Tobi Lütke – Building Shopify and the Future of AI | Ep. 50
Building a life’s work, creating products people love, leading through the AI transition, and why the future belongs to original thinkers and small ambitious teams.
Tobi Lütke is the co-founder of Shopify, where he has served as the company's CEO since 2008.
Under his leadership, Shopify grew from an online snowboard shop in Ottawa, Canada in 2004 to the world's leading e-commerce platform, powering over 4 million merchants in more than 175 countries. The company went public in 2015 at a $1.27 billion valuation and has since grown to a market cap exceeding $100 billion. As a programmer Tobi has served on the core team of the Ruby on Rails framework and has created many popular open source libraries such as the Typo weblog engine, Liquid and Active Merchant.
We discussed building Shopify over more than 20 years, what it takes to sustain a life’s work, and why founder-led companies can move faster through major technological shifts. We also talked about how AI is reshaping software, entrepreneurship, and team building. Along the way, Tobi shared his views on originality, product craftsmanship, the future of work, and why he believes AI will create far more opportunity than scarcity.
Timestamps:
(0:00) Intro
(0:49) A problem worth solving
(5:58) Building products people love
(10:14) Why originality matters
(11:47) Conformity in Silicon Valley
(15:47) Founder-led companies
(18:44) Shopify’s AI transition
(23:52) Building with urgency
(26:52) AI for small businesses
(35:18) Raising the standard of living
(41:11) Predicting the future with AI
(48:14) Changing perception on talent
(55:34) Reading and curiosity
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Social clips
Building something great
"If you are building the same thing other people build, it can only be similarly good. It can't be actually much better. It can slightly look nicer, but you're bounded a couple percentage points either direction. If you want to build something great or much better, it has to be different. So this has to be your starting position."
The browser
Tobi talks about how people think we can’t do big infrastructure investments like we used to, which is true, but he argues it’s because so many of our most talented people have been creating herculean monuments in software instead of the real world.
“People talk about the incredible infrastructure we used to build in the ‘60s.
How quickly we built subways and now it takes forever and so on. There is an observed degradation of a lot of these kind of projects.
The web browser, Linux, all these kind of things are projects at a scale beyond what the pyramids are.”
Finding a beautiful problem
"One of the joys of life and one of the best things in life is like to find a beautiful problem that might occupy all of your life trying to solve it."
The founder’s presence
"I think in a way, people are somewhat overestimating the founders of companies, and massively underestimating what you can do when the founder is still present and in charge."
Tobi talked about how it's not that founders themselves are some kind of super heroes, but that the *role* of a founder is incredibly important because of what the natural moral authority allows them to do.
Transcript
Disclaimer: Transcript generated with AI assistance and lightly edited for clarity and accuracy.
The Romance of Life’s Work
Jack Altman
I am so excited to be here today with Tobi, the CEO and founder of Shopify. Tobi, before we start, I will say that when I was running my company Lattice, and now, you were one of the founders that I most looked up to. So many things about the way you operate, the way you’ve run your company, the changes you’ve made over time… It’s the top of the top for me, and I feel super lucky to be doing this with you.
Before we get into AI and Shopify, I want to learn a little bit about you and your psychology. You’ve been running Shopify for over 20 years, and from what I see, it seems like you love what you do, and you’re as energized by it as ever. It seems you’re as passionate about the future as ever, and I think that’s really hard.
Having a life’s work is this romantic dream for a lot of people, and I just think it’s very hard to do in practice, because people either fall out of love with their work, they get bored, they get tired. On top of that, being a founder CEO of a big company is not even the easiest type of thing to have as life’s work. My work now as a VC would be much easier to do for 30 years. So I’m interested in how you are able to bring, and seemingly grow, your love for what you’re doing after two decades.
Tobi Lütke
That’s such a wonderful question. Thanks so much for having me on the podcast. I’m super excited we get to do this.
Part of the reason I wanted to start a company is because I found in my teens that I have an extraordinarily hard time learning things where I haven’t basically experienced the problem they solve. The way math was taught in school—here are the steps, here’s the formula—I actually had to go and figure out, “Okay, what exactly is trigonometry useful for?” I started by tricking myself into finding a useful problem that involved trigonometry, after which I felt I could learn it significantly faster than everyone else because I was so motivated.
Karl Popper said one of the joys of life, and one of the best things in life, is to find a beautiful problem that might occupy you all of your life, trying to solve it. And if you’re so unlucky to at some point solve it, it will have plenty of delightful problem children that you can dig into. First of all, I think this is a beautiful way of thinking about life’s work. But it also just works specifically well for me, because I love learning things. I love challenging myself. I find myself, to myself, very interesting. Almost my favorite thing is when I want to do something and I can’t. Because you find the limits, and then you can have this conversation with yourself.
There’s a very simple recipe to success that everyone intuits or knows, but maybe hasn’t spent enough time following through on. Success is really simple. You have to figure out what it costs, and then you have to be willing to pay it. Very rarely does this come in the form of money. It usually comes in the form of time commitment and
Jack Altman
Discomfort.
Tobi Lütke
Discomfort and these kinds of things. So I seek problems. I love computers. To stay with the example of trigonometry, it turns out that the very early video games like Wolfenstein 3D are basically just trigonometry. Once you realize this and play with these things, they become delightful, and you learn the next thing and the next thing.
I wanted to start a company because it was the right time of my life. I had just moved to Canada from Germany. I didn’t have a work permit, so I couldn’t work for anyone. I needed something to do. My wife needed lots of time for her degree. I thought, this is a good time to try it. It’s probably not going to work, but I will learn a lot. This has been a powerful way for me to motivate myself.
Jack Altman
As you think about this, are there things other people can do to more likely stick with and enjoy their life’s work? There are a lot of people who enter a career, a profession, whatever, and they love what they’re doing. As time goes on, barnacles kind of attach to the ship, and cruft builds, and responsibilities grow, and your job evolves, and you end up doing something that you didn’t start doing. People sometimes don’t know how to shed all of that weight. You, as much as probably anybody in the world, have the potential to have all of that around you.
You’re a public company CEO, you’ve got tons of employees, you’ve got all these responsibilities. So it’s possible that you could be encumbered by all these things, but you somehow haven’t been. I’m curious if there are learnings for everybody, no matter how many or few barnacles they have. What can you do to keep loving what you do?
Tobi Lütke
Look, I certainly collected barnacles around certain times in my career too, where I fell into the trap of trying to live up to people’s particular expectations, more in the department of aesthetics. I can only call it an aesthetic because people say things like, “This is what CEOs are like. This is the behavior that a CEO should display. You’re supposed to be a statesman. You should travel and kiss babies and whatnot.” That sounded pretty inefficient from my perspective. But I guess at some point, you just get whittled down and you try all these kinds of things, and my life was miserable too.
Again, this is sort of junk science, a little bit. But what I’m pursuing here is trying to make a beautiful product. I just think we need to create products that are joyful. One of my favorite quotes is by Kathy Sierra: “Don’t make better cameras. Make better photographers.” That’s very deep to my psyche. I feel through beautiful tools you can inspire people to be the best version of themselves. Induce more ambition, induce more skill, or at least induce more ambition for yourself to develop skill beyond what you otherwise would do.
So I want this to exist, and this is just my guiding post here. It throws off all these problem children which are interesting, which then challenge me. You’re talking a little bit about calm. I’m not a terribly calm person either, but I actually don’t want to dial down my calmness. I want to channel it into building something.
I’ve just found that almost all the mediocre products in the world remind me of room temperature. It’s the middle temperature you get when no one really cares. It’s the default setting of a thermostat. Almost every great product is forged in some kind of furnace, some kind of temperature. You’ve got to put in every energy source to produce that kind of heat.
Jack Altman
Do you think that basically has to start from love for the customer? You seem to love your customer.
Tobi Lütke
I don’t know. The greatest gift… people make great products, I think, without that crutch. I think if you have it, it should be an incredible boon.
Jack Altman
You think you can be a great CEO and not love your customer?
Tobi Lütke
It depends on what great CEO… I don’t know. I’m an engineer. I read lots and lots of books about how to make great software. You know what? Many of these books, it’s really funny. When you actually check what was the project that they all worked on when they figured out the design patterns of modern software, it’s like the… Pennsylvania payroll system. It’s just not the most inspiring project. But it turns out, I think work is what you make out of it. If you just default to, “Hey, let’s actually build something that is really meaningful, and we all learn a lot about,” I think it can be done in any realm.
I have a massive benefit, and really one of the greatest things. I tell people this in interviews when people are thinking about coming to Shopify, I point this out. One of the greatest gifts that this company has is that all of our customers are inspiring. They are just remarkable people, doing an incredibly courageous act of starting a company themselves.
The people who flock to come to work for Shopify are people who actually have experience starting a company, or have maybe a family member or at least a deep appreciation, or in fact want to do it in the future.
Jack Altman
People who have been your customers in the past.
Tobi Lütke
In many cases. There’s just something wonderful about… Shopify feels hopefully very fresh as a company. There are no tree rings that you can read about its age. But it has been around. So therefore when we do our annual summit where we all get together in Toronto for a week, there’s going to be people who work at Shopify who weren’t born when I started the company. It’s like, holy hell, has this been a little bit of an institution.
Jack Altman
Especially now, kids are so capable at young ages of being productive.
Tobi Lütke
Absolutely. I think finding the challenges is useful, and tapping into… I found it doesn’t work when I’m trying to be different. But what definitely works is if I take the energy that I have. I have such a deep discontent with bad products and software and so on. I want to solve this problem.
You worked for a long time on HR software. We built HR software inside of Shopify because we can’t find the one that we want to use, and because we see ourselves as tool makers and we solve these types of problems. That also means I’m going to spend half a year learning everything there is about how to build this type of software, so I can work with a small team on the side to make something better.
Jack Altman
And I imagine now you’re able to do so much more of that with AI coding. I love it.
Tobi Lütke
Now it’s crazy.
Jack Altman
One last thing here. You talk about wanting to build great products, but you’ve also spoken about wanting to be original, probably to a degree where I imagine you’d rather be original and good rather than mimicking and great.
Tobi Lütke
100%. In fact, what’s even better is: be different. Because, axiomatically, if you are building the same thing other people build, it can only be similarly good. It can’t actually be much better. It can maybe look slightly nicer, but you’re bounded a couple percentage points in either direction. If you want to build something great or much better, it has to be different.
So this has to be your starting position. If it then converges on the same thing, you have learned something potentially from first principles about why the solution is the one that everyone has converged on. If it gets worse, you actually learned something more important, because now you know, “Hey, your theory here was wrong.” You had an assumption which now has been validated. That learning is the thing from which you’re going to pull so much value in every other realm now, because you have a clearer idea about how things actually work.
I think the null results in science are massively underrated. Ideally then you don’t ship it, because the world needs better, not worse. We have tried to eliminate the term “failure” in Shopify and just call it the successful discovery of something that didn’t work.
Originality and the Valley
Jack Altman
I’m curious if you’ve experienced this. You obviously spend a lot of time in the Bay Area, but I wonder if it’s different for you being in Canada. For me, over the last 13 or 14 years in the Bay Area, I have definitely felt a trend towards herd mentality.
I think there was more originality in 2013 when I moved than there is now. I imagine there was more in 2003. I bet you there was more in 1995. It feels like the trend line is professionalization of the industry and the mindset. I’m curious if you experienced it the same way, and if there are things that people can cultivate to free themselves from the sort of mimicry shackles.
Tobi Lütke
Look, you can’t help but be affected by what you see around you. The best and the worst about the Valley is that everyone’s working on interesting things. But of course, that causes priors to be pre-installed when you start on a project. What’s amazing is when you see children interact with things like AI. They will use it so differently from how you imagine.
It’s worth aspiring to have this free mindset of just trying to take orthodoxy or the obvious path off the table when you start, because the forces of, especially teamwork, will always cause a convergence on the safest path. I think it is an advantage to be outside of the Valley. You just have fewer prearranged priors.
In fact, a really funny effect was when I went to the Valley as a visitor and met with people and took them for coffee. I was trying to figure out how a company should work, and I asked questions. Then I went home, and I had the entire flight to make my notes. I, again, have sort of a bias towards doing it differently. So I take what I hear and try to figure out, “Okay, what would a Shopify version look like, and what would be better of this system?” And make it different, because I felt that’s what you have to do.
But then I realized, only very late in my career, that I never actually got the real story from everyone about how they work internally. I got everyone’s ambition or highlight reel, because that’s what they really share. That plus the ability to then make edits to try to improve it further meant that very often we actually found ourselves doing the things that we thought someone else invented, actually. They might never have implemented it. Maybe that was just the thing that they had the most recent meeting over. So I think that helps a little bit, distance.
Additionally, I should say, I think the world fundamentally, Silicon Valley specifically, has now for a decade and a bit declared war on any kind of distinction. All the talk about diversity was very much about eradicating, kind of, eccentricities and distinction. People are not allowed to be just quirky or funny with off-color humor. I think in the rest of the world that is a little bit more intact, and you just encounter characters. There’s often more appreciation of, “So and so is just a little bit crazy, and you know what? That’s really good.” I think that’s coming back again a bit, and so that’s going to, I think, help a lot.
Jack Altman
There was a big moment where all tech leaders had to go through the sort of political back and forth, and “What are we talking about at work, and are we focused on work, are we focused on other things?” That was not easy for anybody. It wasn’t easy for employees. It was hard for everybody.
Tobi Lütke
It was hard because everyone, literally everyone, wanted to do the right thing, and we generally all agreed even on the identified problems, but just not the solutions that were peddled. They just caused distraction, or an erosion of this thing. A company, I think, should resemble an island of misfit toys much more than a convergence on one preordained truth.
It’s totally worth exploring any alternative on this idea, on the spectrum, and then the results will tell us what works best. I just didn’t like when people were saying, “Hey, we are deciding for you if you can have distinction in this company.” That didn’t work for me.
The AI Mandate
Jack Altman
You’ve gone through another employee mindset change in the last couple of years with AI. From what I recall, you were one of the first CEOs to say, “Everybody, however hard you think you’re adapting, triple it, quadruple it.” I’m curious about that journey. How did it go? Is it still going on? Do you have it where it needs to be? Is there an end to how AI-pilled we should be?
Tobi Lütke
I’m actually really proud of how Shopify is with this. I think this worked extremely well. I made a choice. There’s a type of situation you get in running companies, or any large group, where something becomes clearly true and then you need to make a decision. First of all, do you act on it?
Sometimes people are already feeling bad. In fact, very often people fail the figure-out-what’s-true part. I’m sure BlackBerry thought they were doing really well. I think they had their best year of sales ever the year the iPhone was released, and they thought they were pretty safe.
Jack Altman
Sometimes it’s not that people aren’t smart enough to see it. Sometimes they don’t want to believe it or see it, because the implications are—
Tobi Lütke
They’re not predisposed for it. They maybe, through no fault of their own, create an organization where every layer inside of a conversation prioritizes kind lies over hard truths, often because there’s a culture of everyone being nice to each other.
Jack Altman
There’s also, when you have a big enough organization—you talked about this with how teams make originality difficult—with big groups of people, it’s hard to get everybody to agree to go through an uncomfortable change.
Tobi Lütke
In a way, people are somewhat overestimating the founders of companies, and then they are massively underestimating what you can do when the founder is still present and in charge. It’s not so much about the individual as it is about the piece of infrastructure, the slot of having the founder-slot filled. It’s an odd distinction, but as the founder, you get so much social credit for having started the company. You can just invest this.
Jack Altman
It’s a bank.
Tobi Lütke
It’s like a bank. Every time someone onboards, they hear how the company was created, and that deposits a little bit of credibility, tokens I suppose, into a virtual bank account that is hard to reason about but sort of virtually exists. And then I get to cash that in.
Jack Altman
You can spend it on big, important changes.
Tobi Lütke
And change management, that’s one of the best ways. I can speed up something that would take years of small culture change or internal training with sometimes a memo. I take that really seriously. It’s not the easiest thing. It leads to more work or sometimes unpleasantness. But I find that is what I owe the company. It’s my best way to help the mission.
So when something like the AI thing becomes true, we are saying, “Hey, we have two people. They were both equally good programmers 15 minutes ago, but one of them has completely jumped onto the AI train.” Back when I wrote this, it was really hard to actually get real value out of AI. It was more that the premise of AI was important.
What do we do in performance reviews? The moment we said it… It’s an impact rating. It’s called net impact reviews at Shofy. What’s your net impact on the company and the mission? It’s just very demonstrably true that one of the people was of more impact. The moment that is said, it feels incredibly unkind not to tell people. So, “Hey, let’s write it out and send it to everyone.”
Jack Altman
It’s really unfair if you’re like, “This person has the exoskeleton on, and I’m not going to point out that the exoskeleton’s making him 10 times faster.”
Tobi Lütke
If we act on this thing, we should tell people. And so we did. I included a bunch of other things that are true. I’ve invested lots in making sure that everyone has everything they need. We have an unlimited token policy that I’m sure your brother is thrilled with. We want people to tinker. We want people to play with this. We want people to use it a lot.
It’s super good. It skyrocketed the second this message came along. What Shopify did with this, the speed of diffusion of this tool was remarkable. I’d like to think Shopify is predisposed for this. We have “thriving on change” as one of our core values, and we really mean it.
Token Economics
Jack Altman
It’s good that you talked about net impact. One of the blunter instruments that’s getting used a lot right now is just tracking token consumption. People are like, “I want to see token consumption go up 20% a month.” There are founders who say that. It’s not an obviously terrible idea, in the same way that judging people by lines of code… We could debate, is there anything to it? Probably something, but…
Tobi Lütke
I think it’s fine. At some point we had a leaderboard and so on of token consumption. Of course, that leads immediately to bad effects, so we don’t have that. On Vault, which is our internal system—it’s probably not a term that anyone’s ever heard, but it’s our internal wiki and everything—on your profile, it shows what your token usage is and which percentile you are in your department and group and so on. Just because that’s interesting, because we are tracking it. We have to, because at some point we have to allocate finances to OpEx and whatnot. Therefore, we show it to people so that they know.
Jack Altman
This is probably different numbers because you’re at such a scale, but there are private companies whose token spend as a percentage of revenue is going into pretty wild places right now. I think that’s fine if you’re an earlier stage company and you’re just trying to win the market at all costs. But I am curious how this might play out. I’m sure even you’re seeing token spend at numbers that are probably not a huge deal relative to your revenue, but—
Tobi Lütke
It’s a huge deal compared to revenue. It’s unbelievable.
Jack Altman
It’s a many percentage points kind of thing?
Tobi Lütke
It’s extremely high.
Jack Altman
It’s many tens of percentage points for some of these private companies. So I am a little curious. Right now we’re in that part of the journey with AI coding where it’s just so valuable that people are like, “I have no choice but to spend, because it’s too productive.” I do think we can’t spend 70% of revenue on AI tokens forever and have valuable companies. So how do you think this might go?
Tobi Lütke
It’s complex. I’m very grateful for the stage Shopify’s at, because we are a profitable, public, trusted company. Right now, we really, really like the tokens we are buying. They’re incredibly valuable, and we are doing incredible things with them. It accelerates us in roadmap, and therefore in ambition. I think it just causes so many good things.
Jack Altman
You’re getting leverage on your spend.
Tobi Lütke
It’s a no-brainer. I have a very high opinion of markets. Markets are extremely good. They will figure out what the correct clearing price for these tokens is, and right now there’s few providers and maybe there’ll be more in the future. There’s all sorts of interesting moves around distillation and so on.
I think companies will know how to wield these tools within their budgets. We are actually doing a good deal of this kind of thing as well, but we are still charging ahead because frankly, we like the tokens we are buying. It’s that simple.
Jack Altman
I agree, and my instinct is that it should go down. But there are possible worlds where price goes up.
Tobi Lütke
I agree. Honestly, no one knows. We are 10x-ing the amount of tokens we want every year right now, and I’m sure that’s going to go up. We are 3x-ing the amount of GPUs that we are putting into the world. Those lines are not converging anywhere good at price savings.
Small Teams and Pace
Jack Altman
Given that AI coding is dominating so much, what are the biggest changes to team design? There used to be this EPD triad, and it worked a certain way. There were certain ways that roadmaps were built and reviews happened, and people would go out and talk to the customers and bring that back. What is it now? What’s the most fundamental molecule?
Tobi Lütke
The small team is my bet. The 3-5 people team, which, funnily enough, has always been Shopify’s bias. This is quite gratifying. The reason why we had to very often go past it now is because you just need a lot of specialized skills, at least for certain moments, on the teams.
Your example is a great one: talk to the customers. It’s having someone who actually does the customer research and talks with people. What we always did is, we co-located people from the support org. We routed them all the tickets and put them on the teams, which was an amazing way to do it. Now, the agentic harness around our teams is actually routing really good summarizations of what our customers say automatically back. So that’s now available to everyone, and then everyone can do more. Everyone is a 7 out of 10 on every skill now. That’s really helpful because it allows you to make teams smaller.
The thing that we are working the most and thinking the most around at Shopify… I’m big on pace. Pace has to be induced, otherwise it’s received. Parkinson’s Law is one of my most recommended books, and I have a 1970s, or ‘60s, copy of it that I give to everyone, my executives. I own many of them of the original run, because it’s so meaningful.
Jack Altman
And the law is basically…?
Tobi Lütke
“Work expands to the time allocated to it.” The book is 60 pages and full of these kinds of wisdoms. This is the most important one.
Jack Altman
So one of the most important functions of a leader is to just compress time windows.
Tobi Lütke
Yes. To the plausible. It’s not that you just give any deadline and anything happens. This is why it’s really helpful to be very technical and understand all the tasks and skills. You can ask for something that has a 50th-percentile chance of being the right ship date. Then everyone gets to complain about the crazy founder, which is great. Do whatever venting you want. And then you do, very often, some of the best work of your careers. That’s why people actually flock to these types of companies, because you’re surrounded by the other people that you can go on such crazy journeys with.
The main point here is, I run the company by the six-week review cycle, where we go through all the projects and spend the time with engineers and champions and PMs. That existed to set a pace, a pace floor, of a six-week cycle, which was faster than we instituted it. Because if you don’t do it, you are run by the quarter.
The moment in a PowerPoint… First of all, first flag. Second flag is when someone uses the word H2 or H1, which means first and second half. You’re actually fucked. You actually really have to do something drastic.
Jack Altman
Like, what about Thursday?
Tobi Lütke
Exactly. So you do this, and now I think actually a six-week review is way too limiting. We can do so much more, and we are trying to figure out what is replacing this.
AI for Small Business
Jack Altman
I want to talk about your customers and what AI means for them. We were talking a little bit earlier about how there’s a lot of young people right now who have fears of a permanent underclass. The idea being, you’re just entering the workforce, you don’t have any accumulated skills or credibility yet, and now you’ve got this AI thing, which in some ways is empowering, in some ways seems scary. The net is that there’s become this meme of people being afraid of ascending through the career and financial heights that they want to. You talked about how that’s not necessarily the experience your customers are feeling.
Tobi Lütke
No. Our customers are wonderful, and they are entrepreneurs. They are courageous people who are putting themselves out there. They build businesses. They create employment. In one way, it’s clearly a particular slice of people who would do this. But it’s actually much bigger than people think, first of all. It’s incredibly diverse.
Shopify’s customers go exactly with a population map. It’s great businesses in the smallest communities. It’s point-of-sale stores in the town center of tiny little townships, as well as Alo Yoga. So it’s incredibly different, and it’s cosmopolitan. It’s big business, billion dollars of business. It’s the people who are trying to build a thing in their lunch breaks to make ends meet, or actually because they have an ambition that they want to become entrepreneurs.
So what’s funny with the way the AI conversation is projected—how it’s reported on social media and so on—is it just doesn’t… We can’t access it anywhere we look.
Jack Altman
You’re saying Shopify’s data and experience doesn’t map to this doomer stuff.
Tobi Lütke
It absolutely doesn’t. What we hear from everyone is, “Hey, you guys fix computers.” You techies talked about computers being these incredible things that can do anything, and—
Jack Altman
And it was so complicated.
Tobi Lütke
And then we try this, and I don’t know what… You guys just sound unhinged. And now we can talk to it, and it just does the thing, and it’s incredible. It just works with me. I’ve expanded my business, and I’ve hired all these people now. So it fits into Shopify’s vision because we want lots and lots of small companies. By the way, 60-80%, depending on the country, of people in the economy work for small businesses. They are incredibly precious and important.
Jack Altman
So what should AI mean? If you’re a small business owner, you’re starting a new small company, logically, what should the change be as a result of AI from 2023 versus 2029? What’s the fundamental change?
Tobi Lütke
I think you should sign up for more. You can follow your ambition. Further, if you would poll our customers, I think they believe in a permanent upper class. I think we’re going to get to a point where many, many poor people can self-actualize.
There are two pieces of data that I find incredibly meaningful. One is that every 36 seconds, someone gets their first sale. While we are talking here, think about what that means for how many people just became entrepreneurs. The other is more of a higher-level observation: every single time we ship something where we know it meaningfully changes something about the early journey—the sign-up, the complexities, the questions, the friction in the business—each of them can be best thought of as a hurdle that someone has to jump over.
Every single time we manage to make the hurdle slightly less high because we made something just vastly better—we now let you register domains or easily transfer them, or these days have an AI that can share your browser tab and help you set up GoDaddy—every single time we do this, more actual businesses come out of it, which then provide employment and so on.
People churn out early in the process if something happens that ends up being a governor for them. They null out, they give up, they stop, and then the entire business doesn’t exist. AI is just… There has never, ever been such a thing that can be so supportive of people.
Build Me a Business
Jack Altman
It occurs to me that last year on this podcast, I asked somebody this question. They were a fun person to ask, but you’re probably the number one person in the world to ask this to. It’s something that I’ve been thinking a lot about. What has to be true for us to be in a place where you can prompt, “Build me a business”? How far are we from, “Hey, I made this widget. Please go make me a million dollars. Thanks”?
Tobi Lütke
It’s my favorite idea as a replacement for a Turing test, which we of course sailed past with oddly very little notice.
Jack Altman
It is crazy.
Tobi Lütke
Acting in the real world, starting a business that people find meaningful enough to vote for to the tune of a million dollars, is a wonderful test.
Jack Altman
Marketing it correctly, getting the right sourcing, knowing what things to prioritize, does shipping matter?
Tobi Lütke
I think we are actually getting there. I want to be a supervisor role. You can obviously use Shopify without having products. We help you find manufacturers if that’s what you want. There’s an entire thing called Collective where manufacturers offer their products, which you can then use in your Shopify store. So if your particular skill set is marketing, you can come to Shopify and try your hand at entrepreneurship.
Very often, I think about half of Shopify stores end up being created by people who have done an online store, or at least a business, before. People just try and build things. People should have a product that the world wants. Ideally come up with some unique take on something. There’s so much white space out there.
Jack Altman
But you think AI could do everything else?
Tobi Lütke
I think AI should then do absolutely everything else. In fact, it’s literally what our product’s ambition is—to be maybe the vessel for AI, the brain or the exoskeleton around a model—to basically conspire to do absolutely everything, so that if you show up with a product, you can start a business.
Jack Altman
Just to extend the idea a little bit more—not to go into too crazy of a sci-fi place—is it possible that it could also make the product? Let’s say I wanted to say, “Hey, just go make me a million dollars.”
Tobi Lütke
Anything in digital products—
Jack Altman
Go make me some e-books.
Tobi Lütke
Exactly. Actually books, there’s print on demand for books, for T-shirts. Honestly, additive manufacturing is getting extraordinarily good now. There’s lots and lots of great contract manufacturers for this kind of thing, like CNC and 3D printing. And then we are looking at humanoid robotics, which… There’s a lot of tailwinds to the fact that making the products is going to become much more tractable.
Jack Altman
This will probably be 10 years till I’m asking guests this, but the prompt, “build me a house,” and then the robots just go dig up what they need and put it all together…
Tobi Lütke
I think it’s a world we’re looking at. I don’t see how it couldn’t get there. This is what I dislike about the doomer conversation, or the permanent underclass, or whatever people want to call it.
Jack Altman
How are we not headed to a world of abundance?
Tobi Lütke
Exactly. That then goes into this sort of, “we eliminated all the jobs.” You know how good we are at making up jobs? There are so many examples of things that are just delightful.
I have friends… OpenClaw came around, which we didn’t think we needed, and then it ended up being one of the most compelling things. One thing led to another, and now they have a warehouse full of 3D printers and things. Suddenly you have a J.A.R.V.I.S. to whom you can say, “I would like to do this project, and I bought this crazy 3D scanner from Facebook Marketplace, and I just put it there. I don’t even have the software for it. Just go hack it and figure out how to help me.” It’s just like, “holy crap”.
Jack Altman
I asked Kyle Vogt from Bot Co. I was like, “Will we get to a place where I can just text my robot to order Instacart, get the steak, prepare it, serve it, slice it up, clean it all up?” He’s like, “Yeah, that’ll happen.”
Software’s Hidden Wonders
Jack Altman
At Benchmark, I spend probably three-quarters of my time in software land, but sometimes I do step back and think—and this is maybe a little easier for me when I’m not in San Francisco and I’m touching grass in some other city—”Okay, what’s actually going to raise the standard of living for everybody in the world? We need more and better houses. We need better transportation. We need better food. We need better healthcare. We need good education.” All these things that aren’t software.
Sometimes I think about some alien watching us all and we’re just sitting behind our little boxes typing. Everything’s going better in typing land, and it’s all bopping about in software land. But we really do need it to get into the physical world. Because the standard of living, on some level, is all physical.
Tobi Lütke
Absolutely. It completely is. I think this is actually the missing ingredient. People talk about looking at the incredible infrastructure we used to build in the ‘60s, or just even before that. There’s the Hoover Dam and this kind of stuff. Lots of individual stories about these infrastructure projects, how quickly we built subways, and now it takes forever, and so on. There is an observed degradation of a lot of these projects.
It’s multifactorial. There’s not one reason behind it. But one of them that really is true is because we are building the modern wonders, which are no less impressive, entirely in software. The web browser, Linux, all these kinds of things are projects at a scale beyond what the pyramids are, and easily so. Without compulsion and just by volunteers, sometimes people who have never met each other in the open source world, or at companies building things like Google or the social networks, they’re incredibly, incredibly impressive pieces. If they had physical manifestations—
Jack Altman
They would be the most impressive thing in the world.
Tobi Lütke
You go to something like a refinery and you see the pipes and so on. It’s so impressive. It’s not even in basis points territory in terms of complexity compared to a browser. We just don’t appreciate that.
Jack Altman
I don’t think I appreciate a browser. Is a browser near the top of complexity?
Tobi Lütke
I would put it… it’s one of the wonders of the world, for so many reasons. It could never, ever be introduced today.
Jack Altman
Can you give a small flavor? I’m sure it’s hard to even explain why it’s so complicated, but can you give a flavor of what makes it such an unbelievable thing?
Tobi Lütke
In so many ways. Okay, you go to a website. We don’t trust that website. We just run code. It’s actually your computer in front of you magically reconfiguring itself into someone else’s vision for what should be there, without limits. You download software that then just exists for this one moment to do literally everything.
It’s self-responsible. Shopify is an over $100 billion market cap company hosting millions and millions of businesses that might otherwise not exist, and all of this just happened because anyone can just put a server online, and get an IP address automatically. It’s insane.
Jack Altman
And it all hangs together. It doesn’t come down. Why doesn’t it all crash?
Tobi Lütke
It’s the most reliable thing. No app store on planet Earth would allow the web browser if it were introduced today, if it didn’t exist. No one would allow this because it sounds like an insane pitch, yet it exists and we just don’t think about it.
The font rendering alone is one of the most complex things. The font rendering alone is a Turing-complete system, just because we want to be able to read text slightly better than our displays can allow them. It just keeps going and going. I can go full nerd-core on this, but the larger point is the following.
We have not stopped, as humanity, building incredibly impressive infrastructure. What has changed is the infrastructure that needed building over the last 30 years. The reason why other infrastructure didn’t happen is because the people who could—
Jack Altman
So much went into this.
Tobi Lütke
What planet Earth needed from us was a digital infrastructure.
Jack Altman
But imagine if all those people worked on robotics.
Tobi Lütke
And this is happening now. We are—
Jack Altman
This is happening with AI.
Tobi Lütke
It is happening with AI. All the software we built was a bootstrapper for AI. Software becomes, due to this achievement, something that can become personal again. Now you can have basically a web browser, but the websites don’t even need to exist for what you would like to see.
Jack Altman
It’s so true when you say it like that. The easiest example to identify with for most of us is probably an iPhone. We’ve probably all just, randomly one day, looked at our iPhone and been like, “How is this possible? How does this thing exist?” It’s crazy.
Tobi Lütke
As beautiful as it is, and as reliable as it is, and as personal as it is. The iPhone is a lucky exception in that you can appreciate it as a physical thing. Everyone is right when they say, “Why is everything just standing still or not getting better around me?” Because from our ability to observe it, all the infrastructure is digital. But we are almost done with this. We are at the end of the opening chapters. Now I think we will see vastly more impact in the real world.
Jack Altman
We put all of our energy against this thing because it was the foundation, but now all these people will, in some sense, be free to not write software.
Tobi Lütke
That’s exactly right. So I think we will have a huge influx of the brightest and most creative and driven people to make things which are going to be much easier to relate to and have much more direct impact on people’s lives.
Reading the Future
Jack Altman
How important is it for you, as CEO of Shopify, to have an opinion on where AI will be in two years? There’s one worldview you could take, which is, “This is so unpredictable. I’m going to take it as it comes. I’m going to try to know six months ahead, but I’m going to do what I can do.”
And then there would be another which is, “Now I’m actually going to spend a lot of time with the labs, and I’m going to try to have an understanding of two, three years out and try to care about the farthest out I can see.” What do you think is the right position?
Tobi Lütke
Yeah, if my friends would listen to this question, they would laugh, just because it’s my predominant obsession. I try to have as many data points on as many people, which I can then try to match to the right superlinear or sublinear curves, and just figure out how they all connect and what therefore will happen in the future. To me it’s the most fun game in the world: to have a pretty clear-eyed view of what the future is like.
Jack Altman
What in particular are you trying to figure out?
Tobi Lütke
The AI memo is a good example. It was probably slightly too early to write it, but if you read it now, it says nothing that would be surprising. So being able to give my company the gift of a head start, that’s what we are trying to do. I can tell everyone something that is not quite clearly true now about the importance of these systems. We can rebuild our systems to really reinforce this and support everyone in their own tinkering and exploration. That means our view of the future is going to be more accurate, and so will the things we are building. Because you’re always building for a future point.
Software is getting faster to build, but you still have to aim at a future point of value. It’s not our customers’ job to tell us what they need. It’s our customers’ job to tell us what the problems are that they’re experiencing, and we fall in love with those problems, adopt them as our own, and just solve them in an ideal way. But that’s our job, to figure out what the ideal way is. That comes into contact with the customers, and they give us further feedback for refinement. But in my mind, it’s a complete abdication to just build what your customers are asking for. It’s an abdication of product responsibility.
So it’s hugely important. I try to live in everyone else’s relative future, so I do a lot of it. While it’s incredibly fun and helpful to talk with the labs, and sometimes there’s really important information you can get from this, what I found, and we touched on it earlier, is that one of my favorite things, especially for product teams and engineering, is to hire people who actually know Shopify really well from outside. Merchants make some of my best product managers, because they actually understand what the software feels like when it’s being used.
It’s the same with people who build apps on the Shopify platform, having them come to Shopify to help make the app platform better. I actually don’t even think being in a lab is the best position. It’s actually using everything and paying a lot of attention to how everyone else uses the gifts that the labs release, and then being in the conversation, which usually happens on X, about what everyone’s figuring out. Building something and seeing everyone find it useful, I think this sort of learning by doing is actually how to get the clearest view of how everything works.
Jack Altman
Does that give you a clear view on the present, or does it also give you a clear view on what’s coming in a year or two?
Tobi Lütke
If you do it over a while, you get—
Jack Altman
You see a trajectory.
Tobi Lütke
You get trajectories, and the trajectories have a point. If you are exactly on the state-of-the-art meta of the best thought on stuff, and you have other data points, the future gets very simple to predict. Now it’s the hardest time ever to do it because right now the time horizons are so short.
I did this very same thing throughout my entire life. It used to be that the future was absolutely trivial to predict. You just looked at the first couple numbers on mobile browser usage, and you knew what was happening on a cell phone and that we needed to make mobile websites. That just sounds insane now. But at some point, people didn’t believe that.
Jack Altman
Are there parts of AI right now that you think are under-hyped in terms of capabilities? And are there parts that you think are over-hyped?
Tobi Lütke
Obviously, the labs really care about programming because that’s the problem they need to solve for themselves. Again, it’s always easier to build for various reasons. Opus is unbelievably good at programming. Right now it’s easy to go from that and assume it’s equally competent in everything else. Quite often it isn’t.
If you want to discuss how to do a public talk or something, it just doesn’t have great theoretical rooting of this and why. It knows about all the different ways to construct tension and so on, but it’s not able to then look at something and make it meaningfully better. Whereas even with an incredibly well-optimized piece of code, it often finds abilities to do better.
What is happening a lot is that we are bringing more types of problems into the domain of programming, which is really what OpenClaw is, if you think about it. Make it a file system, give it tools like a programmer uses, make a couple of files, and in the files just tell it the soul and the memory and so on. Then it uses the normal programming tools to interrogate this. Because it stays a little bit in the domain of programming, it now actually is remarkably better at this other out-of-domain thing, which is really funny.
I think we should assume though that we are going through the entire radial chart of things that are valuable and bringing them to the same point we’ve honed programming to. So there’s a bit of over-hype in having to work so hard on bringing things into the programming domain, because all of it is just going to get much, much more natural and easier as the models appear.
Where it’s under-hyped is just in deployment in companies, and what role it should play. There’s a huge—
Jack Altman
No one’s using it enough.
Tobi Lütke
No one’s using it enough. Partly because everyone just starts with, “Hey, help me do the things that I’ve been doing all along slightly better”, or actually vastly better, which is valuable, obviously.
But if you do the more first-principles thing… If AI had been around ever since Alan Turing first wrote about it and had just worked, and we’d be in the presence of these superintelligences all the time, and we would just invent the job we are thinking about right now, how would we do it? Just invert the whole thing.
It’s so much more fun to have those conversations. I’m exceptionally excited about this because I think it will create the environments that the most creative and best people will really appreciate, because everything around them happens at the speed that they want to work. That has never been true for any company that required some bureaucracy for doing stuff.
Talent and Going Public
Jack Altman
On the point of talent, have you changed anything about the types of people you’re looking for, pre and post-AI? Are the people who were successful before still the most successful people, or is there any attribute that you are scanning for in a different weighting than you used to?
Tobi Lütke
It’s fascinating. This is actually really changing all the time, and I’ve had to change my mind a couple of times. I think the best distinction point is… Shopify is 20 years old. The average age at Shopify is somewhere in the late 30s, which I think is still pretty good.
This is one thing you have to look out for as a company. There are some companies which just age themselves 12 months a year, for various reasons. That’s probably a problem at some point when a lot of new things happen. So massively restarting the internship program has been really helpful. We take 1,000 interns a year. We’re close to Waterloo and work with Waterloo, so it’s great. Making sure that the interns are not just the students now, but also the teachers, because they are just so AI-native that it was really helpful.
It’s also interesting because initially I had the thought that… There’s fluid intelligence and crystallized intelligence, basically knowledge and curiosity-driven willingness to learn. Often early in your career you have no knowledge, therefore you’re all fluid. And then AI was super new. The first people would just flock to it and immediately got value out of it, and that was super exciting. I had the thought that maybe that really tilts in their direction.
But then as the system got firmed up around the coding harnesses, Claude Code, Pi, and all these kinds of things. Programming is not so much the task of typing. It’s really understanding the problem deeply. I think every programmer in the world massively underestimates how much they’re doing when steering an AI right now, and how much of that was really them being creative. It’s uniquely theirs what they’re coming up with. They’ve seen the movie before. You can spot the AI going the wrong path, and one or two words can completely change everything.
That’s a very long answer to say, I kind of don’t know, but I actually just think good people are good. There’s a bit of variance in how quickly people adopted the tools, but once they did, everyone just falls back onto their level.
Jack Altman
That’s the “what do you like” side of the question. To flip it to what candidates are like, have you felt any change in competing for talent in this market? You’ve got a lot of variables at play here. You’re public. Many of your competing-for-talent companies are probably private. You’re in Canada, not in Silicon Valley. There are all these different factors, but I’m curious how the AI wave changes what you do to attract and retain the very best people?
Tobi Lütke
I think the best way to deal with recruiting is to build a company worth working for, for the best. People are thinking about it too much as selling and not enough as marketing, or at least just information.
Jack Altman
Yeah. It’s like, “How do I look super healthy? You could use this angle, you could turn to this angle, you could do…” Or you could also just try to be healthy.
Tobi Lütke
Exactly. Things are just simpler sometimes than they seem.
Jack Altman
So what goes into that then? Obviously there’s being a good business, but—
Tobi Lütke
Just don’t mire people in bureaucracy. Give people the space to be creative, allow them to fall in love with the mission, have them understand what problems people care about and what impact the work has.
Shopify has a lot of intrinsic advantages here, but the best way to attract talent is to make it so that when people try on the idea of maybe coming to Shopify, they come by, they meet everyone they will work with, and also the really impressive people that they will work with together.
Jack Altman
As a CEO of a public company for, I think, over 10 years, how do you feel about companies being private for so long? Obviously it’s more possible than ever. Venture markets are a lot bigger than they were back when you were going public. What do you think?
Tobi Lütke
I find it a little bit sad. I totally understand why the individual companies do it. I just find it, man, I’m so glad that so many people end up—
Jack Altman
Buying Shopify stock.
Tobi Lütke
Buying Shopify early.
Jack Altman
It’s gone well for them. A lot of retail investors have done really well with it.
Tobi Lütke
Exactly. It’s remarkable. I can go basically anywhere and meet people, and they tell me that they bought some shares at some point and it was really important to them. It’s cool. I want people to make money with Shopify because I’m very much not… The sort of “one share, one vote” kind of thing, the influence part I’m like, “Totally what the fuck is that all about? Just like founder shares, let’s go.” But I think they are tickets to participate in something you believe in.
My view of money is, it’s how you vote for the world you want. When you buy a product, you’re voting for that product and everything that caused that product to exist. That works with shares too. If you want to hop on a company because it does things that you agree with, then you can buy them, and you can go to another company if someone else captures your imagination better. I think that’s a wonderful institution.
I just also feel like it came from a meme. Because I have lived the other side of this… It was kind of easy to go public, wasn’t it?
Jack Altman
You’re saying the “stay private is much better” came from a meme? The argument is you don’t have the quarterly public scrutiny. Not everybody can see all your financials all the time. Your employees aren’t seeing their stock move up and down.
Tobi Lütke
Fair enough. I just never really saw these things as bad things. They induce a diligence and a data-drivenness and a set of responsibilities which I think are worth having, because you’re responsible for thousands of people’s jobs and an important product.
Jack Altman
What are the other benefits? You just shared one about the joy of a lot of people getting to share in your success.
Tobi Lütke
It helped us in a way that maybe is not always the case. Especially as a Canadian company listing in New York, we were just very small. When Shopify IPO’d, it was like a $1.5 billion valuation.
Jack Altman
So you’ve had 100x in the public markets.
Tobi Lütke
Yeah, and that’s cool. Therefore I find lots of people who tell me that was a good investment for them. It gave us legitimacy. We never wanted to go upmarket, but we always wanted to have a product that can work well for people at all parts of the scale. That just sounds like words. It’s about 100x harder from building a product. Building a product that actually scales across the entire thing is insanely difficult to do and has been one of our most fun challenges to pursue.
Bigger customers were just like, “Yeah, you’re a public company. That’s cool.” That’s different. Then frankly, there’s really, really good people who would only work for a public company, so that’s also helpful.
On Books
Jack Altman
Makes sense. My last question. I know you have at least been a big reader. Do you still have time to read a lot? You got any books I should read?
Tobi Lütke
There’s so many books I love. I’m a huge fan of short, incredible books like Parkinson’s Law and Lessons of History. When people distill all of their knowledge into under 100 pages, I think that’s great.
I recently read a really good book called What Is Intelligence? It re-explains basically all of biology from a perspective of how important prediction is and how it probably emerged just in a sequence. It felt existentially profound in a way that I don’t quite know if that was… Because it felt like all this part was just to support an argument later that wasn’t actually that important to make, I think. So this is interesting.
Jack Altman
I think others have felt this too, but I’ve been struggling more to read. Partially it’s a stage of life thing, but partially I think the internet is making my brain loops too short, and partially I think I am in a head space where I want every minute to be productive. So it’s hard for me to read a book for joy, and I need to figure out how to get through that. But you seem to have figured out how to—
Tobi Lütke
It’s the job of an author to make you keep reading. This is an important mental switch. If you read a book and it just doesn’t capture you, that’s not because you’re broken. It’s because the author didn’t manage to do the thing that they set out to do.
I have an advantage—disadvantage? I guess advantage at this point—of being out of cycle with my wife, who is also a light sleeper. I just go to bed when she wants, which is way too early. Usually like at 10:00 or something crazy. I’m a night owl. I don’t need a lot of sleep, luckily. So I have hours of reading time, and the Kindle is not that bright, doesn’t wake her up. Therefore I have a couple hours of reading time.
Jack Altman
You’re not doom scrolling on Twitter like the rest of us.
Tobi Lütke
I really am a huge fan of the Kindle, not because it’s great, but because it isn’t. It’s such a limited but actually single-purpose device. I find that wonderful. I find books just to be so remarkable.
Jack Altman
They’re like going to the gym. When you read a book, I’m like, “I got to be reading more books.” Life just pulls us all.
Tobi Lütke
It’s best to have some ritual or some dedicated time for it. If you can pull it off, that’s just great and it is books for me.
Jack Altman
Tobi, this was an absolute pleasure. Thank you for making time for this.
Tobi Lütke
This was really fun. Thanks so much for having me.