Tobi Lütke

Most countries fail to commercialize innovation due to cultural bias against business and commercialization as a career path.

• Canada has a structural failure to commercialize: it exports raw materials rather than finished products (oil refined in Houston because Canada has no refineries; beaver pelts historically sent to London; Waterloo graduates exported to Silicon Valley), reflecting a culture that loves to invent but treats commercialization as low-status, so it fails to metabolize its own innovation.

  “Canada has no refineries. It all goes to Houston, even though it produces a good deal of energy. Waterloo is basically a raw material export”

• Building tech companies requires optimism about the future; Germany's widespread pessimism about the future, low status of startups, and unwillingness of talent to leave good careers for risky ventures are the leading reasons Germany under-produces tech giants despite abundant technical talent.

  “There is very much a pessimism about the future that, I think, means you cannot build tech companies. You have to be optimistic about the future. Otherwise, why would you want to contribute to progress and make it come faster?”

• Canada's SR&ED tax credits reward original research but exclude commercialization—claiming them for commercially-related work requires meticulous time sheets and an ungodly documentation burden that makes commercialization jobs terrible and drives good people away, which Lütke argues encodes Canada's anti-commercial bias into policy.

  “going and turning this into a product — you're completely left out. If you want to claim anything, you will have to ask every one of your people on the staff to have meticulous time sheets and submit an ungodly burden of documentation, which literally makes the commercialization jobs terrible.”

• Canada's cultural problem is a 'go-for-bronze' mentality of low ambition, common among smaller countries attached to larger ones, but this is easy to work around by simply giving everyone permission to go for world-class.

  “Canada's problem, often culturally, is a go-for-bronze mentality, which apparently is not uncommon for smaller countries attached to significantly more cultural or just bigger countries.”

World-class outcomes require removing guardrails and accepting underperformance as the tradeoff for reaching excellence.

• All companies are bad, and contemporaries—Lütke especially—will be terribly embarrassed by the companies they ran in the early 2020s once new primitives and philosophies are developed; like a soccer team that hits maybe 80% of perfection, a company runs at only ~5%, so reaching even 6% beats everyone else.

  “we are going to be terribly embarrassed by the companies we ran in the early 2020s. There are all these things we didn't yet have or didn't yet understand.”

• Every single time Shopify made something previously complex and gating significantly simpler, it caused more success—more people who otherwise wouldn't clear the hurdle made it through—because everyone acts as an intelligent actor within their local incentive system, and not stopping is, reductively, what really leads to success.

  “every single time we made something significantly simpler, it actually caused more success. More people who otherwise didn't make the hurdle ended up making it through it”

• Well-meaning policies and processes raise the floor so no one does something really wrong, but unseen they also bring down the ceiling, producing places where everyone does 7-out-of-10 work; since entrepreneurship is about going for world-class, keeping the ceiling open requires accepting underperformance and a lower floor as tradeoffs.

  “A lot of what happens in companies is that policies and processes — they're well-meaning. They bring up the floor, so no one actually does something really, really wrong. But what people don't see is, they also bring down the ceiling.”

Organizations accumulate harmful processes and meetings; periodic radical deletion is necessary to maintain efficiency and focus.

• Because people find it very hard to subtract and very easy to add, Shopify periodically deletes all recurring meetings as a ceremony, since the natural tendency to accumulate meetings only leads one way.

  “We periodically delete all recurring meetings because it seems very hard for people to subtract. It's very easy to add. That only leads one way.”

• When the ratio of referees to builders (critics to builders) gets out of whack—as with public-sector employment growth in Canada—productivity stalls and things grind to a halt, a pattern visible even in Canada's slow adoption of digital products like Shopify.

  “it's just pretty clear to me that if the ratio of referees to builders or critics to builders is going out of whack, things grind to a halt.”

• Friday afternoon stand-up meetings are one of the greatest accelerants for businesses, and the digital/remote version (a Slackbot prompting people to type) fails to replicate the effect, which is one of the problems with remote companies.

  “The Friday afternoon stand-up meeting is just one of the greatest accelerants for businesses.”

Engineers excel as company leaders because they bring systems thinking and the ability to make nondeterministic systems work.

• Companies are complex adaptive systems—automated, nondeterministic—rather than industry-applied versions of WWII military organizational structures; engineers running companies outperform because they come pre-equipped with systems thinking, and engineering for 30 years has been about making nondeterministic systems deterministic.

  “companies are complex adaptive systems, much more than being industry-applied versions of military or slightly more complex organizations of military service.”

• Making software is a craft, and countries like Germany, Czech Republic, and Poland are enlightened in making it part of an apprenticeship system; Lütke apprenticed as a computer programmer and considers this exactly the right way to learn, though it diverts talent away from building ambitious startups.

  “Making software is a craft.”

• Germans are blunt and have an innately higher quality bar with less tolerance for underperformance—products are either below the bar or world-class—whereas North America is better at quick iteration and being embarrassed by the first version then building from there.

  “I think Germans have a more innately higher quality bar and less tolerance for underperformance on that quality bar. Products are either below it or good, great, world-class above it.”

Founders and builders need ignorance and youth to pursue ambitious work; long education and pessimism waste peak productive years.

• Ignorance is usually useful for founders because you should be ignorant of the low odds at the beginning; this is one reason founders are often young, and a culture where people study very long (e.g., 32-year-old students) wastes the productive 20s when significant Nobel-Prize-worthy work is done.

  “This is also why ignorance is usually useful because you should be ignorant to the low odds in the beginning, one of the reasons why at least some founders often are young.”

• German schooling's emphasis on filling students with pre-packaged answers (and teaching Latin as the first extra language) is low-utility; Lütke learns the opposite way, needing a problem before he can learn its answer, and suggests starting with English instead.

  “Latin as the first extra language is just not highly utilitarian. Knowing Latin is very rarely the correct answer to questions you might encounter later in life... maybe start with English.”

Builders should trust their own insight and create what they love, not outsource vision to customer research or consensus.

• The silent killer for retailers is thinking they have to build products other people like; the most successful builders—those everyone in a cluster wants to be—build things they themselves would love, drawing on their own insight and authority, whereas asking customers what to build (a Lean Startup import) is an abdication of vision.

  “Thinking we have to build products that other people like. I think this is the silent killer.”

• Lütke designs Shopify's business and incentive systems so the company sits on the same side of the table as its customers—the best way to grow Shopify is to make customers more successful—which turns customers into the primary source of inspiration, as evidenced by product managers each maintaining hundreds of active WhatsApp conversations with fast-growing businesses.

  “Best thing we can do to grow Shopify is make our customers more successful because we are in this together, economically speaking.”

Venting, Chesterton's Fence, pricing complexity, immigration policy, and translation strategy involve nuanced tradeoffs requiring careful thinking.

• There is a significant, unacknowledged human need for venting, which is an original 'safe space' and important outlet; the problem of the early 2010s was that people ported venting online where a single take got retweeted forever, misunderstanding what was actually going on.

  “there's a significant human need — unacknowledged — for venting. I think venting is one of those extremely important outlets. It's an original safe space in a way.”

• The German word 'Verschlimmbesserung'—making something worse by trying to improve it—captures a frequent real-world phenomenon related to Chesterton's Fence: people don't know which parts of a large system encode important cultural or technical understanding versus which exist only because the system was built in a hurry.

  “Verschlimmbesserung is such a good word. What that means is, by trying to improve something, you made it worse.”

• Translations and classic works should be rewritten roughly every 25-50 years for the next generation because they otherwise become hard to access, and sometimes the English translation (e.g., Wittgenstein's Tractatus, which the translator clarified directly with Wittgenstein) is more readable than the original.

  “I'm actually a fan of rewriting books every — I don't know — 25, 50 years for two generations down the line because they just get hard to access.”

• Economists struggle with price stickiness because businesses are so different they are hard to average; much pricing strategy is 'aesthetics,' which is either an entire career of knowledge compressed into intuition or completely made up, and inflation tracking showed price-following behavior differed sharply by product type, margins, and how people consider buying.

  “businesses are just so different that they are hard to average out. There are a lot of businesses where their pricing strategy is aesthetics.”

• The Canadian backlash is not really against immigration in general (which has been very popular for 20+ years) but against adding roughly three million immigrants over three years while building almost no housing, which caused bad downscaling effects; the fix is to fall back on Canada's well-designed skills-based, points-based visa system rather than throwing it out.

  “most of the conversation that I see is not really about veracity of immigration in general, but actually about the fact that in this time of adding three million immigrants, we added almost no housing.”

• Canada has a lot riding on real estate, but real estate is only valuable to a second order—because of all the other things being valuable—so an economy leaning heavily on it rather than on building things is fragile.

  “There's a lot hanging on real estate, and real estate is not by itself... It's valuable to a second order because of all the other things being valuable.”

• Thomas Sowell's A Conflict of Visions provides a powerful prior for political conversations by offering a higher-order differentiation between people; Lütke holds the 'constrained vision' that humans are fundamentally limited—which he calls the best thing about humans—because the systems we build can then yield amazing feats of cooperation, making optimization of tradeoffs a mature way of seeing the world.

  “I just find that an incredibly insightful book by creating a prior to a lot of political conversations, like a higher-order differentiation between people.”

• Entitlement has no German equivalent word; Lütke frames gratitude and entitlement as two ends of a spectrum where, after any pleasant-but-imperfect experience, it is one's choice where to land—an important conversation he has with interns.

  “gratitude and entitlement are two sides of the spectrum. It's your choice where you are here after you have a pleasant experience or maybe with some downsides along the way.”

• Comparing your country to the United States is a bad idea for staying sane because America is genuinely exceptional in economic might; more actionable insight comes from comparing like-to-like, such as Germany to the Netherlands.

  “Comparing to the United States is a bad idea in general. Actually, it's the best possible idea if you're going for optimism, but it's not the best idea if you are looking to stay sane. America is exceptional.”

• A more efficient way to get good information out of meetings is to say high-conviction, incorrect things and wait for everyone to want to correct you—the same dynamic as deliberately saying something wrong on the internet to elicit knowledge.

  “One of my ways to get a lot out of meetings often involves saying high-conviction, incorrect things, and just waiting and seeing everyone wanting to correct me.”

• The future of e-commerce will not be strolling through virtual malls or porting Fifth Avenue boutiques online; instead VR will be about virtual avatars and talking to products, with furniture (placing a couch in your living room) being the clearest early use case, enabled by technologies like Gaussian splats that make digital twins easy to produce.

  “I don't think the future of e-commerce is going to be strolling through virtual malls or these kinds of things.”

• Founders with access to capital reliably underinvest in growth, because internet marketing is scary and getting harder, even though it is not yet priced out.

  “the people who have access to capital — they underinvest in growth. That always happens, too... it's not priced out yet.”