Pod Insights Acquired ACQ2: How to Live in Everyone Else's Future (with Shopify CEO Tobi Lütke) About this episode Tobi is one of the most thoughtful people in the technology industry. He's also one of the very few people who started as a programmer -- just trying to solve his own problem -- and still runs his company as CEO today even as it approaches a $200B market cap. Tobi has done this in two big ways: first, a willingness throw away his past beliefs in the face of new data, growing into the leader the company needed. And second, by remaining a close observer (and participant!) in how new technology emerges that changes what is possible.
Today on ACQ2, we talk with him about both. The first half of the episode is about what has changed for him in the AI era. How he spends his time with AI throughout the day, how he thinks about what AI unlocks philosophically, and what he thinks the impact will be on all of us and what we build. The second half is more about Shopify. How he dealt mentally with the explosion in stock price in 2021 from a 20x revenue multiple to a 70x revenue multiple. And then, what he subsequently did when it all came crashing down. We also talk with him about the leadership and product principles that he's employed to steadily grow the company's revenues to an all-time high today.
*Links:*
- John Collison's Tweet: "Museum of Passion Projects": https://x.com/collision/status/1529452415346302976?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1529452415346302976%7Ctwgr%5E08edc4b87834ff432c39ba053887b46c6b3991fc%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.driverlesscrocodile.com%2Fsustainability-and-change%2Fjon-collison-things-dont-just-happen-or-the-museum-of-passion-projects%2F
*More Acquired:*
- Get email updates https://www.acquired.fm/email and vote on future episodes!
- Join the Slack http://acquired.fm/slack
- Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store!
0:00 How Tobi Lütke is changing his life and habits with AI, and how he "lives in the future" to try and see what's coming next
6:41 How Abstraction Layers Shape (and Limit) Software's Potential
14:33 AI's Role in Unlocking Human Potential and Unnoticed Shifts
22:19 Why This Era is the Golden Age of Humanity and How to Engage with AI
37:46 How AI Tools Redefine Success and Empower Problem Solvers
44:25 Shopify's AI Mandate and what Tobi calls "Context Engineering"
57:26 Shopify Stock and how Leadership is like a Jazz Band
1:07:31 Video Games, Parenting, and Learning
1:13:06 The Fundamental Differences Between Founder-Led and Managerial Companies
1:32:47 Consensus is the Opposite of Leadership, and an Alternative to the Regret Minimization Principle
_Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._
Transcript 21,263 words · 3 speakers
0:00 Speaker 1 Hello, acquired listeners. Since we did our episode on Shopify six years ago, they have turned into a giant public company. They went public in 2015 for less than 1.5 billion dollars. Very cute by today's uh standards. They're worth nearly 200 billion dollars now and doing about 10 billion dollars a year in revenue. We've gotten to know Toby and the team pretty well since then, and Toby is an incredibly unique thinker. We were originally thinking, let's do an ACQ2 episode on Shopify's recent developments, sort of everything that's happened since. Which ended up turning more into a philosophical conversation about the state of computing, how AI changes everything, and what's possible to build in the future because of AI. Yeah.
0:43 Speaker 2 We also got into some of the more insane moments for Toby as a CEO over the past few years, like when the company almost became a meme stock, going from trading around a 20x revenue multiple before COVID up to 70X, then crashing back down after COVID in SERP. Today though, they're nearly back at an all-time high, but this time because the business and the revenues are actually doing great, not because of a COVID and ZERP fueled bet on the future. Yes.
1:12 Speaker 1 So please enjoy our conversation with the founder and CEO of Shopify, Toby Ludke. Where have you spent a disproportionate amount of your mental cycles
1:22 Speaker 0 in the last month? It is a privilege of a lifetime to be part of an another platform shift. And man, like it's just every single time I think I have my head wrapped around it. It's like it it's remarkable how quickly one normalizes to completely featuristic new things appearing. We are all kind of like, yeah, I guess I can just paste this into ChatGPT and like ask it questions about it. I'm still hung up on like software that no one wrote and I have to interview it to figure out its capabilities. So my my time is like really just interviewing uh like these um like new models are coming out for their capabilities and like uh just trying to figure out how to um um make them idealized non-judgmental teachers for people.
2:09 Speaker 0 They keep getting better and how to create structure around uh judging new models for their capabilities, figuring out where the edges are of what they can do right now, but also make it so that I can very quickly retest any new model coming against those edges to figure out if if if we've crested another.
2:30 Speaker 1 Do you have your own personal like test harnesses built to try to understand capabilities? That's
2:35 Speaker 0 exactly it. This is sort of what I'm describing, but you're nailing it. Like I I've now um have um like a uh like a Toby eval. It's like literally a folder of um prompts um with uh expected and judged results, and I'm like I I run it against every model. Like I've at some point I'm like, yes, I have these chats and I have these standard questions, and then I sort of make decisions based on this. I can write code that does this for me and run this against every model. And like it's just like it's funny how your thinking evolves while engaging with these tools, right? Like this is like not how I would have approached this before, but like speaking with um a lot of machine learning um uh experts. Um this is how they have been doing this. These these ideas of um building evals, uh they're called, right?
3:21 Speaker 0 Like um that's not a term to most people, and it's sort of a niche product of the machine learning world, because it's essentially just batch jobs which just try the same thing over and over again and then judge the results. Yeah, I know them as unit tests. Exactly. So yeah, exactly. So you you you you you unit tests were around about kind of a revolution um in um the early 2000s, end of nineties.
3:49 Speaker 0 I talked um with you before about my um uh wonderful uh Meister where I did my apprenticeship um with at Siemens and he always said like you have two years um to develop software after you start and afterwards it's like someone pours cement into it, right? Like you're never gonna change it again. And um that was like that was true at in the 90s.
4:09 Speaker 1 That's how people thought about software. Um civil engineering. It's like you build the bridge, the bridge is done.
4:16 Speaker 0 Exactly.
4:16 Speaker 1 It was an
4:17 Speaker 0 end date to it. And then um if you wanted to evolve it, you rewrote it, right? Like um uh you know, like Windows was a rewrite every time every every major version was actually start from I mean they they took some vivid, but like it's mostly stuff from scratch. Software evolves forever. Um I mean I still can't really explain why Bitrot exists. Like why does a great piece of software is really, really bad, like a decade later, right? Like it's like it hasn't changed. We have changed, right? Our expectation have changed, maybe. But like um As soon as the new iOS is
4:47 Speaker 1 announced, the old iOS feels like garbage. Right. And it's not that your phone got slower, and it's not that those it's those UI paradigms sort of expired.
4:55 Speaker 0 That's right. And and and and I see this like really vividly. It's a good example because you know, I do all these product reviews, and um I'm also like I mean, it's so it's it's such a bad thing to do, but I I just I I physically can't restrain myself from hitting that update to latest beta button when it appears anywhere. Right, like it's
5:14 Speaker 1 just like I cannot.
5:15 Speaker 0 I like it's like this is Sirens call, there's no amount of. Do you run beta software on your phone? Like I just I can't. I can't not. I'm like, and I I have a single phone, and I'm like, I'm I'm just gonna I I find all the bugs that are waiting for me as interesting constraints that I can like uh play with. You know, just like my
5:34 Speaker 2 Craig Federigy on Speed Dell, and you're like sending him screenshots of the Aaron.
5:37 Speaker 0 Nope, no externalities. Uh I'm just like I own it. I own my own problems. I I'm going to the first developer beta, and if uh five of my apps that I need every day don't work, I use it as um delightful opportunity to learn about new apps, right? So it's just like
5:50 Speaker 1 you're a public company CEO and sometimes your phone is just randomly crashing. But that actually is avoidable and y but not for you. Yeah, it's like uh
5:58 Speaker 0 whatever the consequences of this is why Toby is special. So anyway, it's just like live in um you know uh as much as you know, iOS is just updating to a new UI paradigm called liquid glass, which was very much maligned right off the bat by uh people um and some somewhat rightfully so in some instances. But to be fair, like Apple has an uncanny ability to uh figure out like introduce things that afterwards seem that was clearly the right thing and actually haven't like it's not even clear that they are better. It's just very clear that they make everything else worse. It's it it's induced bit rot on everyone else in a way. And it's like just so I I I've been living with this changed U UI for for a while, and I'm in these product reviews with my own teams. Uh and um you know, we're looking at designs which are clearly sort of uh um good designs in the context of the world that we are now leaving in a in a way, and like it it's incredible what it does.
6:54 Speaker 0 Like because I'm like I hey designers, I know you probably need you on beta. You kind of you need to design for um the device as it will be experienced by people in the future, right? And so um I find that is just like the biggest job that um uh you know I personally can do for the company and then my company can do for my customers, which is like live in everyone else's relative future. You don't even need to predict the future that well. If you just live in everyone else's uh relative future, which really is just a couple of uh um high conviction, uh high courage uh update to beta uh clicks. It's not that hard to live in the future. You just really do the exactly. You just go experience, you know, develop taste for it and figure out how to make your own decisions. And this is of course extraordinary true making you know sidekick inside of Shopify and like having the AI assistant, which is now like massive.
7:46 Speaker 0 Yeah, okay, so yeah, tell us about
7:48 Speaker 2 that and like uh back to BitRot. I mean, I was gonna ask before. Uh a lot of code is now not written by humans, and it's trivial to just be like, yeah, update this, make this better.
8:00 Speaker 0 What's going on in Shopify? I mean, exactly. Like what a what an incredible change. Code used to be by far the most expensive thing and uh to produce, right? I think um really really good quote for block bearing things is still exactly like this. But like around around the margins, there's a lot of a lot of a kind of code that glues together um inspired infrastructure is uh can can now just be treated as like like a like a first draft, right? Like uh for for something. And I think that's actually extremely healthy. Like this is a property of almost every great piece of software. Um there's a thing, there's a very clear split um somewhere. There's a layer, like the Linux kernel needs to be developed in one way, and and and then the Linux operating system is like just uses the kernel's infrastructure and pretends like every computer's the same because you don't you can you can like it it creates a pretend word that's easier to reason about so that then the software can be implemented.
8:54 Speaker 0 Abstraction. It's a beautiful section. Yeah, abstraction, but inspired abstraction. Abstractions can also be bad because like abstraction is uh just another word for uh pretension. It's it pretends like everything that abstracts something just pretends um it's different from how it actually is. And so abstractions can be incredibly powerful and uh they're there's some one could name which uh have like really stood the test of time. But a lot of abstractions are um lossy abstractions. They actually pretend the system is something um uh i i i is a lot less powerful than it what it actually is, which really really matters if you evolve things on top, and then you end up on this like tower of uh um uh abstractions, you sit on top, you want something for which you would actually have to go down here and connect, and then you have this sort of uh spider web of cables left and right, and it's just like it's it's it's all it's all like spaghetti in the end.
9:46 Speaker 1 Um this was like the world of uh to make it concrete for listeners, the uh right once run anywhere mobile idea where oh we'll just cross compile to all of the different phones back in the middle of the year. What was thousand twelve or so? Phone gap or Xamarin. Yeah, yeah. Yeah. And the abstractions ended up being too lossy where you didn't actually be able to have access to the capabilities.
10:07 Speaker 2 Oh great, we'll just write for HTML5 and it'll run like a native app and you know like
10:11 Speaker 0 no. Yeah, and and and uh you know very, very good software companies believed that to be the way, right? Like hybrid applications were all the age in the beginning. And remember the phones were really, really slow back then. The phones are insanely quick, and even today hybrid apps are not that great. So uh you know Facebook or famously was all in on this idea, and um Zamarine is a good example. So there's a lot of these kind of um picking the wrong abstractions early really constrains uh the um what you can do on top. Uh but and very often when abstraction is wrong, it means you can't actually reach great software anymore more. You you actually pretended the world is simpler, but like you don't actually allow all the the the most uh lot-bearing uh pieces into this pretension, a pretended world um that are at some point required to making the software just really really good.
10:58 Speaker 0 And so uh you know, again, I'm a toolmaker, right? Let's keep beating on this submarine thing that no one's heard of, but like just I think we've described it enough so that people might have an idea for what it might be. Just imagine you use very bad software and um the team that started the project decided early to use submarine, and then they never had a chance of making this as good as all the other things you really appreciate on your phone due to this decision, no matter how good they are.
11:25 Speaker 1 It's like building your house on top of your kitchen table instead of on the foundation of your house.
11:30 Speaker 0 That's a very good analogy. Um it's it's you can't there are early decisions that will constrain how good you can make something. In our parlance at Shopify, that means certain ideas, certain abstractions, certain choices uh bring the ceiling down, as in like if you have a scale from one to ten of how good something can be. Uh 10 is world-class masterpiece and uh one is like like horrible. Um what you hope to do is that you use abstractions to make it easier to uh to to reach a good number. It brings the floor up. It's at least this good, right? That's what most abstractions do. And from business value, this a lot of businesses choose tools to make it at least this good, because that is sort of a passing grade, right? Like it clears the hurdle.
12:16 Speaker 2 Why why would any customer use Shopify? It's like, well, okay, I could go build my own e-commerce checkout payment system. My store is going
12:24 Speaker 1 to be at least this
12:25 Speaker 0 good,
12:25 Speaker 1 even if I do
12:26 Speaker 0 zero customization. Right, right. And well, if you set out to do your own, like um from scratch. And this is not your mo your core business, what you get back might actually be like completely underperforming what you wanted, right? Like you can't even use it. Um might be, will be. Yes. Way, very, very likely. And um you it becomes one of those ever uh like DevMart projects that you just pour resources in and it takes incredibly good people to rescue a bad project, which is like hard to even convince good people to do this. Windows Vista. Yeah. Yeah. So um you end up in this world where uh you know, so bring bring the floor down is what people hope for. What a lot of people miss is very often the same systems bring the ceiling down. Yeah. And so um what you are try like trying to do as a tool maker as an infrastructure builder, um, as a product maker, is you want to make a uh a tool that brings the floor up significantly, but doesn't constrain the ceiling.
13:21 Speaker 0 And that is extremely hard. I think it takes sometimes it takes um it does it might not take decades to build it, but it does take decades to build the mental um picture to really understand all the aspects of a problem domain um in such a way that you now you you you have to look around five corners to know am I gonna restrict someone's potential with making this sort of choice that's here ahead of me. Uh modern operating systems are wonderful, they don't usually lower the ceiling. Um they like you you can build any amazing piece of software on top of uh you know Windows, Linux and OS X now. We we figured out how to do this because we have been building operating systems for a very long time and they were clearly um attempts that were wrong. You know, there's many such spaces, e-commerce software being being being one of them, um like where it's just like yes, we want we want to build something that's that works like this.
14:15 Speaker 0 However, it also matters how likely it is. Like what is the distribution inside of you the users of the system of who people who hit 10 out of 10 versus like if your floor is seven out of ten, which is really good. Is is is everyone clustered there and one or two people manage to take it to the uh storied heights. That's also bad. And again, this is why I think um AI is so exciting, because I think it's its principal ability is really to help um massively shift the sort of scatter plot of where people end up in as compared to their own vision. I want people, if they have like whatever their vision is, unencumbered is a 10 of 10 um on this scale. I want them to hit it. And I just like if they don't, there needs to be good reasons and ideally their own. Like um the choices they made, maybe maybe mistake, maybe their product's not good.
15:03 Speaker 0 Not that the
15:04 Speaker 1 platform constrained them into not being able to make something great.
15:07 Speaker 0 Computers shouldn't have to constrain people. It's like this is not the computer's role. A computer is to get people to build things where they could not possibly imagine voting uh having having soft otherwise. It's like this is like this is the sorting, this is the ordering. Like computers are there to make humans better, never to constrain what humans can do. Aaron Powell
15:24 Speaker 1 What does that look like from a product? I could imagine, but how what sort of products are you building that take advantage of that?
15:30 Speaker 0 Usually when it is a 10 out of 10, very often um people are working with you know experts, some people who really dedicate themselves to really, really understanding all the ins and outs of uh uh of a really complex piece of software. In many cases, that's the only way we could get there. Although I think this the role of software is to minimize the need for this kind of thing. We want to make it approachable so that people can sort of again accomplish your initial goal, get online, have a checkout, be able to sell the product that they've spent a lot of time with, and if they have additional time to invest, be able to start um we call this hill climbing, right? So now with like you have an AI you can ask. In fact, we are gonna increasingly ask you um what your goals are, right? Or at least we try we either try to find uh ways to uh deduct that from what people are doing with the software, or just straight up ask.
16:20 Speaker 0 My theory is that people are very happy to tell us what their goals are. And a lot of software just doesn't do it because it can't action it, right? It maybe it has a to we could put a to-do list there and help you with a record keeping, but it can't be uh uh we can't do anything about a to-do list before AI. And now again with these agentic flows, we increasingly can. So um yeah, like in uh like the I think the way to get to 10 out of 10 is just like really sit on the same side of a table, have an like we have the intake. We we you very naturally tell us what you're trying to accomplish. And then we can show you here's what a prototype would look like of this idea that uh uh that you have. And just like also implement just these obscure best practices, right? I've spoken with one of our customers, they're selling rugs and um rocks.
17:06 Speaker 0 Sorry, rocking. Oh, rugs. The woolly stuff on the floor. Yeah, yeah, yeah. Like beautiful carpets, really. Um I should use the word carpets because that works better with my accent. They were just not making progress in um in with a Europe strategy and kind of about to pull out, and then they used some tools that uh we we we rolled out not really knowing what it would be used for to um just change the pictures, like literally just upgrade update the the images of all their products away from Malibu beach houses to Parisian apartments. Um this was not a new photo shoot, this was actually just like do this for me. Wow. And they say it's tripled because four years ago, three years ago, this would actually technically not have been possible to do. Now it's about the most boring thing you can imagine, right? Like this is how much the world has changed.
17:53 Speaker 2 I mean, in a minimum it would have been like, okay, let's book a photo shoot in Paris and let's like you know
17:58 Speaker 0 like allocate some capital organization, like it's it's needs someone's attention, probably someone. Let's lay out the yeah. And so now this is just done and like this has proven out. And again, I'm I'm sure they don't run these AI change product pictures now in production. I'm sure they did the shoot afterwards. Um they also discovered something over their business which would have been entirely obscure to it. But this is a applicable lesson across the entire platform and something we can absolutely help very small businesses that don't have the resources to go reshoot all their pictures.
18:31 Speaker 2 Well, and and shoot, like the stuff is now so good that like you probably don't need to do the shoot. Right. Like even if you are uh the biggest business in the world, like differences, it's undiscernible.
18:43 Speaker 0 Yeah. I I and and you know, like if when you talk of the biggest business in the world, they or you operate like this. Like IKEA does not um that is like the here catalog is not has no photos in it. It's all renders. Um they they just like they create really, really good versions of car commercials
18:58 Speaker 1 are
18:58 Speaker 0 not
18:59 Speaker 1 videos of cars driving, it's renders of the cars.
19:01 Speaker 0 Yeah. And you only know because um the uh professional drives on on closed roads has disappeared, which was required before, right?
19:07 Speaker 1 Like so that that just doesn't they
19:09 Speaker 0 don't need to show this anymore because I
19:10 Speaker 1 hadn't noticed that. Like there's no one actually driving. Yeah,
19:13 Speaker 0 yeah, yeah. So I think the way this really like hits for me the most is um again, I grew up on like all the cipher books that uh everyone in my generation really grew up on, or many did anyway. Um sort of like very, very optimistic, but also far future, like uh Asimov and so on. And
19:31 Speaker 2 what's your favorite, by the way?
19:32 Speaker 0 Um I I I I am my favorite. That's actually I think Snow Crash is my favorite. It's just and and neuromancer is uh uh recently re-write neuromancer. That's a really really good book. That's a good one. Um in so many cases. Like especially highlighted this, like there's usually like a catch-up uh chapter. Here's how the we we get to the starting point of a book. And um one of the events is all In 20 uh 21, 10, we pass the Turing tests. And like there are celebrations in the streets and then something turns sour usually right after, right? Like to set the stage. And you know what no sci-fi author dared to predict is that the Turing tests just passes
20:20 Speaker 2 by. We just blow by it and nobody noticed.
20:22 Speaker 1 No one there was no New York Times front page article that we passed the Turing test. There's no it's not even like the tech community was exploding about it. We all were just like, oh yeah, we're in the generative AI era now.
20:34 Speaker 0 Clearly GPT 3.5, which is like uh like it's significantly worse than something you can run on your phone right now locally. It like pass a Turing test of flying colours. And it's it's it's this is crazy. Like this is this is the craziest thing about the actual world, if you think about it. Aaron Powell
20:51 Speaker 1 It's interesting that uh if I maybe I'll take back my previous comment. What was actually happening when we passed the Turing test and no one cared was we were all so focused on, oh, is this the path to AGI. I kind of wonder if AGI will be the same thing where we do actually achieve ABI AGI, but we'll all actually be talking about some other future milestone that we're wondering about.
21:10 Speaker 0 I think humans are incredibly good at moving a GoPost. Yeah. It's like the there's some kind of expectation-related version of a hedonistic treadmill that we sometimes talk about, which is like just like it moves forward. It's that we are just we adjust to our circumstances incredibly quickly. Um so um like I I mean almost everyone listening lives uh um their own dream life from many years ago, right? Like people accomplish their goals and um we we kind of never stop to think about it. And I think this is like it's really really hard for us to judge our uh uh our own um our own environment and what's going on around us. So I think you know like on a society level, this even seems to replicate. And again, the Turing test was one of the best takes we've had, and people can like now people criticize it because it's not good enough because it I suppose it wasn't.
22:03 Speaker 0 But like um it was still the best test uh that that people generally refer to about figuring out if something is intelligent and depassed it and um there was no parades, no uh uh front page news. No, no, no ticker tape parades. You know, just like it's we should have um
22:19 Speaker 2 it does seem though that they're like there are a few CEOs of which you are one that uh noticed this. And like you're behaving. You started this whole conversation by saying you have the privilege now of living through another platform shift. I don't think any the world has quite realized yet that it's a platform shift.
22:39 Speaker 0 Yeah. I um I I uh but I wish people would. And I wish people would like sort of seep in the remarkableness of it. Like it's just like I don't like I don't know if you've ever done this. Like I I mean I love uh the the VR Google MetaQuest and so on. Um I I uh use it more than most because uh I use it for like um uh uh racing simulator preparations and so on. It's it's it's uh it's an incredible device, which also like VR was another one of those things which we thought we would get at some point and then it came and like it's kind of like they are uh people use it sometimes for like their fitness workouts or whatever. It's just like it's a like it it just folded into uh uh the ambient world, at least for some.
23:20 Speaker 1 We take it wildly for granted that that technology is cheap and plentiful today.
23:24 Speaker 0 Exactly. $299 or whatever, like for for like a remarkable device, right? You know, augmented reality. Like also something people talk about. You you you can buy them next week. Like it's just like the event next week after we film this and then uh afterwards you can just purchase video. Yeah, the metaglasses. Yeah, amazing. Um so um that's all around us. And um, you know, one thing that really struck me is when when when you play with uh um uh MetaQuest um and and and with VR goggles, there's one game which I really highly recommend uh people. There's um it's called job simulator. Have you ever encountered job simulator? Okay, you have to try it out. Job simulator is like this sort of satirical take of like a you know like it pretends we are in a far future and there's museums where uh uh people go to figure out what the job was.
24:15 Speaker 2 Yes. And
24:16 Speaker 0 it starts you on a cubicle, and um, you know, like you have to turn on the computer and um uh you have to like to turn it on, you actually have to plug a um uh uh power cable into the wall. Right? And it's like otherwise it doesn't work, and you just think it's broken. And it it it it's it's so wonderful because like it plays on the future historians and robots kind of getting details wrong. I actually think it's like profound uh um and and actually brilliant commentary on on on on on on the world. But I think what idea this nails is that I think we will have um VR simulations of these times. I think we do like I I think this is golden age of humanity right now. It's the I think it's the end of the beginning. And so I think we will um I think people in thousand years will um study these times uh the way we are studying um Cicero's times of our end of a Roman Republic and um as a significant part of history.
25:13 Speaker 0 And um because it's kind of where we figured ourselves out in a lot of ways. And yes, there's like people look at you know, you look at the news with lots of um uh like there's a lot of current affairs in bands. I I think they will um um fade out um uh behind simplistic terms like obviously we have strive in any kind of time doing uh doing great change, but it's so unmitigatedly good. It's like there's so many things we have we are um bringing to the world these gifts of incredible technology um and progress um that are coming rapidly that are all kind of the types of things that are going to make um uh give individuals the vision so much more agency, which is like the thing that like is always at the top of a funnel of anything like that people truly care about.
26:01 Speaker 0 Like is uh everything that people really love, all the products of experiences are other people's uh like is uh things that people fought for. The results and residue in a museum of uh it's it's a museum of pa other people's passion projects, as uh John Coys and puts it. Um such a good quote. Such a good quote. I think that is probably the best tweet on the entire X platform. Like is so good. Um,
26:26 Speaker 1 we'll we'll like to it for the listeners who haven't seen it. The I'd sitting here thinking if if I could kind of describe your life, you started a company in the previous technology era, the web era, and then you know took it into the mobile era. Um you have a family. Uh you have hobbies, you've talked about racing. Um the entire world is going through what I think you think is the most transformative change in the last hundreds of years. Yeah. What should you do with your current life in reaction to that, knowing that you live at one of the most like crucible moments in history when we look back at it? Maybe you specifically and then like generalize it. What should
27:11 Speaker 2 people do if they believe this? It sounds like you're interviewing models every day.
27:14 Speaker 0 Yeah, like uh like uh the the ones with floating points in them, just to be clear. Like, you
27:23 Speaker 2 are interviewing uh uh foundational models. Exactly, exactly. Yeah, it's uh
27:27 Speaker 0 important uh distinction. Good distinction. Yes. So yeah, like I mean here here's uh here is what I'm doing. I I am very much try uh this comes fairly natural to me, and I think it's a little bit a job for me to transmit some of the awe I feel um about the times, right? Like I think that um what we think of history currently is wrong. Um and uh again, the people in a thousand years from now who are also going to play 2020 simulator. Um I'm never gonna get this image out of it. Yeah. They they they uh will think about uh these decades and this time differently, because what we will uh do in due time is uh re-integrate um uh technology into our own history.
28:12 Speaker 0 Our own self-history is one of sometimes decline, right? Like it's we are talking about um uh the golden gate bridge being built in in in whatever two, three years. Um we we and we are rightfully saying we can't do this anymore. Um we um we are looking at great works and infrastructure projects and our uh like uh the great generation, the wars and these kind of things, and look at this and say, well, um we can't experience a world right now where um people build Bethlehem Steel or people build Henry Ford's factories, or um uh they are just like physical manifestations of the incredible uh uh power of you know human beings coming together and creating things is sort of manifest for us to see in front of our eyes.
29:02 Speaker 0 Um and so therefore people judge that we no longer do this. However, we are actually absolutely doing this. It's just the great works are kernels of operating systems, the browser, the um lots of the software platforms, the phones, the um the incredible advances in uh silicon lithography and the um the the uh again the models that we create and train and uh the data centers that support that. But some of it is actually
29:30 Speaker 1 physical building, laying the energy infrastructure and the power the power generation, the power transmission, the building themselves, the heat management, the cooling.
29:39 Speaker 2 I mean, less than three years ago, chat GPT didn't exist. Yeah.
29:43 Speaker 0 But but it is physically not as imposing. So like a data center, I I I love a blinking lights down the aisle, but man, have if you have been to a what a what a what a refinery looks like or uh or or or a net natural gas liquidation uh plant. Um It like it just hits you on a level that is it it's it's it requires zero analogy to understand how incredible of an achievement each of these things is. Like the bridges we drive over um are like they they're just like man, this is this is this is humans being their best self, creating you know, shaping things, not just like and like very often not stopping at utility, but also going for for for uh for just beauty by itself.
30:29 Speaker 0 Like the ornamentation is lotbearing in um because we are not just we we're creating things. So uh uh like there's no ornamentation on outside of it, uh like of a uh of a data center that eventually will um uh train um superintelligence if that were tool. In fact,
30:47 Speaker 1 we hide it. We we don't put logos on it. We don't even we do we try not to be have on maps.
30:51 Speaker 0 Yes, exactly. It's going to be as obscured as we can make it. So um so I think this is um one of those things in a word that makes that sense people astray. So back to what I like I I want I think I I love to transmit um this because I have cultivated um like every technologist has to an appreciation for the abstract in the same way that people naturally come preloaded with an appreciation for the concrete. Like I I can look at a um piece of software and appreciate it in the same way how I can look at uh at the Pantheon. And unfortunately, that is not something that comes easy. In fact, that is that requires in like and is also probably not value uh uh worth the time that it takes. You really have to rewire your brain in a very significant way.
31:36 Speaker 0 People will build tech uh technically. Any human can look at the
31:40 Speaker 2 Pantheon and be like but not any human can look at a piece of software and say wow. Exactly.
31:45 Speaker 0 And we can we we even have uh the thousands of years of um uh understanding about why the Pantheon is. Like we can we can we can we can start with MAV to tell you why the ratios are correct. Um we're close in the tech in in the f in the abstract realm. We we we like we we can't describe Vice Software is good truly. We like it's taste. It's it's some people know it when they see it, it's something you cultivate. Um it's it's just abstract on top of abstract. Um if you build a tech company, you kind of have to do what I'm talking about to yourself because again, uh I see this in my customers. When they the reason why my customers love building physical stores, retail stores is because they can stand in them, they can see them, they can they can judge every piece by like uh touching it.
32:31 Speaker 0 They can they can they can watch their customers come in and like look at things. They look at they they learn what the first thing is they look at. Um and um how they handle it, do they pick it up, is it clothing, does it feel right, and and do they put it down, is that something for them? And they will rearrange the store every day, they hill climb inside of it because they can judge everything. It's concrete. With uh with an online store, it's not. Like we I I we try really hard to tell you sort of life, how many people there are and tell you stats about it. It's always abstract, it's numbers. It's it's it's not real. It's not it doesn't hit us. It even if you cultivate an appreciation for looking at the numbers and looking at stats and become data driven. Um if someone if you would do uh an analysis of how a day went um in your mind.
33:19 Speaker 0 While it's uh while being in an fMRI machine. It would be a very small, it would be neurofrontal cortex only that would light up. If you would think about uh your day in the shop talking with people, it's the entire brain lighting up. It's just if we don't we we are predisposed to appreciate the f uh the concrete, of course. Of course, yeah.
33:39 Speaker 1 We uh We have this exact thing with acquired. We release an episode, numbers instantly hit hundreds of thousands, and then over the course of months hit millions. And like I look at the dashboard and I feel nothing. Yes. And then David and I do an event in-person thing at Radio City.
33:56 Speaker 2 And it's like my whole blows up the whole brain.
33:59 Speaker 1 Like uh emotions I've never experienced before, memory is created, nostalgia is created, relationship is created. You're on cloud nine for weeks and you're like, that was nothing compared to what sh was in the dashboard, but
34:11 Speaker 0 it's so true. And it's it's like I I don't know how to solve it, and I think it might be not solvable because it kind of depends on like it might it might honestly depend on our hardware at some point. Like it's just like the the the we can convince our um incredibly malleable uh uh uh frontal cortex of anything and it can learn to appreciate the abstract, but the lizard brain is not convinced.
34:34 Speaker 1 Uh is the age of VR the answer, like is the next stage after charts and graphs and tables to like create full like abstract experiences. Yeah, like this is how many people if you were standing in your store right now, this is what it would look like as people were shopping.
34:56 Speaker 0 I I actually think I think it will be better and then uh not nearly the same. I just don't think it's reachable. I don't I I don't I don't think you can replace it. And I think that's um that's a real constraint, and we just have to like it.
35:14 Speaker 2 And part of the industry's job is to convey that. Yes. And describe that to the
35:21 Speaker 1 world. Aaron Powell Okay, so what do other people what should other people do if they agree with you that this is this moment of great historical significance. The
35:29 Speaker 0 actual thing I do is uh I found myself a thing I really really care about and uh try to uh bridge from a future to people I like I care about. It's like I build Shopify. I I I try to understand what the future looks like in any with any trick I uh in the book. Um and I want to I I I I want to help with what's going on, and I have uh having finding a task that you care about inside of the change is is I think the best position anyone anyone can take. It doesn't have to be a software company. Like so much of uh uh music is going to change because we can generate quite uh extraordinary mood music from neurons directly. Um that's seen as a threat and like similar to how words can be generated with uh with AI in a in an even more obvious way.
36:17 Speaker 0 Um it's an integration. Like what like help everyone figure out what is like the the the clearly human part. Because here's a fun funny thing. Like there's a couple of worlds where AI has already massively uh, you know, obviously math, like the calculator has been there for a long time, and the best calculations and fastest calculations are clearly not done by humans for ever since the calculator came around, right? So um chess is such a good example of this. Like the best game of chess in every year of the last 20 years has been played by machine against machine. And no one gets a shit. No one no one watches those matches. No one looks at no one studies them, but everyone knows who Magnus Carson is, right?
37:03 Speaker 0 Like we we actually care not about chess. We care about humans playing chess. And um that's the this is the one thing we people really do get very wrong here. Um we need to figure out how how uh how how to treat what the new capabilities as instruments that we can play. Um and then um uh uh like explore that space and teach others. And I think that's I think that's going to be the most fulfilling and fun position because it it it it it me it allows you to um seep yourself in the things that were um previously impossible um while they are still hard and and figure them out, which is always one of the most fun things, and then teach others I can highly recommend it. It is incredibly fulfilling. Aaron Powell
37:48 Speaker 1 All right, listeners, this is a great time to thank friend of the show, plaid.
37:53 Speaker 2 Yes. Odds are you've used plaid without even realizing it. If you've ever linked your bank account to apps like Robinhood, Venmo, or Chime, you're one of the millions of people, like one in every two Americans who've already used Plaid.
38:06 Speaker 1 I feel like I've grown up in the tech industry alongside Plaid. So many modern experiences are powered by them. And at its core, Plaid isn't just about making it easier to connect to your bank. It ends up being the backbone of thousands of companies building faster, safer, and more seamless financial experiences. Whether it's reducing fraud, speeding up onboarding, or turning old school banking processes into something that feels instant and effortless, plaid is making it happen.
38:33 Speaker 2 So last year, Plaid rolled out some powerful tools. Think cash flow data for better credit decisions, anti-fraud tech with AI and analytics for bank payments. And this year they're leveling up again with major updates across all three of those products.
38:48 Speaker 1 And they're even helping businesses manage things like direct billing for your subscription. So the bottom line is plaid is making it easier for companies to build smarter, safer, and more personalized financial experiences that just work. Aaron Powell
38:59 Speaker 2 If you're building financial tools or infrastructure, plaid's data analytics can give you a serious edge, whether it's fighting fraud, underwriting smarter, or managing payments more efficiently.
39:08 Speaker 1 And if you want to learn more about how Plaid created one of the biggest networks in financial services today, listen to our recent ACQ2 episode with Plaid's founder and CEO, Zach Peret. Our thanks to Plaid.
39:21 Speaker 2 It's funny. We were talking to another uh CEO yesterday who um is a huge football fan. Uh American football fan. And uh last year wrote an AI agent to do his fantasy draft for him.
39:35 Speaker 1 And like scour the whole internet, take into account all the likelihoods to be injured. Yeah,
39:39 Speaker 2 incorporate stuff that people generally what do people not incorporate in their fantasy drafts? Well, first it was
39:45 Speaker 1 what do people incorporate, but they actually don't know all
39:47 Speaker 2 the information. Go
39:48 Speaker 1 great, go ingest all that information. Now what are the factors that I think people aren't thinking about?
39:53 Speaker 2 Yeah, yeah, yeah. And uh so like one of those was like propensity to be injured. Like Yeah, that does be really important. Most people don't account for that.
40:01 Speaker 1 Great. Write an
40:01 Speaker 2 AI
40:01 Speaker 1 agent, does that. Or if they do, they've incomplete information and you could go get more. Yeah.
40:06 Speaker 2 So wrote it, crushed it. You know, like won the league, you know, all that. Like this year, everybody in his league is using an AI8. Yes. Yes, yes. So then it was like, you know, well shoot, shouldn't like NFL head coaches
40:21 Speaker 1 do that too.
40:21 Speaker 2 Like
40:22 Speaker 1 one thing on this this like, well, now everybody's doing it. This thing I've been thinking about is when you really see the full capabilities of the latest thing in AI, and you you you get a demo of something or you get to use something for the first time that you're like, this isn't how I was using it before, and this is not how other people use AI. You think, whoa, I have an edge. Yeah. I actually can do something that people didn't think was possible. If it's become clear to me that even five years from now, people who are successful it's not going to be people that are making things in an unassisted way. Everything is going to be assisted. And so the best people in the world at anything necessarily will be the people who best know how to use these tools.
41:10 Speaker 1 Do you agree that like this is this is the new bar to be a human out in the world is understand how to best be a user of AI tools.
41:19 Speaker 0 Yes. But like I think for uh a bigger reason than just the like AI tool. I think in times of stability, which even our industry had like the things versus like not changing that much. 2015 to 2021. Exactly. So that's a that time. Like I think that entire 2000 like 2010's decade in tech was I mean, obviously people will rattle off a couple of things that changed. Uh but like we had the mobile phone, we have a platform, and we just sort of scaled the ideas that all come from a previous decade. Um there it's pretty obscure. But then when things become change faster, it becomes very obvious. And there's two groups of people are people who fundamentally have fallen into in in love with problems, and people who fundamentally have fallen in love with solutions.
42:06 Speaker 0 And um I think that sometimes like of course the people who really fall in love with solutions, obviously then grief if those solutions aren't become unideal. That makes perfect sense and I'm sure it sucks. Um it's happened to me too. I love computer programming, like like low-level stuff for just like for for for no reason. I I I will never implement most algorithms again because I can just like when I type the the function name there's great text already, and I can hit tap and then it's implemented. Um sometimes better than probably my naive first implementation would have been anyway. So like um there's some artistry uh uh uh loss and some skills that I no longer need. Um but again, the people who love to solve problems are the ones who are just so enabled right now, and I think everyone starts there.
42:57 Speaker 0 No one is falls in love with solutions at the beginning of their careers. Um it's like you can't. Um so I think people need to remember how they got to where they are right now and um realize that um this is just a bit of a calcification of who they were, and they need to take a step back and realize probably life was more fun than I w was walking around looking for how I will do my craft, right? Like how I will do my my my thing. Like this even gets so far, like even in the corporate world, like jobs, job descriptions, like job titles. We we've gotten incredibly uh we are almost pushing people into this, like in into falling in love with solutions. Like um you know
43:40 Speaker 1 you you're uh you're a sales operations expert,
43:44 Speaker 0 right? Like what is that? That's that's that that's like a title for a particular way how companies end up solving a particular operational problem they had at some point. What you actually are like is like you're an amazing human being that um got hired into a company and the company wants you to add as much of what you've got to the mission, right? And like clearly uh you can pro you can zoom out. Everyone does this when going out with friends and venting, right? Like it's just like you you're talking about how the place could be better. Well forget about the title. Like let figure out like how can you contribute? Like and and everyone who's like really immersing themselves like in in in in these tools. Um I I sent a memo to my company um uh like uh and we set the expectation that um like we require that people reflexively reach for AI now and and we require it because it's unfair not to, because the people who do are otherwise going to be people who sequester all the best careers to themselves, right?
44:42 Speaker 0 Like and um it's I think it's fair to tell everyone that that's what it takes to be.
44:54 Speaker 2 Uh you're now required in Shopify to use AI as your first pass at everything, right? Which was
45:01 Speaker 1 controversial when you sent it, and now seems obvious.
45:04 Speaker 0 It's like, yeah, exactly. I didn't think I was sending a terribly or controversial message to begin with, but then somehow told me that it's like being leaked in bad faith, I think. Uh so and then I just like posted it. So that I think worked quite well, at least um there. Um I was surprised how many people cared about that. Um because it uh it says a couple of things. Don't don't if if you if you at the beginning of a project, use AI to prototype it. And then if AI is really bad at prototyping, it make fun of AI. I just want it's not about what you make with it, it's what that you did it. Because it might surprise you. And also very earlier in the conversation we talked about evals. If AI is bad at the thing that you asked it to do, now you have an eval for the next AI that come on coming out. So you're building your quiver of tests.
45:52 Speaker 1 What are what are some of your evals? Like you you mentioned you have this like folder of instructions. What are some of your tests? A lot of
45:58 Speaker 0 this is like things where uh you know, like from coding, for instance, where just like uh misunderstands a certain prompt, which it had enough context. I I I like the term context engineering um because I think the fundamental skill of using AI well um is to be able to state a um problem with enough context in such a way that without any additional pieces of information, the task is plausibly solvable. Right? That that's actually it's a really tricky thing. And now with a lot of agents, the agents end up being pretty good at figuring out what's missing and go get it themselves. But I think that's um I mean the crazy thing about AI is like it can do this. I think I think the skill people should build is trying to uh not require it to uh to do it.
46:44 Speaker 0 Why is this a useful skill uh to build? Um first of all, it makes it much cheaper to use AI, makes much higher likelihood of success. But this is really funny. I think it makes you better in so many other ways that has nothing to do with AI. I I write much better emails since I became a good context engineer. I just like I now realize how much is unsaid in instructions and how why so many things. So much of what people describe in companies as politics is actually bad context engineering. It's really funny that to like because I I I so often end up doing the what is the root note of a problem here uh that that we all have. Right. And you realize after digging one two layers down, there's just a fundamental disag disagreement on an assumption about how to do like what is good, what is good look like for for this area.
47:36 Speaker 0 Aaron Powell,
47:37 Speaker 1 David and I have just finally started uh taking some things that we previously thought, oh that's part of the secret sauce of acquired, and who knows why my neurons fire that way. It just comes out and it's part of the magic. We started actually writing down instructions so that AI can do things that we previously thought were like part of our magic. And it like it's it's less magical than you think. We've just never had to actually codify how the how we do the job before. And I think that's probably a lot of people. We are like uh it's a failure of introspection of what actually makes the work that you make good. Um and once you actually write down your process and all that, you actually and have an evaluation framework for what makes it good. It actually is quite executable
48:21 Speaker 0 by AI. 100%. And and you you you're I don't know how far you're down this journey now, but like um there's an entire word that opens itself up to you when once you start doing this. Because um like I uh we I I have this too, and we have as a Shopify use anthropics term for we we call these things constitutions, um, which is maybe a little bit too grand, but like figuring out a document that is actually like sort of all the things that are not platitudes, whereas like all the things where um someone else, like some other company would plausibly take the other side of. Uh and m but that's but both of the real choices, right? Like if no one would take the other side, it's a platitude. But um teamwork is clearly something every company wants, right? Usually the company values end up being just platitudes, it's very funny.
49:09 Speaker 0 Um so you end up like creating a list of these kind of things that you uniquely would uh pick a side on. Um
49:15 Speaker 2 the trade-offs that you're choosing.
49:17 Speaker 0 Yeah, exactly. Um what makes uh you know, basically like write down your uniqueness. And then you get in an absolutely fascinating word, because first of all, you can use it. You can hold up to your work and just saying, okay, well, uh help me here uh the with this and these are things you need to know in your again, context engineered window. But it it gets way more interesting when you use um, you know, your favorite episodes transcripts. Um you you add this and say what uh what's missing from a document. And you get suggestions. And you're like, could we have made Costco better in some way?
49:49 Speaker 2 Yeah, right. It's scary, right? Like, yeah.
49:52 Speaker 0 And and so um what you will realize is um this sort of uh this is enough. Hill climbing exercise because this constitution will get much much longer. And you actually will collaborate with AI on it. Because these things are incredibly valuable.
50:17 Speaker 0 Inside of Shopify, there's so many things that can be done like this. We have product principles, which I wrote at some point and have since been hill climbing with all the in a in in a in a in a loop like this. And any product in our internal systems now, like when it goes into like to review time, is like we can run against the product principles and and and also the prin the specific principles against of this area. And it's not like some control mechanism. It's in fact it's it's honestly just like here is where interesting discussion should happen. It guides the conversation. Because very often what we find is quite the product principles are wrong or imprecise or stated too broadly with not enough provisos. And because you want to write for a large audience in generalities. But like when you do work with AI, you can actually say, okay, well, actually let's write all the if statements next to the convictions, right?
51:09 Speaker 0 Like because
51:10 Speaker 1 it's interesting, you need deterministic in instructions for a non-deterministic machine.
51:15 Speaker 0 Right. Because uh yeah, like and um and they are of course non-deterministically uh integrated in i in the end. But this is also the beauty of it because sometimes it's like it it it tests you. Sometimes it says, hey, this is contradictory and it isn't, and uh then you have to have a conversation with it of about it, and like you realize, you know what? That mistake in the way you read that you made probably is that happens non-zero times with humans too, right? Like so finding a more precise version of stating uh the thing that you're trying to go for, or better examples is also really valuable. All this to say, increasingly I find that um and this is why I'm saying you have to interview these things. Like one thing that I really noticing with the latest series of models, specifically uh GPT-5 thinking and pro is that um you know I I feel like I'm pretty good at asking questions and I I can have like I can take these conversations with AI into very, very, very interesting places.
52:17 Speaker 0 I have started now asking the AI what my next question should be. And I get better ones very often. And that's pretty impressive. Um because again, it is it wants to predict. And they have no memory very often with all your private conversations. So they they are sort of like you know, I probably when I'm at my absolute best, I ask better questions when I'm at my average. And so it can uh execute against my uh uh like against a idealized version of myself. Uh uh like it's it's really really fascinating and really valuable. I have run uh uh like a keyboard logger and uh sort of what is the active window and take a screenshot of a window uh like uh of my c of my machine every 10 minutes and archive this for going on 15 years now.
53:03 Speaker 0 Like it's it's something I've always been running and it just for my own.
53:11 Speaker 2 Your daily digital activity of the last 15 years. Yes, yes. Holy crap. Wow.
53:15 Speaker 0 And I also um I like nobody has that. I I would never imagine this ends up being as valuable as it is. Yeah. Um it's
53:23 Speaker 1 like how Toby became Toby, how Shopify became Shopify. It's
53:26 Speaker 0 basically that. And and I I now I I um it's my a lot of my weekend projects are actually just like um you know, running through all of this and putting it together because of course it's dispersed keyboards with lots of lots of noise in it and different formats over time. Yeah, like every once in a while I use Vim at which point there's a lot of a com like a a lot of what's in the keyboard buffer is complete nonsense. But like the nice thing is um with enough uh um AI tools, you can turn this into pretty clean timelines. Right. Without you
53:56 Speaker 1 having to write a script that's like okay, every time I'm hitting a Q that disregard. Yeah.
54:00 Speaker 0 And and and of course a format changed a million times and there's missing bits and pieces, and then I have my calendar, which I can uh which I'm now adding to it uh over the times and a lot of emails, uh like what just headers of who I converse with and so on. So you
54:14 Speaker 2 stuff do you have that in a repository and then you can just like whenever you say like whatever AI model you're using, like, hey, I need you to make something like Toby, just look at this. Yeah, that's like do it like this. Yeah. Exactly.
54:26 Speaker 0 This is exactly it. So like it's I mean, I the actual format was I just always turned it into uh text files, which are like the most lasting bits of artificial uh like a it's it's the best format in the world because it lasts forever. And now I've like been working on doing more and more work on uh just like analyzing it and and cleaning it and adding more things because the value of this is getting incredibly um uh h high. Um I've also been like always doing like my notes, I kept them and so like with their times and so on. So I have a I I I'm I'm I have a lot of digital artifacts uh about myself, which you know again I prompted you to start doing that. My initial thing was I just wanted to know what I mind spending my time on um in general.
55:11 Speaker 0 Um there were some tools that rescue time kind of stuff. Exactly. There's like I forgot the names of them. But there were some tools, but then I I've always been like the things directly about me personally I want to keep on my machine that has been sort of a bias, which probably comes from when I started using computers. Um these are interesting challenges, right? So anyway, so so I have all this. I don't even know how it specifically got there. But um what's the most useful thing that you found to input that into? I have a period of time where I went from full-time programming to um uh fundraising to designing company things more more clearly. And just like charting it as a time span in different applications is interesting. It's also like um I mean I from seeing what I typed into what applications like text docs and stuff like this.
56:02 Speaker 0 I also like um I get I can track some of my beliefs changing, which is that's a really interesting experience. Because it's it's I mean the brain is fundamentally thought to be a backwards-facing um uh narrative consistency optimization device um rather than actually a chronological data bank.
56:20 Speaker 1 I read a great book recently that described a key element of the brain as the press secretary. When anybody asks you why you did something, the book's called The Elephant in the Brain. Yeah, uh you have this like press secretary that r comes up with the rational answer of why you probably did it. Yeah. But that part of your brain was actually not present at the time of decision.
56:36 Speaker 0 Yeah. Yeah, and uh I think that's they they fundament uh like the brain optimizes for narrative consistency. Um so um having some of the you know, just like things I typed. Um, you know, like I I like on on many issues that that face a company um it's just like fascinating. I don't I I haven't come to real conclusion, but I have ability to do it. I might be a bit um
57:06 Speaker 1 slow to really do the
57:08 Speaker 0 study well. Like it's it's like it's a uh you just have to kind of eat a bit of humble pie. Like it's what
57:15 Speaker 2 amazing at a minimum, what an amazing archive, right? Like companies have archives, right? And it would be like board minutes, you know. Like you have the moment by moment source of truth of how this happened.
57:26 Speaker 1 Can I ask um I'll ask you the question and then I'll give you some context to try to lead the witness a little bit. What are some of those things that you think you changed your mind on over time that you used to feel strongly on and you feel differently now? And maybe to give the w the context. Uh everyone remembers 2021 Shopify is like the media darling, you know, crazy stock run-up, multiple goes I think revenue multiple went from 20x to 70x, something crazy like that.
57:56 Speaker 2 Human brains and narratives, COVID happens, people at home. Shopify. Right.
58:02 Speaker 1 Does this, then does that, and you s like slowly, you know, you're you're within I uh I think you have an internal rule at Shopify, you don't talk about the stock price, well, you talk about it here on air. Uh spinning distance of all-time highs again.
58:14 Speaker 0 Yeah.
58:15 Speaker 1 Um I just want to throw that out as some context if you choose to adopt it for the answer to the question of what has uh what are some things you used to believe that you no longer believe.
58:23 Speaker 0 Yeah, I um so this is interesting because now um I can do like we talked about the archive. I can now go and check this. But like here's what my brain potentially narratively lays out for me. Um is that um I was quite uh I have always seen the stock price extremely different from like I work on the fair market value of a company and which is uh an unknown thing, but the stock is essentially trying to uh the stock is a betting market on the on the fair market value, right? So so it will oscillate over the thing. And so I I I personally didn't like I I I I felt the company was like I mean, obviously fits better in the times because now e-commerce is more important, and I think that it's like actually increases the fair market value of a company.
59:10 Speaker 0 We basically it was like we trained for this um moment for us, right? Um but uh, you know, I I it went really, really high and I really, really low, and and this is like the oscillations over this. It's it's it's whiplashy inside of companies. Um but it's um I don't know. I feel I feel like through this I ended up um having like my convictions were pretty uh unchanged. The thing that though happened is um where I got caught up is there was like a a bubble of uh uh a belief that uh we just had to like massively increase the size of a company, the headcount and so on to like to to to deal with this, and for that it would be okay to um um change like the the the hiring standards. But I I I I changed my mind on a lot of things.
59:56 Speaker 0 In fact, I think I changed my mind on I I I would change my mind on every opinion I have if if someone shows up with good um data on it. And I think that's actually really, really important. Um
1:00:10 Speaker 1 can you remember something from the sort of early founder type days before you became like a manager and an executive and a leader that you've that you've done a 180 on?
1:00:19 Speaker 0 Like straight up I didn't believe in leadership. I
1:00:21 Speaker 1 I I I
1:00:22 Speaker 0 just didn't think leadership
1:00:23 Speaker 1 was important.
1:00:23 Speaker 0 I I I felt um that uh it's if if you get really good individuals um and and um can point them in the same direction, or even without that, like all the right things would happen. And um I I I and I I thought this partly because um people really disliked uh leadership. Um so clearly the right people would show up. I believe those things are utterly incorrect now. I I I I think people love leadership. Like they like they they love complaining about it too, which they should. And it like it deserves all criticism gets, but like there's something absolutely wonderful being part of a group that's being led. And obviously I'm not obviously a leader, like especially outside of Shopify. Like I love just being part of a team. I'm nothing more fun than having someone who has a vision um like and then and and and building something. And every hackathon I go, I'm just like, hey, I'm taking a vacation from leading.
1:01:11 Speaker 0 I'm just like you tell me what to do. It's so good. Um so you know, that's uh that's a that's a distance traveled. That's an almost hundred percent swing on on on on this particular issue. Um the first version of Shopify, everyone made the same salary, right? Like just like we'd be kind of like, hey, let's not have difficult conversations, but just paying everyone exactly the same. We'll figure this out. I I mean how long did that
1:01:34 Speaker 2 go for?
1:01:34 Speaker 0 Well, like not long. Um but like my first ten people or so. Uh we can say, hey, Ben and I do the same. Yeah. Everybody
1:01:42 Speaker 2 require makes the
1:01:42 Speaker 0 same. So it's like it's it's just like an and you know, I think that's it. I actually really like this. Uh I I now now how uh egalitarian socialists that's coded, but like I love starting there, right? Like because I think that would be cool if that would be perfect way, good way of doing it. But like actually rejecting these things one step at a time is actually perfect because now you don't have a derivative idea of something. You actually have some uh uh t you you've we've ran the test for you.
1:02:08 Speaker 1 It strikes me that when you started the company you knew nothing about building a company or leadership or having anything of this scale and you had to sort of from first principles ha go from doing it wrong to doing it right uh along the way. Yeah. Where are some places where you found shortcuts where you didn't have to learn it yourself and you could look to some other leader or bring in someone great and that person actually just had like a whole bundle of shortcut.
1:02:34 Speaker 0 One of my uh my my most important realizations at some point, um like I I found myself at some point uh only doing things I dislike doing. Um and I I'd like to think that even the things I dislike doing, I can learn to like I I I think everyone can get sort of to 80% of state of art pretty quickly on any topic. But like I was just uh kind of miserable at doing this. And the reason why like everything I like doing, I I had no problem delegating to other people because I I know it's fun. Everything I didn't like doing, I did myself because I didn't feel like I should ask people to do it. And luckily I did it, I overdid this to a degree that I had to um that it broke. It's really really it's really good to over swing, right? Like it's I find that if something just sort of works, you don't have to counteract, but if something like really breaks you, then you would just like have to examine the entire picture.
1:03:28 Speaker 0 And I I just ended up like realizing everything I don't like is someone else's dream job. And that's like incredibly liberating. So since then I've been creating lots of beautiful dream jobs of stuff that I don't want to do. So and that's like uh it it this is people ask me a lot about hey Toby, why why do you actually still like do programming and why do you find it valuable? Like I I mean I have a mind I can't find things that aren't valuable um fun either. Like it's sort of ends up being the same to me. Um I did try trust that if my mind wants me to go in a certain direction that there's a premonition that it will be valuable in some odd way and uh even as analogy or so uh as like perspective, um or because I meet people um that are just uh um
1:04:13 Speaker 1 that's probably the successful founder archetype, by the way. If if it's really comes down to one thing, I think it's having that intuition where the overlap of things that are interesting and exciting to you and value creative just like happen to be perfectly
1:04:25 Speaker 0 overlapping. And um for instance the leadership thing, uh a lot of this came from uh learning an instrument um and uh I really like playing guitar. Um I'm very bad at it. But like the funny thing then is um I got fascinated with music theory and different genres and I got so much more out of music. Um and eventually we I got to spend some time with um uh jazz musicians who are um very high near the top of a pecking order in that in that world, especially guitar-related. Um and so only after I understood how a jazz band works did I realize what leadership actually is. Because the because this is where like the business world is just incorrect. I feel like it's it's so chain of command. Um but it but it but a jazz band is uh you have a clear leader and map sometimes the leadership changes and shifts around.
1:05:17 Speaker 0 But like what the leader does is not um dictatorially say what is we are playing and how we're spending our time and uh what you know what to eat. They just invite other people uh that that that have merit for what we want to do. In fact, it maybe not even just invite any people and ask everyone to add what they've got to a very basic set of con uh con con um uh conventions. It's it's gonna be in a key, um, it's gonna be a tempo. It's emergent. It's it's like the piece of music is bec being created that moment. And the next note is entirely dependent on the on on on the merit skill and taste of the of the people who are showing up. And I think this is the m the best metaphor, what a great team is like.
1:06:03 Speaker 0 Like a lead, like there gotta be constraints. It needs to be in the key. It needs to be at a tempo. But sometimes even the members of a group propose changes. We go to a different core set of cores, we go to a different key, we go from major to minor. We like people play um dissonance to um create tension, which is against the rules to then cause like an err uh like a um merging back of a music. Like bringing it back home feels incredibly powerful to everyone listeners.
1:06:33 Speaker 1 And that's mastery, no knowing the rules so that you know when you can break them and why.
1:06:37 Speaker 2 Well, this sounds this sounds to me like the definition of a technology company. Exactly. Like uh Henry Ford couldn't set up the assembly line like this because every you know worker needed to do the same thing and every car needed to come out the same way and it had to be any color you want as long as it's black. But like yeah, software doesn't work that way. Software doesn't work this
1:06:56 Speaker 0 way. People do try to build software um this way uh and really really uh give like try to turn it into something that actually resembles what uh car assembly line looks like after it's created, like where it's really, really dialed in and like everyone has like does one widget. And you get like two percent out of the individuals that you hired, right? Because you like they are incredible. They have a lot to give, they have a lot of priors, they they like give them the room to contribute. Uh but then hold them to it. But you would be amazed how often this happens. I've learned so much from video games about business. Yeah, yeah, you've talked about this.
1:07:33 Speaker 2 Okay, wait uh when you're uh asking for personal research here. When did you start playing video games with your kids? And how did you do that?
1:07:41 Speaker 0 Just basically as soon. Like I I mean, we I think we didn't do screens until they're two years old, which we sort of picked. Um and I don't think that's necessarily even good advice. I think maybe it's it's like a
1:07:53 Speaker 2 two-year-old can't play a video. Like my daughter's four and is like she's just on the customer. So the way we were starting.
1:07:58 Speaker 0 So just so like the way we played video games was um we used an iPad, we were lying on a couch together, um, and uh I I start Minecraft and they tell me what to build. They point at things, I build them. Right. So that's this is us playing video games together. Um and some of my most fond memories because even two-year-olds were just basically just now words, like letting them choose what we build. Like we I I I I played Minecraft a lot before before that um in various instances. I never built such interesting things as the kids told me to do. Like we built tree houses and uh like things on top of tree houses. Like it's just I wouldn't have imagined this because there's so much creativity there. And so um um, you know, that's already a small team. Like I let them to be the jazz director of uh our play session.
1:08:46 Speaker 0 And I think I I I I think video games are like very maligned and like again, uh nothing is uh like some of it deserves criticism. But it's always questioned what does it replace, right? Like in the in those moments, it um I probably needed some downtime, right? Like and this was some way for us to do this. Like I would I have a tricky job, and sometimes I need to shut off my brain too. I'd rather do it doing something together with a two-year-old um being creative than um being upstairs playing Minecraft or so, you know, like well, I mean not exactly what I would be playing, but so it I think I think this is the most important question. So we did this very early. And then it became much more intensive uh during COVID because um I was really worried about how cocooned everyone was.
1:09:32 Speaker 0 I was um like really worried about like the lockdowns and what I would do to kids, especially in that all my boys were like in that i in in ages where um failing softly was just really important for them. Like you just like have to kind of make mistakes. Like I I I I I've I've gotten where to a BMM by just having failed more than others most of most of the time. And I I I invited a l I like failing at things. I like being bad at things. So I Um which is something I want to cultivate with them too, they're being very identical about making lots of choices where uh you stretch yourself.
1:10:07 Speaker 2 It's so funny I'm like such a I was so pre-biased this way anyway, but uh my daughter's like just just at the this age she's about to turn four. And like even just in the last week, she's uh we we have a Steam Deck. I'm previewing my carve out for the next episode. This this ongoing saga of David's carve outs about Will he or
1:10:25 Speaker 1 won't he get a Steam Deck.
1:10:26 Speaker 2 Yeah, yeah, yeah. Uh and uh it's gone from like me playing this thing to her being like, I want to move the character. And then like watching her figure out how to use a joystick, and like the first night is like you know, it's like watching a monkey try to use a joystick, and now she's like moving the character around and it's all like whoa, you know.
1:10:43 Speaker 0 It's so cool. And it's so it's so important to not jump in and do it for them. If you like obviously we you can do everything better, but like this is such an important thing to let them actually like they they ask me for help and I I give them pointers of how to do it better, and it's like it takes a lot. Like it's so hard. So yeah.
1:11:00 Speaker 2 You want to short circuit it. Um last night she was like, Oh, I want to talk to these people, and I was like, okay, hit the A button. And it's like, you know, which is then watching her figure out what the A button is. And force you're just like spamming the A button, and I'm like, okay, no, no, no, like you see
1:11:13 Speaker 0 her figure it out. Hit the A button.
1:11:16 Speaker 1 Yes, you need better context interview. Yeah, exactly.
1:11:20 Speaker 0 So like just like a recent thing is I I I'm dyslexic, two of my kids are also dyslexic, and it's it's frustrating because like it just sort of gets you um it like it makes some things quite harder. In the schools is wonderful. Um Middle Kid finally got frustrated with just not being able to type well. I'm like, okay, well, what are you gonna do about it? Um let's build a habit somehow to do it. And then, you know, he he was doing a typing trainer, and it's just my god, I uh he was very good at it, but uh with with it and did it for 10 minutes a day. But man, is that boring? So then I went out and like clearly someone has must have solved this. Um and so we ended up finding on Steam a game called I I um can't remember the name, but it's like it's like a roguelite typing game where like you're in a middle and like words come at you and enemies and you need to type them to shoot them, and then you can choose upgrades and like it's like all my kids are playing this type trainer.
1:12:16 Speaker 0 Yeah.
1:12:18 Speaker 2 Even though the other ones don't need to learn at it, yeah. Yeah, like
1:12:20 Speaker 0 no, like the the the younger ones also getting good at typing now because they were all like doing 10 10 finger typing and getting to like he's I think I think he went from 16 words a minute uh in when he started, he's now at like 70, like he types like f average speed of most people. And that was like a month. And I'm like, man, how many people think like I wish I would have learned to type better? Well, I let me tell you, as a video game, you're gonna fall into this thing and you come out on the other side being an excellent typer. And just like again, we have not integrated video games correctly into a society as either. Like we are just like we're we're treating them too frivolously. And as a family who solves problems with choosing video games as a thing that we've done periodically. Um this has been just one of those I talk about it, parenting hack. It's like amazing. So it works super well.
1:13:06 Speaker 1 Okay, so I have a to bring it back to Shopify. Is that okay? So I have a company specific or company journey specific question for you. If if you're an outside observer to the company, it seems like this meme stoctification thing that happened in 2021 is a very consequential event to the company. And like then you have this 80% drawdown, you're in this like public market valley of despair situation. What is it like living through that? And if you could build a time machine, what would you go tell yourself.
1:13:40 Speaker 0 Um this is it is very hard for me to I I'm trying to like key an interesting answer to almost any question um because that makes it sort of that's sort of a puzzle of a good conversation, right? Like how to how to take this in the most interesting direction. I I find this one is really kind of stumping me very often because it just wasn't that interesting. And maybe maybe the most interesting thing about what you're describing is that it wasn't interesting um in in in a significant way. If I would have a time machine, I would make I would tell I mean I guess the only thing I would tell me I said is that um I should get like quickly get the credit rating and the sort of uh facilities down to do a buyback once it goes down very close.
1:14:27 Speaker 0 But like uh it just like uh like I would be opportunistic about it. Um I think that um I
1:14:32 Speaker 2 love that. Spoken like a true author.
1:14:35 Speaker 0 It's like uh
1:14:36 Speaker 1 own more
1:14:36 Speaker 2 of my company. Yeah,
1:14:37 Speaker 0 yeah, it's awesome. Uh love love this company. Best investment I ever met for sure. Um so I don't think it was interesting. I I I think it was um um inside of a company. We we worked fair market value of a company, it was something. It actually didn't go down in this time that the stock went down, right? Like it it did not change. So um it was all the same. Yeah. Everyone out in a market are wonderful because people buy and sell, and someone buys it with uh uh a high conviction, someone sells it with low conviction. If you have a lot more people with low conviction, um then uh the price is going down because the clearing price shifts. And um the um uh low conviction is uh not due to the company's what the company do very often.
1:15:22 Speaker 0 Low conviction might be just because the vibe changed. Um and because people's conviction that there will be buyers tomorrow changed and interest rates changed. Interest rates changed. Uh Russia invaded Ukraine and every stock moved in the entire market. Yeah. But none of us companies has shifted in fair market value, um, outside of maybe military contractors. So um i it just doesn't it it it isn't that interesting and it isn't it doesn't affect um um I I I think the company a lot. But it sort of hangs over company, it comes up a lot. And the group I'm sort of usually somewhat upset with is um uh you know, cell site analysts who gave buy ratings at these ratings, right? Like it's just like they are the only professionals whose job is to inform the public with good advice.
1:16:11 Speaker 0 And like telling people to continue buying if companies go to 70 something times revenue, like feels um I mean I feel it's like an asset test for your quality of your predictions, right? Like so I uh but like somehow ends up being um entirely um unproblematic for people doing that, where um somehow the fact that they did that and made some people purchase at these valuations, which then lost a lot of money afterwards, you know, on the sales side was probably you know, Goldman Sachs, because they do fundamental analysis and say and and realize that this is probably overvalued and um sell it to people who then uh lose their shirt. That feels bad. Uh I I I want um, you know, I I I love the fact that I've made a lot of money for a lot of people who had conviction in the company.
1:17:00 Speaker 0 Um and um um you know, who purchased Shopify early, I made sure I I the most different thing I've probably done to most companies of my cohort is where I went public very early, right? Like I went right. It's like over ten years ago. Uh uh 2015. Um depending on how you count, is like a really Shopify sort of 2006 launched the product Shopify, which really is beginning of like of that, we were public um I guess nine years later from from there. Um, it was short. Yeah, today it's like, yeah, well, maybe maybe in
1:17:32 Speaker 2 decade three we'll go public. Yeah,
1:17:33 Speaker 0 yeah, yeah. We went public with every dollar that we ever raised still in the bank. Uh and uh um add a billion and a half valuation, right? Like so uh You
1:17:46 Speaker 1 went public at a 1.5 billion dollar valuation.
1:17:49 Speaker 0 Yeah. Yeah. And I I we
1:17:51 Speaker 1 did a Shopify episode, and I that is still not That's a crazy low number by today's. Yeah,
1:17:56 Speaker 0 and I love it because it means like, hey, uh I I I I love the facility of public companies. I think it's so cool I it's your public. Well means people participated in your growth. If people can buy it on conviction and like uh say I like what this company's doing, I like its positioning, and um I'm gonna put this into uh you know my uh ho hopefully tax-free savings account for a long time, and um um I am very motivated by building something that becomes of more and more value to the people who have high conviction. And um so I I I I I I love it. I tried I'm the person trying to convince everyone else uh to um uh take their companies public because I think it's just like the right thing to do. Again, it's it's also valuable for a company in in many ways, and it's like again, it's it's not difficult. It's just like sometimes it's annoying.
1:18:42 Speaker 0 That's true. But everything is Well, to your point
1:18:45 Speaker 2 about like for every job you dislike, there's somebody else who's dream jobs exactly. Exactly. Yeah.
1:18:50 Speaker 0 And frankly, uh I thought we were data driven before we went public, and we really got data driven through a process of taking the company public. And I I I learned a lot. Um again, 20% of the process was like I felt pretty sorry for myself of having to do, but 80% ended up being utterly valuable, and just like every challenge you set yourself. Aaron Powell
1:19:06 Speaker 1 What are some other things in this 2021 period? Um sort of as historians, David and I can't help but zoom in on these moments of like great tumult for companies and see how they changed. So I'm curious. Uh one thing you've shared with us before is that it even though everyone's issuing all these buy ratings, you actually felt like we're not a very well-run company, and you actually had to change a bunch of stuff, including people. Can you walk us through some of the things in that 2021 forward period where you look back and go, okay, we're a much more resilient company today because we took XYZ actions. Yeah.
1:19:41 Speaker 0 Well, I I mean I'm I I changed the way I work inside of a company because I I I I just felt like I need to like I I I have special um uh special privileges uh in shop for history, such as I've seen every version of it, and therefore I have an enormous amount of context. Like I my own context engineer. Engineering is like easy because it's all preloaded with every important decision. I've been doing shop for 21 years. That's helpful. That helps a lot in product and it helps a lot in strategy and it helps a lot in these kind of things. So anyway, but during this time, I I mean Harley, uh who I've been working with for 15, maybe 16 years now is uh um He's the president of Shop.
1:20:28 Speaker 0 He's president of Comp of Shopify, he's uh absolutely wonderful uh human being and incredible storyteller and uh you know just creates lots of capacity for me to um um be more internal focused. And um uh other than the Harley, uh every other executive is uh more recent now. And it's um um it's a combination of things. Like I I might it's not because anyone's bad people, but like the the everyone of a previous team, it became a really really good optimization function to learn a particular way to make me look another way.
1:21:05 Speaker 1 Like like
1:21:06 Speaker 0 to speak about your area in a way that I was this sounds really rigorous and good. I pro you're probably not presiding over my current biggest problem, which is the one I want to work on. Therefore, I'm going to look elsewhere. And and what the thing that um COVID did is like there was just no uh possibility of uh me being diverted in attention because I just went through everything and like and through every project, every spoke for every team directly when when something was really like stuck in engineering, I talked with engineers and so on. Um this is how I used to run the company um before I got into like taking like a little bit more of an abstract view of a company. Um and so I I I I did more of this and realized this is what I love doing. I I it's incredibly it's tons of work, but I would probably do it if you wouldn't pay me for it.
1:21:56 Speaker 0 No, Shopify works like this. I every four weeks I review every project. We have internal ledger uh like this uh GSD thing where like every project goes in, AI analyzes it all against all um uh our product principles. It's we are cooking with gas now. And it's just like building a company that's just like fundamentally built around a certain conviction about how like a cohesive way of how great products are created. Um and getting to explore if if if you're right about it and finding figuring this out is is this actually a good way to work together is cool. And it's something that is unique to I think founder-run companies that are there which are enabled in such a way that like you can really build them differently.
1:22:39 Speaker 2 Yeah, that was the thing when when you uh when you started uh the answer of like well, the thing about this uh period in history was it actually like wasn't that big a deal and as it just smacked me in the face that like only a founder-led company could say. Yeah.
1:22:52 Speaker 0 Because if
1:22:52 Speaker 2 you weren't a founder-led company, you would have gotten fired.
1:22:54 Speaker 0 Yeah. Like exactly. Exactly. 100%. That's the craziest thing. Again, I really make a massive distinction. Like founder run companies, ideally we find a different term in companies even. They're just they're just so different from uh more managerially run companies and more uh traditional companies. They're just completely crap in so many ways, if if you judge them basically just from perspective of companies. Companies are all like have their shit figured out and are operational and like all
1:23:22 Speaker 1 the most valuable companies in the world are founder-run or look kind of founder-run in some way.
1:23:27 Speaker 0 Because there's playbook for managerial run companies and um and they are bad at adopting to the new things because they're fundamentally again. No one carries the full legitimacy inside of a company. Legitimacy is a currency in a companies. No one carries a full legitimacy in a company, even the CEO. The CEO just has a lot of input on the plan. The plan carries the legitimacy. Right. And so um uh the the in in a managerially run company, the the plan for the next year or years, uh, if we're in a good one, um it's the thing that everyone defers to, and the CEO is an avatar and advocate for the plan. And so um uh changing anything requires an enormous activation energy, where like again, if uh if if a legitimate legitimacy is uh invested in an individual, then you can pivot on a dime.
1:24:16 Speaker 0 And um the people who don't like this don't work on these in these companies. So you have like broad agreement on on like on that's that's the way to work. Um that leads to bad outcomes often, but like you know, if the individual who's playing this role is very conscientious and is very very open to feedback and like changed mind their mind, like strong opinions, weekly held if better data shows up and so on, it can operate at a quite a good batting average, which makes the where the highlights and the accomplishments will end up making up easily for the for the downside. I'm
1:24:52 Speaker 2 remembering maybe it was a Don Valentine thing or maybe a Mike Maritz thing. Uh that's right. We're sitting here. Folks who are watching, yeah. We're we're recording in Sequoia's offices because my home is under construction. So here we are. Uh and uh uh but I think Sequoia had a rule or one of their you know playbooks of evaluating founders of um has to be right a lot. Like that that's the that's the judgment you need to make as a shareholder in a founder-led company. Like, do I believe this founder is going to be right a
1:25:21 Speaker 1 lot?
1:25:22 Speaker 0 That is the case that like great. Yeah, yeah, yeah. Exactly. That's that's that's what you need to aspire to. Which actually I guess
1:25:26 Speaker 2 that was borrowed from Bezos, right? That's a basosism.
1:25:28 Speaker 1 I think be right a lot as an Amazon leadership. That's right. I think that's right. Yeah.
1:25:32 Speaker 0 And it's it's it's a really good one. Like it's it's it's so to the point.
1:25:37 Speaker 1 Um what do you think? Let's draw a clearer distinction between managerial-led companies and founder-led companies. Because I would argue, you know. Satya is not Microsoft's founder, but it's starting to feel a lot like a founder-led company.
1:25:50 Speaker 0 Or um trying to come up with another group. But this is the thing. So such is my go-to example of someone who's transcended. Uh, Jamie Diamond. Yeah, right. Both of them have like and this maybe it's a bit being cute with language, but here's the way I would I would frame it, just to have some term to hang um an analysis on which can incorporate people uh in extraordinary individuals like this. I think both of them have given refounding events to their companies. I think they are actually um uh they have made such large changes with such clear breaks from the past that they are actually are the auteurs of their companies' cultures now.
1:26:26 Speaker 2 Certainly, certainly in JP Morgan's case. We went through the whole thing with it with like bank one. This is Jimmy.
1:26:31 Speaker 0 I think also like I I I know lots of people uh from Microsoft. Yeah, and like Satya did too.
1:26:39 Speaker 1 Yeah. And uh these things aren't as significant as like what Warren Buffett did to Berkshire Hathaway. You know, it's like completely unrecognizable. Microsoft still resembles the Microsoft of old. Um but it's
1:26:51 Speaker 0 it's it's it's transferrically opposite on many convictions. It's like using um WebKit for its browser, not Inter Explorer. It's it's like it's very pro-open source. It's more open source uh than I mean Apple is for sure. It's shocking
1:27:06 Speaker 1 that they've become a great business without owning the important platform of the era. Yeah. Like that was the entire thing that their success was predicated on in their heyday. They don't have that importance now, that relevance. And yet it's still a great business. Yeah,
1:27:20 Speaker 0 yeah, yeah. I mean, they you could argue Azure is actually more of a platform now. I I don't know. Like I I mean, this is not the episode about Microsoft.
1:27:29 Speaker 1 I appreciate Microsoft deeply and and and
1:27:32 Speaker 0 full of incredible in uh like individuals, and it's like hard to find fault there. Like it's it's just like such an incredible company and such a storied business. And again, I aspire to build a company that lasts for a long time. So like um Microsoft has been incredibly successful at this and and managed to reinvent itself and it's like as a second most valuable company in the world, I think, or for free free or something.
1:27:51 Speaker 2 But it seems like there's um it's interesting to hear you like include CEOs like that in uh cadre. There's a group of things. Frank Schwitman
1:28:05 Speaker 0 goes in companies and turns them into like sufficiently moves them um to be give them refounding events. So I think I think this is actually an employable strategy. It requires enormous intestinal fortitude and will probably not work often.
1:28:19 Speaker 1 And the existing shareholders handing over the control for someone to like uh in a one-way door manner take the company over.
1:28:27 Speaker 0 Yeah. My sense is you'll see a lot more of it. I um like, you know, one of my executives cares is like uh going to open door and um you know, like again, obviously that story will have to be written about how this goes, but that's a that I I think that is a uh business that everyone agrees requires a refounding event to uh have a have a shot. And you see more um recognition of that coming uh with him kind coming in, and like I think uh your compensation system even set up to uh facilitate this kind of thing. So
1:29:00 Speaker 1 I think it's it's zero dollar salary, and it's all based on the the if the stock does well. Yeah, something like that.
1:29:06 Speaker 0 Which is I mean, sim again, that's that's a founder type conversation uh like uh compensation that is similar to starting. Jamie
1:29:12 Speaker 2 Diamond of like I'm gonna put half my net worth into this company that I've just joined as CEO. That's right.
1:29:18 Speaker 0 Yeah, like if like all in this like people underestimate how uh uh uh expensive hacking is. But all this to say, so we we've come here to the talk about like uh uh the founder-led companies and and and managerial companies. Currently, people don't understand how stratospherically different they are. I think the thing that will contribute to um understanding this in the future is because we actually I think I've will um determine that there is sort of a middle ground here that is sort of you can get it from both sides. That is um um like super highly enabled um uh individuals and with an acceptance for uh Um things going wrong as long as the balance arcs towards great success uh um is is is is what you want. Right now, the only people who are in a position to ever get there are the founders of companies because the shareholders didn't traditionally let them, right?
1:30:13 Speaker 0 Yeah. And and so I think uh like jobs got back there, but wouldn't have if you would have come in as a new hire, right? Like at Apple. Um so I think uh I think we'll find new tools, and then I think people that's yeah, people
1:30:27 Speaker 2 appreciate this now uh in a way that they didn't before. Yeah. I mean hell, the playbook of VCs used to be uh step number one, fire founder. It's like
1:30:34 Speaker 1 we've seen enough iterations of the simulation now where you can say, oh, actually it it is worth it to vest all
1:30:40 Speaker 0 of our trust into
1:30:41 Speaker 1 this one person.
1:30:42 Speaker 0 Yeah. And there's gonna be plenty of individuals who are not worth that trust. Right. So this is again, it will fail and it's risky and people don't like taking risks, especially investors. Because again, like uh if if open door not isn't working, the people who um you know made this deal with CAS are going to not look very smart. Right? Like so um so it's it's it's high alpha upside downside, which many people avoid. But like I think again, we will see this being de-risked. Um so anyway, uh it'll be more common. Um
1:31:16 Speaker 2 but we're also you know, we're operating in the more and more companies are operating in the technology world. Yeah. Uh which is going through this ridiculous crazy platform shift, as we talked about in the first half of this confirm conversation.
1:31:30 Speaker 0 And this is the you have to operate this way as a you have to. Right. So and this is super important. Like because we're not talking about a generic um like there's no question of where in the spectrum you want to be if you're if if your business is making um is is a widget supplier to uh you know General Motors or something. Like it's like just operational effectiveness,
1:31:52 Speaker 1 like sweat every detail, Friedwick Taylor, stop watch everywhere.
1:31:57 Speaker 0 Being founder run there doesn't do anything. It just like adds chaos and adds hard to predict uh like quality control, I imagine. So um there might be some someone hearing this and might be an industry which is being reinvented right now. And like maybe maybe, but like I think the default position should be you want these to be actual companies. Um this is why I also feel like it's actually better to uh call the founder run even public companies, kind of ventures or missions or something. It's like probably nonsensical to make try to make that change and make that stick, it'll never stick. But like it's pretty
1:32:32 Speaker 2 your process of discovering that like leadership is important in the yeah for you and for Shopify.
1:32:38 Speaker 0 Yeah, yeah, absolutely, because I feel like I uh um I felt very, very dumb the moment I made this realization. Like I I feel like I've had everything basically through most of my life to to make this realization very, very early. And uh it took me way too long. But it's that um leadership and consensus are two sides of the same spectrum. Like they don't intersect at all. It's like every time consensus makes a decision, it's the absence of leadership. And so um I also think I not enough people know this, and I don't think uh I I still feel like it is a bit of a secret um because even in our language, consensus is a positive term. It's maybe it's fine, but consensus is always the absence of leadership.
1:33:27 Speaker 0 No one like everyone abdicated their um uh leadership responsibilities to cause a consensus uh to emerge and prioritized um the the presence of a consensus um to finding the best solution. Some people are so clever that they can manufacture consensus around what they would have chosen anyways and operate this way. But like in you that that's sort of the only time these things combine, and usually it's you decide one thing or another.
1:33:57 Speaker 2 So do your alarm bells go off if you start sensing consensus around something in China.
1:34:02 Speaker 0 Even worse than that. I I actually use it when I don't want decisions to be made. Like um if I if I if you want to bud something, you're like kumbaya, we're all gonna get in the room with like I I think most companies play too much with pricing all the time. It's like it just like causes all these problems with data and like it makes it hard to predict, and then suddenly you you do you A B test discounts and then you cheapen the product because now people are just gonna wait for the next discount and stuff like this. Um I mean obviously all these things are valuable strategies, but like I I think people overdo it um and make like full-time positions changing pricing and so on. And I I I I I basically like every five years I say, okay, let's look at pricing. Let's from first principles, like um uh get to a pricing. If that happens to be the same we have today, we don't do anything.
1:34:47 Speaker 0 In other cases, we we we we make changes, and then it goes uh back into the firmament and uh we are not looking at pricing again for five years. Just because otherwise it's uh too distracting to a company. And um I used to just forbid it from doing pricing. Now I have a much better way. I create a pricing council. And the council the council can if if it could if it if it come to a consensus that something is a better idea, they can then pitch me on it. And it's like super easy to say no at this point, and they don't get to a decision anyway. So I don't have to deal with that. So you have two layers of protection. Yeah, yeah, yeah. Which is a perfect. You're not gonna get to a decision, and then you still have the BTA. Yeah, yeah. Once you see through a matrix, you can uh there's this moves become available to you which are highly efficient.
1:35:30 Speaker 1 This is like whenever a company tells us that there's a V team forming to look into something. Yeah. Or some sort of like uh committee or like what? So it's nobody's
1:35:40 Speaker 0 job.
1:35:40 Speaker 1 Yeah.
1:35:40 Speaker 0 No, I think that V teams can super work. It just uh you have to have a leader, right? Like uh that it needs to be extremely clear who's responsible and who uh
1:35:48 Speaker 1 this is the old Apple thing, the DRI, the directly responsible individual. And like it has to have someone's name next to it. Is it
1:35:54 Speaker 0 yeah? I mean Apple might be too, but like Amazon is definitely big on the DRI thing, yes. Um exactly. So yeah. I I I'm I'm a fan of making this quite fluid. I think it's like I said, I'm I'm going to be a team member in a head day project. Uh I'm um I'm not the leader. Um I I think very often it's it it like if not in commonly the person who is the leader of an area is uh different from the highest paid person, you're not actually uh making the choice uh of leadership sufficiently is my is one test I apply. Because uh by default MO in every company is a highest paid person is making decisions, right? This is actually why I take a one dollar salary. Like some just a like seeds.
1:36:40 Speaker 1 Well, but that I mean you benefit by far the most if the company does well. Of course,
1:36:44 Speaker 0 and because it's like I can and like it's fun and anyway, whatever. Um what's
1:36:49 Speaker 1 the term the hippo, the highest paid person in the organization is always the person that's right in right in a room.
1:36:56 Speaker 0 Yeah. I want to signal that I I will come with opinions. I want everyone to give me better ones because that's fun. Um so anyway, um so consensus decision making and leadership are I think a spectrum. If you see instance of leadership, you also saw um a company that has the ability to avoid needing to make every one of its decisions via consensus. The problem with consensus decision is on that um spectrum from one to ten, it's usually a six or seven. You're just like you by the very process of um making it con uh need for making a consensus, you optimize for lack of downsides. So people are almost always better than five. But because they really like they they don't get the middle.
1:37:44 Speaker 0 You get like some the best version that everyone can agree on.
1:37:49 Speaker 2 It's like back to the floor in the ceiling thing of like consensus will get you a floor, but it'll cram that ceiling. Exactly,
1:37:55 Speaker 0 exactly. That's exactly what it does. While in a presence of leadership, you can hit any number one to ten. Um and if your company that wants to hit eight, nine ten or die trying, then you kind of have to
1:38:09 Speaker 1 rule by fiat, it's the only answer. But more charitably, like um uh we are when we're looking at creating the best products and the biggest companies and the most successful organizations. What you are looking to do is create an extreme outlier. And extreme outliers can only be created, you know, pick your term, whether it's by an autor designer or rule by fiat or leadership, you know, rather than consensus. Uh outliers come from like a single vision executed by a team of people, not an agreed-upon vision executed by a team of people.
1:38:47 Speaker 0 That is 100% true. And there's this is like very, very, very consistently demonstrated in every area where it's uh quantifiable how good things are, right? It's just like I don't think a great book has been written as a big collaboration between
1:39:03 Speaker 1 multiple people. Um
1:39:05 Speaker 0 it's like books are hitting uh are as good as they are because they're always single author. Um there's a supportive agent in uh in the in the editor, clearly. Um but that's uh that is a supporting role.
1:39:20 Speaker 1 This is so interesting because I completely agree, and I'm like obsessed with autour-driven things. And yet we operate a partnership where neither of us are the boss. Yeah, but but we're
1:39:30 Speaker 2 the we're it's it's a totally different thing. We're a two-person partnership, we are one person. I
1:39:34 Speaker 1 suppose a two-person committee. We're like a married couple at this point. It's like a fused brain. I I doubt I I doubt that you work by a committee.
1:39:40 Speaker 0 I I I I think you like every single time I see a great partnership, it's then uh is when I see people who are actually learned to respect and trust the other person like the like each other, over in which areas they tend to have a better higher betting average.
1:39:55 Speaker 2 That's actually true. That that's not we don't operate by consensus at all. We operate By if one of us wants to do something, we do it.
1:40:02 Speaker 1 We should search our iMessage thread for defer to you.
1:40:04 Speaker 2 Yeah, yeah, that's just like any time one of us wants to we're do so we're both we're both you know founders, and so any time one of us wants to do something, we do it. That's what it is.
1:40:13 Speaker 0 Exactly. Exactly. And I work very closely with lots of people that were just overruling, we're give a right to overrule me. Like my my co-founder of Shop first, Daniel Weinand was a um brilliant designer chief design officer eventually. And he had um veto rights over every feature we shipped. And like this this was I made the decision on what was what we were building, and I wrote most of the code, even especially because I mean at some point it was the two of us only. And um he said no to features that I wrote and was wanted to share because we couldn't figure out how to make the UX code for it. And and that was important because ShopFirst Killer feature 2006 was we had brilliant UX. Like this was you know, we we were the linear of our time, the Figma.
1:40:58 Speaker 0 Um and uh it's always been incredibly important. I I giving um the people who have a highest context and the greatest for authorship over aspects of the company is also that's not consensus. That is actually straight up leadership again, right? Like you the leader on bad aspect becomes bad person. And so um it's it it it's it's important that uh you need to be able to realize you
1:41:20 Speaker 2 shouldn't listen to this and be like, oh, I need to be like Toby and I need to be the leader on every single thing in the cover. Like that's not the same. I'm
1:41:28 Speaker 0 not. Yeah, yeah, yeah. I I I I I absolutely am not. I I I uh what I don't believe in is pushing decision making outwards, sort of it's grassroots or down an organization idea. I also don't believe in top-down decision making. I believe in pulling decision making inwards. I I I create um the highest ideal liquidity environments in which we can make very good decisions quickly, but where it's very clear who's making uh making decisions and who is consulting on it. And this is again these like review cycles I talk about are that. Like we are going to a thousand projects. It is a crazy thing to do. It's like text starts at like 8 a.m. and usually runs to 10 at night, three days out of every month. And um uh and and and the follow-ups from this are probably for a weekend, I do follow-up reviews and stuff.
1:42:13 Speaker 0 It's just like I uh like I happen to like working, which is good. Uh and you sound locked in. It's like it's good. It's like this is what I want to do. And like I think it's uh it's it's I I I I'm doing a thing that I didn't set out to do. I'm trying to build at massive scale, like a socially important piece of software. Like it's like there's a lot of if we subtract Shopify out, like if it disappears overnight. There's a lot of uh countries which would have uh no GDP growth. Second order
1:42:41 Speaker 1 GDP because of Shopify is massive. Yes.
1:42:44 Speaker 0 Yeah, it's like just like plain uh GMV uh like uh gross pro um profit dollars, like just sales across the platform is like I think a third or more of a Canadian entire GDP. I mean, uh if you're gonna be able to do that. What's the number-ish? It's like 400 billion kind of things, like it's it's just absolutely crazy. I again I didn't Harley makes it so I I don't know. I think
1:43:05 Speaker 1 that would make you either the second or third largest retailer in the world if all of that GMV was accrued to one retailer instead of the distributed
1:43:12 Speaker 0 which obviously it isn't. So this is a highly virtualized uh uh uh way to think about it. But like in terms of the checkout that Shopfest ships, it is the uh in the top three busiest checkouts on Planet Earth. Um and and at a growth rate that it might end up being the biggest. And so um it's uh that that's a that's a that's a tremendous responsibility, which I man, I don't operate too much like on regret minimization. I actually like like a slightly different framework there. Um Bezus famously um talked about uh um future regret minimization. What
1:43:44 Speaker 1 is the nuance?
1:43:45 Speaker 0 Um I I'll I'll get into that because it's fun. Um and um but it's uh my my my biggest regret would just be like hey, I didn't take it seriously and like responsibility seriously enough, right? Like I I I um I think it sucks when people use bad software. I think it sucks when uh um anyone's underperforming their own potential due to tools. I I like I I can do so much here, so I I of course I'm dedicating myself to um to
1:44:11 Speaker 1 this kind of thing.
1:44:12 Speaker 0 Very early we talked about founder-run companies uh versus managerial companies and how in management uh uh like a CEO is is being fired when results are bad, which I think is fundamentally that's that's multiple levels of wrong. Um but like the way to judge a CEO is like out of what opportunity did you carve what company? Um and maybe even for what reasons. Um you look at something like um uh you know, eBay, which by rights should have all of commerce on the internet, right? Like they were there first and had everything figured out owned PayPal. Um like incredible
1:44:50 Speaker 1 business model, asset light.
1:44:51 Speaker 0 Shopify does not own Drive. Yeah, it's like it's like they had the entire thing. They in the PayPal acquisition, like think about the staff. It's like Peter Thiel coming in, Elon Musk, you know, Max Lefchin, and like a million others besides um got um David. Yeah, exactly. So it's like think about the talent density that they've got like so from that moment. Um what what's eBay now? So not that, yeah. Right. And so um I mean you can even play this is the craziest thing. Um you can even play that game with Microsoft, right? Like it's like obviously the courts have now said that Apple can charge 30% um on all the economic activity on top of platform with you know some emergent provisos um and maybe cover outs. Um that means Microsoft could have done this with a PC. Right. Um they got in antitrust over shipping a web browser, which is so insane if you think about it, right?
1:45:40 Speaker 0 Like it's like they what they should have done is have an app store and charge 30% of literally all money on Plat Earth right now, right? Like that so what kind of trillion dollar company would that be? So obviously I'm not advocating for this particular reality. I'm very glad this didn't happen. Uh yeah. Uh and I think maybe entire or all of Planet Earth is off better because of this demonstration. Well, we have
1:46:03 Speaker 2 Ben Ben, you have you have your theory that uh every great company has latent uh economic value within it that it chooses not to actually store potential energy. Story potential energy.
1:46:14 Speaker 0 So um so out of what opportunity did you cover what is actually the right question. Of course, much harder to judge, but at least for the purposes of every CEO evaluating themselves on a job, that is the question they should ask themselves. So that's certainly the question I asked myself.
1:46:30 Speaker 2 Okay, give it give us your uh version of the regret minimization framework. Okay, well, that'd be a great place to do that. So I think
1:46:35 Speaker 0 I do agree with it. Like in i in in in general, I think it's just lossy, and I think it's much uh in enhanced uh so the way I I before I knew that was the way uh um Jeff talks about it. I I always somewhat maybe more pseudo psych um philosophical. I I I just feel at the end of life you meet the people the person you could have become. Um and uh I f so you I think both work in life is try to minimize the difference between um that person and and who you actually ended up being. Um so that's certainly what I do. I I think one ingredient in this um say that one more time. Is it at the end of life? Yeah, at the end of life, you get the essentially like the game over screen is like you you get this like you get to meet the person you could have become if you would have um the best version you could have been.
1:47:22 Speaker 0 The best version you could have possibly been been. And I think your your goal on Planet Earth is to minimize the difference between that and uh that potential. So I uh like again. This is not uh I I don't think this is a truth of any kind, but it's a very, very valuable story to believe. Uh and sort of a thing that uh I I get a lot of uh value out of. I think one of the most important ingredients is not just think about future self-regret. Don't think about what you're at a death bed you would have wanted to. You need to consult your inner 16-year-old too. This is that's so important. We live in such amazing times and in and we have accomplished so much. Many people, like everything we currently have is something that we dreamed of at some point. Um and uh um it's it's it's it's important.
1:48:08 Speaker 2 That's such a what a perfect place to end it. Yeah, couldn't agree more.
1:48:12 Speaker 0 It feels like such a cheap way to make better decisions, but uh I wish more people would do it.
1:48:17 Speaker 1 Yeah. Well, Toby, thanks for doing this with us. This
1:48:20 Speaker 0 was good fun. I love that. It's a great conversation. Thank you very much. Thanks for your platform. I again keep saying this, but I love your podcast. So great work. Thanks. Thanks for letting us be a fly in the wall on um your own discovery journeys on uh restored companies and uh
1:48:34 Speaker 2 people.
1:48:35 Speaker 1 Thank you. Thanks, Toby. Awesome. All right, listeners, we'll see you next time. We'll see you next time.
Previous Google Part II: Alphabet (Audio) Next Google Part III: The AI Company. Google is amazingly well-positioned... will they win in AI? (Audio) Page updated August 25, 2026 · transcript and summary are machine-generated
