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Tobi Lütke — From Snowboard Shop to Billion Dollar Company | The Tim Ferriss Show (Podcast)

Tobi Lütke (@tobi) is the founder and Chief Executive Officer of Shopify. In 2004, Tobi began building software to launch an online snowboard store called Snowdevil. It quickly became obvious that the software was more valuable than the snowboards, so Tobi and his founding team launched the Shopify platform in 2006. He has served as CEO since 2008 at the company’s headquarters in Ottawa, Canada. Please enjoy! Show notes: https://tim.blog/2019/02/07/tobi-lutke-shopify/ The Tim Ferriss Show podcast: https://tim.blog/podcast Start [00:00] How far back does Tobi’s obsession for optimization go? [05:58] How big is Shopify today? [08:14] How did Tobi and I first meet? [09:13] From my perspective, Shopify is a living example of what happens when the good guys win. [11:45] Did Tobi’s early authority problems lay the groundwork for his current success? [12:31] Something Tobi and Seth Godin agree on: the current characteristics of a temporary solution shouldn’t be mistaken as the ultimate objective. [18:57] Even though you probably didn’t learn about him in history class, here’s how entrepreneur Malcolm McLean changed the world. [20:25] A few of the books Tobi has found indispensable for finding footing in the business world. [23:13] As a self-described slow reader with dyslexia, Tobi has to be selective with the books he takes in. By what criteria does a book make it to Tobi’s “to read” list? [26:55] How Tobi’s role at Shopify changed from passionate programmer to reluctant CEO, and how he rose to the challenge to crash course his way through the learning process. [29:50] When pitching to VCs on Sand Hill Road, this is how Tobi rolls (literally). [36:05] Good and bad decisions Tobi made as a fledgling CEO. [37:36] As a man whose expectations for employees match what he expects from himself, is Tobi difficult to work for? [39:31] How does Shopify company culture facilitate the thick skin required to abide by Crocker’s Rules? [44:12] Feedback is a gift. [47:37] How the Enneagram system is used at Shopify as an empathy exercise rather than a personal horoscope. [48:56] How can a growth (versus fixed) mindset — per psychologist Carol Dweck’s work — be fostered? [50:30] Tobi’s definition of Hell. [55:24] How Scott Adams’ “talent stacking” applies to Tobi’s career trajectory. [58:03] Tobi addresses the factors that contribute to an underreported entrepreneurship crisis. [1:03:08] How Shopify’s annual Build a Business competition came about, what it aims to accomplish, and some of the hurdles it has faced along the way. [1:08:39] The first Build a Business winner and how its success was boosted by a happenstance presidential endorsement. [1:15:43] The fascinating patterns, principles, and stories we observe every year when Build a Business time comes around. [1:17:39] Does dyslexia affect Tobi’s coding? [1:23:49] In search of an extended sense of peace? Here’s a book recommendation. [1:24:12] What Tobi means by “the next box.” [1:25:59] What Tobi learned about the next box from Jürgen, his mentor. [1:30:18] Is it possible to understand the box you currently occupy and aim for the box you want to occupy next? [1:33:37] In what box does Tobi see himself at the moment? [1:34:37] How does Tobi choose ways to stress test possible exits from his current box? [1:35:38] We examine the reasons behind Tobi’s discomfort with comfort on a business level in spite of generally considering himself “the most fortunate person on the planet” on a personal level. [1:36:50] On identifying himself as the bottleneck that held back Shopify for a period of time, what caused this, and what Tobi is doing to ensure he doesn’t take on this unenviable role again. [1:40:21] Why does Tobi think the business not only survived this period in the bottleneck, but actually began to thrive? [1:42:35] Increasing “luck surface area” and staying in touch with the front lines by getting in the trenches from time to time. [1:47:44] How Shopify’s chief investor from the early days still helps Tobi focus on what’s important — by ensuring he’s not “meddling” in minutiae. [1:49:13] Though the future is admittedly uncertain, here are two things Tobi believes a forward-looking CEO can do to peek into what seems most probable. [1:51:54] Is modern China showing us tomorrow today? [1:54:05] What can the massively successful but mostly ignored video game industry teach the business world about the human psyche? [1:55:00] What would Tobi’s billboard say? [1:57:18] What books does Tobi most frequently gift? [1:57:49] What is the Adlerian separation of tasks? [2:00:01] Why Tobi believes we, as a society, need to celebrate and support entrepreneurship now more than ever. [2:00:52] What cities does The Oracle of Ottawa believe are doing the best job of taking business into the future? [2:03:00] Parting thoughts. [2:04:32]

Tim FerrisshostTobi Lütkeguest
Mar 21, 20192h 12mWatch on YouTube ↗

At a glance

WHAT IT’S REALLY ABOUT

How Tobi Lütke built Shopify through first-principles learning

  1. Tobi Lütke recounts how Shopify began as software for an online snowboard store and grew into a global platform with about 4,500 employees and more than 700,000 customers across 175 countries.
  2. He describes a leadership style that values high-impact work, experimentation, and unusually direct feedback, supported by coaching, Enneagram use, and growth-mindset training inside Shopify.
  3. He explains how he learned business rapidly by listening to venture capitalists’ questions, researching unfamiliar terms, and returning to Shopify’s data to answer progressively more questions.
  4. He credits product obsession, frontline customer support, and later parallel marketing experiments for turning Shopify from a fragile business into a fast-growing company that could successfully raise venture capital.
  5. He argues entrepreneurship is declining and needs active reduction of friction—through policy and better tools—because small businesses are central to employment and opportunity.

IDEAS WORTH REMEMBERING

5 ideas

Early optimization impulses became a practical advantage in software and operations.

He describes counting steps to find the shortest route and feeling compelled to automate tasks after repeated repetition, later finding those tendencies become valuable in programming and company-building.

He relies on first-principles thinking and incentive analysis rather than defaulting to orthodoxy.

He says he has trouble accepting “here’s how things are done,” and instead tries to understand the pressures and incentives in a situation (his IPO example focused on learning what drives investment bankers’ behavior and recommendations).

Shopify’s strategy shifted from building a store to enabling entrepreneurship outcomes.

He frames Shopify’s evolution as moving from “online store software” to supporting what merchants actually want: selling and “reaching for independence,” which broadened the product direction beyond a single channel.

Two books helped him translate business and human behavior into learnable systems.

He credits “High Output Management” with making business feel like an engineering exercise, and “Influence” with teaching him how persuasion, framing, and storytelling shape human decisions—areas he felt inexperienced in after “spending [his] teens with computers, not with people.”

Shopify tries to build high-performing teams via coaching, growth mindset, and direct feedback.

He says Shopify invests heavily in developing people (including full-time coaches) in part because longer expected tenure outside Silicon Valley allows deeper growth; internally, Shopify emphasizes viewing feedback as a gift and cultivating growth mindset.

WORDS WORTH SAVING

5 quotes

I have a serious problem just of accepting orthodoxy.

— Tobi Lütke

I had to give the same presentation 103 times in, in, in, in, in, in eight days.

— Tobi Lütke

We eliminated the talk of the term failure. Like, we, we, we name, um, we call it the successful discovery of something that did not work.

— Tobi Lütke

Entrepreneurship is in big crisis right now.

— Tobi Lütke

I would say that I understand the box I'm in, and I haven't found the exit.

— Tobi Lütke

Optimization and automation instinctsQuestioning orthodoxy and first principlesIPO roadshow and incentive analysisLearning business from VC questionsBooks: High Output Management; Influence; Mindset; The Box; The Elements of Style; A Guide to the Good Life; The Courage to Be DislikedFeedback culture, coaching, Enneagram, growth mindsetEntrepreneurship decline and reducing friction (including licensing)

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