The Shawn Ryan Show – Episode #261

Guest: Tobi Lütke, CEO of Shopify

Theme: How Shopify Became a Cheat Code for Entrepreneurs
Release Date: December 11, 2025

Episode Overview

This episode features Tobi Lütke, the CEO and co-founder of Shopify, in a wide-ranging conversation with host Shawn Ryan. The discussion explores the genesis and philosophy of Shopify, Tobi’s entrepreneurial journey, the ethos of simplifying technology for others, his management style, thoughts on AI, risk-taking, raising a family, and advice for both established and aspiring entrepreneurs. The episode combines vivid personal stories, business insights, and candid reflections, maintaining a tone that's both motivational and deeply practical.

Key Discussion Points & Insights

1. The Genesis of Shopify – A Personal Pain Point

• Shawn’s Journey (00:21 – 02:29): Shawn shares his struggle building an e-commerce website in 2015, recalling it cost him $20-25k and the developers "held us hostage." Discovering Shopify allowed him to build a fully functional website in four hours for just $20/month, unleashing capital and entrepreneurial freedom:

  "I just built an entire website in like four hours." (01:50, Shawn)

• Tobi’s Response & Philosophy (02:47 – 05:41): Tobi explains what makes entrepreneurship “honest,” rewarding, and vital for society—that it’s a form of self-expression and positive-sum contribution. He notes the deep gratification he feels when others use his product:

  "There's nothing in the world more gratifying than someone using the product or being delighted by the product." (05:03, Tobi)

• Shopify’s Scale & Impact (06:07 – 07:58): Tobi discusses Shopify’s growth, noting it powers 10–15% of all U.S. e-commerce, with over $1.5 trillion transacted through the platform to date.

2. First Sales and the Emotional High of Entrepreneurship

• First Sale Stories (08:32 – 14:57): Both recount the memorable experience of their first sales to strangers—not friends or well-wishers, but real market "votes."

  "Every single time anyone purchases from anyone else, it is a vote... Every purchase shapes the future." (10:31, Tobi)

• Creation of Shopify (14:57 – 15:13): Tobi narrates how the software for his own snowboard shop, Snow Devil, became the first version of Shopify after people started asking to license it.

3. What’s Overrated and Underrated in Tech Entrepreneurship

• Audience Q&A—Most Overrated Thing (16:48 – 18:14):
  • Overrated: Networking events and generic advice
  • Underrated: Acting on gut instinct, building weird/unique products with confidence

    "Advice is overrated... Gut instinct is underrated. Tech needs to get more weird, more eccentric, more self-confident." (17:32, Tobi)

4. Tobi’s Backstory: From Germany to Canada to Entrepreneurship

• Immigration, Work Permits, and Snowboards (20:55 – 29:06): Tobi details his move from Germany to Ottawa for love, and how not having a work permit led him to start an internet business (online snowboard shop) out of necessity:

  "You can't work, but you can start a company—because while you’re starting, you’re officially unemployed." (23:33, Tobi)

• Building Software Out of Frustration (30:00 – 32:48): Tobi’s "energy source" for building Shopify was frustration with the poor state of existing e-commerce software.

5. Building When No One Is Watching

• Practicing Craft, Intrinsic Motivation (35:03 – 38:20):

  "It just matters what you do when it doesn’t matter as well.” (35:44, Tobi) "The way you do anything is how you do everything." (35:59, Tobi)

• Entrepreneurship Mindset (38:20 – 41:00): Shawn draws parallels between business and Navy SEAL training:

  “If you’re not building, your competitor is—and they’re going to pass you up.” (39:35, Shawn)

6. Copying, Competition, and Carving Your Own Path

• Avoiding Cargo Cult Thinking (42:24 – 45:55): Tobi tells the story of WWII Pacific cargo cults to illustrate the dangers of copying surface behaviors instead of understanding underlying principles:

  "So much of the business world is just people cargo culting—copying behaviors and hoping for the same outcomes." (45:31, Tobi)

• Healthy Rivalry vs. Blind Competition (47:03 – 50:17): Shawn and Tobi distinguish between the value of rivals (who motivate) vs. the trap of imitating or obsessively tracking the competition.

7. Building Company Culture & Team Management

• Lean Teams, Directness, and High Standards (97:03 – 113:43):

  • Tobi advocates for small, skilled teams with clear "editing" authority (“the best size team is one person, second best is five”).

  • Being in the details and embracing both leadership and direct feedback is essential.

    "Don’t be afraid to micromanage if you know what you’re doing." (104:57, Tobi)

  • Both believe leaders should be direct about expectations, accept that high standards aren't for everyone, and aren't afraid to be “a pain in the ass to work for.”

    "If you don’t want to be the best, then get the fuck out of here." (110:34, Shawn)

8. Staying Close to the Customer

• Empathy, Constant Feedback Loops (74:29 – 84:37):
  • Tobi regularly reviews customer interviews and even “red teams” his own company to catch problems from the user’s perspective.

    “Computers don't get to make people feel dumb. Their role is to give people superpowers.” (83:36–84:00, Tobi)

  • Early Shopify users had direct email access to support—that was Tobi himself.

9. AI, Bandwidth, and the New Era of Entrepreneurship

• AI Is Underhyped (86:54 – 94:39):

  • Tobi believes AI is as transformative as the invention of electricity or the internet.

    “AI is actually underhyped right now... it's just huge.” (87:23, Tobi)

  • Shopify's 'Sidekick'—an AI assistant—helps entrepreneurs directly on the platform with everything from product uploads to legal questions.

    "Having an infinitely patient, extremely knowledgeable, non-judgmental AI sidekick... is game-changing." (92:14, Tobi)

• AI Frees Human Bandwidth (155:22 – 156:11):

  • AI tools allow founders to offload mundane tasks and focus on creative, high-value problems.

10. Family, Parenting, and Instilling Entrepreneurial Values

• Harmonizing Work and Family (127:09 – 130:58):
  • Tobi emphasizes seeking “harmony” over balance, being present as possible, and accepting that entrepreneurial brain never fully shuts off.
  • He shares ways he’s instilled entrepreneurial/critical thinking in his kids—no allowances, only pitches for what they want, and an insistence that “everything is interesting.”

    “Everything around them is designed by people no more intelligent than they are.” (133:59, Tobi) “We don’t allow our kids to say they’re not good at something—only not good yet.” (134:41, Tobi)

11. Entrepreneurial Timing and Advice for 2026

• Why Now is the Time (114:26 – 117:17):

  • With AI, new tools, and easy access to global markets, individuals have more leverage than ever before.

    “Every team, every individual, currently has access to a 6 out of 10 programmer, designer, advisor...”

• Advice to New Entrepreneurs (172:37 – 177:27):

  "You can just do things." (172:51, Tobi)

  • Emphasizes reps, trying, and learning—the 'failure case' is not learning or never attempting.

12. Calculated Risks & Failure

• On Risk (169:03 – 171:49):

  • Tobi argues it's "better to be competent than careful"—playing it too safe means missed opportunities and slower learning.

• Failure as Tuition (123:09 – 126:57):

  • Mistakes are inevitable, and the most valuable lessons tend to be the most expensive.

    "If you have to eat shit, don't nibble." (123:25, Shopify saying)

13. Shopify’s Impact and Legacy

• Milestones and Moments (161:35 – 163:48):
  • Tobi presents Shawn with a physical award for nearly reaching 100,000 Shopify store orders, reinforcing how tangible digital achievements can be.

    "Every 24 seconds, someone has their first sale." (179:10, Tobi)

Notable Quotes & Moments

• On Entrepreneurship as Self-Expression:

  "It’s one of the greatest journeys people can go on… a way to not just gain, but also give back." (03:48, Tobi)

• About Being Different:

  "All the interesting things come from doing differently. Most people externalize so much of how they judge if something is good…" (41:00, Tobi)

• On Building For Yourself and Learning from Failure:

  "Shopify is not a unique idea at all. In the tech industry, it’s never about who does something first. It’s about who does it right." (58:27, Tobi)

• On Mission-Driven Company Building:

  "The only way I found is for people to fall in love with a mission… to make more entrepreneurship happen, make our customers more successful…" (69:09–69:27, Tobi)

• On Parenting:

  "We don’t allow our kids to say they’re not good at something—only not yet good." (134:41, Tobi)

• On AI and the Future:

  "Our ability to project intelligence at problems… without rare, specialized people… is just huge." (87:30, Tobi) "AI is underhyped." (87:23, Tobi)

• On Competition and Intrinsic Motivation:

  "Making everything about competition is a time suck. The best drive comes from inside and from loving the mission." (62:38–63:08, Tobi/Shawn summary)

• On Taking the Leap Into Entrepreneurship:

  "The failure case is not failure. The failure case is not learning anything." (173:50, Tobi)

Timestamps for Important Segments

• 00:21–02:29 – Shawn on pre-Shopify struggles and discovering Shopify
• 03:48–05:41 – Tobi on the meaning and societal value of entrepreneurship
• 08:32–14:57 – First sale experiences and why they matter
• 16:48–18:14 – Most overrated thing in tech: networking events & advice
• 20:55–29:06 – Tobi's immigration and untold path to entrepreneurship
• 35:03–38:20 – The importance of "building when no one is watching"
• 42:24–45:55 – Cargo cult story and the dangers of mindless copying
• 69:09–71:41 – How to build and sustain intrinsic motivation in teams
• 74:29–84:37 – Staying close to customers, feedback, and humility as a leader
• 86:54–94:39 – The coming era of AI and Shopify's Sidekick
• 97:03–113:43 – Team building: lean teams, directness, high expectations
• 114:26–117:17 – Now is the best time to become an entrepreneur
• 123:09–126:57 – Embracing failure as tuition, not disaster
• 127:09–130:58 – Balancing work and family, teaching kids entrepreneurship
• 172:37–177:27 – Parting advice for new entrepreneurs in 2026

Conclusion: Flow and Takeaways

This episode delivers a masterclass in entrepreneurial mindset, operating philosophy, and authentic leadership from Tobi Lütke. Impactful stories, actionable advice, and memorable analogies (cargo cults, breaking bones, mission-driven teams) fill the conversation, making it both an inspiring and highly practical resource for founders at any stage. Tobi’s candid, direct style, combined with Shawn’s tough-love host approach, results in a conversation that’s both motivating and reassuring: failures are inevitable, intrinsic motivation trumps mere competition, and anyone can “just do things”—the barrier to entrepreneurship has truly never been lower.

Final Quote:

"Every 24 seconds, someone has their first sale." (179:10, Tobi)