Transcript

[Harry] Tobi, I'm so excited for this. I had so many great things from Glen, from Luke, from Jeremy at Bassima, from so many others. So thank you so much for joining me today.

[Tobi] Oh, it's an absolute pleasure. I was looking forward to this.

[Harry] Now, I thought we'd start with something a little bit off the bat, to be honest, Tobi. And so I thought we'd start with think back to when you were a child. What did you wanna be when you grew up?

[Tobi] Hey, so I got lucky. I got really lucky. My parents got a computer for me when I was six years old. That's like a basic computer. If you think C 64 when you get the right idea. It's a German product called an Abstract, and I knew Red Bear was nothing else. Like that would be more interesting. I learned programming before I knew that was a thing, or term or was called some programming just from following listings on magazine. So I must have been like, what years old or so. There's just no chance I'm gonna do anything other than program all day. Now, I failed in this particular frame of reference. It was only a period of my life where I did that all day long, but I never stopped. So it's been with me ever since.

[Harry] Can I ask what captivated you so much? You mentioned six when you got your first computer. What was it about it that made you so interested?

[Tobi] Oh man. First time sitting in front of. Typing like any letter and seeing at a piano screen was just magic. And remember that was like before that there was even, this was 80, mid, early eighties. So mid eighties, and the typewriters were around. Yeah. I I also like in a small town, so if you would've been in Silicon Valley, you would've encountered computers more. I wasn't. And there was this sort of magic and then you're like, okay, how does a computer actually do that?

I hate black boxes. I really dislike boxes. It's actually a parroting principle in our house. We talk about this with my kids do not like black boxes in our house. Everything is understandable and everything is way more interesting than it seems. And so I just wanted to understand these machines. And again, when you're a 10 year old boy growing up in a somewhat rigid ruling system like Germany's, we've had hours of Latin a day and things.

I mean, you have a lot of things. You might even have some free time, but you don't have this agency. There's nothing in a world that you can absolutely control in a way that it does this thing and it will do it forever. It doesn't fit into the rest of life experience for anyone who didn't end up spending time with, so these fairly primitive computers and making things and then figuring out the utility. In many cases, you did a thing, you might have actually done something about other , and I think people need frontiers or some people need frontiers. I think entrepreneurs need frontiers. There's a need for reaching for something that could lead to value in world around us. I just absolutely loved to build things of my own, share them with others, like some pranks and so on. There was so many things I could do because I had a set of skills that was rare. During this time, it's hard for me to answer your actual primary question other than with anecdotes because it was never a question in my mind as there was basically spending time on a computer. 10 x to a hundred x more interesting than literally anything else that could possibly have my life for the first 10, 15 years of my life.

[Harry] Imagine not growing up in the valley and being in the German school system and hating black boxes. I always think that we're all functions of our history. So to speak, I'm secretly an armed chair psychologist who actually never got a psychology degree or any degree at all. Actually, Tobi, but my question is, what do you think you are running from when you reflect on that all being the functions of our history?

[Tobi] What I'm running from boredom is something I like to avoid. Ignorance. It's more magnetic for me, honestly, there's more magnetism in the direction of where I'm going than there is a reverse polarity in both place. I'm coming from, there's certain schools of philosophy that do a much better job of articulating what I'm about to say because this is my own homegrown life philosophy. Try to become a best version of yourself. I know it sounds like super cliche, but it's as if at the end of life you meet the person you could have come and a, a work of life is really try to minimize the difference in that person and one that actually showed up and I find not understanding a thing feels almost amoral to me. It just feels like we've got these incredible brains. These brains run a model of Planet Earth, which we went constantly interrogate. And I want that model, right? And therefore, every single time I get to dig into something, into learning something, I can update this model. And the nice thing is, first of all, that's super fun.

Second, that model is the one I walk around with. I go into every one of my meetings with, I go into every encounter, every situation I hold up to, every problem that I need to solve. And the quality of all decisions is simply how correct, how close to the truth is that model of a world that I've been developing. And I wanna be able to reason, like right now, I got a reason about the new things that exist in the world. I need to not treat transformer models as black box. I don't need to treat embeddings as the black box. I need to understand those cuz otherwise I cannot show up to a meeting with my teams and say, have a good chance of reasoning with them about not just convenient next task, but what is the new thing that all of this unlocks.

And that's been driving me every step of the way.

[Harry] You just gave me so much too, I would love to break it down into kind of three steps though, which is selection of learning, process of learning, and then decision making post learning. If we think about a selection of learning, I heard you say on a different show.

That actually when it comes to great founders, the best founders that they can do is subtraction. When you think about focus and deciding what you choose to learn, how do you determine what you should choose to learn versus bluntly, maybe interesting, but a distraction?

[Tobi] Right, there's a thing called product market fit. I actually think I'm more, sometimes important thing in this context is actually founder market fit, but I think you can play this game at more layers. I probably have something weird like curiosity slash times fit. I am interested in literally everything that can add value. It's a very bizarre thing actually. When I get interested in something, I know there's value hidden in it. I've basically never not brought lessons back from something, and so I follow my curiosity. I think that's a term you hear, the people who use it from first principles, other people who have something, which I think maybe luck gives them, which is that. The curiosity itself ends up being the product of a probably fairly intrinsic ability to spot value around corners, which is hard to put into words.

[Harry] I ask you, what do you do when the value is ambiguous? And I think about content, obviously, I create content. When you are debating on a new content strategy, the kind of terminal value is actually ambiguous. It may work, it may not work. How do you think about dedicating time when ambiguous terminal value is a potential outcome?

[Tobi] Time is your finite resource. Attention is your fight or flight resources, so you have to create like an evaluation function that you've run over your ideas. I think effort is a big factor.

Also, reversibility is a factor. If something is easy to reverse and not a lot of effort. Try give it a go because the fact that you think the value is ambiguous is a hole in your model, right? So filling that hole means that you afterwards can avoid similar paths because you will encounter the same idea over and over again when you're developing a piece of content.

You could make a decision to commit yourself to a deep research subject about having many meetings, many conversations, maybe reading some books. Or you could say, I'm trying this new channel and maybe I'm going to reuse some content, or maybe it would work in this channel, or something I can do in an afternoon and you time box it. Then my objective is to find out if something is of value. I try to figure out with everything I already got and an afternoon of time, how can I get basically a scorecard for this before you go to interface? I think that helps a lot.

[Harry] I find like goal setting, Very difficult because a lot of goals can be gameable. You said about the scorecard there, but you can give most things a goal that is entirely gameable. How do you tie true outcomes to the goals that you set to ensure that you are actually moving the ball down the field, not just hitting a goal?

[Tobi] Yeah. First of all, I think I'm more of a craft person than a scientist. I like to think that wisdom and again, mental model, whatever you call it knowledge that should be pretty intrinsically motivated. It's actually okay, work on something to just find something out. But the key is afterwards to take that and create something that other people can consume, judge or, so if you just ivory tower some new knowledge, then I think you don't actually add a lot in your world, you consume. And I like building, I like creating, I think going on a journey. To gain some knowledge, figuring out something new, but then turning it immediately into something that you can share with other people is the key. If this hypothesis is right, then I get to do a thing that then many more people can appreciate. If you can't do the end of the sentence, then I would downgrade it quite a bit to take it another side of, at some point I was, I need hobbies again so picked up learning instrument guitar and I, I played a band poorly and that seemed entirely intrinsically motivated for my own purposes. But I actually learned a lot about how to form great teams from the way a band works. I learned a lot about creativity, improvization.

[Harry] What did you learn about building great teams from being in a band and learning music?

[Tobi] A lot of lessons about leadership cause I mean, Most pronounced in jazz, somewhat in blues as well. There's a basic contract, like real artists will always talk about the tyranny of a blank canvas. This is actually not what leads to creativity. Creativity always comes from constraints. Um, I'm constraining the space. I've been in many meeting meetings where people say, I wish we could do this thing where we completely unconstrained by, I dunno, budget area time. And I'm like, yeah, but that's hallucination, that's not craftsmanship, that's not engineering. And I think the older crafts half is totally figured out. In blues, you would set a meter, we were set a tempo. You would presumably set a beat and you would set a key, and then afterwards people improvise over that. Different people might do a solo, different people, you, you're creating a new piece of music with every note. It's deeply creative if the creativity comes out of constraints that were set. And then if you really know what you're doing, and this is where it gets really fun, you get to violate some of traits. You can do a key chain, you can go from minor to major and if everyone's good at what they're doing, they'll follow or create some dissonance on like in, in the scale, which actually leads, if you resolve it, it leads to interesting things. This is I think what the best teams do everywhere. They are greedy for constraints. They wanted to understand how can we restrict our space so that we get to get started, develop something, feel each other out, develop an appreciation for each other’s aptitude and skills, right? It's a different piece of music depending on who shows up to your band. And

[Harry] Can I ask, when you say about constraints in this way, is it purely financial constraints or are there other types of constraints?

[Tobi] No, I, no, no. Let's take an engineering project. Time is is one of best constraints. Time boxing and Shopify. Every project goes. To multiple phases. There's a prototype phase, there's proposal phase format that proposals accepted. You go to a prototype phase, build. The prototype phase is ideally time constraint and people constrained. You can only do it with three people and you've got maximum of six weeks. It should actually be less like it's meandered upwards, and in fact it should probably be a week, and then next week you should start from scratch to try something else and do this multiple times. Some of the best code I ever wrote, I wrote with my first engineer, we hired Cody was the CTO of the company at that time and we set ourselves constraints every single day we have to throw away all other source code other than the unit test and we would ship the feature or we could implement the entire feature in that day. And hopeful, really get good code if you do that. In fact, I think one of the best applications of creativity in the world of creation is actually creating creative constraints. And I think this is a.. a very big topic with lots of ideas.

[Harry] I'm so glad that we did the throwaway on this. What's a creative constraint and how does that differ from a non-creative constraint?

[Tobi] This is just a mindset. It’s how you react to constraints. Every constraint is a creative constraint, and I think people who complain about constraints have an incomplete mental model about the creative process.

[Harry] How do you impose constraints? Now in a world where bluntly, you have much less, when you are a startup running out of cash, you have real constraints on time, you have runway. When you have time restraints on engineers, it's cuz you can't afford any more engineers. You have no money to hire someone bluntly, you are not running out of money.

You don't have necessary restraints where you can't hire an incremental engineer. How do you create artificial constraints and make them real?

[Tobi] There are many ways to do it. Culture is the best. Honestly, I have story about how we built features early is a story that people know in Shopify and they know that's valued. The project management system that Shopify has, which manages the phases of these projects and is a central roadmap, places constraints on different phases, how staff they can be and so on. So some of them can be tool reinforced. Some of them can be culture induced. I think we just have a bad story. Humans have infinite or amount of bad stories. Our brain is loaded up with a firmware that is developed for , right? Basically everything we are doing on planet Earth, we are basically managed to awkwardly do operations against human nature. Sometimes our environment does it for us. Sometimes our self development can help and you replace one bad story at a time.

One of the bad stories is that, um, artificial constraints are annoying, artificial constraints are held with setting up boundary conditions. And again, every constraint, every rule, at least in a company, as long as there's no victim on the other side of this. Of course, while they are constraints, if you really know what you're doing, play some dissonant notes, play with constraints, see what you can do. Try to push against those things a little bit. And then if you discover that one of the constraints was actually not an artificial constraint, but was actually a detrimental constraint for the creative assistant, we can change it because we're trying to figure out how to build best things we can.

[Harry] Do you agree the best CEOs, the best resource allocators? When you think about constraints, that's immediately what I think to you. It's a commonly held saying as we both know. Do you agree with it?

[Tobi] That's a great question. I think the term resource is so poorly defined, but it might be true by default. You can look at everything on planet Earth and think about it as a, as a limited resource, like attention, book hours. Our team size roadmap items backlog. I think it's a heuristic by which people can explain to themselves. Why certain people are great CEOs, but it's not a reason. It's not causal, it’s correlated. I think the best CEOs are people who have a more correct model of the world than everyone else, are good communicators, or have a lot of trust, or are hugely enabled in some other form to have other people follow them in such a way that you build against that model and have such a high batting average that the world that they are building against is gonna come true by the time projects are done. If that happens more than coin flip, then I think you have a company that's outcompeting status quo, outcompeting industry, outcompeting orthodoxy, because the ambient understanding of a word is just not that good. Again, most things we think are true or wrong, or at least wrong in important ways. If you observe this, like visitors from Mars, look at a company run in such a way and they will say, well, that company is like credible at allocating its resources to the project that ended up making a difference. And there's very little voice and all these kind of things, but also the consequences of a company. You asked me about subtraction earlier. The subtraction is important because again, often companies end up doing things for reasons that everyone else is doing it. It's much easier to add something to a company than it is to remove something from a company. And if you can only add, never remove, you're gumming up the system after while you've gotta see reward package.

[Harry] Can I ask, you said about most of our models of the world maybe built on the wrong foundations. You, especially today, have unlimited access to any view on anything in the world really. You could email anyone and get their thoughts and they will sit on a call and explain how they view the world to you. My question is, how do you build your model of the world in new areas where you want to have a model? What does that learning process look like for you? If you're aware that many people have the wrong view of that model?

[Tobi] I don't think that this excess is that differentiated anymore, thanks to podcast. I think me being at the same. 20 years ago, 40 years ago would've been different, but I think it's actually still significantly versed to what any person can do right now with a podcast, a client, or a cellphone. It would've been more differentiated against the ambience of the time.

[Harry] If you think about, say, I don't know, say take Covid and think about how shipping and delivery changes in the world of Covid, you have the ability now to call up Brian at Flexport or the CEO of UPS, or you name any of the big providers and say I'm learning how this changes. Can you please explain to me the different moving parts and you would get access to knowledge that a podcast wouldn't give?

[Tobi] I think that's right, although I'm pretty sure if you go, you would find within in the timeline, Ryan being on podcasts and talking about this very topic because it's an obvious topic to ask him and I think there was a bunch of write-ups about it. Again, I don't wanna belittle, you are clearly right. I actually don't use this as much and I think this is basically a reason I grew up in an outsider city. Again, I come from a town which was started I think by Julius Caesar. It was 2000 years old when I grew up, was being celebrated, and I think that was also the most interesting thing that ever happened there. I was observing groups of people doing high tech usually, or working in highly competitive places, figuring out new things from afar my entire life. I still am not in Silicon Valley. I live in Ottawa, Canada, which is not. I have coffee with Ryan, from Flexport. My, my skillset has developed to try to go and find pieces of information to the answers to the questions I have is of white papers or books that are written very long ago and go to those sources. I think those skills are now almost atrophying because it's just so fast to go in a search engine and look at where did people discuss these topics, what other people, and just listen to other people have a conversation about it and take it from there. I usually take notes and go to Wikipedia and go and build my view. I'm gonna say all of this is for how, but there is a more important behind. Which is and much harder to articulate and much more important and I think common with all the kind of people you would reference as the people to turn to when something is happening in a world and you really would like a perspective. I think one of the biggest differences in planet Earth is culturally between people who are interested in what's right in the context of groups in times. Like what are people thinking, what's something, what is fashionable, what to wear, how to dress, how to lab leak or not. These kinds of things or the people who you wanna know what's true, and if you make a decision to prioritize finding out what's true rather than what’s right in the overtone window of your communities, it’s actually a lonely experience. And you will have to go more to primary sources than into conversations unless you are so lucky to be able to build a network of people who are like that. And because again, I think almost everything we know about planet Earth is directionally correct but wrong in some details and maybe often correct as a heuristic, but true for reasons that are completely different from the explanation of our times. And if you are really interested in figuring out how to make best possible decisions, especially in the context of company or maybe also beyond, then you really need to follow what's true and have to prioritize that and surround yourself with other people on a similar journey.

[Harry] I spoke to people, you said surround yourself with other people on a similar journey. I spoke to Glen before the show and he said on decisions your incredible world class when it comes to dealing with sunk cost fallacy, what do you think he meant by this? And how do you deal with sunk cost fallacy?

[Tobi] Sunk cost fallacy is another thing. It is a real logical fallacy. Like people over, um, uh, fact that you have been doing something for a while means you want to keep going because if you change your mind now, then you are basically passing judgment on all your prior decisions. Again, if you're on a path of wanting to be right in the context of others, logical consistency is your primary optimization target. You want to have made a choice about something and you wanna stick with its choice because your identity is wrapped around your beliefs, your shared beliefs. Again, because you're prioritizing what other people think. It's maybe too strong a term, but I can't help but think that if that's your operating models, You are actually outsourcing your self-worth to people around you. Cause you require positive affirmation by them to know that you're doing a good job, which I find is really regrettable because that actually gives too much power to people around you, first of all. And second, they don't want their job. They have their own thing going, right? They're not interested in moonlighting as your value system. But if you're in this world view, sunk cost fallacy, something that is very important to you and you engage with it a lot. And if you see people that seemingly have no problem with it, you will talk about them being good at not have falling for a sunk cost policy. But again, it's, this is the language of predominant operating system for world. If you are interested in truth, it doesn't exist for sunk cost fallacy because it's irrelevant. It, it's like it's an input into your decision making process that you have been doing a certain thing, but you already knew this cause you were doing whatever was best given your entire mental model. You're trying to avoid continuation of previous ideas. What you want is every moment of your life, you ideally want to run a function over the entire search space of your mental model to decide what is the best possible next move for me. How should I spend the next minute if new information comes in that is not dangerous to your identity? This is delightful. This is what your curiosity steers you towards. And if that piece of information invalidates any of prior beliefs. You might completely change. Obviously you need to go do the exact opposite of what you've been doing until this point. This is not changing your mind because your mind is consistent. Your mind is executing a function over the search space every step of a way. It's a variable that change, and that has no moral problem with it, but it's true by the way. I'm aspiring to all these kind of things. No one's perfect at this. It's something you can only aspire to in general because again, our firmware works against us, but there's other senses strong opinions, weakly held. I try to be an advocate for what I think is best, partly because if someone disagrees with me, I wanna know this cause they might be sitting on a piece of information. But I'm gonna add. So I need to make my current best take on everything clearly known because I want the disagreement cuz then I can learn something, which then maybe makes me, changes my mind. And then I'm gonna be strongly for that because again, I want to have people add more information to this. Again, this, these are consequences of this seemingly simple decision of are you interested in being right or are you looking for the truth?

[Harry] How do you know when to stop doing something? And what I mean by that is you said, every new piece of information's a delight.

Say you engage with a strategic decision and information is revealed. Is it strong enough to make you turn back? You don't have enough data. How do you have enough? Data will know when enough is enough and you've gotta turn around.

[Tobi] Yeah, I think there's a common power data heuristic about if you have between 40 and 70% of that information, you should probably make a choice. Before that you don't have enough, and afterwards it's too little. I think that's largely right, but I think it's missing a dimension on reversibility cost. If a reversibility of a decision and the total body of work on it really is low, then you should change your mind fairly early. Basically you don’t know the way this is gonna go, and if every visibility is high, you want very, very careful, like measure wise cut once.

[Harry] And so can you take me to a decision that you made that was a strong strategic decision that then you reversed on the back of new information?

[Tobi] Sure. Easy. So I'm a very strong believer, like in my physical proximity, but come at surprise right now potentially. So I think physical proximity is, massively underrated and under appreciated. I was fortunate as a young programmer into my apprenticeship to be in a room of six people, which is, I think is the ideal team size. One extraordinarily good mentor who was the meister assigned to me as an apprentice in the vocational system. And so his role was to take me under his wings. Of the social contract, vocational dual education system. I was mostly just working next to him. Like I could do a printout of code and he would with like red pen justly pointers on how to do it better and these kind of things. It's incredible how I probably went for 10 years of four o'clock time career advancement in a year. Uh, To him and just listening to the conversations he was having with others because he was one of those people that everyone went to with questions. So anyway, that's very strongly in my mind. Uh, best team in the world. Fastest moving team in the world is one person that has all the skills needed. The second best is a team of six people that are very intellectually diverse and can bring a lot of new different information together, but become a real team, especially if one person is very senior. Cuz when you have a lot of osmosis learning, that’s the floor plan we created. Beyond that, you want to be on one floor. If not, you should be in one building. Otherwise you want to be in the same time zone and so on. All have strong opinions. We've designed incredibly good office spaces. We actually wanted to open source our floor plan. I don't think we ever did our floor places because my co-founder Daniel did amazing job, encoding everything into the office space that like just everyone we've worked out of, it was blown away by just how collaborative with all this backdrop. Now Shopify is 5,000 people. Ottawa has a million people in it. It's our hometown. We can't stay in one city. It's just, it was just not possible to build the size of company we need by relocating everyone with labor pool. That was locally. So we had to go to Montreal and Toronto and so on, and Waterloo and other places. So we were in this sort of this hybrid work already and we were also expanding to Europe. So we were violating the time zone kind of thing. This equation started like rerunning. My conviction was also that hybrid is worse than full remote. Because hybrid creates concentration power. There's more power to team that's close and it’s made to treat people not as appendages, which creates a lesser experience. It's actually much more shared experience if everyone's in their own square on a zoom call. This is a lot of talk. Two things happened, one, it became clear that Shopify needs kind of staffing that we would be able to support in a single place. So we were basically sleep walking ourselves out of our principles. And my belief was that at a certain point it flips and it's actually better if everyone is remote. And then we were getting very close to the 50 50 point on this. I think within a year or two I would've transferred Shopify to remote entirely. And then Covid started. And in fact I can prove this because we actually did game days. We closed our office for a month at some point just to develop empathy with the people who were working remotely for us actually that worked really well, and we found some tooling problems, but that was one of those Chaos Monkey things, which was some sort of subtraction events that was really fun. At least I thought it was fun. Some people didn’t. And so we practiced and then and Covid happened. And now there's one variable in my model, which is everything we just talked about, except are people allowed to leave the house? And it was a boolean. And it was true for the entire world. It was implicit unstated input into the model. And then lockdowns happened basically everywhere where we had offices and like truths became false and now re deriving this equation with this change variable immediately yielded, Hey, let's work from remote. And trajectory wise, I knew that by, this was probably gonna last a year just because this was reasonably, like if you work in tech you’d know what an exponential week over week growth looks like on as area under the chart, politicians. Turns out didn't but they do now. And so it was clear that 2020 would be a very strange year, and so we, I think called Let's Work from Home maybe amongst the first.

We then also said we are gonna stay remote and become a digital by default company, and proximity is still ideal way to work together, but I would always recommend it to a small, like a company size that can fit on one single floor plate in an office tower in one city. But if it's deliberate, you can do it.

[Harry] If you think about founders listening to this say they are all. City and they are in that ability, is it not actually more difficult to do it scale to that stage together and then go, oh shit, we're too big now we're gonna need to switch from all in person to all remote. Is it not easier on day one to say new company all remote?

Do you see what I mean?

[Tobi] Yeah. The variable you have to consider is a talent. If you assume your company is going to be a hundred people and you think about hiring a first a hundred people, even if you don't think you can work as well, remotely, Say, put a 10 may 20% discount on volatility. Is the talent density more than 20% higher?If you can hire everywhere than if you're restricted onto one city saying yes to only one city, it actually says no to all other cities on the earth, right? If you say yes to something, you actually say no to everything else if you say no to one thing, you'll keep your optionality to say yes to a right thing. The so yes, your founders are around, but again, if you can hire, let's say even everywhere in the United States is the least skilled person in your engineering team, maybe twice as good as the least skilled team would be if you would restrict yourself to, especially like a secondary market location to build your company. The answer to this could be either yes or no, but you should know it.

[Harry] Sorry, you said about a 10 to 20% productivity decline. I'm too interested cuz I think bluntly there's a 10% productivity decline when you are remote. People take Friday afternoon. Monday morning, they're slower, and you name it. But then you also talked about and have done before, reducing the number of meetings, canceling meetings.

Are people more or less productive in person or remote?

[Tobi] I think people are more productive in person. It's just what we are built for. It's in our entire brain. Like there’s a lot of types of works that can be disrupted.. that can be harder to do when you're surrounded by a lot of people in a busy place or interrupted constantly. So like some types of works work, it's actually really beneficial to work remotely. So it depends a lot on the job. There are certain things that remote work is not good at, which you will always have to either create a great culture around or great process or meet in person for it's sort of free idea flow brainstorming session.

It's not great over video. It's magic that manifests only in the middle of a table like floating over the conversation about this sort of shared picture. And everyone's trying to figure out what could we do rather than how to get there? How to get there works great remote. What is possible is not that good. I think you can proxy it also to war time, peace, time, if you like that language, war time, anything is harder to do remote, but they invented airplane. The cool thing is getting the right people into a room. It's not that hard when you need to do it. If a majority of your work is the stuff that you can do concentrated with headphones on or something about remotely, it's a great candidate for remote work.

[Harry] I think one thing that's much easier when you're in person is. Encouragement and sustaining morale. And I think when you have bluntly volatile markets like we do today, large drops in net worth for employees. And I was speaking to a friend of mine who is CEO of like a 30 or 40 billion public company, 10 billion difference is probably quite a big difference. So I should get that one right. But he said the biggest problem that I have today is every day I walk in and people's heads are down because they're looking at their stock options going, Ugh, we've just lost another x percent. How do you think about maintaining morale in the face of volatile markets? You said earlier about being that great communicator. I was fascinated about that when I heard him say it.

[Tobi] Ah, it's interesting. Yeah, it's never been my experience. Uh, shopify has appreciated a lot of value. At some point, I had lost a lot of value, and this was extreme during Covid, but before that, it also an up and down left. Right. I've always told the company, Hey, if a stock price is not the company we all work on something called the fair market value of Shopify, which is for some total of product and, and skill sets of, of the people.

Most of the value of a SaaS company is like extraordinarily hard to value from a GAAP perspective. Shopify's ability to hire the best engineers in the world. What is that worth? I think it's tens of billions as a competitive advantage, not an asset on any asset sheet. Never should it. I don't wanna value it, like I think that would be difficult, but it is one of a major assets we develop, right? Building the fair market value for company us unguessable. The stock market is playing a daily guessing game. Actually, most people don't play that game. They play the meter game of guess what other people guess is the fair market value. And it's a game that has nothing to do with the actual value of the business. And it's Wall Street playing Wall Street. And unless you're selling shares, You have nothing to do with it. And in fact, you have much better information than with people who are doing these trades.

[Harry] Can I ask you a divisive question? Why do you go after the short sellers? I saw this tweet of yours and I was like, go Tobi. Woo.

I don't

[Tobi] I don’t go after short sellers. I think short sellers are important part of a market. I go after one specific one who was like a like short and distorted, bad faith actor who is like this, enter a left fool who was like just unbelievable that guy. So, hey, if you make a principle decision that a company's overvalued and you short the stock, you, you play the game of Wall Street.

Again, I don't really care about the game of Wall Street very much, but you're playing the game and if a game exists, and therefore, if that's the best way to play it, play it, and if it helps converge the stock market value on the fair market value of business when actually you're providing a service. If you post bullshit of a company and make grandstanding videos, the false accusation using basically just like verbal ability of you being able to legally make shit up while you have a short position against the company and the company being bound by s e c communication rules, not being able to really respond to this, if that's kind of something you prey on, you're just a prick. I guess I'm pro short selling in the abstract. I'm against pricks.

[Harry] Just remind me never to upset you Tobi.

[Tobi] Actually don't hold grudges. Usually if it's like I'm making exception, like I in this particular case.

[Harry] Do you care that people like you or not? You said earlier they don't want to be that you are in like value judgment system.

I deeply care that people like me, it's one of my biggest flaws. Do you care if people like you and what people think?

[Tobi] No one doesn't care at all, but like I use it as a piece of information that I find curious. I see it as my job to be a likeable person, to be someone who ought to be liked. And if someone fails to do, that's like them not doing it right To me, people do not live rent free in my head in this particular way so.

[Harry] You mentioned being a likeable person. I've listened to many of your interviews, and I mean this respectfully to everyone that's interviewed you and to you, the one thing that people missed was you, not your decision making or your learning or any of these optimization things, but like I spoke about doing my work on you beforehand, I heard about the wonderful marriage that you have. Tobi, you have a fantastic partnership with your wife. What makes a great marriage and how do you sustain that with being CEO of a public company? I can't even do it with a girlfriend and a podcast. Tobi, how the fuck do you do it?

[Tobi] I met Fiona like super early in life and in many ways opposite people and but also have such a strong bond of intellectual curiosity. We grew together from basically being kids. I think started dating before 20 years old and she was more than 20 years ago. I honestly, I think very often being the CEO of a company is a team production and Fiona does not get credit she deserves. It's often you can play this game of how many variables would have to change to, at least to a completely different outcome. And it's is always exactly one, which is Fiona for me. She's never been on a payroll of a company, but is always been someone I talk to about all the challenges. We've sometimes divided and conquered by reading, like there's like 15 books to read onto. Cause we need, we as a unit need to understand this thing better. Okay, let's go halfsies. Actually, she reads faster than I do. She usually gets through a stack faster. But what sustains a great marriage, it it is to have common projects, but different lives bit as well. She is interested in other things than I and she's enthusiastic about what she discovers and brings forth things back and so do I, if that's important. And we're just deeply curious about each other, and I think that's been sustaining us. I don't think I've cracked the code. I just got extremely lucky in this regard.

[Harry] Glen said you were probably one of the most like computer native technical people. He said if Toby could be an IP address, he would be, uh, which was quite a good description.

Do you struggle to turn off? Do you go home and you are thinking about the business, you're thinking about X, you're thinking about Y, and actually being in the moment, being with your kids, your wife. Is that hard?

[Tobi] Yeah, I'm never off. Yeah. Doesn't, but I’ve also never tried to be off. I will always run background processes, like being interested, trying to figure something out. I have a kind of brain that just lends itself to doing this kind of thing. And I think work life balance is basically nonsense. I think it's work life harmony is a better term, but Shopify is unbelievably interesting. It's a perfect vehicle for someone who's on a life mission like me and lots of my friends here, to provide some consistent impetus to know what new technologies can do. Because we are trying to help small businesses, which, you know, just, Hey, we have a task on kind of, which is, I know that sounds super corny, but man, these are the most interesting times in human history. But candidates here are like the end of a Roman public. Some events in China.

[Harry] I mean it nicely. Why do you think it’s one of the most interesting times we have de-globalization like never before in income inequality. Like never before worse healthcare systems, like never before climate change like never before. I'm looking at the world quite scared, if I'm totally honest, Tobi.

[Tobi] Yeah, but I think this is the overlay narrative of the media. Again, if you go at this from truth, I am quite concerned about climate change, but I mean we know it's a technology problem wealthy equality... It's like this is the most wealthy society's ever been. You can't compare the existence of any king to your baseline experience of anyone in Western Society you don't even need to go to incredible potential for healthcare and all these kind of things. No one until they recently had ever had a warm shower. It are unbelievable luxuries here we have, we just have a builtin hedonistic treadmill, which makes us forget about it all. If, if you don't have to take my word for it if you go for something like, uh, Stephen Pinker’s book Path to Enlightenment, and it, it just drops every single stat you've have seen, quoted as going worse and shows you it actually gets, it's getting better. I'm extremely optimistic. There is a effect in the word, which kinda sucks but it's gonna be temporary and it's, I'm doing fine, but everyone else is fucked effect. And it's actually being measured in all societies and it's like the US is even reversed. But I don't have it numbers on top of my fingertips. But I think to remember, and if it's not true in the US at this level, it's worse in South Korea and other places, but it's 80 to 90% of people who say, I'm doing fine.

Everyone else is doing really poorly around me. So 90% of people say it's fine and they think a vast majority of people are not. And everyone thinks this. Because we are actually, there's real problems. Absolutely. And wealth inequality is a thing that could be even better. It's too high in some places, but it's also like a bad faith take that wealth Inequality is a bad thing by itself.

[Harry] I'm sorry, I'm being just, I don't agree. Like I think people vote for Trump. I think people vote for Brexit because it's not that they're doing okay in everyone else's and it's cuz they're pissed off with what's happening and they're not okay. And I think if you go to the 98%, or that's probably a gross exaggeration, but 90% of people in the UK I don't know, 85 in the US or 90% in the US, who actually are living in real not great quality standards and worsening standards, they're not happy with how they are. And they don't think they're even okay. Yeah. Do you know what I mean? Is it a luxury of ours?

[Tobi] Yeah. No, it's true. Things to change and there are real problems in the world and people want to see things improve, which is really important for society. People will vote for how they think things can be improved. We have disagreements, but even the largest disagreements, like Brexit said, Trump, yes, there are disagreements. Even in the goals, they are very minor. Everyone agrees that hey, we, we wanna live in like voting is a good thing. Everyone votes, thinks voting is presumably a good thing, sort of system of democracy that we have. And enlightened self-interest harnessed towards greater good, at least most components of capitalism are like important And have demonstrably been superior to everything else we've attempted before. People probably do agree that completely unconstrained pursuit of wealth has negative externalities and would like some changes. If you look at poll data of what people want, they actually want to get to largely the same goals no matter which party they are at. They disagree on the bottom approach there, but even there, they don't actually disagree as much. The political spectrum of positions you could hold is massive. Like absolutely. It, it goes all the way from, from complete anarchy and communism all the way to fascism, like the space is massive. We are arguing in a bracket, which is around here now, the people who are on one side of it, but the thing, people on the other side are versed, , but like the spectrum could be so much larger here. And it's for all I against my brother, my brother and I, against my cousin, my brother and my cousin against everyone else. People are somewhat tribal and we are in fighting because we do not have external attacks. People are not really coming and saying, Hey, let's go absolutely straight up to a Stalinist Communism tomorrow if they vote, all the political parties that we are voting for, and this is a credible threat coming from the outside, but start figuring out how much they actually agree anyway. I'm not the person to talk to about these kind of things. You have to talk to people like Tim Urban or Stephen Pinker about these.

[Harry] The final one that you said about the kind of the hedonistic treadmill that humans kind of face and are always on, and that continuous search for happiness. I honestly, Tobi, I face this too, if you told me you might be here chatting to you years ago when I started from my bedroom, I'd think it was a joke, but I'm still not happy. I still want more. I want to be bigger. I want to have more. It's never enough. When you think about that treadmill and looking across at the bigger boat, are you happy now?

[Tobi] I think happiness is a temporary thing, but it's a terrible goal. In fact, it's a goal that's sold to people to keep them miserable. But you wanna be content. That's a worthy goal. And if people would start making this differentiation, but we will figure out is like vastly more people currently live in a state of contentment. Now the thing that can mess with contentment is again, we are comparators. No one wants the worst house on the street and we just, the street came the entire world. Cause of social media. One of the biggest effects of the American Civil War was urbanization because the soldiers which were predominantly rural, lived on farms, had to pass through the cities as they were being before that, people just didn't travel more than 50 kilometers away, or even less. 20 kilometers was usual range of travel throughout your lifetime. During those times and after people pass through cities, they're like holy crap, this is so much better here. So people started moving to cities just because you want, you compare against what you know is possible. And so we derive sometimes content from that or So happiness is bad because happiness is temporary. Like I'm happy that I'm just like seeing a friend that I haven't seen in a long time. But that's afterwards. I'm like content, being able to have fantastic conversations with my friend whenever I see him. So that's an important one. Hedonistic treadmill is the engine of humanity. It's the thing that drives us to do everything that we actually value. It's the thing that cause us to strive things to be discontent for status quo. A thing that said, let's pioneer, set out on new shores. It's the thing that sets our entrepreneurs out to start companies, academics, to descend into knowledge. It's the thing we want, and as so often in life, best thing about us is also the worst thing about us. And so it's a very, very bad idea to make it your primary objective or derive your, how you think about your current state from it. I can tell you, look, I've been extraordinarily lucky in so many ways amongst those materially, right? I would've done this no matter what, but turns out the software products turned into companies can lead to more wealth generation when almost every other pursuit and part of, outside of maybe real estate I partook in this for reasons of my own on a journey, and I accidentally partook in massive material wealth generation in, in, in this of which of very small percent of wealth generated came back to me, which is still a very large number. What does that do? One thing it allows me to do is just be surrounded by beauty. I think it's the best term. I get to live in a house that was carefully designed by someone who, presumably, I don't know who that was, but whoever built it was the best building that they could build, given them whatever constraint they were under and they cared. The things around me, the clothes I wear are made by entrepreneurs, almost like actually my entire wardrobe comes from Shopify and they made a decision that something else needed to exist and was a great product, and I can purchase those independently of how much people are asking for them because I can buy them purely on agreeing with the story and so on. What does all that do? I would say it makes my days probably between two and 5% better. That's it. Past a certain point, which most people clear. The average household income in North America is $60,000 a year. This is household income, especially people who are listening to this. Presumably in the tech industry or in finance.

Most people clear this bar. Um, past that point, you can get the kind of things that inspire you and around you and you increase for quality of happiness in the day or at limited light, you encounter objects or maybe the conveniences by a couple percentage points. Is that worth it? Hell yes. Huge. Like 5%. That's a huge lift on the baseline number, but the baseline number is, did I have an interesting conversation with friends? Did I have, did I build something today? Did I talk with my children? Is everyone healthy around me? Massively bigger inputs.

[Harry] What luxury makes you happy for? Uber luxes, don't laugh, but like getting in a really nice car every time, it just makes me happier, more relaxed and that's like the one thing that I would spend on. And it changes my mood.

[Tobi] Yeah, exactly. I think it's these things, like one of the things that makes me happy, just, I love really good keyboard. I know it sounds stupid. I'm typing a lot. I have a hobby building mechanical keyboards. I, I like the soldering, I buy the components. I often engage in some kind of group buy of some people who, someone designed something so let's help finance. It's just this kind of stuff having

[Harry] For, for all children out there. When you become a billionaire, buy a keyboard.

[Tobi] I like honestly the biggest things like a great chair, a great keyboard, a great monitor, a great mattress. Those things are incredible and they are not things that are... Coco Chanel said this perfectly, oh actually it makes for an opposite point, but it's still funny so I'm gonna share it. Because i set it up. The best things in life are free. The second best things are extremely expensive.

[Harry] I know that my mother's probably Coco Chanel's biggest fan. I think that's a great one. Tobi, I've loved this. I'd love to do a quick fire round with you. So I say a short statement, you gimme your immediate thoughts. Let's start with, you said the best and the worst parts of you.

What is simultaneously the best and the worst part of Tobi?

[Tobi] I think it's the experience that I may hold a different opinion just because through other conversations I've found that I was incorrect previously, and it is a harrowing experience to people sometimes when there’s a societal premium on consistency of choices that I find is useless.

And if you think from first principles, and that is definitely a trip sometimes for people.

[Harry] Luc Levesque asked, what was your biggest regret?

[Tobi] It's hard to answer. I don't think I have any macro regrets. I have millions of micro regrets, so I think that might be evasive, but I think that is important. A million things we could have done better. Decisions I made where the, not just that the input that could have told me this was not the right thing, was available easily, like with an email or with a dashboard or something, it's even, I probably already had it and I just wanted this to be true. Right? Like that was very, I regret not being more true seeking there.

[Harry] Is there a strategic decision you made with Shopify that you wish you could reverse?

[Tobi] Ah, yeah. More like in the style of leadership for a bit I started believing some of us falsehoods. I believe about leadership that micromanagement is bad. That is the dumbest idea of planet earth. I think there's probably no singular idea that has destroyed more business value on planet earth than idea that micromanagement is a bad thing. You look, you're like, you don't agree with that.

[Harry] I really don't agree. But you can't micromanage. How do you determine what you micromanage? If you micromanage, you're gonna create dissonance within the org. Cuz people are like, why is he managing them and not me? And then you're also gonna create people who are like, Hey, he shouldn't manage me.

And fuck off. And also like you might not be as good as the people that you hire in those roles. You also don't have as much data in those roles as those people, Hey, you should work on the machine, not in it. Hire the best and allow them to do their work.

[Tobi] Yeah. You are correct in a frame of reference where the interventions are bad. Let me give you an other example. Let's say you are a leader of a team and are driving the car and you've just been around there and in a straight line where they're going, there's a cliff. Do you not micromanage the steering wheel? That's literally what the situation almost every leader is in right now.

[Harry] I don't know. I, I think actually as a leader, you have to understand the decisions and mistakes that people have to make to learn versus those that they cannot make to learn.

[Tobi] That's true in the high reversibility case, not true in the everyone's fatally crushing case.

[Harry] Oh yeah. No. If everyone's fatally out, then you obviously have to intervene, but the majority of things aren't reversible.

Very few things are irreversible.

[Tobi] So the thing you describe is the sort of dilbert-esque view of leader, right? Like where pointy head boss comes and changes like moves the cheese around that is not micromanagement. That is just being extremely bad as being a leader. What you actually want is you want your entire company to compose into something that is like an idea lab where, where people who are closest and for people who have the biggest perspective, come together to make best choices for that there's a role for absolutely everyone and in most cases. What you do is you find someone, like you find a CFO who's amazing. You work with them together. You make decisions initially for onboarding them. You learn to trust them in such a way that you can now delegate a responsibility, presumably for a bit, you should trust, verify because again, you actively have to build trust with people. Trusting by fear or trusting by the name of a rule is not a great idea. You can use someone's background as like a massive pre-charge on the trust battery, but you should come to your own or then afterwards you are sharing responsibility. No leader can ever abdicate responsibility, you can only share it.

[Harry] Do you not think you have to abdicate responsibility, but share accountability? And that's what sucks about leadership. You didn't do it, but when it goes right or wrong in good and bad, it's often on you.

[Tobi] No, it's impossible. You can share responsibility, but you never not end up being responsible for it. I'm responsible for everything that ever goes wrong in the company at some point, maybe because I've hired something, but I also hold a responsibility, therefore, for all accounts. Why founder led companies are also like a little bit of different use course. There are tricks by which you can diffuse responsibility and interject. The entire consulting. World of consulting is basically one large way of outsourcing a responsibility for bad choices is that's the main product they're selling. And people might disagree with that too, but that would be a fun different conversation for another day. But I don't think you should do that. I think you should stay responsible for everyone and you should bring what you uniquely can bring to all conversations where it's of value and you should be very clear that you're looking for best rather than being right, which is also not micromanagement.

This is actually just quite micro leadership, it's helping editing. The final thing, how great products look to the users, like they are a book written by a single author. They are logically consistent. They are written in the same tone of voice. If you learn a pattern somewhere, it's first of all approachable. At this point. The same pattern teaches you about other parts of a system, especially if it’s a big system doing this with thousands of people have requires a lot of coordination. It's a huge coordination challenge, and it requires people to learn how to watch principles to make these tasks. Now, you're gonna do a million things that help, like for instance, just like it's something like Shop Shopify is absolutely massive. Probably one of the biggest pieces of software on planet earth. But we also have things like design systems, which we also share with our ecosystems. And this design system just helps everyone fall into some big pit of success because a lot of the knowledge of how to build a great user experience and user interface is actually encoded in the design system and therefore is a creative constraint. The floor quality of execution for everyone who just use the design system is very high, but floor is high. However, the ceiling is uncap, which is for mark of a brilliant system. It's the most important system can you can create. The process of creating Polaris, this design system is something that I was involved with, because it has to conform to the aesthetics and, and my, as a founder, ideas about what approachable software looks like. That doesn't mean I did all the work and I did the project, but I hold some co-authorship over creation like of it. And someone would call that potentially micromanagement saying, Hey, Tobi wants part of, uh, design review for the dropdown component and these kind of things. But no, it's just deep appreciation for the craft. It's caring and that's perspective that's honed over 19 years of doing this kind of thing. Like, by the way, this is the worst lighting rod anyone's ever had, by the way, at this point.

[Harry] Oh, you’re fine. You gave me this toy. I'm not gonna, but the options you have are infinite. You have an infinite amount of options to become micromanager on. You said about the dropdown there, as you said, it's the most complex piece of the software almost on planet earth. You could choose to be a micromanager across those 30,000 questions. And so you are going to overload yourself, and it's not gonna be functional leadership. You have to at some point not be a micromanager.

[Tobi] You have to be able to trust people. I do not need to look at drop downs anymore because I work with, uh, Polaris team and trust the leadership and trust principles, and therefore we are sharing responsibility for Polaris. But I'm extremely confident without looking at all the work. However, if it's, Hey, let's make a new version of Polaris. They know that hey, at least tell Tobi so he can update his model of what like things are going to look like in a year or two. But when we are done this or couple months, if a company understands that information has to flow and that we work together as a team, and this may outrage you but every great product on planet earth has been made like this, there is no other option. It is always a collaborative effort of a lot of people. Where, we have a common thing is that there's a common culture, common belief system. A common set of aesthetics…

[Harry] Penultimate one, I promise. But when you think about leaders that embody this for you, who do you most look up to? Is it Steve and Johnny?

[Tobi] No. No. Nah. I think Walt Disney is, I think someone that is understudied in technology, I think you want to learn as much as you can from as many people as you can, and you study all of them and pick your bits from them. I've never found one person to model myself on, or like one person was, had it all figured out. This is the fun part. There’s huge amount of alpha in doing better than everyone else that has done it before. In fact, it’s not even that hard, we are not that good at building companies. You're not that good at building companies. We're not that good at making not like that. Earth is like, like maybe a three out of 10 on the score. Um, this, we're gonna know how to do this way better in like a hundred years from now. And so just try to be a four out of 10 and we rattle off like Disney's set jobs, all these other amazing founders through time like Elon and Zuck and were great founder led companies that we finally get to build. Yeah, probably were four out of 10, but basement is limit. If someone is perfectly insightful, you could probably build an 8 out of 10 right now, right? Like you could be one company which is so vastly superior to literally everything else. Because it's just built on just better firmware, better model of a world, better set of beliefs, maybe better technological systems. Who knows? We don't know what it is like, but I can tell you, you're gonna figure it out. You're gonna figure out basically everything in the next a hundred years. So at the end of our careers, likely we can actually sit down saying, Hey, what's the stuff we didn't fully of yet know in the 2020s? But later on we've discovered, and I can tell you, you're going to be embarrassed by our lack of it's stuff we already, like someone's already done and probably wrote about in some obscure book or some oh, Harvard business report. Probably not, they don't write interesting stuff… they’re just sort of… fortune cookie stuff usually. Actually more importantly, it's the way the jazz band works, or it's the way video game communities organise themselves. Here’s a statement for you. I think you can learn more by studying World of Warcraft rating guilds than you can learn from studying companies about coordination and what great looks like. There's like infinite amount of things to study. Nothing should be a black box and, and everything's more interesting than you thought, and that's fun. It's just so fun. It's fun to have a task. Do you have this thing where we are like, there's millions of entrepreneurs, probably very likely, made tens of millions more who want to reach for independence. And best way they do this is they know where there's like some kind of product needed and know how to make it and maybe can help a little bit with that. And then we take care of just a lot of the drudgery of partaking in the world of global commerce and internet selling and so on. And not only that, we are also pulling value out of the latest things that are possible. This is the greatest part of job, right? What are the things that are just about coming possible right this moment and what is the angle we should take those things for to give it to millions of small businesses? Like maybe some of these things are extremely valuable and they might have it before big box stores might be competing. How cool is that? Since then? Is a leverage and balance tilted in favor for small? That's good. Cause small is more nimble and so it's cool to partake in, again, some of the most interesting times in human history and have a task with all the change around us, all the technology, all this stuff that's happening, we get to say, okay, does that matter for people who are reaching for independence. If so, how can we tool it up? Now we get to play with it and then it's like now we get to have one of those idea labs ideally done in proximity where we can figure out what is it we need to build and then we build and, and that's awesome. I love that it's the best loop in the world.

[Harry] Tobi, we've absolutely nailed the quickfire round. I think top marks to both of us also the best sound bite on World of Warcraft. Honestly, I've so loved this. There's reasons and shows like this why I love doing this so much. Thank you so much for being such an amazing guest, Tobi, and I so appreciate it.

[Tobi] Oh, awesome. Yeah. Thanks for doing this. You've been doing a fantastic job, guys. I love it.