Tobi Lütke – Building Shopify and the Future of AI | Ep. 50

[00:00] I think in a way, like people are all somewhat overestimating the founders of companies. And then they are really massively underestimating what you can do when the founder is still present and in charge. It's my best way to help the mission. Everyone gets to complain about, you know, a crazy founder, which is like, great. It's like, do whatever venting you want. And then you do very often some of the best work of your careers. You know, that's why people actually flock to these type of companies, because you're surrounded by other people that you can go on such crazy journey. [00:30] I am so excited to be here today with Toby, the CEO, founder of Shopify. Toby, before we start, I will say when I was running my company, Lattice, and now you were one of the founders that I sort of most looked up to and so many things about the way you operate, the way you've run your company, the changes you've made over time. It's the top of the top for me. And so I feel super lucky to be doing this with you. Before we get into AI and Shopify, I want to learn a little bit about [00:54] you just and more like your psychology. You've been running Shopify for over 20 years. And from what I see about you, it seems like you love what you do. And it seems like you're as energized by it as ever. It seems like you are as passionate about the future as ever. And I think that's really hard. Like I think having like life's work is sort of like this romantic dream for a lot of people. And I just think it's very hard to do in practice because people either fall out of love with their work, they get bored, they get tired. And on top of

[01:24] not even the easiest type of thing to have. You know, like my work now as a VC would be much easier to do for 30 years. So I guess I'm interested in how you are able to bring and seemingly grow sort of your love for what you're doing after two decades. That's such a wonderful question. Thanks so much for having me on the podcast. I'm super excited that you get to do this. [01:44] Part of the reason why I wanted to start a company is because I have found before in my teens that I have an extraordinarily hard time learning technology. [01:54] things that I don't have basically experienced the problem that they solve. Like, it's just like the way, like in school, how math was taught, basically, here's just sort of like the [02:03] steps for to like i actually had to really go and like figure out okay well um what exactly is uh trigger number three useful for um um and uh i just had to like i started with um [02:17] tricking myself into finding like a useful problem that involved trigonometry, after which I felt I could learn it significantly faster than like everyone else, because I just was so motivated, right? Like Karl Popper said, one of the joys of life and one of the best things in life is like to find a beautiful problem that might occupy you all of your life, trying to solve it. [02:40] And if you're so unlucky to at some point do solve it, that it will have plenty of delightful problem children that you can dig into. First of all, I think that's a beautiful way of thinking about life's work. But also it just works specifically well for me because I love learning things. I love challenging myself. I find myself to myself.

[03:02] Very, very interesting. I just like because almost my favorite thing is when I... [03:07] wants to do something and I can't because it's just like you kind of find the limits. And then you can have this conversation with yourself about what, [03:15] Because there's a very simple recipe to success that everyone, I think, sort of intuits or knows, but maybe not spent enough time sort of following through on, which is success is really, really simple. It's just you have to figure out what it costs and then you have to be willing to pay it. And very rarely is this comes in the form of money. It usually comes in the form of time commitment and discomfort and these kind of things. So I seek problems. [03:43] I, you know, love computers. Like, to save an example, triennometry, it turns out the... [03:50] very early, you know, video games like Wolfenstein 3D are basically just trigonometry. Once you realize this and like play with these things, they become delightful and you learn the next thing and the next thing. So I wanted to start a company because I was just like, is that the right time of my life? I just moved to Canada from Germany. I didn't have a work permit, so I couldn't work for anyone. I needed something to do. My wife had lots of, needed lots of time for her degree. And I'm like, this is a good time to try it. And it's probably not going [04:20] But I've learned a lot. And so this has been just a powerful way for me to motivate. I'm curious about, as you think about this, are there things that, [04:28] other people can do to more likely stick with and enjoy their life's work. I think there are a lot of people who enter a career, a profession, whatever, and they love what they're doing. And then as time goes on, barnacles kind of attach to the ship and cruft builds and responsibilities grow and your job evolves and you end up doing something that you didn't start doing. And so I think people sometimes don't know how to shed all of that weight. And obviously you, as much as probably anybody in the world, have the potential to have all of that around you.

[04:58] You've got, you know, tons of employees. You've got all these responsibilities. So it's possible that you could be encumbered by all these things, but you somehow haven't been. So I'm curious if there's learnings for everybody, no matter how many or few barnacles they have. Like, what can you do to keep loving what you do? Look, I certainly collected barnacles around certain times in my career, too, where I just like I sort of fell into the. [05:20] I think that's a good thing. [05:21] you know, trap of like [05:23] trying to live to like people had particular expectations not really like more like in the department of aesthetics like like i can only call it an aesthetic because people say things like this is what ceos are like this is like the behavior that a ceo should display you're supposed to be a statesman you should travel and kiss babies and whatnot i'm like well that sounds pretty inefficient from my perspective but like i i guess at some point you know you just sort of get riddled down [05:53] rule too. Again, this is a junk science a little bit. But what I'm pursuing here is trying to make [06:02] a beautiful product. I just think like we need to create products that are just like joyful. And like one of my favorite quotes is a quote by Kathy Sierra of like, don't make better cameras, make better photographers. Right. Like, and it's just like very deep to my psyche. I feel for beautiful tools and for beautiful, um, uh, [06:21] you can just inspire people to be the best version of themselves, actually become like induce more ambition, induce more skill, or at least induce more ambition for yourself to develop skill beyond what you otherwise would do. Okay. And so I think that I want this to exist. And that's just like sort of my guiding post here. And it throws off all these problem children, which are interesting, which then challenged me. You're talking a little bit about sort of calm. Like I'm not a terribly calm person either, but I actually don't want to like

[06:50] dial down my calmness, I want to channel it into building something. And so I've just found that almost all the mediocre products in the world, they remind me of room temperature, right? It's just like, it's sort of middle temperature of like the sort of what you get when no one really cares. Yeah, exactly. It's a default setting of a thermostat. Almost every great product is forged in some kind of furnace and some kind of temperature. And like you got it put up into [07:20] Do you think that that basically has to start from love for the customer? I don't know. I don't know. You seem to love your customer. The greatest gift, people make great products. [07:31] I think without that crutch. I think if you have it, it should be an incredible boon. You think you can be a great CEO and not love your customer? It depends on what great CEO. I don't know. I'm an engineer. I read lots and lots of books about how [07:47] to make great software. And you know what? Like many of these books, it's really funny. I like... [07:53] When you actually check what was a project that they all worked on when they figured out the design patterns of modern software, it's like the Pennsylvania payroll system. It's just not the most inspiring project. But it turns out, I think, just work is what you make out of it. And I think you can, if you just default to like, hey, let's actually... [08:15] build something that's like really, really meaningful and we all learn a lot about it, I think it can be done in any way. I have a massive benefit and really one of the greatest things and I tell people this, you know, in interviews, when people are thinking about coming to Shopify, I point this out. It's like one of the greatest gifts that this company has is all of our customers are inspiring. They are just like remarkable people on doing an incredibly courageous act of starting a company themselves. The people who flock to then come to look for Shopify are the people who actually

[08:45] have maybe a family member or at least a deep appreciation or in fact, want to do it in the future. People who've been in the near-customers. Yeah, in many cases. There's just something wonderful also about [08:54] you know, Shopify feels hopefully very, very fresh as a company. And, uh, there's no like tree rings that you can sort of read about its age, but like, um, [09:02] it has been around. And so therefore, when we do our annual summit or so, where we all get together in Toronto for a week, there's going to be people who work at Shopify who weren't born when I started the company. And it's just like, oh yeah, this has been a little bit of an institution. Especially now, kids are so capable at young ages of being productive. Absolutely. I think finding the challenges is useful and tapping into... I found it doesn't [09:32] But what definitely works is if I take the energy that I have, like I have such a discontent with bad products and software and so on, and I can like want to solve this problem. I want to, like you worked for a long time on HR software. We built HR software inside of Shopify because then we can't find the one that we want to use. And because we see ourselves as a tool makers and we solve these type of problems. [10:02] learning everything there is about how to build this type of software, so I can work with a small team on the side to make something better. And I imagine now you're able to do so much more of that with AI coding. And now it's like crazy. One last thing here that you talk about wanting to build great products, but you've also spoken about like wanting to be original, probably to a degree where I imagine you'd rather be original and good rather than mimicking and great. I mean, in fact, what's even better is like,

[10:29] be different because like again axiomatically if you are building the same thing other people build it can only be similarly good it can't be actually much better it can maybe or make slightly look nicer but like you're bounded a couple percentage points either direction if you want to build something great or much better it has to be different now if it's [10:50] So this has to be a starting position. If it then... [10:53] Um, [10:54] either converges on the same thing, you have learned something potentially from first principles about why the solution is the one that everyone has converged on. If it gets worse, you actually learn something more important because now you know, hey, you're... [11:09] theory here was wrong you something about the world like you you had an assumption which now hasn't been validated that learning is the thing from which you're going to pull so much value in every other realm now because like hey you you now have a clearer idea about how things actually work i think it's like the null results in um science are massively underrated and so um ideally then you don't ship it because the world needs to [11:34] Better, not... [11:36] Right. Like so. And I think that's actually we have tried to eliminate the term failure in Shopify and just call it the successful discovery of something that didn't work. I'm curious if you've experienced this. You haven't lived and you obviously spent a lot of time in the Bay Area. But I wonder if it's different for you being in Canada. But for me, over the last 13 or 14 years in the Bay Area, I have definitely felt a trend towards herd mentality. I think there was more originality in 2013 when I moved than there is now.

[12:06] Imagine there was more in 2003. I bet you there was more in 1995. Like I would, feels like the trend line is professionalization of the industry and the mindset. I'm curious if you experience it the same way. And I'm curious if there are [12:17] things that people can cultivate to free themselves from the sort of mimicry shackles. I mean, like, look, you can't help but be affected by what you see around you. And if, if, if, like, it's the best and the worst about the Valley is that everyone's working on interesting things. But of course that causes Prius to be preinstalled when you start on a project. What's amazing is like, and you see children interact with things like AI and they will use it [12:47] like free mindset of like, just like try to take orthodoxy or the obvious path off the table when you start, because the forces of, [12:57] especially teamwork, will always cause a convergence on the safest path, right? I think it is an advantage to be outside of a Valley. You just have fewer pre-arranged priors. In fact, a really funny effect was when I went to the Valley as a visitor and met with people and took over coffee and we were talking about, I was trying to figure out how a company should work and I asked questions. And then I went home and I had the entire flight to make my notes. And I, [13:27] what I hear and try to figure out, okay, well, what would the Shopify version look like and what would be better of the system and sort of make a difference because I felt that it's what you have to do. But then I realized, um,

[13:39] only they [13:40] late in my career that like I never actually got the real story from everyone about how they work internally I got everyone's ambition or highlight reel right like because that's what [13:48] they really share. That plus the ability to then make edits to try to improve it further, like, meant that very often we actually found ourselves doing the things that we thought someone else invented actually. They might never actually have implemented it. Maybe that was just the thing that they just had the most previous meeting over. And so I think that helps a little bit distance. I mean, additionally, I should say, I think the world fundamentally, Silicon Valley specifically, has [14:13] now for a decade and a bit, [14:15] declared war on any kind of distinction. All the talk about diversity was very much about eradicating kind of eccentricities and distinction and, you know, just like... [14:25] People are not allowed to be just quirky or funny with off-color humor. So I think... [14:32] I think in the rest of the world, that is a little bit more intact. And you just kind of encounter characters. And there's often more appreciation of, you know, so-and-so is just... [14:43] like a little bit crazy. And you know, like, that's really good. I think that's coming back again a bit. And so that's going to, I think, help a lot. Yeah. I mean, there was a big moment there. All tech leaders had to sort of go through the sort of political back and forth and sort of, what are we talking about at work? And are we focused on work? Are we focused on other things? That was not easy for anybody, I think. It wasn't easy for employees. It was hard for everybody, I think. It was hard because everyone, like, literally everyone wanted to do the right thing. And we generally all agreed, even on the sort of identified problems, but just not

[15:13] for this cost. [15:15] distraction and also an erosion of this thing. A company, I think, should resemble like an island of misfit toys much more than sort of a convergence on one sort of preordained truth. I think it's totally worth exploring. [15:31] any alternative on this idea, on the spectrum. And then I think, [15:36] The results will just tell us what works best. I just didn't like when people were saying, hey, we are deciding for you if we can have distinction in this company. And that didn't work for me. You've gone through another sort of like employee mindset change in the last couple of years with AI. From at least what I recall, you were one of the first sort of CEOs to sort of say, everybody, we need to like, however hard you think you're adapting, like. [16:00] triplet, quadruplet. I'm curious, like that journey, how did that go? Is it still going on? Like, do you have it where it needs to be? Is there an end to how AI-pilled we should be? I'm actually really proud of Shopify. I think this worked extremely well. I made a choice. There's a type of [16:18] situation that you get in running companies and large companies [16:23] like I think any large group, where something becomes... [16:27] Clearly true. [16:28] Um, and then, um, [16:30] you need to make a decision on like, are you, first of all, do you act on it? And sometimes people are just like, oh, are you feeling bad? Right. Like, in fact, very often people fail to figure out what's true. But, you know, like I'm sure BlackBerry thought they were doing really, really, I think they had the best year of sales ever when the year iPhone was released and thought they were pretty safe. And sometimes it's not that people are just not smart enough to see it. Sometimes they don't want to believe it or want to see it. Exactly. They know the implications.

[17:00] created an organization where like sort of every layer inside of a conversation, like just sort of prioritizes kind lies over hard truths. Often because people just, sometimes because there's a culture of everyone being nice to each other. There's also, when you have a big enough organization, you talked about this with sort of like teams, you know, make originality difficult. I also think big groups of people, it's hard to get everybody to agree to go through an uncomfortable change. [17:30] this with companies. And then they are really massively underestimating the potential [17:35] what you can do when the founder is still present and in charge. It's not so much about the individual as in about almost the piece of infrastructure, the slot of having the founder filled. And there's a lot of distinction, but it's actually, as the founder, you get so much social credit as having started a company, but you can just invest in it. It's a bank. And it's just like every day, every time someone on boards, they hear how the company was created, and that just [18:05] tokens, I suppose, into a virtual bank account that is hard to reason about, but sort of virtually exist. And then I get to cash that in. You can spend it on big, important changes. And change management, right? Like, it's like, that's one of the best ways. I can speed up something that would take years of small culture change or like internal training with sometimes a memo. And so in this case, like I find, I take that really seriously. It's like not the easiest thing for,

[18:35] I just find... [18:36] that is what I owe the company, right? Like it's my best way to help the mission. And so when something like the AI thing becomes true and we're saying, hey, we have like two people, they're both equally good programmers 15 minutes ago, but one of them like it's just been, [18:51] like completely onto the AI train and just like, as sort of back when I wrote this, it was really hard to actually get real value out of AI. It was more like the premise of AI was important. Like what do we do in performance reviews? And we just like the moment we said, like it's like, we can't, we, [19:05] it's impact rating. It's called like net impact reviews, they call it Shopify. So like, what's your net impact on a company and a mission? And so like, it's just like, [19:13] very demonstrably true that one of the people was more of more impact and the moment that is said it is feels like an incredibly unkind to not tell people so so just like hey let's write it out and send it to everyone it's like unfair if you're like this person has an exoskeleton on and i'm not going to point out hey that exoskeleton yeah if you act on this [19:33] thing we should tell people. And so we did. And I included a bunch of other things that are true. Like I've invested lots in making sure that everyone has everything they need. They have an unlimited token policy that I'm sure your brother is thrilled with. And so, you know, like we want people to tinker. We want people to play with this. We want people to use it as much.

[20:03] came along, but what Shopify did with this, the speed of the fusion of this tool was like remarkable. And I think Shopify's like, [20:10] I'd like to think Shopify is like predisposed for this. We have thriving on change is one of our core values and we really mean it. It's good that you talked about like your net impact. I think one of these sort of blunter instruments that's getting used a lot right now is just like tracking token consumption. And people are like, I want to see token consumption go up 20 percent a month. You know, I think there's founders that say that, which is it's not an obvious, terrible idea in the same way that, you know, judging people by lines of code, like we could debate is there anything to it, like probably something. But I think it's fine. [20:40] be like had a leaderboard and so on. Of token. Yeah, yeah. And of course, that leads to immediately bad effects. And then we don't have that. Like on Vault is our internal system, like it's of intranet. It's probably not a term that anyone's ever heard. But like it's so internal wiki and everything. And on your profile, it shows you what your token uses and which percentile you are in your department and group and so on. Just like because that's interesting. I think, again, also because we are tracking it. [21:10] I mean, at some point we have to allocate finances to OPEX and whatnot. And so just therefore we show it to people so they don't know. This is probably different numbers because you're at such scale, but there are private companies whose token spend as a percentage of revenue is going into pretty wild places right now. I kind of think that's fine if you're an earlier stage company and you're just trying to win the market at all costs. But I am curious how this might play. I'm sure even you're seeing token spend at numbers that are probably not a huge deal relative to your revenue.

[21:40] compared to revenue. It's like, it's, it's unbelievable. It's like many percentage points. It's extremely high. It's many tens of percentage points for some of these private companies. And so I am a little curious, you know, right now we're in that part of the journey with AI coding, where it's just so valuable that people are just like, I have no choice but to spend because it's too productive. I do think that that won't, [22:00] we can't spend 70% of revenue on ad tokens forever and have valuable companies. So how do you think this might go? It's complex in a way that like, [22:10] I'm very, very grateful for the state Shopify Z because we are a profitable, public trusted company. And right now, it's just like we really, really, really like the tokens we're buying. They're incredibly valuable and we are doing incredible things with them. It accelerates us in roadmap and therefore ambition. I think it just causes so many good things. You're getting leverage on your spend. It's like it's a no-brainer. I have very, very high opinion of markets. Markets are extremely good. [22:40] They will figure out what the correct clearing price for these tokens is. And right now there's a few providers and maybe there'll be more in the future. And there's all sorts of interesting moves around distillation and so on. Like I think companies will know how to wield these tools within their budgets. And we are actually doing a good deal of this kind of thing as well, but we are still... [22:58] just like charging ahead, because frankly, we like the tokens we're buying. It's like it's it's that simple. I agree. And my instinct is that. [23:05] you know, it should go down. But there are possible worlds where it goes up. I agree. Yeah. Honestly, I don't know. No one knows. It really don't know. We are certainly I think we are 10xing the amount of tokens we want every year right now. And I'm sure that's going to go up and be a free xing the amount of GPUs that we are putting into the world. So that is, yeah, those lines are not converging anywhere good at price savings. So given that AI coding is dominating so much, how,

[23:31] what are the biggest changes to like team design? Like, you know, there used to be this [23:35] EPD triad. And it worked a certain way. And there were certain ways that roadmaps were built and reviews happened. And people would go out and talk to the customers and bring that back. And what is it now? What is sort of like the... [23:48] the sort of, you know, most fundamental... [23:51] molecule yeah i think the small team is my bet um like it's it's like the three four five people team uh which actually is like funnily enough has always been shopper's bias this is quite gratifying to like um um the reason why we had to very often go past it now is because you just need a lot of specialized skills at least for for certain moments uh on the teams your example is a great one talk to the customers it's just like having someone who's like actually like does the [24:21] like four-located people from the support org who are looking at [24:24] We routed them, all the tickets, and put them on the teams, which was an amazing way to do it. Now, just like the sort of agentic harness around our teams, it's actually routing, like, [24:33] really, really good summarizations of what our customers say automatically, basically back. And so that's now available to everyone. And then everyone can do more skill. Like, again, everyone is a 7 out of 10 on every skill now. So that's like really, really helpful because it allows us to make teams smaller. The thing that we are... [24:52] working the most and thinking the most around at Shopify is that I'm, [24:57] I'm big on pace. Pace has to be induced, otherwise it's received. Parkinson's Law is one of my most recommended books, and I have a 1970s, 60s copy of it that I give to everyone, my executives. I own many of them of the original run because it's so meaningful. And the law is basically? Work expands to the time allocated to it. The book is 60 pages and full of these kind of wisdoms. This is the most important one. And it's basically one of the most important functions of a leader is to just compress time windows.

[25:27] Super plausible. It's not that you just give any deadline and anything happens, but like if this is why it's really, really helpful to be very technical and understand all the like sort of tasks and skills, you can ask for something that has like a 50 percent. [25:39] percentile chance of being the right ship date um then everyone gets to complain about uh you know the crazy founder which is like great um it's like do do whatever venting you want and then you do uh very often some of the best work of your uh careers um and and um uh you know that's why people actually flock to these type of companies because you you're surrounded by the other people that you can go on such crazy journeys with the main point here is like uh [26:03] I run the company by the six-week review cycle. We go for all the projects and spend the time with engineers and champions and PMs. That existed to set a pace, like a [26:15] pace ceiling, I suppose, ceiling, floor, floor, of a 6x6 cycle, which was faster than we instituted it. Because if you don't do it, you are run by a quarter. Sometimes you see, like the moment you see in a [26:28] PowerPoint for the first flag, second flag, [26:31] flag is someone uses the word h2 or h1 which means you know first second half you're actually fucked you you you you're you you actually really have to do something yeah yeah exactly so as you do this um and uh now i think actually uh a success review is actually way too limiting it's just like we can do so much more and we're trying to figure out how to [26:50] like what is replacing this um i want to talk about sort of your customers and what [26:54] AI means for them. You know, we were talking a little bit earlier about how, like, there's a lot of, there's a lot of young people right now who have sort of fears of permanent underclass and how I think basically the idea being like, you're just entering the workforce, you don't have any like accumulated skills or, you know, credibility yet. And now you've got, you know, this AI thing, which in some ways is empowering, in some ways seems scary. The net is that there's become this

[27:24] sort of the career and financial heights that they went to. And you sort of talked about how like that's not necessarily the experience that your customers are experiencing. [27:33] feeling. No, and again, our customers are wonderful, and they're entrepreneurs. They're courageous people who are putting this out there. They build businesses. They create employment. And it's like, [27:45] In one way, it's like a [27:47] it's clearly like a particular slice of people who would do this, but like it's actually much bigger than people think. First of all, it's incredibly diverse. It's just like it's like really you put like Shopify's customers go exactly with a population map. It's like great businesses in the smallest communities. It's like, well, it's a point of sales stores in the town center of tiny, tiny little townships as well as, you know, Aloyoga. [28:17] It's incredibly different and it's cosmopolitan. It's big business, billion dollars business. It's the people who are trying to build a thing in the lunch breaks to make ends meet or actually because they have an ambition that they want to become entrepreneurs. So what's. [28:32] so funny with the way the AI conversation is projected, how it's reported and sort of what you see on social media and so on, is like, it just doesn't, like, we can't access it anywhere. Like, anywhere where we look. You're saying Shopify's data and experience doesn't map to this Doomer stuff. It absolutely doesn't. What we hear from everyone is like, hey, you guys fix computers. It's like, you techies talked about computers being these incredible things that can do

[29:02] And it was so complicated. And so and then we try this and they like, I don't know what you guys just sound unhinged. And now we have we can talk to it and it just does the thing. It's incredible. It's like just works with me. And it's like I feel like. [29:13] I've expanded my business and I've hired all these people now. And so, I mean, it fits into Shopify's vision because we want lots and lots and lots of small companies. And by the way, 60, 70, 80 percent, depending on country, of people in the economy work for small businesses. They're incredibly precious and important. So what should AI mean? If you're a small business owner, you're starting a new small company. Logically, what should the change be as a result of AI from 2023 versus 2029? What's the fundamental change? [29:43] your ambition for, I think, our customers are [29:46] like if you would Paul, like I think they believe in a permanent upper class. I think they are just gonna, like I think there's, we're gonna get to a point where just many, many, many more people can self-actualize. There's two pieces of data that I just find incredibly meaningful. One is like every 36 seconds someone has gets their first sale, which I just think is, it just, while we're talking here, think about what that means for how many people just became entrepreneurs. The other one is [30:13] more like a higher level observation, that every single time we ship something, where we know it meaningfully changes something about the early journey, the sign up, the kind of complexities, the questions, the friction in the business, each of them can be best thought of as a hurdle that someone has to jump over. And every single time we managed to make the hurdle slightly less high because we made something just vastly better, we know let you register domains or whatever, or easily transfer them. Or in fact, these days have an AI

[30:43] but it helps you set up GoDaddy, right? Every single time you do this, more actual business come out of it, which then provide employment and so on. It's people churn out early in process if something happens that ends up being a governor for them and then they null out, they give up and they stop and then the entire business doesn't exist. AI is just, never ever has there been such a thing that it can take people to be so supportive. It occurs to me that last year on this podcast, I asked somebody this question that, you know, they were a fine person to ask, [31:13] that asks us to, and it's something that I've been thinking a lot about, which is what has to be true for us to be in a place where you can like prompt build me a business. Like how far are we from, hey, I made this widget. [31:25] Please go make me a million dollars. Thanks. I mean, it's my favorite podcast. [31:30] replacement, like idea as a replacement for a Turing test, which we, of course, sailed past without oddly very little notice, I think. It is crazy. I think acting in the real world, starting a business and that people find meaningful enough to vote for to the tune of a million dollars. Marketing it correctly, getting the right sourcing, meaning demand. It is a wonderful, wonderful test. Knowing what things to prioritize. Exactly. The shipping matter. I think we are actually getting there. [32:00] So you can obviously use Shopify without having products. We help you find manufacturers if that's what you want. We help you... [32:08] There's an entire thing called, you know, collective that's where people [32:12] manufacturers,

[32:14] offer their products that you can then use to in your Shopify store. So if your if your particular skill set is the marketing, you can come to Shopify and like you can you can try your hand on entrepreneurship. And again, very often, [32:25] I think about half of Shopify stores end up being created by people who have done an online store, at least a business before. So people are just like, you know, try and build things. People should have a product that the world wants. [32:39] um ideally come up with some some unique take on something and there's so much white space out there but you think ai could do everything else i think every area should then do absolutely everything else in fact it's actually literally what our what our product's ambition is to be like the maybe the vessel for ai in being the brain or the exoskeleton around the model um to to basically like conspire to just like do absolutely everything so that if you show up with a [33:09] like too crazy of a sci-fi place. Is it possible [33:13] that it could also do the make a product. Like, let's say I wanted to say, hey, just go make me a million dollars. I think, I mean, anything in a digital product. Yeah, like go make me some e-books. Exactly. You know, actually books, you know, there's print on demand for books, for T-shirts. Like, honestly, additive manufacturing is getting extraordinarily good now. And there's lots and lots of great contact manufacturers for this kind of thing, like CNC and 3D printing. [33:43] And then we are like looking at humanoid robotics, which kind of, there's a lot of tailwinds here to the fact that like making the products is going to become lots more tractable. This will probably be 10 years till I'm asking guests this, but the prompt like build me a house and then the robots just go dig up what they need and put it all together. I think it's a world we're looking at. I don't see how it couldn't get there. Right. And I just think this is like, this is what I just like about the Doomer conversation or the permanent underclass or whatever people want to call it.

[34:13] Exactly. And frankly, that then goes into this sort of, we eliminated all the jobs. It's like, you know how good we are at making up jobs? There's so many examples of things that are just delightful. I have friends who are... [34:31] he like open claw came around, but we didn't need, we need, but we didn't think we needed. And then it ended up being one of the most compelling things. And like one thing, let another, and now I have a, [34:40] they have a warehouse full of 3D printers and things because it just like suddenly... [34:46] you have a javas that you can say i would like to do this project and i have this i bought this crazy 3d i know scanner from facebook marketplace i just put it there i don't even have a software for it but you just go hack it and you figure out how to help yeah and it's just like i know holy crap i asked kyle vote um from bako i was like will we get to a place where like i can just like text my robot to like order instacart like get the steak you know prepared [35:16] up. He's like, yeah, that'll happen. At Benchmark, I spend probably three quarters of my time in software land. But sometimes I do step back and I think, OK, to actually like, you know, this is maybe a little easier for me when I'm like not in San Francisco and I'm like touching grass in some other city or something. I'm like, OK, what's actually going to raise the standard of living for everybody in the world? It's things like we need more and better houses. We need better transportation. We need better food. We need like better health care. We need good education. It's like all these things that aren't software. And then sometimes I think about like some alien

[35:46] us all and we're just like sitting behind our little boxes typing everything's going better in typing land and it's all bopping about in software land but we do really need it to get into the physical world to like because the standard of living it's all it is all on some level physical absolutely it completely is and i think this is actually the missing ingredient right like because i mean people talk about the you know what was looking at the incredible infrastructure we used to build in the 60s it's like well just even before that there's a hoover dam like you [36:16] about this infrastructure project, how quickly we built subways, and now it takes like forever and so on. Like there is an observed degradation of like a lot of these kind of projects. And it's multifactorial. There's not one reason behind it. But one of them that really is true is because we are building the modern wonders that are no less impressive entirely in software. [36:46] are and so easily and without compulsion and just by volunteers sometimes people who have never met each other in the open source world or at companies building these i mean like something like google or or or social networks it's like they're incredibly incredibly impressive pieces if they would have physical manifestation you would again you go to something like a uh like a like a like a

[37:16] and so on. It's so impressive. It's not even in basis points territory in terms of complexity compared to a browser. Exactly. And just so we don't appreciate that. And so that's not our problem. I don't think I appreciate a browser. Is a browser near the top of complexity? I would put it under, it's one of the wonders of the world. I mean, for so many reasons, like it could never, ever be introduced today. Can you give a small flavor? I'm sure it's hard to even explain why it's so [37:46] many ways, like, if you just, like, okay, you've got your website, it's like, [37:50] We don't trust that website. We just run code. But also just like it's like actually a computer in front of you magically reconfiguring itself into someone else's vision for what should be there. And like without limits, it's actually like you download software that then just like exists for this one moment to do literally everything. And like what it's self-responsible. [38:20] builds of business that might otherwise not exist. And all of this just happened because anyone can just put a server online, gets an IP address automatically. It's insane. And then it all hangs together. It doesn't come down. Why doesn't it not all crash? It's the most reliable thing. And no app store on Planned Earth would allow the web browser if it would be introduced today, if it didn't exist. It's just like, [38:45] it would like no one would allow this because it just doesn't even sound like it sounds like an insane pitch yet it exists and we just don't think about it and so it's it's just also like the font rendering alone is like one of the most complex like like the font rendering alone is a true incomplete system but like just just because we want to be able to read text slightly uh more uh better than our displays can allow them and it just like it just keeps going going and and it's

[39:15] We have not stopped as humanity building incredibly impressive infrastructure. What has changed is the infrastructure that needed building over the last 30 years. And the reason why other infrastructure didn't happen is because the people who quit. It's just so much went into this. What planet Earth needed for us was a digital infrastructure. And it's like if all those people worked on robotics. It's like this is and this is happening now, right? And it's like we are. This is happening with AI. [39:45] All the software we built was a bootstrapper for AI. Software becomes, due to this achievement, something that can become personal again and become like, now you can have basically a web browser, but the websites don't even need to exist that you would like to see. The browsers, it's so true when you say it like that. The easiest to identify with example for most of us probably is like an iPhone. We probably all just randomly one day look at your iPhone and you're like, how the hell does this thing exist? It's crazy. [40:15] is and as like as reliable as it is and it's like it's personal as it is and so i think um i think the uh [40:22] The iPhone is a lucky exception in that you can appreciate it as a physical because it's not the fault of [40:29] Like everyone is right when they say, why is everything just like kind of standing still or not getting better around me? Because from the perspective and from the ability for us to observe, it is like because all the infrastructure digital. But we are almost done with this. We are at the end of the opening chapters of all this. And so now I think we will see vastly more impact. We put all of our energy against this thing because it was the foundation. But now all these people in some sense be free to not write software. That's exactly right.

[40:59] huge influx of the brightest and most creative and driven people to make things which are going to be much easier to relate to and have much more direct impact on people's lives. How important for you is it as CEO of Shopify to have an opinion on where AI will be in two years? There's one worldview you could probably take, which is like, this is so unpredictable. I'm going to take it as it comes. I'm going to try to know six months ahead, but I'm going to do what [41:29] time with the labs. I'm going to try to have an understanding of like two, three years out and try to [41:34] care about the farthest out I can see. What do you think is the right position? Yeah, I mean, if my friends would listen to this question, they would laugh just because it's my predominant obsession. I try to have as many data points on as many people, which I then can try to match to the right super linear or linear or sublinear curves. So just figure out how they all connect and what sort of therefore... [41:57] will happen in the future right like it's basically i mean to me it's the most fun game in the world is like have a pretty clear-eyed view of what the future is like and what in particular are you trying to figure out i mean the ai memo is like a good example because like i again it was probably slightly too early to write it but now if you read it now it like it says nothing that would be surprising right like so being able to give my company the gift of uh um like a head start is i

[42:27] something that isn't quite clearly true now about the importance of these systems. And we can rebuild our systems to really, really reinforce this and support everyone in their own tinkering exploration. That means that our view of the future is going to be more accurate in things we are building, because you're always building for a future point. Software is getting faster to build, but you still have to aim at a future point of value. It's not our customer's job to tell us what they need. It's our customer's job to tell us what the problems are that they're experiencing. [42:57] our own and just solve them in an ideal way. But that's our job to figure out what the ideal way is. That comes into contact with our customers and they give us further feedback for refinement. But in my mind, it's a complete abdication to just build what your customers ask for. It's an abdication of product responsibility. And so it's hugely important. And it's kind of like almost everything, every decision I make, I try to make on an understanding of, like, I try to live [43:27] Interesting, while it's incredibly fun and helpful to talk with the labs, and sometimes there's some really important information that you can get from this, [43:37] What I found and we sort of touched on it earlier is my one of my favorite things, especially for, you know, product teams and so on. And then engineering is to hire people who actually know Shopify really well from outside. People who are merchants, some of my best product managers, because they actually understand. [43:54] what the software feels like when it's being used. And, you know, same with people who build apps on the Shopify platform to help come to Shopify and help make the

[44:05] app platform better it's like it's like i actually don't even think being in a lab is actually the best position it's actually being like [44:12] using everything and paying a lot of attention of how everyone else [44:16] uses what the sort of gifts that the labs release and then being in the sort of conversation which usually happens on X on what everyone's figuring out, maybe actually [44:26] building something and seeing everyone finds it useful. It's like, I think this sort of learning by doing is just the [44:33] That's actually how to get the most clear view of how everything works. Does that give you a clear view on the present or does it also give you a clear view on what's coming in a year or two? If you do it over a while, you get trajectories. And the trajectories are the point. [44:47] exactly on the state of the art meta of the best thought on stuff, and you have other data points, it's just the future gets very simple to predict. Now, it's the hardest time ever to do it because like right now the time horizons are so short. I did this very same thing throughout my entire life. [45:06] And it used to be that the future was absolutely trivial to predict. It's like, you just like, I mean, you just looked at like the first couple of numbers on mobile browser usage and you just knew what's happening on a cell phone and [45:19] but we needed to make mobile websites, which sounds insane now. But like, yeah, that was at some point people didn't believe that. And so, [45:25] Are there parts of AI right now that you think are [45:28] under-hyped in terms of capabilities and are there parts that you think are over-hyped? [45:33] Obviously, the labs really care about programming because that's the problem they need to solve for themselves. And again, it's always easier to build.

[45:40] And then for various reasons. So like, like, Opus is unbelievably good at programming. And right now, it's easy to go from that and then just like assume it's equally competent in everything else. And quite often it isn't. If you want to discuss like how to do like a like a like a public talk or something, it just doesn't have great like theoretical routing of this. [46:03] ways to construct tension and so on. But it's not able to then look at something and make it meaningful and better, where even an incredibly well-optimized piece of code often finds abilities to go and do better. What is happening a lot is that they're bringing more [46:19] types of problems in the domain of programming, which is really what OpenClaw is, if you really think about it. It's like, make it a file system, give it tools like a programmer uses, and make a couple of files. In the files, just tell it the soul and the memory and so on. And then it uses the normal programming tools to interrogate this. And because it stays a little bit in-domain programming, it now actually is remarkably better at this other out-of-domain thing, which is really, [46:49] you know radio chart of things that are valuable and bring them to the same point of your home programming so i think there's a bit of overhype in like um having to work so hard on bringing things in programming domain because like all of this is just going to get much much more natural and easier as the models appear where it's underhyped is uh just in deployment in companies i think and just like like what role it should play it's like there's a huge

[47:19] enough partly because everyone just starts with like hey let's let's help me do the things that i've [47:25] been doing all along slightly better or actually vastly better which is valuable um obviously but like [47:31] if you do with more first principle things like, hey, if AI would have been around ever since Alan Turing first wrote about it and we just have looked and we are just in the presence of these super intelligence all the time and we would just invent the job we are thinking about right now. Like how would we do it? Like just invert the whole thing. And you know, when you're like, it's just so much more fun to have those conversations. And I think it'll be like, [48:01] that the most creative and best people will really, really appreciate because everything just around them happens at the speed that they want to work. And that has never been true for any company that requires some bureaucracy for doing stuff. On the point of talent, have you changed anything about the types of people you're looking for, like pre-post AI? Are the same people who were successful before, are those still the same most successful people? Or is there any attribute that you are scanning for in a different weighting than you used to? It's fascinating. So this is actually really changing all the time. [48:31] to change my mind a couple of times, but I think the best distinction point is, you know, Shopify is 20 years old. I think average age of Shopify is somewhere like late 30s, which is, I think, still pretty good. But like, I mean, like this is one thing you have to look out for, like as a company. If you, there's some companies which is, [48:49] age themselves 12 months every year for various reasons.

[48:54] You know, that's that's [48:56] probably a problem at some point when a lot of new things happen. So just massively restarting the internship program has been really helpful. [49:04] We take a thousand interns a year from a bit closer to Waterloo. So it's great. And just making sure that the [49:12] interns are not just the students now, but also the teachers, because like, again, they are just like, so I am native that it was really, really helpful. It's also interesting because initially I had the thought that, you know, there's like fluid intelligence and crystallized intelligence, basically knowledge and curiosity driven willingness to learn. And often early career, you have more fluid, you have no knowledge, therefore you're all fluid. And [49:39] Then I was super new. That was the first people who just flocked to it, right? Like I immediately got value out of it. And that was super, super exciting. I had the thought that maybe that really tilts into their direction. But then as... [49:51] we started like more of a system sort of got firmed around the coding harnesses, cloud code, Pi, and all these kind of things. Really, programming is so much not the type of typing, like typing, task of typing. It's really understanding the problem deeply. And I think every program in the world massively underestimates how much they're doing when steering in AI right now. Yeah. And how much that was really them [50:15] being creative and actually just like, like it's uniquely there is what they're coming up with. They are like, just like having seen the movie before, like you can sort of spot the AI just going the wrong path and you just like one, two words can completely like just change everything. There's a very, very long answer to say, I kind of don't know, but I actually just think good people are good. Like it's like, there's a bit of variance how quickly people adopted the tools, but once they did, it's like,

[50:44] Everyone just falls back onto bear. I guess that's the sort of what do you like side of the question. I guess to flip it to what a candidate's like, have you felt any change in competing for talent in this market? Maybe you've got a lot of variables at play here. You're public. Many of you are competing for talent companies. You're probably private. You're in Canada and not in Silicon Valley. There's all these different factors. But I'm curious, how does the sort of like... [51:12] AI wave change sort of what you do to sort of attract and retain the very best people? Yeah. I mean, I think the best way to deal with recruiting is to build a company worth looking for for the best, right? Like, so I think, I think people are like thinking about it too much as selling and not enough as marketing in a way, or at least even just like information. Yeah. It's like, how do I look, how do I look super healthy? Like, well, you could like, you know, you could use this, you could turn this angle, you could do this like, well, you can just try to be healthy. [51:42] just simpler sometimes when they seem. - So what goes into that then? - Yeah. - Obviously there's like, you know, being a good business. - Yeah, just don't mire people in bureaucracy. Don't like, give people the space that like to be creative and have them like, allow them to, you know, fall in love with the mission actually. And like, have them understand what problems people care about and what impact the work has. I think Shopify has a lot of intrinsic advantages here, but like, I mean, the best way to attract talent [52:12] sort of try on the idea of maybe coming to Shopify that, you know,

[52:16] They come by, they meet everyone they will work with, and also really, really impressive people that they will work with together. As a CEO of a public company for, I think, over 10 years, how do you feel about companies being private for so long? Like, obviously, it's like more possible than ever. Yeah. Venture markets are a lot bigger than they were back when you were going public. But I don't know. Like, what do you think? I find it a little bit sad from a perspective of, like, I totally understand why the individual companies do it. [52:46] end up like buying Shopify stock and it's going well for them. Exactly. It's just like I... And a lot of retail investors have done really well with it. Exactly. It's just like, it's remarkable. I can go basically anywhere and just meet people and they tell me that they just bought some shares at some point and just like it was really, really important to them. And it's like, it's cool. I just want people to make money with Shopify because I'm like very... [53:08] much not like the sort of one vote one share kind of thing uh like sort of the influence part i'm like totally that's what the fuck's that all about like just like like founderships let's go yeah but like i think they had tickets to uh participate in something you believe in like i i mean look my view of money is money is how you vote for the what you want um and when you buy a product you're voting for that product and [53:32] everything that caused that product to exist. And that works with shares too. Like if you want to hop on a company because it does things that you agree with, then you can buy them and you can go to another company if someone else captures the imagination better. And I think that's a wonderful institution. So I just also, I feel like it came from a meme. I think because I've lived the other side of this, that's kind of easy to go public. You're saying the stay private, it's much better? It's just like, I don't, I mean... What is there? I mean, the arguments you don't have

[54:02] scrutiny. Not everybody can see all your financials all the time. Your employees aren't seeing their stock move up and down. Fair enough. I just never really saw these things as bad things. They're like, they... [54:12] they induce like a diligence and a data drivenness and kind of a little bit of, you know, a set of responsibilities, which I think are, [54:19] worth having because you are, you know, you're responsible for thousands of people's jobs and an important product, right? So what are the other benefits that like, you know, you just shared one about sort of the joy of, you know, a lot of people getting to [54:32] share your success. But it helped us in a way that maybe it's not always the case, like in, and especially as a Canadian company listing on, and in New York. Um, [54:41] We were just very small. Like when Shopify IPO, there was like one and a half billion dollars valuation, right? So you've had a hundred acts in the public. Yeah, yeah. And right. That's cool. And therefore I find lots of people who tell me that was a good investment for them, right? It gave us like legitimacy to then go into like, you know, we never wanted to go up the market, but we always wanted to have a product that can work well for people at all parts of the scale. That just sounds like, [55:10] and like just words is about 100x harder from building a product, right? Building a product that's like actually scales across the entire thing is insanely difficult to do and has been one of the most, you know, fun challenges to pursue. And so, you know, bigger customers, but just like, yeah, you have the company. That's cool. Like that's, that's, that's different. And frankly, there's really, really, really good people who would only work for a public company. So that's also helpful. Makes sense. And my last question is, I know you have at least been a big reader. Do you still have time to read a lot? Yeah. Yeah.

[55:40] I should read? There's so many books I love. I mean, obviously, like, [55:43] I'm a huge fan of a sort of short, incredible books like "Pakasson's Law" and "Lessons of History". [55:50] And just like then people distill like all of their knowledge into like, [55:54] under 100 pages, then I think [55:56] that's great. I recently read a really good book on, it's called, What is Intelligence? It really explains basically all of biology from a perspective of how important prediction is and how it probably emerged just in the sequence. I'm like, this is like, [56:10] Feld. [56:11] that's accidentally profound in a way that like i don't quite know if that was because it felt all this part was just to support an argument later that wasn't actually that important to make i think so this is kind of interesting i think others have felt this too but i struggle i've been struggling more to read partially it's stage of life thing but partially i think like the internet is making my brain lives too short and partially i think i am in a headspace where i want every minute to be productive and so it's hard for me to read a book for joy and i need [56:41] It's a job of an author to make you keep reading. Like this is important, like mental switch, right? Like if you read a book and it just like doesn't capture you, it's like that's not because you're broken. It's because the author didn't manage to do the thing that they set out to do, right? Like I sort of have an advantage, disadvantage. I have probably advantage at this point. Like being out of cycle with my wife or as a light sleeper. So like I just like go to bed. [57:06] than she wants which is like way too early yeah actually like a 10 or whatever something crazy yeah i'm like a night also i i don't need a lot of sleep luckily so yeah i uh i uh just have like hours of reading time and that's like you know the kindle is not that bright doesn't wake up and therefore i'm have a couple hours of reading time you're not doing scrolling on twitter like the rest of us yeah yeah it's it's important to like using like this i really really am a huge fan of the kindle just because not because it's great but because it isn't right because it's like

[57:36] So yeah, I find that wonderful. I just find books just to be so remarkable. They're like going to the gym. It's like when you read a book, I'm like, I've got to be reading more books. Life just pulls this off. It's best to have some ritual or some dedicated time for it if you can pull it off. That just, I mean, at least looks for me. Yeah. Well, Toby, this was an absolute pleasure. Thank you for making time for this. This was really fun. Thanks so much for having me.