The Tim Ferriss Show #359: Tobi Lütke — From Snowboard Shop to Billion-Dollar Company

I have some weird obsession with optimization. When I was walking to elementary school, I would count my steps so I could know which way was the shortest. 


If I have to do something once that is fine. If I have to do it twice, I would be annoyed. If I have to do something three times, I’m going to try to automate it


Shopify has more than 700,000 customers in 175 different countries. 


From an early age, Tobi had authority problems. In school, he would deconstruct the questions teachers gave him instead of delivering the expected answers. He took shortcuts to figure out the minimum hours needed to pass a class. He used the extra time learning to program.


I have a serious problem accepting orthodoxy. Of people telling me this is how things are done. That doesn’t interest me in any way. I want to understand the situation and the various pressures acting on that situation [before making a decision].


Understand what your customers care about. Do people really care about online stores? No. They care about selling. They care about becoming successful entrepreneurs. They care about independence


So with that in mind we make online stores. But we build our software to help people in the activity of reaching independence. That is what they really care about. 


It is really valuable to stop and ask what your customers are actually trying to accomplish. What is the actual product here? 


Book recommendation: The Box How the Shipping Container Made the World Smaller and the World Economy Bigger. The book is about the inventor of the shipping container. An amazing entrepreneur named Malcolm McLean. [Founders #61 is about this book. I read it after Tobi recommended it.]


McLean was the only person who cared about moving things. Everyone else was focused on a particular transportation method [trains or ships]. By focusing on the actual problem [what is the best way to move things around the world?] he came up with a better solution. We need more of that in the world


Book recommendation: High Output Management. The book deconstructs the world of business into first principles. It helps you understand what matters and how to think about it. It frames making a business as an engineering exercise. 


Book recommendation: Influence: The Psychology of Persuasion was the most mind-bending book you can imagine. It essentially tells you the ways humans are flawed. It tells you how to tell the story of your product.


One of the best things about podcasts: You can be a fly on the wall when two experts are talking to each other


I had no background in business. I had no idea how it all worked. I had to learn fast because in 2008 Shopify was not doing well. It was very tough to keep the company alive. 


Tobi’s reasons for starting Shopify: I thought it would be amazing not to have to answer to anyone. I wanted to challenge myself. Even if it failed I knew I would learn a ton. 


I’ve gotten better at communicating. Before I would see bad work and say this is shit. Today I’d ask if this really is the best way we can do this.


Everyone on your team should take responsibility for their own mental state/emotions. No one should be able to make you unhappy by giving you feedback. Just give me raw feedback without the shit sandwich around it. This allows for honest feedback. So much time is wasted by talking about the weather or something positive before saying what you actually want to say.  


Feedback is a gift. Most people don’t think of it that way, but it is. It clearly is. It is not meant to hurt. It is meant to move things forward. It is meant to demystify something for you. I want frank feedback from everyone. 


Book recommendation: Mindset: The New Psychology of Success for learning how to move from a fixed mindset to a growth mindset.


Hell is meeting the best version of yourself [that you could have become] at the end of your life


Time well spent is anything that allows us to minimize the difference between who we are now, and the best version of ourselves we can become. The experiences we have, and the books we read, should help to minimize this difference. You are building a path that makes you smarter every day. If you do this powerful things happen. Learning new things doesn’t sound scary anymore.


Entrepreneurship is really dear to me. Entrepreneurship is in a big crisis. Most people don’t know this. This is counter to what most people think. Right now new company formation is at the lowest point it has ever been. All of the measurements of entrepreneurship are on a downward trend. Shopify is trying to help solve this problem by making it easier for people to sell things.


We need millions of companies that employ 10 to 20 people. We need more small businesses.


Why doesn’t every product in the world have a video of the founder explaining why they felt this product needed to be created? This story makes the product more valuable. We are storytelling creatures. 


I just want people to have a chance for independence. To start something that is meaningful. To turn into an entrepreneur because I remember what it felt like when I did it. 


A large distance between the front line [contact with customers] and the founder kills businesses. I still take customer calls and work in customer support.


 Barbell Strategy: I like really high-level strategic things and I like the absolutely tiny, minute details. I optimize away everything between those two.


What phrase would you put on a billboard? Entrepreneurship is precious and needs to be celebrated


Book recommendations: The Elements of StyleA Guide To The Good Life: The Ancient Art of Stoic JoyThe Courage to Be Disliked: The Japanese Phenomenon That Shows You How to Change Your Life and Achieve Real Happiness.


Full podcast here.