You are valuable because of the brain you've got. You are valuable because you make choices. You're valuable because as a front-end designer, not just that you are actually engineering, that you can program, but also that you can, you have an aptitude to work on, build systems that are like great and easy and to use for people that are resilient to random, people do very random stuff with user interfaces and you build something that building. No, it's your experience. It's your skill. It's your actual, it's your life story rolled up. It's your intuition. It's your ability to make great decisions quickly.
Welcome to The Knowledge Project. I'm your host, Shane Parrish. This podcast is about mastering the best of what other people have already figured out so you can apply their insights to your life. If you're listening to this, you're missing out. If you'd like access to the podcast before public release, private episodes that only appear in your feed, hand-edited transcripts, and more, you can join at fs.blog.com. Check out the show notes for a link. My guest today is Toby Lutke, co-founder and CEO of Shopify. Toby is a friend, listener of The Knowledge Project, and has had perhaps one of the hardest jobs in the world for the past few years.
I'll warn you now this conversation is wide and deep. We cover the differences between founders and CEOs, how his job has changed as Shopify has grown, fighting bureaucracy, and how he thinks about innovation in a large company. We also explore how he thinks about compensation, what businesses can learn from programming, and how he keeps his head when everyone around him is losing theirs. We also discuss ideas that have left a formative impact on him, including Paul Graham's essay on conformism and the idea of the infinite game. But that's not all. We also cover the technologies most excited about, what he used to spend time on that he now sees as a waste, and how he fixed his sleep.
Long-time listeners will note this is the second time Tobias appeared on the show. The first time was episode 41, which I think was five years ago, which feels like generations ago. It's time to listen and learn.
caused Shopify to be extremely exposed and like just, you know, on everyone's mind. And then the pullback was equally drastic, which was a fascinating experience internally, right? I guess lots of discussions, you get always, everyone's getting messages from their parents about like, hey, what's going on? I mean, I've never thought that companies and their stock have that much to do with each other, right? Like it's related, but not, like no one in a company works on the stock. If things are going well, I think if people start working on stock, things are actually, like that should be a sign that things are going pretty poorly in the company.
And so it's been a challenging time for leadership because you never knew what kind of puzzle box Plattiv would drop onto your desk in the morning. And I think, well, the things that are important during that time, the things that are important during our times, which is... The most important thing is to keep the most important thing, the most important thing. And the most important thing in our case is like make a product that's really appreciated by entrepreneurs and can deal with not just the current, but also the next process of problems. We adjusted quickly. We shipped a bunch, like a lot of products that had in the early days with like curbside pickup and so on. And then we just took it from there. How do you do that though? Like how do you keep the most important thing, the most important thing when the world around you is sort of going crazy? Yeah, I would say like when you dig into the nuances of what the most important thing is, it's usually not.
the current tactic, but it's actually the overall strategy and the North Star is the thing that you need to protect. The end result of the reason why companies exist is the thing that needs to be protected. And in our case, this is very much like we love entrepreneurship. We think entrepreneurship should be simpler. We think entrepreneurship should be simpler on the internet than it has been in the past physical world. And we want to build software to make entrepreneurship just easier. At least make it so that the technological side and the internet side and all these things are not something you have to worry about. We take care of all of them and you make great products and fight your market.
to the degree that we can have the health of us as well, but like basically show up to something people want and we will do whatever we can to make you reach your audience. Because if that is your North Star, just because suddenly there's shelter in place and no one can reach stores and these things, you know, that's an obstacle which no one could see coming. But if you know in which direction you want to go, then you just know, okay, well, clearly we have to get around this obstacle. So like, as long as we keep going the same direction, it's all fine. Right now, no one can reach retail stores. So make sure that we have a retail stores.
get the catalog online and these clips I pick up these kind of things so you can run this constant given what's going on right now what's the best thing we can do and you run this over and over and over like this I actually think even concepts like roadmaps and just generally plants are actually overrated I think The best possible roadmap is have a very clear guide view of what matters to your merchant, have a super strong model of your own capabilities as a company, and then rerun the function of deciding what is the very best thing you can work on. Every moment you have teams ready to pick the next task, instead of everyone's doggedly working off a thing that of course gets interrupted by reality. Okay. So this is how you do it. Now how this looks in actual practice is you go...
You look at everything that is being done in the company and you put things into categories. Helpful, not helpful right now. Because reality changed. And I think we ended up stopping to work on cancelling or not yetting. 60% of the things we were working on, which I think everyone was ready for because it was very obvious in the first half of 2022 that we are going into very different times, right? So everyone was looking to see, like, how can we be most helpful? And I think everyone really wanted to, you know, all of us made life decisions. We were not doctors. We were not frontline workers. We were not essential workers. But we worked in the technology industry. The technology industry was probably amongst the least affected from a productivity perspective. We had home setups. And so, you know, given...
us being able to be helpful with the primary objective that everyone had, which is health-related, we could at least nail it on what we could do. And so everyone rallied around this, and we got cracking on it. I imagine it pulled you all together, too, because all of a sudden, there's a lot of meaning and urgency to what you're doing. 10%. I mean, I wouldn't say it's like, I mean, it clarified the mission for everyone. And the mission, I know sometimes it sounds, everyone talks about the mission, and it's almost like one of those things you go like, well, what's your mission statement and whatnot.
But it matters. It's a reason. I mean, some companies might have mission statements that are kind of dissonant with what they actually want, and that's unfortunate. But I think that's rare in front of the net companies. They tend to be coming from a particular observation or a particular reason why they need it to exist, and in some cases...
that is a limited goal, at some point, you might accomplish this goal. And then you're looking for something else, I imagine. In all cases, I don't think we're threatened by this. This is a simple forever mission and invented game, if you want. And so it's really clarifying for us. Now, it was very difficult times. I mean, like, man, so many people were holding up in tiny little apartments and didn't step outside for a year or more. There's a lot of mental health issues, you know, like it was...
Everyone had so much energy to want to do something. People were upset with what they were seeing in so many different ways, not just COVID, but also other conversations. There was a lot of racial unrest for very good reasons. I think there was a lot of energy that couldn't be converted into productive means during this time, which made things challenging as well. It was a fascinating time. It was a challenging time. I think it was a clarifying time. I think a lot of companies, we connected really with what they are there for and how they think about their own principles, how they think about organizing, how they think about talking, how they think about contributing, not just as a company, but also as a community.
We had to go through this all in a hurry and all at the same time, and leadership for this was tricky, yes. Are there different roles that you see for founders and CEOs? I have a good word for non-founder-led companies. I used to refer to them as professionally managed companies, but it's like that the founder-led companies are amateurishly managed, which is actually not true. So I'm sort of lacking a great moniker for non-founder-led companies. But if you look for both these types, they are very different internally, completely. Like, let's keep going with it. Professionally managed companies are often...
The mental picture comes to my mind. It's like a river stone, right? Something that's really smooth around all the edges. It's a very similar skill level on everything. Usually, if they have significant competencies, they're often about just operational excellence and very, very quantifiable things. Everything that can be measured, they tend to be very good at. The core competency of the CEO leadership team is stakeholder management, I guess.
I say it with great respect because it's a very, very hard thing to do. It's extraordinarily hard to align the interests of very, very different groups and bring them all to the same side of the table. You have shared a community, sometimes society, sometimes your local economies, your employees, your customers, of course, and the board of directors. And taking everyone for a journey is a tricky thing to do. The way you do this in a professionally-run company is by planning, right? Because, like, bad companies.
I promise that people tend to not like to work for all companies that share no of their former self. How does this happen? The key, what happens is revision to the meal. It's the tragedy of the comments. It's the active ingredient. Entropy, you can call it. All these things describe the same thing. They all affect companies.
where a department or the tech company reverts to the sort of middle of the bell curve ambient industry competency for everything it does. That's really bad because ambient industry, like autodox, quality is just quite low. It just is. And so what you're trying to do is literally everything a company does is try to beat the revision to the mean. And your options there are usually you have a strategy. That's the plan. The plan by the people...
have us do the stakeholder management, we'll bring all the stakeholders on site, imbue the plan with a ton of legitimacy. And then the legitimacy that the plan has ends up being the thing that beats revision to remade. Because you can now go around saying, hey, you team, you have an engineering team, you're implementing the things on the plan. You, UX, you're going to build a user interface for this. Sales learns what's going to happen when and when we have which competency and how to explain the product. And so...
This is a mechanism. Now, all this to say, a founder of the company doesn't need this, right? Because there's another thing of legitimacy, which is the founder. And I'm not saying this is a person. It's actually the fact that the founder is in the company. It's a thing. I think legitimacy is one of the most underappreciated resources that exists. I think the only really good piece of writing I've found, and you probably might know 10 others, is Vitalik's. Vitalik wrote an essay on the topic of legitimacy. More like interest in the blockchain world, but I think it brings true across.
So where does this come from? In every company, there's a sort of founding story. Like everyone sort of gets this clear sense that, hey, the reason why they have this job, the reason why they're on this mission, the reason why they're doing this thing is because at some point someone took the first step, right? Like they wrote the first line of code. That story is imbued in the company. It's in onboarding. It's like, even if no one would actively talk about it, it's something people eventually like encounter. What happens when a story is told is that there is some sense, like a little bit of legitimacy almost deposited into a bank account. That's like, you can almost think about it as social credit of some kind. This happens in all companies, but if the founders are still there,
they can still draw on this account of legitimacy. And so my role, I see very often, is that I have the pretty humbling ability to use the resources deposited into this bank account of legitimacy in the company and make changes. And because I can speak for the entire story of the place. Now, if I would leave Shopify, this bank account would only increase, but no one could draw on it. And therefore, it can't be an active ingredient in the company. Okay, what does all this mean? The best thing founders can do is subtraction. This is surprising, but it's the...
But the reason, like it's much, much, much easier to add things than it is to remove things. Adding things is a lot more expensive than removing things, actually. However, it requires some measure of bravery and risk-taking anyway. Saying yes to a thing is actually, like if you say no to a thing, you say no to one thing. If you say yes to a thing, you actually say no to every other thing you could have done in this period of time. And so as people are adding things, the set of things that can be done becomes smaller and smaller and smaller. And the set of things that has to be maintained gets larger and larger and larger.
And you end up with more and more people actually working on just maintaining the status quo or maintaining code bases and so on. So where does subtraction come in? Very often, some things build... Every individual addition was a very good idea, but where it builds to is actually sediment layers of... something that actually doesn't make sense in the end and that you have to walk away from. Like, sometimes you're building, for really, really good reasons, a product that actually will not make a difference for the company. Or when reality changes, you actually have, like I just said earlier, I had to subtract 60% of everything like the entire NFT was working on. Which, the reason why I could do this is because I could draw on the legitimacy of like, hey, I have seen every single vision of this company. I've seen recessions. I have seen downturns. I've seen chaotic times. And I've seen calm times. I know what to do. And...
So while this might affect you negatively, because your day-to-day job is changing, the thing you're going to be working on, you're going to be prouder because it's going to help with the corporate submission in a better way. And that is a form of subtraction. And then there's many, many others that we could go into. So I've actually very rarely, like the very, very, very best non-founder CEOs. can subtract. It does happen. Nadella has done it at Microsoft in a phenomenal way, like potentially better than many founder CEOs can. But it's about probably 10 times harder to do or 100 times harder. And so that's almost a service around it for the business. So in a way that you have Riverstone on one side, you really have sort of volcanic ash kind of spiky object thing of a rock on the other side. Like some have very, very strong aptitudes, spiky objects. Sometimes
surprising weaknesses. It's not a well-rounded thing in the end, but it's usually perfectly appropriate in terms of, in an ideal case, it's appropriate in its aptitudes for the particular set of problems that a company solves. And I think this is why they end up feeling so different internally. You mentioned risk-taking. I'm wondering how you think about risk-taking in sort of a professionally managed, just to use those terms versus like a founder-led company.
Yeah, I mean, that is exactly one thing that doesn't take risk, which is do the same thing everyone else does. The number one thing that is very, very hard to teach, actually, or very hard to convince people of, but I'm pretty sure it's true, is that I just don't see value in doing the same thing as everyone else does. I don't know who grows up to say, I'm going to join industry, I'm going to go into finance, and then... That's not the best example. Let's select UX. Let's go to design UX. And then I'm going to do work that corresponds to what generally everyone else launches around me. I see why you might want to because it gives you more common ground with your peers in other places. It's easier to appreciate making a slightly different version of something else that someone does because then if you encounter those people who are behind that, you can now have conversation about the slight changes you made. But I think that's just...
But if everyone does this, that makes this planet simply spin too slowly. I think sometimes there's significant wisdom encoded in what everyone's doing. In most cases, go all in on it. But in many cases, just use, like, put everything you've ever learned together to make something that's just as good as possible, right? Like, because otherwise, I think you're holding your setback. And I think the company needs to de-risk this for people. Now, it's not no one's intuition. Every single time you do anything that is different from best practices, like, there's so many euphemisms for just basically doing undifferentiated work.
It's a strong statement I'm making here, but best practices actually just simply means don't take risks and do with what everyone else is saying you should be doing. Best practices are not that good. They should be best. No, they're average. Risk adjustment. Yeah, exactly. It's just average. And I don't think, I have no time for average. I don't think, oh, shit is that good. Around Platinum, I think we can do much better on everything. There's no chance that in 100 years, people are looking back and saying, wow, back then, we just nailed everything. It's not going to, like, we barely nailed anything. I mean, you look back three years and you're like, wow, we just kind of.
I had no idea how to do all these things, right? Like, all video contracts and software was terrible. No one had a home setup, home desk, and so on and so on. So everything depends on innovation. Innovation depends on a very basic thing, which is like, to be innovative, you have to do things that are different. And if you do something different, you can either overperform or underperform. So that was cool and obvious.
Now, sometimes you get one, sometimes you get the other. But again, if you can subtract, you can remove afterwards the things that underperformed and give another go at it. And if you do that effectively over and over, then you are out-competing what other people are doing. So is that the role of the company then to provide safety for that failure internally? I think so.
I don't think anyone's correct a quote on how to do this. I think school conspires to tell people, here's how to solve problems. Ideally, don't deviate, and you probably don't have to learn anything new after this. It's just like a joke, right? I mean, I don't know how you still end those arguments, but this is definitely what school would say. And then through the beginning of your career, you sort of put the lie to be statements, and you look around you, and some people will have...
vastly different career outcomes because they are just walking away from it. They're using orthodoxy as a major input. They learn everything they can out of it. They use it as a starting point, but they're not hamstrung by it. They will do things that could be described as risky. But I have to say...
This is very, very hard to, again, get people to believe, but it's actually risky to not try higher. A lot more people have... It's not risky in the moment, though, right, to follow best practices. It's only risky as you fast-forward time. Yeah, and I mean, we should acknowledge why. If you make...
If you do what everyone else does, you are like, say, like, well, that's what industry does. If you make it added to it, you will have a responsibility, good or bad, for that change. At least that's, if you risk avoidant, this is something you don't want. Now, of course, if it works, it's great. At Shopify, it's very clear, like, it's very important that we explain to people, like, it's not failure. It's a successful discovery of something that didn't work if we underperform. It's we know actually more data and we will try again. It's people actually...
our performance managed out if they don't take risks. So it's actually for your career, it's actually more risky to not aim high. And I think that environment and the psychological safety to take this risk is very hard to produce. And I imagine there's going to be like 20 years from now, there's going to be fantastic books on how to create these environments. I think that there might be a few, but it's a very, very hard thing to maintain in my experience. Two rabbit holes here. One being typically what seems to happen in this case is...
Risk can be taken outside of companies, not inside. So you leave your job, you have an idea, you can't do it internally, or you fear doing it internally, or you don't perceive enough upside to doing it internally and only downside. You go start a company, that is the risk in that profile. A company succeeds, gets acquired. How do you think about innovating internally at Shopify versus acquiring to bring that in? Yeah. I mean, sort of an ergonomic for a lot of companies in the end state is to become companies that maintain what they've got and then acquire all innovation. I think that's a... I mean, I would not be proud of it.
like overseeing a company like this. If Shopify would turn under my watch into that, I think someone else could do my job better. I think companies ought, like innovation is a lifeline. I think you want to innovate everywhere. And I think every group in a company should be able to go to a conference and talk about how we are doing, like how our group is better than sort of the general implementation of this discipline or idea. And by us doing things differently and how we are thinking about this, first principle of thinking applies to any area can get a huge upside.
And I mean, ideally, I think the best way I would like to see this is actually that... For our own purposes, to build the best company that supports being extremely innovative for entrepreneurs in the retail space. We are innovating across all the disciplines, across like we've recently done, a completely new comp system in HR, which is not usually an area that sees total innovation. But it's been very, very successful internally and generating a lot of interest externally as well. And this is just Shopify applied.
to a place that usually just simply doesn't see a lot of innovation and therefore it's notable that we want to have the same thing everywhere. The best then entrepreneurship is like actually get this, be innovative inside of Shopify, which has the balance sheet to support this kind of thing. You know, failure is just not that fatal. Upside is massive because anything can be brought to market very quickly. And then, you know, if there is, like if Shopify with its focus on entrepreneurs says, well, this idea, there's more value in this if it's brought to another segment or maybe like this comp system might be productizable.
Well, but that's not our main thing. Like, we are perfectly happy to yield this to others and maybe people go and prioritize it and then make this a sellable product for other companies which would like to take part in some of these innovations. I think that's actually, I think that's probably a better way for entrepreneurship in the phase we're going in. I think it's important, like, the sort of stories around entrepreneurship, they much come from the same period of time, where there was, like, a unique situation of, like, incumbent incompetence. Although, it's too strong, but I think it's incumbent.
It's just, you know what, it's a fairly new idea that you have to innovate at the pace I'm talking about, right? Like, it's actually, it fits into the times because we're in times where everything changes so quickly all the time and therefore so much more, every time new infrastructure comes online, every time, you know, I don't know, like, transformer models are like, just like, we figured out how to get unreasonable value out of machine learning now. Like, it's the perfect sort of midpoint between the academic ideas and the vocational, like... just sort of get it done now. That's a huge, huge space for innovation. And now it's time for the companies to apply this to their own problems and potentially for new companies to be formed around this. It's amazing that it exists. It's a great example, which I'm giving. These examples are not coming along at the pace anymore. It's the early 2000s, right? Like, you know, a lot of multi-billion dollar companies in technologies come from three, four, five year period of startup creation, right? Which was this extreme Goldilocks zone of...
Everything was changing. Mobile, SaaS, internet, broadband. Remember broadband? All these things happened at the same time. And it was just easier. Let's put it like this. So I think you could take, like I did, massive risk, career risk, to just go all in on an idea. Because the batting average of just having a good idea, given all the technological changes, if you just pick up natively, they're building an internet native, in my case, software as a service, e-commerce system, rather than...
software that could sort of supply online stores, then that was just, like, so categorically different from what everyone else was going for that there was just a clear, obvious business opportunity in there. That wasn't, like, it's not a craziest idea, right? Like, it was like, but it was enough. I think that it's more difficult and subtle now. So if you can, basically what I'm saying is, I think...
great entrepreneurship is actually extracting amazing innovative ideas out of now much, much, much more innovative, larger companies than existed previously and bringing them to other fields. And I think that's a good form factor for entrepreneurship. Coming back to the revision to the mean, one of the other ways, so best practices is a way to sort of start the path towards revision to the mean. Another way would be bureaucracy. How do you fight against that? You're 8,000 employees now. How do you fight against... It's good to know, actually. It's, well, I mean...
Yeah, like, I mean, subtraction helps a lot. You know, sometimes, again, broxy happens because people put sediment layers of broxies on top of each other. I have found people don't actually describe... things that work really well as bureaucracy. I think bureaucracy and process are almost terms that are exclusive to things that did not work. So if people talk about some area having a lot of bureaucracy, it's actually usually an area that if you apply some first principle thinking, you might actually find a way of just streamlining this enormously. It's not all bad. It is fundamentally extremely hard to build things in groups of people. There's very few very, very important things that can be done by individuals anymore. We almost mind the...
the entire value space. Basically, all the minerals that are on the surface have been mined out. Minerals of value. The valuable minerals are now fairly deep underground. For that, you need to organize groups of people to build the infrastructure, the support and the air tissue, the safety. You have to build high-tech mining operations now.
so to speak. And that requires coordination, that requires incentive systems, that requires vision, that requires culture, that requires like every trick in the book to say, hey, we are going to do things that can only be done in teams. Very often, there is conflict between different, like dissonant infinite games, right? Like it's like the infinite game of Shopify is causing this like sort of like getting towards the horizon behind which there's a lot of value for entrepreneurs. That's what journey Shopify is on.
What you need to do is get as many groups and as many things, like parts of the company, to all be in alignment with this overall overarching goal. It's very easy for a group to end up with an additional non-goal. And I think what you sometimes encounter is a lack of logic. I don't know. I don't know if it's a good example. I remember when I started to look into, like, how to do charity work, right? Like, you know, that's something I want to do. I'm very interested in sort of comprehensive, like, how can I affect, like, for every means of energy I have, time, money, other resources, how can I be as beneficial to all the communities around me as I can? And so, I'm like, the first thing you realize when you talk to people is, like, you have to make a choice between individual level and society level impact, right? And individual level is, like, you can do something for a person.
And that's deeply gratifying because it's very sort of immediate and fairly, it's deeply popular with people. It's very easy to point out. Almost all those are hero stories around a charity of individual level. But like the data, if anything, it actually causes problems because you usually then create dependence on charity, the things which is actually opposite of, I think, the goals you're having. So you end up having to look a lot at society level things. Like what's the upstream problems for the thing that you're trying to solve? Anyway.
Companies are just the same. You have the society level and the individual level experience. And company design only allows you to really try to, you know, get to the large outcomes of a company, get to the alignment, and try to avoid bad individual level experiences to the best degree possible. Ideally, just like uptime on servers, you want to get to a 99.99% SLA on people having good one-on-ones. That would be great.
But of course there's going to be bad ones. Like people will have, you know, maybe the same person that usually has good ones at some point has just a disastrous one. And one of the problems is like in terms of criticism, you know, like a lot of people then describe all of the company through the lens of their one individually bad experience, which actually was an exceptional case and so on. And so, you know, you end up like with a story becoming a description of an exception, which was actually rather expected, although unfortunate. Anyway, with all that being said, Broxy is very, very real and absolutely soul-crushing, horrible and mind-numbing if it happens. I do not want to build a company that causes people to have to go to Kafka-esque experience. However, there are instances where what people describe as bureaucracy is actually...
good checks and balances, which are like a way you are trying to solve a problem. You see a hole in the wall, and what you would try to do is paper over it. It might make perfect sense in the sort of local context that you have. But actually, if the next person with a larger perspective says, actually, we use drywall patches because that doesn't cause problems with rodents. And the person, like if they talk to the next person, they say, you know what, that wall, that is actually a bad wall. It shouldn't be there. Let's actually get rid of the entire wall. And, you know, some of the more perspective might say, you know,
we are actually going to remodel this entire floor in this hypothetical office that I'm just sort of spinning up for the purposes of this conversation. The entire floor is being redesigned so that it doesn't matter. It's like that whole is going to be, no one has to fix this right now and this is unnecessary work. And the next person might actually say, hey, we're going digital by design and we don't even have offices anymore. And so what the culture you need is that ideas and action and proposals come from absolutely everywhere. Ideas must be omnipresent.
decisions on their strategy should be like coming from the place of right perspective, which sometimes is the people that will cross the front line and sometimes actually the other people will have a really intuitive understanding of the long term goals of a business. And so that's, you know, when things get mucked up there and not explained right. I have found that people reach over bureaucracy in these cases. I don't think that is bureaucracy. I don't know if this is a useful conversation, but maybe. I'm not a bureaucracy apologist. I do. If you ask anyone at Shopify, they will be able to cite many, many instances of me using my legitimacy to subtract bureaucracy in every instance I can. However, it's not all that, I guess. I like the visual of sort of sentiment layers and how it builds up over time. You end up with this outcome that nobody intended, but you fast forward time and nobody would have chosen this, but it happens and it happens so incrementally that nobody notices. That's it. I think that's it.
road to all evil in businesses like very very smart people in groups sometimes do um extremely entertainingly dumb things like it's like every individual credit along the way um however the result is something that absolutely no one can steal man about how to be done this way and um if you don't have a some kind of system of removing those things and and and like i mean humor is by way very good this is why one of the books i give to my uh executives is like is parkinson's law which is a wonderful 80 page read on like how silly companies end up being very often. So being able to make fun of these kind of things and then just like, hey, let's replace it with something better is a good way of doing it. How has your thinking on compensation changed? A lot. I think compensation is, I mean, I'm very much in this because I've worked on this quite a lot. It can last a little while. And I actually don't know if it's a super interesting topic. It's just sort of like a problem we had.
I mean, actually, not one. This is the other thing. A lot of solutions are multivariant. They solve five things. I'm usually a believer that if there's smoke somewhere, there's probably a fire. But it's often one of those smothering fires that's been going on for 2,000 years in the root system. These things exist, right? They're in real life as well. They're for existing companies. I think the way technology industry ended up...
doing compensation is one of those many, many, many sediment layers of, I think, individually good decisions, which amount to a place that's just strange. For something as important as compensation, I think we should not press into service reflexively such highly financialized derivative instruments of enormous complexity and huge variance of outcome without there being an agreement between both sides that that's something that they want. Now, a lot of stock options and RCUs, these things, exist because it's a tax optimization system. Very often, it's not actually... true anymore in many places. Canada has different taxes than Europe. It never had really stock options in most places. Actually, in some instances, it's not coming, which is sort of interesting because Germany is creating some tax liability for stock options. So the world is very different. I think these things should be available, but not prescribed.
very simple system where everyone gets a number. This is what you make every year. And so everyone agrees what, like, the ground truth is of compensation. And then you can say, we want this in cash. Do you want this in stock options? And there's going to be other things like, like, we will hopefully get to a place where you can use, like, we have currently, I think, two or three sliders that you can choose how you want your compensation. And then, like, there hopefully there'll be 10 or so to give, as you build more capacity for different options. Like, a charity market would be great.
Maybe even a charity bucket for individual level action, society level action would be like, maybe make that decision at this level. It would be wonderful. And so we now have a system that we control, that they can say like, hey, we're making our compensation system and implementation of our belief in what's actually the fairest, best and most flexible and treat people like adults where they can make choices. And then if you want stock, you just simply get those. And if a stock market value of Shopify is a very low at this point, you get more shares and it's very high.
You get fewer shares, but presumably once you got previously have appreciated value, therefore you're kind of ahead in both ways. And the moment of joy, I mean, this sort of gets into the weeds of previous compensation models. Like the thing that really, I think is, it's the weirdest thing about the previous systems is you make these big grants four or three years. At some point, there's a grant date. All these grants are created every single time before this.
this grant moment, like you actually have to look at the stock. And because I'm like, man, like the individual outcomes of people for getting this next set of grants is so different based on what's happening that week. Because again, it's like, this has nothing to do with company, right? Like Shopify's real market value is going up, I think fairly rapidly by all my amazing things we were building up. That's what I'm working on. Shopify's stock price is like this crazy function over time based on, again, sentiment, market value. So tying everyone's lifetime earnings really, but like to this other thing, just like
Why is this swinging compared to the thing that we're all working on? Feels like just such a pattern violation. Steel man, steel man me the argument that it should affect what you, like a Shopify employee, makes as lifetime earnings, whether or not Russia invaded the Ukraine a week before the grant or not. It's like that seems, if someone wants to steel man this, let's do it over beers in a bar and I'm like, oh yes, because that would be a fascinating conversation. But I don't think it's a silly thing to have to even discuss. I feel like...
the answer should be no. And therefore, you should design systems where that is not that big of a factor. What do you think businesses can learn from programming? I think all of business has to be re-derived from programming principles. I had this intuition. I think we even had this situation on previous episodes. We talked about this. Wherever I tried it, it worked better than all other approaches. And I think people need to understand it. Why is this? Because it sounds random. I know, especially in the technology industry, we are sort of...
used to putting technology on, treating it with deference. Like if you go into like oil and gas or like into finance, where engineering and technology is almost like a cost center, it would be about as random to them to say, hey, we have to derive all of business from... engineering principles as it would be to come to a technology industry and saying, hey, you have to derive all your HR system from silver culture. It's a total random idea. Here's my theory and we can talk about examples. I think we ended up in a quite path-dependent but very unideal treatment of what technology is and how people think of technology.
And actually, I think it's causal from the way campuses of universities are organized in the 50s. And like a big statement, Turing came up with the Turing machine and, you know, reading executions from tape and writing back to it and von Neumann formalized the architecture that you're using. This sort of created this sort of conceptual Cambian explosion around this time. It took like... to the 60s for having reasonable implementations of these things. Of course, there were some examples before. But where did everyone put that? If you actually, I'm well through the books that chronicle the history, even though those are obscure books that are, like, more people have to read. It's always a basement of some building, like, or a rental of campus across the street from...
MIT or Harvard or something like this, where they put people, because it didn't fit into anything, right? Like, it's like, what is this thing? It's like, it has a lot to do with language, really. Like, because, I mean, what's great about language? Language is a concept of taking very complex concepts, abstracting them behind new words. You know, like, it's the concept of abstraction, which is like, what is it mathematics? Well, mathematics, it's like, it's called as probability. It's like, it's called as sort of...
It's theoretical cohesion. The equivalency sign is like, those two sides are exactly the same thing, not just reasonably similar. It acts on a very limited syntax. It's sort of a language, but it's actually, it doesn't have a concept of abstraction. It's like everything is just these formulas, which are. And so you end up with this new world of a Turing machine, which is actually the midpoint between human language and mathematics. It has none of the theoretical parts of mathematics. It's all only the practical things. There is no such thing as a pi that is an infinite number that you can't cover to the end of the universe.
there is a very practical, like you can make a function called pi, and this function, you have to make a decision for how much compute you need to invest into it. At some point, you should stop because otherwise you end up in endless loop. So therefore, like what computation actually is, is a practical part of mathematics. and the much more definable parts of linguistics. Basically what Wittgenstein was trying to do exactly 100 years ago. I think Wittgenstein was actually probably the first hacker. And so you have this completely new field. What do we do? We put it, like, we call it what? Computer science? Engineering? We're still not sure what to put it. But it's much larger. It's actually...
I think we've taken a significant chunk out of all the fields and figured, hey, there's actually a unification out of it. And all the practical people for the next 50 years gravitated towards whatever department was called computer science, if you will, because that's where... And leaving behind all the theoreticists, this is where the philosophy group was only doing physics, and physics basically only does string theory. It's also like the topics that are a lot going on in academia are basically the disciplined versions of a nerd snipe. They're the things which are like...
Yes, let's discuss them, but it's not clear that it will be a practical value. I'm being somewhat critical with these groups here because, frankly, I am. I think we are just not thinking about all this stuff, right? Okay. With all this being said, where does this leave us? I think what this field is probably is some kind of applied computational philosophy is the correct way of thinking about it. It's like a little bit like game theory and economics ended up being like sort of an extraction from people playing poker. You're like...
you found a practice where game theory was applied and then a lot of ideas from game theory were sort of informed to this. Computer science is a bad term because it's actually all applied. And therefore, it's the most applied field of systems design. It's the most applied field of architecture. It's the most applied field of control theory. It's the most applied field of almost all these things. And it's a practical, almost vocational side of academia, like extracting all the good bits. And so...
But we left it to the nerds and said, hey, for most industries, you're a cost center. You just sort of enable the things that the others do. And the wrench of the nerds is actually that we now build all these companies which have been outperforming everyone else. And frankly, everyone has to kind of understand that that isn't because you have technical skills, but actually because we, and I'm including myself here instead of this engineering discipline by being very loose with it because I clearly don't have an engineering degree. We spend our formative years designing systems that have to be resilient to like weird, non-deterministic, like the kinds of things that you can't even really put into a mathematical formula, right? Like packet loss. And like, you know, our word actually is one of chaos in which we are trying to pretend that it isn't. And then we have to put abstract systems almost in the heritage of linguistics. Is this an ecosystem? Like that word has...
Right now at Shopify alone, like three and a half thousand, four thousand people in R&D working on, like every single day, it has had slightly fewer for years and years and years, 18 years of my life invested into it. And so there's a lot behind this. Okay, all of this, why is this applies to business? Business is unbelievably complicated. Business is a, your departments are trying to use sort of old way of, the old imports to try to make the most of it in most places. Like the old imports are processes.
bureaucracy, and story. And all of those leading to a culture. That's your compensation team, for instance. Have those mechanisms by which they venture a process to look up, okay, there's a new job. What's the cost center? What's the comparables? What does the Radford or Compensier data say? Is it comparable? What's the percentile? Here's the salary. Let's use this as an input.
All this is data processing, right? And we should, you know, engineering discipline has a lot to say about how to build very resilient systems that can roam across a lot more than just a few inputs like this and actually implement like a function that spits out the right results based on way more inputs than this. And the function is auditable and can run every moment. And if you are thinking about making a change to a business, what would it look like when a certain discipline or a job moves into a different part of the department of a company? Well, now I made all of this executable. I now go and...
just edit one file, and then it rebuilds the model of a business. I think, and then if you like it, in an engineering-led, sort of engineering-thinking company, that becomes the new desired model. And the goal of the HR discipline is actually not to make all these arbitrary decisions, but actually to look at what is the model of a company. What is the actual state of a company? What are the moves that get to the actual state as close to the model as possible? Where are the biggest discrepancies?
A company like that retains its ability to evolve with a changing landscape because it's extremely hard to change bureaucracy, extremely hard to change the stories in the business. It's extremely hard to figure out all these little arbitrary exceptions that have been created and can still move fast, but also just leads to much more fair and observable outcomes. You can use all the systems building advantages of unit tests, of linters, of where are things weird? Data processing, observability, dashboarding. And so we have ambitions, I think, amongst the most technically-run engineering companies, and it allows you to think about what we have done, but it gives you a new tool because at the end of the day, I think what Tourette invented is not as separate as people make it out to be. If you look at the cells that make all life, this is kind of what DNA is like. It's a read hat and a write hat, and it creates more DNA, it creates more cells. It's like...
The comparison is not equal to science in terms of mathematics, but by analogy, yeah, I think it's a lot more fundamental than we give it credit for. I think in 120 years from now, when we talk about human history, these books spelled like Hackers by Stephen Levy and The Dream Machine and Code by Petzold, these books are actually going to be referenced books that show the actual mainline history of our species, right? And currently, it's relegated. The newspapers talk about current affairs, which we showed. They are also important. But it feels like we are living on this weird word that actually has not integrated its own mainline history track into the public consciousness. And I think this is why the word is so weird to so many people. Why are things the way they are? Well, because we have a model in our minds that propagates a model through...
I have no school, media, books. That's deeply rooted in the physical, which is easy for us to reason about, to be fair. But it's an extraordinarily lossy model if you actually hold it up to what is happening in the world. Anyway, this is a topic I've been talking for hours. I never know if it's an interesting topic because I have no answers. I'm trying to be like...
I think it's worth... I mean, what's the TLDR? The TLDR here is just like Poker taught economics a lot because it was applied game theory and people play many, many, many hands in an evening and therefore develop a more intuitive understanding of a part that's important to economics and the best part of mathematics. I think... engineering involves applied systems design. It has a discipline of systems design that is just vastly... We're not talking about slightly ahead. We're talking about 100 years ahead to everything else. It is not a contest when you hold it up to industry orthodox thinking on these things. If orthodox thinking is purely informed by... If a book is basically from the 80s...
It will have interesting things to say because how to implement things for humans is going to be one more better developed and potentially how to craft story and process. But it was a fairly minor support role now to be like. I think what makes it interesting is the fact that there's no answer, right? If there was an answer or a definitive answer, it would be a little bit less interesting. Yeah, I wouldn't do this. I'm only interested in you. I mean, I'm interested in you. No, I'm interested in the ideal. And I'm actually uninterested in fields where the ideal is figured out. Because I have nothing to contribute there.
I love and understand technology. I love and understand design and UX. Why? Because I really, really care about people. I know it's a weird thing to say, but I have sort of built my life around giving people the powers due to technology. This is what I love delivering. So these are the three pieces. Technology is the enablement. People are the point of it all. And people are awesome. And people are creative. And people need to be augmented with technology. And I think that's the obligation of us, the technology industry, to cause this to happen instead of replacing people.
And what we should replace is toil and drudgery. Yes. And bullshit, right? Those are the things we replace. Sometimes there's jobs because we are mean or because we didn't know better or we couldn't do better. Better. Only toil, drudgery, bullshit. Let's replace all these jobs. Everyone locked into these jobs as a creative person can contribute significantly more if enabled with proper tools. And so, of course, UX is in the very middle. It's like UX makes all the world of technology and everything we've accomplished there available and approachable by everyone. It's a fundamental equalizer.
And I have a concrete set of problems that I need to solve around organizing tens of thousands of people to build a highly innovative company with tens of thousands of people. I think... this might be surprising to people. I don't think that has been attempted many times before. I don't think people, like, you know, there are companies you can describe as being highly innovative that are hundreds of thousands of people because I think you're going to always get sort of a residue of innovation out of it. And if you have a lot of people, that ends up being, you know, still significant in terms of innovation that comes. Of course, there are phenomenal companies that have succeeded this, but I'm...
I think it's not unique, but it's probably single, maybe low double digits of companies have ever attempted it. Most companies are just trying to build, like find their market for their core competency and then play a defensive game around this. It's just a very, very different thing to do. Everyone pays lip service to innovation, but innovation costs you a lot. Innovation is a, if you want this, every single, like solving any single problem in a company is 10x as hard as it is if you don't. And so I don't think that many people have signed up. So that's kind of a headache, but I think it's intoxicating.
One of the things that you sort of said was unleashing people with technology, which is, it's fascinating to me because small differences in skill technology can amplify or leverage that ability to massively different results. You and I have the same iPhone. We have the same technology as available to us, but you can do a lot more with that than I can. Well, I'm not sure about that, but like, um, I, I, uh, yeah, like, I, I mean, again, The tools we use is a multiplier, not an ad. Not something that adds. Like, I think I took the computer around, but the most powerful tool in the world, probably a slide goal. It's actually an interesting conversation about what might have been the most, the highest sort of multiplier tool that existed before. Probably sitting on top of bureaucracy, frankly. It was probably a times 10. Like, I mean, I'm sort of making this up right now, but like...
I indicated, let's say you would go back to pre-desk calculator times. The way they had to do the Manhattan Project was rooms and rooms and rooms of people, a lot of what they did at Los Angeles was actually calculating calculus, doing the trajectories for artilleries. And rooms and rooms and rooms of people doing this manually, right? And so... All these people are better at mathematics than I will ever be, and most of us will ever be. And I've been locked behind writing tables for every particular artillery. Every one of them was different, so you had to re-derive all the calculus, like, look-up tables, basically, for different illnesses. I think. And that sucks. So now you're living in a world where one of them could probably go on YouTube and learn enough programming in maybe a week from scratch. Because, again, people must be always to make how complicated it is to learn programming. It's like you fire up Khan Academy, you sit down.
clear your calendar and by the next weekend you're programming some useful stuff like this example and you will write a function that you input some calibration numbers from artillery that you care about and the distance and maybe an elevation difference and will spit out very quickly to you know exactly where to point it or you do it with a desk calculator so after that person after you do this this function this thing is great too always be, like, correct. Maybe you need to add, someone adds wind at some point because you forgot about it. But, like, that's just one optional parameter you add to the function. That function will solve the work field. Like, it's done forever. The amount of productivity added to the world is not the utility value of a function. It is freeing.
all the best people at calculus on planet Earth to do productive work and actually write these functions. It's flabbergasting in terms of a planetary productivity number. By the way, we are terrible at carbonating productivity. Also, this is because none of what I just said would actually be in productivity numbers that economists use to figure out if productivity is going up. So are we more productive now? Because based on that, we should be massively, but it doesn't seem that way. Because...
I'm curious why it doesn't seem that way. I think it does, like, if you put a movie on from, like, there's a funny list I've seen recently about, like, all the movies you love that could not exist in a world that has cell phones. It was, like, Die Hard. And obviously, it's just, like, you know how movies you watch most days? So, like...
It's like cloud earth has changed a lot. It's just we are all the frogs sitting in the slowly boiling water. We're the sentiment. But the sentiment is, like, I mean, one of the most important things that I think everyone's overseeing is the, I'm great, but everything else is fucked effect. So this is actually like a metric you can look up per country. Basically, people have to answer the question, how are you doing? And how do you think everyone else is doing around you? And what you get back, everyone is like, I'm doing great. Everyone's anxiety is based on their understanding of everyone else, which everyone else literally disagrees with.
Like, so you all think everyone else is doing bad and everything else is getting worse, but it isn't. Like, the numbers don't bear it out. There's countries, I think South Korea was like 90-10. Like, 90% of people are doing fine and they only think, like, 10% think anyone else is okay. So sentiment is an important thing. The sentiment tracks the actual experience of planet Earth in the same way a stock tracks the fair market value of company. It's maybe eventually convergent, but sometimes vastly swinging up and down based on... And driven a lot by media, right? And what you're exposed to and the messages you're getting. Yeah, because, I mean, why? Because media has a grudge against technology for, frankly, understandable reasons.
Everyone in media works for an institution that probably was negatively affected by tech. Now, I think media itself, like, if you shoot some art, it's actually doing great. Like, podcasts are doing great. Like, builder-operated, founder-operated media is killing it. Your founder-operated media. It's like, it's the golden age of media along those lines. I could never find, like, there's no chance I would, like, I am a clicker.
delighted customer for the product of the knowledge project, but I don't think I would have been serviced in any other period of time, right? So founder, builder operated media is doing amazing. Institution, legacy institution operated media, some of them actually doing great. I mean, titles at higher inference, great than they ever have been. But there is a prestige change to these jobs. And so I understand that people are fundamentally, in this space, are colored and pessimistic about the changes that technology wield.
But what is technology? Technology is progress. So if you have the people who own the airwaves, you know, like every person on the planet ends up becoming, well, everyone becomes sort of average of five people that spend the most time with, right? Like that's just sort of a really well documented score. It's fundamentally true, but it's super useful as a mental model. And I think that, you know, one of those people is the media for most people. And so you're adopting a set of beliefs, which are, I think, extremely colored. And in this particular case, I think somewhat unfortunate because you just recast.
the applied field of human progress as something that is causing detrimental outcomes, which, you know, again, in the individual case can happen, but clearly on society level isn't. And so we lost our ability to be optimistic enough for future and a lot of progress. And I think that's, I mean, I think that's extraordinarily unfortunate. And this is like somewhere in the top five things that we really ought to edit. And because people actually think they are doing okay. Like, no one's so perfect. Everyone has problems. It would be great to get rid of all of those too. But like overall, things are going in a really, really neat direction. And...
you know, like books like Enlightenment Now and so on. Everyone chronicles, hey, what was the past like? It will overwhelm you with evidence for how good we have it. Well, if you can go back in time, you'd definitely choose today. Like I have incredible, I don't know, birth, the year envy with my kids. It's just like, I was born in 1980.
You hit on something interesting there, which is the search for accuracy over utility. So a lot of people dismiss ideas because they're not 100% accurate, even though they're useful. How do you think about that? Oh, man. Like, I mean, this is, like, a real current topic that you, I think, teach extremely well. Like, what concept of, like, all models are wrong, but some are useful? Like, yeah, I just, like, it's a right way to think. Like, I think this is another one of those things that you learn in engineering adjacency. Like, electrical engineering has this really well done. The sciences don't, sadly. But computer engineering is, like...
you're carving a system that works out of what you got. Now, that's good engineering, but actually, if you expose yourself to this, this is actually good thinking. You have to think in bets. You have to make choices earlier. You have to make a choice when you have... You can't wait for having 100% of the inputs because you will never have it. Sometimes, after the fact, you get to go back and give yourself a scorecard for how good of a job did you make when you had to make an important choice? How good of a job did you find all the relevant inputs to connect to make a choice with? That's something you can...
really sort of review after the fact, like, hey, I made this choice this way. It was wrong choice. Was it the wrong choice for chance? In which case, you made no mistake. Was it a choice for...
a certain chance that would have been known and wasn't considered, that is something you had something. Was it invalidated because you didn't see the bigger picture? That's totally your fault, right? I'm not making choice. As long as the bigger picture would have been available easily. My test is always like, were there any 20 minutes I could have spent to pull this piece of information I didn't consider right into the set of things I used as inputs to make the decision? If so, I wasn't equal to the task of making the choice at the time, and I need to understand this better in the future and improve from.
So accuracy very often is picking the right result, but that's actually independent of making good decisions. I think resulting is what poker players call this, and I think it's not really the right thing to do. Let's talk about decision making a little. I mean, we sort of highlight the last two and a half years and all the ups and downs in that. How do you keep your cool when everybody around you is sort of losing theirs? A lot of people end up getting really invested in their sort of job title as an identity. And they think they are valuable because the job is valuable.
Unfortunately, so much of the world is a second-order effect of self-confidence issues. People seem to have a fairly low opinion of websites, fundamentally, which I think is just so sad, because I think we should have a vastly high opinion of people's capabilities in general. I have a very, very high opinion. Sadly, actually, it makes me somewhat disappointed in people. In a funny way, at this funny exchange with Toby Shannon Weigel for 12 years, recently retired and joined the board, he told me, like, hey, Toby, one of the biggest differences between you and me is, like, you have an extremely high opinion on people's ability, and therefore you're constantly disappointed in people. And I have a really low opinion of people, therefore I'm just utterly delighted when they do anything useful. And it's like, he was offering this advice for me to change my mind. I think I'm less confused about people's potential than I think they sometimes are themselves. In many cases, I see this as one of my major contributions to my career to have people actually reach their potential and have a more clear idea about their capacity ahead of time. One of the ways how this low opinion reflects itself is that people think they are valuable due to
more legitimate sources of external accredited and territorialization. I mean, having... External validation. External validation. Like having a degree. I'm valuable because I have this degree. I'm valuable because I am a front-end developer. And most things are fundamentally incorrect. I mean, maybe in some of these sort of meandering, middling companies, that might be true.
You are valuable because of the brain you've got. You are valuable because you make choices. You're valuable because as a front-end designer, not just that you are actually engineering, that you can program, but also that you can, you have an aptitude to work on, build systems that are like great and easy and to use for people that are resilient to random, people do very random stuff with user interfaces and you build something that they're not. It's your experience. It's your skill. It's your actual, it's your life story rolled up. It's your intuition. It's your ability to make great decisions quickly.
So often this anxiety that we're talking about popping up the stack to your actual question is that people confuse their own self-worth and their role in the world and their ability to feed their family, frankly, with the continuation of jobs and the continuation of a role that they have. But the question you should have is like, how can it be valuable? That's Shopify hire you as a person. The only reason why we create roles and recs is because they are like lures to great people. The interview process is not a process of figuring, can you do this role? Can we slot you into this role? It is, will the job fair be better for you being here? Right? And so people should help us anxieties. People should figure out how to be valuable and show great flexibility in this. Ideally, develop range. Or you should make a fundamental choice of, are you going all in on specialization for range? Most people should opt for range.
Specialists, everyone who knows that there should be a specialist knows they should. Everyone should be a specialist knows they should be. This is a big particular set of character traits, which wants to dedicate itself to a very narrow kind of thing and go unbelievably deep, to a degree that's absolutely impossible to appreciate for the non-specialists. The depth, the true depth of true specialists is incredible. What specialists don't understand is how...
how incredibly good journalists can be at 50 things, right? Many people think a journalist is sort of like a jack-of-all-trades, master of non-legates. This is one of the dumbest sentences I've ever heard. That's just usually someone who hasn't made a choice and is not good at developing any kind of stress. They're fairly rare, people. You're like Pareto Principle alone tells you that first 80% of every field can be done 20% of time. So you can develop easily five fields to a degree of eight out of ten.
while the specialist is just looking at primary topic, right? So, and frankly, this is even incorrect because learning the next thing is significantly faster than learning the previous thing because the skill set of learning is itself a skill set. And it's actually your skill set of how quickly you are learning, which determines how long it takes you to pick up any kind of new field to a set of 8 or 10 out of 10. Okay. Anyway.
how do you keep your core like know what matters and like humans are awesome and humans are like with fact like every individual human has more has more compute than all the computers we've ever built in network together right so therefore there's a lot of roles for us to play um and um especially when millions of variables change software technology pits but like it's like um right now the way engineering works for your systems work um as great as they are and as flexible as they are these days, they are still a little bit more, like, you pour a little bit of cement into your current approach. Like, refactoring technology is tricky. So, if the world changes, it's time for humans to shine. And so, we should actually be very self-confident into our role. And then, again, you make decisions. I think decision-making is misstudied. I think decision-making is easiest thing in the world. It is blindingly obvious how to make a decision, or any decision. What isn't is finding the inputs.
Like, what is the context? What are all the things that affect the decision? Developing that is hard, right? So, like, knowing all the things you should look at. Knowing what to ignore, such as what everyone else is doing. I mean, you might use... When everything else is doing, it's actually a second-order import. It's an import. Like, you should look at it.
make a judgment on, like, how much value there is and use your judgment on that as a hit put into your decision-making. So you're twice removed. And then you build up the picture and then, honestly, everyone who looks at the inputs will kind of come to the same. I've actually never really seen this situation where people are truly making different choices. Like, there's always, if there are, like, people on different sides, you just have to, like, okay, let's take it from the top and, like, state all the unstated assumptions that are actually inputs into decision-making. And once it was flushed out, it becomes pre-office, I find. And then...
after you make this decision, you don't just, if it's an important decision strategy or something, you don't throw away this entire book. You actually capture it and you revisit it because, again, the world keeps changing. And by the way, your appreciation of the inputs that you considered end up evolving as well. And so you should actually, at any moment, rerun a function over the inputs and be fairly neutral to what that says. Like, I did that with, I decided we built a lot of offices. We did them extremely well. I think they got very good at building offices. But then a change happened in the world and one of the variables was like,
Well, are people allowed to go to offices? I don't think I had that. That was an unstated input. That wasn't a stated input, but it was one. The moment that flipped, they decided, like, I have no offices anymore, right? And then another input was, like, where is our current staff? Like, are they all closed to offices? And then they said, like, another decision should be higher now outside of these places. And after we made that decision...
the variable on like where people live changed. Not everyone has closed offices. And I think it just said, okay, well, you're going to go digital by design. And like these decisions actually went very quickly because you could see how one leads to the other. And then we just call it early, for instance, the stuff that we did like 2000, like I think in May or so, I did like, okay, we are done with offices. We are going to be probably the biggest role.
And you were the first to come out, basically. And we thought it was valuable to be the first because, again, I think removing bad ambiguity is a very important thing. And I think a lot of people want to know. Some people were just waiting to get back to office, which I appreciate. But many people would say, and people at Shopify were in this state should know that that's not something Shopify could provide in the future or would not. And people in other places which were clear that they would go back to offices and actually like this thing or like the ability to move wherever they want to live, like engage in more lifestyle design than what you can do when you have a desk job.
For them, it was important for me to understand that Shopify would be a fantastic company to join. And I think that was very good for us. So I think it's fair to summarize what you sort of said about decision-making as being easy in the sense that the source of all errors in decision-making is basically blind spots or other blind inputs where you're blind to the effects of your decision. How do you think through the primary, secondary, third order? effects of your decisions and then the broader impacts. Yeah. I mean, I think you would develop a little bit of an intuition for the second and third order effects, but I don't think you can't plan for them. You tend to make decisions on primary effects and you communicate them on primary effects. I think in a smaller team, you might talk about, okay, this by way will actually cause this other thing, the trend will cause this other thing. And I think that's sort of expert level decision making is being able to have a fairly high batting average.
idea of how this is going to continue because you're saving future headaches by being aware of them. But I would say this is like, this is where things get really hard. Most people really only concern us with the primary effects. Secondary effects are very, very hidden and opaque. Although I think govern the world a lot more than people realize. Very, very often the secondary effects and tertiary effects are vastly more of societal impact than the primary effects. Like, I mean, primary effect was people didn't like to lose their power.
It's like an entire different conversation about how that might have happened. But I mean, if you look at causal requirement, it's probably because all the green parties in the world, which I actually appreciate for what they do, somehow ended up embedding nuclear power being bad as one of their family myths and organized around this. And therefore, it was like possible to get out of their platforms later on when this became sort of silly. And so there's like an input, which I mean, maybe to the best of knowledge when these parties were created in countries like Germany. Maybe that was thought to be true. Like, I mean, I think sustainability and environmentalism and so it meant something different back then. We didn't really understand fully the real carbon plate. It became a huge problem. And so anyway, what they then didn't do is, like, after they got more data, they re-ran the function of their position on nuclear power, and they just kept it because that was, like, convenient, I think. Or you don't re-run it. You just dismiss the change invariably. Well, it becomes just this. I think that's actually more accurate, sadly. It's probably just, it's written into the set of...
Again, it's a founding myth. A founding myth can't be revisited. This is why you better end up with a really good set of initial rules because once the people who write the initial rules are gone, there's going to be a great set of deference to them because, again, no one will ever reach for legitimacy of founding fathers. Think about how few founding fathers there were and how many constitutional lawyers there are now. It's a crazy discrepancy.
But this is one where it's super important that we find a way to rerun or get rid of or change. How do we do that? Yeah, I mean, we actually, talking about secondary effects, sometimes we use, very often secondary effects are really the opposite of the primary effects. A lot of our carbon issue in the world come from the environmentalists convincing the world that even though we're building an economy that requires nuclear power, we could somehow do it with coal instead. Now, I think we've got the scorecard for that. This really worked very poorly, and I don't think it's an expense.
kind of needed to run, but like we did. And until maybe a year ago, it seems like we actually were really not looking at this. Because, I mean, I should make this explicit. The secondary effect of us not building nuclear power plants is that now we have climate change. So primary effect is environmental movement. Secondary effect is climate change. Like, chew on this for a bit. Again, everyone in this movement wanted to do what's best, the best of the information, but like a secondary effect matter. Now, take another one. Russia invites Ukraine, which seems to be a recurring topic here.
everything in primary is bad. Secondary effects, many, many, many, many of them are bad. Like, there's a secondary effect of everyone having to look at their energy policies and realizing holy hell, should we probably leave these nuclear power glanced back. So, you know, we actually, in a really odd way, Europe's dependence on Russia for natural gas pipelines plus the act of aggression by Russia may actually cause climate change to be solved, which is like an unbelievable story when you're looking at this. And honestly, this is the danger of secondary for tertiary effect thinking is it really lends itself to cynicism because sometimes you see these connections which feel extraordinarily inconvenient for the main story we tell ourselves. But I also think facts are friendly. And also, it wasn't a fact. They're facts. They're like compounding systems that feed into each other and loops and cycles. All of this is just like, yes, and then a hundred things besides.
but it's really good to figure out one. So you do the same thing, I hope, in a microwave in the company, right? Like it's, you know, like if you are in a company, everyone is allowed and actually encouraged to be an intelligent actor in their own sort of local incentive system. The system should be designed so that people sort of individualistic efforts level up to the society-level benefits, like the roadmap, the mission, you know. Bureaucracy very often ends up being the grinding between those things, like the local incentive system and the needs of a company or the needs of another group. So designing things in such a way that their alignment is really important. And for that, you will have to go analyze, you know, these things. So I think that's, to me, those are interesting challenges. And again, it's interesting, again, because there are no right answers. No one has figured this stuff out properly. I think partly because we had to build every company before, from reputation, really from way.
basic building blocks, which is policy, rules, process, and story. And those are like software for humans. Now with computation and actual computing, I think we can implement more complex systems that are more auditable. be able to provide some of the analysis of things that are going in the right direction in a more macro sense. And will actually make it much easier to implement more complex incentive systems. It will make it easier for everyone to know if they're doing work that's actually helpful to all the company and the mission. I think that's completely underappreciated right now as a source of...
business thinking value. And I find this very, very interesting. This is really what I mean with applied computational thinking and applied computational philosophy being almost a higher order. academic department that should exist on the campus. By the way, it should probably have the nicest building. And then this sort of computer science, hacking, tech, engineering are like the super applied versions of this. But I think a lot of other fields should have moved into this particular faculty as well. Now, I'm not engaged in redesigning academia. It's not something I'm interested in in any shape before. I've never been in a university outside of giving talks there. So I'm a little bit of an outside observer there, although I am looking at what's going on with a little bit of exploration because I think academia fundamentally is a...
one of those areas where all the ecstaticisms are incorrectly designed for society's interests. And I wish... we would have more founder-led academic institutions that could engage in some redesigns and subtractions or figure out some different means by which we could enable some good thinkers of the legitimacy needed to make some changes there. Because otherwise, we are just going to get papers, setting papers in rings. And I think progress from academia has slowed down too much, given the amount of resources. If you look at IQ dedicated to... If you believe in IQ as a heuristic for potential, which is not necessarily a discussion. I put my signature under, but for simplicity's sake.
man, you're diverting a lot of people into academia, nerd-sniping, thinking about the string theory, and I just like, man, there's a lot of practical effects we need to solve here, and I think we should go and solve those. And you did some of that during COVID, right, with the rapid grants? Yeah, I mean, rapid grants was great. I mean, there's an entire sort of emergent field led by a bunch of non-academics, or sort of academic applications, sometimes founder-builder types, called progress studies, which says a very basic thing about, hey, we should probably... study how progress happens because it's probably slowing down a lot right now and we should kind of have a theoretical framework by which to just like you know like meta academics is probably almost a better term there um before watches watchmen so to speak and um um i don't i think that's very nascent and probably not like university loved and potentially um I don't know if it can get off the ground, but we did some experiments with FastGrants and some other things where we just said, like, hey, with enormous time pressure, give us a proposal and we'll tell you if you might get money for it in a couple of days, because that was really needed at the beginning of COVID, because the brand new process is too Byzantine and Kafkaesque and the product. And I don't think, and this was sort of my opinion, proxies to societal schools very often. What have you learned so far about how progress does happen? I mean, FastGrants was incredibly successful. It's unbelievable. It was like, the amount of...
times that things that made a real difference ended up being the recipient of like it was like a clear mark of like the people really want to try to make the system work but like they're stuck behind various and I think that was good I don't know how reproducible it is and because it was a unique moment I think It was also unexpected. Springing these ideas on people is very important sometimes because the problem is, in any other case, you reward the most prepared, and the most prepared are usually people with the most time, and people with the most time are not usually people who work on important things. Sadly, true. So it's very hard to build academic environments or even processes that reward the people who can make the biggest difference. That's a very complex problem in incentive system design and against systems design, especially once humans are part of it. Sadly, the people, the most capable, tend to be the busiest.
You said in the past that, I want to read this so I get it right, people should make decisions based on the decision they assume the company in 10 years from now wishes they would have done. Can you expand on that? I love having these questions as one of governing, putting it as an input there, or at least as a sort of a linting rule, if you will, on the quality of a decision. It's very easy to do what's popular right now and commit yourself to more pain in the future. This is almost every...
important decision that doesn't happen automatic, ends up being a little bit of a, do we do what's right or do we do what's easy, right? Those are the only real decisions that people get hung up on outside of the, hey, we see no path forward, we will have to eat shit, which is like, which is the pile we should start nibbling on. It's like, that exists too, I mean, especially in times of crisis or sort of wartime. Those will also end up becoming discussions, but like usually it's in the form of, are we allowing ourselves to do what's expedient or easy? I want to have good heuristics for viewing towards best decision overall in the long term. Ideally, again, especially at the strategy level and people systems levels, these things should be along the lines of long-term benefits, inclusive of some of the secondary and tertiary effects that are predictable. And so this is why I try to ask people, hey, I found this question to be clarifying for people. Because often, I mean, on strategy, a lot of what people call strategies actually go to market. And a lot of go to market.
It was trying to figure out if you want to pull future profits forward at a discount, right? And how big that discount is. And sometimes these discounts are enormous, right? Like absolutely crazy, like 90% discount, but you can finish a quarter. I'm not talking about like, here's a Shopify account for 90% off. I'm talking about, we have a product called ShopPay, which I think a lot of people are familiar with because it's the kind of thing that makes checkouts good, so you don't have to type your address with your funds. And that thing is like increasing conversion rates to a degree that not having it simply makes it a mistake.
You're basically committing a strategy, like right now you make a strategic mistake by not using Shopify. If you call this to sell products on the internet, because it's, it's, it's, it's, that's how high the number is. I'm super, it's so gratifying to be, I've got to this point. The attachment rate is massive. The value is insanely high of this. There exists a lever inside of the company. Obviously it does. I don't think I'm really, really anything with this. Like basically when you build products that are extremely, extremely valuable, you have like a dial, which is like your monetization dial. It's like set to zero. That exists in a room full of monetization dials or dials like that exists, but, but, but as like.
your roadmap tries to build more dice for that room, your long-term strategy ought to be to use as few as problem as possible because I could walk up to the one attached to shop pay and just say, you know what, like, we should charge for shop pay. We should just say, hey, you know, like, cost an extra percent. It's like utterly worth it. It's like, again, like, from vision is like 20% better. Like, everyone in the world would probably pay this. Yet, I think that would mean that people will, like, it could create all these incentives for disintermediating the product. It would create competitive landscape things. It would, you know, it's just like...
I think Shopify all in, like over the next 10 years, we would be a very diminished company for not giving our best feature to everyone to make it like a fundamental, like, you know, like flag in the ground about, hey, you come to Shopify because we work on things like this and then we have them, they become available to you. And because, again, for the period of time that involves us not, like, the web doesn't have identity built in in a good way. You don't have, like, there's autocomplete, but that's really a hacky solution to the problem. pre-internets like BTX and other things had your identity as part of what the platform just supported. It's like your name had transactions built in.
And our AOL had all this. So it's kind of surprising that the internet doesn't. But it doesn't. And therefore, a certain period, which is still ongoing, requires us to sometimes enter all that just with our thumbs. And ShopPay is the portly telephone missing internet platform feature in a way. And so this is valuable for this period of time. And there will be something else that's valuable if this is solved at some point.
um but we want to play the role of like democratizing the best features to as many like millions and millions of small businesses because we approve it we want a small business to compete on uh equal grounds of the biggest companies and so um the mission like all this to say um this style is not just a dial of like monetization this style is a dial of um how much the observable deference to the mission, you know, how much we invested into this. And I think it's more valuable for us to build a reputation of doing this way than it would be for us to, you know, absolutely kill it for a bunch of quarters, right? So, like, that's an example of that. I want to talk with you about two ideas that have left an impression on you. The first one is Paul Graham's essay on conformism. Can you talk to me about what insights you drew from that? Okay, so let me see if Ember could use this. I mean, I have to say, like, Paul's essays are...
They're kind of this wonderful... I find they're always insightful. They're always gems. And I find even sometimes the same essay, actually. It's valuable reading it at multiple stations. So his writing is brilliant. Very often he...
does this thing where, again, he does the thing that language is best at for, like, putting a couple of labels to things that are being observed in general, but, like, afterwards, they make them easier to reason about. And he always, like, builds up these pretty arguments around them, which can serve as almost onboarding throughout the year. I guess it's like, I mean, mental bottle faking, that's what I'm saying. I find, so in this, he draws, if I remember this right, like, one of those four panel grads where one axis is how independent minded you are and or how conformist you are on the other side and then sort of a passive aggressive um standard separation and and um yeah i think this is it's valuable because i think um uh you can you can sort of put a relation density crowd um like over this and and you would serve i think he makes the argument um that but most people are probably passive to begin with and um um which i think makes
I mean, I think society would kind of, like, thought about it. That's potentially not true. And then there's, more people are, significant more people would be on the conformist side of it. I mean, one thing to acknowledge, conformist is really, like, I mean, maybe it's all to me, but it seems like a very negative connotation in there. Like, this just means, like...
people who are willing to like work on great ideas really like it's like kind of especially passive conformness is like it's something that um you know some of the greatest people are probably can be swept this way but people who are like i was of a specialist right people who are making a choice on like i'm going to really go super deep into this one topic and um i'm going to go like i i will i'm okay like working based on what i know on like like a company goal right like it's like this is like very sort of This, on the aggressive side, the picture kind of changes, right? Because those are people who are trying to get everyone else to go to their side. And I think the aggressive independents are clearly entrepreneurs. They are a little bit different, and they're aggressive conformists. And I think that is what the essay gives at.
I think it's important that we sort of talk about them with a little bit of like, hey, there's probably a lot good in there, but we should also really understand the downside effects here. Because aggressive conformism is a thing that is going to make it way, way, way hard to innovate. It's going to be a thing that certainly makes a lot of people, notable people's life living hell on places like Twitter. And, you know, there are a good deal of industries that are deeply... invested in this sort of as an archetype. Again, I would say, like, generally, peroxy is, like, especially sort of the sort of bad part of peroxy, the Kafka asset part of peroxy, usually involves aggressive conformance. They're often the comic book villains, but, like, they blend in really well. So, like, it's just, like, I don't know. I don't know if one person is, like, one of those things always or in different contexts, but what I like is, like, hey, this is useful. Like, this feels like what's going on? Why are people, like, having so different opinion on looking at the same thing? Like, here's something.
That changes things. And some people automatically say, well, that's quotient. Some people say, that's clearly something I'm going to fight. And I think it's important that companies kind of state what kind of groups they like. Like a company that makes no choices of what people they want to make. I mean, again, you end up with a full-on bell curve, and therefore you're going to end up with full-on average results, because the potential for agreement is extremely tiny if you are fully in the limitation of like every set of ideas, right? Because if you combine everyone's favorite color, you end up with mud-brown, and that sort of thing you're going to end up with. So if you are wanting to build an innovation company, you should...
not be very deliberate with where you put the conformist or aggressive conformist. Like, they play a very important role in some groups, but you have to be clear about which rule, because the consequences of that kind of thing are, like, they will cause a thing to happen that you need to want to happen, because they will definitely make it happen. If not about what you want, then you should treat carefully. The other idea is the Infinite Game, which we've talked about a little bit earlier. That's a big topic. I find James Carr's book, Infinite Infinite Games, to be really profound and underestimated. I think Paul Krepp could do us all a service by making another single essay, three-page repackaging of the idea, because he seems to be able to uniquely be able to simplify complex ideas to this point. For everyone else, you have to read James Carr's book, which is somewhat dense, but actually I think it's wonderful. He gives you this real sense of like, what? The difference between long-term...
It is important to delineate finite and finite games. What's the difference? Finite games are things that have a goal. Anything that has a goal can't be an infinite game anymore. They have a winning condition, and the winning condition is usually met when participants agree that the winning condition is met. This is a constituted way of saying tennis is a finite game. Tennis exists in a world of rules. It's been defined as probably a governing body of aggressive conformists.
that keep tennis the way tennis is. And the match goes to a couple of sets, and there's a referee who's a participant in the game that people forget about, but it's actually like the game is won because all the players, like all the participants, agree that the winning competition has been met, which is what someone won three or two sets. And then they do the crows, and it's the same game of tennis. They've played over and over and over and over again, right? So that's a finite game. An infinite game is something that has no goal.
It's actually interesting. Let's try to make this happen with tennis because that's an example I've used. An infinite gold game is actually, let's say, fitness. It's like, this is not a destination. There's no winning foundation. It's a journey. It's like, it's a...
there is no defined thing that happens there. Like, it's actually the goal of the game, the only goal of the game is keep playing. It's the, you're trying to say, I'm going to go into some direction, the direction of it, and you can make the opposite decision, you know, but you could make a decision to go towards Sloth if you wanted, I guess, but you made that decision and that you have to compromise on this. Every single step along this way is going to be different. What you're allowed to do, though, along the way is play Fire Gets. So, and this is where things get really, really interesting because people's...
Like, everyone should think about their infinite games. What is the infinite game they do? And maybe you have multiple ones that happen to be in reasonable alignment. And you should make your life decisions largely based on your infinite game. Like, again, I talked about my infinite game as I love computing. I have computation and technology has huge potential. I really love people. I guess they have huge potential. And frankly, we are people and therefore we should look out for each other. Like, we should help each other reach our full potential at species and individual level. And, you know, design and systems and organization and all. Like, my...
goal is, well, everything I do is try to get people as much power from technology, like feel a little bit on that bridge. And so Shopify is awesome for me because it's that and it costs resources. It's like my infinite game is in 100% alignment with all the final games I play within the company of doing financial calls. And I don't know. you know, build a company worth looking for. And, you know, all these things are finite and have goals. Filling the role of CFO, you know, it's a game that's recourse every, you know, hopefully not too many years. And so that's, I think, important. I think the word often confuses this because, for instance, school is such a great example. I'm really down on academic school here in this conversation. It's funny. We all have, I think, an infinite goal for being educated, right? Like, we want to be educated. We want to acquire knowledge so that we could...
we can turn it into wisdom, right? That's sort of like a pursuit, I think, everyone's on. I hope. But then we explain this to kids, the way we tell them to do this is like, you play the game of grade one. And there's a test in the end, and you are passing or not passing in the end, at least sort of a return system, you repeat the entire class. And then your first prize is you play a grade again, and this time it's called two. And then you do this again, and you do two. And underneath there, each subject is like...
Math is like, we start on page one, and we do a page of a book, and we solve the current topic, and then there's a test, and you solve the test. It's like, it's a fractal of final games. And everyone's forgetting about education. Because if you remember the education being the infinite game, I think there's a whole lot of final games you're playing, even in schools, that are not leveling up to the infinite game. We end up obsessed with testing, over-testing, road memorization, random things that are just like kind of so beside the point.
And I think very often my criticism for school and my observation, my biases before having kids and my observation with having kids is that Some of it is really, really good, and some of it is totally random and just is something you're doing because you're doing it and you're falling out of alignment. Okay, so what does all this mean? The rubber hits the road. The finite and infinite games is the following. And actually we talked about this, and this is actually potentially sort of a theoretical sort of frame of a knowledge tree to hang these sort of leaflets of interesting ideas from earlier on. The biggest difference is the attitude to change in between those two games. If you pull a lever somewhere and you change gravity down to 0.7G on planet Earth, if that would be a thing.
The finite games of tennis cannot be cruel. Tennis depends on gravity being 1G. No, it's not something that is going to be edited, hopefully. But it is not possible to have a game of tennis ever again if that just doesn't have 1G of gravity. You can potentially invent a new game, but then maybe even one which is more fun than tennis, frankly. But you have to end forever this game and you have to invent a new game.
It seems to me that the only people who seem to have the ability to reinvent a game based on changed information are the people who are actually the infinite players along some other journey. Maybe the infinite begins with just, again, fitness or self-mastery or something, or just actually sort of a need for physical entertainment. It's like whatever it is. But if you are on an infinite journey, change is actually welcome. Change is clarifying. Change is a new bit of information. Because you actually have no opinion. You want to try to get a horizon. But like...
you're not because it's a goal like there is no goal in an infinite game the only reason why you want um like you you have this vision of wanting to get towards your horizon is to keep more vision from horizon for something else and i think that's i think that's poetic that's beautiful and i think it's like i i feel i um I read this book twice now, once and it sort of roughly came out, and once like 20 years later almost. And I realized maybe they first had me in this way myself, but I feel I just always had more to do with infinite games. And I've learned to translate.
the tasks that need to be done on an infinite game into finite, winnable, quantifiable, sort of more fast-paced games because a lot of people ask me to, right? It's like most people are just not okay on the full, like sort of raw, like we never know how you're doing. You sort of like even progress is not... There's a lot of ambiguity. It's not satisfying because there is nothing you're working towards. It's progress for its own sake. It's not even progress for an outcome that you're hoping for. It's almost a little bit spiritual, the pursuit of this. You're doing this for your own purposes. And nothing in society tells people that this is anything worth doing or even that anyone else. You can't have a career unless you climb some kind of ladder. It's just finite. One run and one job up and one title change.
Therefore, people's identity gets tied into the finite. Like, I'm currently crushing the finite game of being a senior UX developer on a subject like this. And you think that's your self-worth. And someone comes to you and saying, hey, we don't do UX developer because we just moved to UX developer. Like, that's actually an engineering job because it's part of the engineering discipline. We move them over there. That's, like, crushing to some people and delightful to others. And I was always wondering, trying to figure out, like, how to separate people. And I do find you can sort of spot it in the language of people that people use talking about their own career.
I don't know, we talk about just your life story a lot. And I feel like we can find a lot of predictive artifacts in a life story about which kind of type of pursuit you're on. But I think the key is just invite people. Like, I actually think this is one of those, like, a lot more people would say, holy hell, this is just... That sounds like a lot more reasonable as a sort of way I'm going to structure my career and my life than this sort of meal to like doing the same thing over and over and just trying to like, I don't know, hit a quarter close slightly better with a slightly higher number. You do that if you actually want to become the most persuasive people, if that's a thing you want to build. Or if this is your craft.
through which you make commerce better for everyone and make entrepreneurship more valuable through our products. If you can find the alignment between the infinite goals of the company and your infinite goals of the things that you really want to acquire for yourselves, and then you pick your finite games as things that have a second-order effect to help you along your actual journey, there's a harmony that's unbeatable. And I think when you study really, really successful people, you invariably find people who are on some kind of intrinsic, sometimes unacknowledged, throughout that world, journey of their own, and a... They structured their time management in such a way that they spent most of their time doing things that are highly valued by society, potentially for the purpose of a job, but actually played dual duty towards their own goals. Let's switch gears and talk about a couple of personal questions, one of which is you recently tweeted that you had fixed your sleep. I'm curious. What did you do to fix your sleep? I have to admit, one thing, one compromise I made when COVID started is I had a prescription for sleeping pills, which I had just for...
of international travel. So I could, I just ended up like, I was really worried about an issue because it's like, that's a pretty slippery slope. It's easy to create a dependence on. But like, the other side was, if I can't do red eyes, then I can just lose one day with my family on each side of international travel. And I just like, that felt like an easy decision to make. So I had this. When COVID started, I mean,
As you can maybe spot, like spools up chronologically here at the top, the things I shared about, you know, going for all roadmap and looking at and canceling a lot of things and doing a million other things besides, COVID for me meant 14, 16 hour days every day, like seven days a week for probably a year and a half, two years, actually two years probably almost. I think I started taking weekends after about a year and a half again, one day, one day. It was just like, lots of my executives turned over who ended up just like, It wasn't for them to go into those times. And so, you know, for obvious reasons, anyway, this is sort of, I'm not making excuses, it's just, I'm like, I can work two, three jobs with my time management skills and background if I'm reliably sleeping six and a half hours, actually, precisely. By the way, I thought I needed a much more. So then, so I took sleeping pills, all just to say I took sleeping pills. And I was like, okay, I gotta get off this because I'm not gonna stay dependent on sleeping pills. And so I imagine this is gonna take me a very long time, but I'm saying like,
One of my first questions I ask is, like, if we know what is good at this and what can I learn from that? I'm like, clearly, a lot of people are good at sleeping. Like, this feels like a core skill for a lot of people. And, you know what, like, because when you go into sleep hacking and you're like, okay, melatonin plus, like, you know, redshift on your screens and, like, routine and all the same and temperature. You know, when you talk about people who are good at sleeping, they don't know of any of these things, they just sleep. Like, it's like, it's very, like, it's actually almost annoying to the simplicity there. Okay. That was a backdrop. I'm like, okay, man, what's the theory here? So, um...
I eventually found that there's like, I mean, CBT is like a modern package, I mean, it's, if I might be glib here, it's like a modern packaged stoicism, right? Like, you know, cognitive behavior and therapy, but it's like sort of take stoicism plus, I think, a little bit of Alfred Adler and... a little bit of yarn and then package it in an important system that you can study and then it's like brilliant it's exactly what we need so good stuff um unreasonably effective as a form of therapy um has a lot of sub theories one of them is cbdi cbdi is the sub part of that called insomnia it's actually thoughtfully named but actually it's it's correct um i think the taxonomy is correct so i'm finding out what this exists i tried finding a doctor for it i couldn't um because uh there's only like i think all of the united states is 100 Certified people that have been doing it since the 90s. Effectiveness rate is 90% as better as sleeping pills. They reliably fix everyone's insomnia in a bunch of sessions. And kind of somehow we don't talk about it. I'm like, okay, I found a book to read. I think I read like two books on it. They were like pretty sort of pop-sized. And I think you can pick any book because it's actually pretty basic.
actually found some apps that have which i think is actually really great um sort of entry point for app-based healthcare because i think what the what the practitioners do is basically they just put you on a program if they hold you rigorously to it but these apps actually do a very good job on this actually have more data because i have an aura ring which was very useful to have data before i even started with this already i highly recommend aura rings or apple watches all these trackers um because having some data about your sleep is important and then um apps can just help you interpret this okay what have i learned i'm not gonna go through the entire program because you just have to do it but um I thought this was going to take me a month of a grind. I actually sort of pre-registered for Shopify. I may have to take, like, full time off to do this. By day three, I slept for a night. I have been sleeping perfectly ever since. I mean, once a month, I maybe, like...
Walk me through this. What are the steps to do that? What app do you use? Honestly, it's mental, unfortunately, or annoyingly. It's like I fought poorly on sleep. I have had bad stories that I told myself, such as if I wake up in the morning and I feel drowsy, I had a bad night's sleep. That's incorrect. That just means you woke up in a different part of the sleep cycle. You cannot judge your sleep. I had stories like I need eight hours of sleep. I don't. In fact, if you spend enough time forgetting to charge your app, you probably have enough data to figure this out. You go into the sleep app. You look at...
all of history, you get it to pull the average of your sleep. Sleep is like hunger. There is no need to train for it. Sleep will come. Your body takes it. You probably will tell you when you're hungry. Your body will tell you when you're sleepy. If you're not sleepy, that means just exactly one thing. You're not sleepy. There's a difference between sleepiness and fatiguedness. Fatiguedness is like you are running on too low sleep.
Fatigueness can lead to sleepiness. They are often correlated, but they're different things. You cannot sleep when you're just fatigued and not sleepy, but you can always sleep when you're sleepy. So what you do on an effective basis is you do create this routine. A lot of these tools are useful. But, and this is the hardest part, you do not do.
Basically, there's some minor allowances. Anything in your bed that isn't sleeping. It's your best for sleeping. You have a chair close by. You take your book there. You breathe there. You do not bring your phone to bed ever, even something after doing, if it's convenient and you're just hiding from kids or whatever. And it needs to be a little bit more Parthenobian rules to sleep. To allow yourself to go...
sleep like into a bed if you're sleepy uh you don't go there until you're sleepy you learn how to figure out how to be sleepy you will always get sleep at the same time of the day and if you don't see you don't need to sleep you just like i i'm going to sleep at like i'm going i'm going reading at 10 every evening basically that's sort of like maybe sometimes a little bit early depending on how cool my book is um and then i'm going to go to my bed and i'm sleepy and i i sleep immediately i fall asleep like my sleep effectiveness rating on my sleep trackers is basically 95 percent now it's like i just that means like on average it's like five minutes in bed that i'm not sleeping and um then uh Some nights there's more, some next nights it's fewer. After, like, over a course of week, it averages to exactly six and a half hours, which is exactly what my watch taught me the average amount of sleep that my body takes. Now, you can be less lucky, like, you can be more unlucky here, and you might actually need eight, at which point that's your number. But this is, apparently there are people who need, who actually legitimately need up to 12 hours of sleep. That sounds like, that's crazy, unbelievably, in compared with modern society, I really feel for those people. That should be treated as, like, man, big. What a rough cut that would be to be dealt with.
But there's also people who are fine with, you know, less. There's a book, which initially I thought was good, called Why We Sleep, which is actually very bad from everything I now know. I mean, it's not that the book is incorrect in the macro sense. But it gives you... I think the book itself is anxiety-inducing because it makes claims on, which I don't think prove out, on the importance of sleep and how everyone's goal should be to sleep eight hours and there is no variance. This is a bizarre claim to make given that we all were incredibly good trackers now and we have all the data and we just simply know that that's not true. And so I think there's a bit of damage caused by this and I think we should need to change the story. Okay. So I don't know if that's like all content that needs to go on a podcast. I actually...
I don't know what to do with this. I feel like it's just like, it's silly that we have so many people who can't sleep and it's actually something that seems like, maybe this can't help everyone, but like it seems to help everyone I'm sending in this direction. Well, that's how I wanted to talk to you about it because everybody has problems sleeping and it seems like the most common problem these days is like, you go to bed, you don't have a problem falling asleep, but then you wake up at like 2 or 3 a.m. and you're like wide awake and wired. Yeah, exactly. I mean, what you do is you get up to your chair for 15 minutes. You read and your body is sleeping and then you go back and after a while your body just doesn't do it anymore. I know it sounds crazy, but like...
It takes two to tango in your brain and body for this. And if one of those is super not in on the job or not aligned with the institution of sleep, then you feel about sleep. Yeah. Two final questions. What do you use to spend time on that you now see as a waste of time? A lot of travel. I think it's hugely pro spending time with people. And I think travel is a...
sort of a tax on doing this which is totally like easily worth it um but i think there was a lot of travel before that um pandemic i think it was almost like i don't know feels like it was almost penance for meetings like it's just like your sincerity had to be proven at some kind of alter of sincerity by you sacrificing and uh days of travel and airports and cross-continent travel um and compromising your time with your children. It's just like, it sounds insane now, but we did this, all of us, that shouldn't come back. What should come back is like, hey, deliberate time spent with people that are important, and then it works, and that's out. I fell a little bit into this work through org chart, treat it as a trust fall, you know, like hire smart people and then get out of their way. I think that's a waste of everyone's time. It's not even good for the, like, it's a nice story, but it's like, damn, it's like, one of us would be nice if that would work, but doesn't. At least not, maybe again, if you're going for middle-of-the-back curve outcomes, then I think probably it works, but.
In some industries, that's all you need to do, but not in mine. We are trying to work class. So I have enormous perspective and ability to, again, found legitimacy to make things happen faster. And it's not that I want to make decisions. I want to be part of important decisions because that helps me for my mental model. And so now I work on the old idea of trust battery that we talked about in previous times we talked about together. The trust battery builds. We work together. We work alongside. We make key decisions together. As a team, everyone brings perspective. We listen to absolutely everyone, but the choice at some point has to be someone's.
And, yeah, it's not a good place for faith. It's like, at the end of the day, if you're trying to make a worker's product, it's all the details that matter. And for that, you need to have a team of people who are okay to go into all the details, or at least can talk to the trade-offs that have been considered when we talk about the details. And so I think that's... It's the way how I always worked on all technology. I like understanding many layers below the level I'm working at. Again, I feel very... I don't know why it took me almost a decade, but it took me almost a decade to allow my...
the way I've been successful in working with technology and software to actually fully come to fruition outside of working on technology. Like maybe this is sort of a thing you're spotting in our conversation. I'm a lot more at ease with the integration of those two things. I think it's not even integration. It's actually our collision course. And I think maybe it's already happened. I don't know, man. Like I'm looking at some... I think there's a lot of good content in something like Harvard Business Report. And sometimes I read these things, I'm like...
That is some kind of weekend at Bernie's kind of style party you guys are on where you think they're still just... This is like everything that you're talking and taking as like statements and as the multiple truths is utterly invalidated by things that we've figured out in engineering system design 10 years ago. And just because that's the nerds doing this kind of thing, we haven't been pulling out the lessons in the way like Nash pulled out the lessons from his... poker evenings to then get a Nobel Prize for in game theory, right? It used to be that academia was better at pulling the lessons out of the practitioners, and I don't think that's happening anymore. And if academia is not doing it, at least the business leaders need to do it more. And so, I don't know.
I've changed the way I work, mostly around self-confidence in my intuitions. I think your intuition is all of the mental models, all of your experience. The supercomputer in our brain is utterly unsurpassed by all two machines combined, coming to work to use everything you've ever seen to make the best decision in the moment, and continuing just to build out. the situations I can fold up models to or can say, I've seen this before and, you know, that's how I become better at my job. And I'm not putting engineering skills on speed dial anymore. They are now the core of how I make decisions. And that's been just fascinating. Like, if I could travel back in time, like, and just give this as a, hey, this will happen, I wouldn't, I would be extraordinarily surprised by this. I really was almost in a, like, hey, I...
These skills took me here. They will not take me there. I actually need to go for a full change of identity and just embrace me working through strategy and a bit more of the old school things a bit. I thought this was going to work. It's blown up in my... I think it can work in peacetime. I think it cannot. I don't like wartime. I think crunch time. Everything matters. All the slack is gone. It's much more of a high-wire act of can you pull this off?
It's just, there's not enough slack in the system then. And everything has to be more precise. And the feedback loop is much taller. In a recession time, potentially, it came out of COVID, which was like a different crisis into crisis in a way. Although the weirdest crises compared to previous ones, like just bizarre shape to them. And therefore even less predictive then. You can't even really look at previous ones because we just never had an economy that was also good, but inflation, but all this kind of things.
In these times, there's no margin for error, but very tight feedback clues. There's actually better times for this kind of decision making, and again, even more valuable and innovative than the new. You seem a lot more comfortable. I hope so. What technology are you most excited about right now? I would say, I mean, look, I'll say Metaverse and MS Rolling Eyes. I think the Metaverse is like a Hemingway implementation. It's like nowhere, and then suddenly everywhere, and it's hard to predict where it's going to be. We definitely have platform requirements around glasses, but they are always like...
The labs are healing those. I think we know how to make lasers for the glasses now, minus maybe rent. And this is really where academia shines, and there's a lot of practical industry-relevant work happening. So that is going to happen, and I'm excited about it. I think that it'll just be clear that it's only gone to that word. It's not as far away as to think. Right now, you've got to say machine learning. So machine learning has been unreasonably effective already.
Or do transformer models change everything? Like, it's another one of those, if transformer models feel a little bit more vocational than academic, and, like, they're probably not as good an analogy to the brain as maybe some of the other, like, approaches, or at least it's not as pure play as some of them. But, like, it's crazy what's happening. Like, it's crazy. And another thing that I love about what's happening in machine learning, like, is it feels like, I mean, Delli deserves a form of priority, deserves all credit here, but really...
I have to say, as a sort of relapsed apprentice, computer programmer, slash hacker, I love that a stable diffusion happens. And not even for what it can do, although that's stunning. Like, who knew that so much of the human creativity could fit into 4.2 gigabytes of binary floating point numbers? Like, I mean, that's another thing to send back in a bottle, like, for a time machine and really, really stun people with. But we all live in that world where we know that that's true, which is also something that doesn't feel fully reintegrated with our mainline in human history. But what is so profound, I think, Stable Diffusion is that it's gotten released as open source, and now what's happening with it is just a monster. It's like all acceleration has. This is already probably maybe minus crypto, the fastest progressing field in the world, and has just found two or three more gears there.
If you track, like, I mean, we started, like, I think first versions on top of the line graphics cards. On your own machine, you can execute this, right? It's open source. You can make an image in 15 seconds. I think it's down to three. Yeah. And, like, with no hardware changes. And just, like, because the tooling behind machine learning was, again, it's a very academic field. It really feels academic. It's janky as heck. Yeah, yeah. Not really an outcrop of the soundest engineering that I've ever seen. Although it's unbelievable what they've enabled. But, like, it's coming from, again, mathematical purity rather than sort of...
developer experience, like this kind of stuff. So that's true. And then you have, but now you have a lot of people who can contribute because we have an open source thing that we can all hack on. So suddenly you have people who are good at developer experience. Suddenly you have people like John Carmack who are like, hey, everyone, we can probably do this with less precision and here's like 15 ways in order to use a computer. I don't know if he actually is saying this, but like he will say this because he's that kind of person. He's going to tell us how to make computers do this thing significantly easier. And a lot of people who grew up on Carmack's contributions to video games and have been inspired and want to do and bring the same thing to this field. So,
everything changes every time there's, like, a significant breakthrough in terms of speed and computation because, like, it is extraordinary how many things we can do with language, large language models and diffusion models and transformers, and I just, like, I wish, like, in a more inspired world, yesterday's breakthroughs in the world of stable diffusion would be every single day of the last couple months, front-page news in the newspapers. We are just, we are spending our time thinking about very relevant and very important, but, although, there's more important things going on in the world that are a lot more crazy, exciting, cyberpunk, and optimistic. And I think that's incredible. I just can't wait to see what's coming from there. I'm pretty optimistic about whatever valuable things coming out of the crypto world as well. Now as that went through a cycle, they're just shedding a lot of the froth that was very obvious and easy to criticize for. And so I find that. I am extremely excited that everything progress.
can watch three, four or five different fields right now. One of them are progressing at breakneck pace where, I mean, especially machine learning is the first time I think I found my total capacity. I actually have to say, this progress is so fast, but I think my model of what's possible is falling behind, even though I'm trying to make that not true. I think sometimes I just don't notice that something is accelerating and fall behind, but then I can catch up. Yeah, I'm actually having trouble staying on top of it.
I mean, maybe that's a statement about me being very busy at work. Maybe it's a statement of me being in my 40s now. But, like, I don't know. If it's a test, the machine learning model is the first which is clearing it. The technical realm, and I think they're really cool to solve that, because I think we have a lot riding on this, so that's awesome. The best is yet to go. It is. And it's just going to be freaking amazing.
There is no chance. Like, I'll take a long bet for a lot of money on this if anyone wants to take it. It'll have to be a real long bet, but, like, if I'm right, I'll have to pay out. That for the rest of human history, that 20 years before this point and 20 years after are going to be more studied and will be treated as the coming of eight of our species. They are going to be treated as the formative years where we went through the questions we had to ask ourselves, where we had to learn how to organize in a way that we saved our planet or at least...
take the things that are available to us and prioritize them based on something that is clear prioritization for the global good. Like, where we actually band together. I've always had very high hopes this would happen around COVID. COVID failed the first time. Maybe since the plague has a, like...
all humans got attacked by something. And it might be a binding experience. We all know that didn't work. But I think we learned a lot about how information travels and how, you know, like the upsides and the downsides. We've become so much more mature in understanding what the world is like, given all these new possibilities we have. And so I think these are our formative years in a lot of ways. They involve the coming of age of, I think, one of the greatest...
the bits of, like, if technology is progress, the Turing machine is the engine of progress. And that almost all, like, net human progress is going to be built on because everything else is going to round to zero. And it was probably mainly needed for bootstrapping the Turing machine. And we are, like, the early sort of custodians and the explorers of this field. And I just, I have, like, there's no chance you would want to live to any different times. The future is fantastic and we'll probably become immortal relatively soon and all these kind of things. And maybe not us, but our children definitely will. And so,
a lot of what people will be preoccupied with in the future is clearly what's next and what's possible. And many of the biggest questions will remain to be studied and to guide our curiosity. But, like, it's here that it all was, like, up on the table and it was wounded, the whole thing. And it just seems so incredibly great to be around, you know, to study this stuff. It's so fantastic to go and actually play a tiny little role, like, make a tiny little dent into it. Like, again, the crazy possibility that, you know, so many of us who made these choices to get into this industry or
pick up these disciplines and these skills, which all really, really help making companies, which are the implementations of large-scale coordination, which again, as I said earlier, it's like all the problems that are both solving now are large-scale coordination challenges. You know, we get to play our part in it and we get to make it end into it. And I think that means we get to write into the most lit up parts of historical record. I think that's just, I think it's humbling and incredible. And we get to all play part in it. And that's cool. I think that's a great place to end this. Thank you.
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