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- [00:00]
Tobias Lütke
The best gift in life is finding a beautiful problem that you can never solve. And even if you accidentally solve it, if you're so unfortunate to solve it, hopefully it has plenty of enlightened problem children. Consumerism is like a thing that is being thrown around, but where does it come from? They throw away things because they hate the things they have. The thing that solves consumerism is quality products. A personalized ad is a wonderful thing. I am scrolling past something that's monetizing the free application that I appreciate using.
- [00:32]
Patrick Collison
I tell that EU this.
- [00:33]
Tobias Lütke
Yes, well, I do actually. Some people fall in love with solutions, some people fall in love with problems. And I just like fundamentally, am I a person more appreciative for people who fall in love with problems. But it's very hard to know who is who because, well, if you don't change anything, they look exactly the same. Disappointing. You only have half an Irish problem.
- [00:55]
Patrick Collison
This is our mvp when we weren't even sure this would be a thing. Toby Luca launched Shopify in 2006. We've been working closely with them for over a year decade. And I always enjoy getting together with Toby and I always learn a lot.
- [01:07]
Tobias Lütke
Cheers. Cheers. Okay.
- [01:12]
Patrick Collison
Many places I could start. What's the size of the code base in as much as, you know, vendor stuff, whatever.
- [01:16]
Tobias Lütke
I think the sort of core part of Shopify, all the like minor stuff like the identity system and these kind of things is like 20 million lines of code. And then the typescript written admin interface is like another, I think 8, 9, 10. It's apparently one of the largest typescript applications and definitely the largest Ruby application. So we pushed it into pretty uncharted territories for our tech stacks. It does so much like. It's like a sports fintech business in there with capital and these kind of things and all of what we are doing together and my company adopts the complexity, the real life, messy complexities of the commerce world into itself to then front it with approachable interfaces, things that don't, you know, just making all the pieces fit together and so that requires a lot of work. So there's like thousands of projects going on at any given time. So going through all of them is work. But we have a good system. We have like a product operations team that prepares for it. We have an internal system that's just for the reviews, which is actually kind of cool. What does the system do? So I'm fascinated with companies. I think companies are underappreciated by the, for the like just we don't think of that generally it's like they, they, you know, companies are technology themselves. They are technology by which you create. Part of what they create is social acceptance for, you know, people, maybe tens of people, hundreds of people, thousands, tens, thousand people depending to spend all their d. All their day pursuing a mission together. You know, it's like, it's really just like universities exist, giving you time that you can use for hopefully intellectual inquiry into some topic. And everyone's cool with that. Although if you try to do the same thing just with your laptop on the Internet all day long has not nearly the same social acceptance may also be valuable. And then companies are ones that allow a lot of people together to try to make a. Pursue a mission or create something hopefully world class. So I think companies are understudied. And also the sort of incentive system behind companies tends to be that there's no absolute need for perfecting them. There's just like you've got to be better than everyone else. And at some point in many industries, if you get ahead, it's really, really hard for others to catch up. And so there's sort of a point equilibrium at which point you just because.
- [03:47]
Patrick Collison
You'Re good enough and so there isn't pressure to get better beyond some point.
- [03:50]
Tobias Lütke
Yeah, I mean, I just, I mean, take an absurd example. I talked with some executives in the gold mining space, right. It's just like really sort of interesting because I'm like, what is your day like? The same question. It's like, it's like much more interesting.
- [04:00]
Patrick Collison
How hard is a gold mining executive?
- [04:03]
Tobias Lütke
It's just like, I mean, my conclusion, which wasn't maybe what he was trying to guide me to was, but it's essentially government relations or investor relations. You know, like if you're, you know how much is in the ground, you know, it's a capital play. But somehow if the investors like you better, then you get a higher multiple, at which point it behooves you to purchase off other gold mines really quickly. So I imagine this involves playing golf. That's probably the technology.
- [04:30]
Patrick Collison
There is one of the conundrums for you as someone who thinks about companies and organizations a lot. The lack of measurability of R and D, which is probably half of what Shopify spends its money on, is rd. And so if you're running a factory, it's pretty easy to measure the inputs and outputs and how many widgets are we producing per hour and what's the labor efficiency and everything like that. It's very measurable. Whereas when you're building software, it's like, I don't know, we put a bunch of engineers on it and hopefully in like six months they have a great product out there in the market. But the intermediate measure is yeah, you can measure like pull requests per engineer per day or whatever. And everyone knows that's like a very broken proxy.
- [05:08]
Tobias Lütke
I had lots of thoughts on this specifically. I would love to actually know how you think about this too. So traditionally when you look back in business history about when people got like a little bit scientific about business or like actually started to improve them, like clearly it all started sort of vibes based. And then you know, Friedrich Taylor came up and you know, brought the wonderful new technology of stopwatch to the production line and like timed the various steps and of course produced this is I think Bethlehem steel end of 1800s and drove massive efficiency gains. And so that's like the hero's journey of business books. Right. Like it's like.
- [05:42]
Patrick Collison
And there's still so much of the corporate culture today. Right. You know, it's how org charts tend to be structured. It's how the financial statements are. You know, it's what the kind of business that financial statements are optimized for is kind of a factory in a.
- [05:52]
Tobias Lütke
World where almost no company was terribly conscientious and no company was like metabolized all the value available to them.
- [06:00]
Patrick Collison
Yes.
- [06:00]
Tobias Lütke
Someone starting to hill climb some source of, you know, efficiency gains or just like becoming better company was like a breathtaking change. Right. Like once someone starts hill climbing everyone has to. Or like gets, you know, gets left behind. So that became the story and it's remarkable to think that that was probably good enough for like, 80 years or 90 years of like from this point on. Right. Like it's like just like to lean basically.
- [06:28]
Patrick Collison
Which is kind of the 2.0 of that.
- [06:30]
Tobias Lütke
Exactly. So you said it was of a car industry with. Exactly Toyota and so on. We just. There's a new ideas came on, but they were all around this drive for efficiency. The downside of a drive to efficiency is that it requires you to act on quantifiables. You can only measure what you can measure thematically. So that's not the entire space of how to make better companies. There's a huge amount of things that are unquantifiable, but taste like quality is hard to quantify.
- [07:04]
Patrick Collison
Well, not only that, because those are the obvious examples of unquantifiables, but the big one is, I'm curious, like there's a team at Shopify that's doing a great job of their product. And there's a team that's lost and has kind of a woolly direction and actually their dev tools suck and so it's very hard for them to make forward progress and they're thrashing lots of Keep the lights on work. Just how do you distinguish between the team that's struggling and the team that's executing really well?
- [07:28]
Tobias Lütke
Yeah, I think that's. I mean this is why the question in my mouth is I should go to. I don't know. Here's what I found works is have rituals by which we talk every. I mean at the latest every eight weeks. And so let the teams talk about the progress against the goals. Like the new. Like we have an internal system called GSD getting shit done. It's with Central Registry Clearinghouse, it's our wiki, it's our feeds and stuff like this. But it also has every project in it. And so it's built around teams updating everyone else registering like, here's something we learned. And so that was step number one. Let's get the actual state of a business into a legible internal system by which you can reason about where is every project, what are the deadlines, what has changed. And so this is what these reviews are about. So we go like, this is what we have on the screen. They get a little TL draw that they can drag images and mock ups and everything into, but that's their area. But all the metrics and all the things are around the edge on the screen right in front of everyone and we can talk about that and how many people are on a team and this kind of stuff and giving everyone an opportunity to just talk to me, even if it's a only quickly is incredibly valuable. And I just learned tons of things about it. And this is something that's in the calendar and I know it's exhausting and a lot of work, but I don't know how to do it in any other way because that is the thing by which people can say hey, it feels like progresses really well and here's what we're building and here's something we learned. What should we do about it?
- [09:11]
Patrick Collison
Is it like people who want to get into running the Couch to 5K program, start with get off the couch, go walk down the block, go walk down two blocks and things like that. It turns out that from an organizational point of view, having a centralized source where you track all the projects and you list out your goals and you post updates based on it, that sounds too simple. To work in the same way that getting off the couch is too simple as a step to running a marathon. But it turns out both are true.
- [09:35]
Tobias Lütke
I think honestly, it's not a complex idea and it's extremely valuable for 15 other reasons other than it powering the these reviews. But yeah, it's not terribly complex and it works.
- [09:52]
Patrick Collison
No, we took inspiration from gsd, your system, as we built out ours. Similarly, and having a centralized internal source of truth for projects that are going on is surprisingly helpful. And it feels like it shouldn't be, but it is.
- [10:07]
Tobias Lütke
Yeah. You know, it's funny because so again, it's an internal system. Shopify has a culture of building internal software. It's. I mean, I tend to point out Shopify itself started out as internal software to power my snowboard store. So it'd be funny to not do this. And so I think fundamentally, like, companies are all pretty bad. Like all the companies of today are pretty bad compared to the companies we will have in the future. And I don't know how I would possibly run Shopify without having gsd. And I think there's going to be some productizations of GSD that'll be available to everyone that's probably going to be renamed 15 times or whatever, become a category of software that's going to exist. And then everyone's going to be wondering how the hell did we build software before we had it?
- [11:00]
Patrick Collison
Yes.
- [11:00]
Tobias Lütke
And I tried to have Shopify live in that particular state a little bit earlier.
- [11:06]
Patrick Collison
So has your proclivity for developing internal software ever led in just like a really hilariously overbuilt internal software direction?
- [11:13]
Tobias Lütke
Oh yeah, absolutely. All the time.
- [11:15]
Patrick Collison
Like, what's the most ridiculous internally developed.
- [11:16]
Tobias Lütke
Piece of software you have? Like static, sort of our internal geocities. Like it's like static site hosting, which is like, it's the most incredible. And like geocity. Yeah, like it's like a, like 90s web of all the pros and cons. Yeah, I mean it sends us down wrong paths. It's very often I say internal tools culture. This is actually a little bit of a dangerous statement. I shouldn't make it as such. We have a very strong appreciation of good software and good in the context of we have to use it. Some software is really good. Shopify is really, really, really, really good software. If you're running like a D2C business or products, some people try to stretch it to subscription based groceries, doors, something maybe that even works. But we clearly didn't build it with this in mind. And I actually, although I appreciate all my customers. I'd rather not anyone use the software if it's bad for them because that's like I built Shopify to avoid people having to use shitty software, not to add to the pile. Right? So sometimes this means, given our scale in our minimum quality bar, that we have to build it ourselves. And in those cases we do that. Sometimes we build it where we have no business doing it and that's where things go sometimes.
- [12:35]
Patrick Collison
Well, what I think is interesting is you think it's important to build your own HR software and you would recommend people at least think seriously about that. Maybe you can share the worldview there.
- [12:44]
Tobias Lütke
Not sure I exactly recommend it, but we have ideas about how to do HR in terms of compensation and so on that are just different from what's normally implemented. This is most true in project management software. Like again gst, if you use software by others, you have to buy into their vision. Like some vendors tell you, the software can do absolutely everything and that should.
- [13:08]
Patrick Collison
Be softwares have a worldview. So you're adopting workday's worldview when it comes to your hr, which may or may not be what you want to do.
- [13:14]
Tobias Lütke
That's right. And I think that's important to realize and it's important to use to your advantage. And I think this is why it's really, really important to buy software. Like the people who buy the software are the people who should use the software in the end because they have a better view of what needs to be that. So in our case in HRS we had some things that were not doable with workday and obvious systems and so we built it ourselves. I mean this led to a journey that might have gone a little bit too far on how should this be done? This is one of our areas where probably Shopify is the weirdest bit of software ever made.
- [13:54]
Patrick Collison
But is it something like the internal systems you use will subtly affect the decisions that you make. Everyone's probably been in meetings where it's like oh well we can't do that because the system doesn't support it. And so again, do you want to have a workday designed compensation system? Probably not. You wouldn't frame it that way. Which is why again, it's important that people think about what is the vision they want and does the software support.
- [14:19]
Tobias Lütke
I'm toolmaker true and true. The kids in the LAN parties of the 90s that set up the Internet sharing for everyone, that was still difficult. I just like I'm a tools tool maker, infrastructure thinker in my entire Life. And I deeply believe in environments that cause people to accomplish bigger and better things than what they even imagined they could have done. Marshall McClun says, First we make the tools and then they shape us. Or something along those lines. I have a terrible memory for exact quotes, but the sentiment is right. And so I think this is powerful and is something I want to channel at every level. Again, I want the people who have a utilitarian problem of, hey, I need an online store to accidentally catch Shopify because it's the go to software, but then Shopify to inspire them to build much bigger and better companies than they thought they did and elevate their own ambition in what they are building. Just like my ambition increased from building snowboard stores to helping millions of businesses be built. And so it's an environment that I think we have a lot more power over. And it's the sort of missing ingredient people talk about. You know, people talk about incentives shaping companies and then policies shaping companies. So both of the tend to be the two tools. And I think then sort of generally, like, if people are really insightful, they talk about culture as well. But it's the environment that's even more powerful than all those things. And it tends to be, as a software company, especially if you feel like you have agency over the tools, that you actually have more power over the tools and therefore the environment than you have over policies, because those can be moving forward by the speed of a deploy, like a new change to the gsd. Software is immediately part of environment where a rollout of a new policy is going to be a conservative town hall and a lot of convincing. So in funny ways, it actually acts as a fast and the most effective way of evolving a company forward.
- [16:28]
Patrick Collison
Having opinionated software that you use to tweak the environment.
- [16:33]
Tobias Lütke
That's right.
- [16:33]
Patrick Collison
So the obvious question is if software shapes us and kind of shapes the actions of organizations, and you should think about what the vision embedded in software is. What is the vision of Shopify for your merchants? I mean, you said one part, which is that they should be more ambitious for their business success, and they can probably be more successful than they might realize. What else?
- [16:56]
Tobias Lütke
What I tend to visualize is like, what are the things? If you are sitting with a friend over drinks in an Irish pub and.
- [17:07]
Patrick Collison
I'm with you so far.
- [17:10]
Tobias Lütke
And the question is like, hey, you've done an online store, you've done an E commerce business here, you've done a retail business with Shopify. Would you do this again? But the answer to the question Is hopefully hell yes. Because. And then there comes a list of things that we would like to do. Like amongst those. It just makes it easy. It allows me to build the business. Not feeling like I have like. You know when you try to paint a painting and you have like mittens on. It's just like this is sort of a. There's perfect vision in your mind but you can't get it out because the tools or the.
- [17:45]
Patrick Collison
We've all used software like that.
- [17:46]
Tobias Lütke
Exactly. So like another thing is that it keeps me cutting edge. Right. Like we are going through an enormous platform shift. Like Shopify predates smartphones. Right. Like a software. So we have seen multiple platform shifts. And usually what happens when you study any kind of industry upheaval or like a recession or anything. It's hardest on like the small businesses. The really big businesses get bailed out anyway and everyone in between has probably usually line of credits or whatever capital to make it through.
- [18:19]
Patrick Collison
You're talking about an economic recession.
- [18:20]
Tobias Lütke
Economic recession. So like something happens in the world. The small businesses are the ones who are wiped out. The failure rates during recessions is enormous. And that's a huge drag on economies because like 60 to 80% of all people who work, work for small businesses.
- [18:36]
Patrick Collison
I think people felt this very viscerally in Covid with restaurants which were obviously particularly hard hit by Covid. But I think people could see how little, how shallow the balance sheets were because entire streets turned over with new storefronts. It was a very visual representation for people of how fragile a lot of the small businesses are.
- [18:56]
Tobias Lütke
Yeah. And many, many places never recovered. It's a very organic process by which an area becomes sort of have the critical mass of interesting stores that then has people come there. And just like this builds up over very, very long periods of time. Entire cities centers can shift in these times. And so it's very precarious balance and they have very tight margins. There's so much that makes them fragile systematically that at least all their sales disappearing because suddenly most people purchase from their mobile phones that just their website doesn't work on. It's not their job to stay current with these kind of things. So just inoculating from all these kind of shifts is a really important part of a business.
- [19:48]
Patrick Collison
So you're talking about some of the disadvantages that small businesses have. I was realizing recently, it actually really hit me when I went to buy something from a very large famous brand name redacted to protect the guilty. But very big, very storied. And I was going through the E commerce experience. And it was horrendous. It was so bad. And I realized that thanks to Shopify we are now, I don't think it's hyperbole to say we're living in an inverted world where the very large retailers are worse off in their e commerce experience. They have worse systems and lower converting websites than small businesses which have these amazing super snappy. And they're just more technically performant. You measure the latency if you measure the full funnel conversion, everything like that on any metric by which if you were with your stopwatch and you went from Bethlehem Steel to the Internet and we're kind of measuring things which are a stopwatch, the small businesses are better off. So one I thought that was just interesting that in this case we have this inversion where on a very tangible technical level the Rebel alliance is doing better than the large established companies. But then it made me wonder, there's kind of a question for Shopify where you have succeeded on the small business side And I know that's probably anathema to you, it's like oh no, we're just getting started, blah blah, blah. But you have a very significant fraction of the small business e commerce market with a very successful product there. And so how do you think about Shopify expansion from here where you can go international, you can go up market to large companies, you can go into new modalities like agentic commerce. There's many vectors of expansion. But it does feel like there's a take stop moment because step one is deliver a great experience for small businesses. Yeah.
- [21:24]
Tobias Lütke
Thank you. By the way, me too. I also have purchased from Nike.
- [21:31]
Patrick Collison
It wasn't Nike, but yeah. Those kinds of people.
- [21:35]
Tobias Lütke
Yes. You know that I love this inversion because the inversion is super. This is one of very few spaces where this is true and that is exactly what we set out to do and it's.
- [21:48]
Patrick Collison
It's not true. And access to the capital market.
- [21:50]
Tobias Lütke
My fundamental belief is like people should use amazing software that really, really like is like perfectly fit to the problem they have.
- [21:59]
Patrick Collison
You don't blow them.
- [22:00]
Tobias Lütke
Exactly. But we can go deeper and deeper and deeper, deeper into this space. Right. So it's just really, really quick. It's really easy to underestimate the size of. Everyone underestimates the size of Internet and everyone underestimates the size of retail. And we sit in the intersection of both of those things. Right. Like it's my favorite stat is that.
- [22:17]
Patrick Collison
The.
- [22:19]
Tobias Lütke
Companies, the industry supplying wooden pallets to warehouses is a $60 billion a year industry. It's just like that gives you a sort of a idea for how large retail actually is, at least directionally. And so what we have done from a company perspective is be very, very clear that our mission is to make entrepreneurship simpler. And that's where our heart is. And many of our customers have gotten quite big. We ended up raising one of our customers to a billion dollars of revenue. And so there's some of our customers have in the top 10 of largest customers, many of them have started on Shopify. The reason why they're still around is because we actually, again, we take this so seriously that we're actually building with them while they grow. And it turns out again, all these stories of software is for a certain segment of a market are skills issues. And that's exactly what they sounded like when I first heard about it. It's convenience to the company making the software to say, focus on one segment and by the way, the other segment like focused on the richest segment, funnily enough. And we just said, no, we are like starting with SMB and then some of them grow and hopefully we build good software and then we invite the others over. The most common thing that people said with Shopify in the early days was always that this will never work in real life because like in the real world, retailers are messy and you know, just like have all these business rules that we didn't implement. And our opinion where I was always like, well, the real world sounds like a terrible place, we like ours better and we just invite everyone over.
- [24:00]
Patrick Collison
Well, isn't there also something where the real world is messy? But we find this with stripe billing where people say, oh, everyone's billing system is different and the dimensions of their billing that they want to encode and things like that. Therefore there's a certain size beyond which stripe billing will cap out and people need a custom system. And our view is absolutely. Billing is really messy. And it's also hard to test because it involves time travel.
- [24:25]
Tobias Lütke
Right?
- [24:25]
Patrick Collison
It's like, you know, what happens if people do a mid period adjustment that needs to be prorated, whatever. Therefore, do you want to be using your homegrown version of this that was developed by some guy who had never built an E Commerce or billing system before and has since left the company and, you know, now it's kind of poorly maintained or do you want to buy it from people who have been thinking about this problem space and building a generally abstracted frame? And you know, our stripe billing now has a time travel engine where you, you can just move time around to test all these kind of different cases because obviously you need that and in Shopify's case similarly. Yeah, we've been thinking about inventory management for a very long time and how you model inventory and all these kind of things. And so I feel like it's funny that people sometimes say oh this will never work at the large end because our needs are super complex. Therefore we should be using a piece of software that only has one user and is poorly maintained by one tiny corner of the company.
- [25:17]
Tobias Lütke
Yeah, that's right. I think look, when I first started programming in my apprenticeship, my meister told me that in the software world you have about two years time anytime you start an important piece of software to try to nail it, try to nail the problem main because afterwards it just magically like someone puts them in the code base and you're never going to change a thing. Yes, and that's just like, that's the state of it like software in the 90s and frankly just the way the software works like everything that got to scale was like finished in 90s with cement in it and then sold in the 2000s. And in a lot of decision makers life that was the time when software adoption really started and their priors are loaded up with software that corresponds to roughly what Jurgen back then was telling me. Now we've gotten a lot smarter about building software. We have CI and automated testing in general and we know how to build software in a way we are by no means perfect and we don't even know how to measure it as we talked about earlier. But like state of art has increased significantly and we make better software and that's a completely different thing than what people are comparing it again but it's hard to tell them, right? Like it's, you know the first 80% of every E commerce business are the same. It's like you need a checkout, you need credit cards of course and you're taking credit cards for us and you know like you need the hosting and the checkout and obviously got fixed and admin interface. So it's the last 20% are actually quite unique and they exist in a particular very predictable problem domain. Like what does the website look like? It's like what my brand looks like and also business rules we have over time just like your time traveling backtest system figured out where do we allow programming or programming enabled extensibility in the system so that these last 20% can uniquely be created for everyone who wants them. And I think that's what it means. I think that's a place you can only get to if people work on the problem, really care. Because you kind of have to fall in love with a problem to want to look at it from so many sides. But at some point you understand it well enough to not solve the problems that people state, but build infrastructure in the form of primitives that can be composed to solve all the problems. And that's a completely different level. But it's what I deeply appreciate. I it appreciate. I massively admire it every single time any category gets to this quality of decision making and infrastructure.
- [27:49]
Patrick Collison
Another thing I enjoy on the software quality side that both Shopify and Stripe sell on. That's just a funny domain to pursue is peak load where Stripe sells on. Just you can put a lot of transactions through the system at once and obviously Shopify similarly. It feels to me that how you displace other e commerce systems is if you are getting very spiky sales, you can put 1,000 requests per second through the system and that's totally fine. And most systems at a technical level can't do that. I guess I find it funny because I think we kind of grew up together, kind of expanding the requests per second thresholds and you guys pushed us pretty well there. But I'm curious, where did this come from in e commerce culture? Because the marketers say everyone will come to the website and click Buy at the same time. The engineers are like, no, please do not stop encouraging that. But it's become like a real part of e commerce culture, like the drops and things like that. Maybe you can fill me in on the drop history because you seem to have started.
- [28:50]
Tobias Lütke
Yeah, like, it's really funny. I'm just as amused by this as you are. Because it's like no engineer would ever suggest this, right? Because it's a very, very strange thing. But it works and there's fantastic businesses built around it. The one that did it for us first is like somewhere in 2010 was a. This is called the Chive, which was like some. I mean, it's a website. It's like some community. I had like some T shirt with Bill Murray on it and that thing. Every single time it went on sale, it took Shopify down. It was just like unbelievable. We actually couldn't. We didn't know the demand level because we just couldn't observe it upstream. The routers could not send enough traffic. And it's like, first of all, who should try? You have to catch up very quickly. So it was one of those things where there was a very specific decision Moment where we realized, obviously, shopify down is the worst possible thing. This is like the entire company exists to never make it so that anyone's down, no less the entire thing. So we were like, well, the traditional business thing is like, this is super expensive from reputation, from money, and we can't even in our business model may ever make money back from the chive given what amount of resources they consume. So we clearly need to fire the customer and decided, no, absolutely not. We're using this as a gem and we're going to use them. We're going to build the system in such a way that we can deal with this because this is exactly what good engineering looks like. And that was fortuitous because I think this sort of pattern ended up really sticking. It was supreme, which really drove us further. It was Streetwear World.
- [30:40]
Patrick Collison
I remember supreme and I remember Kylie Jenner. It was like lip kits. That's embedded in my memory from kind of 2013, 2014 stripe ish. That was definitely like. That was a board level topic.
- [30:53]
Tobias Lütke
Yes. And we had board level discussions. And on our side too. It's actually would be funny to know the diff. We probably sweated exactly the same amounts on both sides because obviously we have an incredibly long standing and I think at this point, storied partnership, it's tremendously difficult to synthetically test all the pieces that go into commerce because it's just like so complex of so many things. There's so many APIs, there's so much we have to like. The shipping to of course, payments and payments is like depending on the mix of bins. It's like a different profile of onlord. Right. Kylie Jenner. Like, the store had offers a lot more debit cards and that just kind of exercises different parts of the infrastructure. And so anyway, these kind of things you find out. And on our side we just like, yeah, no sin was forgiven. Every single sin was revealed and found us to be wanting very publicly.
- [31:56]
Patrick Collison
Is there anything particularly technically hard to scale?
- [31:58]
Tobias Lütke
Well, I mean, so if you open a book on databases, like sort of page, probably chapter one is like an example of how a transaction works is like, I mean, taking either moving money on a ledger or moving an item out of inventory and into an order.
- [32:17]
Patrick Collison
That's the textbook definition of transactionality.
- [32:19]
Tobias Lütke
Like two textbook definitions in a row. So you fundamentally have to serialize at those points. This is like the lock contention moment. There's architectures which we employ that you can get around this. There's pools of products. We take products out of an integer into striped thing and there's all sorts of things that do. And then try to refill this as fast as possible. But the point is that you really deal with log contention and log contention is difficult. It's very, very hard to scale. If everyone at the same time wants to decrement an integer in the database just actually then also the transaction involves having to go to interchange and move money.
- [33:04]
Patrick Collison
I was reading some histories of Oracle recently, but I think it's kind of interesting because proprietary databases were the leading databases. The LAMP stack only really took over in the 2000s, but in the 1990s if you were building a thing, you actually needed to go buy your database. And there was these proprietary database wars in the 70s and I was wondering, are there lessons for us for the current open source or, sorry, current AI wars and model wars from the database history. But it was striking. Talking about kind of the early feature wars of Oracle versus its competitors. And locking was such a big differentiator in those early versions. And like row level locking.
- [33:41]
Tobias Lütke
Row level locking.
- [33:42]
Patrick Collison
But it came in like Oracle 6 or something. You know what I mean? You would think it's like an Oracle 2 feature, but no, it took them a few revs to get there. And row level locking was like the bee's knees.
- [33:54]
Tobias Lütke
And they released it and they're glad they did. I mean, yeah, I mean this is dot com predates Shopify a little bit about like. Yeah, dot com tech company creation was like day one you send a million dollars to Larry to get your Oracle database. And I think day like 180, you went public or something. It's a very different time from today.
- [34:18]
Patrick Collison
Yes. I mean, I guess we're kind of getting back to that a little bit in AI where step one, send $300 billion to Oracle for a data center.
- [34:28]
Tobias Lütke
You're a Couple days past 180 on your journey to becoming a public company, I have to say. But like, yes, yes.
- [34:36]
Patrick Collison
Anyway, moving on, I want to talk about agentic commerce. I had a really nice shopping experience recently where I wanted to buy a integrated travel adapter and power brick. And so I did some product research in ChatGPT and it was really nice. There was no ads getting in the way or anything like that. Actually found a product that I hadn't come across from Momax. It was really good. I think I was telling you I was excited too. Okay. Yeah. And what's the verdict?
- [35:04]
Tobias Lütke
It's very good.
- [35:04]
Patrick Collison
It's very good. Okay, yeah, we'll put a link and it kind of let me out and I purchased obviously super easy one click with Shopay and everything like that. And it felt very futuristic to me both on the product discovery and the completion side of things. But it feels like filling out web forms is not a value add activity for people. Like when you travel, you probably don't directly book the hotel yourself on the website. You have an assistant who does it or something like that. Because choosing the hotel might be desirable for you, but actually filling out the web form is not a value add activity for you. And so what is your vision for how agentic commerce happens specifically because it seems relevant to your interests?
- [35:45]
Tobias Lütke
It's relevant to my interests. I mean it will be extremely valuable and it will be something that will be done a lot and might even be like a majority of commerce on the Internet, I don't know. But I think my role in this is going to be largely into infrastructure providing. Our job is to keep all the minutes of business of Shopify extremely current. And so what we want to do is make sure everyone's plugged into the various chat systems and there's an MCP connected to every Shopify store and global catalog. That's really nicely presented. We're building software specifically for the OpenAI's and the clouds and the complexities to make it really, really easy for these products to show up and reason about them and so on. Because we think it's really important that they can show up. So there's an infrastructure angle in it, but how it's being used. So I think the best way to predict the future in most cases is just frankly look at what rich people buy for themselves. Uber is a wonderful company, is also extremely predictable because rich people had car service and so it's figuring out a way to scale that in such a way from cost basis so that everyone can use it. It's just like, yes, that works. So personal shoppers, right? These are the places where memory and understanding people and personalization are just like pay so many dividends and are so clearly also good. It's like people have made so much out of like data and advertising. You know, a personalized ad is a wonderful thing, right? Like if a personal ad that tells, you know, I am scrolling past something that's monetizing the free application that I appreciate using. And the fact that you this. Yes, well I do actually. And the fact that it's highly personalized to me means like at this moment where this platform monetizes because they're giving me a gift, you know, the, that I get to use, it's Win, win. It's win, win. Using this moment also that it's now not just like a fucking like Ford 150 truck or I don't even know if that's how you say that. But like, it's like I'm not in the market for trucks, right. So I instead I see a travel adapter, like one unit sent me. You know, like, let's just like, I.
- [38:10]
Patrick Collison
Am your personal shopper. Yeah, in this case.
- [38:12]
Tobias Lütke
But the funny thing is you send me the link and if I would put that link in ChatGPT, which has my sort of, of lots of my history and ask, is that the kind of product that I would appreciate it would just return? Yes. Right. Because it's like it solves the problem in its entirety. It's like a travel adapter which is like for any country, to any plug, to any other, all sorts of stuff. Good product, right. I want it.
- [38:36]
Patrick Collison
Okay, so we're getting down the road here. I mean, it feels like step one that's going to happen with agentic commerce is I feel like existing aggregators, if just aggregation is their raison d', etre, then they're going to have a lot of questions that they need to answer because ChatGPT and the AI apps end up as a new aggregation point. And so it seems to very much benefit the tail. It benefits all the Shopify merchants. Just like we had a new set of content creators emerge on YouTube that effectively compete with TV. They're both just, just entertainment. And the tail becomes much more powerful when you've over the top distribution through YouTube. Similarly, it feels like once you have over the top distribution through AI apps, it becomes you have a much more powerful position as a tail merchant. Because, you know, Momax is a tiny brand, but they can just get recommended as the best product. So that's step one that I think happens.
- [39:34]
Tobias Lütke
I think a slight modification I would just make. I don't think the tail part matters. I think merit matters. It's just like it's kind of an important point because often when you talk a lot about commerce and products at some point, just because of prior discussions, people are like, yeah, but aren't you just feeding consumerism? So this is sort of like the negative take, right? And again, consumerism is like a thing that is being thrown around. But where does it come from? It comes from people throwing away a lot of things that they probably shouldn't, but they throw away things because they hate the things they have. These things don't work, they fall apart. They don't do the thing, they're like cheap, plasticky, this kind of thing. The thing that solves consumerism is quality products which you want to keep using. You want to be excited about this and you want this travel adapter to last forever. And so you never have to think of, you literally never have to Google what plug is being used in Singapore. You just know that the thing that you have with you can deal with everything to everything. So problem solved. And so I think that's an important modification on the point.
- [40:47]
Patrick Collison
Yeah, I guess implicit in my view is that there's good stuff in the tail, whereas the head has distributional advantages. And so it is more meritocratic to bubble more stuff up from the tail. That is I think the reconciliation of those two worldviews. Okay, so that's kind of step one that happens. I think you are getting to step two, which is it feels like there's a lot of changes potentially that can happen around personalization about agents actually acting for you. And maybe one thing I'm curious if you have thoughts on. It just seems like a lot of search in E commerce is really bad where it's keyword based search still and you can't do things like let me know if this becomes available in gray or what other products do you have like this? And you want some kind of embedding space that thinks about similarity between the products and no one can do this. So when are we getting better personalization and search? I just want really good search of.
- [41:39]
Tobias Lütke
The products that are there. I'm obsessing about this now and we should have been solved.
- [41:44]
Patrick Collison
Tell me the secret. Shopify robot.
- [41:46]
Tobias Lütke
Shopify should have solved this earlier and hasn't and I'm pretty mopey about this.
- [41:54]
Patrick Collison
You guys are okay?
- [41:55]
Tobias Lütke
Yeah, I think we will solve this now. So the thing is that it's really, really fascinating. I really deeply appreciate it as a field. It's so different. It has its own lore. Everything is interesting. It's my fundamental opinion. And search has been a wonderful area to actually learn a lot more about the history now. And the fundamental thing is there is a generic bias in search and a text is king. And frankly the people who worked in search are much more interested, fundamentally more interested in searching through papers than through products. And so there's very few of the best people in search in the world. The people who know most have actually ended up working specifically on product search, which is really should be seen as its own completely different domain that just sort of looks like it, but it's really clearly deeper with Lots and lots of complex features and so on. So I got to build up over the last year, really great search team. And exactly. Look at the embeddings and these kind of things. And the amount of improvements that it's just like unexplored is just staggering.
- [43:13]
Patrick Collison
Shouldn't you do search across. I mean, I find it interesting when Shopify does things broader than the Shopify universe because the Shop app can track packages not bought from Shopify merchants, Right? Yeah. And so shouldn't you do the search thing across the whole web and not just Shopify?
- [43:31]
Tobias Lütke
No. Should we?
- [43:32]
Patrick Collison
I think so. Because the thing that feels like the big opportunity to me is clustering was always so hard to do because all the features were developed manually. And so you had to, like, go say that the dress is red and everything like that. And it feels like. Have you ever used an LLM as just a recommender engine where, like, I like feeding in. These are all the books that I've read recently. Give me a narrative nonfiction book that someone who's read all these books might like, and it does extremely well. But you're kind of using the LLM to access its world model, and it feels like now you can have an interesting kind of product world model and access it, but people, like, for the people using it, whether a merchant is on Shopify or not is probably an incidental detail they don't care about.
- [44:12]
Tobias Lütke
Yeah, I totally agree. And you're talking about the how, but, like, the what is the really important thing. I want the LLM to be proactive. Just tell me, hey, there's like, this outfit would look good on you and here's a preview. Right. Like, and. And. And just like, here's a full cost and you want it right like this. Like, it's. It's the personal shopper outreach kind of component, which I think is just, like, really valuable. And this is not going to be like some kind of, like, you. You'll get this from everyone. Because the. It's really easy to put together. It's hard to get the data and the embeddings and the sort of understanding about, you know, like, we have to figure out. It's funny, the most important thing, again, in the AI space is also the unquantifiables. It's the vibes, people call them there. It seems like Midjourney specifically is one company that managed to actually scale taste.
- [44:59]
Patrick Collison
Because they have a very distinct aesthetic in the images they produce.
- [45:02]
Tobias Lütke
Yeah. And maybe this is because they drove towards a particular aesthetic that they just sort of had Ownership over but it's one that's clearly appreciated.
- [45:10]
Patrick Collison
But David is also like deep founder mode type how he operates.
- [45:14]
Tobias Lütke
Yeah, exactly. And so when something outperforms it's usually the product of a place that doesn't make decisions by consensus. Right. As we know. So how do we need to figure out taste in this product sense and we'll figure this out. Someone's going to figure it out. Maybe everyone's going to figure it out. Maybe it's already figured out in the neurons and we just don't give enough information for it to reason or taste. And so putting like I think it will be very very vague with personal Shopper. The thing that I think the aggregator still to just like get back to your point on the aggregation side. There's many reasons why people buy things. I just like lots of things are inputs purchases. Like it's like the things next to the checkout counter in the supermarket. I don't think people are going to use ChatGPT to buy mass bars or something like a candy or so like.
- [46:13]
Patrick Collison
That'S just like don't do so online.
- [46:14]
Tobias Lütke
Right, right, exactly.
- [46:16]
Patrick Collison
But like is there an online impulse purchase that is not suited to happening in an AI app?
- [46:23]
Tobias Lütke
Interesting question. Nothing comes to mind immediately.
- [46:25]
Patrick Collison
I mean I guess online impulse purchases are like things where you're scrolling through Instagram and it's like you know all the COVID stuff. It's the sharpest knife ever developed.
- [46:32]
Tobias Lütke
You know, I wonder if the umbrella.
- [46:35]
Patrick Collison
That changes color in the rain.
- [46:37]
Tobias Lütke
I wonder if also truly inputs. I mean they sort of feel like input purchases but they tend to be like pay a few people part with money. Unless they are like holy shit, this is the thing I always wanted. Like this is actually usually the log.
- [46:47]
Patrick Collison
Into demand that's been there for a long time.
- [46:49]
Tobias Lütke
It's sometimes a little bit of opinion when you look at log files you're going to get a very incorrect view of the world. It's very often the longest consideration phases like for years I wanted a travel adapter that can deal with everything to everything and the fact that it goes in a chat from you or in an Instagram ad doesn't matter. I'll instapurchase it at this point.
- [47:12]
Patrick Collison
Okay, you were just ready to do that. My other purchase I made recently that I really liked is I was going kind of on a long day hike and if you read the accident reports there's often people day hiking who get into trouble because people who are going out on a multi day hike they have their tent with them. They're prepared. You know what I mean? And then people go.
- [47:28]
Tobias Lütke
It's a whole problem with bicycle helmets too. Right. Like same issue.
- [47:31]
Patrick Collison
It's a short journey. Exactly. Just to the store. That gets people in trouble. Yeah. So day hikers, they get in trouble and so because they think they don't need any preparedness and then they end up out after dark and you know, a rescue party and everything like that. And so it was like. It's called a bivvy, you know, like a little sleeping bag for emergency purposes. And it's made out of the reflective foil. And so again it's if you end up stuck an emergency foil sleeping bag just so you don't die of exposure, but it folds up to. It's like that size and so you can just stick it in a day pack. And now you are somewhat more prepared for the elements than you were before. I don't know. Do you have favorite recent purchase?
- [48:09]
Tobias Lütke
I just really like these. I mean, someone going just like too ridiculously fervored and to just like almost like products that just celebrate craftsmanship in a way. Even in places where it's just like no one else does. It's like weird example but like I take all these vitamins in the morning and like I've bought these like CVS vitamin pill cases at some point just for travel. And then I found on Shopify this Japanese perfectly cnc milled like unbelievably beautiful pillcases. It's just like vintage website is just like a love letter to most beautiful pillcases. Precision engineered tolerances of submit.
- [48:53]
Patrick Collison
What's it made of?
- [48:54]
Tobias Lütke
Like metal. Which is like. Absolutely. It feels like. It feels. So anyway, whatever. I'm really excited about it. I itchy. Let's put a link in. Put a link in. I forgot the name sadly and now I like gift those things because they're just beautiful.
- [49:12]
Patrick Collison
No, that's cool. How's Sharpay doing? We referenced it there.
- [49:19]
Tobias Lütke
Shoppe. Shoppe is awesome. It started out this life as a feature called Remember Me, which is literally the name.
- [49:28]
Patrick Collison
We also had a thing that was called Remember Me. That's like the original name for link. Like.
- [49:32]
Tobias Lütke
No way.
- [49:33]
Patrick Collison
Yeah.
- [49:35]
Tobias Lütke
That's trippy.
- [49:35]
Patrick Collison
That's very funny.
- [49:36]
Tobias Lütke
So which you know, is like. I mean, it makes sense.
- [49:40]
Patrick Collison
They're kind of the same thing. I mean shop is much broader, but they're similar things.
- [49:43]
Tobias Lütke
Yeah. Actually shop feels more narrow. It's like it's on commerce specifically.
- [49:48]
Patrick Collison
But you guys do all the shipping tracking.
- [49:50]
Tobias Lütke
Yeah, that's right. Yeah. And so yeah, so yeah, Shop started like Shop then. I mean, Shop is Shopify's brand for buyers. Right. Like, so it's, you know, Shopify is what you use to be on Shop. And at least this is how we think about it. So, you know, there's a Shop app and you know, Shop Pay. So I mean, again, it started because it just is a ridiculous thing that we asked anyone, asked anyone to fill out their address with their thumbs when you purchase something, which is insane. This was meant to never be a thing because, you know, like in the. I don't know when they came up with HTTP, but there's the 402 error code, payment required. Right. Like it's like built into the HTTP standard and no one ever implemented it. And so moving money around was supposed to be built into the platform and wasn't. And then credit card forms were like hilariously insecure over a normal web. And when we came up with HTTPs and made it reasonable, I suppose, and then it became good enough, there's all these efforts. Apple Pay, actually PayPal was around, but then it sort of didn't do anything, you know, so there's so many people like doing this and I was just like, they just like, okay, well clearly this is going to be solved soon. But like, might as well just put a remember me thing in there so we can solve this now as almost a portal for the future of Internet. And then no one did. I mean very few people did. And. And it just sort of didn't happen. And then now Shop Pay is like incredible. Super glad to have it. It's like the most converting thing we've ever done.
- [51:28]
Patrick Collison
Yeah. What seems interesting to me about it is I think it's a significant part. It's not the only part, but it's a significant part of the inversion where again, now the small stores are significantly better off than the large stores online. And that's just a striking.
- [51:43]
Tobias Lütke
It's striking and it's like it's 16% conversion increase by it being wrapped. Right. Like it's. So it's a remarkable product now partly because again, it's power branding, it's purple always. And people learn to trust it and associate it with a store that's like actually recent and cared for and doesn't, you know, they don't have to before they get to checkout. They know they will not have to type in the address of their thumbs like some kind of heathen from the 90s. Yes.
- [52:13]
Patrick Collison
Like you mentioned personalized advertising and being a big fan of it, it Seems to me that there is a real symbiotic relationship between Instagram where people are kind of scrolling in an aesthetic mood, looking at nice things and then Shopify stores where they need customers. And so especially during the pandemic, there was this huge growth of direct to consumer brands who really cracked the Instagram cactltv math and they were able to grow in a big way there. Then of course the Apple ATT changes happened where for a brief period it got harder. It seems like Meta has mostly solved that. But anyway, I'm just curious, what's the current state of like is this worldview I have? True that there's a lot of Shopify merchants that have been able to really scale up thanks to personalized direct advertising.
- [53:03]
Tobias Lütke
Yeah, 100%. It's a main growth channel is advertising on the platform. The Meta platform specifically is just so incredible for this. I think the Meta Shopify La oop has created more businesses than any government policy in history. So it's like, I mean if you just compare it to television and consumer packaged goods before the television channels required broadcast and so the only things you could really advertise were like mass market high margin products that could afford the advertising.
- [53:40]
Patrick Collison
Washing powder and.
- [53:41]
Tobias Lütke
Exactly. So it's like laundry detergent and toothpaste. And so the Instagram Shopify is the precise inversion of this. It's like highly meritful products.
- [53:54]
Patrick Collison
It's the first time you can advertise niche products.
- [53:56]
Tobias Lütke
Exactly. And the niche products actually doing better. That's the crazy thing. Like advertising directly snowboards is like impossible there because you got a billboard for snowboards. The brand Halo of Burton means you can't compete with that. There's intersections like snowboards only for powder snow on the US west coast. And in certain environments with just like this is not the best example. Usually there's like three different intersections of something. And it goes back to Kevin Kelly wrote about this in the early 2000s. Like it's like he wrote an essay of a thousand true fans. And the Internet is about finding your thousand true fans and everything else will happen and restoring that idea or bringing this idea into retail has done a lot of good things right? Like it just like created better products, it created visible users. And like Meta, allowing you to discover one of those people who has a potential to be one of those thousand two fans is an incredibly powerful thing that just like, like again led to enormous good and employment and all these kind of things. So it's a very, very powerful combination. There's all sorts of other ways how people grow. But this is a very, very large part of everyone's strategy.
- [55:15]
Patrick Collison
You're saying this enables 4k for commerce. There's this like higher resolution, more specialization as opposed to the blurry generic products.
- [55:23]
Tobias Lütke
Yeah, it's exactly. Find the people who are really interested in who appreciate the products.
- [55:28]
Patrick Collison
I like that. How is the stablecoin rollout going on Shopify. So you know we're obviously doing lots of stablecoin stuff with lots of people including you guys but I feel like you guys are one of the biggest bets on stablecoin pay ins. Everyone should just be able to use stablecoins as a payment method that we've seen. And so how's that going?
- [55:50]
Tobias Lütke
I'm obviously just like you're a huge fan of the concept of stablecoins. I love the work you're doing there. And congrats on the launch of Turbo. And Vintage just needs its own currencies. I think it's important at least it needs its own infrastructure to move things by Internet speeds. And I'm excited for it because I mean sort of I think a valid criticism of crypto in the past as exciting as it is has been that the utilitarian difference between a real US dollar and US dollar crypto coin, it's like that the US dollar crypto coin is mostly like it's sort of like gift certificates to scams. It's like there's not that many things you can actually purchase with it that are of high utility value. It's like obviously this is.
- [56:39]
Patrick Collison
I think the economy was too circular.
- [56:42]
Tobias Lütke
Exactly. It's like most of it was like you, you purchase other coins but then you might have, I mean hopefully you diamond handed into some kind of upswing but like it's like like that's not usually what happened. And I think that's valid criticism. But I think the most important thing to happen there is we need to expand what can be purchased with stablecoins to the things people want to purchase like outside of like just the sort of insular crypto fintech. But yeah like we are working hard on getting all Shopify stores to just take stakeholders.
- [57:17]
Patrick Collison
What does the merchant response mean?
- [57:19]
Tobias Lütke
Very positive again because like through like the work that bridge is doing we can settle into US dollars directly so the merchants can, they've just gained a new ability without having to make a strategic choice to go into a new industry. Like if there's demand for being able to spend stablecoins and they can now sell to everyone who wants to particularly do that. And so it's like it's totally transparent and that's a beautiful thing, amortizing R and D over millions of businesses with us centrally because we can just build up the system and everyone gets the benefit of it. And so obviously it's in testing. The conversion rates have to not be negatively affected obviously by its presence. So there's some like we have to make absolutely sure this is the case and like lots over buns of caution on every roll of records in the checkout because it's like the property. I mean it's busiest checkout on the Internet basically, so we might not want to to reduce conversion rates ever.
- [58:21]
Patrick Collison
Yeah, I think it'll also be interesting to watch the consumer training aspect of it where QR codes is always my example of this. Where the tech has existed since what, the 90s, but it was really only during the pandemic when we installed the software in people's brains to understand how QR codes work. But there was a moment and now they're kind of everywhere for everything. And obviously they were in Asia before they were in the US and everything like that. I think there'll be something similar with stablecoins where they'll be offered at the point of checkout way before people become super familiar with them. But we're probably only a small number of years away from some mass market familiarity.
- [58:57]
Tobias Lütke
I think it's going to be very, very natural for people, but also in a way that they will just not think about it. It's like it's a normal thing, it doesn't matter. It's going to be so well tooled up to bridge between these things. But, but it's, you know, just, it's using crypto rails while using the Internet and until you need it out of the Internet, it's not like you don't have to bridge anything. So yes, yes, you've referenced a few.
- [59:22]
Patrick Collison
Times the kind of stuff Stripe and Shopify are doing together. And you know, we've caught up at various points on and you even talked at the meta level about the stripe Shopify relationship where there's some, I don't know, is it like Apple TSMC or you know, something there where it's like deep, intertwined, building in a stable way, but also kind of expanding over time and no confusion as to who's ultimately the one building the end product versus who's kind of providing some of the underlying infrastructure. But I'm curious what you think has worked well because yeah, a lot of corporate relationships do not last. I mean, I guess if you dated to 2012, which I think is accurate. Maybe 2011. 2012, like 13 years. It's certainly more tenured than some.
- [60:06]
Tobias Lütke
Yeah. And I think it's almost more impressive when you think about it as market cap expansion. Right. Like, I mean we were both.
- [60:13]
Patrick Collison
People get greedy.
- [60:14]
Tobias Lütke
Yeah. Well also, I mean we have had a highly functioning, excellent symbiotic partnership and probably there's like, I mean how many more digits on the market cap of both companies? Like we've expanded many, many, many times here many orders of magnitude. And that's pretty rare because like again partnerships, especially in tech, tech is extraordinarily bad at partnerships. It's always treated as a prisoner's dilemma that at some point someone in the company realizes defecting. Gives you five points on the math. And that sounds really, really good for short term focus. So everyone mistrusts each other and so it's pretty rare. And I think it's cool that we pulled it off. And I appreciate the partnership. It's been really, really fantastic being able to just focus on my space instead of having to duplicate things that Stripe would always have done better. I think a lot about main Quest and sidequest and I have such good, I guess founder market fit with commerce. I just like I really care about this and I have, I can spend my entire like it's one Karl Popper calls it. Finding the best gift in life is finding a beautiful problem that you can never solve. And even if you accidentally solve it, if you're so unfortunate to solve it, hopefully it has plenty of enlightened problem children that you can then tackle. Right. And so finding one of those is good. And not having to meander into some complete adjacency to support it is actually one wonderful.
- [61:57]
Patrick Collison
Yeah, yeah. I think there's also something about when you talk about this idea of focus, I think second acts are kind of a bit over valorized in Silicon Valley somehow where everyone talks about oh we want to do like a new AWS is kind of the coolest thing ever where you do a second thing that is completely unrelated to the first thing versus Nvidia is the largest company in the world and they just started making GPUs in the 90s. And turns out a lot of people want GPUs. And I mean they did obviously lots of incremental expansion from there. Like calling them GPUs is doing a disservice but it's in a very hill climbing expansion way.
- [62:33]
Tobias Lütke
I think they went vertical. I think it said horizontal business folks tell you to go horizontal. Because again, the chief competency of most businesses ended up being having a stopwatch. It was sort of a management system would. But we are actually in a different world now. It's like this is commoditized, it's easy to access and probably GPT5 is better at it than most managers. And it's now actually like, well, what problem do you understand better than what's in the training tokens for GPT5 and what do you care more? Which is a human capacity specifically. And so Jensen just cared more about GPUs and saw more potentially.
- [63:12]
Patrick Collison
Isn't there a bit of MBA ism here too, where if one was trying to, when Shopify was a thousand times smaller, raise money for Shopify, it would just sound ludicrous to say we're just going to do E commerce software. And it turns out that's a really big market and here's our current projection and here's when it's a thousand times larger, it's like, get out of here, come on. Whereas if you say, oh, we'll expand to do this and we'll expand to do that and we'll build a CRM or whatever, it's easier to justify expanding into other TAMS.
- [63:39]
Tobias Lütke
I got rejected from plenty of VCs in 2008 when I went around and some of them said they would invest. And then it was usually terrible terms with like ratchets or multiples. And I had to move a company to Silicon Valley, which again, I would have, if I wouldn't have told me to do it. Like once you tell me to do something, I don't want it anymore. But anyway, so like, I caught up with many of the partners later and in one case we had a really interesting conversation. Just like he asked me what did we miss back then? And just like, well, the reason why you didn't invest is like the. Like you said, there's 40,000 online stores in the world right now in 2008. And well, you can get half of them. But that's not actually that big of a business. And what we miss is like, well, Shopify itself was a solution to that problem. The reason why no one was building online stores is because the friction was so high. And so it's a little bit of that, right? You gotta like, yes, it's not an interesting business plan if the pitch isn't very good. And specifically coming from me. Yeah, yeah, coming for me is probably especially bad. But like, it's also kind of man, the best products in the world come from People just like really, really, really, really being deep on something. Like in a programming world we are using cursor, which is basically VS code. VS Code is Eric Gamma's fourth edit editor. Right. Like it's like he spent his entire life making these things. Craftsmanship. Yeah. It's like he wrote the design patterns book that many of us read at some point literally about programming text editors. Right. Like so it's like yeah, sometimes you just need to dedicate a career to a field and get deeper into it than anyone else and celebrate craftsmanship along the way and kind of try to build the best thing. Yeah.
- [65:30]
Patrick Collison
But again, it's hard for people to give credit to that idea in a model. People are not capable of being sufficiently optimistic about a business that really works. It just blows through all their projections.
- [65:42]
Tobias Lütke
Yeah. The question is also we've seen the story so many times that some step function changes at some point. Maybe with Shopay and all these kind of things with Shopify, it somehow became something very different than what it otherwise sort of what you would have visualized. And I mean this is in no area more true than in the Nvidia case where like, I mean these CUDA cores, the tensor cores were around. They were on these cards which everyone. They were part of a bomb and very little use by any of engine Like Carmack's new engine probably used them for something useful. But they were just there. And CUDA was not even like that was around for 10 years before Alex net got trained. It's an incredible vision to just doggedly pursue this because in the future there will be value if you do this. And it makes you wonder. I think that's probably true for almost every space. I think every space driven to that level could become so big.
- [66:43]
Patrick Collison
Isn't there something here where more founders should be willing to follow their nose of what's just a good product? Because again, I think that what can happen as companies scale is founders get successful by building good products and then they hire a bunch of people and finance people and run the planning process and everything like that. And it's like, okay, well what's the revenue projection for this? And things like that? Whereas actually when we built Stripe Atlas for incorporation, there was no amazing projections behind that that one day this will be a giant business. And it's not a giant business for us by any kind of revenue metric, but we think it's very valuable because people start their business on Stripe and we help them with something foundational of like incorporating the company and get it off the ground and it all kind of ties together in this very immeasurable, nebulous way. And kind of like you're saying with Cuda, I think that it's hard to justify at that moment in time, but it seemed like the right technical decision. And there's something maybe where founders should be a bit more willing to follow their noses on what is right for the product and right for the user and it'll all come out in the wash and years down the line.
- [67:51]
Tobias Lütke
Yeah, I'm a great believer that if you build things that are of value, then people will figure that out. It's very, very hard to keep people away from things that make their lives significantly easier, better or more joyful. And I mean I get the front row seat to this on my platform. It's crazy how fast some success stories. One of my favorite things we do is we started making these really sort of nice awards for people when they do hit certain sales milestones. And you know, some of those, like when I go travel, I check out who's just got them and just like sometimes deliver them. And Harley does this much more than me. And like it's, it's such a cool thing to like, it's awesome to talk with them. And man, like some of these businesses that hit like 100,000 or million sales are like, like 18 months old. It's just like just cracked the code or something. And with the most talk of a thousand two fans, it's like millions. It's like an army created because people just were starved for this authentic, unabashed, something needed to be done, something was wrong in world. It involved a product not existing. And that product not existing was such a bother to someone that they made it their mission to create it. And then they went through trials and tribulations usually they often documenting the journey, allowing other people to write shotgun to sort of over time try on their vision of the world. Which again is not to change the world, but it's to add the thing that was missing. It's just like it's makes things 1% better. Not like sort of everything's new and they just agree with that and they love authenticity of it. They love that someone that they know have a little bit of a relationship with, like kind of pursued this thing that they think was worth doing. And then the product comes out and they tell everyone and then more people buy it and it's just like there's so much good that comes out of this and that was all value which was there for everyone to take. Right. Like every product that Sells well was a discovery. It's like it was sort of invented but also kind of discovered. And so, but. But it's that person that did it and they deserve economic value. It comes to them. Everything about this is like it's the best parts of capitalism all rolled up for everyone to inspect and review and you get to have a front row seat from data and front row seat sometimes with giving these sort of celebration artifacts and anyway, so this is always the greatest thing is just like the people who are using the platforms are actually really inspiring people.
- [70:41]
Patrick Collison
Well I feel like it must be particularly satisfying for you because there's all these edge case failure modes of capitalism, of rent extraction or oligopoly or regulatory capture or everything like that. And you just have a front row seat to the pure competitive differentiation, people succeeding on the merits. And it's kind of a very pure form.
- [71:03]
Tobias Lütke
I feel like you have it too. It's. Yeah. And it's like we should like write postcards from the rest of it. It's like it is like there's something really to this. Like you know, just don't this real world thing, right. Like it's like the one everyone says your product doesn't wouldn't work in. Like, which sounds so dystopian is like it does really sound quite dystopian. Like so I don't want to have anything to do with it. I just much rather like, like hey, just build this whatever world, whatever that is and invite everyone over and if it's good and works and then people will join. Like it's actually that simple. And I think it's better to live in a world with not like people going direct people communicating. Right. People being real people. There's very, very rarely is there a PR department or like even. There's probably a marketing strategy but the marketing strategy evolves based on just like new ideas and organically. And there are very few people being highly enabled building products that they care about.
- [72:06]
Patrick Collison
We had Mackenzie from Ambrook on here, which is SaaS for financial infrastructure for farms. But she was saying one of the big trends in agriculture right now is direct to consumer stuff where you're actually transacting directly with your farmer. I'm sure a lot of them are running on Shopify as well. What have you learned on the Coinbase project?
- [72:25]
Tobias Lütke
I never had another job really my apprenticeship and mostly learned what not to do as a company and then sort of had opportunity to start Shopify just trying literally the opposite. And that's basically the operating system I've Been running on. It's been amazingly successful. So thank you Siemens. But like it's so hard especially building it in Canada, like in Ottawa and Toronto. It's funny, I always had this effect of it came to Valley a lot when I had time and you know, I had both these meetings and then talked with people and they described to me how real companies do these things. And then I went home and tried to implement it. And 20 years later did I realize very few of the companies describing what they're doing actually did the things that they told me. Everyone gave me sort of idealized highlight reel and I compared that to my average and then I implemented how I think you could do a better job on the stuff that you described and sometimes ended up with good things. And I was very, very happy with this. And then and now obviously I'm describing when this goes really right and just as often this went really wrong. So they are just like Shopify ended up being this sort of lopsided thing that is probably ludicrously over engineered and but advanced at certain things and then incredibly primitive at things that no one fails usually because in a more liquid labor market where more people to build companies the information is just more readily available. What was awesome was joining Coinbase as a board because it's like here's another founder run company by an incredible entrepreneur that's put together again not by committee but by a clear desire to build an important company, an important institution and just holding it up and seeing what they were incredibly strong at compared to it gave me. I learned so much about my own company and I could have a reference point, have a reference point. So it's quite a gift. I don't know when is the right time for a successful entrepreneur to join another company. I wouldn't do it too early, but it eventually becomes quite valuable. And so Conbase is such a remarkable company. You had Brian on. He's such an incredible entrepreneur.
- [74:42]
Patrick Collison
Very first principles.
- [74:43]
Tobias Lütke
And that was a company under brutal attack by regulators in a way that very few companies of our time have ever faced. That's like that through the government wanted them dead and pretty much settle. So I learned so much about the posture that Brian took to it. He will never get enough credit for the courage and the intestinal fortitude he's shown there because many of the details are internal to the company and the board. But like God damn it. He's like good. I do not think I could have navigated my company through a similar barrage.
- [75:23]
Patrick Collison
Yeah, Brian strikes me as someone who is very Hard to manage up to. That's always the risk for CEOs that people are trying to construct some Potemkin Village. And he was describing the policy work that they were doing and he was saying, well, the company's meant to be the good cop and the trade group will be the bad cop.
- [75:42]
Tobias Lütke
And then he's being the trade group.
- [75:43]
Patrick Collison
And it's like wait, these are also the good cops. And so he was saying, okay, here's our new bad cop plan. But again he was just kind of refusing to go along with the things that everyone was serving up to him as the plan.
- [75:53]
Tobias Lütke
I think great entrepreneurs are ungovernable and it's the problems often arise when people somehow manage to figure out how to. Yeah, I think studying failed companies is actually often more useful than you agree. What you find invariably is that the company knew exactly the stuff that was the problem. It's just like somehow CEOs got disconnected from that.
- [76:18]
Patrick Collison
Yeah, it's not so much that I want to study failures, it's that I really want to avoid making the same mistakes that other people have, well, intentionally made and found. Oh yeah, no, that's a blind canyon up there. We should at least be able to make new exciting mistakes. Rob, the guy here who runs corp dev, he's very experienced and he's done hundreds of acquisitions previously. But it makes him way better as a corp dev leader because it turns out that there's lots of ways for deals to go sideways and if you just have seen a lot of them before, you can keep tabs on them and be finding ways to steer away from them, things like that. And I think just avoiding the well trodden mistakes and if you're going to make mistakes, at least make new mistakes that haven't been discovered yet. Is kind of underrated as far as.
- [77:04]
Tobias Lütke
It'S totally underrated but completely vital because you died to a thousand paper cuts as a company. So you kind of have to first avoid it becoming a thousand and then second you will make mistakes, make them original so there's alpha in it so that you accrue some additional knowledge. But now it's unique to you.
- [77:23]
Patrick Collison
How do you like to be ungovernable? How do you like to avoid being managed up to? Probably can't share all your secrets because part of them are part of the specialty.
- [77:30]
Tobias Lütke
I just think going direct a lot inside of a company too is just like, I mean this attorney of the.
- [77:35]
Patrick Collison
Org charge and flowing up, being polished at each step.
- [77:38]
Tobias Lütke
Yeah, I'm just like, I don't think up and down is sort of not the right mental model as in now it is good. Certain decisions are best made at the outskirts of a company closest to the customers. But I'm a big believer in many decisions have to be brought inwards as well. This is why product reviews are very centralized. It's a way of efficiently moving information completely independent of org charts. I'm a fan of functionally organized companies. The trade offs is like, it is significantly harder for executives. It's very unpopular with executives because obviously they just don't own entire shebang that they can make all decisions in. And that requires a lot more collaboration, which feels wrong and feels slow. But you make vastly better products in functional organizations, at least for Shopify. And you know, that helps. I just know a lot about the company, like being so many details. I try to be in AI stuff first so that I can. I always see it as a gift when something new happens because especially like I'm very good at quickly figuring out stuff. And then I sit there with knowledge and I can now look at, okay, who else gets there fast and those are my future leaders. Like that's a very implicit test.
- [79:03]
Patrick Collison
Oh, that's interesting. You're kind of testing some adaptability or something like that.
- [79:07]
Tobias Lütke
Yeah. Like the biggest difference between people inside of any company or just like in general in industry is like some people fall in love with solutions, some people fall in love with problems. And I just like fundamentally I'm a person who appreciates what people fall in love with problems. They are hard to distinguish during fairly stable times. Right. Like it's very hard to know who is who because, well, if you don't change anything, they look exactly the same. I like inducing change in general to suss this out. I like, I don't know, how do you induce change?
- [79:34]
Patrick Collison
That sounds euphemistic.
- [79:36]
Tobias Lütke
I don't know. Just like literally like that. Like do stuff. I think reorgs are sort of a standard way. All reorgs work because reorging is valuable. It doesn't matter what your organization structure is afterwards. Well, I mean it does, but like there's some benefits to any organization structure.
- [79:53]
Patrick Collison
Shakes things out of the stasis.
- [79:54]
Tobias Lütke
Well. And the advantages of any organization structure accrue immediately where the disadvantages only appear over time. So if you change a lot, you do multiple things. You're also like, I think heightening your misalignment with people you don't want in your company is an enormously important thing. So like if you reorg. Yeah. So if you reorg A lot you end up the people that don't like that, which is a perfect. It's probably the sane position to take. Even if a company thrives under a lot of change and is exposing itself to a lot of change, then it's important that you are clear about that. I think you try to make your company as different from every other company as possible, which is actually, I think the opposite of what Most companies most CEOs optimize for and probably most professional management. Right. I think a lot of people want to make their company as similar as possible to all other companies. But I think that's, I mean that to me that's a lack of diversity, right? Like there should be diversity in companies because there is diversity in people and people need to fit find a product.
- [80:54]
Patrick Collison
In what ways is Shopify most different to other companies?
- [80:57]
Tobias Lütke
I mean this sort of, you know, the internal tool culture is maybe an example of this. It's quite clearly R and D run in a way that quite a few companies are, but they don't acknowledge or obscure it. We actually say it and celebrate it and say we actually are on our opinion at this point that everyone should be able to code at least sort of since vibe coding is around. This is clearly. This has gone from a, you know, have to spend all of your teenage years in a dark room cultivating a rare skill to spending a couple of weekends with YouTube like let's go. Like this is not a problem anymore.
- [81:31]
Patrick Collison
Speaking of teenage years, I'm always very interested in the on ramp to entrepreneurship and the on ramps to programming. And I'm curious, some people decry that programming has gotten harder to unramp into where the first stuff I built was janky PHP web pages. But obviously PHP is actually very nice because you're just writing code directly in the web page and you refresh it. That's the execution environment.
- [81:55]
Tobias Lütke
And now so a high watermark of our industry.
- [81:58]
Patrick Collison
And so have we made programming too hard to get into?
- [82:01]
Tobias Lütke
Totally okay to tell my wonderful board member David Heineman Hansen. Like the high watermark of the world of programming, at least web programming was clearly when the FTP PHP file up and it was instantaneously deployed. How long does it take code to deploy these days? This is like all choices now, right? I mean we made some choices which are worth making. Maybe we'll do it again. But there was an immediacy and a visceralness to programming and that clearly has been lost. So lots of things have gotten incredibly amazing. And I always said like we used to say that after two years it's like someone puts cement in the code base and no one changes anything. We figured out how to avoid those horrors. I think we have a very mature discipline. We've always as programmers, I'm an engineer too. We've always had a identity crisis. We always wanted to be someone else. We have significant science envy. We even attempt to call it computer science. There are some people who do computer science in the machine learning world. So it's a real thing. But clearly that's not. It's a vocational art.
- [83:12]
Patrick Collison
It's not most computer science degrees.
- [83:13]
Tobias Lütke
Yeah. And this is also how we eliminated things like aesthetics and beauty and stuff from our code bases or from talking about it. There are beautiful code bases with beautiful code. It's like this code that tells a story and clearly communicates what it's there for to everyone who reads it. Ideally in is an artwork of sorts. And so yes, I think we have aggressed, I think we have also advanced. But I think we don't have a clear vision to drive simplicity. And I think I personally really deeply appreciate and have hired, always prioritized hiring electrical engineers into programming roles just because they just have a better idea for the costs of inefficiency. Waste, really. You put too many chips on a thing, it's too expensive to manufacture, you will just never sell it. It's not a good product where the zero marginal cost of copying software just means all sins are forgiven. And in fact of course still runs and does the thing.
- [84:16]
Patrick Collison
You really have to fit the whole system in your head as an electrical engineer.
- [84:18]
Tobias Lütke
That's right. And so anyway, I think we are immature, we don't know what grade is. We leave a lot of this up to people. And therefore the outcomes are so different depending on who's on the project. I mean again, we are all getting more conscientious about it. And I think we are in a counter swing to the sort of horrors of architecture astronauts that have caused a lot of damage to I think our industry over the last, especially in the 2010s. So we are getting in a better spot. And then, then I don't know what AI does. But the interesting thing is I don't even think it's going to end up mattering because AI is going to solve all technical debt. So it's like maybe something engineer.
- [85:00]
Patrick Collison
You're right, exactly. Same question about on ramps to entrepreneurship. As a kid you were selling things to your classmates. And what I observe is a lot of entrepreneurs have the same origin stories where they were entrepreneurial early either something like that where they had some business in school super common known as Patrick did web development. And when you're a kid getting paid thousands of euros to build a website is like infinite money. I didn't know such large amounts of money exist. And obviously to a small business they're like wow, I'm totally taking advantage of this kid for a mere few thousand euros. And then another common one seems to be dropshipping, arbitrage, this whole thing of buying on Aliexpress and selling on ebay or something like that. But you maybe have a window into this with Shopify or something. Do you have a sense of what the rise like if a 13, 14 year old is listening to this and interested in making money, what are the areas where you think are kind of good to pursue today?
- [85:56]
Tobias Lütke
Yeah, I think just these reps are the important thing. The mechanisms change and there's like entrepreneurship clubs are really using Shopify a lot and I love that. And this is one of those areas I would love to go much deeper on just because it's such a, it would be so fun to really, really, you know, built directly for them. The super important thing is just go through life like understanding that like everything around you is built. You. You wrote one of my favorite tweets of all time. Probably like actually maybe a high water mark on X like on, on this topic.
- [86:28]
Patrick Collison
Like I got the museum of passion projects.
- [86:30]
Tobias Lütke
That's right. And I, I, I love that because it's like if you can teach that to students, it's worth more than most of the entire curriculums of subjects. And so, so I think the commonality behind entrepreneurs is that very early in life somehow something happened that told them that the world is dynamic and it changes some of us. I had the enormous advantage of living exactly sort of at the time when we went computers to no computers in homes and I had one early and lots of my neighbors didn't. So I had the counterfactual there and I just absolutely fascinated with them. And then networking works came in my teens in Internet. So I had a front row seat to a world. The world around me in this small sleepy town in Germany was irreconcilable with what was becoming possible. It was so clear that so much would change. And so I think that dissuaded me of sleepwalking through a world. It just made me like this, like okay, that's fun. Like I'm sitting on a piece of information that everyone around me doesn't believe yet, but it's clearly true. And I'm going to bet on. And so I'm going to take reps, looking at things around me and figuring out how they could be done better. And that process is I think, the most valuable process to cultivate as a young adult or teenager.
- [87:58]
Patrick Collison
So the meta process is more important than the actual domain you choose.
- [88:02]
Tobias Lütke
I agree. Yeah, absolutely. I think if you spot opportunities, see what you can do with it. It's a really important thing. I think we overemphasize those stories and de emphasize the process that causes this. It's building the habit of looking at things and thinking about a do I know how to make a better version of this? Which you should do anyway. And then we definitely underestimate and under celebrate and under lionize the Beatles Hamburg days that we're going to. And acting on this impulse would mean I'm going to spend the next five years of my life doing this. And I'm willing to pay what that costs.
- [88:42]
Patrick Collison
And for you, was that just doing a lot of programming as a teenager?
- [88:45]
Tobias Lütke
Programming is how I just like made things different. And you know, like I went to these classical language schools. I was bad at Latin. We started with Latin. I only got English in like 8th grade, hence my accent.
- [89:00]
Patrick Collison
But your Latin accent is excellent.
- [89:01]
Tobias Lütke
Yeah, I imagine. Well, no, because no one knows how that actually sounds. And it's definitely not German. So everyone just like it goes off. Yeah. Anyway, I just hated doing the vocabulary tests. I was bad at it. So at some point I wrote software for teaching myself. Basically similar to, I suppose, what's called spaced repetition now. But like, just like. And it's like there's little basic shell script. Right. Like, and it's stupid but like something about making this and then using it made it interesting enough that I did it. And so like it's very clear moment where like went from. I think I got a D on a test which was starting to be problematic. I just like A's for the rest of my life. Right. Like it's just like that is a crazy experience. Right. Like this is a thing that didn't exist that like fits me personally, maybe my first internal tool. So. Yeah, it changes you.
- [89:49]
Patrick Collison
Exactly. It made you passionate about building your own software.
- [89:51]
Tobias Lütke
Yes.
- [89:51]
Patrick Collison
You mentioned spaced repetition. The other interesting, you know, educational topic du jour is mastery learning and the Bloom 2 Sigma effect. How do you put that into practice? Do you with your own kids?
- [90:03]
Tobias Lütke
Yeah, so my kids, I have three boys, 15, 14, 11. And they go to a school, a boys school, which we are quite fond of. And I mean my kids, they're quite nerdy. So like it's just like I met them. Yeah, yeah. So I love them to bits. I can't wait to go home. It's such a fun time. Everyone should have kids. And the particular mechanisms by. I don't know, it's like the most important principle of like parity principle I have is everything's interesting. This is a sentence you will hear a lot in our household. It's the kids say it. No one is allowed to say they're bad at something. They're only allowed ever allowed to say they are not good at something yet. So that's basically the entire set of principles.
- [90:52]
Patrick Collison
We're not good at gross margins yet. Exactly.
- [90:55]
Tobias Lütke
Yes. We choose not to. Yes. And making a joke is funny too. Right. It's just like I want them to have those things in their priors because it's really easy to say something is annoying, but it's much, much harder to figure out what you would have to do to make it interesting for yourself. And I think there just isn't anything that is not actually interesting. You spent a long time in banking. It doesn't sound terribly interesting to me initially, but I've learned enough about it. But I've read books about double entry accounting and the history thereof and it's just absolutely fascinating.
- [91:29]
Patrick Collison
Did we recommend the Calamiris book to you? Fragile by Design, which is a history of various countries banking systems.
- [91:35]
Tobias Lütke
I'm literally just reading it.
- [91:36]
Patrick Collison
Oh you are?
- [91:36]
Tobias Lütke
Okay.
- [91:37]
Patrick Collison
The Canada chapter is particularly good. It's like a history of the Canadian banking system.
- [91:41]
Tobias Lütke
Very fond of Canada right now. It's just like need some new origin I think. Yeah, yeah.
- [91:46]
Patrick Collison
Well just I found it interesting how it kind of explains the path dependence of how each country gets to where it is. Speaking of Canada, what's your advice for Mark Carney?
- [91:54]
Tobias Lütke
Yeah, I mean like funny. Our partnership is very, very storied and layered and somehow your board member is now my prime minister. So that's fun. Look, I love Canada. I live now more in Canada than Germany for longer. I think it's a beautiful project. It's a beautiful implementation of different implementation from the United States or from Europe of classical liberalism. It's very much veered into socialism under Trudeau. He pushed that very, very hard. I am very much hoping that Mark is helping all of Canada to figure out whether it's a successful discovery of something that doesn't work. Because obviously that kind of push socialism always leads to poverty.
- [92:38]
Patrick Collison
The problem with socialism is eventually run out of other People's money.
- [92:40]
Tobias Lütke
Exactly. And so it's just like. And it doesn't need it because it's such an incredibly. I mean I built care's largest company now at this point by market cap cap as an immigrant. I think the advantage I had as an immigrant is I wasn't sort of aware that we are supposed to, you know, make small plans. So I made big plans, you know, just like, and held everyone accountable to that. And turns out you can build world class companies if you do that. And there doesn't need to be any kind of inferiority like they are. And also just like on, on from first principles, it's like, it's just like, I mean first of all it is attached to like next door to, to the best consumer market on planet Earth. Until 15 minutes ago we were good friends. And it has in the ground basically as much. It's number one, two or three on every single resource that is of value in the next manufacturing buildup age. So we should probably get on extracting some of those resources and do something. I think it can be the richest country in the world if it shows. So and it just needs to make a decision that it wants that. And I'm very optimistic about Mark pushing into that direction and I hope he's going to push very far because I think there's no advantage of waiting.
- [94:02]
Patrick Collison
So taking economic growth and GDP growth seriously, which has obviously plateaued somewhat in Canada in recent years, and then being willing to make the potentially controversial policy decisions and kind of changes that are required to actually enable that.
- [94:14]
Tobias Lütke
Well, I mean the things that are controversial policy decisions are not like controversial for path dependence, not for, for not real. Like it's like people, like Canada has something crazy to tell people, but there has like this incredible heartburn over, over pipelines which are like things that go underground next to highways. And it's just like, it's just like no one knows that there's a pipe. Like the only thing a pipeline does is you don't need diesel trucks. That's the only thing. And you can save a lot of diesel. It also changed the cost basis. And Canada has all these resources and they need to somehow get to ports. And so it just feels like these tiny little implementation details, it's like as if computer manufacturers would somehow get down on copper cables. Right. It's a weird thing. So depoliticizing just like implementation details that professionals can do. It's odd because Canada for instance, doesn't have its own nuclear power. Like there's like where I live in Ontario, it's like the grid is entirely clean. It's like the Bruce Nuclear Power plant, which we constantly build more reactors for, which is like every time under budget and before schedule, like 6, 7 gigawatts now and just humming and then the rest is it's the cleanest grid in the world. And so like the funny thing is it doesn't even need it because it has all the other stuff too that it could just use. But we good at this too. So I think there's like the blueprint is obvious what I actually. So my main advice to him is always like, I want him to in fact ideally talk to you about the Shannon Economic Zone, because I feel like it's like the blueprint for success in Canada because I think we can build data centers or spaceports and stuff. Like it's much faster. And my hope is that Canada can build up an economy and a merit full market and so on, which makes it like can. Can get back to doing what Canada's best, which is like succeed by helping America succeed and you know, just like work together and let's go.
- [96:12]
Patrick Collison
Yeah. And as you say, energy could be a big part of that. As you mentioned nuclear, I was thinking about hydro, where obviously Canada has a ton of hydro already.
- [96:18]
Tobias Lütke
Yeah.
- [96:18]
Patrick Collison
Like you're saying the 7 gigawatt nuclear power station, but I think La Grande river is a 7 gigawatt project and could be a lot more. I think there's other phases that were not done.
- [96:28]
Tobias Lütke
Absolutely massive on every single angle you look. It is every single time I learn about a new resource that we will probably need a lot of. If I look, it's just like there. It's just unexploited.
- [96:39]
Patrick Collison
Yeah, maybe. Last question. We have your Daytona car here. What is the draw of motor racing to you?
- [96:50]
Tobias Lütke
Yeah, I mean, I just love it and I'm surprising to me, honestly, this is one of a weirdo.
- [97:00]
Patrick Collison
Sorry, is it isn't surprising?
- [97:01]
Tobias Lütke
It is surprising to me. So it's like, you know, so I love, like kind of figuring out my own limitations or propensities. Like, it's just like. I think it's like some. It's a game everyone is playing. I think to some degree, maybe less conscientiously. I try on every hobby that anyone I admire gets into because it's like, maybe I'm interested in it too. Who knows? Like, again, everything's interesting. Motorsports was like, not really something I high likelihood or batting average on liking because I didn't even have a driver's license after coming to Cast after my German one expired. And so a couple of friends took me to like I had went to a track and I went out and I just like immediately fell in love with it. There's something just incredible and I love competing against myself. I guess I think that's the thing. I just like I race in races and I don't even try to win. I'm like I'm still competing against myself and I see over other cars as obstacles. I. And so there's just like this beautiful thing about it's technical and you connect it with this like four basically playing card sized patches of rubber to the ground and there's only so much grip to get out of them and like trying to get to like 99.9% of like lateral acceleration or turning, understanding the weight transfers of the cars and all these kind of things and trying to get to the best lap time you can. And the difference between that lap time and the theoretical possible lap time is just the exact report card of all your inadequacies as a driver. And like next lap you try to do it slightly better and better and better and just hone this craft. It's like just like the mediacy and adrenaline, it's just like, it's just a brilliant thing which I discovered for myself. So started taking seat more seriously over a couple of years and now like did Daytona this year and hopefully do.
- [99:00]
Patrick Collison
The big 24 hour, 24 hour relay race. Right? Like you swap other drivers.
- [99:04]
Tobias Lütke
Yeah, yeah, that's right. So, so one car, 24. It's actually if you watch the formula one cinema movie that, that starts at that race which was also really fun to see. It's like I, I've done the getting up in the middle of the night, walk exactly down that first scene where Brad Pitt walks like down to the pits and. And oddly our pit stall was even exactly the one you went to there like in the movie and then get in the car and you're very, very tired in the middle of night. So I have to say I found.
- [99:32]
Patrick Collison
Out recently they sold sponsorships for the fake F1 teams in that movie and made a lot of money on the brilliant, incredible bit of product placement.
- [99:41]
Tobias Lütke
I mean like if you think about it, Formula one itself is like such a made up thing, right? Like it's like it's so synthetic. It's like we just decided it to create a document which is a set of rules and somehow because that document existed like 20 teams move cars around planet Earth, which is also one of the worst cases I don't even believe in AI. Unemployment to begin with is not how things work.
- [100:03]
Patrick Collison
But if you were worried about it.
- [100:05]
Tobias Lütke
It's a good F1 is kind of proving that we can just make up completely incredible pursuits, especially with AI and robotics. We can make it cheaper and then let's go.
- [100:14]
Patrick Collison
Yeah, there's a great. I mean the history of F1 is super interesting. There was a great Colossus podcast on the history of F1 describing basically the Bernie Ecclestone era which came with the emergence of tv obviously. And there's even things like the different race schedules were not standardized and there was multiple. Not every team would show up to every race or whatever. And so he really kind of harangued everyone into kind of a standardized thing. But then it feels like the modern era, especially with Netflix, I think they very successfully internalized that they're selling an entertainment product and some people will watch every race every weekend. But like I'm not going to watch every F1 race, but I will watch Drive to survive. Like that is an appropriate short form amount of F1 for me. And so I think they've actually very savvily internalized that F1 is an entertainment product and it needs to be kind of consumable in all the appropriate form factors.
- [101:07]
Tobias Lütke
And they just gave access to the sort of intrigue and politics and just characters behind it. Like Formula 1 drives are crazy people, right? It's a nutty thing to basically drive a billboard around at free 150 kilometers an hour. So like the characters are larger than life and like absolutely like driven by most zero sum competitors you can imagine. No one's there to just compete against themselves.
- [101:28]
Patrick Collison
And part of how it works. I remember hearing Zach Brown, the McLaren team principal talk about how Netflix is everywhere and you know, the paddocks and around and things like that. And he was saying yes, you're aware that you've signed a thing that like Netflix microphones will be everywhere but they're really savvy where they'll have the like in a spy movie, they'll have the directional microphones trained on you from like a super far away distance. And you just end up forgetting that you're on a hot mic your entire day while trying to actually manage a race. And so I think they get authentic content because yeah, in theory people know that they're on camera and on a microphone all the time, but you actually just can't live your life that way. You just forget. And so they actually get kind of interesting content.
- [102:09]
Tobias Lütke
I completely agree. And it's like, the season's long. They do many races. It's actually amazing what they do, you know, like, they fantastic athletes. They lose like 5, 10 pounds, like.
- [102:19]
Patrick Collison
Some of these Singapore Night Race.
- [102:21]
Tobias Lütke
So it's pretty amazing. And, like, it's a fantastic sport. I actually love what Netflix did because, like, I mean, Liberty Media is one of those companies you kind of have to start. Like, Joe Malone, like, I mean, Cable Cowboy is already one of the best. It's a great book. It's such a great book. And then, like, you know, he wrote a book.
- [102:36]
Patrick Collison
He's like, it's coming out soon. Imminently.
- [102:38]
Tobias Lütke
I did not know.
- [102:39]
Patrick Collison
Yeah, he has an autobiography.
- [102:40]
Tobias Lütke
So that'll be. That'll be fireworks.
- [102:42]
Patrick Collison
Yeah, it'll be really good. I agree. Well, look, thank you, Toby.
- [102:45]
Tobias Lütke
This is fun.
- [102:46]
Patrick Collison
This is super fun.
- [102:47]
Tobias Lütke
So it's really, really fortuitous that you sort of an AISH pup just popped up in the office.