Lenny's Podcast Transcripts

Transcript

tke[00:00:00)]Your podcast is a podcast by a builder for other builders. Here's the most interesting question I think people can ask builders, what is your energy source? My energy source is dissatisfaction with status quo. There are so many books are about this ... Technology leading to dystopia. Like no one who really thinks about this would want to be born into a world 20

years before today. I think today is the dystopia of the future. It behooves us to try to build the kinds of products that leads in ... Towards progress. Lenny Rachitsky[00:00:28)]There's a couple quotes along these lines I've seen that describe the way you think about this stuff. "If most people are doing it a certain way I by default don't want to do it that way." Tobi Lü

tke[00:00:34)]There's an aesthetic in the world that exists which is that business people dress in suit and tie, they are speaking much more sophisticated than I do, usually without an accent. They usually have a stick and show dramatically at the chart that is behind them. How much is that aesthetic overlapped with outperformance?

Pessimism sounds extremely sophisticated. Optimism always sounds dumb or at least naive. The most powerful unquantifiable things in the word of business are fun and delight. Lenny Rachitsky[00:01:04)]I don't know of any other company that operates where the founder has this 100-year vision of where the product needs to go and working backwards from that. Tobi Lü

tke[00:01:11)]I talk about look in the future and then think backwards a lot, right? It's like what would we want to have done 20 years ago on this? We have very long-term plans. At 100 years you can't talk about this software project but you can talk about the mission itself, whatever things that will survive for 80 years that are left on this particular timeframe. Entrepreneurship is just precious. Shopify exists, basically,

to make entrepreneurship more common. Lenny Rachitsky[00:01:35)]Is there anything you want to leave listeners with? Tobi Lü

tke[00:01:37)]I really, really,

really think that there is not a single person on this planet who is even close to being at their maximum potential. Reminding people of their own potential constantly is actually a wonderful thing to do. Lenny Rachitsky[00:01:54)]Today my guest is Tobi Lütke. Toby is a man who needs no introduction so I'm going to keep this very short and get you right to this jam-packed conversation. If you enjoy this podcast don't forget to subscribe and follow it in your favorite podcasting app or YouTube, it's the best way to avoid missing future episodes and it helps the podcast tremendously. With that I bring you Tobi Lütke. This episode is brought to you by Sinch, the customer communications cloud. Here's the thing about digital customer communications. Whether you're sending marketing campaigns, verification codes, or account alerts you need them to reach users reliably, that's where Sinch comes in. Over 150,000 businesses including eight of the top 10 largest tech companies globally use Sinch's API to build messaging, email,

and calling into their products.[00:02:42)]And there's something big happening in messaging that product teams need to know about, Rich Communication Services or RCS. Think of RCS as SMS 2.0. Instead of getting texts from a random number your users will see your verified company name and logo without needing to download anything new. It's a more secure and branded experience. Plus, you get features like interactive carousels and suggested replies. And here's why this matters. US carriers are starting to adopt RCS. Sinch is already helping major brands send RCS messages around the world. And they're helping Lenny's Podcast listeners get registered first before the rush hits the US market. Learn more at getstarted@sinch.com/Lenny. That's S-I-N-C-H.com/Lenny. Today's episode is brought to you by Liveblocks, the platform that turns your product into a place that users want to be. With ready-made collaborative features you can supercharge your product with experiences that only top=tier companies have been able to perfect until now. Think AI copilots like Notion, multiplayer like Figma, comments and notifications like Linear, and even collaborative editing like Google Docs. And all of that with minimal configuration or maintenance required. Companies from all kinds of industries and stages count on Liveblocks to drive engagement and growth in their products. Join them today and give your users an experience that turns them into daily active users. Sign up for a free account today at Liveblocks.io/Lenny. Tobi, thank you so much for being here. Welcome to the podcast. Tobi Lü

I'm glad to be here. I'm excited for our conversation. Lenny Rachitsky[00:04:26)]I've listened to so many of your other interviews, I've talked to a bunch of people that work for you. I want to try to do something a little different. There's basically two themes that emerged over and over and over as I've listened to you share advice, and interview, and in talking to people that work for you. One is thinking from first principles, the other is maximizing human potential. I'm just going to plant these seeds for now. I'm going to not ask about these directly, I'm going to come at these from the side with the many questions that I have for you. Something that I've heard people describe at Shopify called the Tobi tornado. Tobi Lü

tke[00:05:01)]Oh, wow. Okay,

that's a start. I like it. Lenny Rachitsky[00:05:06)]What is the Tobi tornado? Tobi Lü

tke[00:05:08)]A Tobi tornado, I would say, is a whole lot of change management or a conversation or conflict or real talk compressed into a very short timeframe. I see something it doesn't ... It's not good, I have a conversation. I have learned something very quickly about hey, I need to update my priors, or cool, let's do it differently. At which point a project might be stopped and we get back together in a room and then we start a new version of a product. And everyone who's currently on the team, of that particular project, is no longer on the project but they are the founders of the next version which is built differently. And that might be a bit whiplashy for people. I mean, I certainly hope that's true,

it's certainly what people tell me. It's also what they appreciate about the company. It's like what is best ends up mattering a lot. Lenny Rachitsky[00:06:08)]Basically, it's you going into a chat room being like "Hey, this" ... "We're going to end this project we're" ... "Let's try something else" because you've discovered or realized this is a bad idea. Some people complain about this practice of like "Oh, Tobi kills the we've been working on." My lens is, you realize we're just wasting time on this thing that is not going to work and we shouldn't do it. Is there anything there along those lines? Tobi Lü

tke[00:06:32)]No. This is everything. Again, once I imagine something might be not the right thing to work on I'm either incorrect at which point this is super important that I understand why or I'm correct at which point it's super unfair for letting people work on something that isn't going to make it. There's a third wave which is I could also ignore it but that's an abjection of my CEO and founder responsibility that I'm absolutely not willing to make so that's just not a path forward that I see valid. I understand that's what a lot of people choose to do. So yeah, compressing time is important. We have a fairly limited time in our careers, right? Our careers are not that long. If you're lucky you have 40

years in the industry. Most people spent more time in school and then maybe leave later if they're so lucky that they can. So it's not even that.[00:07:33)]I think you want to do the maximum amount of things you can be proud of at the end of your career. When you look back you want to be saying, "Hey, holy shit, we shipped this thing which was absolutely an incredible contribution to a mission I cared about at a company that was full of other people who cared as much as I did." And also are very proud of working. And maybe even thinking of working with me and being really, really glad that we spent time on projects together. Yeah, none of this happens if everyone's sort of optimizing a thing that probably shouldn't be there, right? And, therefore,

I think it's the better thing to do. Lenny Rachitsky[00:08:16)]And, by the way, I love this way of describing ... Of compressing it in time to just make a decision, not focus on making it come across the most kind, nicest, sweetest way. When you give feedback to people when something is not the way that you think it could be or as good as you could be it's often very direct and often hard to hear. To me this comes across as you're trying to maximize their potential, you're trying to push them to do something better. Is there anything there that you think is a way of approaching feedback? Tobi Lü

tke[00:08:49)]I really, really, really think that there is not a single person on this planet who is even close to being at their maximum potential. I just think everyone is way, way, way, way, way better than they think. And the reason why we're not performing at this level is a series of ideas, maybe certain approaches for cultivating our skills and our crafts that have not yet been discovered and, therefore,

we could not take advantage of them. It's an environment that just narrows the focus on fairly unambitious things at which point you get stuck competing with literally everyone else in the world because everyone's unambitious.[00:09:33)]I have found that reminding people of their own potential constantly is actually a wonderful thing to do. And I have a history of being right about people's potential more than they are themselves. Now, in a way, this dooms me fairly often to be disappointed, right, in myself. By the way, I'm talking about myself here too. I think I have way more potential than what I bring to bear and I hate that so I'm trying to cultivate the skills that I need for tomorrow and constantly challenge myself. I'm harder on myself than on anyone else. By some discount rate act equally to the people around me, especially the ones who just so, obviously,

are brilliant.[00:10:23)]Spending time and longer time in careers with people and then holding them to a high standard means that they accomplish very often things that just they didn't imagine they could. To me this is the most wonderful thing to see. And frankly this is a throughline for all of my career because this ... My product is that. I want my product to cause people to be more successful than they thought they could. And, in fact,

become more ambitious about what they are building with their online stores and their businesses than they are actually initially set out to do.[00:10:56)]Because something like this happened to me, right? I started a snowboard store at some point. I didn't set out to build Shopify. If you are committed to following your curiosity as to the next step, and optimize for maximum amount of learning when you choose these steps, it takes you from one place to another and you actually realize the world's full of lies about human potential and progress. Maybe people are not malicious about it but they're definitely confused about it. School teaches you that you have to learn this particular piece of math in this 12 month period, and it doesn't matter how much you understand it. It's like the outcome can be variable and will grade you on a variable outcome for a fixed amount of time which has nothing to do with anything I've ever seen or learned or see ... Or witnessed about how to actually learn things. You follow that thread and you just find that there is no speed limit for personal growth. In a way Shopify has been a wonderful experimental lab for this sort of conviction. I've just seen this to come to be true. And, of course, hearing from someone that you respect that "Hey, I think you had it in you to do this thing significantly better because I think you probably saw fairly early in the project this sort of path A path B. You chose path B potentially out of convenience even though you knew that wasn't the right thing. And I actually expected better of you and I expected" ... "I think the next time this happens in your career you should go path A because" ... "Based on your conviction." And, therefore, that's hard to hear, right, because it's right. But it's also extremely valuable, right? What I love is an environment of people who are holding each other accountable to the actual potential rather than sort of their current level plus or ... Plus some, I don't know,

a little bit extra. Lenny Rachitsky[00:13:19)]There's so many threads I want to follow here. The example of the school is such a pertinent one. To me right now we're looking at preschools for our son and I'm ... They're describing their education philosophy I'm like, I don't know why I should believe this is the right approach. And it makes me just want to spend all this time researching what education approach works. I know it's just preschool and maybe not as critical yet. Tobi Lü

tke[00:13:38)]Did you have a bet yet? I have three kids too and this is sort of a decision that every parent faces, right? So many of your listeners are probably product managers of machine learning products that maybe this resonates. So there's a funny thing about machine learning which you're just like ... You train on a lot of data, and, hopefully, you get something that predicts the thing you want it to predict correctly out of it. The biggest problem of this is overfitting, right? What does good look like, a loss function? Which is a heuristic because it's not the actual task that the thing will do in the future it's something that proxies to the task that you want the thing to do in the future. Predict fraud, predict the next word,

whatever. So overfitting is basically model learning how to cheat on the benchmark or on the fitness function.[00:14:39)]So there's a business analogy of this which is that ... It's called Goodhart's law. It's literally the same thing as overfitting just for businesses. Goodhart's law just says, "Any metric that becomes a goal ceases to be a good metric." Same exact thing. The universal truths are things that almost any competitive field will invent for itself by different terminology often. And I think this is also, by the way, why it's so interesting to focus on personal growth and learning a lot about a lot because you end up finding these sort of hidden harmonies behind things, the things that are clearly enduring correct insights. So overfitting, Goodhart's law are the same thing. School optimizes for what? Marks supposedly, right? In fact, overfitting in school is literally the kids cheating to get marks, right? You get another analogy. What is however the right loss function for children? Have you made a decision yet?

Lenny Rachitsky[00:15:53)]No, I have not we just started down this path. You told me- Tobi Lü

tke[00:15:55)]It's the kind of thing [inaudible 00:15:57]. You have to actually go fairly deep in philosophy to figure this out. And then again afterwards you can build, you can find the schools that you like. For us it was just maintaining curiosity. This is a completely different goal from being good at marks. But I just think everyone's born extremely curious and school has a habit of getting it out of kids. Literally, there's a foundation model of a child, and you fine-tune it at school,

and it just loses the neurons of curiosity because it's actually discouraged to meander into other topics and explore them just because they're interesting. I don't know. This is sort of not the beat of a podcast but I just think about this a lot. It's funny how these things just recur constantly. Lenny Rachitsky[00:16:48)]So when Archie was on the podcast, he's the head of growth at Shopify ... I don't know if that's his official role. Basically drives a lot of the growth. He talked about how the core product team, outside of the growth team, operates without KPIs, without specific goals. And decisions are driven by taste and intuition primarily you, and Glen, and some other leaders. And a lot of people heard that and they're like "I" ... "First, I don't believe that. Second of all, how does one operate that way when there's no data to tell us exactly what is right and good?" So the question I have is just how does one operate in that way successfully? What does it take for a company to work that way because a lot of people will try it and fail? Tobi Lü

tke[00:17:25)]This is very close to what I just talked about before with [inaudible 00:17:28]. Goodhart's law is real. The moment a metric becomes a goal it's no longer a useful metric, right? I think that's more or less a precise wording. Why? Because no metric by itself is a complete heuristic for a complex business because business are complex. There's a million of different tensions in a company and you can't all keep them in harmony by optimizing for one fix. It's true that we don't have KPIs and we don't have at least OKRs in the Silicon Valley sense but we are extremely data-informed. We have invested enormous amounts of money and time into systems that give us basically everything at our fingertips. I sent this demo to other founders and they're completely bowled over by the way we can dig into basically every constituent atomic bit part that makes up the cohort that just got formed 15

minutes ago by the end of a ... At the end of a quarter or month or week.[00:18:39)]In a lot of different places, this is one of them but also in its products, it's just not overfitting for the quantifiable. Everyone competes for everything but it's highly quantifiable because it's ... It's fun, it's like a game. You tweak a number and 0.1 more is better than 0.1 less. That's an immediate gratification thing. But I just think the overlap of most valuable things you can do with a product, and for things that happen to be fully quantifiable, it's like maybe 20% which leaves 80% of a value space unaddressable by the people who will only look at quantifiable things. Shopify is comfortable with the unquantifiable things such as tastes, quality, passion, love,

hate. It's with the strong emotions that people have.[00:19:49)]The sort of deep satisfaction that a craftsperson feels when they've done a job well is actually better proxy if you allow it to be then the ... Do a unit test pass. A unit tests might not pass. And the unit tests will pass 15 minutes later because we already fix them or adjust the one or two things so they support us. We have systems that tell us exactly if something goes the wrong way. There's an extremely sophisticated rollout system in Shopify that forever holdouts and correlates everything with everything for ... In every experiment and so on and so on and so on. But if you think about it as a cockpit for a pilot. The decisions are still made by pilots and we think this leads to better results. It's just the same with our product. There's plenty of A/B testing tools and all these things for commerce, and it's, of course, really important to figure out what your conversion rates are. But are you representing your brand is an unquantifiable question? Are you proud of the thing that you have built? Do you feel it's your own, right? (00:21:03): And so I think there needs to be more acceptance in businesses or for unquantifiable things. The most powerful, not unquantifiable things in the world of business are fun and delight. If people have fun when they're doing something that is just upstream from so ... Sorry, downstream from so many other things. I think that if all the metrics are pointing down but everyone says, "My God, I'm having so much more fun,"

I think that the very next thing that will happen with some time delay is all metrics will start going up. And if that doesn't happen then we adjust course.[00:21:51)]The reason why we specifically don't have OKRs and these things is because ... If you want to hold the unquantifiable as things that are stable and exist ... That people actually do really defer to them and really actually learn to be okay with someone just saying, "Hey, this is actually just really great and they're shipping this" then you need to make certain edits to a business that don't remind everyone too much of the companies they might have come from which the only way to get promoted is by driving the metric up. It's a bit of a [inaudible 00:22:24] conversation I suppose. Good on the fortune cookies saying, "Shopify doesn't do OKRs or doesn't do metrics" and so on. But it's actually just because the metrics take us [inaudible 00:22:37]

function where we often defer to just more ... Sometimes a little bit emotional but generally less quantifiable things. Lenny Rachitsky[00:22:48)]I imagine if someone were to hear you describe this of focus on joy, and fun, and love, and delight, maybe ... It's easy to dismiss that. Tobi Lü

tke[00:22:58)]It sounds completely idiotic, right? Again, there's an aesthetic in the world that exists which is that business people dress in suit and tie, they are speaking much more sophisticated than I do usually without an accent, have a full head of hair. They talk about metrics, they are in front of PowerPoint presentations, they usually have a stick and show dramatically at the pie chart that is behind them. And highly charismatic, highly ... So that's our aesthetic. How much is that aesthetic overlapped with our performance? I don't know but some of them ... Some people pull it off who are like this. I think the world is sort of stacked to lead us astray based on our stories about what optimal looks like are just so incorrect in so many ways. Optimism always sounds dumb,

or at least naive. Pessimism sounds extremely sophisticated. Metrics driven sounds extremely sophisticated. Talking about fun sounds like naive.[00:24:14)]Well, first of all,

I've always ignored what people think generally. That came pretty natively to me somehow which I'm very lucky about. But I've now actually learned that almost all of the alpha in the world is now in the ... Exactly the things that are unobvious but true. And the things that people dismiss as naive or so. The most successful business person on planet Earth is Elon and he conforms to no idea of what the most sophisticated business person ought to be like in any which way you can imagine. I think we live in a world where the counterfactuals are winning because our ... Because aesthetics are just leading us astray. Lenny Rachitsky[00:25:02)]This is an awesome segue to the other theme that I wanted to spend some time on which is thinking from first principles, Elon is the classic example of that. Honestly, I think you're the other most classic example of that these days. And we'll keep talking about all the ways you operate very differently from other companies which are examples of this. But I want to read a quote from Glen Coates, he shared with me, of how he sees you that gives an interesting lens into your first principles thinking. So here's what he said about you. "Tobi is at his heart a true futurist, he's obsessed with the way things should be in the future. Being data-driven is innately being anchored in the way users and technology are behaving today. He's never really said this to me explicitly, but knowing him I think any design that is drawn primarily from the way things are or were is one that he sees as inferior to one that is skating to the puck of the way things could or should be." Does that resonate? Tobi Lü

tke[00:25:55)]Yeah. I mean, I think that's correct. That's actually really interesting. Your podcast is a podcast by a- Tobi Lü

tke[00:26:01)]Your podcast is a podcast by a builder for other builders. Here's the most interesting question I think people can ask builders is like, "What is your energy source? Where are you getting energy from?" I think fundamentally the world exists at room temperature. Almost all companies are running at that, humming along, doesn't do anything. There are certain individuals who can inject heat into businesses. Founders do this very well. All the startups anyone's ever heard of have people who are injecting heat because if no one would inject heat into the business, at room temperature, you cannot outperform anyone else. You can't be hotter than everyone else if no one's injecting heat into the concern. So fundamentally, there is a injection of energy into companies that comes from founders and the best leaders,

like all the people you've had on the podcast from Shopify have a perfect set of cast of characters of people who are just exothermic. They are just like wellsprings of energy that leads to all the amazing results that we get to enjoy.[00:27:21)]So the question is where does energy comes from? And that's another one of our discussions which very quickly goes into the emotions. Actually, there's a really... So I watched The Last Dance, the Netflix special of Michael Jordan a while ago, of course, but there was one scene where he just, I'm sure this is a super famous story and he just made up an insight that someone told him so that he would then go and just want to destroy them afterwards, which he then of course proceeded to do because it's hard to imagine anyone more exothermic than him. So we know what his energy source is. It's rivalry. It's potentially it's insight or it's anger,

something like this.[00:28:06)]I am not... My energy source is dissatisfaction with status quo. My fundamental belief is all this talk about technology where all... So many books are about just technology leading to dystopia. You know what dystopia is? Today, compared to what it will be in 20 years ago or any. And you can play this for any part of human history. I'm not making a future statement. I'm making a almost totalical statement about the experience on planet Earth. No one who really thinks about this would want to be born into a world 20 years before today rather than today. And so I think today is the dystopia of future, and I think it behooves us to try to build the kinds of products that lead in towards progress in a small way or a big way. But yes, I think if someone comes to me and says, "Hey, let's go do this thing. And we've looked around and here's how people solve this problem, let's make a good version of that," I'm like, "That was not the job." Because everything that you encounter, that every solution, every product, everything that exists is path-dependent, highly, highly, highly path-dependent, and often path-dependent based on having to make compromises,

based on things that were true at the time a decision was made but are no longer true.[00:29:38)]The entire field of... What was it? I forgot the name of a field. Chomsky's field, the linguistic research field. It's cool. We now have autoregressive models that are just like, we don't actually need to set up a complete... We don't need to research the structure of grammar to be able to make machines also engage in the spoken word. We actually can just train on the internet, it turns out. So that was not possible back then because you didn't have the right architecture for this, but now it is. So I think what you have to do is to actually have, when you come up with a new product or you discuss a new product, you have to derive it from first principles. You have to say, "How would we solve this problem given every fundamental building block that we have available right now?" (00:30:25): For that, to do that, you actually have to understand the power and the composability of all the building blocks that exist right now, which is a tall order and no one is perfect at this. But so this way, you go ahead and say, "Okay, cool, so this is how we are implementing this thing. This is how it will be implemented today." And now we can talk ourselves in taking shortcuts. "Maybe we should actually start up doing it the way everyone else does. Maybe we derived exactly what everyone else does as the correct thing to do." (00:30:56): Sometimes there was a lot more wisdom encoded in the status quo than you expect, which is I think is super delightful. Then you figure that out and so when you act on it. But what isn't okay is skipping the exercise and doing the same thing everyone else does because that is again a abdication of product leadership. And so yeah,

I would say I become extremely suspicious if I get a pitch to do a good version of the same thing everyone else does because I just find that in our space specifically very rarely to be the best solution. Lenny Rachitsky[00:31:33)]There's a couple quotes along these lines I've seen that describe the way you think about this stuff. "If most people are doing it a certain way, I, by default, don't want to do it that way. And if you want to do something world-class, you can't do it like everyone else." Tobi Lü

tke[00:31:46)]Yeah. I don't even think that's an opinion that I hold. I think that's actually... We are basically in axiom territory here. If you want to do something better than what exists, you have to do it differently. That does not make a statement about if it will be better in the end after you do it. It could also be worse. But you can't get something better done if you do the same thing. It's like axiomatically not possible to do. It's fails Archimedean logic, yet it's something... You would be amazed how many business plans are actually failing Archimedean logic in this way like, "Let's do a good version of this thing that we've already been doing and we will capture 1% of the market," and just like this stuff. It's like, "Trust me."

I find it kind of cute. Lenny Rachitsky[00:32:36)]Is there an example that you can share of you approaching the problem this way? I imagine it's constantly happening. You also mentioned you're born this way. So I think it's hard for someone to just sit down, learn, think the way Tobi thinks, but I'd love to help people start to approach problems this way, so maybe an example might help. Tobi Lü

tke[00:32:54)]I think this is entirely learnable, I think. And so I encourage people to just have a practice of think step by step essentially and just do it. It'll become a habit pretty quickly because it just,

it also just outperforms.[00:33:09)]Examples. The very first example is Shopify itself. It's cool. So there was lots of e-commerce software and it was all the way it was because of path dependence because everyone who want it in 2004, 2005, e-commerce was an existing retailer and therefore they had complex businesses that needed to be ported online, including all of their somewhat Byzantine business logic. "I wanted to make e-commerce software that would do very well on the internet of the future and I believe that we can make it easier to start new businesses online than it is in a physical world because the physical world is encumbered by a lot of regulations and also upfront costs for leases and so on. So let's optimize for that case and build something that is so intuitive to use that frustrated people in dead-end careers can spend their lunch breaks making progress towards building their own business, which then eventually allows them to do it on their own way." (00:34:25): And so being fortune was biased, eventually it turns out to be a much better prep for also solving all the enterprise cases because no one had to... Enterprise software is overfit to the sales process, which is that it wins the RFPs because it has every feature ever or at least a way of putting a checkbox next to every RFP line ever. But they're not good, right? An RFP is a great example of overfitting in the world of procurement because it tells you nothing about the quality of software behind it. But honestly, this happens all the time. It is just like here, we are setting the stage for much more, much higher quality retrieval for the products on Shopify and across Shopify. I think we've been in a local maxima on search and we think that, especially with the advances of the new models, certain things are now possible to do that could not have been done yet because again of these layers and layers of path dependence and no one coming and saying, "Is that the best way to do and maybe we should rebuild this component periodically?"

We can now do a better job if search that will leads to much more delightful experiences. And so this is a fun project that this happening right now in. Lenny Rachitsky[00:35:50)]I think this is really interesting because what I'm looking for is like the Tobi algorithm of first principles thinking. Elon's got these famous ways of thinking he shared. One is start with the cost of metal to help you understand how much a rocket should cost. And then he's got this five-step. First, decide, do we need this thing? Then figure out how to optimize it, then automate it. What I'm hearing so far, and I'm curious if you've thought about this? And if not, this feels like a really good blog post in your futures, the Tobi first principles algorithm,

but I'll share a couple of things I've heard so far as you've described it.[00:36:24)]One is analyze the path that existing solution has relied on, almost like the assumptions that were true for it to be built back and it was built. And the other is this overfit, what is it overfit for? What is it over solving that maybe isn't necessary? Is there anything along those lines of just how you approach problems? Tobi Lü

tke[00:36:43)]This is probably too nerdy technical. You are right, but I should figure myself out a little bit. My brain runs on a meter language but isn't directly something I can translate into words, I suppose. I think more about things like this in terms of programming constructs, pure functions, overstate. And I think in any moment, the best decision to do is I think the perfect product lead is almost like a thermostat for high quality product. It's like you're setting, saying, "I would like to build something really, really great and I'm going to go through a series which is much, much more complex than what a thermostat does," which basically checks the temperature and then makes a decision of air con or heating. You make you re-derive literally every decision that is valuable, every foundational assumption, every foundational ABC direction. And you want to see the observation you've made in the meantime since you last derived the next step. Re-running the entire function over the state that is now updated, the higher fidelity information, would you come to the very same thing? (00:38:08): Sometimes fairly early in the construct in the tree of foundational assumptions, change is made. An example we all had was beginning of COVID when we suddenly had shelter in place. So Shopify has that incredibly good office spaces and we were very in-person company and we've... Our floor plans because I think we really added something to the understanding of how to put great... I got a lot of founder energy from my co-founder, Daniel, to build great collaborative spaces for creative work with lots of happy accidents,

people running into each other and so on.[00:38:46)]Anyway, we were very, very, very, very determined on doing that. But somewhere in this construct of nesting functions, you have to rerun and foundational assumptions. It's in the stack is the fairly basic Boolean of are people allowed to leave a house? Which was yes. The moment that flips, it's not that just like, "Okay, over here let's do the best what we can do." It's actually that the entire tree now moves into a different place. And it can be a very far place, different, that you land because you will make the same quality of decision on every step, but you need to rerun something that takes you to a completely different landing zone. And so then this is also easy for us to say, "Cool, we are going to be remote only forever? Let's go." And because we realized that the temporal shelter in place would cause a series of events that would make that for optimal best set of trade-offs for the company. And so I think this is... Can I put this into a piffy five-step? I wouldn't know, but maybe it resonates with someone who can help me figure out the coded English language for this because it has been nerdy way the I explained it,

even to me. Lenny Rachitsky[00:40:05)]This remote work example is something I definitely wanted to touch on, which is I'm glad you got there. So in this decision, is there anything more you could share about how you got to that place of like, "Oh this Boolean changed so we should rethink this?" Because I know you probably, you weren't... I don't know. Were you in the shower and just like, "Oh wow, we should really go remote because of this"? How did that actually come about? And then I wanted to ask on another part- Tobi Lü

tke[00:40:27)]Yeah, pretty much actually yes because again, I rerun over all the inputs and figure out what happens. And here's a couple of other things that were starting to fray on the decision to be in person as well. We started in Ottawa, Canada, which is a city of a million people, and it has some tech heritage and good universities. But at a million people, it's just not population dense enough and has a depth of talent pool that it can support a company that is going to 10,000 people. So anyone who runs this optimization function I'm talking about here about location strategy for a new startup will come to the conclusion if they do it right that everyone should be sitting around the same table. Only if you can't do that, do you say, "Okay, let's be all in the same couple of rooms." Only if that doesn't work anymore, you say, "Okay, let's be spread over one floor." If that doesn't work, in the same building. If that doesn't work, in the same city. If that doesn't work,

at least stay in the same time zones or make sure that there's good hub connections between.[00:41:39)]This is how it works. It's just like some assumption somewhere along the line is invalidated. You end up in a different side of a decision tree. But what was happening to us was we already were in four or five cities. We were adhering to the same time zone at this point. But my experience was I went through, sometimes at the Ottawa office, through an entire day where I had 10 hours of meetings, which is fairly normal,

but I do every single... I don't think I had a single other person sometimes with me because every one of them was with people in another office. Some people are dialing in remote and so on. So there was an awkward hybrid-ness which we ended up in making only good decisions along the way.[00:42:29)]This is actually the most dangerous thing. Most of the time you end up in a bad part of a tree, in a local maxima of a path-dependent environment,

by only making good choices. People think that making a good choice inoculates you from making mistakes or that the presence of a downside of an idea ends up disqualifying the idea. Both of those things are incorrect. So what you need to do then is... So that was an overlay to decision.[00:42:59)]The moment COVID started, then we also had this thing of shoppers exploding because we were actually an asset to people during COVID, e-commerce for the local businesses. And we took that very, very seriously trying to make more businesses survive COVID, small businesses survive this particular calamity than otherwise won't which is important because small businesses tend to be wiped out first anytime the times turn fragile. And so we needed to staff up. And so there's a very weird question about where to staff up. So clearly the better input there would be if you could hire people everywhere. And so once that decision flipped, you can see how this is actually now super easy to say, "We are going to remote," because there is no turning back. There is no... Even with this decision,

it's a better set of trade-offs for the future is to accept the vast additional difficulty of building a remote company. It's way harder.[00:44:03)]It's not something you should recommend to anyone to do this because it's the same as trying to run a world record marathon run in Aspen, Colorado. It's like there's not enough oxygen up there to do that. But if you end up pulling it off, you're a real Chad. That's very cool. So I find difficulty itself interesting. And again, I spent enough of my teenage years on the internet to know that there's amazing cultures that can be put together purely remote like, I don't know, Wikipedia, World of Warcraft, Raiding Guilds can at least have excellent cultures. And so we are like, "Okay, cool. Let's come to a new stable part." That stable part was don't port the office online. Let's port the internet into a company and then we are like, "Let's go."

Lenny Rachitsky[00:45:00)]This episode is brought to you by Loom. Loom lets you record your screen, your camera, and your voice to share video messages easily. Record a Loom and send it out with just a link to gather feedback, add context, or share an update. So now you can delete that novel-length email that you are writing. Instead, you can record your screen and share your message faster. Loom can help you have fewer meetings and make the meetings that you do have much more productive. Meetings start with everyone on the same page and end early. Problem solved, time saved. We know that everyone is in a one-take wonder when it comes to recording videos. So Loom comes with easy editing and AI features to help you record once and get back to the work that counts. Save time, align your team, stay connected, and get more done with Loom. Now, part of Atlassian, the makers of Jira. Try Loom for free today at loom.com/lenny. That's L-O-O-M.com/lenny. I want to talk about this talent stack concept that you've touched on a couple of times that I think so much. But before we get there, I want to go in a different direction, which I think is an interesting foundational element to your ability to be successful in your first principles thinking, which is you getting to the metal, to the core of the problems you're solving by actually spending a lot of time coding. And I actually heard a story about how you all had this huge all-hands summit. You flew everyone in. You're all together. There was a three-day hackathon. And the way it was described is you're sitting at a table with headphones in, coding, just like any IC engineer. No one would've known you're the CEO of this company, the founder of this company. Why is coding and working in the code to you still so important? Tobi Lü

tke[00:46:46)]It's so funny that that's the way the story goes. It's right, but I don't know why that is surprising. That's my happy place, being able to clear out free days of my calendar and being there till midnight with all these remarkable people who join us on journey, just building stuff. It's like, I do my job so that that is the jobs that exist for other people. That's a job I actually want. That's the one I couldn't find because no one did a company for me. But at least back in most days,

I think still not really.[00:47:26)]And so I just love coding. It's one of the greatest, I don't know, hobbies and pursuits. I've done it for a very long time. I came across it very, very early. It fits my brain like a glove. I appreciate so much of the craft behind coding. I am a trained apprentice in... Sorry, I've apprenticed as a programmer in Germany, which has a dual education system that you can do such things. So I've been professionally in companies spending all day. And I really mean it, programming ever since I just turned 16. I think first day was just before I turned 16

when I started my apprenticeship.[00:48:18)]And so I love it. I have a view on my screen left of you is a cursor right now, which is opened to a Juniper notebook where I'm working on some projection stuff that I'm playing with. I try to sanity-check as much as I can of what I get. I try to find... It's a game for me to find new insights in data. And I just think, I don't know, it was cool. Maybe this is the picture you talk about. There is a picture that someone captured, which is really fun where I'm on my laptop with a bunch of engineers and then Harley, so president, is on stage DJing. This was taken at 1:00 AM or something like this. It's a picture which actually really precious to two of us because it perfectly summarizes our relationship in a way which these happy accidents are wonderful and these long journeys, I've been doing Shopify for 20 years now, so I appreciate these artifacts. But yeah,

so... Lenny Rachitsky[00:49:32)]To be clear, the reason this is unusual is, and why someone told me this story, is most CEOs do not do this, don't just sit there and code along with the team. And the reason I thought this story was important is and the reason I think your first principle approach works is you're actually in the engineering details, similar to Elon if you think about it, of just in the weeds doing the thing, understanding how the thing works, not just coming up with ideas out of pontifications. And so I guess is there anything there of just how important it is, if you want to approach thinking from first principles, it is to be really close to the metal, to the bare metal? Tobi Lü

tke[00:50:11)]Well, yeah. First principles thinking starts from, I think Elon puts it as physics, which I think is a little bit atoms-coded. I think just from the atomic building blocks really is a right starting point. Atomic building blocks are the computers we are using. Computers are our instruments. We use them to create the music that when people appreciate to receive in the form of software. So you've got to understand how they work,

at least to work the way I do.[00:50:48)]Now, is the way I work optimal? Of course not. This is my point about the aesthetics of how to behave, how to work. I probably don't conform to the traditional view of what the most of public companies should be like or even should spend their time, but I think I'm successful because I don't try to conform to anything other than what I've learned works. And so what I learned works is be in as many details as you can. Really, really,

really just understand the stuff that we are making decisions about and be willing to don't put too much stake into the sunk cost fallacy. Try to inoculate business or your parts of a company from a sunk cost fallacy as much as possible because that allows you to just see better solutions and so on.[00:51:45)]And I think what we were doing, if I remember right, is at hack dates is we were working through pros or cons of just merging all of Shopify into one huge monorepo and we are sketching out directory structures and tooling that we would need, and... Tobi Lü

tke[00:52:00)]... tooling that we would need and... Again, monorepo, now for companies, it's a very much one of those door A, door B kind of things. It's a very consequential choice that is incorrect to go say yes to at a certain size, and then it becomes very correct in my mind to say yes to, but at that point it's an enormous amount of effort. So, it's a kind of thing that actually is something I'm uniquely positioned to be involved with because it's actually a business strategy thing as well. That's an investment, a very real investment to say, "Hey, let's change the way we are building system. Let's figure out what the best way is." (00:52:47): There's going to be change management. There's going to be some people that have very strong opinions on yes or no. And frankly, "Tobi said so.", helps. It also compresses a lot of time, because everyone knows the way I book. Everyone can come to me with better ideas about anything, and if you're right, I will change my mind. But I will hold my opinions very strongly until the point of being convinced that they're not the correct ideas. Maybe that's another aspect of this Tobi Tornado thing you talked about earlier,

people do fight.[00:53:27)]Again, the aesthetics of our times put a lot of stake into consistency. I remember various politicians losing campaigns because they were called flip-floppers at times, which I... Although, I'm more of a Maynard Keynes school of... "When the facts change, I change my opinion. What do you do, sir?"

It sounds like a better OS to go by. Lenny Rachitsky[00:53:52)]It's awesome, because I'm extracting more of your algorithm of how you think about stuff. A few things you just shared are, ( 1.), you need to be in the details. This is thinking about to be successful as a first principles thinker is (B.), you need to be in the details in your case code. In Elon's case, it's like, build the thing and be at the factory, sleeping on the floor. As you said, he's very Adams based. You're more digitally native. And then also, don't be so reliant on some costs. Like you said in this Tobi Tornado case, "I know you've been working on this project, we're going to kill it, because it's not going to work better if we do that now versus this. Just keep going, because we've been going." And then, coming back to the stuff you've shared previously is, analyze the path that you've been on, that the previous products and solutions have assumed the path dependence of them, and then don't look at what they've overfit potentially, that isn't correct. Love it. Okay. This actually is a good segue to something else that someone that you work with suggested I ask you, Farhan, your head of engineering. I asked him, "What's the best way to get a glimpse into Tobi's mind?" And it's actually along the lines of what you just described, which is, the question is just, what's the best way to disagree with you? Tobi Lü

tke[00:55:02)]I think just disagree with me. I immediately love it, honestly. I really crave it. It's very funny. I know how this really surprises people. And I actually appreciate it even more because it requires courage, and frankly, I actually do find that... But it also makes me immediately trust the person more, partly because I, first of all, think they will do what they think is right rather than what is convenient. Agreeing with a group tends to be much more convenient. But more than that actually, that they're courageous enough to do it right then. I think courage is really,

really rare. I found a lot more high IQ in industry than courage. I found a lot more maybe even genius than courage. I like that. I wish it wouldn't require that. This is why I try to be very inviting of it.[00:56:08)]When someone disagrees with me, I tend to immediately stop and say, "Cool, let's figure out why there's disagreement." And it's almost never, I find, in the, "I just feel like we should do this differently." What I'm looking for is offer unstated foundational assumptions. What is our divergence point? Because you might be right. In fact, people often are, when it gets to this point, I found. Sometimes it's an unstated foundational assumption that I hold that is incorrect. People tell me and then I'm so glad we talked about it, because I will stop forever nagging on this thing because now I know we can't do it because of Sarbanes-Oxley or something like this. It's just like, "Well, cool." My mental model of Sarbanes-Oxley, which is regulation for public companies, is not perfect. I have not in-depth studied all the details for it, so I will not consult this in my mind when I am saying, hey, we should solve the task at hand in a certain way. So,

this is very good.[00:57:24)]How to disagree? I really like debate. I will play devil's advocate actively if everyone agrees on something. Again, especially if a proposal is something that feels like I could have predicted would be a proposal before it got into the meeting and there was nothing surprising in it, I will make myself an end boss of a level and just say, "I'm going to say this is just not that good. I think we could do way better." I want people to then argue more in-depth for the veracity of the decisions,

and that leads to a form of disagreement. I think all these things end up building trust. Lenny Rachitsky[00:58:08)]I like that that touches also on this idea of, again, maximizing potential, the potential of the teams, the potential of the employees Tobi Lü

tke[00:58:14)]Because of course, the really important decisions, we don't talk about. This is the most important thing. Shopify probably makes... What?... millions of decisions every day, like, write this code this way, yes, I'm going to add this unit test, maybe I'm skipping a unit test. Might be the difference between a future production audit. Millions and millions of these tiny decisions. So, you're not hiring engineers primarily or accountants, you're hiring people who make excellent decisions, given their specialization and areas they're overseeing. And given that, decision making as a concept is actually really understudied,

I find.[00:58:59)]I think these are instances where we can just learn to make decision making together. Because I think while a lot of decisions are made independently, we are a product company, we are on a mission, and we want our product to feel like something that a single person made, in the same way how any author tries to write a book that clearly reads that it came from one mind. Because people can see and spot this, if this doesn't happen. You end up with something that looks like a television remote, where there's a Netflix button over here... It's like you can reverse [inaudible 00:59:41]

from the remote control. That's important.[00:59:48)]Using these moments and also bringing decision making inwards to go and say, hey, let's have very efficient opportunities for as many people that can possibly get together, make decisions together, not as a democracy but with clear who needs to convince who. That because otherwise this ends up just taking way too long. Give a opportunity for everyone to change my mind over Glenn's mind, and so on, is an excellent practice,

I find. I think this is a more optimal way of going about it. Lenny Rachitsky[01:00:22)]Speaking of disagreeing, it reminded me of a story I heard, about the Tobi Tornado actually, the way you operate that. I love it. It ends up being this interesting microcosm of your first principle's way of thinking. The story is, I think you've said at one point that the best way to get people to give you insights is to say something they disagree with on the internet. Tobi Lü

Yeah. Lenny Rachitsky[01:00:44)]That's often the way you approach this is, you post in a Slack group, "Hey, I don't think this product is going to work, and here's why." And that ends up creating the most information for you. Is there anything along those lines that might be helpful to share? Tobi Lü

tke[01:00:56)]I don't think that's one of my better ways of doing that. I have to be somewhat careful. The people I worked with a lot, I will do this,

just because it's funny. But even I can see that that would seriously stress out the interns. Lenny Rachitsky[01:01:16)]You guys have a lot of interns. I think you have 1,000 interns this coming year, is what Farhan shared. Tobi Lü

tke[01:01:20)]Yeah,

we just started. I was in the office yesterday and it's absolutely full of interns. It's great. Lenny Rachitsky[01:01:25)]Oh, man. Love interns, so much energy. This idea that you shared about building one product, building towards one vision, this actually reminds me of something that came up basically every time I had someone from Shopify on, which is this idea of a 100-year vision that you keep. I don't know of any other company that operates in this way, where the founder has this 100-

year vision of where the product needs to go and working backwards from that.[01:01:48)]Can you just speak to that, of that way of operating, why you find that helpful, how that actually works? Tobi Lü

tke[01:01:54)]I talk about look in the future and then think backwards a lot. What would we want to have done 20 years ago on this, or 10 or 5 years ago? What's the decision our future selves would want us to make, is useful. I find future casting to be generally extremely valuable. I definitely did not build Shopify to flip. I had lots of opportunities to sell Shopify to various people. I didn't consider it, because it's just too interesting of a journey and I think that's too... If a endpoint [inaudible 01:02:34] all companies is a convergence on a set of four or five people who can afford them, that just creates too much of a monoculture, I think,

in thinking.[01:02:43)]I like that Shopify is different. I think this is good. I think it's a terrible place to work for many, many, many people. It's the best place in the world to work for some people. That's so good. That's what we want, I think. We want more of this. We want people to be able to window-shop for a place where they can be enormously successful,

because the place's set of beliefs just fits you like a glove.[01:03:14)]100 years. We have very long-term plans. 100 years, you can't talk about this software product, but you can talk about the mission itself, whatever things that will survive for 80 years that are left on this particular timeframe. Entrepreneurship is just precious. Shopify exists, basically you make entrepreneurship more common. That is the thing we wanted to cause in the world. We have had, I think, success doing this already, but again, there's no speed limit and no stopping point for this. As I keep saying, the word's unbelievably path dependent. And therefore, if we are part of a path,

we can cause it to be more in adherence to the things that we value and would like to see. This is the wonderful thing about company building. They can have lasting impact.[01:04:16)]We are making decisions based on all the things that we can do. What are the things that will be most long-term valuable for the long-term pursuits we are on, and how can we normalize entrepreneurship? It's a thing that's really important to me, just because people don't spend enough time on it. It's all economics. Our [inaudible 01:04:44]

living entirely depends on businesses. We are all part and tag of an environment that is extremely entrepreneurial and actually celebrates entrepreneurship as a courageous act and a glorious act even.[01:05:02)]But that's not true in most of the world. In fact, most people never encounter anyone who engages in doing that. It's not something people see as one of their options. I want us to make these choices. And I think the long-term focus matters. It's also really powerful for decision making. And I know this is potentially intuitive to most, but also rarely practiced. You've had a lot of people from Stripe on here. Stripe and Shopify have had a very long-term partnership. Stripe and Shopify had potentially the most valuable partnership, or at least one of the top ones in history, of technology, because we were both very small companies and we decided, hey, let's work on an assumption that both of us are going to win our markets, and work together. So, Stripe's [inaudible 01:06:02]

for payments and we're allowed a part of Stripe and so on.[01:06:07)]When you're in a partnership like this, you play basically iterated prisoner's dilemma. Every instance, every turn you can make a choice: coordinate or defect, defecting if the other person collaborates, collaborator effect. If both collaborate, everyone gets a point. If one defects and the other one collaborates, you get a lot of points,

all at one moment. Being a good partner in business is like this corporate marshmallow test that companies tend to fail in a very funny way.[01:06:44)]If you see the videos of kids doing actual actual marshmallow tests, the smart ones actually turn the chair around, look away from the marshmallow, and sit on their hands, and just go vibrating. Because they know it's the right thing to wait for getting two marshmallows in the future, but man, if they just look at a marshmallow, they'll just eat it. Most CEOs,

most companies can't even successfully do that and just engage in pulling future profits forward at a discount or even defecting on partnerships that would be much more long-term valuable.[01:07:16)]If you're talking about long timeframes, like 100 years, there is no question. But clearly, the correct way to play iterated prisoner's dilemma is coordinate for both sides. It's way more valuable [inaudible 01:07:27] doing that over long periods of time than any momentary defection could possibly be convenient at a moment. It's a huge amount of product decisions. When we are deciding roadmap, end up being very influenced by this, because I get pitches for things we should do and why don't we do this kind of change to the system, there's so much money in it, and all these kind of things. I'm like, cool,

but almost always come in a form of putting future profits forward at a discount.[01:08:08)]But we have a long time horizon. Let's not take the discount, let's... Also, you often compromise the entire business after a while because you end up just... Your customers notice if you're going into value extraction. The best companies, I believe, at least from a perspective of a leader, resemble some kind of cockpit, or maybe a room full of dials or levers for monetization. My job is adding as many of these levers as possible to the room, and then not pulling any of them. Because I think we do best if we are on the same side of a table of our customers and we had them become entrepreneurs, which is a mission, and we want to support them to be more successful, which is the business model we are in. We get a very, very small stake of the sales in our monetization system. And therefore,

we are incentivized to make everyone as successful as possible.[01:09:11)]Again, when I get a PowerPoint from investment bankers or so, where they tell me I have enormous pricing power and I could massively change the prices, I'm like, "Yeah, but I'd leave Shopify if that happens to me, so how is that good?" He's just like, "Why?"

It just goes like that. Lenny Rachitsky[01:09:30)]There's a quote that you wrote somewhere that, to me, identifies this point so succinctly, "On a long enough timeline, playing positive-sum games with your customers is the ultimate growth hack." Yeah, beautiful. Tobi Lü

I think that's pretty piffy and it's also just... Try to argue with it. Lenny Rachitsky[01:09:53)]That's true. Tobi Lü

tke[01:09:54)]Positive-sum games have incredible returns, especially in the worlds of software, where you can experience exponentials very easily. I see company building as... I wish there would be better analogy than chess, because chess is a game of perfect information, which is totally incorrect. But one thing which I like about chess as an analogy for business is that it basically is two games, that you have to be good at at both. There's a positional game that you learn: Develop your pieces, gain influence by your pieces over the board. That's really, really important. And then there's tactics, which you learn tactic training. You go get a puzzle trainer and you drill tactics and you learn the intuition to sports tactics,

sense them. Both of them are actually super independent of each other.[01:10:53)]The business world only talks about tactics. It only talks about the conversion of we did this thing. We did an A/B test and we changed the color of blue, and conversion red went up. We lionize the easy hack. I don't think that's important, honestly. You need to be good enough at tactics to not go out of business. You can't get margin code,

sure. But the sum total of all the value of a potential tactics that you could employ stays with you if you are actually are doing the positional game.[01:11:36)]The positional game is like, what is the territory on the map that you are taking? What role do you play? How much trust do you have of merchants? Do merchants want more from you or less? Are you the kind of thing they're trying to optimize out of their software spend, or the one that they ask to subsume all other software spend? Do they rely on you? Are you part of a team, or are you used as a tool in the toolbox, usually forgotten, sometimes coming out when certain task is being done? What does your product cover? What industries are you addressing? And so on, so on, so on. This is the positional game. How well do pieces fit together? Do people like relying even deeper on you? (01:12:25): If you do that well, the tactics are yours and you can hire a lot of people who are extraordinarily good at spotting tactics and using them. But if you do it too much, you end up extracting through tactics the entirety of the value that you have created and that is yours to take through a positional game. And if you do that, you have nothing left in the tank. That's for companies that we all see,

that just got to a point and then just fade. Those are the companies that got tacticked out of their position. Lenny Rachitsky[01:13:01)]The skill, obviously, is finding the balance between these two things of short-term, not get margin calls, as you described,

but also think ahead.[01:13:09)]Is there any kind of heuristic for founders listening to this who are like, "How do I do this? How much should I be thinking about the future versus now?", I guess? How do you try to create this pie chart of driving goals immediately and show investors we're killing it, while also thinking ahead? Tobi Lü

tke[01:13:22)]Is there a good heuristic? Objective number one is: Don't die. Again, in the end, for companies that become historic companies are the ones which did not die. It also sounds very basic, but actually it's more actionable than it might seem. Past that point, I would argue: Just focus on the positional game. I think this is where a bit of a discrepancy of the founder and the rest of the company sometimes lies. I think the founders create finite, winnable games for people, that are very much serving the infinite game of developing, that the mission implies,

the quality of position on the board.[01:14:14)]By the way, it's an infinite board. Just picture the chess board as the initial terrain, but there's, I don't know, fog on the board and it's a terrain that's much larger that you will explore over time. I think that's the most prettiest way of mentally thinking about the experience of building a company. It's an exploration and a collaborative inquiry into a question that is implied by the mission. And you will get to explore how correct your mission is and how good your decision making is along the way. And you get to learn a lot,

and this is why I think it's a valuable thing to do.[01:14:55)]But they often, the founders, and the mission of a company are in alignment, but they are, again, non-quantifiable things. They are pursuits. Maybe as time horizons that go past, all of our time horizons of our careers, therefore that makes it hard for people to care deeply yet. But they do care about the instances, the games along the way, the [inaudible 01:15:24] that have to be done to explore a part of a map,

the tactics that have to be executed. Lenny Rachitsky[01:15:29)]I'm not going to take us here, but I know you're a big fan of this book, Finite and Infinite Games. I actually had it once at a book club and it blew my mind open. I'm going to link to it. People should check it out. You've talked about this on another podcast. I'm not going to [inaudible 01:15:40]. Tobi Lü

tke[01:15:40)]Yeah, it's a lovely book. James Carse did an incredible, underappreciated... I think they essentially wrote one of the best business books. They is trying to write a hard philosophy book. I don't know if it works for its intended purpose, but I think there's more value in what he actually accomplished. Maybe, sadly, it may be that he didn't know before he died,

which would be very sad. Lenny Rachitsky[01:16:08)]It's a little hard to read for people... Tobi Lü

Yes. Lenny Rachitsky[01:16:09)]... so just stick with it and just try to wrap your head around what he's trying to say, is my advice. Tobi Lü

tke[01:16:14)]I think reading... I don't know how many it is, but... the first couple of chapters really helps you get your arms around the story, his insight. The rest of the book are examples of his ideas applied. My takeaway from reading his examples is that he did not fully appreciate the insight of his own idea. It just ends up being very locally limited and very narrow-focused. It's a much grander idea than I think he really... This is why I say I don't think he fully appreciated quality of his own idea,

which... Lenny Rachitsky[01:16:58)]I think we need a Tobi version of this book, with a foreword, and... Tobi Lü

I heard Simon Sinek... Lenny Rachitsky[01:17:04)]Uh-huh. Tobi Lü

tke[01:17:04)]... wrote a book of a similar title. I've actually never gotten around to read it,

but I think he would be very good at interpreting this if that's what he did. Lenny Rachitsky[01:17:11)]That's what it sounds like. I feel like his book is that book,

written in a different way.[01:17:15)]I want to come back to something you talked about, which is focusing on entrepreneurship and the merchants that you all work with. To me, this is another example of maximizing human potential. The way I think about this, people always talk about Y Combinator and Stanford and all these places that create all these companies and founders. If you think about it, Shopify does this orders of magnitude beyond, and I don't think you guys get enough credit for that, the amount of businesses you create, the amount of lives you change. Tobi Lü

That's because we don't want the credit. That's the point. Lenny Rachitsky[01:17:46)]Is there a platform? Tobi Lü

We don't want the credit. Lenny Rachitsky[01:17:47)]No. Tobi Lü

tke[01:17:48)]I mean, maybe if you wanted it, you could also not get it, but we don't need to explore that because we actually, literally don't want the credit. Shopify is a company that pushes from behind. We don't want to be written into the story. We want to just... Tobi Lü

tke[01:18:00)]... want to be written into the story, we want to just kind of have you do your thing. There's just too much grandeur in wanting to front it all. This is also what caused us to go and help people build their own things rather than start with a marketplace that everyone gets to lease a little component of at prices that corresponds to magically exactly your margin, as this usually goes in marketplaces. And so yeah, I think we don't want it. I'm proud of it, but that's intrinsic. I don't need very extrinsic appreciation for it, I suppose. There's millions, millions and millions of people that use Shopify daily and that represents the business and it causes major amount of employment around the world actually,

definitely in North America specifically and Europe. And so I think that's really gratifying. I'm sure there's a way of saying that many of us businesses might actually have existed without Shopify.[01:19:18)]I also think you can make a case that a good number exists because of Shopify, because what we've observed is that this was actually, it's my favorite thing in the entire Shopify journey that we sort of rigorously determined, which is that because I really, really, really prioritize good UX, legible interfaces. You can tame enormous complexity with great UX in a way that makes sense to people. I think this is actually almost a moral obligation to do for software because when software goes bad, it makes people feel dumb and machines do not get to negatively influence people in my mind. That is the inversion of the priority of the hierarchy of how machines are tools wielded by people to be more powerful at the things that they're already great at than they might imagine. That's when this all needs to fit together, but beyond the moral point, which is 10 years,

and you could definitely take the other side of what we have determined is that every single time we make a complex thing simpler. It is actually that more businesses will exist on a platform.[01:20:38)]So I think this is intuitive or at least directional, but sometimes people are not like, "Well, don't you just need to have all these features?" This is the RFP view of a world of software, right? "Don't you need to just have all the features then people can implement their plan?" Well, no. Think about the mental state and entrepreneurship entrepreneurs, they are, I mean especially if you're first entrepreneurs, they're unsophisticated. They don't know what to do. They're kind of scared. By the way,

engaging in building something again is an act of pure courage and usually one which is very hard to hide from others. The people around you will know that you're doing this thing. Ask any entrepreneur. The amount of people who tell you to not do this is actually stunning. People do not want people to just step out of a box that exists that they sort of explain to themselves around them and have a chance of reaching higher because that would sort of invalidate their own life story in some meaningful way.[01:21:38)]So there's actually a whole lot of nay saying that discourages people already, which is not super helpful. So now you have a situation where people are telling you to quit potentially, you don't have a lot of money presumably, you're asking yourself, are you even doing the right thing? Hopefully there's some elements of encouragement. Hopefully there's a passion. Hopefully you're trying to create a thing. Then comes to a situation that stuns you in some way,

somewhere where suddenly the software starts talking about APIs where this is something you've never encountered in your life before or that just the option that you think it should have on the text configuration screen doesn't make sense given what we know about local taxes and so on. Here's the thing that happens. So the beautiful thing with Shopify is there's basically no tax configuration screen. It's just correct. The amazing thing about software is we can actually just overtake this piece of complexity.[01:22:53)]We know what the taxes are everywhere and we are just doing it for you. You don't have to think about taxes. In this case we have someone encountered something that stunned them, that stopped them in their tracks. On the wrong day, what that means, it's like they are going to close a browser and they say, "You know what? Fuck it. I'm not cut out for this." Or, "This piece of software I use sucks and it's too dumb for understanding the thing I have in my head," or something else. Everyone has a different rendering of the same thing, but just like progress stops. It is not just the businesses that shouldn't exist anyway that stop in this way. In fact, it's actually, and this is again what the data says, so many businesses get very close to this point many, many times. I can tell you Shopify did many times and I have more tools on entrepreneurial journey than most. I'm a computer programmer and I love those things. You tell me I can spend 14 hours programming for the next couple of years. I'm like, "Holy shit, let's go." (01:24:01): Most people aren't like that. So I've had unfair advantages that allowed me to overcome very technical climbs on this learning curve, but I know that's like most people can't have these advantages and therefore will churn out of a test. And so in other words, lowering complexity, making good UX, creating software that just autopilots taxes or payments or any of these kinds of things, fraud, actually causes more entrepreneurship. That is the best thing, the best answer to the most important question of my life that I've encountered because up to this point it was an intuition that doing the Shopify thing would be valuable in absolute sense, in a hundred-year sense. Afterwards I knew, right? And so that also just means now seeing things that are overly complex or shouldn't even be there, it's just physically painful because I know,

it's like all these business that are trying to get somewhere and could exist and could now employ people and delight customers just died along the way because of something we did wrong or poorly and so on. And so this is a great source of energy for me to keep going. Lenny Rachitsky[01:25:26)]I feel that, I feel that pain of the idea of anytime a button's broken or it's not as... the button's wrong color and more people would be converting means that you're not creating as many businesses, many entrepreneurs. The feeling you described of being scared to launch something, I exactly felt that when I started the newsletter. And my solution to that as I launched it is, "I'm just launching this as an experiment. We'll see where it goes, just don't worry about it. I might blog once in a while." And that really helped just lowering the stakes and I could see how just things like that and advice that can help someone get over that hump. Tobi Lü

tke[01:26:01)]Yes, and I think this is an under explored thing in the word of UX. Random example, I was absolutely delighted by, maybe TikTok has the same thing, I don't know, but I was posting a video to Instagram and it allowed me to run a try run of the reel. It just seems like a new feature and just saying it shows it to a couple hundred people out of network and if they like it then it's going to post to my profile. I'm like, "I don't need that." But I thought that was one of the more... I honestly just closed Instagram and was like, "Holy shit, this is probably one of the most profound insightful pieces of software I've encountered. And as a connoisseur of good ideas, I've never had this as a valuable thing." It feels like a step function upgrade to the traditional A-B test as a concept because it's so understandable and I'm like, "What else in the world should have try runs that run out of network?" Basically everything, isn't it? (01:27:03): This is an amazing thing. Like I said, the rarest thing in the world, it's not even creativity or genius, it's courage. So let's lower the net amount of courage needed. Honestly, that's one of those things you can probably run an entire career or reinvent an industry on. These things unfurl into incredible amounts of value if you really pursue them and come at them from first principles rather than how can I do the things I want to do anyway slightly better because of insight. That's good and people should always do it, but not usually where most of the value ends up becoming, like manifests when a new idea comes around. So I talk radically about an Instagram feature. That's a weird thing to do, but I was actually just really to delighted because again,

it just came up a few days ago. Lenny Rachitsky[01:27:54)]I love this thread of courage. The example you gave reminds me also of I feel like going on a dating app at a different city for the first time is another example of this where it's a dry run, nobody knows you. Tobi Lü

tke[01:28:06)]But even then, shouldn't there be like, "Hey, post my profile to a different city for telling me if it's any good."

Lenny Rachitsky[01:28:14)]SO people like it. Tobi Lü

tke[01:28:14)]I mean I've never dated basically so I mean at least not in the last 25

years. Lenny Rachitsky[01:28:19)]Yeah, of the podcast. Tobi Lü

tke[01:28:20)]So I'm pre swipe left and right dating,

so my conception is very low of this. Maybe I should look more at dating apps. I'm pretty sure there's some amazing UX in most things. Lenny Rachitsky[01:28:34)]I imagine. I feel like dating is going offline more and more. I'm feeling like that's what people are trying to do. They're tired of the swipe, but anyway, going to go in that direction. Maybe a couple more questions while I have you here. One is this idea of the talent stack. You've mentioned this concept before and this is the term that I've seen you describe it as of this idea of the power of focusing on your unique talents and curiosity and that leading you to the biggest opportunities, especially early in your career. Can you just talk about what your insight there. Tobi Lü

tke[01:29:04)]Yeah, again, I only lived one life, so I can't Monte Carlo all the decisions I make and just figure out which ones ended up being load baring, right? I'm at this point pretty amused by the following thing which keeps happening. But I am getting curious about some absolutely random thing and it really is fairly far-flung stuff and like magic it becomes the way that ends up allowing me to make a very important choice a year later. It's ends up being a better analogy that I've learned or a different way to see something or another idea that I found being represented in this area of expertise that is actually just again, another repackaging of another foundational idea,

which allows me to go and look for more examples.[01:29:57)]And it's just funny this way. So even early in career just I followed my curiosity. I love programming and I love computers and I loved the internet when it came along and I just like, "Cool, I'm going to find a task that I find valuable," which I was always engaged in retail and I have a lot to say about how retail should be brought by the internet to people. But this is a beautiful intersection of all the things that I find interesting. And then on top of it, I found Ruby, which I loved as a technology and then just now I was highly motivated to tinker,

explore a space that was clearly emerging but just felt very obviously of value in the future.[01:30:44)]But I didn't do it because I was following money. I did it because I like learning by doing stuff and I like tinkering the things and so this was a way of financing my tinkering by selling snowboards and then it led to other things. And I've kind of been doing that thing all along. It's great fun, great fun for me. I don't know how much of a advice that is, but maybe a proof point that can work really well. I sometimes worry though that things like this end up being a little bit like all you need to do is buy a lottery ticket, set for lottery ticket winner, right? So it's, who knows?

Lenny Rachitsky[01:31:30)]It does resonate. It reminds me of something Brian Armstrong once shared, which is the reason that he- Tobi Lü

tke[01:31:37)]He's also, by the way, you have to add him to the set of first principle thinkers if you're starting to cultivate one. And I think there's plenty of startup success, successful founders, CEOs, especially for public companies are surprisingly alike in this projecting slightly different, maybe coming from different backgrounds, but Brian is extraordinarily strong at this [inaudible 01:32:06]

by the way. Lenny Rachitsky[01:32:06)]Okay, here's to the next nominated for the podcast, Brian. We'll get on it. But interestingly, he had basically exact same advice for what allowed him to create Coinbase is his background was economics, coding and cryptography or something along those lines. And it's the Venn diagram, is like, "This is the thing I'm uniquely strong at and have an opportunity to win it." Tobi Lü

tke[01:32:29)]Yeah. So this is what we very actively tell our customers, right? There's a 2005 essay by Kevin Kelly saying, "In the future on the internet you just need a thousand true fans." It's what the internet and I think what Shopify celebrates, that instead of trying to create toothpaste, which is of course a huge term but hard to differentiate. It's much better to figure out a triplicate intersection of three different things and nail it. We took a winter vacation with my boys and my family in the Caribbean and I like playing poker with them. I like playing poker and it's great limited information game. I think this were valuable for kids and so I found this, I might have mentioned this in some place,

but I found this pirate gold I think it's called.[01:33:32)]It's just amazing poker set, poker chips that look like they come right out of the treasure chest or in Pirates of the Caribbean. Think about just the intersection, so this is online Texas Hold'em, quality poker set instead of... because you can play with just anything, right? People were in the market for spending money on something like this and pirate themed. You're like, " But I'm such a big fan, I'm telling you about it and people might actually purchase it because I'm enthusiastic about it." And because enthusiasm is actually the best marketing and they have at least a thousand true fans, and it's just better to make amazing things for some people than make something that everyone wants maybe or would tolerate. And I think that's really, really good. So I think that works for your career too because by the way,

we are all entrepreneurs so we're ready to think about any career.[01:34:36)]If you actually ask me for career advice is we are products, we are engaged in entrepreneurship, we are basically software as a service if you want, or talent as a service. We are selling a subscription in the form of our employment we call it, but it's actually just rebranded the subscription frankly because it comes some extra protection, which is very good, but it's still the same thing, it's a double opt-in company. Like you would say, I can do these things and I will be of significantly more value to the company than you will have to spend on me. There's like a positive ROI ideally for a company and a company either says, "I agree or I don't agree with you."

And that's actually what employment is. So I think people should think about themselves as a product. Your career is not based on mentors you find or getting a promotion or not.[01:35:34)]It's about what are you too good to ignore in? How good can you be? Can you be absolutely work? Can you be excellent? I mean you don't have to be work class and stuff, but you have to... Ideally you find a thing where you are just in this sort of tiny space of five intersections or so versus we just know more than everyone else and then everyone calls you. Like I said, we use Ruby. Ruby was not that fast. Shopify would rather have it very fast. We found people who got PhDs in dynamic language, garbage collection dynamic language,

just in time compilation to make Ruby fast. And they're having delightful time at Shopify and Shopify is now very fast and it's very good. And everyone gets to profit from us needing this because we merged it back into Ruby Core and now everyone can have a JIT compiler. So it's great. Lenny Rachitsky[01:36:40)]I feel like every story is a fractal into other hours of other podcast conversation we can have. I know you have to go run this nine, 10, 10,000 person company and do real work. So I'm going to end it there. We got through almost everything I was hoping to get through, but there's infinitely more questions I still have. Just to maybe end it, is there anything you want to leave listeners with? Any last nugget that maybe you didn't mention? Tobi Lü

tke[01:37:03)]If I get to talk to again people who look at product and product management, here's my thing that I think maybe only implicitly came through in all this. Every product in the world, the quality at the end of the day is simply a reflection of how much the people who created it gave a shit about the product. And it is not possible to make great products if the people work on it do not give a shit about the product. And I actually think this is a very important role for product leaders to make sure that the team gives a shit. And I think this is something that can be done with building empathy for people using it,

but also it can be done infectiously by the product leader. The product leader has to give a shit. Do not engage in product work on product that you don't care about because you cannot produce the thing that the person will give you a task is looking for.[01:38:04)]And I think again, so much goes into this unquantifiable conversation which we already had, but boy is that important because it just isn't about the brief document, it isn't about the aligning stakeholders. Sometimes in some places some of those things are aspects of it and I think they correlate sometimes with people. But I think the higher order bit is if you are in product, you have basically free roads. You have to have the team sits, look around corners that they don't see. You just have to understand this thing that's being done better than everyone else because that's a role. Now, you don't have to do this by yourself. Everyone on the team is of a resource to you and you can query them and therefore determine what is around the corners and so on. But in engineering and UX and so on, but that's very important. Second is you've got to be exothermically infectious with actually caring about this thing because just that one thing alone will make a 10

times better product. It's crazy how much of a change this makes. Lenny Rachitsky[01:39:25)]I feel like honestly what you're describing here is like founder mode, what the outputs are. Giving a shit, being exothermic excited and looking around corners. I feel like this is its own conversation here. Tobi Lü

tke[01:39:37)]Yeah, I agree. I don't think founder mode, so I mean I think, yeah, founder mode is a super valuable term, but I actually do think that I answered the question about what I think about founder mode in the discussion about pumping heat into systems. That's what I do. It's just that founder mode in a founder run company, I think this has an easier time existing because people dislike the people who are pumping heat into a thing. People fight them, people probably take them out, and if the boss is like this, boss can protect the other people like this. And therefore I think founder run companies can be innovative longer because there's a substrate by which this can stay a thing for a long time. So anyway, that's my tear down on the founder mode discussion, which I think is a really fascinating recent discussion. I find it's very valuable. I'm sure it's misunderstood in all sorts of ways,

but I think it's more actionable than people think. Lenny Rachitsky[01:40:40)]Tobi, I appreciate you continuing to drop nuggets, even though I know you have to go, by the way, your video looks incredible right now. This is amazing editing, we're doing like a rainbow streaming across your body. Tobi Lü

tke[01:40:53)]Yeah, we really hit the rainbows here like, "Let's go and invent."

I hope you've got to gold that you were hoping and- Lenny Rachitsky[01:41:00)]So much gold. Tobi Lü

tke[01:41:00)]...

I was sufficient leprechaun here to deliver. Lenny Rachitsky[01:41:05)]What a metaphor. Okay, Tobi, thank you so much for doing this. This was incredible. I feel like this is going to help so many people build great companies and thank you from first principles. Tobi Lü

tke[01:41:13)]Okay,

I got to run. Bye-bye. Lenny Rachitsky[01:41:15)]Okay,

bye.[01:41:18)]Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.