And, uh, we... you replace one bad story at a time. One of the bad stories is that, uh, um, artificial constraints are annoying. Artificial constraints are help with setting up boundary conditions. Again, every constraint, every rule, at least in a company, as long as lo- there's no victim on the other side of this, of course. While they are constraints, like, if you really know what you're doing, play some dissonant notes. You know, like, play with the constraints, see what you can do. Like, like, try to push against those things a little bit. And then, um, if you discover that one of the constraints was actually, um, not an artificial constraint but was actually a detrimental constraint, um, for the creative process, then we can, uh, we, we can change it, because we're trying to figure out how to build the best things we can.

   14. HSHarry Stebbings20:58

       Do you agree the best CEO is the best resource allocators? When you think about constraints, uh, that's immediately what I think, too. It's a commonly held saying, as we both know. Do you agree with it?

   15. TLTobi Lütke21:08

       That's a great question. Hmm. I think if you take a really, um... I think the term resource is so poorly defined, but it might be true by, uh, default, um, because, um, y- like, you, you can look at everything in planet Earth and think about it as a, as, as, as a limited resource, um, like attention, work hours, like, um, uh, team size, like, roadmap items, backlog. Here's what I think. I think, um, I think it's a heuristic by which people can explain to themselves why certain people are great CEOs. But it's not the reason, it's not causal, it's correlated. Um, I think the caus- causality runs by... I think the best CEOs are people who have, um, a more correct model of the world than everyone else, um, are good communicators, uh, or have a lot of trust, or are hugely enabled in some other form to, uh, have other people follow them in such a way that y- y- you know, that, uh, um, you build against that model and, um, have such a high batting average that the world that they are building against, um, is gonna come true by the time the projects are done. If that happens, more than (inaudible) 　 then, uh, I think you have a company that's out-competing status quo, out-competing industry, out-competing orthodoxy. Um, because the ambient understanding of a world is just not that good. Like mo- again, most things we think are true are wrong, um, and... or at least wrong in important ways. And so, um, as... if you observe this, like, like visitors from Mars look at a company that is, uh, run in such a way and they will say, "Wow, that company is, like, incredible at allocating its resources to, uh, the projects that ended up making a difference." Um, and there's very little, uh, l- little waste and all these kind of things. But also consequences of, um, a company... Like you asked me about subtraction earlier. Like, the subtraction is important because, like, again, often companies end up doing things for reasons that everyone else is doing it. And, um, uh, you know, sometimes, uh, like, it's, it's much easier to add something to a company, um, than it is to remove something from a company. And so, um, if you can only add, uh, never remove, you're gumming up the system after a while. Like, you gotta see, see the work package, I guess.

   16. HSHarry Stebbings23:29

       Can I ask, you said about kind of most of our models of the world, uh, maybe built on the wrong foundations,

6. 23:34 – 29:00

   How Tobi Learns New Things

   1. HSHarry Stebbings23:34

      you especially today have kind of unlimited access to any view on anything in the world, really. You could email anyone and get their thoughts and they will sit on a call and explain how they view the world to you. Um, my question is, how do you build your model of the world in new areas where you want to have a model? What does that learning process look like for you if you're aware that many people have the wrong view of that model?

   2. TLTobi Lütke23:58

      By the way, I don't think that this excess is that differentiated anymore, thank you, thanks to podcasts. Um, I, I, I in- like, I think me being at the same place 20 years ago, 30 years ago would have, like, been different, but I don't... I think it's actually still significantly worse to what any person, uh, can do right now with a podcast, uh, uh, like, um, uh, client, so (inaudible) 　 .

   3. HSHarry Stebbings24:24

      Do you... do you... do you... I, I, I mean this nicely. Do you agree with that, that if you think about, say, um, I don't know, say, take COVID, and think about how shipping and delivery changes in a world of COVID, you have the ability now to call up Brian at Flagship Support or the CEO of UPS or you name any of the big providers and say-... I'm learning how this changes. Can you please explain to me the different, uh, moving parts? And you would get access to knowledge that that podcast wouldn't give.

   4. TLTobi Lütke24:51

      I, I, I think that's right, although I'm pretty sure if you go, you would find within the timeline, uh, Ryan being on a podcast, uh, and, and talking about this very topic, right? Like because it's, it's, it's an obvious topic to ask him and, um, I, I think there was bunch of like write-ups about it. I, I, I again, I don't wanna belittle you. You're, you're clearly right, I just, I, I actually don't use this, um, as much, and I think there's, there's a particular reason. I grew up in an outsider city. Again, like I come from a town which was started I think by Julius Caesar, heh, like, uh, it was like two, 2,000 years old when I grew up, uh, it was being celebrated, and I think that was also the most interesting thing that ever happened there. So like-

   5. HSHarry Stebbings25:28

      Wow. (laughs)

   6. TLTobi Lütke25:28

      ... it's, it's just like-

   7. HSHarry Stebbings25:30

      Wow. Good.

   8. TLTobi Lütke25:31

      ... um, uh, like I, I, I was observing, uh, groups of people doing, um, high tech usually or, or working in, in highly competitive places, figuring out new things from afar my entire life. Um, I, I still am not in Silicon Valley. I live in Ottawa, Canada, which is not, uh, where I have coffee with, um, uh, uh, Ryan (laughs) from Flexport. Um, so, uh, so, so my skill set has probably, um, has sort of developed to try to, uh, go and find pieces of information to, uh, the, the, the answers to the questions that I have is often white papers or books, um, uh, often books that are written very long ago, um, and, and, and, and go to those, uh, sources, and like, but, but like I said, I don't even, I think those skills are ten- like now almost atrophying, um, because it's just so fast to go in a search engine and, and look at where d- did people discuss these topics, what other people, and like just, you know, listen to other people, uh, uh, ha- have a conversation about it and, and take it from there. I usually like take notes and then go to Wikipedia and look up and again build my, my, uh, my view. I'm gonna say all of this is the how, um, but there is a more important thing behind this which is, um... And, and, and, and much harder to articulate and much more important, um, because, um, I've... and I think common with other kind of people you would reference as the people to turn to when something's happening in the world and you really, really would like a perspective, I think there's a, one of the biggest differences in planet Earth is like, um, um, sort of culturally between people who are interested in what's right in the context of groups, like in the times, like what are people thinking about something, like what is fashionable, what is, uh, how do, h- uh, uh, what to wear, like how, how to dress, how to, um, you know, um, uh, you know, lap leak or not, um, uh, you know, these kind of things. Or the people who, uh, you want to know what's true. And, um, if you make a decision to prioritize finding out what's true rather than what's right in the overtone window of your, uh, communities, um, it's actually a very lonely experience, and you will have to go more to primary sources, um, than, um, uh, in, in, into conversations, unless you are so lucky to be able to build a network of, uh, people who are like that. Because again, I think almost everything we know about planet Earth is, uh, directionally correct but wrong in some details. Um, and maybe often correct as a heuristic, but, uh, true for reasons that are completely different from the c- from the explanation of our times, right? And so, um, if you are really, really interested in figuring out how to make the best possible decisions, um, especially in the context of a company or like even, I mean, maybe also beyond, then you really, really, really need to follow what's true, um, and, um, uh... Yes, that's, uh, a- a- and, and have to prioritize that and, and surround yourself with other people on a similar journey.

   9. HSHarry Stebbings28:47

      I spoke to people... you said surround yourself with other people on a similar journey, I spoke to Glenn before the show.

   10. TLTobi Lütke28:51

       Thank you.

   11. HSHarry Stebbings28:51

       And he said on decisions, you're incredible, world class. When it comes to dealing with sunk cost fallacy, what do you think he meant

7. 29:00 – 34:12

   The Sunk Cost Fallacy

   1. HSHarry Stebbings29:00

      by this, and how do you deal with sunk cost fallacy?

   2. TLTobi Lütke29:03

      Sunk cost fallacy is another thing, um, I mean, it i- it is a real, uh, uh, logical fallacy, like people over, um, um, the fact that you have been doing something for a while means you want to keep going because if you change your mind now, then you're basically, um, passing judgment on all your prior decisions. So, so, uh, again, if you're on a path of wanting to be right in the context of others, logical consistency is your primary optimization target. Like you want to have made a choice about something, and, uh, you want to stick with this choice, because your identity is wrapped around your beliefs, y- y- your shared beliefs, um, again, because you're prioritizing what other people think. You give, you, you, you, you, you, um... One of the sort of... it's maybe too strong a term, but like I can't help but like think that if that's your operating modus, you're actually outsourcing, uh, your self-worth to the people around you, because you, you, you acquire positive a- affirmation by them to know that you're, uh, doing a good job, which I find is like really regrettable because that actually gives too much power to people around you, first of all, um, and second, they don't want that job. They don't... they have their own thing going, right? Like they're not, they're not interested in, um, uh, uh, moonlighting as your value system. Um, and so, um, I, uh... but if you're in this world view, sunk cost fallacy is, uh, something that is very, very important to you and, and you engage with it a lot, and if you see people that seemingly have no problem with it, you will, uh, talk about them being good at not ha- falling for the sunk cost fallacy. But again, it's, it's, this is the language of the p- of the predominant operating system of, of, of the world.... in, in, if, if you're, if you are interested in truth, it doesn't exist fun- uh, con- uh, sunk cost fallacy because it's irrelevant. It's, it's, like, it's an input into your decision-making process that you have been doing a certain thing. But you already knew this because you were d- you were doing whatever was best given your entire mental model. You, you're not cont- there's, uh, th- you're, you're trying to avoid continuation of previous ideas. What you want is every step, uh, like every moment, uh, of your life, you ideally want to run a function over the entire, uh, search space of your mental model to decide, "What is the best possible n- next move for me? How, how should I spend the next minute?" If new information comes in that is not dangerous to your identity, this is delightful. This is what your curiosity steers you towards. And if that, um, piece of information, uh, invalidates any of prior b- beliefs, you might completely change, uh, y- like, eh, obviously, you need to go do the exact opposite of what you've been doing until this point. This is not changing your mind. Your, eh, because, your mind is consistent. Your mind is executing a function over the search space every step of the way. It's the variables that change, and that's like there's no moral problem with it. But it's true. So when people observe, um, I, I, by the way, I'm aspiring to all these kind of things. I'm, I'm, I'm, I'm, I'm not, uh, uh... Like, no one's perfect at this. Um, it's al- it's something you can only aspire at, uh, uh, to in general, um, because again, our firmware works against us. I mean, there's other sentences, like w- strong opinions weakly held. I try, I try to be an advocate for what I think is best, um, partly because if someone disagrees with me, I want to know this because they might be sitting on a piece of information that I'm gonna add. And, um, um, if they are, um, uh... So, so I need to make my current best take on everything clearly known because I want the disagreement because then I can learn something which then maybe makes me completely change my mind. Um, and then I'm gonna be strongly for that because again, I want to have people, uh, uh, add more information, uh, to this. Again, this is the consequences of this seemingly simple decision of are you interested in, in being right, uh, or are you looking for truth?

   3. HSHarry Stebbings33:03

      How do you know when to stop doing something? What I mean by that is you said every new piece of information's a delight. Say you engage with a strategic decision and the information is revealed, eh, beh, is it strong enough to make you turn back? Eh, d- you don't have enough data. How do you have enough data or know when enough is enough and you've got to turn around?

   4. TLTobi Lütke33:24

      Yeah. I think there's a... Colin Powell did a, had a good sort of heuristic for that. If you have like between 40% and 70% of right information, you should probably make a choice. Um, before that, you don't have enough, and afterwards, it's too little. I think that's l- largely right. But like ev- I think it's missing a dimension on reversibility cost. Um, like if, if, if, if, um, if the reversibility of a decision, um, and sort of the total body of work on it is, uh, is low, then you should change your mind very early, like after you, eh, like, basically know this, the way this is gonna go. And, uh, if the reversibility is high, you wanna be very, very careful, like measure twice, cut once. Um, so...

   5. HSHarry Stebbings34:03

      Can you take me to a decision that you made that was a strong strategic decision that then you reversed on the back of new information?

   6. TLTobi Lütke34:10

      Sure. I mean, easy,

8. 34:12 – 46:19

   Remote Work vs In-Person

   1. TLTobi Lütke34:12

      easy, uh... So I, I, I'm a space strong believer, like in my, um, of, of, of physical proximity, um, which will come as a surprise, right, um, potentially. So I think physical proximity is massively underrated and underappreciated. Um, there's incredible, um, uh, osmosis that come. Like I, I was fortunate as a young programmer into my apprenticeship, um, to be in a room, uh, a room of six people, uh, which is I think the ideal team size. Um, um, with one extraordinarily good, uh, mentor, um, who I, who was the meister assigned to me as an apprentice in, in a sort of Vocational, um, system. And, um, uh, so his role was to take me under his wings, uh, uh, as, as, so the social contract of a vocational, uh, doing an education system. I was mostly just working next to him. He, he, like, I could do a printout of code, and he would sort of like with a red pen just like give me, give me pointers on how to do it better and these kind of things. Um, eh, a bit code reviews these days. Um, and, um, it's incredible how I, I probably went through like 10 years of, uh, um, wall clock time career advancement in a year, uh, sitting next to him and just like listening to the conversations he was having with others because he was one of those people that everyone went to for questions. So anyway, uh, that's very, very strongly in my, in my mind. Um, so very strong opinion on, uh, the best. I mean the best team in the world, the fastest moving team in the world is one person that has all the skills needed. The second best is a team of six people that are very neuro- uh, like, um, intellectually diverse and can bring a lot of, uh, new, uh, different information together but like, um, become a real team, um, especially if one person is very senior because then you have a lot of osmosis learning. That's the sort of what the, the floor plan we created. Beyond that, um, you want to be on one floor. If not, you should be in the one building. If, uh, like otherwise you want to be in the same time zone and so on. Um, all those are very, very strong opinions. We've designed incredibly good office spaces. Like we shou- we actually wanted to open source. I don't think we ever did our floor places because my co-founder, Daniel, did an amazing job, um, encoding everything I just said into, uh, office space. But like, just like everyone we worked out with, eh, like was blown away by just how collaborative it turned. With all this backdrop, like now, um, Shopify is like 5,000 people. We now ha- like Ottawa is a million people, uh, in it. It's, uh, it's, it's, uh, it's our hometown. Um, we can't stay in one city. It's just, uh, uh, it, it was just not possible to, um, build the size of company we need, uh, with uh, with, with, with uh, by relocating everyone with labor pool that was locally. So we had to go to, you know, Montreal and Toronto and so on.... uh, and Waterloo, and other places. So we were kind of in this hybrid world already. We were also expanding to Europe, so we were violating the timezone kind of thing. This equation started change, like, rerunning. Now, my conviction was also that hybrid is worse than all remote, because hybrid creates concentration power, conce- like, there's more power to the team that's close, and it ma- t- treats the people who are not, um, as appendages, um, and, and, and creates a lesser experience. It's actually a much more shared experience if everyone's in their own square on a Zoom call. This is a lot of talk. Basically, two things happened. One, it w- it became clear that Shopify needs the s- kind of staffing that we would not be able to support in, in a single place, so we were basically, um, sleepwalking ourselves outside o- out, out of our principles. And, uh, my belief was that at a certain point it flips and it's actually better if everyone is remote. Um, and then we were getting very close to sort of a 50/50 point on, on, like, on, on, on this. I think within a year or two, I would have m- transferred Shopify to r- um, uh, remote entirely, um, and then COVID started. Um, and in, in fact, I c- I can prove this because we actually did, uh, game days. We, we, we closed our office for a month at some point, just to, like, develop empathy with the people who were working remotely for us. Actually, that worked really well and we found some tooling problems, and, um, but that was one of those chaos monkey things with Shopify was sometimes, these sort of subtraction events. Um, that was really fun. Um, at least I thought it was fun. Some people didn't.

   2. HSHarry Stebbings38:32

      (laughs)

   3. TLTobi Lütke38:33

      Um, and, uh, um, so we practiced, and then, and then COVID happened, and, um, now there's one variable in my model which is like everything we just talked about, except are people allowed to leave their house? And it's a Boolean, and it was true of the entire world. It was an u- implicit, unstated, um, input into the model, and then lockdowns happened basically everywhere where we had offices, and, uh, uh, like true became false, and now we're deriving, uh, this, like, equation with this changed variable, immediately G yielded, "Hey, let's work from remote." And trajectory-wise, I knew that by the, like, this was probably gonna last a year just because this was reasonably, like, if you work in tech, you know what an exponential, uh, week over week growth looks like, on, o- off, like, as area under the chart. Um, politicians, turns out, didn't. But they do now.

   4. HSHarry Stebbings39:21

      (laughs)

   5. TLTobi Lütke39:22

      Um, and, uh, so it, so it was kind of clear, like, clear that, uh, there was be, this would be, like 2000, like 2020 would be a very strange year. And so we, I think, called, like, let's work from home, I th- maybe amongst the first. Um, we then also said, "We are gonna stay remote and become a digital by default company." Nothing changed my mind. Like, I, I, I'm not... Proximity is still ideal way to work together, but, um, uh, I would always recommend it to a small, like a c- company size that can fit on one, one single floor plate in a, in a, in a, in a, in a, in an office tower in one city.

   6. HSHarry Stebbings39:59

      If you think about founders listening to this, say they are all in one city and they are in that ability, is it not actually more difficult to do it scaled to that stage together and then go, "Oh shit, we're too big now. We're gonna need to switch from all in person to all remote"? Is it not easier on day one to say, "New company, all remote"? Do you see what I mean?

   7. TLTobi Lütke40:19

      Yep. Um, I mean, I think the, the, the advantage, like, the advantage is, like, the, the, the variable you have to consider is, um, uh, the talent. Like if you assume your company's going to be 100 people and you're thinking about, like, hiring your first 100 people, like, even if you don't think you can work as well together remotely, let's, like, say, like, put a 10, maybe 20% discount on, on productivity. Is the talent density more than 20% higher if you can hire everywhere than if you're restricted onto one city? Saying yes to only one city is actually says no to all other cities on planet Earth, right? Like b- it was, like, yeses are way more d- um, costly than, uh, nos, um, uh, which is also counterintuitive. Again, our software is in the way here. Um, if you say yes to something, you actually say no to everything else. If you say no to one thing, you are, uh, keep the optionality to say yes to the right thing. So, so yes, your founders are around, again, if you, if you can hire, let's say, even everywhere in the United States, um, I mean, is the least skilled person in your engineering team maybe twice as good as the w- a- a- as, as the least skilled team would be if you would restrict yourself to especially, like, a secondary market location to build your company? Um, answer to this could be either yes or no, but you should know it, because you'll make other, like, because if you don't have an opinion on it, you just made a decision not adding a very important input.

   8. HSHarry Stebbings41:47

      You, you, sorry, you said about a 10 to 20% productivity decline. I'm too interested 'cause you've got, uh, I, I think bluntly, there's a 10% productivity decline when you're all remote. People take Friday afternoon off, Monday morning they're slower, and you name it. But then you also talked about, and have done before, like, reducing the number of meetings, canceling meetings. Are people more or less productive in person or remote?

   9. TLTobi Lütke42:10

      Uh, I think people are more productive in person. Um, it's just what we are built for, like, it's like, like, and our entire brain, uh, is, is kind of, like, there's a lot of types of works that are, um, that can be disrupted by, like, like, that, that are, that are harder to do when you're, like, surrounded by a lot of people in a busy place or interrupted constantly, so, like, for, for some types of works, uh, work, it's actually really, really beneficial to, uh, you know, work remotely. Um, so, so it's, it depends a lot on the job. There are certain things that remote work is not good at, which, um, you will always have to, you know, either create a great culture around, or great process, or, like, meet in person for, like, um, like, the sort of free idea flow brainstorming session is not great over, uh, video. There's something, there's sort of, like, magic that manifests only-... sort of in a, in a middle of a table, like sort of floating over a conversation about, like, the sort of shared picture of when everyone's trying to figure out what could we do, rather than, um, how to get there. How to get there looks great remote. Um, what is possible is not that good. I think you can proxy it also to sort of wartime peacetime, if you like that language. Um, like, wartime anything is harder to do remote. Um, but I mean, they, they invented airplanes. Right? So like, it's like, it's not, you know, like, the cool thing is getting the right people into, into a room is, like, not that hard, um, uh, whe- when you need to do it. Um, if a majority of your work is the stuff that is, you can do concentrated with headphones on, um, or, or something like that remotely, it's, it's a great candidate for remote work.

   10. HSHarry Stebbings43:50

       I think one thing that's much easier when you're in-person is also encouragement and sustaining morale, and I think when you have bloody volatile markets like we do today, you see, you know, large drops in net worth for employees. And I was speaking to a friend of mine who's CEO of, like, a $30 or $40 billion public company, $10 billion difference is probably quite a big difference (laughs) . So, I should, I get that one right. But he said, "The biggest problem that I have stays every day I walk in and people's heads are down because they're looking at their stock options going, 'Ah, we've just lost another X%'" How do you think about maintaining morale in the face of volatile markets? You said earlier about being that great communicator. I was fascinated about that when I heard him say it.

   11. TLTobi Lütke44:31

       Ah, it's interesting. Yeah, it's never been my experience, uh, like, uh, uh, Shopify's, um, appreciated a lot of value at some point, and then lost a lot of value. And, um, you know, this was sort of extreme during COVID. But, like, before that, it also, like, went up and down, left and r- right. I've always told the company, "Hey, um, the stock price is not the company." Like, it's like, we, we, we all work on something called the fair market value of Shopify, which is, like, the sum total of products and, and skill sets of, uh, like, of the people. Um, most of the value of a S- like, of a SaaS company is, like, extraordinarily hard to value from a gap perspective. Like, Shopify's ability to hire the best engineers in the world, like, what is that worth? Like, it's, I think it's tens of billions-

   12. HSHarry Stebbings45:17

       (laughs) .

   13. TLTobi Lütke45:17

       ... as a comparative advantage. Not an asset on any ￡S sheet. Never, never should it. I don't wanna value it. It's like, I think that would be difficult. But it is one of the major assets we developed, right? Like, it's, it's, it's, it's a r- it's, it's, uh, reputation, it's the fact that, you know, people are doing super impactful work for some, uh, like, for people they care about. Um, so, the, the, we are building the fair market value of a company which is unguessable. Um, um, the stock market is playing a daily guessing game. It's like, "Guess the fair market value." And, um, mostly, actually most people don't play that game, they play the meta game of like, "Guess what other people guess is the fair market value." (laughs) And so, um, uh, it's, it's a game that has nothing to do with the actual value of a business and, um, it's, it's, it, it's, it's, um, Wall Street playing Wall Street, um, and, uh, unless you're selling shares, you have nothing to do with it. Um, uh, and in fact, you have much better information than the people, uh, who are doing these trades. And so, I, I, I, I don't, I don't know. Like, I, do you know, I, I, I, I-

   14. HSHarry Stebbings46:18

       Tobias, can I ask you a divisive

9. 46:19 – 49:12

   Tobi vs Short Sellers

   1. HSHarry Stebbings46:19

      question? Why, why do you go after the short sellers? I saw this tweet-

   2. TLTobi Lütke46:23

      (laughs)

   3. HSHarry Stebbings46:23

      ... of yours and I was like, "Go, Tobi. Woof." Uh-

   4. TLTobi Lütke46:25

      I, I don't, I, I don't go after short sellers. I, I think short sell- short sells are an important part of a market. I, I, I, I go after one specific one who is, like, a, like, short and distort bad faith actor who is, like, like, this, this enter or left fool, who is, like, just unbelievable, that guy. So I, this, this is like, hey, if you make a principal decision that a company's overvalued and, uh, like, you, you short the stock, you make the, you, you play the game of Wall Street. Again, I don't really care about the game of Wall Street, uh, very much. Um, but, like, you're playing the game, and I, like, this game exists, and therefore you... Like, if that's the best way to play it, like, play it, and if it helps, um, converged the stock market value on the fair market value of the business, then actually you're, you're, you're, you're, you're, you're, you're providing a service. If you post bullshit of a company and, like, make, like, grandstanding videos with false accusation using basically just, like, the ability of you s- being able to legally make shit up, uh, while you have a short position against a company, um, and the company being bound by SEC communication rules, not being able to really respond to this, if, if, if that's kind of something you prey on, you're just a prick. So that's, like, I'm, I'm, I'm, I'm, I'm, I'm, I guess, I'm pro-short selling in the abstract, I'm against pricks. (laughs)

   5. HSHarry Stebbings47:44

      Just remind me never to upset you, Tobi. (laughs)

   6. TLTobi Lütke47:47

      (laughs) I really don't hold grudges-

   7. HSHarry Stebbings47:48

      Okay.

   8. TLTobi Lütke47:48

      ... but usually it's like I'm making an exception, like, I, I had so, uh, in, in this particular case.

   9. HSHarry Stebbings47:53

      Do you care that people like you or not? You said earlier, you know, they don't wanna be, uh, that you're in, like, value judgment system. I deeply care that people like me. It's one of my biggest flaws. Do you care if people like you-

   10. TLTobi Lütke48:05

       the-

   11. HSHarry Stebbings48:05

       ... and what people think?

   12. TLTobi Lütke48:07

       I mean, no one doesn't care, at all, but, like, I use it as a piece of information that I find curious. I, I see it as my job to, to be a likable person, like, to be someone who ought to be liked. And if someone fails to do that, that's, like, them not doing it right (laughs) , like, to me. So, like, I, I, I, I, it's, I, I, it's not my, like, people do not live rent-free in my head, um, in this particular way. So, um-

   13. HSHarry Stebbings48:35

       Sh- (laughs) You, you mentioned being a likable person. I, I think, you know, I've listened to many of your interviews, and I mean this respectfully to everyone who's interviewed you-

   14. TLTobi Lütke48:42

       (laughs)

   15. HSHarry Stebbings48:42

       ... and to you. The one thing that people kind of missed was kind of you. Like, we, not your decision-making or your learning or any of these optimization things, but, like, I spoke about, you know, uh, doing my work on you beforehand. I heard about the wonderful marriage that you have. Like, Tobi, you have a fantastic partnership with your wife.

   16. TLTobi Lütke49:01

       ... there.

   17. HSHarry Stebbings49:02

       What makes a great marriage and, and how do you sustain that-

   18. TLTobi Lütke49:04

       (inhales) Ow.

   19. HSHarry Stebbings49:05

       ... with being CEO of a public company? I mean, I can't-

   20. TLTobi Lütke49:08

       I-

   21. HSHarry Stebbings49:08

       ... even do it with a girlfriend and a podcast, Tobi. How the fuck do you do it?

   22. TLTobi Lütke49:11

       (laughs) I,

10. 49:12 – 52:32

    Marriage Advice

    1. TLTobi Lütke49:12

       I, I met Fiona, like, ex- like, super early in life, um, and we ended up being, like, so, th- th- we are in many ways o- opposite people and, uh, but, like, also have such a strong bond of, like, intellectual curiosity and, like, we, I mean, we grew together from basically being kids. We, I think, we, we, we started dating when we were above 20 years old, which was more than 20 years ago. I mean, I, honestly, I think, um, very often being, like, the CEO of a company is a team production, um, and, and, and, um, Fiona does not get the credit she deserves. Like, she encouraged me to even start a company in the beginning. So like, it, like, it's, it's a, uh, it, you know, y- s- often you can play this game of, like, how many variables would have to change to lead to a completely different outcome? And it's like, and it's always exactly one which is few and not for me. Like so, um, she's like, she's never been on a payroll of a company but she's always been, like, someone I talked about all the, like, you know, challenges. We've sometimes divided and conquered by read- like, there's like 15 books to read on, to, because we need t- like, we as a, uh, unit need to understand this thing better. Um, okay, let's go halfsies. Actually, she read- she reads faster than I do.

    2. HSHarry Stebbings50:23

       Mm-hmm.

    3. TLTobi Lütke50:23

       So, um, she usually gets to a stack faster. But what sustains a great marriage, I mean, it ha- it, it is- we have common projects but, uh, different lives a bit as well. Like, uh, there's like, sh- th- there's just like, she is interested in other things than I and, and, and she's enthusiastic about what she discovers and brings those things back, uh, and, and, and so do I. That's important. We're just like deeply curious about each other and I think that's been, uh, you know, sustaining, uh, s- sustaining us. It's, I again, it's, I don't, I don't think I've cracked the code. I just got extremely lucky, uh, in, in, in, in this regard.

    4. HSHarry Stebbings50:59

       Glenn said you were probably one of the most, like, computer native technical people. He said, "I- if Tobi could be an IP address, he would be." (laughs)

    5. TLTobi Lütke51:07

       Yeah. (laughs)

    6. HSHarry Stebbings51:07

       Which was quite a good description. Do you struggle to turn off? Like do you go home and you're thinking about the business, you're thinking about X, you're thinking about Y? And actually being in the moment, being with your kids, your wife, is that hard?

    7. TLTobi Lütke51:19

       I'm, uh, yeah, I'm never off. Like it doesn't e- but it's also never tried to be off. I, I, uh, I, I will always run background processes, uh, being interested, like, r- like, like trying to figure something out. Um, I have a kind of like brain that just like lends itself to doing this kind of thing. Um, I think, I think work-life balance is basically nonsense. I think it's like, I mean, a work-life harmony is kind of a better term. Um, but like Shopify is unbelievably interesting. Like it's, it's, it's, it's a perfect excuse, it's a perfect vehicle for someone who's like on, on, on a, on a life mission like me and lots of my friends here, um, to, it provides the consistent impetus to like know, you know, what new technologies can do because we are trying to help small businesses. Like at which, you know, just, hey, we have a task on Planet Earth which is like, I know that sounds like super corny but like, man, this, these are the most interesting times in human history, I think. I, I, I really, really, really f- like I, I, I mean the candidates here are like sort of end of a romantic public, some events in China, like, um-

    8. HSHarry Stebbings52:31

       I mean

11. 52:32 – 1:06:00

    Why Happiness is BS

    1. HSHarry Stebbings52:32

       this nicely, why do you think this is one of the most interesting times? We have like de-globalization like never before, income inequality like never before, worse healthcare systems like never before, climate change like never before. I'm looking at the world quite scared if I'm totally honest, Tobi.

    2. TLTobi Lütke52:45

       Yeah. But I, I, I think this is, I, I think because, um, this is the, the overlay narrative of the media. Again, if you, if you're, if you go at this from truth, um, I, I, I am like, I'm, I'm, I'm, I'm quite concerned about climate change but I'm also 100%, like I, we know how to solve it. It's a tech- it's a technology problem. Um, wealth and equality, it's like this is the most wealthy, uh, e- society's ever been. You, you, you can't compare the existence of, uh, any king to, uh, your baseline experience of anyone in Western society. Uh, it, it just, it just, uh, like you don't even need to go to like incredible, like, like, like potential for healthcare and all these kind of things. Like no one until very recently had ever had a warm shower. Like it's, it's like, it's like re- these are unbelievable luxuries for you, we have. We just, we are, just have a built in hedonistic treadmill which makes us forget about it all. I- I- I- if you, if, if you don't have to take my word for it, you, you go for something like, uh, Steven Pinker's book, Path of Enlightenment or, I think, and it just, it just, it just like drops like every single stat you've, have seen quoted as going worse and shows you it actually gets, it's get- getting better. Um, I'm extremely optimistic. This is like, it, it's, um, the, there is a effect in the world which is, um, that kind of sucks but it's gonna be temporary. Um, and it's where, um, I'm doing fine but everyone else is fucked effect.

    3. HSHarry Stebbings54:10

       Yeah.

    4. TLTobi Lütke54:10

       And it's actually being measured in all, like in all societies and it's like, the US isn't even the worst but like, hmm, I don't have the numbers on top of my, uh, my, my fingertips but I think to remember, and if it's not true in US, uh, at this level, it's, it's worse in K- South Korea and other places. But it's, um, 80% to 90% of people who say, "I'm doing fine but everyone else is doing really, really poorly or like, like, like around me." Um, so 90% of people say, eh, uh, it's fine and they think, eh, a vast majority of people are not and everyone thinks this because we are actually, I mean, there's real problems in the world, absolutely, and wealth inequality is the thing that could be even better. Like it's, it's, it's, it's too high in some places. Um, um, but it's also like a bad faith take that wealth inequalities a bad thing by itself. Like different people-

    5. HSHarry Stebbings55:05

       Do, do, do you think that's... I'm sorry to, I'm, I'm being just, I'm, I don't, I don't agree. Like I think people vote for Trump, I think people vote for Brexit because it's not that they're doing okay and everyone else is and it's 'cause they're pissed off with what's happening-

    6. TLTobi Lütke55:18

       The s-

    7. HSHarry Stebbings55:18

       ... and they, they're not okay.

    8. TLTobi Lütke55:19

       Mm-hmm.

    9. HSHarry Stebbings55:20

       And I think if you go to the 98%, or that's probably a gross exaggeration, but 90% of people in the UK and, I don't know, 85 in the US, or 90% in the US, who actually are living in real not great quality standards, and worsening standards, they're not happy with how they are and they don't think they're even okay.

    10. TLTobi Lütke55:37

        Yeah.

    11. HSHarry Stebbings55:38

        Do, do you know what I mean? Is it a luxury-

    12. TLTobi Lütke55:40

        Yep.

    13. HSHarry Stebbings55:41

        ... of ours?

    14. TLTobi Lütke55:41

        Yeah. No, it's true. Uh, uh, and like pe- people are, people want things to change and there are real problems in the world and people want to see things improve, which is, um, really, really important for society. Um, people will vote for how they think things can be improved. We have disagreements, but even the largest disagreements, like Brexit, Trump, yes, there are disagreements even in the goals, but they are very minor. Like everyone like agrees that like, "Hey, we, we wanna live in, um, uh, like voting is a good thing." (laughs) Everyone who votes thinks voting is presumably a good thing. Um, uh, like, uh, the- the sort of system of, uh, uh-

    15. HSHarry Stebbings56:18

        Democracy.

    16. TLTobi Lütke56:18

        ... democracy that we have and, and, and, um, enlightened self-interest harnessed towards the greater good, um, at least those components of capitalism are like important, um, uh, and have demonstrably been superior to everything else we've attempted before. Um, uh, people probably do agree that like completely unconstrained, um, uh, pursuit of, uh, uh, wealth has negative externalities and would like, uh, some changes. If you look at the poll data of what people want, they actually want to get to largely the same goals, uh, no matter which party they are at. They disagree on the, on- on the approach there, but even there they don't actually disagree as much. The political spectrum of poi- uh, of positions you could hold is massive, like absolutely. It's, it goes all the way from, uh, from- from- from complete anarchy to like and communism, all the way to fascism and, and like the- the- the space is massive. We are arguing in a, in a bracket which is around here. Now, the people who are on one side of it, they'll think the people on the other side are the worst. (laughs) But, like the spectrum could be so much larger here- here and it, like it's the old like, um, I against my brother, my brother and I against my cousin, my brother and my cousin against everyone else, um, thinking. We do, uh, like people are somewhat tribal. We are in a infighting because we do not have external attacks. Like it's, it's not like people are not really coming and saying, "Hey, let's go absolutely straight up to like Stalinist, uh, uh, uh, communism tomorrow." If they would, (laughs) all the political parties that we are voting for, uh, um, uh, and- and this is a credible threat coming from the outside, but start figuring out how much they actually agree with each other. Anyway, um, I'm not the person to talk to about these kind of things. You have to talk to people like Tim Holden or, uh, Steven Pinker, um, a- about these things. I, I, what do I know? I, I, I built a company. Um, so...

    17. HSHarry Stebbings58:18

        Uh, final one there. You said about the kind of the hedonistic treadmill that humans kind of face and are always on, and like that continuous search for happiness. I honestly totally be, I face this too. If you told me-

    18. TLTobi Lütke58:27

        Yeah.

    19. HSHarry Stebbings58:27

        ... you know, I'd be here chatting to you years ago when I started from my bedroom, I think it was a joke. Uh, but I'm still not happy. I still want more. I, I wanna be bigger, I wanna have more... It's never enough. When you think about that treadmill and, you know, looking across at the bigger boats, are you happy now?

    20. TLTobi Lütke58:44

        I think happiness is a temporary thing, but it's, uh, it's terrible goal. Like in fact, it's, it's, it's a goal that's sold to people to keep them miserable. What you want is contentment, which is very different. Um, you, you, you want to be content. That's, that's, that's a worthy goal and it's actually much, like if people would start making this differentiation, what we will figure out is like vastly more people currently live in a state of contentment, um, than, uh, uh, at many other pla- times in history. Now, the thing that can mess with contentment is, uh, is, um, again, we are comparators. Like, um, no one wants the worst house on the street, so, um, and we just, the street, it became the entire world because of, you know, social media. This is by way, and, and, and, and, and other things. Like this has been effect, like, um, one of the biggest effects of, uh, the American Civil War was, uh, urbanization, because the soldiers, which were predominantly rural, uh, farm, lived on farms, had to pass through the cities as they were being like, and, um, after the civil, like before that people just didn't travel, uh, more than like 50 kilometers away, or even less, 20 kilometers was usual range of travel throughout your lifetime, um, during those times. After people passed through cities they were like, "Holy crap, this is so much better here." So people started moving to cities just beca- like, because you want, you, you compare against what you know is possible. Um, and, and so, so we derive, um, sometimes contentment, um, from that, although that's a bug. Um, anyway, the, um, so happiness is bad because happiness is temporary. Like I'm happy that I'm like, just like seeing a friend that I haven't seen in a long time, but like that's afterwards I'm like content being able to like have fantastic conversations with my friend whenever I see him. So that's an important one. The hedonistic treadmill is n- is, is, is a, is the engine of humanity. It's the thing that drives us to do everything that we actually value. Um, but it's, it's a, uh, it, it's the thing that causes us to strive for things to be discontent with status quo. The thing that said let's, um, pioneers set out for, for, for, for, for new shores. It's the thing that sets entre-preneurs out to start companies. Um, uh, academics to, uh, descend into knowledge. Um, it, it, it's the thing we want, and as so often in life, the best thing about it is also the worst thing about it. And, um, so, so it's a very, very, very bad idea to, uh, make it your primary objective or derive your, how you think about your current state from it. Like I, I can tell you, look, I, I, I've been extraordinarily lucky in so many different, uh, uh, ways, amongst those materially, right? Like, so I like, it turns out like I, I would have done this no matter what, but like it turns out, uh, software products turned into companies can lead to-... more of the wealth generation than almost every other, uh, pursuit on planet Earth outside of maybe real estate. And so, um, uh, like, I part- I partook in this for reasons of my own on a journey and, uh, I, uh, uh, I, I, uh, sort of, um, through, like, accidentally partook in massive, massive, um, uh, uh, material wealth generation in, in, in ?% of the wealth that Shopify created came back to me, which is still a very large number. What does that do? 'Cause people will, like, talk about this a lot. I think... I mean, it's cool. That's probably the best description. I can, um... One thing it allows me to do is, like, just sort of be surrounded by, like, beauty, I think is the best term. It's, it's, it's like, um, I get to, you know, live in a house that was carefully designed by someone, uh, like, who presumably, I don't know who that was, but whoever built it, it was the best bu- uh, building that they could build given the, whatever constraint they were under and really, really cared. Um, I, uh, you know, just like the, the things I, around me, like, uh, clothes I wear are made by entrepreneurs, uh, almost... Like, like, actually my entire wardrobe comes from Shopify and, uh, they made a decision that something else needed to exist and it was a great, great product. And, um, I can, I can, I can purchase ?$ independently of, uh, how much people are asking for them because I prioritize... I can, I can buy them purely on agreeing with the story, um, and so on. What does all that do? I would say it makes my days probably between 2 and 5% better. That's, that's it. I think that's a, that's, that's... Past a certain point, which most people clear, like the average household income in North America is $60,000 a year. This is household income, right? Like, um, especially, i- uh, like, the people who are listening to this are presumably in the tech industry or in finance. Most people, uh, like, um, clear this bar. Um, uh, past that point, um, you can, like, uh, get the kind of things that inspire you and around you and, and you increase the, you know, the quality or the happiness in the day or the, the delight you encounter with, with, with objects or maybe the conveniences by a couple of percentage points. Is that worth it? Hell, yes. Huge, like, 5%. That's makes the days... That, that's, that's a huge lift on the baseline number. But, like, the baseline number is like, did I have, like, an interesting conversation with friends? Did I have... Did I build something today? Did I, did I, did I, did I, did I talk with my children? Um, is everyone, uh, healthy a- a- around me? Those are-

    21. HSHarry Stebbings1:04:33

        So you-

    22. TLTobi Lütke1:04:33

        ... massively bigger inputs.

    23. HSHarry Stebbings1:04:35

        What luxury makes you happy? It sounds... Like, for me, it's, um, Uber Luxes. Don't laugh, but, like, getting in a really nice car, like, every time, it just makes me happier, more relaxed. And that's, like, the one thing that I would spend on and it changes my mood.

    24. TLTobi Lütke1:04:49

        Yeah. Exactly. I think, I think it's, it's, it's these things. Like what... One of the things that makes me happy, I, I just like... I mean, I love a f- really, really, really good keyboard. I know it s- sounds stupid-

    25. HSHarry Stebbings1:05:00

        (laughs)

    26. TLTobi Lütke1:05:00

        ... but, like, I'm typing a lot. Like, I, I, uh, like, I, I, I have a hobby building mechanical keyboards. I, I, I like the soldering, I buy the components. I often engage in, like, some kind of group buy of some people who, like, someone designed something so let's help finance... Like, it's just, like, this kind of stuff. Um, you know, having-

    27. HSHarry Stebbings1:05:20

        For all, for all children out there, when you become a billionaire, buy a keyboard. (laughs)

    28. TLTobi Lütke1:05:24

        (laughs) I, I, I, I like, like... Uh, honestly the biggest things, like, like, a great chair, a great keyboard, a great monitor, a great mattress. Like, those things are incredible and they are not the things that are... I... Coco Chanel said this perfectly. Um, uh, although actually that almost makes the opposite point, but it's still funny so I'm gonna share it when, because I set it up. Um, the, um, the best things in life are free. The second-best things are extremely expensive.

    29. HSHarry Stebbings1:05:51

        (laughs)

    30. TLTobi Lütke1:05:53

        (laughs)
12. 1:06:00 – 1:17:47

    Quick-Fire Round

    1. HSHarry Stebbings1:06:00

       I love this. I, I'd love to do a quick fire round with you. So I-

    2. TLTobi Lütke1:06:02

       Sure.

    3. HSHarry Stebbings1:06:02

       ... say a short statement, you give me your immediate thoughts. Let's start with, you said the best and the worst parts of you. What is simultaneously the best and the worst part of Tobi?

    4. TLTobi Lütke1:06:11

       I, I think it's the experience of, like, um, that I may hold a different opinion just because, um, through, like, other conversations, I've found that I was incorrect previously. And i- it is a harrowing experience to people sometimes, um, uh, when, when, like, their, there's societal premium on consistency of, uh, choices that I find is useless and if you think from first principles and, uh, that is definitely a trip sometimes for people. (laughs)

    5. HSHarry Stebbings1:06:41

       Luke Velasquez: what is your biggest regret?

    6. TLTobi Lütke1:06:44

       Hmm. That's hard to answer. I, I, I have... I don't think I have any macro regrets. I have millions of micro regrets. Um, so I think that might be evasive but I think that is important. Like, there's a million things we could have done better or, like, decisions I made where the... It's not just that the input that could have told me this was not the right thing was available easily, like with an email or with, like, a dashboard or something. It's even I probably already had it and I just kind of wanted this to be true, right? Like, that was a, a very... I regret not being more truth-seeking there.

    7. HSHarry Stebbings1:07:22

       Is there a strategic decision you made with Shopify that you wish you could reverse?

    8. TLTobi Lütke1:07:26

       Yeah. I mean, um, more, like, in the style of leadership. Um, I, I, I, I, I... For a bit, I, uh, started believing some of those false thoughts which people like to believe about leadership, um, like that micromanagement is bad. Like, that is the dumbest idea on planet Earth. I, I, I think there's, there's probably no singular-... idea that has destroyed more business value on planet Earth than, uh, the idea that micromanagement is a bad thing. Sh- so, um, if you wa- like y- you look s- you look, you're, you're like, "Ah, I don't agree all of that or that sounds crazy."

    9. HSHarry Stebbings1:08:00

       I, I really don't agree. You can't, I mean, how, you can't micromanage. How do you determine what you micromanage? If you micromanage, you're gonna create dissonance within the org because people are like, "Why is he managing them and not me?" And then you're also going to create people who are like, "Hey, he shouldn't manage me and fuck off."

    10. TLTobi Lütke1:08:13

        (laughs)

    11. HSHarry Stebbings1:08:13

        Um, uh, and also like you might not be as good as the people that you hire in those roles. You also don't have as much data in those roles as those people. A- you should work on the machine, not in it. Like hire the best and allow them to do their work.

    12. TLTobi Lütke1:08:26

        Yeah. And you, you're, you're correct in one, in, in, in a frame of reference where, um, the interventions are bad. Let me give you an oth- other example. Let's say you're a leader of a team and they, like, they're driving a car and, um, you've just been around there and you know, like, in a straight line where they're going, there's a cliff.

    13. HSHarry Stebbings1:08:44

        Pardon?

    14. TLTobi Lütke1:08:45

        Would you not micromanage the steering wheel at like... Because that's literally what the situation almost every lead is in right now.

    15. HSHarry Stebbings1:08:53

        I don't know. I, I think you have-

    16. TLTobi Lütke1:08:54

        People are terrified.

    17. HSHarry Stebbings1:08:55

        ... I, I think actually as a leader, you have to understand the decisions and mistakes that people have to make to learn versus those that they cannot make to learn.

    18. TLTobi Lütke1:09:05

        That's, uh, true if in the, in the high reversibility case. Not true in the everyone's fatally crashing case.

    19. HSHarry Stebbings1:09:11

        Oh, yeah. No, if everyone's fatally, yeah, then you obviously have to intervene. But the majority of things aren't-

    20. TLTobi Lütke1:09:16

        So-

    21. HSHarry Stebbings1:09:16

        ... reversible. Very, very few things are irreversible.

    22. TLTobi Lütke1:09:19

        So the, the, the, the thing you describe is like o- is this sort of Dilbert-esque view of leader, right? Like where, like, pointy hat boss comes and changes, like, moves the cheese around. That is not the sto- like, um, like, that is not micromanagement. That is just being extremely bad as bein- being a leader. Um, what you actually want is you want, um, your entire company to compose into something that is sort of like an idea lab. Where, um, like, the people who are closest and the people who have a b- uh, like, the, the biggest perspective, uh, come together to make the, like, the best choices. For that, there's a role for absolutely everyone in, in, like, in this. And, you know, in most cases what you do is you, you find someone, like you find a CFO who's amazing. Um, you work with them together, you make decisions initially for onboarding, uh, uh, for onboarding them and s- a- and, um, you learn to trust them in such a way that you can now delegate, uh, the responsibility and, and, and, and, and the book. Presumably for a bit you should trust but verify because again, you are like trying to... Like, you actively have to build trust with people. Um, like trusting by fiat, trusting by name of a role is not a great idea. Um, you can use someone's background as like a massive pre-charge on a trust battery, but you should come to your own opinion. Then afterwards you, you now are sharing responsibility. Like you cannot, like you, no leader can ever abdicate responsibility. You can only share it. It's never broken and it's never... You, you always still have it for everything. So, um, but you can share your responsibility for all parts of a company with, uh, your leaders and other pa- an- and, and, and other people.

    23. HSHarry Stebbings1:11:02

        Do you know that you have to abdicate responsibility, but share accountability? And that's what sucks about leadership. You didn't do it, but when it goes right or wrong, in good and bad, it's, it's often on you.

    24. TLTobi Lütke1:11:14

        No, you can't. Like it is impossible to, uh, um, sh- it's impossib- like, you can share responsibility but you never not end up being responsible for it. Like it, yeah, I'm responsible for everything that ever goes wrong in the company at some point. May- maybe because I hired someone. Um, but, um, um, I also t- hold full responsibility therefor, for, for, for, for, for, for all outcomes. But this is why founder-led companies are also like a little bit of a different beast, because there are tricks by which you can diffuse responsibility and, and, and, and, and, and reject. I mean, entire, uh, consulting, world of consulting is basically one large way of outsourcing, uh, responsibility for their choices, um, uh, uh, is, that's the main product they are selling. Um, and, um, uh, people might disagree with that too but, like, um, that would be a fun different conversation for another day. Um, but I don't think you should do that. Like, I think you should stay responsible for everyone and you should bring what you uniquely can bring to all, like, conversations where it's of value and you should be very, very clear that you're looking for the best rather than being right. Which is not... Again, which is also not micromanagement. The, like, it's, it, like, the f- this is actually just, we call it micro-leadership. It's, it's like helping editing the final thing. A great company is l- looks, or great products look to the users as if they come like, like they are a book written by a, uh, single author. They are logically consistent, they are, um, written in the same tone of voice, they are... If you learn a pattern somewhere, it's first of all approachable at this point, but then it's also rep- like the same pattern teaches you about others parts of a system, especially if it's a big system. Doing this with thousands and thousands of people requires a lot of coordination. It's a huge coordination challenge and it requires people to learn how to, like, by what principles, um, to, to, to make these tasks. Now, you got to do a million things that help. Like, for instance, like just like, there's something in Shopify. Shopify is an absolutely massive piece of software, um, probably one of the biggest pieces of software on planet Earth. Um, but they also have things like design systems which we also share with our eco- uh, like, uh, like ecosystems. And this design system is like, just helps everyone fall into some big pit of success because a lot of the knowledge of how to build a great user experience and user interface is actually encoded in the design system, and therefore is a creative constraint, if you will.... the floor quality of execution for everyone who just used the design system is very high. The floor is h- high, the- however, the ceiling is uncapped, which is the mark of a brilliant system. That's the most important thing you can- you can create. But the process of creating Polaris, this design system, is something that I was involved with because it- it has to conform to the aesthetics and, uh, uh, and my o- and my, as a founder, ideas about what approachable software looks like. That doesn't mean I make the- I did all the work when I did the, um, project, but I hold some core authorship over the creation, uh, leg of it. And that, someone would call that potentially micromanagement, saying, "Hey, Tobi wants to be part of, uh, like, the design review for the dropdown component," um, and these kind of things. But no, it's like let's just deep appreciation for the craft that's caring and that's perspective, that's, uh, honed over 19 years of doing this kind of thing.

    25. HSHarry Stebbings1:14:42

        I- a- really?

    26. TLTobi Lütke1:14:43

        All of this is... Like, by the way, this is the worst lightning round anyone's ever had by the way, at this point.

    27. HSHarry Stebbings1:14:46

        Oh, yeah. Oh, yeah.

    28. NANarrator1:14:47

        (laughs)

    29. HSHarry Stebbings1:14:47

        Yeah, well, funny, you gave me this tour.

    30. TLTobi Lütke1:14:49

        (laughs) .

Episode duration: 1:23:23