21年の会社づくり——Shopify トビー・ルトケ

One of the things I admire most about you is like you've been running your company for 21 years, something like that. I love people that do things for a long time, people that chase excellence, that try to be great. My entire life is founders, right? So, during the day, I read biographies of historical founders. I've read like 410 of them. And then at night, I hang out with founders. I don't think I have a single friend that's not an entrepreneur. And then I'm always asking the founders I most admire Yeah. who are the founders they most admire. And your goddamn name comes up over and over and over again. And what they talk about is that you have very unique ideas on company building and management. And your they use the word singular a lot. So, I want to kind of like lay out how you think about building companies, building products, building technology, and then, you know, spreading the gospel of of entrepreneurship. I want to start with one thing that you said. You said companies are technologies themselves. What do you mean by that? In a lot of ways, like I mean like take the social angle. Like um a lot of the companies are social technology in in the sense that they allow us to go all in. Like the only time you're really allowed to uh spend eight I I'm going to say eight because that's the right number to say. Really, like … 14 hours a day, right? Um just singularly pursuing a thing is like um I mean we want kids to spend this time in school and that's okay. And then university, you know, dedicate yourself. Um other than that like you can't just like not have a job and but just be like really really into interfaces. It's socially not acceptable. So, like company building turns out to be a perfect excuse. Once you call it a company, it's not like tinkering around anymore with your ideas. And um you get to you get to explore things. What a company fundamentally allows you to do is like just run the counterfactual to the world you see around you, right? Like you you you get to um try to build a thing that you think ought to be there. And um then you means test it against the market. And if if a market uh um agrees with you that this thing need to exist and it it it moves energy in the form of money back to you so you can do more of the thing that you you've been pursuing all along. And not only that, it's like self-financing. Like if you find out like again, I started a company which I didn't think was going to be um uh like have a very very big market. And along the way, it just like the market like pulled Shopify out of the project I started essentially. You know, that's an incredible intelligence to uh to to tap into. So, you put all these things together and um you say like, "Well, look, companies, the concept of companies not that old. It's like um we've been on a 500-year run and sort of kind of extra extracted from things called companies which weren't which were actually more like quasi-governments like the East India Company. And so, um the modern company is not that old. I find that if you take that mindset that like companies are just sort of a path-dependent solution to a social and somewhat legal problems, they allow thousands of people to join the thing your project and um it's called a job and therefore everyone accepts this. Um and uh um uh you you like obviously you can make money, so it's a good deal. And um then um you can figure out if this counterfactual of yours might be correct or needs updating along the way or any of these kind of things. And you get at the end of the day, if you're lucky, you um work with other people who are really all in and like inspiring and like taking it forward and you have a thing. And I just like the whole thing is just like I I just like I marvel at the institution of a company in a way. Like because if it wouldn't exist for some reason and someone would propose a whole idea now, it would something say from first principles, none of this makes sense really.

Well, I heard you say something that was fascinating really piqued my interest when you're like, "We do not know how to build companies yet. All companies are terrible." Yes. "Including mine." Which you said and you know, that that's hilarious when somebody's you're running a 200 billion-plus dollar company and you think that in the next 20 years we're going to look back at what we were doing at this point and be embarrassed by what we were doing. Why do you think that? Cuz it's like everything else. It I'm sure when you listen to your first podcast, you're like, "Oh my god."

No, I I do it all the time.

[laughter]

Really really saddest day of my life because I'm like, "Holy … the implication of this just hit me like a like a train, right? Like um There you are progressing. You want to

Absolutely. I mean, you know, you're supposed to agree with me, but like I I I really think we need to shout this more from the rooftops, right? Like it's you know, like the one weird trick seems to be just like read books, right? Like it's um and and it kind of doesn't matter. Just make a habit of reading books and like ideally change genre every three books or so at least for one book. And then that'll that'll all like give you a range that you you can draw on for basically everything you'll ever do. So, like look, I I I I read lots of books, lots of them, you know, just like you know, especially uh when I went from programmer to uh business um uh like realizing I have to just learn business really quick. Um I um I got really dismayed with the quality of the business books pretty quickly because frankly, I think the business books are largely written by uh by the people who have time. We're not the people who actually built the companies frankly. Um so, um so you read between the lines as well. Depends on like if if a person who started a company or a person writing a book is a sales person, every problem can be solved with sales. If a person is a marketer, clearly every problem can be solved with marketer. And I mean, at least that I can take away to as a trap to not fall into, right? So, I was determined to not um be the engineering type founder who was going to see everything as an engineering problem. Uh because that would be called blindness and like I would that's what capped my capabilities. So, um I really tried everything and learning like the you know, just how to, you know, build the team in such a way that I delegate everything and I have my uh um different business lines and you know, arrange things. This is sort of after the IPO when I realized I have to be a very serious uh public company CEO. And so, um it almost killed the company, honestly. How did it almost kill the company? It was actually COVID that saved it. At this point, like I I had the inclinations that something was really really going poorly. Um Um it was a time we didn't have a lot of competition. So, which is also um really really hard for businesses. It's not a good thing at all because um again, you you don't get you don't have good rivalry and you can't you can't sort of like even if something seems really good, you don't know because there's no one else to keep you honest about it. You have the distinction between a competitor and a rival. And you think rival competition is one thing. Rivalry is really good. I mean, it's the same, but it depends it's a mindset change. It's like I I think if you um again, if you compete with uh another company, like there's a lot of um we need also a version of what they have. Uh copying like you you do the Xerox uh strategy very quickly. Companies tend to get obsessed. Like there's companies which have very very like the most active channel in this Slack is where is the competitive analysis channel. Um where people just bring everything everyone else is doing. And I think that um while it that has some merit, um I think the problem is um it makes companies very reactionary, right? Like um I you know, like in in in in the arts, part of any everyone's art studies is um or at least fine arts, you you copy the great pieces. Like you you make uh copies of great works. Your next painting is not at the quality of a Van Gogh you just copied, right? Like so, um mimicry is actually not an excellent way of getting to excellence. Um and companies end up falling very much into this. Whereas if you treat someone like other companies in your space as rivals, much easier to have a positive sum outcome there because rivalries inspire you to be best. Like Agassi could not have been Agassi without Sampras being there, right? Like and he very very clearly states this in his book. The Sampras that existed during the Agassi era that Agassi like understood wasn't a real person. Then you read Sampras's biography, he just like tennis. Yeah. And Agassi hated it. Agassi hated it. And so, um the rivalry he created for himself created him in a in a very real way. In The Last Dance, which I loved, um like Michael Jordan, like he admits that he might made up this light at at some point. Which to me is like one of the most profound moments.

Interesting. Hip-hop history is incredibly entrepreneurial. It's It's It's so We just recorded with Jimmy Iovine, who's the star of the documentary, 2 days ago or whatever this was. I don't even know what day it is. And that's exactly what he said. He was like, "They understood the business of music before anybody else." That makes perfect sense and totally tracks. You can see it from the outside. It's um Um we actually we see it from inside. Like it was the first category of music that was like killed it on Shopify. It's like there's like so like opportunities converted into products. Like like that. And it's it's like they made different. It was really really cool. Like this is beautiful thing about Shopify is the front row seat to um just seeing how high agency that the different industries are and how you know quick they absorb new ideas. And it's just like it's anyway, it's like a different topic, but like almost like a in video game like a god level view of entrepreneurship because you How many How many entrepreneurs on the Shopify platform?

And you're drawing like insights for your own work from the entrepreneurs on your platform. One of them we'll talk a lot about today was like the importance of differentiation. Mhm. But I want to come back to that. I want to go back to like So, you were thinking, "Okay, right after the IPO, I'm going to approach everything This is like an engineering problem."

Why did you not know that was going on in your own company though? Because the company was like I'd say like 4,000 people. You know, it's sort of cause I distributed we started in Ottawa, Canada. We We had like Toronto office and Montreal office and so on. And so it just turned out that like, you know, in Toronto office, there was a fairly big project to build the features to add to Shopify so you could use it for running a supermarket because, you know, just they decided that supermarket industry is very large and we should go and capture 1% of all of it like the in the Dilbert comics, right? And so

you know, and and frankly, it like I'm I'm not saying those were wrong decisions. The The sort of really surprising thing about building a business or just in decision making in general is that um making the right decision is actually child's play usually. Like you can make wrong calls but which end up because the world changes and up being wrong call later and so on. That's a different thing. Um Um But like most of the time if you like the bad options are in front of you, just prune them so they're away. They just don't make sense. They're too expensive or just like off mission or whatever. You The problem is and I think school, unfortunately, accidentally drills this into people is that there's one right answer is sort of what people think. And once they find a right answer that could plausibly accomplish the goals that they set out, they go with it. But that's like Well, there's probably hundreds of great answers and one of them is like far less work, far more especially in an engineering project, like the best solutions are always modular and components. You build one thing and it will work with everything else you did. Um Lots of bad software that people use is are things there which are just like hairballs inside. They're like none of the pieces fit together and a huge amount of code has to be written to extend the new thing, make it usable from everything else. And like I'm not going to bore you with those kind of details, but um if you look at the project brief, the team killed it. Probably everyone made their bonus. They delivered the thing. It just it's like an island upon itself now that and and and and after it's delivered, it nothing else in the product works. So, you were looking at things as like cos playing a like a CEO or business person as opposed to an engineer.

[snorts]

Had you already started turning over your executives?

[laughter]

Someone grew faster than you. You said somebody beat you guys to a billion dollars a year.

So, that you were 15 years in 15 years in This is very common biographies. I think it would surprise people like oh, why did it take so long to figure it out? It's like no, it takes a long time to actually build the skills and then the important thing about intuition has to be refined. Yeah. So, it's like maybe in 2005 you shouldn't have been trusting your intuition. Trust your gut is sometimes good advice, but it really depends on your gut. So, it's like no one no one is born with intuition for building businesses because first of all, building businesses is a completely every decade is different. Like some problems are persistent. Um Uh like I loved I listened to I think the episode you did on Larry Ellison. You were describing his frustration with problems in his sales team, which literally I had to. Like it's like, you know what? I I didn't actually live have to live that horror. I could have actually like there you know, I would have read the right Did you read software any of the biographies? Then it's like the the incentive problems are all commercial teams. It's like But that's the that's amazing part. I'm glad you just you picked it up because he's like, I'm … embarrassed. He's like I'm 40 something years old. I've been running this company forever and I didn't understand that incentives with my sales team mattered and they almost destroyed his company. He almost went out of business. I use your listen to podcast when I'm sitting in my racing simulator to practice for next race and like I got to that point and I had to like okay, I have to stop and just listen to this because I'm I'm I'm just feeling so much empathy for Larry Ellison of all people. How funny is that? So, [laughter] anyway Who's that empathetic person before you move on cuz I love where you're going. I can't help myself cuz you know this. It's like when I hear you saying like I'm getting really executives. I'm going to build an executive team of founders. That's not a new idea. Rockefeller was doing that 150 years ago. It's interesting how Uh the building blocks that largely Rockefeller invented. I mean, we call these things trusts because it was you know, like that that was a term. Um um they first used there. Toby's relentless dedication to improving his company reminds me of my friend Karim who's the co-founder and CTO of Ramp. Karim is one of the greatest technical minds working in finance. I spend a lot of time talking to Karim and every single conversation centers around his obsession with crafting a high-quality product and using the latest technology to constantly create better experiences for his customers. Like Toby, Karim believes that nothing is ever good enough and it can always be improved. Karim is running one of the most talented technical teams in finance and they use rapid, relentless iteration to make their product better every day. So far this year, Ramp has shipped over 300 new features. Ramp is completely committed to using AI to make a better experience for their customers and to automate as much of your business's finances as possible. In fact, Karim just wrote this, "AI is all I think about these days. It is our duty to be first movers and push limits so we can make the greatest possible product experience for our customers." That sounds a lot like the approach Toby uses. Both Karim and Toby never rest on their laurels and use rapid iteration to invent new products for their customers. Many of the fastest growing and most innovative companies in the world are running their business on Ramp, including Shopify. Make sure you go to ramp.com to learn how they can help your business save time and money. Let AI chase your receipts and close your books so you can use your time and energy building great things for your customers because at the end of the day, that is what this is all about, building a product or service that makes someone else's life better. That is what I'm trying to do. That is what Toby has dedicated his life to doing and that is what Ramp has done, too. Get started today by going to ramp.com. So, now you have the executives. You're going through the most difficult point in your life.

Yeah. This is another thing why I think that decision you made six, seven years ago, however long it was, is why so many founders like study you, respect you, take pieces of like your philosophy as well cuz you're like, "God damn it, I'm just going to do this the way I want to do it."

Wait, so they can stay individual contributors?

No, it's not they're not boring to to me and to the people listening. Wait, why do you hate the way that they were doing compensation in the industry? What I love about entrepreneurship is is is the level of responsibility personal responsibility people take.

But what was going on in your head when it dropped by 80% though? Well, I'm like, well, but my head I'm relieved because I'm like, you know, I I mean I where where the stock was.

economics are amazing. However, like um at the I I don't I don't want to say this right but I honestly don't remember the exact numbers. Like at the high point of our stock price, I think we were trading at beyond 50x of revenue and stuff like this. I'm like, yeah, that's not exactly value investing here, right? Like guys [laughter] and so I get it like so But you weren't worried about the fundamentals of the business.

Okay. Right? Like it's my like my job. My my job is to build the best company I can. Um [snorts] the betting market says that I can deliver that kind of thing. I'm like, yeah, maybe but you got to give me a moment here. Like like I I need a moment here for for doing this, right? Like so I [snorts] I the reason I bring this up is cuz again, everything I talked another entrepreneur and I just run it through this whatever the hell's in my head from all these books. And when I hear you talk about that, I think of that the time when Amazon stock he took Bezos stock like this in the short term or something like that from like something like you know, 180 down to six or 120 down to six. And he's like, "Yeah, but they were they were focused on something else. I saw the actual fundamentals of the business and I was like this thing's going to work." And so eventually, I think Buffett always repeats that thing where like in the short term, the stock market's a voting machine and in the long term it's a weighing machine. You just want to build a heavy ass company. And he's like and and Jeff's like, "I'm building a very heavy company. Amazon will be a heavy company, so I'm not worried about this like short term drop by 80 or 90%." That really tracks. And so, but like one of the effects was um and this is right. Like well, people got stock options at Yeah.

When you started this, I'm going to do it my way. I'm working with the founder executive team. You were in the process of that and the stocks dropping.

[laughter]

Yeah. So, he's saying you should document it more.

So, I'm like, let's engineer company. Be a company engineer. That's what I tell my team. That applies for every single department in like do you engineer marketing? Do you engineer everything? I require my um uh executives to uh um I mean, at least tell me, but actually do it. Go to a podcast, some international conference and and and and and talk about how Shopify does the thing the conference is about differently and why that's better every year. If they don't have a good answer for how they were doing this right now or how they would That's That's what I'm working on with them to uh crystallize that message. And um um there's a couple of reasons why I do it this particular way um that we can get into um they're partly psychological, but like it's also just like

Literally affirmations work, right? Like affirmations work, which is the dumbest trick that that that works. I'm so glad you're saying this cuz people from the outside like this guy's like very logical engineering and but you're all about intuition and now you're talking about affirmations. You're speaking to the choir, just so you know.

Like I I know. Yes. And now you you love it?

What's the topic there? Hold on. You write messages to yourself?

I think trial and error, but like I think the hints are like everywhere, right? Like it's I mean, affirmations are one of those things that Like I mean, there's a reason why they like society co- creates rituals, right? Because rituals end up being largely affirmations uh on on repeat, right? So,

agree with that.

especially when we talk about podcasts, that makes sense. It's like Well, they have um It's funny, I looked at my end-of-year wrap on Spotify, and one of the podcasts I listened to the most, which was shocking to me, was they have the internal company history. It's called uh Spotify a product story. And it's because, you know, everybody else I think one of the reasons that uh we have a mutual friend, obviously, in Lulu, she's on your board, and the importance of telling your own story. Like, is it What I told We went to dinner the other night. I was like, "Lulu, what I love about you is like you're repackaging old ideas." Like, Napoleon told his own story, Julius Caesar told his own story. Like, they all these people did it. It's very valuable idea. And so, everybody was trying to tell the company history outside of the company. They're like, "No, you got all this other wrong. We're going to make it ourselves." And it's like a I think a 10-part uh podcast, but they they originally, I think they built it for themselves, and then they like published it.

Yeah. And they take it in chronological order. And so, like if like Sean Parker played a big role at the very beginning, right? He's obviously not there now, but he's on like episode one or two. And then they interview the people that made the decisions. And that's the whole point. Like, we were making Think about all the crazy … that you go from, you know, desktop to mobile, all the all the things they had to deal with. Well, just go listen to what the company did at the time. Executives and founders but not only what they did, why they did It's And the why is so much more interesting. Like, one of the Like, the term of Tobi said is real inside of Shopify, right? Like, it's like people just throw these things around. Like, "Well, Tobi said we're doing it this way." Right? Like, and I I I just like try to get people to like always ask when. When I said exactly. Do you change your mind all the time? Yeah, yeah. And this is not even I learn about this because something is like really really odd and like really odd decisions. Like, there was easier ways available. Like, how did we get to there? And it's like, "Well, it's like everyone said that you wanted it this way." And it's like I'm like, "The Under which context, when did I say this? Like, clearly we've never talked about this." So, it's like it's very common thing. So,

Yeah, yeah. It's like taking people back to major decisions. Are these short episodes? No. Like, initially I went through phases where I was sort of for the first maybe 50 episodes, we said like we we had a we we have to mix it down to 23 minutes because we calculated that that was the average com- commute in Shopify. Like, so we we we checked where everyone lived compared to the offices. We ran the data, and it was 23 minutes. And so, we made it 23 minutes because that seemed like as good We We needed a reason. And you like designing with constraints. You talk about this a lot. Exactly. So, so, you know, just like I Well, I also just don't like picking 20 minutes because it sounds good. Like, I want like I need a better reason. So, I I I might say I want something to be like 20 minutes sounds right, but let's find an actual good reason why it's 20 minutes. And then we found 23-minute reason. So, sometimes you're allowed to like just parallel construct the thing you want to do anyway. Then at some point we abandoned it because just like you know, the nice thing with podcasts is like people can skip, move. It doesn't matter. Like, you can just keep going for hours and hours. And uh Do you have any ones that are like long? I think there's one which we had to cut over a couple of episodes that ran like I think if you ran it for like five hours. It's like What was that one about? That was like the philosophy of engineering um with a bunch of our uh our distinguished engineers. Like, like how how You know, like it's you would not believe how immature engineering is as a discipline. Um

It's just like um there's so many good ideas and so many bad ideas, and it's so hard for people to sort through them in in a way that's like way harder than any other industry cuz it has a weird property Like, software has a weird property. Um I mean, the best thing and why the business model of software is so insane is because of zero marginal copying of software is free, right? Like, I It's like you can you know, you build Shopify, first person signs up, you make money, second person signs up, uses exactly the same thing. And it's like um you know, the second instance of it is not it's the same piece of software. So, um hence the margins of software are incredible. The same thing causes a lot of problems for the creation of software because you just don't know how much dead weight is in the system. If you compare this with um electrical engineering, there's a very clear cost of manufacturing, right? Like, the the bill of materials is like the thing that dominates the success of a product because it dominates then the cost, which then dominates the product market fit. Um it also manufacturability is uh a huge component in electrical engineering. It's like Is the Is the board laid out in such a way that it's prone to defects? Did you choose all the right components? Are they like Is like one chip get really hot next to a soldering thing? But like, you know, I remember the original Xbox desoldered itself if you just played certain games too long. So, you know, but there's real constraints like this. So, excellence is obvious in a way. It It is like in the numbers and everything. Everyone's trained on costing waste into the system. Software engineering just is throws away so much of the capability of these incredibly powerful machines um partly because it just doesn't cost anything. However, at a certain scale, it starts costing, but at this point it's being fixed by operations teams getting more servers rather than engineering teams going back to fixing those things. So, the um consequences of uh bad decisions in software engineering are next to reality that doesn't accrue back to the engineers who caused it in almost all in instances. So, it's like a little bit like a factory's polluting the environment. It's just like it doesn't cost back to them. And so, anyway, so therefore, it's a very tricky um industry to move forward. It actually quite often moves backwards significantly. Computers got much faster, and we threw a huge amount of capabilities away um making like these very very heavy client-side JavaScript applications that took over everything. They were just got awfully slow and very error-prone and took forever to load, especially in e-commerce where people vis- visit sites rarely. Some of our customers went out of business because they got talked They got talked themselves into their own stack. They had a CTO who brought in their own team. They used a set of technologies that they wanted to use because they are currently the in thing that that has the most interesting conferences and the most interesting places. Then uh they deploy it, and uh you know, like it sort of works and it in the demos, but the problem is when you're going to that site the first time, you have to load it all, and you don't have an up-to-date MacBook, perfect hardware with much memory like everyone has who's working on engineering teams. Uh you might have an Android device, and you might be on a train right now. You're sitting there a minute and a half for this thing for this online store to load. Guess what the conversion rate of that online store is. Zero. Yeah. I'm quite annoyed by this, although we uh that was a real real real real problem in 2023, especially when like I think a bunch of frankly, us you know, older engineers had to like take the kids to to the side and just like have a good conversation. And that was the con- That was the context of the episode of Context. At least that's what led to this particular thing. I don't know if he actually succeeded there, but like I think we didn't need to because I think uh Like, I think the world just changed. Like, moment zero zero interest rate phenomena uh they're they're they're gone. People actually wrote better code out of sudden. Like, it's it's like amazing how much Like, how consequential Like, the zero interest rate uh um absence of zero um percent interest rates actually ended up being. You could feel it in the engineering team being less prone to accepting random waste into their stacks. It's unbelievable. Oh, that's interesting. I don't know if I've ever heard anybody else make that point. I I think this idea of hearing directly from the founder in a audio way is underutilized. I did this episode on the founder of Kinko's. He was dyslexic, okay? Yeah. So, So am I. Yeah, I heard. Which surprised me. Um so, he Actually, a lot of great founders are dyslexic.

Yeah. And so, he what he would do, this is back in the day, he would call into a corporate voicemail. And so, he at the end of day, he'd give like a 3-minute update about all the good ideas that he saw.

voicemail. I love it. And then he he this is an interesting thing that you might agree with though. They after doing this a while, he's like, "You're resurfacing all these great ideas, right? This guy in Memphis found the best way to do X. Yeah. Why don't you mandate that everybody in the company does X, this guy's way?" He goes, "Because if I do that, that's the best way it will ever be." Mhm. Which kind of relates to what you just said. He's like, "Listen, there's a [clears throat] probably a hundred different good ideas, or right ideas. And if I stop here and don't keep tinkering, going back to that word that you like, then that's the best it will ever be." If you need something and you tell people what to do, uh you might get it, or you will probably will get it. If you don't tell them what to do, you might get something you cannot possibly imagine if you have good people. And so, this is like actually a really really important thing. It's much more important to create an environment uh in which people can um be their most excellent self, uh it is to uh prescribe here's the precise um uh moves to do. So, how do you create an environment that people can be the best version of the excellent version of themselves? Or did you say is this related to your idea where you're like, you said something that made me chuckle. You're like, "I don't do corporate baby proofing." Yeah. [laughter] Yeah, exactly. Like I mean, exactly. I I absolutely, it's the same idea. Like the baby proofing thing is real. Like what's what is internal uh uh policies, right? Like processes. What are what are they? Um they are like, "Do this thing different from the way your intuition tells you to." Um Okay, why are you wanting people people to behave differently from their intuition? Like like let's let's look at our higher order bits there. It's like like what other op- opportunities do you have? Well, you could change environment such a way that doing the right thing is intuitive. All right, that's that's pretty good because now you don't have to post the policy. Um you could also um you know, hire the people who who whose intuition is uh better honed. They often policies and processes are um sort of downside protection. Um um you're trying to make hard to make um uh to to avoid the people who do things wrong to be of uh you know, causing so much damage. That's like like the you know, downside protection. But you're also really limiting what the best people can do, right? So, I think in creating something like an environment almost as a box for people. Like here's the space, and I want you to fall like inside of the space is um this problem I need you to solve. Right now, my world in Commerce world is attempting to figure out what generative commerce is, how it works, how the all the companies are working together, like how you have the research labs work with everyone else, how to expose product catalogs for my entrepreneurs, how to make sure that transactions can be uh met, what the um uh large language models need um in terms of information to, you know, do a fantastic job as a uh when when people ask them to be their personal shoppers. Um You know, that's a box. Like inside of this somewhere, somewhere in it, it's all dark, um is the most beautiful solution. Um What tools do we have to explore this box? It's like dark. Like I I don't know. I I can take a stab at it and paint a picture of what I think is good, but that's just like sending people into the room with a couple of tools. Afterwards, they need to make their own decisions, and I want want them to do this. Like I'm not there. I don't want to like control every decision. The company makes millions of decisions every day, right? Like in in a building like this, right? But what I can make a decision of like this like help them um really want to be on this journey. Help them fall in love with a problem and see the potential. And um I can make sure it's the right team, and everyone has the right skills. And I can make sure that um um that uh they know what they have decision power over, and like how to um at some point uh because, you know, people are only willing to take so much risk. Um how to transfer that risk to me, ideally. Uh or to a company, right? In in the form of our projects work in phases. A prototype phase is what I just described, um where you explore the problem. Uh then you think of I like when you've learned what you need to learn and think you have something that you can uh build, um you make a proposal, and you transition out of the prototyping phase. That's a meeting, right? Like that's a you know, that's what we call like it's it's a phase transition in our in our project system. Um there's software that manages all this kind of thing. Uh they can use my AI to preview what the what what the um uh transition will like be like because it's trained on all the other reviews I've ever done. Um so, they can sort of mock do it, um and figure out what they will probably say. Um that saves me a lot of time. And then we have actual um uh meeting. And

um you know, then they tell me what they're planning to do, what they've learned, that helps me a lot. And then I say, "Okay, uh okay to transition." Um yes. Some engineering leads, design leads give a okay one. I give okay two, um and then they are in a build phase, and then a new phase starts. That's a new box. They have they have uh agency to make decisions in there. At this point, I assume the risk. This is it's like a trade off um a accountability um for autonomy. And so, um that's how we found we can almost operationalize this this um system. Uh because what I'm finding is like um I mean, all the biographies you you you read, what you find is uh I'm sure is that the moment of insight, the often the product that made the that started all, or the artworks um that uh are defining the careers, um they were not really coming out of an office building environment, right? Where someone had OKRs, but of a precise metric to hit, and then like Da Vinci probably did not have um uh one Vitruvian Man as an OKR given to him, right? Like it's like you you kind of have to create an like a box for them sometimes, a physical space as well. Um like he he was in an attic, but just ended up being where he did most of his creative work at uh to I believe. And um so, you try to figure out what is this sort of environment in which uh where excellence um uh and creativity can come together. Um and then collapse it to saying, "Okay, now the company needs what it needs because we need to make resource allocation decisions. I mean, you bring more people onto a project at this point." There's a couple of sort of things that need to be decided, and then autonomy is regained um uh until the uh next phase is releasing, um at which point we do that review. And sometimes we say, "Okay, we we're not ready to transition because we need some things we need to do differently." Um but that's the way Shopify orchestrates now. These are all things that exist today based on the days during COVID where I reviewed every project in current. And like well, what should I be able to do if I would be like if I would be a competent CEO, what would I have put in place so I could do this thing I need to do here in the beginning of COVID very very quickly? Given that I wasn't, and now I aspire to be, what needs to be created? And so, like what I would answer to that is uh we worked hard on it. We I think we just discovered some extraordinarily powerful uh systems, mechanisms in in in this sort of journey. That was the prompt. Like what would a competent CEO do in this situation? I love to take the view that like I'm a um um corporate raider. And uh um Shopify went bankrupt, and I bought it on a fire sale, and I I'm like marching in on day one here, and previous management was crazy, and um we need to turn this place around, right? Like that's my favorite. Like this is my I I I love playing this game every uh like year. Um figure out what I would do differently, and then like it's like, "Let's go." I I I have my to do list. And um I ask a lot of teams to do this a lot. Like it's like when when we have systems that just don't work. Um One of the most powerful, you know, maybe before affirmations made for its parents things you can do, is just don't be prideful about the prior work too much. It's a lot You're allowed to have pride in it, but like you want to wake up better every day, right? You want tomorrow's version to be better than today. And for that, you have to kind of downgrade what's there. Like you can't like the sunk cost fallacy is so powerful. But how's that an affirmation? Like how does that represent Like how do you when you're actually talking to yourself, or you're writing this down, or this is your inner monologue?

Mhm. Look, nostalgia um was put on death certificates in the 1800s, right? Like it's like it's people died of nostalgia in their minds. I mean, they really died of something else, but like I've never heard that before.

[laughter]

separate yourself cuz that was your decision. You might be like, "Oh, well, like I feel a little sensitive about that." It's like, "No, no, this that was somebody else's. This is a new company now." So one of the things that is unpopular that I when I do it inside of a company is like I really … talk the past. Especially if I did it. You know, like you know, there's still like systems that I built inside of the system. So I like I You … talk the past publicly?

It's almost like distancing yourself. I need to help people not think that what I'm doing is I'm passing judgment on their prior work because I'm not. We're all to like expect everyone

They need to disconnect from like the work is collected is the moment the pull request is accepted or okay to is accepted. You've converted like your craft into something the company is like is in the company's commons. It's a company is a collaborative project where everyone contributes and there's a process by which it's contributed at which point the company accepts it as being on quality and [snorts] says like this is now part of you know like my like the company's embodiment essentially. So the product you've contributed it. You can um you deserve the credit for this and and so on. But the company could have had someone improve it at any point of time. But it's not yours. It's like we don't allow people to use word ownership over parts of the code base or so. We only allow stewardship as a work like just as a as a proxy term because sometimes you need to be able to talk about it. In this way it the company thinks of it that more like an open source project. You're contributing into the commons. People talk about Wikipedia not about the particular editor of a Wikipedia page. You know what I'm saying? I have a selfish question before we move on. So you're looking at all past work. You have this guy named David Ogilvy who's one of the greatest advertising agency founders. He says that we have a divine discontent with our work. It's a perfect antidote to smugness. Right? Cuz he's like you don't want to rest on your laurels. I talked to James Dyson about this though because he has a very interesting organizing principle. So we're going to take this cup right here. This is a product. He goes, "This is organize this entire life." He's been an inventor and engineer for 55 years now. He's just like I see this product and I say ask myself, "How can this product be better?" Then I make it better. And then I put it down. And then I short time after I pick it back up. "How can this product be better?" I make it better. I put it back down. And he goes he just he goes, "I see the bad in everything but the interesting part is he's intellectually and emotionally mature enough." He goes, "You have to understand. It doesn't like I'm not a miserable person. I just look at it as like this is a problem. That problem is an opportunity and I want to work on that." What is your inner monologue when you're critiquing your past work? Are you harsh on yourself? Yeah, no no, I I get excited by by by finding problems. Like I I just like I love like I mean look at this point I'm such a long term veteran of of tech company building. I love figuring out what we're bad at stuff because like we have a pretty good thing going on. Like like all all intents and purposes this thing is working. Right? So and you know, when when when I figure out what like we're actually bad at something I'm like, "Holy … Like I'm an obvious blueprint for now how to become a better company now which is like actually my job my craft. Right? Like this is all opportunities. Things go into commons. They are being hopefully judged by everyone. I get grumpy when things that are shitty are not identified as such and improved and then I make people go do it and sometimes I do it by um uh trying to create um energy by just like roasting the thing's current state of what it's like I want I want people to feel no deference to it. I don't want people to respect the piece of code that exists and that or system that I want them to improve. Um and I want people to um um you know, just find their sort of energy source because I what I'm asking them is like go into the particular box that contains this problem and do the best possible better than anything I could possibly ask you right now for solving it because I expect people to um be highly agentic and you know, fall in love with problems and just like find better solutions than what you know, industry usually produces and so on. Right? That's my entire point. It's unpopular when people aren't in the right head space for it and it's incredibly effective if they are. So um the difference very often is just a couple of words. Um and a bit of framing and uh I just find that's like that's one of the most powerful sort of tools you pick up I think along um uh you know, along the the journey. It's like the five words to say at the beginning of sentence will change everything. Um And my co-founder actually gave me one of those very early which was like probably why I turned into this kind of thinking and this collecting these kind of things because

Again, becoming something else. It's like we don't want to uh like a lot of people avoid when they're a public company they're going to be different because like people sort of expect um public companies to be a certain way. At least the people who worked at Shopify did. I felt it was important to be different and do things differently. One thing we did, I think you will appreciate this, is um you know, we looked at the requirements. Um we talked about Formula One. Formula One's fun. It's Sorry, it was a little bit of a veer, but like Formula One I love because it's like there's a rule book. It's the opposite of every other rule book on planet Earth. People read it so that they can comply. The Formula One rule book is a rule book that is read so that you figure out how to beat it. It's it's like it There's no engineer in Formula One has anything to do with with a central casting engineer. Central casting engineers actually usually wants to get requirements and then comply to to them. They're like the people going to Formula One are the people who want to beat the system, right? Like this is um very important uh to them. So I I I I um uh count myself as [clears throat] uh of the archetype of the ladder. Like like the group of like I I would have liked being an engineer in Formula One. I I like beating the systems that that I'm uh that other people tell me to abide by. I heard a story one time that somebody had hacked your compensation system uh to get more money than, you know, essentially they just read the rule book, found this loophole, and you're like, good for that person. Like and then you'll fix the loophole or whatever the case is, but like that's exactly the kind of person I want working for me.

Not their fault for taking advantage of it, but really appreciate if you give me a heads up. Like so because we are still same team here. So like you know, may maybe you raise your hand at some point saying this is fine. Yeah, not like 10 years later after I, you know. So back to the IPO just like in the IPO we just looked for ways how to like within the very constrained rules by the SEC, where we do we have agency where we can do different things. We sort of honed in on the IPO roadshow video. Like It's like a horrible video player the IPO roadshow website is like an uh like and every other IPO we could find was just um you know, CEO standing in front of uh um a screen, camcorder, and uh just like going through the same slides. We're like, there's no rule for that. Let's do a … documentary here. Like let's like let's let's go through the history of why this company exists and why it's important. And he said like, what video can be put onto this space where no one expects it that will somehow hook people in to full screen the video within uh the first 20 seconds and actually watch the entire thing. And we we heard so much about this on the road. Like so many people were like, I always look forward to meeting you. What you guys did with this video was insane. I didn't even know you could do this. Every video every IPO after this was like always a little bit of like a nice little moment of put putting a bit of uh like agency into the process which was pretty uh I I heard this um this story one time. I think it was the like the founder of Sirius XM. I forgot who the person is, but they were like, well, how do you make annual reports? And there and there's like no rules around it. So you have to present certain information. So so they made a book. And like the book would be illustrated. And she's like, no one said we couldn't do it. It's like we're just going to do it our own way. Let me ask you a question though cuz um I I think I heard you say this as well. You you were getting what you felt was bad advice or incomplete advice or maybe advice not from first principles about like whether to go public or not. Or they say some people were saying stay private exactly. So yeah, yeah, I I get you. The advice was always like don't. Right? Like it's like um Who was telling you this? Other founders?

I think people are reflexively scared of change, too. They'd rather be in a bored boring or like even miserable environment than actually change cuz there's the fear of change is so great. So wait, so people are telling you So don't don't stay private longer. Like like you being private is better. Like friends of mine like at, you know, Stripe uh running this experiment like they managed to avoid what they put off in terms of figuring out how to stay private for such a long time is actually remarkable. I just think they spend a lot of time figuring out how to um stay private. And like I don't think that's the most valuable way to spend time. Right? Like it's like I think you So you went public 2015? Yeah. What were the arguments for staying private longer in 2013 2014 when you're having these discussions? We were tiny. We had um like 800 people. We're Canadian. So they're saying you couldn't I mean you. Yeah, like I I mean, when Shopify's first trades happened at I think a billion 1.5 billion dollar valuation. Right? Like so That's pretty wild that, you know, the public market almost got like venture could have got venture if you bought Shopify. Yeah, essentially had venture returns in the public market.

Yeah, of course. I mean ultimately, I really really believe in the sort of stoic maybe uh uh Adlerian uh idea of separation of tasks. Um what have I control over um and what I don't. I I always love uh um particular formulation about um uh thinking about how other people think about you. Like again, you need to make yourself a person worthy of being liked. If someone then dislikes you, that's up to them. It's not It's not your job to make people like you. It's your job to be likable. And if they make a category mistake, it's their own … problem. Right? So it's a really really freeing way to think about it. Talent. I um my job is to make a company worthy for the best and brightest work for. Like um this is the part everyone skips. Everyone's like oh we need to hire better better recruiting team. Well, maybe you need to also just like uh be worthy of the talent that you would like to have. Um so I mean this goes from like uh office space if if you have any to uh company uh like the amount of … people have to deal with to how much um uh you know, uh … politics can you subtract from the whole thing? Um and can you large company feel like a small company with lots of resources and lots of impact? Um you know, it's more fun to ship software to millions of people that you really respect than to uh um a few people who you then try to uh make a sale for at some point. Or like it's just like it's like you know, impact matters. In a way this like you got to be misquoted, but I think the talent eventually makes takes care of itself. There are not that many good companies to work for. There are not many companies that that many good companies that deserve um uh the attention of people who can be of by by by the most capable people um because they have a lot of options to start their own companies.

Yeah. It like again in in your you you should uh hit like take pride in your work um um uh like in in in the inputs and how you like did you accomplish the things you set out for in the aggregate? Right? Like um like be easy on the path, but like like the outcome does should matter to you. And like man, I just shake my head sometimes with like how people overcomplicate these things. It's just like it's kind of Man, people know what they're looking for. Right? Like and and some you know, I'm talking about very very very fortunate people here. Like people who have a lot of choices, who have like incredible competency and uh in in some of the rarest skills. And like a like combining this with enormous drive. Like it's like it's sort of you like there's like like a couple of attributes that all have to come together to um be one of those people who can command like a hundreds of thousands, millions of dollars of uh um compensation packages you can make in in in in in this industry but partly because you're worth it. Right? Like you're you're contributing more than that to a mission uh um like this and therefore you can command this kind of um uh compensation. And that's like the way it's all fits together. I think of everyone as an entrepreneur, really. Your capabilities, that you are an entrepreneur of your own work output. Your product is what you can do and what you can accomplish. Um your market is the companies that exist and um um you are selling a uh exclusive subscription um in a that's the institution of employment, right? It's a it's a two-sided um opt-in relationship. Whenever people come to me and saying, "Hey, how do I earn more money?" It's like, well, be too good to ignore when we increase compensation. You know, like it's like uh you know, like like be better. You you're making this amount. You would like to make this amount. In which way have you become um so good that you can add that amount of increase to, you know, just like the the the collaborative project we all working on. And so, I think that's just sort of clarified and simplifies things, right? So, um I I mean, all this said, I don't want to sound it like it make it sound like it's inevitable, but if you just do all the right things, you end up like you there's obviously information gap and reputation lag and um uh I'm I'm out there recruiting and telling people about the company um uh a lot. What helps me a lot is people are curious about the company and I've heard about the company and so on now. Like that's uh that is because of things that um uh were under my control. I tell people that it's an unshared attention company. Um there's no part-time jobs. You will have to put a lot into it. You're going to get even more out of it. You will even make great money, but we'll we'll we'll attempt to never be the highest uh compensation play um um bit. Um because we have found that the people who optimize for that above all else actually don't do well at the company um cuz Shopify is a mission-driven company.

Mhm. Spikiness. Spikiness. So, a lot of people a lot of big corporations, they want you like well-rounded. Like, no, no, this guy might be bipolar alcoholic or this guy might, you know, have some other might not shower. Yeah. Yeah. Yeah.

100% okay. It's like exactly it's it's like we never look at the credentials and stuff like this. I I again, I'm a high school dropout. It would be like rich if I would start making everyone want to have PhD. Um the path by which we do it is we we we go for a life story. We we ask you like, "Hey, give us your story." And this is a very important ingredient in our hiring process. And what we're really looking for is like high agency experience. We look at like something went wrong in your um in in in these story at some point. Well, now let's zoom in. How do you react? Give me minute by minute. This is what we learned now, right? Because a lot of us are entrepreneurs. Even everyone like I I talked about the founders of companies you purchased, but like most of the people just in general in Shopify are entrepreneurs. Many started Shopify stores, built a business, and then fell in love with the company and applied for a job and got a million. That's like so this is um there's a huge amount of building company building background. And we want to be surrounded by people we admire. That's I think the biggest product any company can deliver to their employees is so is that every day they're surrounded by people they deeply admire and can learn from. I think so. It's a very important part of this. So, lots [snorts] of entrepreneurship uh lots of entrepreneurial impulses um and then so we look for this uh high agency behavior um and um then um uh you know, obviously did you drive a particular craft uh that that that you you're applying for to to excellence? How do you think about this kind of thing? Can you just sort of talk about excellence or actually perform it? And then um you know, this is really what we fill our buildings with. And uh you know, just like again, create the space then and let them be creative in this stuff. This is how it always worked and it's it's it's worked really really well. We couldn't do anything other than this in the beginning, right? Like in the beginning, we had no money. Like not zero, like really zero. Um I didn't take a salary for like four years. Um I heard your father-in-law covered your payroll when you couldn't make it. That's right. Um so, yeah, we were living with uh my parents-in-law um Fiona, my wife's uh old childhood bedroom. Uh from which I also had I put put a IKEA desk and I built a lot of Shopify from there. Um and uh you know, like I mean, just kept costs low. That that was the main thing. Um make every dollar count is something that's I'm so glad. Like this is what I worry sometimes with all these really really big seed rounds. Like like money with mainly money to us is that uh gets you I mean, it it sometimes it reveals, but usually it just like makes you get a whole lot more of what you got before. Um and um people did raise early partly because they were not tight with money. When you get a whole lot more tight not tight with moneyness um at larger scale, it gets really really bad. You're making my heart sing because I feel like I'm like an on an island by myself about this cuz I've spent 10 years reading 410 of these biographies. All of them control their costs like crazy. They'll tell you over again constraints are your best friend. And then I talked to these young founders. I I I usually don't meet start founders cuz I'm an investor, but a good friend of mine is like, "Hey, meet this kid meet this young kid." Uh I met him and one of the things he was talking about was like, "Yeah, let me show you pictures of like this beautiful office we're moving into." And he was showing me everything. And I was like, "This is stupid. Like you haven't done anything. You don't deserve this." And I go, "Go look at like what where did like Apple start? Look at Microsoft. Microsoft started where? In a strip mall in Albuquerque, New Mexico.

Yeah. Like maybe we should repeat that over and over again. Like just go look at where these companies were where You mentioned the Larry Ellison episode I did earlier. Like they were in a shitty office building.

Like and like I think they had three uh like three separate rooms. Oracle. That's where Oracle started. I think um I mean, there's a well-documented uh effect of when companies build monuments to themselves, they usually decline right after, right? Like so, um but that's uh has a long running history in business history. Um I do think there's an like I I I do think that um companies underinvested into office space um for a very long time and it actually was a mistake. Uh I think I think space around us is actually extremely important, but it doesn't need to be expensive. Like like um uh that's probably an aside, but like

But inexpensively. But like you need to figure out how to make this cheap, right? Like so, um man, I mean, we built a bunch of offices in a row uh and they are obviously insanely good at this. I'm years in into Shopify. This is like 2000 I think 10 was the first one of the six six years in five years and four years after Shopify launched. We went out of like sort of above a coffee shop which was like really nothing to to our first office. So how do you do this? They like he said like first of all the economy is wrong. It's not between open office and like closed office spaces. There's like perfect midpoint. Because and and it has to come from your strategy of product. Shopify loves the five-person team. We increase to eight sometimes but we think the the best team size is one because like a single offer can do things that is impossible to do for teams and hit high notes that are unreachable. But I think play off has rather played the field of what can be done as solo projects actually changing again because of AI but like which is very exciting bit but like um most projects we're doing need to be done in teams. Then there's a magic number at five is sort of what the military ends up like figuring out to they they test these things and come to the same conclusions. You can sort of temporary go up but then at some point you have to split teams and parcel out the tasks. Each of these gradations is like a figure 10x loss of productivity. So Shopify is like of all like R&D team is in Toronto thousand people it's really lots and lots and lots of small teams. Um And this is also why we need this legibility coordination layer that I talked about earlier. Okay. So pods. Um They have figured out how to make pods that are like exactly they are private enough while being open enough and never make the office feel dead but they also draw you around. It's like what's a pod? What does that mean? It's just like a it's a room that just like sets up to like when you put the seventh person in you it's uncomfortable. Like it's like again, think about how much policy you don't have to post and if environment just makes you do the obvious thing. You can play that uncomfortable to too many people in this area. Like when you when you know what you're doing now you don't need to post a policy about how many people you want in a pod. And people self-organize into five people teams because that's the most comfortable thing to put in a pod. So um not meeting rooms and meeting rooms going to metal on unlimited floor space because you don't want people to spend all day in meetings and then get out of the dark rooms. We put like everyone sits around the windows in in pods and they are like structured in such a way that you know it all works. The coffee area is on the other side to create serendipity. We cut through every floor eventually to create stairs that move teams in such a way that certain teams that have to work together but work on infrastructure separated them out in floors so that they going to each other would run into other people who are using the infrastructure to you know and so on and so on and so on. So design being super conscientious about this is really important. Daniel did an amazing job. We we I think we open sourced the floor plans and I think lots of lots of modern like This is not interesting anymore when you look at what they look like because I think that work has gotten absorbed into the tech industry as a right midpoint. And but many people um cargo culted rather they just Xerox copied it essentially instead of understanding so they make pods too big or whatever. Look you know these kind of things. We caught them cargo culting a few times. You observe that behavior in other companies. I'm curious what internally you have caught your own company cargo culting. Oh we actually um we are in the Toronto office here. Um uh The Toronto office actually has a few floors that are clearly um mimicry of these ideas that they all figured out but are not they don't understand where where it is coming from. Like again pods too big is it is it's like more um the nice meeting room is right at the on the window has has lots of light. You know just like again maybe this is okay to have a view but like I went with the teams through it because we then changed some of the floor plans after we moved in and realized like holy … this is like oh Norman doors everywhere. … that's the craziest thing. I I fundamentally allergic to Norman doors. What's that? Doors but you push then And can't [clears throat] tell.

Yes. Wow. Yeah. Um Yeah of course. Um Yeah. I mean because product is not a thing. Product is an abstraction. Product is a name but like a handle that you put on some on some totality of a body of work. From the perspective of people creating product product doesn't exist. It's what other people call your work. A product is just details. It's minutes minutes and little details that are appreciated if they compose right and make a bloody mess if they don't right so from the inside perspective you have to sweat all the details. The way you do anything is how you do everything and that is absolutely down to the floor plans and you know the ambient noise levels and so on. Just like you go in a room that's like that like silent. It's like it's just like you you you notice when you're talking while going to a meeting room. Um at least on the floors we fixed based on previous specs. Um It's kind of uncomfortable talking hallway because so ugly and you walk in a meeting room and immediately like it's just a different noise level because it's just like diffuse we have an enormous amount of like in fact we actually worked with companies on Shopify to create their products of sound dampening that are now really really like supply all companies tech companies it's really fun. And so in fact like everything in our offices is from Shopify stores right because again like if if if anything we are doing is not mission aligned we just didn't align to the mission axiomatically so you know just you you can go pretty far in these kind of things. When you need something for office spaces and it's not on Shopify we usually put a call out for someone to start that thing so it's on Shopify and we help them get started and build the thing and then we can maintain our 100% Shopify record. That's also fun. That's incredible.

good way to get a customer.

[laughter]

Starcraft.

I completely agree. So, like So, again, this is like man the world has such a weird way of like um somehow changing itself around me to make the stuff that I thought was uh uh irrelevant relevant so is late in life. It's like absolutely amazing. Um it's just like okay. So, so video games. Video games are best thought I mean this depends on very much on the video game. But in the aggregate they often say the good video games are simulations. They are a world upon itself and you are an an high agency actor and you modify things. You you you take you perform actions. Um you make decisions and then the game rearranges itself giving you a feedback loop of usually a very quick feedback loop because otherwise it's un fun. Um but it it you you learn about consequences of your actions. So, like um uh competitive multiplayer games are they obvious they are and and Starcraft and strategy games they they're not that popular as a category of games anymore. But like um you know, when I was going through my teens in the '90s like Starcraft was the biggest uh game. And um you know, I loved it because it was really really hard. It was like easy to learn how to master which is exactly I think the a hallmark of everything that's worth doing. Motorsports for for um kind of like for my for my hobbies tennis all all these things are like this. But like it specifically is like honest in a way that like there's like two people on a map mirrored. Everyone has the same potential every single game. Um and one person wins at the end. Right? Like it's it's like it is it's unconditionally it's a game of imperfect information. Um it's uh not like chess. You don't see the moves. Um you see only some information that like in fact you have to invest you have to use one of the things that could get you resources instead to go to the enemy base to figure out what he's building. And then you need to interpret this. So, all these kind of things is like what you're learning in this game is uh information is everything. Every like there's no right decision there's only context in which decisions could turn out to be correct. And um while resource management is extremely important um you have to understand that resource management is not just quantifiables. It's not just minerals and gas and gas that you have to manage which allows you to build units. It's also your attention. And frankly attacking other people's attention is much more profitable very often in in a game of Starcraft than it is um to actually attack the base because if you overtax their ability to pay attention to things they will make mistakes. How do you overtax their ability to pay attention to things? You can do an early attack. You can do any number of things. Especially if you play against the same person and then when you get up to a very high level you will play with the same people over and over again and they get a sense for how you play. So um at that moment like there's always been the people who are just like incredibly prepared. Right? Like they just like they they they perfected playing a single way which my play was always different. Chess Starcraft are the same. Like I I disrupt other person's play. Like I I do moves that aren't in books. Right? Which are they're not in books because they're not good. But other people can't deal with it because they need the preparation. That's like their their their skill set is um their ability to play chess is uh the crystallized intelligence not the fluid intelligence to deal to roll with the punches. And so um um you know, like I I learned a lot about myself doing this. Um but I also learned about a lot about um you know, how do you like you know, just like how to approach um uh a game. Like how do you how do you get better? How do you how do you get more out of every game you play? Because like I I never ever in my life had as much time as some other people could uh to invest in something like this. So, I always had to like how can I get more uh skill progress units out of out of the time I have than other people out of less constrained uh kind of like I'm talking very fondly of Starcraft. It might just have been oddly the right teacher for me at that moment when the student was ready. Um and um so, I could have maybe learned the same lessons from any number of things. But I think it was specifically good because um of it being a simulation. You start a new game. It had skill-based match making things so you should play against other people of your skill set um based on you know, Elo rating. Um uh and um so, you had a very very clear sense if you started winning more games than you lost that means you were progressing. Yeah, if you started losing more games if you were regressing in an on an absolute scale compared to all other players in the world. And um I think that was perfect little sandbox to explore how to um um you know think about when it's time to build infrastructure, when it's time to invest in resources, when it's time to prepare, when it's time to reveal your hand, when it's not time to reveal your hand and um um I think it was perfect for perfect place to spend time for me in my teenagers years forget what I did afterwards. So, um back to your AI question. I just find that looking with uh uh AI like agents especially like I mean we are recording this this is like week three of um 2026. Um if you would have recorded this in week 52 of 2025 um uh it would even be different. Right? Like I might not even make this analogy so strongly. But that's how much is happening that the world changes every three weeks right now. Um if you figured out some new harnesses for agentic loops that are much more autonomous and frankly supported by models which didn't exist at the beginning of December even um that uh can perform at this level. And so, I look at my computer and I'm like six different agents going all coordinating between them. They send emails to each other which I think is hilarious. Um um and so uh you know, I just like I'm like man this like is starting to really look Starcraft. My attention is paid like this one is currently working on a module for what I really really need. So, I'm zooming in paying attention doing a little bit of micro giving a little bit of extra um double check sort um the output of the critic which looks at all of them all the time to figure out if they're still on task. It's exact same thing. Right? Like it's like it it it is a fascinating time. It's just like I I can't describe how fast progress is right now. I just like you know, what I tell my team uh it's like you know, 21 years now starting companies is really really really hard. Um right? So, so first years let's like just like it that's interesting and everything's urgent because like you're getting to the margin. I think I got like within a week of running out of money so many times and you need to get a bailout many times it was like just like it it like the clearance of the one time try hurdles which are friend to was like millimeters at times. Like there's so like I bet you if you rerun the first six years simulation 10,000 times you would not succeed in most of them. Right? So, like like in in a way like luck is a big component timing all these kind of things people luck especially. After that you know, IPO you think that's probably the most interesting thing period of the company. I think it was hard. And maybe not terribly interesting. Right? Like it's financing event at the end of the day. But maybe with some some aspects were interesting like figuring but like they were aspects of how we make it our own as a process. Like that that that probably this is why I did it is why we made changes of to the process or why we wanted to have our own stamp on it because I didn't want to join someone else's process. I wanted to have it my own. Then there's COVID which was um very very hard definitely not interesting actually … annoying mostly. Um and um so, I'm like just trying to figure out like 2026 man this is going to be hard and interesting. Those are the things you're most attracted to. Hard and interesting.

And people were just like this is ridiculous. There was like some pushback and now to your point about how fast everything moving it's like of course you would. Yeah, exactly. People will look at that memo in two years and just he didn't say anything. It's like saying the sky is blue.

But it's also your form of entrepreneurship. I was reading I never read comments of podcasts and YouTube videos. I highly recommend you get that. But people were saying like this is like one of the good entrepreneurs. This is like what you're building and the other entrepreneurs you're trying to to enable. It's not like the crony capitalistic. There's like a lot of like dirty part I'm as capitalist as they as they come. So I understood what that that comment meant. Uh out of every single note that I took from all the talks that I've I've seen you give before, the one that was at the top of my list is exactly how I feel about what I'm trying to do. And you said focus on craft and giving a … And you said it doesn't matter that a bunch of this stuff isn't quantifiable. It's exactly how I feel.

I tell you one thing. I just I I because I'm I'm not sure if I maybe I've shared this publicly because like I think you were going to get more mileage out of this than anyone else. The um when we did surveys with our customers um about like because we wanted to like like I mean, we need to identify where our customers what they do what they read, these kind of things. What we have found, this is long time ago before your podcast existed, it was like almost 80% or 70 high 70s percent people check the box saying they have someone who if they sent a entrepreneurial question to would respond to the email in 24 hours. Um and I initially thought that was um insanely cool how many people have such a resource. It's not like it in the general population though, right? And eventually I um clued in. I think I was probably on Wikipedia I read about survivor bias um um survivorship bias. And then I realized, … the reason why they are my customers is because they have someone who responds to these questions in 24 hours. It's the other way around. It's causal. Um uh and um the concept of entrepreneurship is so underexposed and underexplained. It's sort of got better in the 10 years 15 years since we surveyed. But, I think I I love what you're doing because you're just bringing this concept like you you you you're rolling this out for people to introspect like an entire life story of entrepreneurship, giving people the thing that is implied by the question is like "Do you have any exposure to a world of entrepreneurship in some way that you actually know what you're what you're signing up for?" Cuz the people who don't know it exist, people have no relation to it, or the people who don't happen to have someone in the family or friends who have at some point started anything, well, they just won't try. It's not part of their toolbox. And just making putting this part into people more people's toolboxes cuz it's going to be so load-bearing because I think actually in this world of AI, there's going to be disruption and so many more people than people believe have a plan B with entrepreneurship. And I think we can I think making things will be much simpler in the world of just-in-time manufacturing and 3D printing and additive and raising printing and all these kind of like products just humanoid robotics, Dreadnought, lights-off factories making anything on demand and 3D printers in every home or at least very very commonly at homes now. Um You know, in that world, um more people will realize and working with AIs about learning the skills of figuring out how to make the better cup. Um and how to design a better version and not having a normal door. It's capitalism the best parts. And um uh I think it would be much more common and much more uh exciting. And I I I just like it's so fun to work on. And like in that way, like you and I are working on the same project, which I think is super super cool, right? Like, it's like the because the information gap is getting the stories out, telling people what's possible and and and is so important for people to then try and hopefully then they might use Overfy and then hopefully we can push them behind. I love that. Appreciate you saying it. Appreciate the time. Thank you so much, Toby. Awesome, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast Founders. For almost a decade, I have obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.