Tobi Lütke on Building Shopify, Video Games, and Mental Models

things going wrong is not actually this rare thing that but it's actually something too it's not in everything that just does not cure every day [Music] hello and welcome i'm shane parish and this is the knowledge project a podcast exploring the ideas methods and mental models that help you learn from the best of what other people have already figured out to learn more about the show access show notes or see previous guests go to FS blog

slash podcast my guest today is toby loop k co-founder and CEO of Shopify the marquee shopping cart system of the e-commerce industry like me Toby's based in Ottawa Canada and while we had a lot of mutual friends we had never met in person before recording this interview as you'll soon discover Toby's incredibly well thought out on a wide range of subjects this in-depth conversation covers a lot of ground everything from growing and scaling Shopify to the

trust battery and other useful mental models heck we even talked about playing video games and how that helped prepare him to run one of the largest technology companies in the world I hope you enjoy this conversation as much as I did before we get started here's a quick word from our sponsor Farm Street is sponsored by metal lab for a decade metal lab has helped some of the world's top companies and entrepreneurs build products that millions

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out at meta lab co that's metal ab co and when you get in touch tell them Shane sent you Toby welcome to the show thanks so much for having me I thought we'd start with video games I've been reading your Twitter feed and it seems like you have some strong opinions on videogames not only from why it's unfair to see them as a waste of time but right up in to how they helped you run and

scale an organization like Shopify let's unpack this can you expand on these thoughts yeah that's so funny because I'm pretty open about I mean just playing video games a lot I play B you get some like my kids I I like a lot of people know my opinion that their sort of their role in people's lives is sort of misunderstood um you know so I get in these conversations their parents ask me you know like hey

you know my son's like playing this video game the entire time and how should put constraints on this and all these kind of things usually because like every one of us ends up coming into these conversations they apologetically that's like almost like hey I as a parent lost control and now I need to course-correct so I'm always frustrated with this you know because I I you know like obviously you can have too much of a good

thing but like there's a weird way that people perceive video games and in society which is not true about so many other things right so for instance if the same parents come to me and saying hey Mike my son is playing chess all day you know like like wouldn't I mean it was never happened right it's like Jessa's everyone understands hey you learn chess but obviously if it's not terribly relevant the the skill of chess outside

of wanting to have a good time playing board games of friends but people understand that there's all these other benefits that come from developing this kind of skill read so I was frustrated I put on Twitter like hey you know I think I actually learned most about building businesses from playing Starcraft and then somehow became one of my most popular tweets those of interesting well it's so unconventional right in terms of most people wouldn't think that

playing a videogame would help them run a company or their specific ways that it's helped you in terms of resource management or organization or failure or yeah so what I had in mind but then I said was and I didn't actually expect us to be terribly insightful or even controversial and clearly it was so I spent my I think I'm born in 1980 I grew up some charter for 90s good videogames sort of started coming out

when I was 15 essentially right and so I played a lot of Starcraft you know I came out and I now it's it's easy to look back and sort of when you connect the dots do you realize just certain things you did during your formative years were important and certain things where it is not important and and to me it's a blindingly obvious thing stuck with us was was one of us more more important points I've

read a fascinating book at some point where it was about the topic of soccer you know like Brazilian soccer is sort of very um the Brazilians were always playing better soccer than everyone else right and at some point rightfully everyone said well is you know what is that nature Nature Genetics and something else and so some early 80s people started flying to Brazil to actually look at what's this environment and you know there's probably multiple factors

that I play but what what people realize is that Brazilians play a lot of soccer first of all that's just a lot of deliberate practice and then partly due to the circumstances of them just not having as many soccer fields or not for space and in certain places play sort of a derivative of soccer then you know like a game I think it was it's called for like I can't say it it's like it's something like

foosball but it's a little bit difficult so that game is played with six players on a field much smaller page and just faster game and what happens is everyone plays first and therefore in a covert civil game everyone touches football probably five 10 times as much as in a normal game of soccer so what this says is what they found is there's this other thing they can do which is sort of like the thing that they

really care about but it's sort of a concentrated version of it which just lends itself to just deliberate practice better where people practice accidentally so that's the kind of thing I think that people have in mind they may say you know chess is the kind of game that is good to play because it's a distilled version of like making decisions you need to you have you need tactics in strategy and then that happens every single time

you play this game and so this is a way I see video games right so Starcraft itself is and I don't necessarily put Starcraft above any other game it just happened to be the one I learned a lot from and everyone sort of reference is a different one who sort of things about this kind of topic Starcraft is both players play it's it's heads up one person against one person and it starts the same no one

has an advantage it's complete symmetrical map and it's a game of imperfect information so you you end up only learning the things that you actively get so you have to scout but for porn is doing you have to react it's a little bit like chess but it's more real-time you have to make decisions fast and a game is about 15 to 20 Milan games can last 30 minutes now you do it again and again and again

very quickly you figure out that the most important resource is not the minerals that your mind always kind of thinks it's actually you attention right like what are you spending time on do you are you gonna have your troops directly and and get an advantage for that or are you gonna build buildings that get your advantage later in the game so you have to make a lot of these kind of choices constantly real time with pressure

about you know how to invest in your game plan what strategy should you employ and so on so on and so you do this and then again you do it again and in an evening you do it four five six seven eight probably more like 20 times next day you do it again and you do that for years and when you realize hey in the entirety of building a company these are exactly the kind of questions

you ask yourself all the time should I do something that's a bit short term but can help should I actually do something that it's only going to be useful later in the lifecycle of this company should I refactor this code or should I just get something hacky done do we need to expand later later in life to where do our resources come from should I go fund raising our baby should I raise prices all of this

happens in high stress environments and you're kind of making these kind of same decisions over and over again but in the entire course of building a company that happens takes many times you play this game it happens every single time you play with your game and so I think this is sort of a better way of thinking about video games to me they often they distilled environments and that you can learn things do you still play

video games now and if so what are you playing now for nine yeah I think we aren't about playing fortnight right now I really there's a game I really love called factorio would have you ever played that No yeah so factorial is like like if you wanna learn operational excellence like for factory was like a game which we'll teach it to you by accident I'll have to check that out let's talk a little bit about Shopify

I know what the company does but can you explain it for listeners yeah Shopify is most people who come to us because they want an online store more broadly what shop referred to us is it's kind of it's a missing software that didn't exist when I started my own retail business about Magnusson of 14 years ago I mean if red got together we wanted we had a lot of snowboards which we wanted to sell we wanted

to start a physical store and an online store this was again in 2000 2004 and and those are the snowboards like the symbolic nosov the snowbirds in your office yeah exactly in fact we so we're sitting here in my office the above ottawa-based so this is nice for economy's episode we can do it in person and along one wall in my office and there's bears no boss and was exactly the snow but IIIi saw it back

then so I kept some and I actually bought some back from they confused customers who got an email for me saying hey I this board you bought you you bought ten years ago do you still have it and would you sell it back to me for the price you paid so I got some bag and that's now part of the decoration of this room yes that's awesome and so um so we had snow boats to sell

I did build this software to run my online store and I learned so much about the process and there's some attention on us when we're doing this I was this was probably the sort of best-known Ruby on Rails software that paws in Basecamp back in those days for were sort of more technical he was you were part of the core Ruby team right exactly well yeah Rubin Reds team I used the software loved it it's wonderful

story there too so people are using like people looking at this this online store and it provides some legitimacy that we win we're just real technology you can use for real world real life look and ask the came to me and ask hey can I license this software can I can I use this and so based on this what we did we sat down and turn this online store into what is now Shopify and people come

to us and you know you you sign up you tell us about your products you get a amazing looking website on and stuff it just works really well it's really optimized around selling and ease of maintenance and so on you get everything you need so I had to make a copy of my passport and fax it to American Fork Utah to get a merchant account that process took two and a half months of course after you

sign up if I you just have a merchant account and therefore you can take credit cards on these kind of things so it's very easy to use it's what a lot of people use to get into entrepreneurship to start their own businesses and that's what we do would you say you're lowering the friction of starting an online business and giving people the tools that they can use to compete against bigger more well-funded infrastructures like Walmart or

Amazon or yeah exactly I mean look um again I grew up in 93 so my view of what the internet should be is very much inspired by sort of what happens then mental health sort of first came around like I remember when my dad came to my my city read which some say there is no the amazing thing about that was before that point if I wanted to somehow talk to many people at the same time

I had to either be a ham radio operator or I had to like call into some radio show or game show or something like this and I will the only way how you could really communicate unless you knew someone's phone number of people who aren't right next to you and so then the internet came to town suddenly Evan couldn't participate you know like you could put your own thing there you I made my own website and

that probably talked about video games and that just felt super liberating to me and to me that's for the entire doors now this sort of gets into the problem of internet right now what happens and what always happened if you a small village somewhere or medium sized city and you have this frightened community of different stores merchants people like everyone like this collision of ideas which cities are and of Walmart starts in your city a couple

of people still go to the mom pop stores in the smaller stores because they just like them and for various reasons but over time you know the convenience factor and so on happens and then at some point all that and then you have Walmart Toni and so the Internet is a very big town and loudest city ever they are next to each other and the internet has its Walmart right and so I think that it is

really really important that there's a counterbalance to this as a counterbalance to everyone just buying everything from the same place because the problem is the merchants Madame emotions come up with new and new ideas I have incredible stories of you know amazing stores that were created in the most random Atlantic islands that you know because they created products and they sold them around word waken we can preserve something of a heritage of these places and so

so Shopify is kind of the counter force to this centralization at least in the world of world of Commerce we want to make it so simple to partake in entrepreneurship to like add your own voice to sort of what's going on in the world and so so we want to lower the bar lower of a learning curve make it just something that almost everyone can do because you know I know we are like lots of your

listeners from a tech industry every everyone sort of things like entrepreneurship is in really good shape because we all know like you know two guys the laptop can do whatever that's true but they live their life in a very certain way they computer programmers they you know like all sorts of things are true here most people aren't like that most people do not have like half a chance to just sit down and start a you know

tech startup in fact while it is cheaper to make tech startups now the minimum difficulty that and requirements that you just have to bring to start a company had actually increased and we can see this in the numbers entrepreneurship is actually tanking across North America can you expand on that like why is the the barrier to entry increasing is it because the data that the company is accumulator what are they it's not even bad it's just

like what kind of qualifications do you need to be a tech co-founder right like like what kind of things do you have to put on your application to Y Combinator to be even considered right like you essentially have to spend your life in a you know in almost a perfect linear arrow towards this goal you have to have the right skills ideally you have to have all sorts of extracurricular kind of things which you know are

as we are now associated with middle or upper middle class upbringing Betfair people have time for this extracurricular kind of like things that give you an advantage and and so you have to be without lots of dependence because you're gonna go into a hole for a decade to build a company I suddenly had to do that and you know oh that was good then but could I do it again now probably not affricates so there's a

lot of kind of requirements that exist so it became actually cheaper to start companies for a ever-decreasing circle of people the more and more fortunate and so I what I love and what gets me out of bed every day to to do shop if I invoke on it is but it's a counter force to this right like it's it what the seller Chopra allows people to do is like half you know the for $29 a month

get something that gets them pretty close to having all the things that Jeff had to build for themselves when you start Amazon right and so leveling playing field is important and I think you know like if you look at sort of a word of a tech discourse novia talked a lot about privacy but really we are talking about that you're talking about the divide we are talking about you know things like inequality and so on and

you know the role take place in this and I think this we need companies that kind of like are not technology companies but actually are companies that use technology to give non-technical people superpowers and so that's the thing about some photos where technology isn't necessarily changing the business but it's rather enabling the business yeah exactly as you mentioned earlier I mean we're sitting in Ottawa so one of the questions I've always had for you is kind

of like how is it they're one of the top tech companies in the world is headquartered in Ottawa Canada of all places what makes Ottawa right for Shopify yeah I you know that guy started the snowboard business here because um my wife are studying in what about doing the time and every time I needed to find people I found fantastic people and I think this goes back into a sort of way is a like I think

there's a dangerously narrow narrative for how companies in general are created when I sat down at some point and I by way I had lots of opportunities to move shopify I had term sheets by all the dream venture capitalists that sort of however stipulated that I would have to relocate the company to you know certain value a place like this which I then walked away from and the reason why I walked away from is because I

looked at the history of how great companies were made and and and what I found is but it's true that there's a greater concentration in a place like second Valley usually what happens for making a world-class company happen is that there's one company really anywhere that creates sort of a broader geographic consensus but this is the company that all the best people should go look for right and I knew how I could become by far the

best employer inaudible I knew how I could like like this Montreal and Toronto and Waterloo like almost right next to us and so at least but North American measure of distance and that seemed like a right way to do it and they always find fun right people have been many great technology companies been that came out of Ottawa and then you know everyone sort of forgot about that and I feel like we discovered why because people

if we have great universities we find extremely smart people who are loyal and work hard and this is how these companies are made now I think there's one interesting thing in this I do think that there is an almost complete difference between how you build a company in a primary market of a primary talent market and and sort of secondary talent markets which primarily Telemark Billy is the Bay Area for technology company or LA for film

right then you go to so we're interested like almost all books but you read about business are written by people who built businesses in primary pockets you know you know teal Horowitz and so on Andy Grove there it's all all these companies got built in in primary markets so the problem I think what makes it rarer that companies great copies are created outside of them it's partly because then secondary market people have read four books from

primary market people they get the wrong lessons so for instance one of the most like biggest differences in primary and secondary places is if I hire someone you probably like for chance that we're gonna still vote together in a decade from now it's super high but it just it's it's it's it's a different it's just different in this way that doesn't sound like a big change but it changes absolutely everything above of a company it means

that it it's a much better idea to a higher for future potential relevant for current skill once you do that what you realize is and dollar invested into helping to train people or even subtle things like making sure that next to any junior programmer like on like for every five junior programmer in a team you have one person who can become their mentor like just like these basic ideas all start having way more dividends because there's

just you because the people after you make them better they stay with you longer you get to benefit where in certain value where you know like some companies are sort of pushing in their R&D teams twelve months average tenure for for staff like that is a silly investment student to make it becomes almost win-win instead of transactional which is like I'm here as a stepping into something else and it becomes like we're gonna help you you're

gonna help us and we can have this long-term kind of runway and do you think that culture is more to do with the geographic location or more to do with the organization that you're you know I mean I think you have to put a company that people don't want to leave you know so but you also should invest in your people so that record right and so if you combine those two things and do it well

you can do it I mean Shopify is it an Asian company at this point like people do like the people who move to come to shopping from all over the world and book here like usually they don't move to Ottawa by move to Shopify right and so so if you like you have to make your company worthy of that kind of thing and then and then it will happen and that's through any anywhere but doubly true

again and and and and and what what we call sort of secondary places to build companies I want to come back to something you said earlier in that answer which was you studied how great companies are made give us some of the lessons you got to expand on that what is that what happens this is a big topic you know because it's usually it's actually tricky to get these business of information my best my absolutely favorite

way of doing it is like I tend to go back what's in history and then try to build my own picture from multiple viewpoints right so I got fascinated with for instance the Industrial Revolution and the time of her rare vote so you start reading the various autobiographies by the major players and even Volvos tend to be very sanitized they usually are they accurate explaining sort of a situation that existed that in which vapors solving problems

and then you can sort of rebuild this saying okay why did that work like like how did what like how did it happen that only Rockefeller saw that the money in oil was in refineries not in the wells right like that that seems like obvious but it was only one person who figured it out right during this time and so you trying to reconstruct these kind of situations and we look at them from multiple angles and

you realize okay here was were the science and you know that's a lesson and that's something to take and next time you underlies the situation but you said come across yourself this is a something a new model you can compare this situation situation to so I find you know I find history is absolutely underrated and I find I get most of my lessons from there and that's usually how I explain you know fix for at hand

is like I say hey I've seen this problem before described in here and let's go double click on how this was soft Eggman and you know sometimes you also want us to do a spreadsheet you know like it's not so hard to figure out I mean now billion-dollar companies a dime a dozen but like that didn't that's not true ten years ago when I was doing my spreadsheet and it was not that many and if you

put them on a map it is concentration sure um it seems like Silicon Valley can support like two to potentially free breakout companies at a time which is not true about any other place but that's the difference it's not that you want a but a certain company you have to go there it's just like there's a deeper town pool and if you can become one of the best free employers web and you have a Charlotte is

there one lesson from history that stands out when you think of how to go about making a great company that you think may be under appreciated yeah for sure to me the more this is such a big topic so almost all companies have been created in a word that can be described as complicated problem solving right so like you look at Henry Ford's factories or you know something like that let him steal or whatever and it's

actually you have this incredibly long chains of cause and effect where you know at one point he put iron ore in and and sheep and at least she will and then on the other side a Model T comes comes out and every single step in this process was like this this code popularised by a guy called Frederick Taylor under the name of scientific management I think and so it's a break this incredibly complicated task down into

a single task which can be individually taught and can be done by absolutely anyone and then you do this this really is the story of Industrial Revolution it's kind of like the difference between being a chef and creating something starting to finish or being working at McDonald's where it's like the fries go down for 90 seconds and exactly so it like a chef would look at the holistic total or like off it we have McDonald sort

of broke it down into into into v-steps microns is a wonderful example of like Henry Ford's idea to apply to food production so this cause and effect thinking is embedded everywhere like the entire like like an MBA program really drills this kind of thing now I happen to believe that this is not so relevant anymore because I think the word we are actually spending our time and like we've almost built throughout the last hundred years every

company that serves a complicated problem and so the only kinds of problems that are now left what's usually referred to as complex problems now in in a world of complexity cause-and-effect isn't so clear in fact what happens is secondary and tertiary effects often become actually more important and so what I what I actually learned from from from from history and what I sort of reconstructed is the world in which people life retreat Friedrich Taylor were actually

trying to solve the problems and what they were solving for and why this worked that allows you to at some point walk away from this and saying hey this situation is two different the in which fear building hidden companies and so I found it's interesting when like I found there's a lot of great companies that suddenly became not great because through especially when they found a led they were comfortable in a world of complexity where things

aren't so measurable and so clear but where you optimized to have a holistic total and saying hey the product needs to be perfect and it doesn't really it shouldn't reflect for organization I'd build it and all this kind of things where and then at some point the company slowly like fell in love of hey let's measure every single step let's let's optimize for various things that I measure well and this ended up like really sort of

eroding a company so this is I think one of those ingredients that really helps building a company or that that's that's that's larger but still feels like what makes we're gonna start up so much fun I think the we were talking about this room for the interview that we have a lot of Shopify kind of readers and to the podcast and one of the things that was sent in was you wanted to run the largest small

company in the world is that what you mean by that that's what I mean yeah because I I just find like people are very quickly miss correlating things you know like a lot of people say hey it's like really fun to vote for a start-up and it's like super no fun to work for like a large company like in like IBM or whatever and and and they really go and say hey like a small company fun

large company no fun but like clearly it's more complicated than that right clearly there's things that make one fun and things that make have a not fun and but you can you can decompose that you can say okay one thing that's fun about being small companies is the amount of impact you can have on what's going on it's the amount of autonomy you get to solve problems it's four amount you know it is the sort of

tight fast-paced relationship you have the people around you it's like it's a you you going through a you know an epic journey surrounded by friends um which is what clearly everyone wants to be doing right and so um none of those things are beyond the realm of some but in a large company you can experience in fact if you just put your mind to it it's something you can absolutely recon deconstruct and then restore and actually

keep but what is true is that there are invisible forces acting on every company in the world that get rid of these things so the question is which are was what how does this happen how can we build scaffold scaffolding for the things that we really like about this how can we keep you know risk they have the autonomy like being surrounded by people you really want to spend time with and so on so on so

on so I think it's i think company building in general is a fascinating topic i operate on our assumption that you know I and many of my peers who are running companies right now at some point the 30 years from now or something they might get back together we might have retired point we look back at these times right now and we will all be horribly embarrassed by the companies we ran in 2018 do you're going

to say like how did we get anything done how did we do anything that's like how did we build up right like how did we do everything before we figured out this thing or that thing and all these things but yeah I I don't know what was our all right no because we haven't invented them yet but I think you all we all gonna be terribly embarrassed in the same way how when you watch a old

movie now and bears people in a car and they are smoking the children in the back that seems really embarrassing but seems okay back then right so I think the best company ever made wherever it is I don't know and I don't even have one don't venture guess it's going to be like six out of ten on the scale to towards a perfect company and my goal in life like oh at least something that's very important

to me is I won't be slightly less embarrassed than other guys in goods in 40 years I want to figure out how to get to be a six out of ten maybe start going into the seven out of ten and so for that I think a lot has to be reinvented there's a lot of stuff at companies to bet have no positive impact on anything that the companies do it's interesting because it sounds like you're looking

at that on an absolute basis in terms of what is possible versus a relative basis which might be like what is possible right now given the information and where we are as a company and where what's possible today versus what's possible based on the laws of physics or nature because you have to because um one thing that happens with Shopify which made actually made making sure before actually really hard is fed we did not really have

competent competitors it's really it's really almost it's really really really hard to build a company if you don't have an obvious enemy and there was no like like nothing unified hurts exactly there wasn't a fight right like there was Yahoo's to us was absolutely horrible then when we started I had tried to use it for snow day but I couldn't like the best thing it allowed you to in terms of customization of your net store was

change the background colors of your different frame sets like that was most people don't even know what a frame set is right like this this was really really outdated even beg man and so it's you know there wasn't obvious person completely fought so I think the only thing the thing we learned is we always have to look at the absolute you have to say what is like the you know the perfect ecommerce software is something you

put your name in a product in and then it like sales just appear and it teleports every product directly to the destination within seconds but like so that that would be ideal now we can't get that first like you know physics and in anyway so what's the next best thing we can settle and then after that what's the most realistic thing for us to build right now and then how do we always keep going further into

this reaction so we kind of grew up in a leg for our formative years as Shopify just having to essentially compete against ourselves and and and and our own high standards forever thing that that sort of pushed us along I wanted a little bit a bit scaling the company your 4,000 5,000 employees know about 4,000 see you've gone from like two to four thousand what what kind of lessons have you learned from growing the company and

how did you scale it yeah I mean it's interesting so Shopify is now a larger company then you know the city I grew up in rightly so it's it's a largest community I've ever been part of and it is an incredible is really an incredible journey I think this is the one time these kind of sort of hyper politic words actually appropriate but from my perspective it kind of didn't feel that different all along in the

different steps like a company that grows really fast feels entirely different every year so I just gotten really comfortable having essentially a new job every year and to me the most important thing was to make sure that every new version of shop if I was slightly better than the one before and so you know I know ideally across all the kind of things like better add the things that we were good at and fewer of our

weaknesses we had before and there was there's great purpose that comes from just having like a mission that is kind of like kind of good right like this is hey this might get into it's it's it's an interesting topic but you know one thing which really helps about building Shopify is if shop if I succeed no one loses mmm right it's like there's zero to win for everybody down the whole ecosystem and absolutely so so you

know every time like right now every 70 seconds someone has her first sale right this I I remember the day I had my first sale right I wasn't a coffee shop I hope my email I mean I built the software so it was my own email which this office sent to me it's kind of funny but your mom buying something so it was someone someone buying a snowboard from Pennsylvania we've never met I'm like oh my

like someone I've never met like deemed the thing I'd built movie right it's like that's when you become an entrepreneur by the way it's not when you start building something that he's just a builder then and so every 60 70 seconds someone has this experience and this is like you know some mother of three in Idaho but like you know brings some kind of skill from her local community into a product which when is being sold

and which friend creates a new economic way of getting money there and which fan eventually leads to them hiring people and all these kind of things so our customers get something their buyers get something I want like they find unique products and these kind of things there's a partner ecosystem that like builds all these kind of little apps and extensions for Shopify that really make these stores unique and so everything just gets kind of better with

no one with no externality that caused so much problems in the tech industry usually so it's it's an easy mission to tap into for the people who join you know they they come here because it's a these are great jobs but then often for a sort of a transition period like through for a year or so afterwards people start really really caring about the effects that that shopify has what about the the people I mean just

managing the complexity of the business must be much more than it was before obviously it whatwhat's straightforward about scaling and what was not straightforward about scaling to that degree I'm trying to think of something most straightforward right like it's kind of it's an amazing question to stumped me but honestly it's it but it like no one in the world knows how to build companies office-type right it's it's not a skill that anyone has you can't read

a book or play a video game and then you can't there's nothing that you can truly do but only thing is you can cultivate the skill to quickly figure out what to do in any and when you get into a situation where you have to make a choice what I've this this is why I think especially visit of secondary city approach to building companies is so valuable because there's no way around having to build a learner's

organization you you you have to because you're not gonna find all these ready-made people so how did we scale again we have a hiring process that really really finds people of high future potential and then we try to help them reach his potential 10 20 years earlier in their career than they ever thought was possible through coaching through book clubs through just for anything part if you have an internal podcast which talks about all these events

that led up to today and how we made decisions and what we considered and how we went wrong and all these kind of things everything I mean Shopify is kind of built around this idea that if someone shows up the fixed mindset you convert them into a growth mindset quickly and then once we have a growth mindset Phil people of context and we had them get better at their craft and then the kinds of people who

like challenges if you like putting them into iterations we would say ok here's something that's really important for his company it's a strategic move you care more about this than anyone else we found why don't you give us a go and and bill will help you as much as we can but we also trust you to be able to do the best job you can and we think you're ready for this kind of thing and you

do that at scale so if this is not like the one time I'm thinking of that we did that this is actually the way all of Sharpie functions and if we bring in experts in in topics that are important like can you build a payment gateway if you really needed people of when I stood for payment in payments industry they're not the people who run the group they have the people with support force people and so

those are the tweaks to the formula and we found that this is how it works and this or at least this is how it worked for us aside from being a learning kind of organization or a learning culture what other words would you use to describe the culture that you're instilling or trying to get at Shopify I've mixed opinions on culture you know I think I think they're getting dangerously close to the point where a lot

of people think that catches this sort of manageable and it is just something that may just have to kind of own in some kind of form I think culture is just with sum total of all the people who've worked with each other in fact Shopify is super happy with internal multiculturalism you know one thing again they're a Canadian company and one thing Canada is like increasing non-forest but you know for the last 34 years Canada has

run the biggest worldwide experiment in multiculturalism and by the way it worked well in fact it probably works better than alternatives and that's a very very sort of important lesson cata starting to teach the rest of the world because I can tell you when Germany 10 years ago had this conversation about HIV double click on assimilation or multiculturalism no one talked about the example that Canada has actually been running this experiment successfully so that's something that

I find so inspiring about Canada especially as an immigrant from Germany and that's something we really like the finish up before as well every one of our offices that's different culture and that's okay there's no Shopify culture I know there's like companies like I think apparently I've never booked for Google obviously but apparently people talk and internally talk about sort of a googliness score which to me sounds super dystopian and I hope I score lowly I

score low in that yeah because I don't want to be like everyone else around I I actually I'm super happy being different and I super happy about everyone being different and I want everyone to show up as the authentic self at work not some sanitized like conclusion of what people should be like and feel comfortable and who they are exactly feel like show up like you are and that's what we celebrate you know diversity is a

strength as our prime minister keeps saying and I absolutely agree with so I tell you like if we are here in Ottawa if like a lot of people from the Toronto office are coming to visit because you're working on you know preparing for some conference together so but the culture of all of our office is different that day just because of who showed up that day and so so that that's actually a way to think about

culture is the culture is like how constrained to people feel like of a true original authentic people showing up or some like sanitized guarded inversion of of people and you know the sanitized guarded version isn't just you know it's not just sort of a world of suits where they're sort of obvious like it's I can I've been to a lot of second value companies where everyone wears hoodies like so this comes in all where everyone's optimizing

for being seen to be similar to the people who happen to get the promotions and yeah it it's it's very very quick that you end up losing something that makes companies really much better so this is again so we don't manage culture we just like hire interesting people and let them be themselves and that's you know I've I can directly measure of a quality of a meeting the how different people spend the lives up to the

point of arriving at the meeting so the more diverse a better how do you think about employees in terms of process versus or process in bureaucracy in terms of being adaptable and nimble and the organization that you won't run yeah I mean that's I have lots of thoughts on process I actually think process is probably one of those things that the business world of right now over be most embarrassed about of and then we look back

it's it is amazing how little what what I refer to as good process exists in most businesses right because so you can you can actually like there's three kinds of process that's a kind of process that makes things that were previously impossible to do possible that's good and there's a kind of process that makes something that was previously possible significantly simpler which is also called like make it ten times better ideally make a process that makes

an entire thing that previously took like days making make make this light void that's that's good and then there's everything else and I bet you 99.9% of all process that exists in corporate America is for third category where which is actually just telling people to behave slightly different from what common sense tells them to do right so we have lots and lots and lots of examples where we even maybe just avoided having to create process by

just changing the environment in which we all spend our time and like changing the wave offices work chain you know it's it's a it's interesting I don't know it's like this is what kind of lessons but even maybe learned I think it's fascinating you know I wanted to talk to you but how the environment impacts people because some of the stories I got from people who work here you know relate to the microwave being changed to

make sure that it had one button in the hot water the old hot water tanks used to have like three buttons you had to hold down how to screen yeah so walk me through like how you think the environment affects people and why you were so adamant about those things not existing here I asked everyone to do for class software all right like build some build something that's significantly better than anything ever made in this particular

space but if you like arrived in the office and the first thing you do is you know you get the hot water for your tea and you you face the some kind of absolutely insane user experience where they use the touchscreen for no particular reason or you had to like push free buttons down just to get hot water like we're the obvious thing to use the device is feels like an afterthought from a user experience then

I can't really ask everyone to do better in fact I can but then I'm again I'm Fighting Gravity and which I don't like to do so a much much better way to do is just make sure that everything is off the kind of like everything that the controls of equality around us but I want to see in our own products because I think people are so much more affected by their environment than we like to believe

right well like again I had one of the best things that ever happened to me in my life is I moved between countries right when you do you you you actually you will learn some like you can't explain culture of a country to someone in the country it's like explaining water to fish right but if you leave somewhere and then move somewhere else you actually end up with a sort of outside perspective to both there's a

UI in Canada you talk to people about Germany and everyone talks about great engineering and all these kind of thing and weird things but it but then I go to the Museum of Modern Art and go to like a dieter Rams exhibit with a design I really like and that looks like my house been growing up like this versus all this stuff is not fancy stuff that's actually the default coffee maker and raised and the radio

but everyone has in their house for during the 80s and 90s right and so why is there so much appreciation for great craftsmanship because we were surrounded by it yeah and I think this effect is something you need to use to advantage when you avin you build a company if you if someone is in an inspiring space but just just that just is full of great design and and you know where everything just works like you're

not your base level of what you will do and your own craft is going to be significantly affected by this so the corporate America way of doing this would be have a crappy cubicle farm and then post motivational posters everyone saying have high standards right this is which is crazy and clearly that doesn't work so this is how we find that changing environment just helps us get for things but you want it sounds like my days

in government how much of your job would you say is about finding these processes that don't make sense and eliminating them like how much of your day is a bit elimination or subtraction i I've it's actually a lot it's it I'm sort of like I mean I'm a CEO you you have a holder of a standard right like it's things need to clear your minimum quality bar to get out end up being shipped so so many

of my conversations are this is what it should be and here's how we can get this kind of thing there or here's why this is not quite quite there and this is how you get into them wonderful like teachable moments or like sometimes you you you you write something about it if it's generalizable it's some sometimes you record a podcast episode about the kind of topic so it ends up being uh it ends up being a

lot of it want to come back just the environment before we move on one more time is there anything else that you do within the physical or even virtual environment of Shopify that's used to nudge people's subconscious well yes all of I mean natives are such a big thing like it's probably not no surprise I'm a huge fan of Richard teller and Danny Kahneman and at Mastro's Kea my spirit animals so I am a big fan

of behavioral psychology you know these kind of things I I just I see that as a better path forward other than you know posting process and what what they figured out is just like you change the environment to make it so that people just their common sense compels them to do the right thing like the shortest way of stating that it's like whatever always follow over easiest path down any kind of mountain right obviously so you

can't like the water everyone gets that you cannot go and just post a sign saying hey there's a village on the other side of mountain I need you water to go over there so that they can have water that sign is not going to vote you will have to you will have to dig a ditch and so like building companies is actually very similar to me we had this was one of us it doesn't sound like

much but it ended up being like sort of an importance of aha moment for us when we first serve started serving lunches at Shopify um we had our own kitchen our book was really popular of course and we were a small company then and the bigger problem we had was after lunch the room was mess and not initially but over time and so what happened very quickly is the posters made up right second hey here please

bring you played back to the kitchen afterwards for it like um it's funny how these tend to escalate like after what someone puts like an exclamation mark on it I heard like and even at some point we tried social proofing this river we had a picture of my co-founder who was like really sad looking with an empty plate and eggnog and just try to shame people into it and that worked for a couple weeks and it

didn't and then at some point we realized if you just put like a train next to every exit of a lunchroom that's that you can just put your cutlery until your plate they and make sure that's not overflowing and do the right thing I don't wants to do a ride for you just be ask people to use to have to invest their willpower into doing the right thing and that's not right like I mean it's I

mean you can't try to do it but I I want the maximum amount of people's willpower that they are going to expand doing the time at Shopify to be beneficial to our customers and and and and not invested into going out of your way to return like a dirty plate to some sink and so a lot of a lot of Shopify looks like this not just for people like for people how like people don't have one-on-ones

for a long time they're getting a nudge about it right leg and suddenly you can universally have one-on-ones much better than having a policy with rights of yeah but some people do you're known for running Shopify is known I guess for being a very resilient organization one of the stories that we we talked about the first time we ever had a conversation was about you moving buildings can you tell us that story and what happened and

why it happened the way it did yeah I I've always been a fan of like I mean this is called nessam Telep finally gave this concept a name the spoke anti fragile right I firmly believe that if you want an organization but lasts you need to be okay with bad things happening and in fact I think the quality of an organization is not how much it how could it is at preventing bad things from happening although

that's it's a useful skill but I don't think that's necessarily the quality of organization the quality of organization is how quickly it does react to bad things happening so this started very early with you know long before it became cool I was sort of log this is all or anybody even knew about antifragility yeah long before this was a name like VI I looked into our server farm and turned random service off right because I just

wanted to make sure that they are not relying on memcache being up you know for it you know and and and this is we did that in production so like oh yeah internally it's called the Toby test yes that's cool it really made a point and it created a culture where everyone says hey you know what things going wrong is not actually this rare thing that but it's actually something to that's not in everything but just

does not cure everyday and so I think it was really important so the we always looked for opportunities to do this kind of thing like we always like I I really really like changing something just so that everyone has to adapt like freighting one change is actually one of her core values and and it's a huge disclaimer it's deriving unchanging be as serious about right like this is something that comes up doing hiring saying hey you

really need to understand what that means because that's they if Shopify is not absolutely not a company for everyone this one thing you really have to like be ok if things are going to change a lot we are not going to pretend that Shopify lives in a static world of unchanging requirements and so you know when we had this sort of view of the changing officers people about I think 600 700 people from from one office

to the next and here in Ottawa and Viva like our landlord was really unhappy about losing us and so it wasn't giving us an extension on our lease and the second office started becoming late and later at some point we had two conversation about you what we gonna do if we need a plan B here if those things don't line up anymore and so blend B was okay well just we'll have to ask everyone for work

from home for a little while and I didn't actually sound so it was so scary and when over the course of next week I increasingly fell in love with Plan B and at some point that like I was really disappointed and I heard that it actually became like the buildings it would line up we could do it and so I'm like why don't we still go with Plan B because you know the the increasingly hired people

in other offices I think a company needs to like a company that wants to be able to work well different offices especially with some people working remotely as well needs to have a lot of empathy for those people because unless you have ever done this yourself it's very very hard to work with you just don't know what it's like to not be there and not hear those conversations and not be in office and so on so

we decided to make plan B plan a and so we closed our office as in the D program to everyone swap one day then it's an email evening before and said hey we want we're gonna be homeless for four for four months and let's like if anyone has some good ideas about how to deal with that please share and it was pretty chaotic it was really really really good business for all the audible coffee shops initially

like people started collecting some people had you know house downtown so that's they became basis of operation our chefs ended up buying an old taco truck no that's amazing a favor drove around town and you know just to offend everybody and pop up little ya do pop-ups and post on chat which parks favorite Park ad and where people could come and so it was actually a wonderful time we had a great time everyone was really glad

to be back in an office afterwards um and but but we learned so much about tools we had to like which just didn't work anymore like we didn't learnt where we were relying on physical proximity which is physical proximity is an incredibly powerful force mmm but you need to appreciate it and you need to know when you use it and using it as a crutch because if you add a remote person into the team suddenly you

kind of have to change behavior so so it's a good example but like Chopra is littered with examples office like we did or big develop developer conference last year in central San Francisco day one was really really great day to really arrive and there was no power in at the place and this was across all of San Francisco I might add like this is you know the capital of technology in the world and we had no

electrons come from a socket I was absolutely remarkable I think most companies would have canceled than they - in our case like everyone just immediately said okay this is probably gonna last people ended up getting like like move the entire conference we couldn't go into a room because fire marshals wouldn't let us so move the entire conference to the parking lot then people then to get tents shades we didn't have PA systems so they created like

small groups they've come up with topics we estimate but like probably five to ten new companies were created from just the people who were networking that they otherwise would have followed like a signal to a conference and a being actually promised a better Dave and what would we have blend and I I love that because that's what we trained for this is important like react reacting like this is I think it's something you want to cultivate

as a company yeah I think adaptability is massively underrated whereas efficiency is a little bit overrated especially on a rapidly changing environment you know in some cases sure but in so many cases efficiency is something that companies like in most cases I been in companies that you have really really on this sort of efficiency drill what they actually often do is it's very actually creating something in the name of efficiency they're actually becoming verse as companies

because what they actually do is they trade things that look inefficient but could have been paralyzed if something that looks efficient but now has all sorts of dependencies right like hey take this thing everyone's doing the same thing so instead centralize it while great you just like if your background is engineering you immediately ask you know that sometimes is the right solution but not always because now you have contention for single resource do you actually want

your entire company to have like at like everyone have a dependency on like one team like clearly you don't because you want to go as fast as possible and those are exactly the kind of ways how large companies slow down because on the name of efficiency they create a massive dependency graph which is invisible but slows everything down internally you have something called the Toby manifest so do you mean about Toby blue brand is that what

it's called okay so it's got a trust battery like what is on this this list so it's a friend of mine put put me on to have idea Luke you look back essentially like it takes a long time for people to learn how to work with each other so I always look for ways to short-circuit these kind of process as much as I can so in this particular case I wrote out the things that people always

take a year to figure out about about me like how I work how I think and so that's on our internal wiki and it's on the you know vault or job phytochrome slash Toby over with an internal address and everyone can who has a first meeting with me can kind of figure out you know what's probably a good thing to do and what isn't a good thing to do and I think it's very very helpful what's

on that list you know things like don't prepare a PowerPoint presentation is a good one I think so some things that just sort of tactical it's not the way I like like I like conversations not presentations especially and you know smaller ones like I not a big fan of huge meetings and so that's just useful to know because like like no one wants to do this wrong and right and so but there's other things like this

sort of personality test vote called the Enneagram I know of as millions of these kind of things Enneagram happens to be one bad shop if I was really into in that word I'm a challenger but what that means is someone comes up with an idea I I will take four opposite side of that idea even though I agree with the idea so when I when I challenged an idea someone else idea that's actually exactly what I

would do with my own ideas this is my internal process just you know like in a room and so it's important that people don't immediately become defensive because I don't I'm not out to get them and think out oh he doesn't agree with me or exactly because I've seen this effect too many times that you know someone has a really good idea I I say well how about we do exactly opposite and then they really immediately

came over to my point of view I'm like oh hold on a second no no I like us better and that cause why was that so easy for to give in to you why was it easy to convince me no likey make you wonder why it's so easy to convince them to change their mind I think it's human nature this is I I wish it wasn't so but like it's there's a thing like North America is

blessed with a very low distance of power and as a culture right but still the problem is if you have a founder of a company you were CEO of a company especially if it's one of your earliest meetings as much as I wish it wasn't so people treat you of some difference because of all the sort of social credit that you have and so I don't want people to I want people to have a conversation with

and I do today at es excited what I do to my own ideas and the through that process we get to better understanding because I I want the best idea to win at any point and I care don't care if that comes from me or from from someone else so writing this out and telling people full disclaimer this is probably what's going to happen he's really really helpful for us to repair our meetings one of the

things on that list is I think the concept of the trust battery can you yeah can you expand on that what is that what does it mean yeah I you know I find this a trust battery fits in perfectly with sort of your topic of your entire board it's it's just a mental model for how to think about the relationship between people right it's you know it's something that actually exists but is rarely documented people sort

of think about trust as almost an on/off kind of thing like I trust my mother I don't trust NSA or whatever but it's actually a clearly a gradient it's it's really so it's something with a lot of different points on this particular spectrum right if people meet each other especially in a sort of qat context like like a company like both of us start working here and people have got hired so we both ran through a

gauntlet of how to be how to be hired here so that means we probably will trust each other let's say 50% right right off the bat when we have these interactions we have a meeting like the one we just talked about the combat an idea or we just talk talk about an idea they come we come up with something even better we work well together this slowly charges right and I think it's useful to have this

metaphor between people because of me it allows you to sort of talk about the trust that exists between two people without actually becoming personal you know so much about working in teams as the way you communicate about working together like the way you give each other feedback it's so much easier to say hey I love working with you and in the kind of work you do but you don't show up to the team meetings and and

and I just want you to know like those two things out offset each other this is why your trust battery of a recipe team is just not going up even though you're doing great work that's okay it's a much better conversation of saying hey do you not care about us do you write you know like because when you attack me were sort of identity where this is actually affected like a factual discussion about like a concept

and so the trespasser is really useful for two people to converse about working together but it's more important than that because like I already said I won't show prefer to be a company where people have an enormous amount of personal autonomy but it's not possible to just be stove it on everyone so like well you know because like if you like trust needs to be earned and so when you have a concept like this where you

can say hey get to 80 90 percent of the trust period with majority of people around you and then they give you an area to own and then we trust that your own that's what people do already so all you're doing is putting putting a metaphor into play that people can refer to and give people a goal saying hey here's what I get if I'm if I built a trust with the rest of a team and

so on what are the other mental models that you use to either run Shopify or interact with other people as you know like I I read lots of books and fascinating the concept of mental models I you you've listed hundreds of over 100 on your on your page I know you're working on a book on the topic I had so many more there's so many metaphors that come from different fields you know like I sometimes feel

like I learned more about how to build a great team from from learning to play an instrument than from you know any kind of managerial kind of training or something like this you know so I I just think this is the way they become better at anything we like there's a one-of-a then I haven't i sat down with especially sort of younger engineers designers and so on in a company and they asked me like how to

get better everyone is always really quite like like people know how to get better at their craft but it's actually I think most cases the best way to get better at what you do is actually gonna cope broader like just learn adverse skills like we we have a we have a reading like a library like essentially a book club across shopify I curate the books that are in it and like there are books that you have

absolutely nothing to have business like drawing on the right side of a brain understanding exposure you know like these books are there because I really want people to just say okay that's you know you you an engineer if you learn to draw you're gonna be you're gonna have so much more empathy for for for working with designers you're gonna have such a different appreciation about how light books yeah like and so on and so on so

this is really what I try to do with people and what I try to do myself i am i i've found some of the most interesting lessons that i use for to building a company like this again as we said and playing video games where people don't expect it this is what people are so surprised with my with my comments start is an absolutely wonderful kind of like game of incomplete information in a box that can

be can be played very quickly factorial teaches you how to productize an op like optimizing the entire massive complicated system and so on and so I think people just help should have broad interests and follow me where did your love of reading come from it came pretty late I'm so I'm actually just like sick so it's actually hard for me to read and I read very slowly um so I I didn't read any books for the

first of 20 years of my life and then I at some point I challenged myself to read a book fully and that was a wonderful book called crypto nomicon by Neal Stephenson instead one of my favorite yep books and I like this was so good of a book to pick up first and was sort of almost random because you know I just learned so much from this book it's like it's a piece of fiction but you

learn so much about you know all this like even cryptography you know obvious things that you relevant to me and you know I I start picking up more and more books and just sort of devouring them from that point on and you know I found and books at the closest you'll ever come to finding cheat codes for real life it's like you can access the entire learnings of someone someone else career and you know sitting down

for you know what is it 12 14 hours and if you if you're slow reader so I read a lot which books would you save like influenced you the most over the years I mean there's some incredibly so it's a specific books yeah what comes to mind um yeah it's hard to pick like the most important book it's it depends on what you're doing of course I I mean one book which I find stunningly high insightful

is called mindset by Carol Dweck yeah because it's like it gets into it really really really puts its finger on the thing I need to change for most of people who start at this trouble growth versus fixed mindset yeah and it's one of the most liberating experiences for people who can transcend like we all have fixed mindsets ie on some things and and so most people have growth mindset on some others but actually again having the

language having the mental model of it see like improving yourself after you understand this but then helping others mm-hmm traverses in through one-on-one meetings and so on it's just so powerful I think that's one of the best I loved you know there's a book cut which is sort of not well known but I just love it it's called Parkinson's Law have you ever came across yeah yeah it's a like many people know about this sort of

bike shedding kind of analogy it comes up it comes from this book it's like 80 pages it's really old it's like a comedy book written because back when he wrote it you couldn't really criticize the like the Queen of England and so on outside of comedy so it's sort of that's a way he could write it but I read that really early and I have in chiapas history and I just can't ended up being you know

if I felt like it allowed me to disrespect everything like companies that existed a little bit more and and like to be more irreverent and yeah and similarly there's a book called of a design of everyday things which I'm just a huge fan of it's actually similar in the way that why are things designed so fully around us over time like what how did this happen and and it just makes it in a way that book

you read it and afterwards you're like oh I'm not the only one with just all these kind of things like annoying it's like it gives you some legitimacy of complaining because you know because he makes a very impassioned case for that more people need to complain about bad design right and I mean there's some books which were incredibly relevant for for building of shopify lots of books by innocent a lab team of teams by general mcchrystal

so there's plenty of kind of great books how do you filter what you read now like what is it everybody wants your attention all the time you're running an fifteen billion dollar market cap company you've got four thousand employees and yet you still make time for you when you're not playing for how do you determine what your what goes into your mind and what you're reading and consuming I mean so again I have to be very

picky about the books just because I do tend to go cover-to-cover on books so I so I'm committed for very long time to a bad book if I pick up a bad book so I are usually on like you know at some point I usually dive deep into the literature behind things right like some like it's really important to me again on the soft quest of building a better company one of the sources often that is

completely underexposed to have the business world is actually back academic mode so this is why I I go really deep into behavioral economics or something like this because and then I just like like I first find someone's you know some important person's biography and they usually reference all these kind of interesting moments that happen and then I try to find the books that sort of came out of these moments and so on because I need the

historic sequencing of something before I can really make sense of it I just find if someone just gives me like facts about something I can't really if I if if I don't have a tree to hang bows ideas well then I add veggies for the background and so that's usually my approach so um you know like I spent a year of reading about like really understanding something like evolution because I actually I'm always amazed how few

people really understand how that actually works and how few people are asked and how relevant emergent feel like you know emergent concepts and emergent systems are to anything we are doing like the stock market in a merchant system that no one control its common laws and merged system and no one controls its evolutions all around us all the time and in fact it's precisely I think of a reason why Shopify has been working so well because

we create a synthetic environment which is sort of lends itself for the merchants of great solutions to problems in the common space and that's real way after I'm thinking about this place so those would be examples of figs I go and III you know systems thinking is one of my sort of favorite subtopics I notice the book on the bookshelf over there yeah it's probably the most common book in here just because I give it out

so much and so it's actually then we do our internal summit which we get the entire company to Ottawa in February every year I you know I have now what to tell the comb like everyone a company something I actually was here I'd just been most of that talk just teaching systems thinking because it just like a like the world is a better place that people realize that they are not like root causes are really rare

and again events don't happen in sequence and cause and effect all the way through the word is loopy it's not you know and everything like if something is bad and you want to change it there's usually something that reinforces the bad behavior and you have to change it you have to change bad to change the situation I want to geek out on decision making a little bit here which is something I know you put a lot

of thought into but I want to start with what what's the hardest decision you've ever made I don't I don't know what the hardest decision is what I ever made I can tell you one I did the worst on it was the most important decision which I took too long to make which was so again Shopify's stories a little bit different from most venture backed and public companies in the way that you know it started with

snowboard selling so it was actually profitable there I mean I stopped selling snowboards to focus completely on putting Shopify and then through a lot of work you know in many years eventually shop if I became a profitable company it said but it was a my goal was I wanted a bit of world's best 20 people lifestyle business that was really my goal Shopify you know boy like I just didn't love idea of venture capital I'm I'm

European so I tend to think that companies exist to make money at a certain point like this seems like so using other people's money to you know just try to growth over everything it's like it just seems wrong to me but I had lots of evidence that shop if I really was a growth company like it's like a venture capital model is for a certain kind of business and it's a really good fit for that kind

of business and I I think I knew that shop if I was one of those companies and then I kind of artificially constrained it so the decision I didn't make was can I and should I transition Shopify from being a lifestyle business to a growth business and the reason why I ended up like so so I feel now that I was the limit I was for the bottleneck on potential for Shopify for like a good year

and a half period in which I just drag my feet making this call and I I'm so traumatized from that I never want to be a bottleneck of a company again and this was another one of those things that just pushed me into like I need to look after my own personal growth I need to be ahead of every company needs me to be at and so on and you know eventually I made the decision in

a very sort of data-driven way I saved up some money instead of investing it immediately into hiring someone new and once I had like $50,000 saved I took five ideas we had that you know like of mock marketing ideas or ideas to how to grow Shopify and just funded all of them at the same time and said if two of them would be a really a growth company that's been being held back by three sources and

they all five booked so high because yes it became very very very obvious you mentioned you took too long to make the decision how do you think about speed when it comes to decision making internally yeah but most important I tend to talk with people about this a lot I think the most important thing that people have to understand is how undoable is a decision I gave even idea is fully undoable I want people to almost

you know make it as quickly as I can so the problem is that the you know you can never unbe see fund yourself yeah so when an when a decision is something that you can't take back then it's both really really understanding so in terms of like decision making I don't think I can teach terribly new things like it's the most important thing is get all the context and then make a decision if you just do

that you're already doing a better job than the vast majority of people in business because almost everyone makes a decision and then gets data to support that decision so so values you re out ahead if you do that and then your skill and decision-making is directly proportional to your quality of information acquisition so how good are you at making decisions like that like how good are you at acquiring information how far can you go how many

resources do you have do you have ability to go directly to a database and ask a question now you have ability to call the right people up to to ask them about my experience did you read the books already which allow you to sort of identify the duration as something that's like something else where you can go and reread it to say figure out are you considering the same fact so that most things are the things

that you would need to cultivate as a as a skill and then lastly one thing I started really early which was has been exceptionally useful is when and ever since this decision of turning shop Frederick row of company accord I tend to take when I have them to do a major decision I have a small log file they I just put one paragraph in about the decision I made and what information I considered to be the

most important one which pushed me into in interval direction and then I I just sort of revisit about every half year and just say what I write about this given benefit of hindsight because eventually you know if your decision was right and so it's actually if you if your job is to make decisions it's both treating it like any other kind of thing to be to get better at and so this allows you to do it

what have you learned from going back and reading that not not about outcomes of decisions but maybe more about the process by which you use to reach a decision yeah I think Kahneman cause it hindsight bias rightly yes we have a very very strong bias to underestimate how difficult it was to make a decision and and and really just just just treat difficult decisions that were made as if they were obvious all along but because you

know have all these additional information that's right so it kills you of that to a degree which is really really helpful for anyone who leads people it's also um like I've just learned you know every single time I got a decision wrong it just happens like I found that the piece of information I was missing was actually totally available to me and I just you know I I just didn't go get it is it because you

didn't get it or you didn't realize it was going to be irrelevant or salient piece of information usually I didn't I just didn't put it in it's like you thought about it yeah dismissed it yeah like I you realize like hey this was a thing that would have actually made me change my mind and and that person knew it already and so I didn't I didn't go to a spent person so I didn't know do you

think subconsciously that's you going like I know this bit of information might make me to change my mind but I've already made my mind up and I don't want to have to do the mental labor of going back and then and that happens and then you have to be honest with yourself saying hey you know how would you want to make decisions based on what the best ideas or based on being right in a way or

getting your way and so on again you need like this is why it's a good practice because it just forces you to recognize when you make mistakes right take me back a little bit to the early days of Shopify and the struggles you were having maybe walk me through some of the things that you learned since then some of the mistakes that you made possibly running the organization that you look back and you kind of laugh

at yourself you're like oh man like I wish I would have done that differently or I'm really interested in not only the mistakes you made but really like how you learned from those mistakes and didn't repeat them yeah um I strive to never make a wasted mistake right so I tend to refer to as even internally when when this failure we tend to refer to it as the discovery of things that did not work just because

like that it's just it's it really it really helps offer the the right kind of mindset I I mean no one from the earliest days no one's ever gonna commit more egregious bugs to a shop forecourt bears been knighted you know no one's gonna accidentally cause more downtime than I did like I've kind of like done so many of these kind of problems already which know it's like automated systems to prevent it happening right so you

know that helps a lot i I've committed every managerial sin in the book and I have unbelievably patient people who vote for me who allowed me to grow into the role I'm playing now in this company over time even though it took me very long time to to adjust to this and there's some really funky ideas I had for what Shopify should become that totally wasn't one right and the timing wasn't right or you know sometimes

maybe they actually were right ideas but like five years too early and it's all you learn from it all right it's it's hard to kind of put your face like it's not it was not a single thing I would change about Shopify like Eve involved and ended up with you know they close calls and it was by no means yoga skipped over the entire years between starting snow devil to becoming a profitable company we were I

spent a year and a half being out of money and asking my father-in-law was living with me and my wife for four checks to meet payroll and I thought I never will figure out why he actually gave those checks to us but like we were essentially dead non life support for a long time and it was only actually recession which sort of safe Shopify because at this point it was good enough and people were replacing really

expensive e-commerce systems with much cheaper but at this point better Shopify and that kind of Goddess experience of like not being able to make payroll or being desperate to get money to make payroll does it change how you run the company today oh yeah it's I mean it just it did you just have to I had to learn to make every dollar count and it's hard it's a hard habit to to shake right like it's you

know I actually think it's one of those kind of lessons that you get deprived of if you go straight to an internet startup accelerator and then go and get the Series A funding with not a lot of effort and you know like every company that's being funded you're gonna get a lot more of whatever vapor already doing right so if the company at this point of getting funding was already good at making every dollar count really

understood its market you know like it then you can kick kick start a story that produces almost 100 percent growth for very extended period of time and you know in some cases you actually fueling something some completely different behavior so I think it helps a lot talk to me a little bit about you mentioned the first thing we talked about was video games and how your focus changes where you see in the game what is your

focus like on a day to day basis here like how do you invest your time yeah I mean it's it's a it's a mix I mean I spent a good deal of time with my direct team and sort of leadership team of Shopify like it's probably a foot or four percent of my mind my schedule I actually have full reports on this my assistant caught we caught my expansion pack here at Shopify to keep the videogame

analogy and he like he actually has a full report of exactly how time allocated and we rebalance my time or every quarter like you would do with capital so I spent a lot of time for my with my leadership team one on once I agreed now I have to New York SEC you tips when I'm helping to on board so that's I spend more time with them but then I also have a like a good chunk

of my time this is what's called writing time which is which I can sort of allocate against something that I really want to want to work on often I write a spec for something that just needs to be done or I write a quick essay about some important decisions like that that were in in the past sometimes I run around with podcast gear and to view someone about about the topic as well so like this allows

me to just sort of that time what it really is is I like I have a spotlight and Shopify is like really really really sort of just big like room in a bit in which I can move around and just sort of look around you know if my if my spotlight I have when I see something I don't like I tend to go digging a little bit and see hey you know like why is that so

like you know why why is a lot time of that screen so low you know like like what else is what team is going to do it should I have a conversation about you know like how important website performances - you know perceived quality of a software right or I encountered that for saving for for really good legitimate reasons we switched from coca-cola to Pepsi and but coca-cola company if your number one likely be be aiming

too high for for being a Pepsi company so you know like Pepsi is number two that's the first number one company you know like it's like the standards are too high for talking Pepsi right like we're also really really random decisions I'm sure but like again environment matters and so so so I I get to have interesting conversations with people about random things like for soft drinks I buy why I don't even drink soft drinks so

like it's this is a lot this is very symbolic and the last bit is honestly it's just it ends up being like recruiting its recruiting is just so key like it's you know you've gotta get the best people on the bus and you have the best people on the bus you're gonna have fun no matter if ever buses going and so this is this ends up being a good deal of time would you say is the

the smallest habit you have that makes the biggest difference like I like in shop at Shopify just in general in life like any any habits that you have that makes just like a a symmetric difference I mean that decision lock is pretty good example of it but I know like I am this is gonna sound so weird and Patti um but I kind of love it so I'm gonna share it I recently got like a well

we smell like four five years ago I got introduced to shaving with a straight razor right cool this is like super random and it you know that's how it used to be done like and and it's actually a wonderful that kind of craftsmanship like you get like razors made by one person who you can call and talk with them over how you wanted and all these kind of things and it's like you know Japanese blades and

and Joe emigrated and so on like the craftsmanship behind that this is this is wonderful to begin with and we live in a world of like disposable everything right so I just found that starting a day like like the just making Mileva and like like you like doing something that's actually difficult right off the bat in the morning every morning is born it is one of those random things that starts the day like it's like you

cannot zone out doing this right like you're doing this for five minutes you committed to a craft you try and like it's something you can get better at it like i serious the consequences for for for for for my mind drifting and then doing something else so it's almost a little bit meditative so I I would say like starting the day if something in routine that's actually not super out like autopilot to do starts a day

out in a right way I like that a lot I know we're butting up against time you have humor questions that were submitted that I'd be remiss if we didn't we didn't ask one of the questions that people wanted me to ask you specifically it was how do you separate people who know what they're talking about from the people that pretend that they know what they're talking about I don't know I just feel like I you

can tell it's it's like I mean I I do dig right like I I want to be able to be like I I'm trying you challenge function when how well III judge I try to understand enough about everything that's relevant to shopify but I not an expert but but I sort of know what my experts think right like I still I'm still heavily in engineering I'm in and technology and so on IIIi added a lot of

the fields that sort of make up the world of business when I transitioned from being the technical founder to looking after the business side as well and so I tend to not just leave things on challenge and just say hey you know like let's do this a couple like let's do a couple of ping pongs here about you know like making sure that you're actually serious about saying this and make making sure that with persons actually

really saying thing they're saying because sometimes people say what they think you want to hear and that's really obvious if you just start asking a bit and again when the trust battery comes in you do very few terms of people and then you don't need to do it anymore right like after I hired my first CFO I every single spreadsheet I got from him looked really really complicated and was far beyond my excels skill set but

I learned how to use the craziest Excel lookups it's because I need like I just rebuilt the same spreadsheets from the raw numbers you know and make sure that it wasn't like a sum that wasn't like drawn all the way across a column or something like this and I just make sure that also most mistakes it's trust but verify right and I've verified never wanna mistake a very fat again I didn't find a mistake ever fight

again didn't find a mistake and eventually I stopped verifying it's like a way how you learn how to work with people what's the most common mistake that you see people make over and over again it's it's it's people are terrible at deciphering a cost effect or even correlation force causation right like again I said this earlier um systems-thinking is the best cure for this kind of thing but like there isn't obvious a cause for things but

they're much more often bears the system that just reinforces something like everyone's complaining why is everyone like was all of them the word of business so short-term focused was because Wall Street wants quarterly reports right so you know it's a system reinforcing the thing that you want to fix and then people love putting hex on easily identifiable problems and then think the problem goes a very involve a foil thing that's reinforcing this is not it's not

being addressed so that that's that's what I see see a lot you keep bringing up systems thinking what does that mean to you in terms of how you want people to apply it here at Shopify yeah I mean systems thinking is teaches you to draw diagrams of a certain kind right like that's really other like hey let's zoom out let's declare a little boundaries of our system of it all the stuff that doesn't matter but within

it let's really figure out what forces exist and how they like how they're balanced the loops how they reinforce for loops and once you do that you can then like part of what is so great about just this exercise is it is almost impossible for room of people to like everyone in the room can talk about the same thing I mean completely different things but if you're writing as like a systems diagram on a whiteboard afterward

space is simply versus soon like people will like if someone has an assumption about that system working differently that will come up and so I think this is that's why it's so powerful so that's the actual way of how I want I wanted to by exposing money it forces people to expose how they're thinking about something in terms of interactions which allows people to kind of challenge oh I don't think it's that way and then you

get to a better deeper version of reality or understanding through that but there's also this entire other thing that's also acting on this is that relevant and then everyone's like oh my god you're right and then suddenly you make progress against rain you know coming up with a solution last question that I want to ask you is what do you think of algorithmic decision-making and where we're going in that sense in terms of not only scaling

and running an organization but in terms of machine intelligence if you will a very complex set of thoughts on our own vests but I if I'm sort of in the I think broadly I'm probably in the garry kasparov kind of camp of thinking one thing he points out which I really really love this fad obviously famously lost to deep blue in an in in chess and he did not like that one bit so finally he wrote

a book about what I experienced was likes of twenty years later and one thing he did point out is that the discussion is framed too much about people against machines manera t'v sly sleight of hand it's not really what we're seeing in a world it's it's it potentially even comes from the sort of deep view experience right because there was the best grandmas and world champion playing against the computer and the computer came out victorious but

that's not the way reality works because what he says is if even a reasonably good chess player with an engine plays against just an engine it's obviously human and the engine will win so it's the we are interested in trying to get the best result right and so I think humans assisted by technology of probably the thing that we should be going for instead of trying to replace people so much and I think you will see

bad affect significantly more and in a way that's kind of odd job if I kind of is right like like so like we think about Shopify a little bit as you know like it's sort of a fire flower from for Mario right like you you find one and then you can throw fireballs you just go superpower like you want you want to be a superpower that people discover and just have skills so if I never thought

I would have afterwards we have a skill to start a business and scale it and become an entrepreneur and change your entire identity like your descendants like your grandchildren will refer to you as a entrepreneur because but at some point you signed up for Shopify and somehow made it work but it's not chubby forward which did it it's you right it's it's empowering people giving them opportunities for self-actualization and so I think that's you know I

think that's just a right way to think about it machines are there to help people not replace them I like machines like humans should never wait for machines mom and machines wait for people and so in this way I find myself so far outside of a world of technology it's like it's I see so much technology over everything kind of thinking where does people are like this is it's it's all it's all there it's like I

just I don't even think there's such a thing as truly the technology industry right it's a weird it's it's a real construct it's like technology's a it's it's it's it's it's not an industry it's not it's not a student strategy it's sort of a tactic it's like it's it's a tool that you use to give people more skills and that's that's what I'm looking for and if I can automate a task so but people just it

frees up people so they can spend more time on or on some things sure we'll do it all right no one needs to learn how to look at an order and figure out if it's fraudulent like like but like we can look at every single data point which we could also present you but we can just do like we can just do it do it for you that that improves your quality time you can spend on

building your business or even looking in it but I think we want to assess people and instead of replace one I think there's a great point to leave this to me this has been a fascinating conversation and maybe will continue for a part to you next year awesome that's dude take her hey guys this is Shane again just a few more things before we wrap up you can find show notes at Furnham Street blog comm slash

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