Tobi Lütke is still captivated by internet commerce, 20 years later

Shopify founder and CEO Tobi Lütke joins John Collison to discuss the philosophies driving one of the internet’s most foundational companies. Tobi shares his perspective on why companies are a form of technology, how internal tools and "opinionated software" shape an organization's culture and accelerate its evolution, and why the best gift is finding a beautiful, unsolvable problem. Show notes [Buy] Momax: 140W Universal Travel Adapter https://www.amazon.com/MOMAX-Universal-Technology-Worldwide-Charging-Black/dp/B0CRYPKR4H?th=1[Read] Benjamin Bloom: The 2 Sigma Problem https://web.mit.edu/5.95/www/readings/bloom-two-sigma.pdf[Buy] Ikigai: vitamin cases https://ikigaicases.com/ [Read] Kevin Kelly: 1,000 True Fans https://kk.org/thetechnium/1000-true-fans/[Read] Erich Gamma: Design Patterns https://www.amazon.co.uk/Design-patterns-elements-reusable-object-oriented/dp/0201633612 [Read] Charles Calomiris: Fragile by Design https://www.amazon.co.uk/Fragile-Design-Political-Princeton-Economic/dp/0691155240[Listen] Business Breakdowns: Formula One https://podcasts.apple.com/gb/podcast/formula-one-the-iconic-motor-sport/id1559120677?i=1000526586800[Watch] Netflix: Formula 1: Drive to Survive https://www.netflix.com/title/80204890[Read] Mark Robichaux: Cable Cowboy https://www.amazon.co.uk/Cable-Cowboy-Malone-Modern-Business/dp/047170637XKey Moments (00:00) Intro (07:07) How internal software shapes culture (16:32) The Shopify vision (27:49) Peak transaction capacity (34:36) Agentic commerce (49:15) Shop Pay (55:29) Stablecoins (59:20) Stripe + Shopify (1:12:23) Learning from the Coinbase board (1:17:23) Is Tobi ungovernable? (1:25:02) Entrepreneurship (1:31:50) Advice for Mark Carney (1:36:40) Motor racing

• 0:00Speaker 00

  The best gift in life is finding a beautiful problem that you can never solve. And even if you accidentally solve it, if you're so unfortunate to solve it, hopefully it has like plenty of enlightened problem children. Consumerism is like a thing that like is being thrown around, but where does it come from? They throw away things because they hate the things they have. The thing that solves consumerism is quality products. Personalized ad is a wonderful thing. I am scrolling past something that's monetizing the free application that I appreciate using.

• 0:31Speaker 01

  You should tell the EU this.

• 0:32Speaker 00

  Yes, well, I do, actually. Some people fall in love with solutions, some people fall in love with problems. And I just fundamentally am a person who appreciates when people fall in love with problems. But like, it's very hard to know who is who. Because, well, if you don't change anything, they look exactly the same.

• 0:50Speaker 00

  Disappointed you only have half an Irish problem.

• 0:53Speaker 01

  This is our MVP. When we weren't even sure this would be a thing. Toby Luca launched Shopify in 2006. We've been working closely with them for over a decade, and I always enjoy getting together with Toby, and I always learn a lot. Cheers.

• 1:08Speaker 00

  Cheers.

• 1:11Speaker 00

  Okay, many places I could start.

• 1:12Speaker 01

  What's the size of the code base? In as much as, you know, I would do vendor stuff, whatever.

• 1:16Speaker 00

  I think the sort of core part of Shopify,

• 1:21Speaker 00

  minus stuff like the identity system and these kind of things, is like 20 million lines of code. And then the TypeScript-written admin interface is like another, I think, eight, nine, 10. It's apparently one of the largest TypeScript applications and definitely the largest Ruby applications. We push it into pretty uncharted territories for our tech stacks. It does so much. It's like a full fintech business in there with capital and these kind of things and all of what we are doing together. And my company adopts the complexities, the real-life messy complexities of the commerce world into itself to then front it with approachable interfaces, things that don't, you know, just making all these pieces fit together. And so that requires a lot of work.

• 2:07Speaker 00

  So there's like thousands of projects going on at any given time. So going through all of them is work. But we have a good system. We have like a product operations team that prepares for it. We have an internal system that's just for the reviews, which is actually kind of cool.

• 2:21Speaker 01

  How does the system do?

• 2:23Speaker 00

  So I'm fascinated with companies. I think companies are underappreciated by the for the like just we don't think of that generally. It's like they're, you know, companies are technology themselves. They are technology by which you create part of what they create is social acceptance for, you know, people, maybe tens of people, hundreds of people, thousands, tens of thousands of people depending to spend all their day all their day pursuing a mission together. You know, it's like, it's really just like universities exist doing giving you time that you can use for like hopefully intellectual inquiry into some topic and everyone's cool with that. But if you try to do the same thing, you know, just with your laptop on the internet all day

• 3:07Speaker 00

  long has not nearly the same social acceptance, may also be valuable. And then companies are ones that allow people, a lot of people together to, you know, try to make like a pursue a mission or create something hopefully work out. So I think companies are understudied and also the sort of incentive system behind companies tends to be that they're just, there's no absolute need for perfecting them. There's just like you've got to be better than everyone else. And at some point in many industries, like if you get ahead, it's really, really hard for the others to catch up. And so so there's just this sort of a point equilibrium at which point you just

• 3:46Speaker 01

  Because you're good enough and so there isn't pressure to get better beyond some point?

• 3:49Speaker 00

  Yeah, I mean, I just, I mean, take an absolute example, I talked with some executives in the gold mining space, right? It's just like really sort of interesting because I'm like, what is your day like? Like the same question is like, it's like much more interesting.

• 4:00Speaker 01

  And what is a gold mining?

• 4:02Speaker 00

  It's just like, I mean, my conclusion, which wasn't maybe what he was trying to guide me to was that is essentially government relations or investor relations, you know, like if you're, you know, like you know how much is in the ground, you know, the sort of it's a capital play. But somehow if investors like you better, then you get a higher multiple at which point it boosts you to purchase other gold mines really quickly. So I imagine this involves playing golf. That's probably the technology there. So

• 4:31Speaker 01

  Is one of the conundrums for you as someone who thinks about Companies and organizations a lot, the lack of measurability of R and D, which is probably, you know, half of what Shopify, you know, spends its money on is R and D. And so if you're running a factory, it's pretty easy to measure the inputs and outputs. And, you know, how many widgets are reproducing per hour? And what's the labor efficiency and everything like that? It's very measurable. Whereas when you're building software, it's like, I don't know, we put a bunch of engineers on it. And hopefully in like six months, they have a great product out there in the market. But the intermediate measure is, yeah, you can measure like pull requests per engineer per day or whatever. And everyone knows it's like a very broken proxy.

• 5:08Speaker 00

  I had lots of thoughts on this specifically. I would love to actually know how you think about this too. So traditionally, when you look back in business history about when people got like a little bit scientific about business or like actually started to improve, like clearly it all started sort of Vip's based. And then, you know, Friedrich Taylor came up and, you know, brought the wonderful new technology of stopwatch to the production line and like timed the various steps. And of course, produced this is, I think, Bethlehem steel and end of 1800s and drove massive efficiency gains. And so that's like the hero's journey of business books.

• 5:40Speaker 01

  Right, like it's like, and there's still so much of the corporate culture today, right? You know, it's how org charts tend to be structured. It's how the financial statements are, you know, it's what? The kind of business that financial statements are optimized for is kind of, you know, a factory.

• 5:51Speaker 00

  In a world where almost no company was terribly conscientious and no company was like metabolized all the value available to them.

• 5:59Speaker 01

  Yes.

• 6:00Speaker 00

  Someone starting to hill climb some source of, you know, efficiency gains or just like becoming better company was like a breathtaking change, right? Like once someone starts hill climbing, everyone has to or like gets, you know, gets left behind. So that became the story. And it's remarkable to think that that was probably good enough for like probably 80 years or 90 years of like from this point on, right? Like it's like just like.

• 6:27Speaker 01

  It's a lean, basically, which is kind of the 2.0 of that.

• 6:29Speaker 00

  Exactly. So you said, you saw the car industry with exactly Toyota and so on. We just, there's a new ideas came, came on, but they were all around. This drive for efficiency. The downside of a drive to efficiency is that it requires you to act on quantifiables. Right? Like you can only measure what you can measure like schematically. So that's not the entire, like the space of how to make better companies. Like there's a huge amount of things that are unquantifiable, but taste. Like quality is hard to quantify.

• 7:04Speaker 01

  Well, not only that, because those are the obvious examples of unquantifiables. But the big one is, I'm curious, like, there's a team at Shopify that's doing a great job of their product. And there's a team that's lost and has kind of a woolly direction. And actually, their dev tools suck. And so it's very hard for them to make forward progress and they're thrashing. It's lots of keep the lights on work. Just how do you distinguish between the team that's struggling and the team that's executing really well?

• 7:27Speaker 00

  Yeah, I think, I think that's, I mean, this is why I, the question in my mouth is, I should go to, I don't know. Here's what I've found books is have rituals by which we talk every, I mean, at the latest, every eight weeks. Right? And so let the teams talk about the progress against the goal. It's like the new, like we have, we have an internal system called GSD getting shit done. It's, it's, it's the central registering, registry clearinghouse. It's our wiki, it's our like feeds and stuff like this, but it also has every project in it. And so it's built around, you know, teams updating everyone else, registering, like here's something we learned. And so like that was step number one.

• 8:12Speaker 00

  Let's get all, like get the actual state of a business into a legible internal system. Where you can reason about it. Where is every project, what's the deadlines, what has changed? And so this is what these reviews are about. We go like this is what we have on the screen. They get a little TL draw that we can drag images and mockups and everything into, but that's their area. But like all the metrics and all the things are like around the, around the edge on the screen, right in front of everyone. And we can talk about what that and how many people are on a team and this kind of stuff. And giving everyone an opportunity to just talk to me for, even if it's only quickly, is incredibly valuable. And I just learned tons of things about it.

• 8:53Speaker 00

  And this is something that's in the calendar and I don't know. It's exhausting and much, a lot of work, but I don't know how to do it in any other way. Because that is the thing by which people can say, hey, it's. Feels like progress is really well and here's what we're building and here's something we learned, what should we do about it?

• 9:11Speaker 01

  Is it like people who want to get into running the Couch to 5K program start with get off the couch?

• 9:16Speaker 00

  Yes.

• 9:16Speaker 01

  Go walk down the block, go walk down two blocks, you know, and things like that. It turns out that from an organizational point of view, having a centralized source where you track all the projects and you list out your goals and you post updates based on it, like that sounds too simple to work in the same way that like getting off the couch is too simple as a step to running a marathon, but it turns out both are true.

• 9:34Speaker 00

  I think it's honestly, it's not a complex idea and it's extremely viable for 15 other reasons other than powering the resource views. But yeah, it's not terribly complex and it works.

• 9:52Speaker 01

  No, we took inspiration from GSD, your system as we built out ours similarly. And having a centralized internal source of truth for projects that are going on is surprisingly helpful. And it feels like it shouldn't be, but it is.

• 10:07Speaker 00

  Yeah, you know, it's funny because so again, it's an internal system. Shopify has a culture of building internal software. It's, I mean, I tend to point out Shopify itself started out as internal software to power my snowboard store. So it'd be funny to not do this. And so I think fundamentally, like companies are all pretty bad. Like all the companies of today are pretty bad compared to the companies we will have in the future. And I don't know how to, how I would possibly run Shopify without having GSD. And I think there's going to be some productizations of GSD that'll be available to everyone.

• 10:49Speaker 00

  It's probably going to be renamed 15 times or whatever, become a category of software that's going to exist. And then everyone's going to be wondering how the hell did we build software before we had it?

• 10:59Speaker 01

  Yes.

• 11:00Speaker 00

  And I tried to have Shopify live in that particular state a little bit earlier, so.

• 11:06Speaker 01

  Has your proclivity for developing internal software ever led in just like a really hilariously overbuilding internal software direction?

• 11:12Speaker 00

  Oh, yeah, absolutely.

• 11:14Speaker 01

  Like what's the most ridiculous internally developed piece of software?

• 11:17Speaker 00

  We have like a static sort of our internal geosities, like it's like static site hosting, which is like it's the most incredible.

• 11:25Speaker 01

  OJ, yeah.

• 11:26Speaker 00

  Like geosity, yeah, like it's like a like 90s web with all the pros and cons. Yeah, like it's it's, I mean, it sends us down wrong paths. Like it's very often, I say internal tools culture. This is actually a little bit of a dangerous statement. I shouldn't make it like as such. We have a very strong appreciation of good software. And good in the context of we have to use it. Like some software is really good. Like Shopify is really, really, really, really good software. If you're running like a D two C business or with products. Some people try to stretch it to subscription based grocery stores, something. I maybe that even works, but I clearly didn't build a diverse mind.

• 12:08Speaker 00

  And I actually, although I appreciate all my customers, I'd rather not use anyone use the software if it's bad for them. Because that's like I I built Shopify to avoid people having to use shitty software, not to add to the pile. Right. So so sometimes this means given our scale and our our minimum quality bar, that you have to build it ourselves. And in those cases, we do that. Sometimes we build it in where we have no business doing it. And that's where things go sometimes wrong.

• 12:34Speaker 01

  Well, what I think is interesting is you think it's important to build your own HR software. And you would recommend people at least think seriously about that. Maybe you can share the worldview there.

• 12:43Speaker 00

  Not sure I exactly recommend it. But we have ideas about how to do HR, tips of compensation and so on, that are just different from what's normally implemented. This is most true in project management software, like again, G S D. If you use software by others, you have to buy into their vision. Like some vendors tell you the software can do absolutely everything and that should be.

• 13:07Speaker 01

  Software has a worldview, so you're adopting Workday's worldview.

• 13:11Speaker 00

  That's right.

• 13:11Speaker 01

  When it comes to your HR, which may or may not be what you want to do.

• 13:14Speaker 00

  That's right. And I think that's that's important to realize and it's important to use to your advantage. And I think this is why it's really, really important to buy software. Like the people who buy the software, other people should use the software in the end because they have a better view of what needs to be, what needs to be had. The so in in our case in HR, we had some things that were not doable with Workday and all the systems until we built it ourselves. I mean, this is a. This led to a journey that might have gone a little bit too far on how should this be done? This is one of the areas where like probably Shopify is the weirdest bit of software ever made, but like.

• 13:53Speaker 01

  But is it something like the internal systems you use will subtly affect the decisions that you make? Everyone's probably been in meetings where it's like, oh, well, we can't do that because the system doesn't support it. And so again, do you want to have a rock day designed compensation system? Probably not, like you wouldn't frame it that way, which is why again, it's important that people think about, yeah, what is the vision they want and does the software.

• 14:19Speaker 00

  I'm toolmaker, true, true. I have the snippets in the LAN parties of the 90s that set up the internet sharing for everyone, right? Like, that was still difficult. I just like, I'm in tools, toolmaker, infrastructure thinker in my entire life. And I deeply believe in environments that cause people to accomplish bigger and better things than what they even imagined they could have done. Marshall McLuhan says, like, first we make the tools and then they shape us or something along those lines. I have a terrible memory for exact quotes, but the sentiment is right. And so I think this is powerful and is something I want to channel at every level.

• 14:59Speaker 00

  Again, I want, I want the people who have a utilitarian problem of, hey, I need an online store, to accidentally catch Shopify because it's a go-to software. But then Shopify to inspire them to build much bigger and better companies than they thought they did. And like elevate their own ambition in what they are building, just like my ambition increased from building snowboard stores to helping millions of businesses be built. And so it's the environment that I think we have a lot more power over. And it's the sort of missing ingredient people talk about, you know, people talk about incentives shaping companies and then policies shaping companies, right? So those tend to be the two tools.

• 15:43Speaker 00

  And I think then sort of generally, like, if people are really insightful, they talk about culture as well. But it's the environment that's even more powerful than all those things. It tends to be as a software company, especially if you feel like you have agency over the tools, that you actually have more power over the tools and therefore the environment than you have over policies. Because what can be moving forward by the speed of a deploy. Like, you know, a new change to the T S D software can is immediately part of environment where a rollout of a new policy is going to be a consultative town hall and, you know, a lot of convincing. So in funny ways, it actually acts as a fast and the most effective way of evolving a company forward.

• 16:27Speaker 01

  Having opinionated software that you use to tweak the environment.

• 16:32Speaker 00

  That's right.

• 16:33Speaker 01

  So the obvious question is if software shapes us and kind of shapes the actions of organizations. And you should think about what the vision embedded in software is. What is the vision of Shopify for your merchants? I mean, you said one part, which is that they should be more ambitious for their business success and they can probably be more successful than they might realize. What else?

• 16:56Speaker 00

  What I tend to visualize is like, what are the things, you know, if you're sitting with a friend over drinks in an Irish pub and...

• 17:07Speaker 01

  I'm with you so far.

• 17:10Speaker 00

  And the question is like, hey, you've done an online store, you've done an e-commerce business here, you've done a retail business for Shopify, would you do this again? But the answer to the question is like, hopefully, hell yes, because, and then there comes a list of things that we would like to do. Like amongst voices, like, it just makes it easy. Like, it allows me to build the business not feeling like I have like, you know, when you try to paint a painting and you have like mittens on, like, it's just like, this is sort of a, you know, there's perfect vision in your mind, but you can't get it out because the tools over you.

• 17:44Speaker 01

  We've all used software like that.

• 17:45Speaker 00

  Yes, exactly. So like another thing is that it just keeps me cutting edge, right? Like, we are going through an enormous platform shift. Like Shopify predates smartphones, right, like a software. So we have seen multiple platform shifts and usually what happens when you study any kind of... Industry upheaval or like a recession or anything. It's hardest on like the small businesses. The really big businesses get bailed out anyway. And everyone in between has probably usually the line of credits or whatever capital to make it through.

• 18:18Speaker 01

  You're talking about an economic recession?

• 18:20Speaker 00

  Economic recession. So like something happens in the world. The small businesses are the ones who are wiped out. The failure rates during recessions is enormous. And that's a huge drag on economies. Because like sixty to eighty percent of all people will work for small businesses.

• 18:35Speaker 01

  I think people felt this very viscerally in Covid with restaurants, which were obviously particularly hard hit by Covid. But I think people could see how little, how kind of shallow the balance sheets were. Because entire, you know, streets turned over with new storefronts. Like it was a very visual representation for people of how fragile a lot of the small businesses are.

• 18:56Speaker 00

  Yeah, and like, I mean, many, many places never recovered. It's like it's, it's a very organic process by which an area becomes, like sort of have the critical mass of interesting stores that like then has people come there. And that's just like this builds up over very, very long periods of time. Entire cities, centers can shift in these times. And so it's a very precarious balance. And they have very tight margins. They're off, like there's so much that makes them fragile by like systematically. But at least all their sales disappearing because suddenly most people purchase from their mobile phones. That just their website doesn't work on.

• 19:40Speaker 00

  It's not their job to stay current with these kind of things. So like just like inoculating from all these kind of shifts is a really important part of a business.

• 19:47Speaker 01

  So you're talking about some of the disadvantages that small businesses have. I was realizing recently, it actually really hit me when I went to buy something from a very large famous brand, name redacted to protect the guilty, but very big, very storied. And I was going through the e-commerce experience and it was horrendous. It was so bad. And I realized that thanks to Shopify, we are now, I don't think it's hyperbole. Say we're living in an inverted world where the very large retailers are worse off in their e-commerce experience. They have, you know, worse systems and lower converting websites than small businesses, which have these like amazing, super snappy, and they're just like more technically performative. You measure the latency, if you measure the, you know, full funnel conversion, everything like that.

• 20:32Speaker 01

  On any metric by which, you know, if you were with your stopwatch and you went from Bethlehem steel to, you know, the internet, and we're kind of measuring things with your stopwatch, the small businesses are better off. So one, I thought that was just interesting that in this case, we have this inversion, where on a very tangible technical level, the rebel alliance is doing better than the large established companies. But then it made me wonder, this kind of a question for Shopify where you have succeeded on the small business side. And I know that's probably anathema to you. It's like, oh no, we're just getting started, blah, blah, blah. But you have a very significant fraction of the small business e-commerce market with a very successful product there. And so how do you think about Shopify expansion from here, where you can go international? You can go up market to large companies. You can go into new modalities like agentic commerce.

• 21:15Speaker 01

  And like, there's many vectors of expansion, but it does feel like there's a take stop moment, because step one is deliver a great experience for small businesses.

• 21:24Speaker 00

  Yeah, thank you. By the way, me too. I also have purchased from Nike.

• 21:30Speaker 01

  It wasn't Nike, but yeah, those kinds of people.

• 21:34Speaker 00

  Yes, you know, that I love the inversion because the inversion is super. This is one of the very few spaces where this is true.

• 21:43Speaker 01

  Yes, exactly.

• 21:43Speaker 00

  And that is exactly what we set out to do and it's.

• 21:47Speaker 01

  It's actually an access to the capital market.

• 21:50Speaker 00

  I fundamentally believe is like, people should use amazing software that really, really like is like perfectly fit to the problem there.

• 21:59Speaker 01

  You don't blow something.

• 22:00Speaker 00

  Exactly. But we can go deeper and deeper and deeper into the space, right? Like, so it's just really, really quick. It's really easy to underestimate the size of. Everyone underestimates the size of the internet and everyone underestimates the size of retail. We said in our intersection of both those things, right? Like, it's my favorite stat is that the companies, the industry supplying wooden pallets to warehouses is a $60 billion a year industry.

• 22:28Speaker 00

  That gives you sort of an idea for how large retail actually is, at least directionally. And so what we have done from a company perspective is be very, very clear that our mission is to make entrepreneurship simpler. And that's where, you know, like our heart is. And many of our customers have gotten quite big, like we ended up raising one of our customers to a billion dollars of revenue. And so there's some, some of our customers have, like in the top 10 of largest customers, many of them have started on Shopify. The reason why they're still around is because we actually, again, we take this so seriously, that we're actually building with them while they grow.

• 23:08Speaker 00

  And, you know, it turns out, again, like all these stories of software is for a certain segment of a market are skills issues. And that's exactly what it sounded like when I first heard about it. It's convenience to the company making the software to say, we are focused on one segment. And by the way, they're always segment, like focused on the richest segment, funnily enough. And we just said, no, we are like starting with SMB and then some of them grow and hopefully we build good software and then we invite the others over. The most common thing that people said with Shopify in the early days was always that this will never work in real life. Because like in the real world, retailers are messy and, you know, just like have all these business rules that we didn't implement.

• 23:52Speaker 00

  And our opinion there was always like, well, the real world sounds like a terrible place. We'd like ours better and we just invite everyone over and.

• 23:59Speaker 01

  Well, isn't there also something where like the real world is messy, but we find this with Stripe billing? Where people say, oh, everyone's billing system is different and like the dimensions of their billing that they want to encode and things like that. Therefore, you know, there's a certain size beyond which, you know, Stripe billing will cap out and people need a custom system. And our view is absolutely billing is really messy and it's also hard to test because it involves time travel, right? It's like, you know, what happens if people do a mid-period adjustment, then it needs to be pre-raised or whatever. Therefore, do you want to be using your homegrown version of this? That was developed by some guy who had never built an e-commerce or billing system before and has. Since left the company and you know now it's kind of poorly maintained.

• 24:41Speaker 01

  Or do you want to buy it from people who have been thinking about this problem space and building a generally abstracted frame? And you know, our strike billing now has a time travel engine where you can just move time around to test all these kind of different cases.

• 24:53Speaker 00

  Yeah.

• 24:53Speaker 01

  Because obviously you need that. And in Shopify's case, similarly, yeah, we've been thinking about inventory management for a very long time. And you know, how you model inventory and all these kind of things. And so I feel like it's funny that people sometimes say, oh, this will never work at the large end because our needs are super complex. Therefore, we should be using a piece of software that only has one user and is poorly maintained by, you know, one tiny corner of the company.

• 25:16Speaker 00

  Yeah, that's right. I think, um, look, when I first started programming in my apprenticeship, my meister taught me that in the software world, you have about two years' time. Anytime you start an important piece of software to try to nail it, try to nail the problem main. Because afterwards, it just magically like someone puts cement in the code base and you're never going to change a thing.

• 25:41Speaker 01

  Yes.

• 25:42Speaker 00

  And that's just like, that's the state of software in the nineties. And frankly, just the way the software works, like everything that got to scale was like finished in the nineties with cement in it.

• 25:52Speaker 01

  Yes.

• 25:53Speaker 00

  And then sold in the two thousands. And in a lot of decision makers' life, that was the time when software adoption really started. And their priors are loaded up with software that corresponds to roughly what my, uh, what Jürgen Beck then was telling me. Now, we've gotten a lot smarter about building software. We have, you know, CI and automated testing in general. And like, we just like, we know how to build software in a way.

• 26:14Speaker 01

  Yes.

• 26:14Speaker 00

  We're by no means perfect at it. And we don't even know how to measure it, as we talked about earlier. But like state of art has increased significantly and we make better software. And that's a completely different thing than what people are comparing it again. But it's hard to tell them, right? Like it's, you know, the first eighty percent of every e-commerce business are the same. It's like you need a checkout, you need credit cards, and you're taking credit cards for us. And, um, you know, like you need the hosting, the checkout and office graphics and admin interface. So it's the last twenty percent that are actually quite unique. And, and, and they exist in a particular, very predictable problem main.

• 26:46Speaker 01

  Yeah.

• 26:47Speaker 00

  Like what does the website look like? It's like what my brand looks like. And also business rules. Like we have over time, uh, just like your time traveling, uh, back test system, figured out where do we allow programming or programming enabled extensibility in the system? So that these last Twenty percent can uniquely be created for everyone who wants them. And I think that's what it means. Then I think that's a place you can only get to if people work on the problem really care. Because like you kind of have to fall in love with a problem to want to look at it from so many sides. But at some point, you understand it well enough to not solve the problems that people state,

• 27:31Speaker 00

  but build infrastructure in the form of primitives that can be composed to solve all the problems. And that's a completely different level, but it's what I deeply appreciate. I massively admire it every single time any category gets to this quality of decision making and infrastructure.

• 27:48Speaker 01

  Another thing I enjoy on the software quality side that both Shopify and Stripe sell on, that's just a funny domain to pursue, is peak load, where Stripe sells on just, you can put a lot of transactions through the system at once. And obviously Shopify similarly, it feels to me that how you displace other ecommerce systems is, if you are getting very spiky sales, you can get, you know, put a thousand requests per second through the system, and that's totally fine. And most systems at a technical level can't do that. I guess I find it funny because I think we kind of grew up together, kind of expanding the, you know, request per second thresholds. And you guys pushed us pretty well there.

• 28:33Speaker 01

  But I'm curious, like, where did this come from in ecommerce culture? Because like the marketers say, everyone will come to the website and click, you know, buy at the same time. The engineers are like, no, please do not, stop encouraging that. But it's become like a real part of ecommerce culture, like the drops and things like that. Maybe you can fill me in on the drop history, because you seem to have started.

• 28:50Speaker 00

  Yeah, like it's really funny. I'm just as amused by this as you are, because it's like.

• 28:56Speaker 01

  No engineer would ever suggest this.

• 28:58Speaker 00

  Because it's a very, very strange thing. But it works fantastic, this is builder on it. The one that did it for us first is like some, somewhere in 2010. This is called the Chive, which was like, like some, I mean, it's a website, it was like some community.

• 29:18Speaker 01

  Yeah.

• 29:19Speaker 00

  And I had like some T-shirt with Bill Murray on it. And that thing, every single time it went on sale, it took Shopify down. It was just like unbelievable. We actually couldn't, we didn't know the demand level because we just couldn't observe it. It's like upstream, the routers could not send enough traffic. And it's like, first of all, who's the Chive? We had to like catch up very quickly. And so it was one of those things where there was a very specific decision moment where we realized, I mean, this is obviously Shopify down is the worst possible thing. Like this is like, the entire company exists to never make it so that anyone's down, no less the entire thing.

• 29:59Speaker 00

  So we were like, well, the traditional business thing is like, this is super expensive from reputation, from money. And we can't even in our business model may ever make money back from the Chive, given what the amount of resources they consume. So we clearly need to fire the customer and decided, no, absolutely not. We're using this as a gem and we're going to use them, like we're going to build a system in such a way they can deal with this. Because this is exactly what good engineering looks like. And that was fortuitous because I think this sort of pattern ended up like really sticking. It was like Supreme, which really drove this further, the streetwear world.

• 30:39Speaker 01

  I remember Supreme and I remember Kylie Jenner, it was like lip kits. Just that's embedded in my memory from kind of 2013, 2014 Stripe-ish, that was definitely, like that was a board level topic.

• 30:52Speaker 00

  Yes, and we had, we had, we had board level discussions and on our side too. It's actually would be funny to know the diff. I'd be probably sweating exactly the same amount on both sides. Because obviously we have an incredibly longstanding and I think at this point storied partnership. It's tremendously difficult to synthetically test the, all the pieces that go into commerce. Because it's just like so complex of so many things, there's so many APIs. So much we have to like the shipping to of course all payments and payments is like depending on the mix of bins, it's like a different profile of on Lord, right? Kylie Jenner like the store had a lot more debit cards and that just kind of exercise of different parts of

• 31:37Speaker 00

  infrastructure and so anyway, these kind of these kind of things you find out and and on our side, we just like, yeah, like no sin was forgiven. Like every single sin like was revealed and found us to be wanting very publicly, so.

• 31:55Speaker 01

  Is there anything particularly technically hard to scale?

• 31:58Speaker 00

  Well, I mean, so if you if you open a book on databases, like sort of page, probably chapter one is like an example of how a transaction works is like, I mean, taking either moving money on a ledger or moving an item out of inventory and into an order, right?

• 32:16Speaker 01

  It's the textbook definition of transactionality.

• 32:19Speaker 00

  Like two textbook definitions in a row. So you fundamentally have to serialize at those points. This is like the lock contention moment. There's architectures which we employ that like you can get around this. There's like pools of products like we take out of an integer into like a striped thing and like there's all sorts of things that do and then try to refill this as fast as possible. But the point is that you really deal with lock contention and lock contention is difficult. It's very, very hard to scale if everyone at the same time wants to decrement an integer in the database just actually. Then also the transaction involves having to go to interchange and move money.

• 33:03Speaker 01

  I was reading some histories of Oracle recently, but I think it's kind of interesting because

• 33:09Speaker 01

  you know proprietary databases were the leading databases. Like the Lamp stack only really took over in the 2000s, but the 1990s, if you were like building a thing, you actually needed to go buy your database and there was these proprietary database wars in the 70s. And I was wondering are there lessons for us for the kind of current open source or current AI wars? And model wars from the database history, but it was striking talking about kind of the early. Feature wars of Oracle versus its competitors. And locking was such a big differentiator in those early versions. And like row level locking.

• 33:40Speaker 00

  Row level locking was a big thing.

• 33:42Speaker 01

  But it came in like Oracle six or something, you know what I mean? You would think it's like an Oracle two feature, but no. It took them a few revs to get there and row level locking was like the bees knees.

• 33:53Speaker 00

  Yeah, yeah.

• 33:53Speaker 01

  And they released it.

• 33:54Speaker 00

  Yeah, I mean, and very glad they did. So, I mean, yeah, I mean, this is dot com predates Shopify a little bit, but like, um, yeah. Dot com tech company creation was like, um, day one, you send a million dollars to Larry.

• 34:10Speaker 01

  Yes.

• 34:10Speaker 00

  To get your Oracle database. And I think, you know, day like one hundred eighty, you go public or something. It's like a very different time from today.

• 34:18Speaker 01

  Yes, I mean, I guess we're kind of getting back to that a little bit in AI where, you know, um, uh, step one, send three hundred billion dollars to Oracle for a data center.

• 34:27Speaker 00

  You're a couple of days past one hundred eighty on your journey to becoming a public company, I have to say, but like.

• 34:33Speaker 01

  Yes, yes. And anyway, moving on, um, I want to talk about agentic commerce. I had a really nice shopping experience recently where I wanted to buy a integrated travel adapter and power brick. And so I did some product research in ChatGPT and it was really nice. There was no, uh, ads getting in the way or anything like that. I actually found a product that I hadn't come across from Momax. It was really good. I think I was telling you.

• 35:00Speaker 00

  Yeah, I have too.

• 35:01Speaker 01

  Okay, yeah, I was, and what's the verdict?

• 35:03Speaker 00

  It's very good.

• 35:04Speaker 01

  It's very good. Okay, yeah, we'll put a link. And it's kind of linked me out and I purchased, obviously, super easy, one click with Shopee and everything like that. And it felt very futuristic to me, both in the product discovery and the completion side of things. But it feels like filling out web forms is not a value add activity. For people, like when you travel, you probably don't directly book the hotel yourself on the website. You know, you have an assistant who does it or something like that because choosing the hotel might be desirable for you. But actually filling out the web form is not a value add activity for you. And so what is your vision for how agentic commerce happens specifically? Because it seems relevant to your interests.

• 35:45Speaker 00

  It's relevant to my interests. I mean, it will be extremely valuable and it will be something that, that, um, will be done a lot and might even be like a majority of commerce or like on the internet. I don't know. But like, I think my role in this is going to be like largely into infrastructure providing. Right, like I, um, uh, this is the, our job is to keep our, like, all the millions of businesses of Shopify extremely current. And so, um, um, what, um, we want to do is make sure that, like, everyone's plugged into the various chat, uh, systems. And there's an MCP connected to every Shopify store and, uh, you know, global catalog that's really nicely presented.

• 36:26Speaker 00

  So it's, um, we're, we're building software specifically for, um, the Open AIs and the clouds and the, the, um, perplexities to make it really, really easy for these products to show up and reason about them and, um, and so, because we think it's really, really important that they can show up. So like, there's an infrastructure angle in it. But like, how is being used? So I think the best way to predict the future in most cases is just like, frankly, look at what rich people buy for themselves. Right? Like, you know, Uber is a wonderful company. It's also extremely predictable because rich people had car service and, uh, you know, so it's figuring out a way to scale that in such a way from cost basis to so that everyone can use it. It's just like, yes, that works. So, uh, personal shoppers, right?

• 37:11Speaker 00

  These are the places where, uh, you know, memory and understanding, people and personalization are just like, pay so many dividends and are so clearly all too good. Like, it's like, people have to make so much out of like data and, and advertising. You know, personalized ad is a wonderful thing, right? Like if a personal ad that tells like, you know, I am scrolling past something that's monetizing the free application that I appreciate using and You should tell the EU this. Yes, well, I, I do, actually. And, and, and the fact that it's highly personalized to me means like, at this moment where this platform monetizes because they're giving me a gift here that I get to use. It's win-win.

• 37:53Speaker 00

  It's, it's win-win. Using this moment also that is now not just like a fucking like Ford 150 truck. Or I don't even know if that's how you say that. But like, it's like, I'm not, I'm not in market for trucks, right? So I, uh, uh, instead I see a travel adapter, like what you sent me, you know, like, it's just like. I am your personal shopper, yeah, in this case. But I, I, I, the funny thing is you send me the link and I, if I would put that link in ChatGPT, which has my, uh, sort of, you know, lots of my history and ask. Is that the kind of product that I would appreciate? It would like, it would just return yes, right? Because it's like it solves the problem in its entirety. It's like a travel adapter which likely for any country, to any plug, to any other, all sorts of stuff, good, good product, right? I want it.

• 38:35Speaker 01

  Okay, so we're getting down the road here. I mean, it feels like step one is that's going to happen with agentic commerce is I feel like existing aggregators, if just aggregation is their raison d'etre, then they're going to have a lot of questions that they need to answer. Because ChatGPT and the AI apps end up as a new aggregation point. And so it seems to very much benefit the tail. It benefits all the Shopify merchants, just like, you know, we had a new set of content creators emerge on YouTube that effectively compete with kind of TV. They're both just entertainment and the tail becomes much more powerful when you have over the top distribution through YouTube.

• 39:16Speaker 01

  Similarly, it feels like once you have over the top distribution through AI apps, it becomes, you have a much more powerful position as a tail merchant, because you know, Mo Max is a tiny brand, but they can just get recommended as the best product. So that's step one that I think happens.

• 39:33Speaker 00

  I think a slight modification about just next to this. I don't think the tail part matters. I think merit matters. It's like, it's just like, it's kind of an important point because like, you know, often when you talk a lot about commerce and products, at some point, just because of prior discussions, people are like, yeah, but aren't you just feeding consumerism? Right? Like, and so this is sort of like the negative take, right? And again, consumerism is like a thing that like is being thrown around, but where does it come from? It comes from people throwing away a lot of things that they probably shouldn't. But they throw away things because they hate the things they, they have, right? They, they, they, these things don't work. They, they, they fall apart. They don't do the thing. They're like. Cheap plasticky, this kind of thing.

• 40:17Speaker 00

  The thing that solves consumerism is quality products which you want to keep using. Right, like you want to be excited about this and like you want this travel app to last forever. And so you never have to think of, you literally never have to Google what plug is being used in Singapore, right, like and you just know that the thing that you have with you can deal with everything to everything. So problem solved. And so, um, so that's, I think, I think that's, that's an important modification on, on, on the point.

• 40:46Speaker 01

  Yeah, I guess implicit in my view is that there's good stuff in the tail, whereas the head has distributional advantages and so it is more meritocratic to bubble more stuff up from the tail. That is, I think, the reconciliation of those two worldviews. Okay, so that's kind of step one that happens. I think you are getting to step two, which is, it feels like there's a lot of changes potentially that can happen around personalization, about agents actually acting for you. And maybe one thing, I'm curious if you've thought on it, it just seems like a lot of search in e-commerce is really bad, where it's keyword-based search still, and you can't do things like, let me know if this becomes available in Gray, or do you, what other products do you have like this?

• 41:29Speaker 01

  And you want some kind of embedding space that thinks about similarity between the products and no one can do this. So when are we getting better personalization and search? I just want really good search of the products out there.

• 41:39Speaker 00

  I, I, I am obsessing about this now and like we have, like, we should have been the solution.

• 41:44Speaker 01

  Tell the machine secret Shopify roadmap.

• 41:45Speaker 00

  Yeah, Shopify should have solved this earlier and hasn't, and I, I'm pretty mopey about this.

• 41:52Speaker 01

  You guys are okay.

• 41:54Speaker 00

  Yeah, we will, I, I think we will solve this now. So like, the thing is that, um, so just, it's really, really fascinating. I really deeply appreciate it as a field. It's like so different, it has its own, it has its own lore, it's like, everything's interesting, is my fundamental opinion, and search has been a wonderful area to like actually learn a lot more about the history now and like, the fundamental thing is like, there is a generic bias in, in search and a text is king and like.

• 42:27Speaker 00

  Frankly, the people who worked in search are like much more interested, fundamentally more interested in searching through papers than through products.

• 42:36Speaker 01

  Yeah.

• 42:36Speaker 00

  And so there's very few of the best people in search in the world. People who know most have actually ended up working specifically on product search, which is really, should be seen as its own completely different domain. That just sort of looks like it, but it's really clearly deeper with lots and lots of complex features and so on. So like I got to like build up like over the last year, like a, like, you know, sort of really, really, really, really great search team and exactly look at the, you know, embeddings and these kind of things. And it's just, it's so, the amount of improvements that's just like unexplored is just staggering.

• 43:12Speaker 01

  Shouldn't you do search across, I mean, I find it interesting when Shopify does things broader than the Shopify universe, because like Shopify, shop, the shop app can track packages not bought from Shopify merchants, right? Yeah. And so shouldn't you do the search thing across the whole web and not just Shopify?

• 43:30Speaker 00

  No, should be.

• 43:31Speaker 01

  I think so, because again, the thing that feels like the big opportunity to me is clustering was always so hard to do because all the features were developed manually. And so you had to like go say that the dress is red and everything like that. And it feels like, have you ever used LLM as just a recommender engine where like I like feeding in, these are all the books that I've read recently. Give me a narrative nonfiction book, you know, that someone who's read all these books might like, and it does extremely well, but you're kind of using the LLM to access its world model. And it feels like now you can have an interesting kind of product world model and access it. But people, like for the people using it, whether a merchant is on Shopify or not is probably an incidental detail they don't care about.

• 44:12Speaker 00

  Yeah, I totally agree. And you're talking about the how, but like the what is the really important thing. I just want, I want the LLM to be proactive and just tell me, hey, there's like this outfit would look good on you and here's a preview, right? Like, and just like, here's a full cost and you want it, right? Like this, like it's the personal shopper outreach kind of component, which I think is just like really valuable. And this is not going to be like some kind of, like you'll get this from everyone because the, it's really easy to put together. It's hard to get the data and the embeddings and the sort of understanding about, you know, like we have to figure. It's funny, the most important thing again in the AI space is also unquantifiable. It's the vibes, people call them there.

• 44:52Speaker 00

  Like it's like, it seems like Midjourney specifically is one company that managed to actually scale taste.

• 44:59Speaker 01

  They have a very distinct aesthetic in the images they produce.

• 45:01Speaker 00

  Yeah, and maybe this is because they drove towards a particular aesthetic, but they just sort of kind of felt they had ownership over. But it's one that's clearly appreciated.

• 45:09Speaker 01

  But David is also like deep founder mode type, how he operates.

• 45:13Speaker 00

  Yeah, exactly. And so like, I mean, it's when something outperforms, it's usually a product of a place that doesn't make decisions by consensus, right? As we know, so. So, you know, how do we like, we need to figure out taste in this product sense. And we'll figure this out, someone's gonna figure it out, maybe everyone's gonna figure it out. Maybe it's already figured out in the neurons and we just don't give enough information for it to reason around taste. And so putting like, I think it will be very, very good personal shopper. The thing that I think the aggregator still, to just like get back to your point on the aggregation side. There's many reasons why people buy things.

• 45:58Speaker 00

  I just like lots of, lots of things are input purchases. Like it's like the things at the next to the checkout counter in the supermarket. I don't think people are gonna use ChatGPT to buy Mars bars or something like a candy or so.

• 46:12Speaker 01

  Well, you just don't do so online, right?

• 46:15Speaker 00

  Exactly.

• 46:15Speaker 01

  But like, is there an online impulse purchase that is not suited to happening in an AI app?

• 46:22Speaker 00

  Interesting question. Nothing comes to mind immediately.

• 46:25Speaker 01

  I mean, I guess online impulse purchases are like things where you're scrolling through Instagram and it's like, you know, all the COVID stuff. It's the sharpest knife ever developed, you know?

• 46:33Speaker 00

  I wonder if it was a truly.

• 46:35Speaker 01

  It changes color in the rain.

• 46:36Speaker 00

  I wonder if it was a truly inputs, but I mean, they sort of feel like input purchase, but they tend to be like, very few people part with money unless they are like, holy shit, this is the thing I always wanted. Like this is actually usually the longest.

• 46:47Speaker 01

  Tap into demand that's been there for a long time.

• 46:49Speaker 00

  It's sometimes a little bit, the opinion, when you look at log files, you're gonna get a very incorrect view of a. It's very often the longest consideration phases. Like for years, I wanted a travel adapter that can deal with everything to everything. And the fact that it goes in a chat from you or in an Instagram ad, doesn't matter. I'll Insta purchase it at this point.

• 47:12Speaker 01

  Okay, you were just ready to do that. My other purchase I made recently that I really liked is I was going on a long day hike. And if you read the accident reports, it's often people day hiking who get into trouble because people who are going out on a multi-day hike, they have like their tent with them. They're prepared, you know what I mean? And then people go.

• 47:28Speaker 00

  It's a old problem with bicycle helmets too. Like same issue.

• 47:31Speaker 01

  It's a short journey, exactly, just to the store that gets people in trouble. Yeah, so day hikers, they get in trouble. And so because they think they don't need any preparedness and then they end up out after dark and you know, a rescue party and everything like that. And so it was like, it's called Bivi, you know, like a little sleeping bag for emergency purposes. And it's made out of the reflective foil. And so again, it's if you end up stuck, an emergency foil sleeping bag, just so you don't die of exposure. But it folds up to it's like that size and so you can just stick it in a day pack. And now you are somewhat more prepared for the elements than you were before. I don't know, do you have a favorite recent purchase?

• 48:07Speaker 00

  I like the, I just really like these, I mean, someone going just like to ridiculously further and to just like almost like products that just celebrate craftsmanship in a way, even in places where it's just like no one else does. Like it's like, I, I, weird example, but like I, you know, take off these vitamins in the morning and like I've bought these like CVS vitamin pill cases, which is for travel and then I found on Spotify like this like Japanese perfectly CNC built, like unbelievably beautiful pill cases. Like it's just like, it's like the entire website is just like a love letter to.

• 48:47Speaker 01

  The most beautiful pill case.

• 48:48Speaker 00

  You know, precision engineered, like tolerances of.

• 48:52Speaker 01

  What's it made of?

• 48:54Speaker 00

  Like metal, which is like absolute, like it feels like, it feels so, whatever. I'm really excited about it. I, let's put.

• 49:04Speaker 01

  Put a link in.

• 49:05Speaker 00

  Put a link in. I forgot the name sadly. And now I like gift those things because they're just beautiful.

• 49:11Speaker 01

  Yeah, that's cool.

• 49:15Speaker 01

  How's Chape doing? We referenced it there.

• 49:19Speaker 00

  Chape, Chape is awesome. It's.

• 49:22Speaker 00

  You know, it started all this life as a feature called Remember Me, which like is literally the name, what was on the checkbox.

• 49:28Speaker 01

  We also had a thing that was called Remember Me. That's like the original name for Link.

• 49:32Speaker 00

  No way.

• 49:33Speaker 01

  Yeah.

• 49:34Speaker 00

  That's, that's trippy.

• 49:35Speaker 01

  That's very funny.

• 49:36Speaker 00

  So, the, um, which you know, it's like, I mean.

• 49:39Speaker 01

  It makes sense, they're kind of the same thing. I mean, shop is much broader, but they're, they're similar things.

• 49:43Speaker 00

  Yeah. Actually, shop feels more narrow. It's like it's on, it's on, it's on commerce specifically.

• 49:48Speaker 01

  Well, you guys do all the shipping tracking.

• 49:49Speaker 00

  Yeah, that's right. Yeah. And so, so, um, yeah, so, yeah, shop started, like shop and, I mean, shop is Shopify's, uh, brand for buyers, right? Like, so it's, um, you know, Shopify is what you use to be on shop. And this is what we think about it. So, um, you know, there's a shop app and, uh, you know, shop pay. So, I mean, again, it started because it just, it's a ridiculous thing that we asked, anyone asked, anyone to, uh, fill out their address with their funds when you purchase something, right? It's insane. This was meant to never be a thing because, you know, like in the, I don't know when they came up with HGP,

• 50:31Speaker 00

  but there's, uh, the 402 error code, payment required, right? Like, um, it's like built into the HGP standard and no one ever implemented it. And so, moving money around was supposed to be built into the platform and, um, uh, wasn't. And then, um, you know, credit card forms were like hilariously insecure over the normal web. And then we came up with HPS and made it reasonable, I suppose, and then it became good enough. There's always efforts, Apple Pay, like, I think actually PayPal was around, but then it sort of didn't do anything. You know, so there are so many people like doing this and it's just like, okay, well, clearly this is going to be solved soon, but like might as well like just put a Remember Me thing in there so we can solve this now.

• 51:15Speaker 00

  As almost a polyfill for the future of internet. And then, um, no one did. I mean, very few people did. And it just sort of didn't happen. And then now shop pay is like incredible. Super glad to have it. It's like, it's the most converting thing we've ever done.

• 51:28Speaker 01

  Yeah. What seems interesting to me about it is, I think it's a significant part. It's not the only part, but it's a significant part of the inversion where again, now the small stores are significantly better off than the large stores online. And that's just a striking.

• 51:42Speaker 00

  It's striking. And it's like, it's, it's 16% conversion increase by, by it being around, right? Like it's, um, So it's a remarkable product now partly because again it's powerful branding. It's purple always and people learn to trust it and associate it with a store that's like actually like recent and cared for and doesn't, you know, even now they don't have to, before they get to checkout, they know they will not have to type in the address of their funds, like some kind of heathen from the 90s.

• 52:11Speaker 01

  Yes.

• 52:12Speaker 00

  Just like.

• 52:13Speaker 01

  You mentioned personalized advertising and being a big fan of it. It seems to me that there is a real symbiotic relationship between Instagram, where people are kind of scrolling in an aesthetic mood, looking at nice things, and then Shopify stores where they need customers. And so especially during the pandemic, there was this huge growth of direct-to-consumer brands who really cracked the Instagram CAC to LTV math and they were able to grow in a big way there. Then, of course, the Apple ATT changes happened where for a brief period it got harder. It seems like Meta has mostly solved that, but anyway, I'm just curious what's the current state of, like, is this where we all have true that there's a lot of Shopify merchants

• 52:58Speaker 01

  that have been able to really scale up thanks to personalized direct, you know, direct advertising?

• 53:03Speaker 00

  Yeah, 100%. It's a predominant, it's a main growth channel for, is advertising on the platform. The Meta platform specifically is just so incredible for this. Like, I think the Meta Shopify L A O P has created more businesses than like,

• 53:22Speaker 00

  any government policy in history. Like, it's like, so it's like, I mean, if you just compare to television and consumer packaged goods before, the television channel provided broadcast and so the only things you could really advertise were like mass market high-margin products.

• 53:39Speaker 01

  Yeah, yeah, yeah.

• 53:39Speaker 00

  For advertising.

• 53:40Speaker 01

  Washing powder and all that kind of stuff.

• 53:41Speaker 00

  Exactly. So it's like, you know, laundry detergent and toothpaste.

• 53:44Speaker 01

  Yeah.

• 53:44Speaker 00

  And so the Instagram Shopify is the precise inversion of this. It's like highly, like highly merit for products.

• 53:54Speaker 01

  It's the first time you can advertise niche products.

• 53:55Speaker 00

  Exactly. And the niche product's actually doing better. That's the crazy thing. Advertising directly snowboards is like impossible there.

• 54:05Speaker 01

  I think I got a billboard for snowboards.

• 54:07Speaker 00

  The brand halo of Burton means you can't compete with that. There's intersections for like, like, snowboards only for powder snow on, you know, like, US west coast and like in certain environments with like, just like, you know, like this, this is not the best example, but usually there's like three different intersections of something. And it goes back to, you know, Kevin Kelly wrote about this in the early 2000s. He's like, it's like he wrote an essay for 1002 fans and the internet is about finding your 1002 fans and everything else will happen. And restoring that idea, or bringing this idea into retail has done a lot of good things,

• 54:47Speaker 00

  right? Like it just like created better products, it created this bios and like Meta allowing you to discover one of those people who has a potential to be one of those 1002 fans. It's an incredibly powerful thing that just like, again, that do enormous good and employment and all these kind of things. So it's a very, very powerful combination. There's all sorts of other ways how people like, like, like grow, but this is a very, very large part of everyone's strategy.

• 55:15Speaker 01

  You're saying this enables 4K for commerce. There's this like higher resolution, more specialization as opposed to the blurry generic products.

• 55:23Speaker 00

  Yeah, it's exactly. Find the people who are really interested in, who appreciate the product. I like that.

• 55:29Speaker 01

  How is the stablecoin rollout going on Shopify? So, you know, we're observing lots of stablecoin stuff with lots of people, including you guys, but I feel like you guys are the, one of the biggest bets on stablecoin payments. Everyone should just be able to, you know, use stablecoins as a payment method that we've seen. And so, how's that going?

• 55:49Speaker 00

  I'm obviously like, just like you, huge fan of the concept of stablecoins. I love the work you're doing there and congrats on the launch of Turbo. And the internet just needs its own currencies. I think it's important. At least it needs its own infrastructure to move things by internet speeds. And I'm excited for it because, I mean, sort of, I think a valid criticism of crypto in the past, as exciting as it is, has been that.

• 56:17Speaker 00

  The utilitarian difference between a real US dollar and a US dollar crypto coin is like that the US dollar crypto coin is mostly like it's sort of like gift certificates to scams. It's like there's not that many things you can actually purchase with it that are of high utility value. It's like, obviously, this is, I think. The economy was too circular. Exactly. It's like most of it was like you you purchase other coins. Yeah, yeah, yeah. But then you might have, I mean, hopefully you diamond handed into some kind of upswing. But like it's like that's not usually what happened. And I think that's valid criticism. But I think the most important thing to happen there is we need to expand

• 57:02Speaker 00

  what can be purchased with stable coins to the things people want to purchase. Like outside of like just the sort of insular crypto fintech. But yeah, like we are working hard on getting all shop stores to just take. What has the merchant response been? Very positive. Again, because like through like the work that Bridge is doing, we can settle into US dollars directly. So the merchants can, they have just gained a new ability without having to make a strategic choice to go into new industry. Like if there's demand for being able to spend stable coins and they can now sell to everyone who wants to particularly do that. And so it's like it's totally transparent.

• 57:44Speaker 00

  And it's a beautiful thing, amortizing R and D over millions of businesses with us centrally because we can just like build up the system. And everyone gets benefit of it. And so, you know, obviously, it's in testing. The conversion rates have to not be negatively affected, obviously, by its presence. So there's some like we have to make absolutely sure this is the case and like lots. Overbunds of caution on every record from the checkout because it's like the probably, I mean, it's the busiest checkout in the internet, basically. So we might not want to

• 58:18Speaker 01

  Yes.

• 58:18Speaker 00

  Reduce conversion rates ever.

• 58:21Speaker 01

  Yeah, I think it'll also be interesting to watch the consumer training aspect of it, where like QR codes is always my example of this, where like the tech has existed since, what, the 90s, but it was really only during the pandemic when like we installed the software in people's brains to understand how QR codes work. But there was a moment, and now they're kind of everywhere for everything. And obviously, they're in Asia before they're in the US and everything like that. I think there'll be something similar with stable coins where they'll be offered at the point of checkout way before people become super familiar with them. But we're, we're probably only a small number of years away from some mass market community.

• 58:56Speaker 00

  I think it's going to be very, very natural for people, but also in a way that they probably just not think about it. It's like, it's an enormous thing. It's like, it doesn't matter. Like, it's gonna be so well-tooted up to

• 59:08Speaker 01

  Yes.

• 59:08Speaker 00

  Bridge between these things that it's, you know, just it's using crypto rails while using the internet. And until you need it out of the internet, it's not like, you don't have to bridge anything. So.

• 59:20Speaker 01

  Yes, yes. You've referenced a few times the kind of stuff Stripe and Shopify are doing together. And, you know, we've caught up at various points and you even talked at the meta level about the Stripe Shopify relationship where there's some, I don't know, is it like Apple TSMC or, you know, something there where it's like deep intertwined building in a stable way, but also kind of expanding over time. And no confusion as to who's ultimately the one building the end product versus who's kind of providing some of the underlying infrastructure. But I'm curious what you think has worked well because, yeah, a lot of corporate relationships do not last. I mean, I guess if you dated 2012, which I think is accurate, maybe 2011, 2012, like 13 years, it's certainly more tenured than some.

• 1:00:05Speaker 00

  Yeah. And I think it's almost more impressive when you think about it as a market cap expansion, right? Like, I mean, we're both very

• 1:00:12Speaker 01

  People get greedy. Yeah.

• 1:00:14Speaker 00

  Well, also, I mean, we have had a highly functioning, excellent symbiotic partnership, and probably there's like I mean, how many more digits on the market cap of both companies? Like, we've expanded many, many, many times here, many orders of magnitude. And that's pretty rare, because like, again, partnerships, especially in tech, tech is extraordinarily bad at partnerships. It's, and, I mean, it's always treated as a prisoner's dilemma, that at some point, someone in the company realizes defecting gives you five points on the map, and that sounds really, really good for short-term focus. So everyone must trust each other, and it's pretty rare.

• 1:00:58Speaker 00

  And I think it's cool that we pulled it off. And I appreciate the partnership. It's been really, really fantastic being able to just focus on MySpace instead of having to, you know, duplicate things that Stripe would always have done better. I think a lot about main quests and side quests. And I, I, I have such good, I guess, founder market fit with commerce. I just like, I really care about this, and I really, I have, I can spend my entire, like, it's one, Karl Popper called it finding, like, the best gift in life is finding a beautiful problem that you can never solve. And even if you accidentally solve it, if you're so unfortunate to solve it,

• 1:01:41Speaker 00

  hopefully it has like plenty of enlightened problem children that you can then tackle, right?

• 1:01:47Speaker 01

  Yes, yes.

• 1:01:48Speaker 00

  And so finding one of those is good, and not having to like meander into some complete adjacency to support it is actually wonderful.

• 1:01:56Speaker 01

  Yeah, I think there's also something about, when you talk about this idea of focus, I think second acts are kind of a bit over valorized in Silicon Valley somehow, where everyone talks about, oh, we want to do like, a new AWS is kind of the coolest thing ever, where you do a second thing that is completely unrelated to the first thing, versus Nvidia is the largest company in the world, and they just started making GPUs in the 90s, and turns out a lot of people want GPUs. And, I mean, they did obviously lots of incremental expansion from there, like, calling GPUs is doing a disservice, but it's in a very hill-climbing expansion way.

• 1:02:32Speaker 00

  They went vertical. I think it said horizontal. Business books tell you to go horizontal, because, again... The chief competency of most businesses ended up being having having a stopwatch. Like that's it was a management system world, but we are actually in a different world now. It's like this is commoditized. It's like it's easy to access and probably G P T five is better than most managers. And it's now actually like, well, what problem do you understand better than what's in the training tokens for G P T five? And what do care more, which is a human capacity specifically? And so like Jensen just cared more about G P U's and and and, you know, saw more potential in that.

• 1:03:12Speaker 01

  Isn't there a bit of M B A ism here too? Where if one was trying to, you know, when Shopify was a thousand times smaller, raise money for Shopify? It would just sound ludicrous to say, we're just going to do e commerce software. And it turns out that's a really big market and here's our current projection and here's when it's a thousand times larger. It's like, get out of here, come on. Whereas if you say, oh, we'll expand to do this and we'll expand to that, we'll build a C R M or whatever. It's easier to justify, you know, expanding into other terms.

• 1:03:38Speaker 00

  Like I got rejected from plenty of V C's in two thousand eight and I went around and some of them said they would invest. And when it was usually terrible terms of like ratchets or multiples. And I had to move a company to Silicon Valley, which again, I would have if it wouldn't have told me to do it. Like once you tell me to do something, I don't want it anymore. And but anyway, so like, like, and I caught up with many of the partners later. In one case, we had a really interesting conversation. It's just like, he asked me what did we miss back then? And I just like, well, the reason why you didn't invest is like, like you said, like there's forty thousand online stores in the world right now in two thousand eight. And well, you can get half of them, but that's not actually that big of a business.

• 1:04:23Speaker 00

  And what we missed is like, well, Shopify itself was the solution to that problem. Like the the reason why no one was building online stores is because it was the friction was so high. It's like, and so it it's a little bit of that, right? Like it's you got it like, yes, it's it's not an interesting business plan. It doesn't, the pitch isn't very good and specifically coming from me. Yeah, yeah, coming from me is probably especially bad, but like it's also kind of.

• 1:04:50Speaker 00

  Man, the best products in the world come from people just like really, really, really, really being deep on something. Like in the programming world, they are using Cursor, which is basically VS Code. VS Code is Eric Gammas' fourth editor. Right? Like it's like he spent his entire life making these things.

• 1:05:06Speaker 01

  Like craftsmanship.

• 1:05:07Speaker 00

  Yeah, it's like he rewrote the design patterns book that many of us read at some point. Little about programming text editors, right? Like so it's like, yeah, sometimes you just need to dedicate a career to a field and get deeper into it than anyone else and celebrate craftsmanship along the way and kind of try to build the best thing.

• 1:05:29Speaker 01

  Yeah, but again, it's hard for people to give credit to that idea and the model. Like people, people are not capable of being sufficiently optimistic about a business that really works. They just, it blows through all their projections.

• 1:05:42Speaker 00

  Yeah. The question is also like, like we've seen the story so many times that like some step function changes. Like at some point, like maybe the Shop Pay and like, like all these kind of things with Shopify, it somehow it became something very different than what it otherwise sort of what you would have visualized. And I mean, this is in no area more, more true than in the Nvidia case. They're like, I mean, these CUDA cores, the tensor cores were around and they, they, they were on these cards which everyone, they're a part of the bomb. And very little used by any of engine. Like CarMax new engine probably used them for something useful. But they're just there and CUDA was not even like, like that was around for 10 years before AlexNet got trained.

• 1:06:25Speaker 01

  Yeah.

• 1:06:26Speaker 00

  Like it's an incredible vision to just like doggedly pursue this because you know, in the future there will be value if you do this. And it's, it's makes you wonder, I think that's probably true for almost every space. I think every space driven to that level could become so big.

• 1:06:43Speaker 01

  Isn't there something here where more founders should be willing to follow their nose of what's just a good product? Because again, I think that what can happen as companies scale is founders get successful by building good product. And then they hire a bunch of people and finance people and run the planning process and everything like that. And it's like, okay, well, what's the revenue projection for this? And you know, things like that. Whereas actually, like when we built Stripe Atlas for incorporation, there was no amazing projections behind that, that one day this will be a giant business. It's not a giant business for us by any kind of revenue metric, but we think it's very valuable because people start their business on Stripe and we help them with something foundational of like incorporating the company and getting it off the ground.

• 1:07:28Speaker 01

  And it all kind of ties together in this very immeasurable nebulous way. And kind of like you're saying with CUDA, you know, I think that was hard to justify at that moment in time, but it seemed like the right technical decision. And there's something maybe where founders should be a bit more willing to follow their noses on what is right for the product and right for the user, and it'll all come out in the wash in years down the line.

• 1:07:51Speaker 00

  Yeah, I'm a great believer that if you if you build things that are of value, then people will figure that out. It's like, it's very, very hard to keep people away from things that make their lives significantly easier, better, or more joyful. And I mean, I get the front row seat to this on my platform, right? It's crazy how fast some success stories. One of my favorite things we do is we started making these really sort of nice awards for people when they do hit certain sales milestones. And you know, some of those, like when I go travel, I check who's just got them and just like sometimes deliver them. And Halit is much more than me.

• 1:08:36Speaker 00

  And like, it's such a cool thing to like, to talk with them. And man, like some of these businesses that hit like a hundred thousand or million sales are like. Eighteen months old.

• 1:08:48Speaker 01

  Yeah.

• 1:08:49Speaker 00

  It's just like, just cracked the code or something of, and, and, and with the most, you know, talk of thousand true fans, it's like, it's like millions, it's like, there's an army created because people just were starved for this like authentic, like unabashed, like something needed to be done, some, something was wrong in the world, something, it, it, it involved a product not existing and that product not existing was such a bother to someone.

• 1:09:16Speaker 01

  Yes.

• 1:09:16Speaker 00

  And they made it their mission to create it. And then they, they, they went through trials and tribulations, usually they often documenting the journey.

• 1:09:24Speaker 01

  Yes.

• 1:09:25Speaker 00

  Um, taking, like allowing other people to ride shotgun to sort of over time try on their vision of the world, which again is not to change world, but it's to add the thing that was missing.

• 1:09:36Speaker 01

  Yes.

• 1:09:36Speaker 00

  It's just like, it's, it's a, makes things one percent better, not like sort of everything's new. And they just agree with that and they love authenticity of it. They like, they love that someone that they now have a little bit of a relationship with, like kind of pursued this thing that they think was worth doing. And then the product comes out and, and, and they tell everyone and then more people buy it. And, and, and, and it's just like, there's so much good that comes out of this and that was all value, which was there for everyone to take, right? Like every product that sells well was a discovery. It's like, it's more sort of invented, but also kind of discovered.

• 1:10:10Speaker 01

  Mm-hmm.

• 1:10:11Speaker 00

  And so, um, um, um, but, but it's that person that did it and they deserve the economic value that comes to them. It's such, everything about this is like, it's the best part of capitalism, all rolled up, um, for everyone to inspect and review.

• 1:10:24Speaker 01

  Yeah.

• 1:10:25Speaker 00

  And they get to have a front row seat from data and front row seat sometimes with giving these, um, uh, sort of celebration, uh, artifacts. And, um, anyway, so this is always the greatest thing, it's like, just like the people who are using the platforms are actually really inspiring people.

• 1:10:41Speaker 01

  Well, you know, I, I feel like it must be particularly satisfying for you because there's all these edge case failure modes of capitalism of, you know, rent extraction or oligopoly or regulatory capture, everything like that. And you just have a front row seat to the pure competitive differentiation, uh, people succeeding on the merits and, uh, it's a, it's kind of a very pure form.

• 1:11:02Speaker 00

  I, I mean, I feel like you have that too.

• 1:11:04Speaker 01

  It's, it's. Yeah.

• 1:11:05Speaker 00

  And, and it's like, we, we should like write postcards from, you know, to the rest of it. It's like, it is like, there's something really to this, like, you know, just don't, this real world thing, right? Like, it's like.

• 1:11:18Speaker 00

  The one everyone says your product doesn't, wouldn't work in, like that sounds so dystopian is like, it does really sound quite dystopian. Like, I don't want to have anything to do with it. I'd just much rather like, hey, just build this whatever world, whatever that is, and invite everyone over, and if it's good and works, then people are joined. Like, it's actually that simple. And I think it's better to, like, live in a world with, like, not, like, people going direct, people communicating, right, people being real people. It's, there's no, there's very, very rarely is there a PR department, or like even, there's probably a marketing strategy, but the marketing strategy works like based on, you know, just like,

• 1:11:59Speaker 00

  new ideas and organically, and there are very few people being highly enabled building products that they care about.

• 1:12:06Speaker 01

  We had Mackenzie from Ambarc on here, which is SaaS for financial infrastructure for farms. But she was saying one of the big trends in agriculture right now is direct-to-consumer stuff, where, you know, you're actually transacting directly with your farmer. And I'm sure a lot of them are running on Shopify as well. What have you learned on the Coinbase board?

• 1:12:25Speaker 00

  I never had another job, really. My apprenticeship and mostly learned what not to do as a company, and then sort of had the opportunity to start Shopify, just trying literally the opposite. And that's basically the operations I've been running on. It's been amazingly successful, so thank you, Siemens. But like, it's so hard, especially building it in Canada, like in Ottawa and Toronto. It's funny, I always had this effect of I came to a valley a lot when I had time and money. You know, I had lots of meetings and then talked with people, and they described to me how real companies do these things, and then I went home and tried to implement it. And twenty years later, they realize very few of the companies describing what they're doing, actually.

• 1:13:07Speaker 00

  Did the things that they told me. Everyone gave me sort of an idealized highlight reel. And I compared that to my average. And then I implemented how I think you could do a better job on the stuff that described. And sometimes ended up with good things. And I was very, very happy with this. And then now, obviously, I'm describing when this goes really right. And just as often, this went really wrong. Like, so there just like Shopify ended up being this like sort of lopsided thing that like is like probably ludicrously over-engineered and but advanced at certain things. And then incredibly primitive at things that no one fails usually. Because in a more liquid labor market, where people, more people build companies, the information is just more readily available.

• 1:13:52Speaker 00

  What was awesome was like joining Coinbase as a board. Because like it's like he has another founder-run company by an incredible entrepreneur. That's like put together, like again, not by committee, but by, you know, like a clear desire to build an important company, an important institution. And just like holding it up and seeing like what they were incredibly strong at compared to like, like it gave me, I learned so much about my own company. And I could like, you know,

• 1:14:21Speaker 01

  Have a reference point?

• 1:14:22Speaker 00

  Have a reference point, right? Like, so it's quite a gift. I don't know when is the right time for a successful entrepreneur to join another company. I wouldn't do it too early, but like it eventually becomes quite valuable. And so Coinbase is such a remarkable company. You had Brian on, he's such an incredible entrepreneur.

• 1:14:41Speaker 01

  Very fresh principles.

• 1:14:43Speaker 00

  And that was a company under brutal attack by regulators in a way that like very few companies of all time have ever faced. That's like they went through like the government wanted them dead. And pretty much said so, right? So I learned so much about the posture that Brian took to it. He will never get enough credit for the

• 1:15:04Speaker 01

  Yes.

• 1:15:05Speaker 00

  For the courage and like the intestinal fortitude he's shown there.

• 1:15:10Speaker 00

  Because many of the details are internal to the company and the board, but like. God damn it, he's like good. Like, I do not think I could have navigated my company through some of the barrage.

• 1:15:22Speaker 01

  Yeah, Brian strikes me as someone who is very hard to manage up to. You know, that's always the risk for CEOs, that people are trying to, you know, construct some Potemkin village. And, you know, he was describing the policy work that they were doing. And he was saying, you know, well, you know, the company's meant to be the good cop and the trade group will be the bad cop. And then he's been in the trade group and it's like, wait, these are also the good cops. And so he was saying, okay, here's our new bank cop plan. But again, he was just kind of refusing to go along with the things that everyone was serving up to him as the.

• 1:15:52Speaker 00

  I think, I think great entrepreneurs are ungovernable. And it's the problems often arise when people somehow manage to figure out how to, yeah. I think studying failed companies is actually often more useful than.

• 1:16:06Speaker 01

  I agree.

• 1:16:06Speaker 00

  You agree, yeah, like what you find invariably is that the company knew exactly the stuff that was the problem. It's just like somehow CEOs got disconnected from that.

• 1:16:18Speaker 01

  Yeah, it's not so much that I want to study failures. It's that I really want to avoid making the same mistakes that other people have well intentionally made. And like found, oh yeah, no, that's a blind canyon up there.

• 1:16:31Speaker 00

  Yeah.

• 1:16:32Speaker 01

  We should at least be able to make new, exciting mistakes. Rob, the guy here who runs Corp Dev, you know, he's very experienced in it and he's done hundreds of acquisitions, you know, previously. But it makes him way better as a Corp Dev leader. Because it turns out that there's lots of ways for deals to go sideways. And if you just have seen a lot of them before, you can keep tabs on them and be finding ways to steer away from them, things like that. And I think just avoiding the well-trodden mistakes. And if you're going to make mistakes, at least make new mistakes that haven't been discovered yet. It's kind of underrated as a strategy.

• 1:17:04Speaker 00

  It's totally underrated and but completely vital because like you died to a thousand paper cuts as a company. So like you kind of have to like first avoid like it becoming a thousand. And then second, you will make mistakes, make them original, so there's alpha in it. So that your crew some additional knowledge with now is unique to you.

• 1:17:22Speaker 01

  How do you like to be ungovernable? How do you like to avoid being managed up to? You probably can't share all your secrets because part of them are part of the special.

• 1:17:29Speaker 00

  I just like think going direct a lot inside of a company too is like just like I I I mean this.

• 1:17:34Speaker 01

  The turn of the org chart and information flowing up being polished at each step.

• 1:17:37Speaker 00

  Yeah, I I'm just like I I don't I don't think like up and down is sort of not the right mental model is in and out is good. It's like uh you you like certain decisions are best made at the outskirts of a company closest to the customers and um. But I do I'm a big believer in many decisions have to be brought inwards as well. Um like this is why you know product reviews are like very centralized. It's like a way of efficiently moving information uh completely in the end of org charts. I'm a fan of functionally organized companies. It's um the trade offs is like it's it is significantly harder for executives. It's it's it's very unpopular of executives um because obviously we just don't own like entire shebang that they can, you know, make all the decisions in.

• 1:18:20Speaker 00

  And that's requires a lot more collaboration which feels wrong and feels slow. But like you make vastly better products in um uh um functional organizations, at least for Shopify. And um you know that that that helps. I just like know a lot about the company, like like being so many details. Like I I try to be like in AI stuff first uh so that I can, you know, it's it's. I always see it as a gift when something new happens.

• 1:18:48Speaker 01

  Yeah.

• 1:18:48Speaker 00

  Because especially like I I'm very good at quickly figuring out stuff. And then I I I sit there with knowledge and I can now like look at, okay, who else gets there fast? And what are my future leaders? Like that's a very implicit test.

• 1:19:03Speaker 01

  Oh, that's interesting. You're kind of testing some adaptability or something like that.

• 1:19:06Speaker 00

  Yeah, like the biggest difference between people inside of any company or just like in general in industry is like. Um some people fall in love with solutions, some people fall in love with problems. And I I just like fundamentally am a person who appreciates when people fall in love with problems. It's very hard to distinguish during fairly stable times, right? Like it's very hard to know who is who um because well, if you don't change anything, they look exactly the same. I like inducing change in general to to assess this out, I like. I don't know.

• 1:19:33Speaker 01

  How do you induce change? That sounds euphemistic.

• 1:19:35Speaker 00

  I don't know, just like little like that, like do stuff. It's, I think reorgs are sort of a standard way. All reorgs work because reorging is valuable. It doesn't matter what your organization structure is afterwards. The benefit, well, I mean, does, but like, like there's some benefits to any organization structure.

• 1:19:52Speaker 01

  It shakes things out of the stasis.

• 1:19:53Speaker 00

  Well, and, and the advantages of any organization structure accrue immediately. There were disadvantages only appear over time. So if you, if you change a lot, you do multiple things. You're, you're also like, I think heightening your misalignment with people you don't want in your company is an enormously important thing. So like if you reorg a lot. Yeah, so sorry. So if you're, if you reorg, reorg a lot, you end up, um, the, the, the people that set like out would don't like that. Which is a perfect, like, it's probably the sane position to take even.

• 1:20:20Speaker 01

  Yeah.

• 1:20:21Speaker 00

  If a company thrives under a lot of change and is exposing itself to a lot of change, then it's important that you're clear about that. I think you try to make your company as different from every other company as possible, which is actually, I think, the opposite of what most companies, most CEOs optimize for.

• 1:20:36Speaker 01

  And probably most professional management.

• 1:20:37Speaker 00

  Right. Um, I, I think a lot of people want to make their company as similar as possible to all other companies. But I think that's, I mean, that to me, that's a lack of diversity, right? Like there should be diversity in companies because there is diversity in people and people need to fit, find their product.

• 1:20:54Speaker 01

  In what ways is Shopify most different to other companies?

• 1:20:57Speaker 00

  I mean, the sort of, uh, uh, you know, the internal tool culture is maybe, maybe some, uh, an example of this. It's quite clearly, um, R and D run in a way that quite a few companies are, but they don't acknowledge or obscure it. We actually say it and celebrate it and say, we actually are on a opinion at this point that everyone should be able to code, at least sort of since vibe coding is around. This is clearly, this has gone from a, you know, have to spend all of your teenage years in a dark room cultivating a, a, a rare skill to, um, spending a couple of weekends with YouTube, like, let's go, like, it's, this is not a problem anymore.

• 1:21:31Speaker 01

  Speaking of teenage years, I'm always very interested in the on-ramp to. Entrepreneurship and the onramps to programming. And I'm curious, some people decried that programming has gotten harder to on-ramp into. Where, you know, the first stuff I built was like janky PHP webpages. But obviously PHP is actually very nice because you know, you're just writing code directly in the webpage and you refresh it. That's the execution environment and now.

• 1:21:55Speaker 00

  It's a high watermark of our industry.

• 1:21:57Speaker 01

  Well, so is this, and so have we made programming too hard to get into?

• 1:22:01Speaker 00

  Totally.

• 1:22:01Speaker 01

  Okay.

• 1:22:02Speaker 00

  To tell my wonderful board member, David Heinemeier Hansson. Like, the high watermark of the world of programming, at least web programming, was clearly when the FTP PHP file up and it was instantaneously deployed. How long does it take code to deploy these days? Like, this is like all choices now, right? Like, I mean, we've made some choices which are worth making, maybe we'll do it again.

• 1:22:23Speaker 01

  Yes.

• 1:22:24Speaker 00

  But like, there was an immediacy and a visceralness to programming and that clearly has been lost. So lots of things have gotten incredibly amazing and I always said, like, we used to say that after two years, it's like someone puts cement into codebase and no one changes anything. We figured out how to avoid those horrors. I think we have a, we have a very mature discipline. We are, we've always, as programmers, I'm an engineer too. We've always had like a identity crisis. We always wanted to be someone else. We have significant science envy. We even attempt to call it computer science. There are some people who do computer science in the machine learning world.

• 1:23:07Speaker 00

  So it's a real thing, but clearly that's not, it's a vocational art.

• 1:23:11Speaker 01

  It's not most computer science degree.

• 1:23:13Speaker 00

  Yeah. And this is also how we eliminated things like aesthetics and beauty and stuff from our codebases. So like, from talking about it, they are beautiful codebases, beautiful code. It's like this code that like tells a story and clearly communicates what it's there for to everyone who reads it. Ideally, it's an artwork of sorts. And so, yes, I think we have a grasp. I think we have also advanced, but I think we don't have a clear vision to drive. Simplicity. And I think I personally really deeply appreciate and have hired always prioritized hiring electrical engineers into programming roles, just because they just have a better idea

• 1:23:56Speaker 00

  for the costs of inefficiency, waste, really. You know, like you put too many chips on a thing, it's too expensive to manufacture, you will just never sell it, it's not a good product. Where the zero marginal cost of copying software just means all sins are forgiven. And in fact, of course, it still runs and does the thing, right?

• 1:24:15Speaker 01

  You really have to fit the whole system in your head as an electrical engineer.

• 1:24:18Speaker 00

  That's right. And so anyway, so I think we're immature, we don't know what great is.

• 1:24:25Speaker 00

  We leave a lot of this up to people and therefore the outcomes are so different, depending on who is on the project. I mean, again, we are all getting more conscientious about it. And I think we are in a counter swing to the sort of horrors of architecture astronauts that like have caused a lot of damage to, I think, our industry over the last, like especially like in the 2010s. So we are getting in a better spot. And then I don't know what AI it was. But the interesting thing is, I don't even think it's going to end up mattering because AI is going to solve all technical debt. So it's like maybe all sins are forgiven.

• 1:25:00Speaker 01

  Engineer, you're right.

• 1:25:00Speaker 00

  Exactly.

• 1:25:02Speaker 01

  Same question about onramps to entrepreneurship. You know, as a kid, you were selling things to your classmates. And what I observe is a lot of entrepreneurs have the same origin stories where they were entrepreneurial early, either something like that where they had some business in school. As you've become known, as Patrick did web development and you know, when you're a kid getting paid thousands of euros to build a website is like infinite money. I've had to know such large amounts of money exist. And obviously to a small business, like wow, I'm totally taking advantage of this kid from here.

• 1:25:35Speaker 01

  Few thousand euros. And then another common one seems to be dropshipping arbitrage. You know, this whole thing of like buying on AliExpress and selling on eBay or something like that. But you maybe have a window into this with Shopify or something. Do you have a sense of what the right? Like if a thirteen, fourteen year old is listening to this and interested in making money, what are the areas where you think are kind of good to pursue today?

• 1:25:56Speaker 00

  Yeah, I think it is these reps are the important thing. The mechanisms change and there's like entrepreneurship clubs are really like using Shopify a lot. And like it's, I love that. And I, this is one of those areas I would love to go much deeper on, like just because it's like such a, it's, it's, it would be so fun to really, really, um, you know, build directly for them. The super important thing is just go through life, like understanding that like everything around you is built. You, you wrote one of my favorite tweets of all time, probably like actually maybe the high water mark on X. Like on this topic, like again.

• 1:26:28Speaker 01

  The world's a museum of fashion projects.

• 1:26:29Speaker 00

  That's right. And I, I love that because it's like, if you can teach that to students, it's worth more than most of entire curriculums of subjects. And so I think the commonality behind entrepreneurs is that they early in life, they somehow something happened that told them that the world is dynamic and it changes. Some of us, I had the enormous advantage of living exactly sort of at the time when events of computers to no computers like in homes. And like I had one early and lots of my neighbors didn't. So I had the counterfactual there of, and I've been just absolutely fascinated with them.

• 1:27:11Speaker 00

  And then networks came in my teens, internet. So I had a front row seat to a world, like, like the world around me in this small sleepy town in Germany was irreconcilable with what was becoming possible. Like, like it was so clear that so much would change. And so I think that dissuaded me of sleepwalking through world. It just made me like this, like, okay, like that's fun. Like I'm sitting on a piece of information.

• 1:27:38Speaker 01

  Yes.

• 1:27:38Speaker 00

  That is, uh, everyone around me doesn't believe yet, um, but it's clearly true and I'm going to bet on. And so I'm going to take reps, looking at things around me and figuring out how we could be done better. And like that process is, I think, the most valuable process to cultivate as a young adult or teenager. And.

• 1:27:58Speaker 01

  So the meta-process is more important than the actual domain you choose?

• 1:28:01Speaker 00

  I agree, yeah, absolutely. I think if you spot opportunities, see what you can do with it. It's a really important thing. I think we overemphasize those stories and de-emphasize the process that causes this. It's building the habit of looking at things and thinking about, A, do I know how to make a better version of this, which you should do anyway? And then we definitely underestimate and under-celebrate and underline is

• 1:28:30Speaker 01

  The Beatles-Hamburg days.

• 1:28:31Speaker 00

  They're going to. And acting on this impulse would mean I'm going to spend the next five years of my life doing this, and I'm willing to pay what that costs.

• 1:28:41Speaker 01

  And for you, was that just doing a lot of programming as a teenager?

• 1:28:44Speaker 00

  Programming is how I just like made things different. And, you know, like I went to these classical language schools. I was bad at Latin. We started with Latin, I only got English in like an eighth grade, hence my accent.

• 1:28:59Speaker 01

  But your Latin accent is excellent.

• 1:29:01Speaker 00

  Yeah, I imagine. Well, no, because no one knows what, how that actually sounds, and it's definitely not German. So everyone just like, because of, yeah. Anyway, I just hated doing the vocabulary tests. I was bad at it. So at some point, I wrote software for teaching myself, basically similar to, I suppose, what's called spaced repetition now, but like, and it's like, there's a little basic shell script, right? Like, and it's stupid, but like, something about making this and then using it made it interesting enough that I did it. And so like, it's a very clear moment where like, went from, I think I got a D on a test, which was like, it's starting to be problematic. I just like A's for the rest of my life, right? Like, it's just like, that is a crazy experience, right? Like, this is a thing that didn't exist, but like, fits me personally. Maybe my first internal tool.

• 1:29:45Speaker 00

  So, yeah, it changes you.

• 1:29:48Speaker 01

  Exactly. It made you passionate about building your own software.

• 1:29:51Speaker 00

  Yes.

• 1:29:51Speaker 01

  You mentioned spaced repetition. The other interesting, you know, educational topic to do is mastery learning in the Bloom Two Sigma effect. How do you put that into practice, do with your own kids?

• 1:30:03Speaker 00

  Yeah, so my kids, I have three boys, 15, 13, 11. And they go to a school, a boys' school, which we are quite fond of, and

• 1:30:15Speaker 00

  I mean, my kids, they're quite nerdy. So like, it's just like that.

• 1:30:18Speaker 01

  I met them, yeah.

• 1:30:19Speaker 00

  Yeah, yeah, so I love them to bits. I can't wait to go home. It's such a fun time. Everyone should have kids. And the particular mechanisms by, I don't, I don't know. It's like, the most important principle of, like parity principle I have is everything's interesting. This is a sentence you will hear a lot in our household. It's the kids say it. No one is allowed to say they're bad at something. They're only allowed, ever allowed to say they are not good at something yet. So that's basically the entire set of principles.

• 1:30:52Speaker 01

  We're not good at gross margins yet.

• 1:30:54Speaker 00

  Exactly, yes. We choose not, yes. You know, and making a joke is funny too, right? Like, it's just like, it's, it's, I want them to have those things in their priors. Because like, it's, it's really easy to say something is annoying. But like, it's much, much harder to figure out what you would have to do to make it interesting for yourself. And I think that's, there just isn't anything that is not actually interesting. I, I, you spent a long time in banking. It doesn't sound terribly interesting to me initially, but like, I've learned enough about it. But I've like, I've read books about double entry accounting and the history of it all. And it's just like, absolutely fascinating.

• 1:31:28Speaker 01

  Did we recommend the Calamira's book to you? Fragile by Design, which is a history of various countries' banking system?

• 1:31:34Speaker 00

  I'm literally just reading it.

• 1:31:35Speaker 01

  Oh, you are? Okay.

• 1:31:36Speaker 00

  That's so random.

• 1:31:37Speaker 01

  The Canada chapter is particularly good. It's like a history of the Canadian banking system.

• 1:31:40Speaker 00

  Like, very fond of Canada right now, which is like, um, it's a new origin, I think.

• 1:31:45Speaker 01

  Yeah, yeah, well, just, I, I found it interesting how it kind of explains the path dependence of how each country gets to where it is. Speaking of Canada, what's your advice for Mark Carney?

• 1:31:54Speaker 00

  Yeah, I mean, it's like, funny, our partnership is very storied and layered. And somehow, your board members know my parents.

• 1:32:02Speaker 00

  So, but that's fun. Look, I love Canada. I lived no more, more in Canada than Germany for long, for longer. I think it's a, it's a beautiful project. It's a beautiful implementation of different implementation from the United States or from Europe of classical liberalism. Um, it's very much beat into socialism under, under Trudeau. He pushed that very, very hard.

• 1:32:24Speaker 00

  I I'm very much hoping that Mark is helping all of Canada to figure out that that's a successful discovery of something that doesn't work because obviously that kind of push socialism always leads to poverty.

• 1:32:37Speaker 01

  The problem with socialism is eventually run out of other people's money.

• 1:32:40Speaker 00

  Exactly, and so it's just like, and it doesn't need it because it's such an incredibly, like, I mean, I built Canada's largest company now at this point by market cap. As an immigrant, I think that one that I had as an immigrant is I wasn't sort of aware that we are supposed to, you know, make small plans or make big plans, you know, just like, and held everyone accountable to that, and turns out you can build world-class companies if you do that. And there doesn't need to be any kind of inferiority like there. And also, like, from first principles, it's just like, I mean, first of all, it is attached like next door to the best consumer market on planet Earth.

• 1:33:18Speaker 00

  Until 50 years ago, we were good friends and it's, you know, it has in the ground basically as much, like, it's number one, two, or three on every single resource that is of value in the next manufacturing buildup age. So like, we should probably get on extracting some of those resources and do something. I think it can be richest country in the world if it chose so, and it just needs to make a decision that it wants that. And I'm very optimistic about Mark, you know, pushing into that direction, and I hope he's gonna push very, very far because I think that's, there's no, there's no advantage of waiting.

• 1:34:02Speaker 01

  So taking economic growth and GDP growth seriously, which is obviously plateaued somehow in Canada in recent years, and then being willing to make the potentially controversial policy decisions and kind of changes that are required to actually enable that.

• 1:34:14Speaker 00

  Well, I mean, the things that are controversial policy decisions are not, are just like, controversial for path dependence, not for, not real. Like, it's like, like, Canada has something crazy to help it, but it has like this incredible heartburn over pipelines, which are like things that go underground next to highways. And it's just like, it's just like, no one knows that there's a pipe, like, the only thing a pipeline does is you don't need diesel trucks. That's the only thing. And you can save a lot of diesel. It also changes the cost basis and like Canada has obvious resources and we need to somehow get to ports. And so it just feels like these tiny little implementation details. It's like as if computer manufacturers would somehow get down on copper cables, right? Like it's a weird thing.

• 1:34:59Speaker 00

  And so deep politicizing just like implementation details that professionals can do. It's odd because Canada, for instance, doesn't have its own nuclear power. Like where I live in Ontario, it's like the grid is entirely clean. It's like the Bruce Nuclear Power Plant, which we're constantly build more reactors for, which is like every time under budget and before schedule. Six, seven gigawatts now and just humming and then the rest is, it's the cleanest grid in the world. And so like, the funny thing is it doesn't even need it because it has all the other stuff too that it could just use. But we could have this too. So like, I think that's like, the blueprint is obvious.

• 1:35:38Speaker 00

  But actually, so my main advice to him is always like, I want him to, in fact, ideally talk to you about the Shannon Economic Zone. Because I feel like it's like the blueprint for success in Canada. Because I think we can build data centers or space ports and stuff like this much faster. And my hope is that Canada can build up an economy and a meritful market and so on. Which makes it like, can get back to doing what Canada's best, which is like succeed by helping America succeed. And you know, just like work together and let's go.

• 1:36:11Speaker 01

  Yeah. And as you say, energy could be a big part of that. You mentioned nuclear. I was thinking about hydro, where obviously Canada has a ton of hydro already. Like you were saying, the seven gigawatt nuclear power station. But I think La Grande Réfère is a seven gigawatt project and could be a lot more. I think there's other phases that were not done.

• 1:36:28Speaker 00

  Absolutely massive on every single angle you look. It is, every single time I learn about a new resource that people probably need a lot of, if I look, it's like, just like there.

• 1:36:37Speaker 01

  Yeah.

• 1:36:38Speaker 00

  Like it's just unexplored.

• 1:36:39Speaker 01

  Yeah. And maybe last question. We have your Daytona car here. Wasch is the draw of motor racing to you?

• 1:36:50Speaker 00

  Yeah, I I mean, I just love it and it's I'm surprising to me. Honestly, this is one of the weirdest. Sorry, is it or isn't surprising? It is surprising to me. So it's like, you know, so so I I love like kind of figuring out my own limitations or propensities. Like, it's just like, I think it's like some, it's a game everyone is playing, I think, to some degree, maybe it's less conscientiously. I try on every hobby that anyone I admire gets into because it's like, maybe I'm interested in it too. I wouldn't know. Like, again, everything's interesting. Motorsport was like not really something I high likelihood or betting average on liking because I didn't even have a driver license after coming to Canada.

• 1:37:33Speaker 00

  After my German one expired. And so a couple of friends took me to like, I had no, went to a track and I did went out and I just like me fell in love with it. It's it's there's something just incredible and I love competing against myself, I guess. I think that's that's the thing. I I just like, I race in races and I don't even try to win. I'm like, I'm I'm still competing against myself and I see all the other cars as obstacles. And so there's just like this beautiful thing about it's technical and you're connected with this like four basically playing card sized patches of rubber to the ground.

• 1:38:14Speaker 00

  And there's only so much grip to get out of them and like trying to get to like ninety nine point nine percent of like lateral acceleration or turning. Understanding the weight transfers of the cars and all these kind of things. And and and and trying to get to the best lap time you can. And like the the difference between that lap time and the theoretical possible lap time is just the, you know, exact report card of all your inadequacies as a driver. And like next lap, you try to do it slightly better and better and better and just hone this craft. It's like just like the meancy and the the adrenaline. It's just like, it's it's a it's a just a brilliant thing which I discovered for myself. So so started taking SIBO seriously over a couple of years and now like the the Tona this year.

• 1:38:59Speaker 00

  And hopefully do the big 24.

• 1:39:01Speaker 01

  Which is a 24 hour relay race, right? Like you stop with other drivers?

• 1:39:04Speaker 00

  Yeah, yeah, that's right. So, so one car 24. It's actually, if you watch the Formula One cinema movie, that that starts at that race, which was also really fun to see. It's like I've done the getting up in the middle of the night, walk exactly down that first scene where Brad Pitt walks like down to the pits. And only our pit stall was even exactly the one event to there like in the movie. And then get in the car and you're very, very tired in the middle of night. So I have to say.

• 1:39:31Speaker 01

  I found out recently they sold sponsorships for the fake F1 teams in that movie and made a lot of money.

• 1:39:38Speaker 00

  Brilliant.

• 1:39:39Speaker 01

  Incredible bit of product placement.

• 1:39:41Speaker 00

  I mean, like, if you think about it, Formula One itself is like such a made up thing, right? Like, it's like, it's so synthetic. It's like, we just decided to create a document, which is a set of rules.

• 1:39:50Speaker 01

  Yes.

• 1:39:51Speaker 00

  And somehow, because that document existed, like 20 teams moved cars around planet Earth, which is like also one of the bull cases. Like, like, I, I, I don't even believe in AI unemployment from, to begin with, is not how things work.

• 1:40:02Speaker 01

  But if you were worried about it.

• 1:40:05Speaker 00

  F1 is kind of proving that we can just make up completely incredible pursuits, especially with AI and robotics. We can make it cheaper and then like, let's go.

• 1:40:14Speaker 01

  Yeah, the great, I mean, the history of F1 is super interesting. There was a great Colossus podcast on the history of F1, describing basically the Bernie Ecclestone era, which came with, you know, the, the emergence of TV, obviously. And there's even things like the different race schedules were not standardized and there was like multiple, like not every team would show up to every race or whatever. And so he really kind of harangued everyone into kind of a standardized thing. But then it feels like the modern era, especially with Netflix, I think they've very successfully internalized that they're selling an entertainment product. And some people will watch every race every weekend, but like, I'm not going to watch every F1 race, but I will watch Drive to Survive. Like, that is an appropriate short form amount of F1 for me.

• 1:40:55Speaker 01

  And so I think they've actually very savagely internalized that their F1 is an entertainment product. And it needs to be kind of consumable in all the appropriate form factors.

• 1:41:06Speaker 00

  And, and they just gave access to. Sort of intrigue in politics and and and just characters behind it. Like in Formula One drivers are crazy people, right? It's a nutty thing to basically drive a billboard around at three hundred fifty kilometers an hour. So like the characters are larger than life and like absolutely like driven by almost zero sum competitors you can imagine. No, no one's there to just compete against themselves.

• 1:41:27Speaker 01

  And part of how it works, I remember hearing Zac Brown, the McLaren team principal, talk about how Netflix is everywhere and, you know, the paddocks and around and things like that. And he was saying, yes, you're aware that you've like signed a thing that like in Netflix, microphones will be everywhere. But they're really savvy where they'll have the, like in a spy movie, they'll have the directional microphones trained on you from like a super far away distance. And you just end up forgetting that like you're on a hot mic your entire day while trying to actually manage a race. And so I think they get authentic content because, yeah, in theory, people know that they're on camera and on a microphone all the time, but you actually just can't live your life that way. You know, you just forget. And so they actually get kind of interesting content.

• 1:42:09Speaker 00

  Completely agree. And it's like, the season is long, they do many races. It's actually amazing what they do. You know, like a very fantastic athletes, they lose like five, 10 pounds.

• 1:42:18Speaker 01

  Yeah, yeah, Singapore night race.

• 1:42:20Speaker 00

  So it's pretty amazing and like it's it's fantastic sport. I actually love what Netflix did because like, I mean, Liberty Media is one of those companies. You kind of have to, like, I, Jerm alone, like, I mean, Cable Cowboy is already one of the best.

• 1:42:32Speaker 01

  It's a great book.

• 1:42:33Speaker 00

  It's such a great book and then like.

• 1:42:35Speaker 01

  You know, he wrote a book. He's like, it's coming out soon, imminently.

• 1:42:38Speaker 00

  I didn't know that.

• 1:42:38Speaker 01

  Yeah, he has an autobiography, so.

• 1:42:40Speaker 00

  That'll be, that'll be fireworks.

• 1:42:42Speaker 01

  Yeah, it'll be really good. I agree. Well, look, thank you, Toby.

• 1:42:45Speaker 00

  This is fun.

• 1:42:46Speaker 01

  It's super fun.

• 1:42:47Speaker 00

  So it's really, really fortunate, it's what you, sort of an Irish pub just popped up in your office.