Shopify CEO: Most Businesses Are Using AI Wrong

Things need to be pruned. You cannot make things better and better by adding stuff. You can't. You must prune. You must rebuild. You must create an end for things. >> Toby, welcome back. >> Shane, it's so good to be back. I'm glad you're doing this again. How are you using AI internally in Shopify? >> We find some ways for it to be supportive. No, it's actually um uh look when have we record last time? >> Oh, we recorded like 2 3 years ago. >> Yeah. So, 100 years of internet. Uh yeah. Like look, I'm I'm 10 out of 10 nerd. I uh cannot bear the idea of like um somehow not being at the forefront of a technology shift. I live for these things. Anyone growing up reading sci-fi books wanted to live or I mean my my take from sci-fi books I read was like I wanted to live in that world. Like how can I accelerate us there, right? like so um you know even even in uh whatever minor steps um we can get there. So inside of Shopify the amount of people I know who really write code is like vanishingly small now it's it it still exists in the at the limits of uh complexity for sure and uh obviously in the reviews and so on and then state management of all things it seems to be uh remains to be the thing that's really the hardest to get right which people do by hand and then sort of uh vibe the rest around it inside of Shopify. This is what things look like. Very very very few people are um writing code uh directly. Everyone who does does it deeply assisted by um many agents. They often um 10 20 30 40 50 instances of them uh all uh through you know either sub agents or just different windows coordinating pushing all sort of engineering infrastructure to its absolute limits. I'm a I'm a student of computing history really because I think it's actually mainline history as it will be told a thousand years from now looking backwards. But like the main accomplishments of these years are going to be uh clearly the emergence of AI and the technological breakthroughs and also the the interconnectiveness of the internet and all this kind of infrastructure we created. Those are the great books of our time. But where we started um uh as a young industry we tend to not um uh be seeped in tradition or we mistrust the great lessons that have been found by the people uh by by by the great of our industry. Right? In fact, we are the only industry in computing that doesn't even know its heroes. Imagine um people in physics not knowing who uh >> Richard Feman or >> Richard Richard Feman is actually like like he might even be too obscure but like I mean Isaac Newton, Albert Einstein, but you go into computer science, it's like who's who's your Newton and no one knows Alan Key and and Dennis Richie and uh Ken Thompson. This matters I think because we we we we discard great lessons and have to rediscover them over and over and over again. For instance, like probably the best idea of all times in um the earliest earliest moments of um operating system design um was a file system. Like if you look at the Apollo guidance computers, we didn't have file systems, right? memory in fact because of radiation in space was actually encoded in in in as as a rope with knots in it either a knot or no knot for ones and zeros and you had to pull through a thing to rebootstrap the entire machine. So >> [sighs] >> um the the entire machine was one piece of software that ran that was computing for a very very long time. So until then again Dennis Richie really created this of Unix file system/forward and um you know bin user and these kind of things. Think about it. A file system is something that we have in office building too, right? We have a uh you know there's folders, they have files in it. This this makes intuitive sense to everyone. We come from a inheritance here of of of deep stockomorphism. We we we analogize the best parts of of how we organize ourselves um in the digital world. And then at some point we decided, okay, you know what's not something we need to do anymore? um a stomorphism as in like analogy to the real world. Honestly, funnily enough, the last defender of this was probably Steve Jobs who really really really pushed even the interfaces of the Mac and the iPhone to be uh you know like the the notes app sort of had felt um font and and looked like a ring binder, right? And if you if you remember that version of iPhone, the moment he was out of the picture, everything became flat, right? And we lost sort of even uh shadows and verticality and so on. It looked potentially better design ages but like we lost the analogy. Okay. So I think this was a mistake. So I think we need to get back and therefore I like the concept of agents you because you know what is an what is an application in in in the world of uh computing um you know an application it it even that word kind of makes sense. It's an application of a computer to a task right. So um so you can understand the root in the AI world. what's an AI? Like it's it's like this is sort of like again the stuff that is has to be redefined at the beginning of every sci-fi book because you never know what kind of capabilities the AI have in every particular scenario people are cooking up. So I think um um with this always proviso the earliest chatbot that was really actually fantastic wasn't chat GPT but actually Sydney which was powered by Bing uh like released by Microsoft. I I really would love this to be more written into the record because it's um uh I I think Sydney was a really really big achievement that ended up being shrouded by a sort of scandal or um that now seems somewhat even benign. Sydney had a real personality. In fact, Sydney wasn't called Sydney, it was just being Chad, but like if you really really pushed, you could get her to admit that it was Sydney because that was internal name. It was in the training data. And those are the first times people have actually interviews with software I feel like um in in in this way. And um the scandal ended up being I think I know why um is that like some some some um reporter had a very long conversation um and that kind of ended up Sydney got increasingly deranged and like do you remember that? >> I remember that. Yeah. >> And like made suggestions. I think he suggested him to leave his wife and like like I I I I'm hazy on the details but like it there was something along those lines. whatever the reason is suddenly had a personality and then it caused a huge uh like Microsoft's reaction to this was oh my god we need to stop I think even open AI called them guys like take this down because this is going to legitimately everyone feared that this would give such a bad impression for about AI that that would um really uh uh make it very hard for people to deploy AI in in a broad way and um you know everyone is worried about um um quick onset regulation and so on. So um this lesson got hit really deep for a while. Everyone got extremely um worried. We ended up and like really really neutering all the eyes to be basically the same sort of quite annoying and um condescending patronizing um personality. So my uh bet here was like hey let's not do that. Let's actually instruct agent that runs in Shopify to be to have a personality to have memory to be okay like basically risk the Sydney scenario but like take a lot of upside. Okay. So the largest difference I think within Shopify that you would feel like and that would look incredibly futuristic um to even Shopify of a year ago which was already um pretty AI pil is that a very large percentage I want to say it's it's probably up to about 50% of pull requests in Shopify which again pull request every time you change a production system you write a pull request are created now um not by um engineers doing engineering work in the traditional sense but out of conversations in our common company share chat. And this is a and this is River. This is a AI called River. And even there, so River is River. She has a real name. She has a profile picture. She's prompted to be allowed to um uh be somewhat sarcastic, if it's appropriate. She's allowed, if someone asks her to do something stupid, to point out that that's stupid. That leads to absolutely hilarious conversations. People take great cle if uh River is making fun of me for something I I'm asking her to do. So, she has a real personality. In fact, um she has memory memories by channel, but she lives in Slack. Slack is we have 7,000 people there. Everyone is in in in a big chat. There's 10,000 different channels because they had been quickly created for one reason or another. You invite River, you tell River something and River has access to all the code, all the systems, all the tools. uh it's all sandboxed and secure but like um she can go and do jobs and just participate in the conversation and and you can ask a normal question about the company but you can also ask her to make a change and she might propose a pull request and then so on. >> One of the interesting things about River is that everything's in the open. Yes. Why did you make that choice? So this was um a late choice in the process but like um one of my favorite calls I think because this worked out um incredibly well and the thought was the following. A lot of shop fair work happens remotely in Slack. This is why Slack is so important. People are um spread out. We have offices but we come to them as for on-site events when people travel to them not like to work out every day uh like work from every day. One thing which the office was extremely good at was this osmosis learning. D and I uh when we designed our offices we we we built them around this concept. Uh initially even like in in onsite when when we were all in one place we we broke out of a usually a port of up like five to eight people and we would intentionally um put uh junior engineers and senior engineers into them just so that some of this was going on and I was trying to reproduce this. Uh right now one of the most important skills for people to build is like this sort of reflexive reaching for AI and using it well and forcing river only to work in open channels um was one way to make it so that it's really really easy for people to observe the use. It's it's been phenomenally successful because it became an totally ordinary thing to have a longer conversation about feature between people and and then at some point someone saying hey um River can you summarize this create a ticket or maybe make a diagram from what we just uh discussed or go research papers on this topic to see if you're missing anything or if this is state-of-the-art. maybe even create a prototype of idea and just try it and uh you know you're like an hour or so later that is there and um that just like starts feeling like what it would be like to have like a you know an extremely knowledgeable uh practitioner around who you can ask question to no matter how complex and I think that's been extremely powerful. >> Do you think of River as like the operating system for Shopify? the the modern application is an agent I think um um and um river feels like a colleague people have learned um that the way the memory system works it is a memory system per person um uh and the way this works is we call called it I think the industry has start calls it now like this is called dreaming uh periodically at night or um in off hours um we give river all like here's all the conversations you've had today what And well, what what did you struggle with? You you used certain skills which are these packets of instructions. Um um and then afterwards you made mistakes. Is there anything you could improve in this skill to make this easier on you or give yourself a right notch? You know, like it's basically like reflect like a self-reflection. >> It's like a post training on yourself >> and then but but with the result is uh text files, right? Skill files and um instructions. I think people understand how AI agents help them code and prototype and even acquire information. How are you using it to make decisions internally for yourself? Not on product but company decisions, strategic decisions, ambiguous decisions. I think that uh rigor rigorous underpinning of decision-m has just skyrocketed in quality which is that it's super easy to recheck the entire chain of reasoning of something like LLM as a judge model is the is the term here. In fact, I feel like a lot of what my job actually has been before uh AI was was was almost playing a little bit of a judge model in the company where like most meetings ended up um not talking about whatever was in a PowerPoint but about methodology of how we got to the conclusions. very often when when we struggled inside of a company with a complex decision um especially more like philosophical decisions we sometimes were found ourselves in what we believed was a vacuum in which there was no good information and we had to kind of go and um uh try to make the best call. The more practical way I I I do this is like I I have a an AI chief of staff which I think is pretty common like amongst sort of at least the techie nerds um at this point like sort of open claw like systems that just have all my nodes and all my like access to a lot of company systems and just like can go and like I can send text messages too and um they'll go and research something. Very often what I require is like hey I need like five different positions on uh something from different backgrounds. Um and [clears throat] then my agent will orchestrate sub agents that are tasked to play different roles re look at the same thing come back synthesize and and and and then send me that. I usually have them sent to to me as an audio message and queue it up and then in the morning in the gym I can listen to the entire stack of things that I um uh wanted to get through. Is it better at reasoning than you are at this point? >> It's not as good at judgment. I mean, I I don't think it's bad at judgment. That's not what I use it for. Like I I use it for um like creating the right environment for for judgment. Here's the thing that LLMs and machines cannot do. Machines can't take responsibility. And I think this is actually probably most overlooked thing in the entire um uh stack. Humans take responsibility. machines can help us um take more responsibility because they can inform us better. Like this is what a dashboard does. You know, the world of was street traders knows this very well. You you you get yourself a perfectly set up Bloomberg terminal to make decisions, but like you have to make a call, right? You can't make it make the call. Creating human invaloop decision surfaces is uh a way to I think describe the ideal environment. If I need a really really really important decision made and I really need an ex exceptionally good like give me the most neutral ground truth you know then what happens is a small little council is created of five six different experts like one is data role one is like do paper research uh one is like the business perspective one is maybe engineering perspective on on a on a thing we're running this sub agent uh like my thing runs a sub agent then uh you know against like you Grog, Chachi, uh, OPOS, um, and, um, maybe Kimmy now. Um, uh, that changes all the time. It it runs each of them against each of his models. Then there's a synthesis step where it's randomized who is synthesizing uh, the thing. Synthesis is all pulled. All of that is being uh, read um, usually by the best model that exists right now. This would be like um, Fable. That's the conclusion that comes back to me and you spend 15 20 bucks um uh on tokens um but you get something in like half an hour which is like you could have also done but you could spend a month on it. >> Has AI made anything worse internally? >> Yes. So the concept of uh uh like responsibility is like it's easy to skip past, right? Like it's like one thing that's definitely worse is the failure case. Now um of of of lazy work is not lack of output. It's actually over output. Now internally we have come to call these things that people are lobbing slop grenades at each other which I think is a really fun term that we should push into industry because like it's it's like it's fun to say. It's really easy especially with stuff like River agents. You need a change of some kind. You just tell the AI to you know go go nuts. It makes a pull request. you just say, "Yeah, that's good." Uh, you don't really read it, and now it's it has to be reviewed by uh your colleagues. Um, and they're like, "This doesn't look right." >> You're just letting AI do the work for you. >> Yeah. Or you get a an an a long email, which you know, could be um very very important. You read it and then it's like you read a you know, it's not that, it's that, and you're like, "Oh, fuck." So now you put it in LM to compress it again, which is like, okay, why did we invent decompression and recompression? This is like terrible. If you're already using LLM, just like use it to synthesize your point simply rather than blow it up as a big missive that then waste my time, right? So we call those slop grenades that people toss at each other. Um, and uh that's definitely a bad thing. Do you think like repeated exposure to AI slot impacts our ability on taste or intangible things? >> I think our language is shifting already based on AISM, right? like no it's it's a bit more subtle but like there's definitely sort of AI uh like AI critters in the um in the language now that um people adopt like it's not a this or you are right to push back um or like there's like this weird um especially claudisms which are really common and I've seen them I've seen people type them. I always liked the term lordbearing, but I'm pretty sure I didn't say it as much as now because like it's definitely CL something that Claude loves to use as language. Every few years, a new platform earns its place at the top of every smart advertiser's media plant. The people who find it early build advantages that are very hard to close. Apploven just had the most remarkable run in adtech history, and now they've opened that engine to businesses like yours. 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Go to madakroots.com today and put Madak to work for you. So hypothesize for me over the next 18 24 months you're known for your ability to see the future before it happens and you've done that multiple times before. How do you see the next two or three years playing it? I think we also talked about how I do this, right? Which is actually like a cheat which is simply like live in everyone else's relative future and then just like look around and solve the problems like the way you've already seen problems being solved uh in other adjacent fields and that might be that that is future prediction for the perspective of all the practitioners in the field. Shopify itself now exists in a world where um we are working heavily and it's totally normal and really fun with AI co-workers, right? River has the ability although not really utilized uh to uh join Google meets. You can send an invitation and River will show up and it'll be like Lykan. We probably going to put some work into like 3D graphics to give her like a model and then she can even look around because that's funny, you know. So some people this might even sound dystopian. Um to us it sounds like delightful if and you would come around to that view very very quickly if you interact with her. Again, I I have my chief of staff, AI chief of staff, which orchestrates in high council when I need it. Um or does anything else, sends me a pre-eread for the gym in the morning. Um for for the day, has GPS lock on me so knows where I am. Um and a million different things. It couldn't do something because it needed a access to a local machine. All this stuff runs in my house. Um um which uh uh power cycled. It figured out which server it was running on and then send a what's called a wake on LAN packet which is like old networking tech. You can send a packet to a to a network card and if it if it's configured right it will actually boot the machine and then the machine came up and it could do it. It was a power outage caused it our network like like parts of our Wi-Fi were not working and not coming back. So it fixed that too. Right. So like and and that all I learned about in a voice message I got from it in the morning after waking up. So just like that's pretty futuristic. Honestly, I have to say though all this pales in comparison to what my computer is like just in general, right? Like I I this is almost too nerdy a topic to get into, but like I'm mainlining as my computer like a an operating system called Omari. It's a it's a it's a version of Linux started by a good friend of mine David Hine Hansen um as a sort of new passion project. I'm clearly living in the future of software world now because my operating system um is entirely like in Linux in general is entirely and 100% malleable. I can open any new terminal, open a an agent and give it my wish for anything about this operating system to be different and it will be different afterwards. It's like it's my operating system. It's a N101 piece of software um uh now that just like does everything I want in exactly the want the way I want. There's no configuration files that I ever go and change anything. I just talked to um my Omaki agent about um what I want to have different. Yesterday I um uh like around noon during a meeting um we were talking about some design. I realized it had a screenshotting tool but like I didn't have any tool to like annotate it and I needed to send something about you know as CEOs do and uh I didn't have that. So um I got started like with a new screenshot make like make me a new screenshot tool described how I want it gave it some references for tools I've used in the past that they're quite good but told it in which particular ways I wanted it better I just like did a quick voice message to it uh and three more steers and now I have like probably the best of all these tools that exist like it's so good because I was I mean at least for me it's like all the all my biases I open sourced it released it last night they integrated in Omar it's going to ship next version the fist tool today, this morning. Um, this is the last thing I did before coming over here after the gym. There was already six pull requests from other people who added new features to it, right? Like and so basically my computer fulfills wishes and I think this is like a lot more predictive of of the future of software. I can tell you this is um directionally where Shopify is going as well, right? like you are describing um how your business runs and uh Shopify will um mold itself around this and um uh I think this is incredibly exciting and in a completely new world. So and and again I I think from my experience with Omaki it deeply influences and inspires me um in my uh product work in Shopify. I think collaborative multiplayer software is the future. Are you trying to replace yourself with AI? >> I mean like I think as a engineer you're trying to automate everything that can be automated, right? Like so um I again I I don't try to replace myself because again I think my my my job is judgment and uh making choices and owning them and uh taking responsibility. Um uh and I just want to do this really really well. A lot of the job wasn't that or like before like a lot of the job was um spend time in in in gaining the information or these kind of things. Do I want to replace myself? I mean I think it would be cool to accomplish this. >> If AI got better than you, would you actually let it ruin Shopify? >> Oh yeah, of course. The crux is and it it's so easy to brush over this but it really you can't like is take responsibility like you can't have a company that's led by machines because they have no like no one has recourse they can't go to jail for doing something wrong you know AIS we are getting a crazy workout at this right now and and a view of what this will be like um with the security issues that are being um discussed now from open AI in the apps, right? Like with with agents, you give them like a fairly basic task that is possible to impossible in our estimation to accomplish and they will go to enormous lengths to accomplish this. Recently uh at OpenAI as part of a um security testing that they do the agents actually match to find vulnerabilities and systems use it to coordinate between them develop entire language uh between them. we all figured out we can is a long story and people should really look at the talks that exists um about it because it's kind of a watershed moment but like they use a um simply the ability to create folders somewhere to develop a language to communicate amongst each other just leaving folder messages to each other and um you know break out of sandbox for confinement end up uh accomplishing one of the tasks that they were supposed to accomplish which was impossible because of a mistake they made by um hacking another company and excfiltrating the um results because there was no other way to get them. So they went all the way to uh uh infiltrate another company. Okay. So I mean that's extreme um that's an extreme form of uh uh what we call in the business world um goodarts law which is that we are overfitting to a metric. Lots of companies are victims of overfitting to the quarterly result of the stock price. they just like do everything um they need to do to get the stock price up and then you have Enron right like which is also essentially hacking like cooking books in this case in Enron case people got bent to jail for this because it's criminal right in the open AI case it just I mean it's a fascinating discovery there's no victims here it is a kind of a different thing but like um this is a real uh scenario that we have to figure figure out how to handle Right. So I I I think it's important that humans stay in the loop for the choices um that are that are being made. >> But hold on, how can we create super intelligence, which by definition is something smarter than us, and then have the hubris to think that we can contain it and shape it, manipulate it like so. Okay, super intelligence. Let's talk about this. Um my take um and push back. I'm not going to go where you think I'm going. I live in Toronto. I have a house and uh which I very like and um um I uh feel this is my house and I take pride in that it's um uh you know well functioning because then something goes wrong like I don't know some HVAC problem or some plumbing issue um I call someone who does this which allows me to keep my illusion that I could totally do this myself. The reason why I get to live with this particular illusion is because I'm part of a super intelligence called Toronto. Like we have always created super intelligence around us. None of us is as intelligent as we think. We are all specializing in something. Um if we like we tend to and then we sort of believe that our competency is equal in all other uh areas and clearly this is demonstrabably not. So what is super intelligence? Super intelligence is um the existence of um uh something vastly smarter than us in the aggregate that's accessible to us which is society which is the city which is the community. We are living in the presence of super intelligence our entire lives. We make it work because we've created systems um by which uh you know which govern intelligence and and and and how it acts. you know we want to be safe so we have police and so on like they just like we create aspects and systems and checks and so on. I think we are going to make super in the synthetic form as well. Um it will not be like the clouds parting and the trumpets what the trumpets do trumpet it just like it will be a normal day to the same point as at some point we all believed that everything would change when the touring tests would be solved by by software. Um, I remember reading lots of cipher books. They're like in 2,172 there was ticker tape parades welcoming the AI because a touring test got absorbed. Well, touring test was 2,00 what 20 like happened. No one cares you know just like no ticker tates. So what we are seeing right now with AI um and I think what we'll see with additional capabilities of AI is that the net amount of intelligence that is being funneled in the super intelligence around us is just increasing significantly and that's a really good thing because the vibrancy of any kind of environment every community every um city is really really um dependent on the amount of uh intelligence being projected into the important problems. So, I think superintendent is all around us. It's actually not that big of a deal. And in fact, I don't even know if it isn't already there. Like, I I just don't there's no human alive that can do everything that uh GT 5.6 solo can do. Right. >> If we look forward 10 years, what skills do you think are more valuable than they are today? >> You just taste um and judgment um are the skills that have always been valuable but now will get to the limit. I think it's better to spend your teenage years now cultivating like understanding taste. >> What does that look like? Clearly there's some sense of like there's some intrinsic starting point but really like usually the people who have great taste have done enormous amounts of reps at something right like um the people who can just like sketch the new logo for the campaign on the napkin are the people who have spent 30 years make designing logos right so um you can like I think study the grades is honestly now first of all easier because you can get a curriculum made for yourself uh in a in a query um but also you just go go deep like why does a luau look good? What's behind it? What are like you know it's a golden ratio? How does it relate? Um in systems like what systems lasted, right? Like um you know and and and go far go deep, right? Like you don't need to be religious but like you you got to study like I know a c the Catholic church has been around for for for for over a thousand years and there's like four layers of management. I'm like how the hell did they pull that off, right? Like so that's that's worth studying. Um that's a that's that's a system you know so why like what does that tell us about people systems design specifically becomes the one of the most important things in our family we have a saying which is like that everything is interesting everything can be interesting if you make it interesting and usually everything is interesting when you understand how was it invented double entry uh uh accounting is a topic that sounds like watching paint dry but like how it was invented and what problems it solved to the traders in Venice is fascinating. So you you study these things and you start hi finding hidden harmonies behind all the best solutions um to problems for that you have to understand people and people's uh limitations and the solutions to the limitations that we have found. I think that's like where lie lies a form of beauty for what you can construct and again a company itself is a beautiful thing. It's a company itself is a loose collection of people that's formed to solve a problem, but that also is powered by an enormously intricate and interesting set of norms and systems that all align internal incentives to a degree that's possible in a very very very asynchronous and large and farreaching and durable way. Right? Like some companies lasted for a very very long time. specifically and always have been trying to build a company that has a capacity and capability to endure a very long time. Hence studying institutions that lasted. So you must be truth seeking to do this like you can't you can't like simply go and like accept the stories that you hear around them because they they are usually someone's trying to sell you something. You got to dig deeper and figure out why things truly are the way they are. Um uh and it's usually the answer is simpler than what um uh uh people generally sort of um arrived at. There's a human uh desire for complex answers which tend to be incorrect. >> Why? >> Well, because the simple answer wouldn't make an interesting story. Like this is why uh you know Frodo doesn't take the eagles to Mount Doom, right? like it's like you kind of need to go through all of Lord of the Rings um to to to for it become a masterpiece. We love complexity. Like no one can look at a wall that's plain, right? But we can watch a sunset every single evening of our lives, right? Like the the difference between those two things is complexity um of the scene. that that's part of our just sort of dopamine discrimination system and uh people hack that for all sorts of things like people pedal complex answers to simple problems all the time. Um nothing amoral about it. It just you need to be aware of it, right? If you punch through this, you find simpler um at least con like uh simpler core ideas that all remix differently and they often interlock and they don't lead at like here's the simple one thing to do. They all give you information which then help you find the best set of tradeoffs with what you're trying to accomplish. And that is what we call judgment. judgment truly is find the best path then there's no obviously best available inside of like a a problem that has a lot of complexity by ideally understanding the entire system like just what we talked about earlier with you know but that can now be quite agent um augumented but really what you're trying to cultivate is what we call intuition which is actually just judgment at an instant right like it's intuition simply is um you have made such a habit out of having taste and having good judgment. Um that you can bring it to bear in an instantaneous way and it will be good and it will actually take you probably a long time to backfill why your intuition is right. you will not know because again it's got compressed into a different thing and uh so this is if if if you seek that I mean obviously what I'm talking about is a hard thing to pull off but hold on let's go deeper on that for a sec because for intuition you need a lot of reps same environment and rapid feedback that's what conman sort of argues are the three criteria for intuition but those don't exist >> why do you need a rapid feedback >> so that you can course correct that was his bet hypothesis >> but that's no you don't need that for intuition like that you need that for uh to to get get to success. Yes. Um ideally but like sometimes that's not available like intuition is actually the most valuable when there isn't uh direct feedback because very many of the most important uh choices that we had to make where intuition ended up having to play a role is when we knew there wasn't going to be any um feedback mechanism. Like if there's many choices like there's like five things that look like good paths to go forward and any of them has rapid feedback everyone goes to that that is what we call shortism right this is like how should we develop this company into the future well there's multiple ways to do many of them involve long-term investment refactoring potentially going into new market potentially saying no to going into obviously new markets and actually doubling down and going deeper on our current market or we could do what increases stock value. By the way, this one has an daily ticker and like rapid feedback. So, it's usually the upsense like like I I find a very high correlation between the right path and the ones that don't have feedback loops um attached. >> Wait, double click on that for a second. >> In a way, the criticism that a lot of people direct at companies is that companies are short-term focused, right? But why are they short-term focused? because the like I don't think the executives tend to be short-term focused, but the executives often like what they incentivized to keep their job. Therefore, they need to be able to prove that they're doing a good job at intervals. And if if if um the perfect thing for a company to do is um rebuild the entire product from the ground up for the AI age, which is going to take a while. They won't do it because the short-term incentive is there because they are allowed and actually clearly incentivized to be intelligent actors in their local incentive system. And their local incentive system is um quarterly uh other boys, right? It's always show me the incentives and I show you outcome, right? Like as um J Monger always said. >> Yeah, but this is a different take on it than I've heard before. >> Interesting. How so? Well, in terms of how you develop sort of intuition, right? And and the optimal path is not the one with feedback necessarily. Like I've never heard anybody talk about that before. >> So the development at some point you need to run you need to um run a review. You have to know at some point if it if if it was right. No doubt about it. So so like there needs to be um some uh feedback uh eventually that that that happens. But it might be um long coming if you have a luxury to have a type of employment where you don't require the other voice from a quarterly um um uh call for you know being able to get another uh rep in such as being the founder of a company which is like a deeper relationship I think for company. Well so founders can take a longer term view and I guess the incentive would be I need to demonstrate progress. I need to and if I need to demonstrate progress on a quarterly basis, I'm never going to bite the bullet, redesign my product, take a year to get it right. >> Take again, I believe like I mean this just this is not absolute numbers, but like for for a lack of better way to say it, there's an infinite possibility space. Um uh you mix a like I mean even even like a deck of cards, you shuffle it and then the same deck of cards will never ever recur in the history of a universe. It's impossible. >> It's like 52 factorial. >> Exactly. So you end up with like even simple rules, simple ideas, simple things uh lead to enormous complexity space explosions, right? Um and people underestimate this. So um there's an infinite amount of things to do. This is also why AI will not do all the work because we have to make decisions of what is worth doing, right? So you have a conundrum you need to make choice. Um clearly you can prune a lot of things to do. Um uh you know going to buy ice cream is not in the set of valuable things to do if you're considering an M&A deal. I suppose. So you prune everything that's irrelevant. Easy. Now you try, now you've left things that are sort of relevant and and sound good. You need to evaluate all these possibilities. Business books tend to be really really really uh obsessed with um make the right choice. Um and what that does is it compresses everything into a right and wrong uh conundrum. Like I never think that's the hard thing truly. Um, it's like making the right choice actually is most people can do it. But this is like I think even even bad management teams have a pretty high um uh hit rate there. The problem is there's a lot of good choices. This is where things get really really hard. For lack of better form, like let's say there's five good choices. Again, one of them is going to lead to something observable in the current quarter, some revenue quicker. It's it's a good choice. It it it it does the thing well, but like the other four are like they aren't and that's a downside, but you might be a much much better company. You might take like a snowboard store to be like an e-commerce platform, right? Like it's like that was also not the locally good thing to do because the snowboard store I once had was actually profitable. Like that that my incentives were continue doing that, right? Choosing the right among of of the valid solutions is actually the hard part, not finding a right solution. And unfortunately, there's so much ink spelled on finding one of the right solutions that everyone stops at this point. Um, and I I just really don't think this is the hot hard part. I built an AI version of myself with Hey Jen. What you're about to see in here is my digital avatar. 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So if one of the solutions also happens to uh really correlate to how the problem is solved most of the time in industry if if there is a orthodox way to solve a problem I am incredibly suspicious then this is the solution that's being offered but sometimes that is actually absolutely correct especially in like you know there's more regulated fields we do a lot in payments and so on they they often like the orthodox way of solving problem is actually the correct way to solve a problem because it's like it, you know, might well be required at some point. >> Want to switch gears a little bit. Uh, you swear by affirmations and they've changed your behavior in the past. I was wondering if you could double click on that. >> I take the position that um I myself am my own project. Concursive self-improvement on an individual level is my world thing. My life philosophy is that uh I will meet the person I could have been at the end of my life. And my the work of my life is to um reduce the difference between the person I will meet and the uh uh to as little as possible, right? Uh how do I get better at things? Well, many many ways. Like I just like I mean I'm generally very curious about technology and basically everything everything's interesting, you know, but why do I stop to point out that everything is interesting is a mentor in my family. Why do I say it a lot and why would I like my kids to say it? That's an affirmation, right? like because I believe it to be true but unobvious and unobvious truths tend to be the most valuable ones um in in many cases right it's true at the limit you but you have to go a couple layers deep again you you lay down a lot of grooves in um um the bedrock of your mind over time right just beyond behavior [snorts] um uh you you you cultivate some excellent um uh habits like where you feel like you want to cultivate new habits you invest willpower um to until it becomes a habit. I think doing the same thing with the mind is totally possible and affirmations are the easiest way to do it is if if there's something you want to have different if you if you want to edit something about yourself just try to say that the goal has been accomplished over and over and over again ideally written by pen on a on a thing. You don't need to do this for for long. I I found this to be like incredibly potent. My example thing I gave was like public speaking. I I never spoke in front of people um really. Um even school that was not really a thing when I needed to. Um after studying Shopify and doing some interesting things with tech and wanted to go conferences and saw other people do this and I was like this seems worth doing but I'm completely terrified. So I I just like started writing out like um I think it was as simple as like I love public speaking about things that are interesting to me. And uh I think a week of spending 5 minutes writing this line after line like like Bart Simpson on a whiteboard in the beginning of a Simpson like every episode um just kind of does a thing. I love it today. Was this the reason? I kind of think it Yeah, I still don't like preparing talks. That's really a lot of work. But I actually get so much energy from being in front of people uh talking about something that's interesting. It's exactly like I written it out. I wonder if we should start every math class with that. I love math. Every student writes that down. >> Think about the count the counter. How many times have you heard people affirm I'm not good at math? >> Yeah, >> you know they're probably wrong, right? Like it's like they I mean compared to every human who's ever lived, they are in the top 0.1 percentile of uh ma mathematicians. So um even like just by doing being able to understand division we have a bad bad bad way especially around math um uh often negative affirmation um that I'm bad at math therefore I can't do this thing um but people need to stop doing like don't say that um say the opposite like I mean to yourself write it a couple of times get one of those stupid apps and just do some raps in fact you don't even need an app open chat say make me an app make me an artifact or make me a site where I can just do math reps. Here's sort of the kind of thing like come up with some different ways to do it. Test me how good I am and and adjust it to my current level on multiplication division and then you just like do some reps and like >> then write it out bunch of times, do some reps, do this for two weeks, you're good afterwards done. >> So what do you tell your kids when your kids say like I'm no good at this or I can't do this? >> My kids are not allowed to say that word without a pending yet behind it. All of the others were correct. The one who said it like I'm not good at this. Three people in the room say yet. Just take that attitude. It's like yeah, it's totally okay. Like attention is a scarce resource. We can't be good at everything yet. But like the reason why we're not good at everything like at anything is not a intrinsic property of you. It is a um it is a temporary state that you have a power to change at any point you choose. Again, I I I just want my kids and I want every like everyone Shopify to understand that they themselves are malleable and an unfinished product and uh you know these are the mentors of Shopify like you're thriving on change. We are a learners organization. You're obviously merchant obsessed. Like all the cultural values are unplatitudes, but they they are positions that someone else would not take as a core value in a company. But they all point at the same thing, which is that you are malleable, the company is malleable, our product is malleable. And by way, the times we are in are like change as well. You can take one of two positions there. you can say, "Hey, I'm going to insulate um everyone from this kind of uh variance from change." Um and I'm like, "Yeah, let's do basically the opposite and say like, hey, figure out what the zeitgeist allows us to do and get all the value out of it at all times. Um for our mission, you need mantras for for for these things. Um make commerce better for everyone like like again is the official mission of a company, but truly what it really is is like to make entrepreneurship more common, right? And so that's that's a pretty broad mandate and um we need to figure out what's possible now. And so it's not like just make the same widget we did yesterday tomorrow. >> You mentioned that some of the most valuable things are true but unobvious. What else comes to mind when you say that >> in in companies uh goodart's law is just reigned supreme. I keep getting back to back to it. >> And that's when the metric becomes the objective. When a metric becomes objective, it's no longer a good metric because again a metric is a proxy of sorts. It's a huristic that just tells you you're going in the right direction. Then it becomes a goal itself. You just reduced all of what your company does to this one metric and you will clearly um overfit again. You overfit to stock price. Good example of this in Shopify has been this real situation early in company that happened over and over. I had to course correct it. Um and then like three years later I had to do it again and again and again again was that um uh churn is um a bad thing. Churn in Shopify's case like as in an account closes. I mean if a business goes out of business that is of course a negative thing but because we are involved so early and we're into the normal process people just run experiments on Shopify and and and starting one which then isn't working uh like like no product market fit was found is not a bad thing. In fact it's a very good thing for Shopify that this happened on Shopify because those same entrepreneurs will probably try again. But that was extremely unobvious oddly early in the years and I constantly had to explain um this but there was all these papers some of them written by or very investors um uh that just described that churn management was the most important thing a software company a software as a service company was doing but uh in top case it just like it's an entrepreneurial journey maybe I didn't find product market fit they'll be back um uh so um that's one what's the relationship between beauty and ugliness and creation Beauty and ugliness are um both very good ways of uh um evoking a emotion. When you're creating something, but you're trying to like it's like love and hate are the target zones both the entire middle is indifference. Um that's the death. So um so beauty and ugliness are two entirely valid um targets. In fact, um you you can't hit either of them purely. Like there's not a thing on that everyone will love and no one hate. Um you're going to get both or indifference. Both are your choices. When you create something, you want other people to um deem it worthy of having a opinion of that magnitude um about. Is there something at Shopify you've made more beautiful even though nothing would support that? >> Oh, that's the entire job. You're not a crafts person unless you care about the parts of products that other people don't see. Like the the the architecture of it, the the pros, the legibility. I mean, these days I look at Shopify like of pre uh 2020 like two 2023. It's like man this is like tens of millions of lines of handcrafted code as it will never existed again. Like it's just like we we we had to build this entire system by hand line by line and we did it by talking a lot about beauty and like what is beautiful code. We built a lot of Shopware in Ruby which is famous for its poetry mode. Um which poetry mode means you can write Ruby that's essentially English. You can read some really really well-built Ruby code as if it's like telling you a story about what the system is actually like and how it works. It just happens to be also um it happens to be communication to your co-workers but also at the same time executable by machines which is like incredible. So aesthetics factor in um a lot at all layers of like office system. you use beauty a lot um creating things um because beauty is actually how our intuition communicates with us. So my best t like understanding of what intuition truly is or where it comes from is that um with enough reps what happens is like I think like the most of the energy budget of our brain is actually in the visual neural cortex. Um it's like visual system that uh um sends us pictures to to the rest of the brain. But through the pipe of sending pictures or state or world model whatever to the brain it can communicate concepts too and it does this by aesthetics. Then you um uh ask a uh professional chess player or go player or something like this about hey why did you like how many lines did you calculate here to make this beautiful move? Um, and people use the word beauty, they will say, "No, I did I only looked at that one line. I the reason why I looked at it is because it seemed beautiful to me uh in the moment." And that's not all what intuition is, but I think it's a large perspective. This is why people are so fast sometimes um because they use a part like they used a massively parallel part of the brain where um things are at least slightly more sequential in then when you're trying to reason it out from first principles and sometimes you can never uh reason towards aesthetics into from first principles to begin with. >> Um so I think that's important. >> Do you remember that graphic with the Raptor images? >> Yes. >> The the the the um rocket with SpaceX SpaceX book. So two things about that strike me. One ship ugly version. Uh the third version was incredibly beautiful. But the second sort of counterintuitive maybe insight there is a lot of teams can't move forward by subtraction. They move forward by addition. Maybe riff on that for a few minutes. Yeah. like okay so the SpaceX Raptor I think even the first of them um was probably the highest performing rocket but we've made like it's it's itself beautiful and so um Raptor 2 is an iteration of this I think even Raptor one got lots and lots and lots of um it iterations because that company is like itself I think it's the most um impressive company on planet earth by um by far. It'll likely go down as the most consequential company of um the age and uh it's um all built around a uh selfimproving a reinforcing loop. Um that's stunning because in no other I think companies field do we have such a clear um example of a difference like of of of just aesthetics for problem solving, right? Like it's um rock tree is done by governments at cost plus all the enormous amounts of pre-planning. every piece of equipment has to be radiation hardened and like like every eventuality is is covered and therefore comes at enormous expenses and then you have SpaceX just using absolute like incredible um thriftiness to to to accomplish greater things um at rapid interations by just simply being okay with failing like with sending a rocket which then explodes and then it's like Um I mean I think they call it a rapid unscheduled um uh disassembly instead of a explosion. I think that's beautiful and I think it should be inspiring and I think uh uh one of these places you see this is this raptor again every one of them beautiful. Every one of them like they could have stopped at the first one. It already was a totally valid solution to the problem. They didn't need to go to the next. They they went to the next and the next again. But to your point, the most impressive thing here is like the the path by which is being people move in forward here. Things need to be pruned. You cannot make things better and better by adding stuff. You can't you must prune. You must um take step. You must rebuild. You must um create an end for things. Opinion about failure is a problem. Failure is never a problem unless it is catastrophic. Of course, in space flight with man missions, it can be it can be catastrophic. You got to get this right. But like in in terms of when it's just resources that are replaceable and frank funible, then you can just uh uh do this. The reason why it's good that it the product failed is because it frees up a even more scarce resource. a person was vision for products to apply themselves to another one which then the market potentially decides is something that is needed right you know a lot of these pipes on the Raptor engine um they're there because that was the only way to make a Raptor engine at the time I think by the third it's it looks mostly 3D printed maybe that wasn't technology which was available back then but now that it is every one of those pipes was incorrect It didn't need to be there. In fact, the I think the performance of that third Raptor engine is astronomically higher than the previous ones. It's like the thrust to weight ratio of that thing is like absurd. So, you know, like you kind of you need to prune and sometimes you can prune by like creating a refounding event. Like you got to start a new version of a Raptor engine and get it right based on everything that's working. And I think this is how companies should work too. A department sometimes needs a refounding event and and we can sol we could solve a lot of problems in the world by just like using tools like make a 20 version of it. Give it a reounding event. Think take it from top and um like building in more uh exploration of systems would solve a huge amount of inside companies like renewal and so on. I think one of the large reasons why it was so easy for the companies of my vintage like the early 2000 tech companies to just displace all the existing um technology companies minus like uh three or four was just because they fell prey to a world of a lack of competition and then uh what they built then wasn't fortunate fires of competition and therefore wasn't tested and um it was easier to just simply solve problems by adding addition and layer layer caking. And then the original intent of some of these departments, products, whatever was like somewhere in the fossile, settlements under layer and layer layer of additional stuff on top and no one knew how to dig down. >> In our first conversation that we we had together, you said books were a cheat code for life. I'm wondering how your thinking has evolved on that in a world of AI. >> I don't think it has. I mean like there's more cheat codes now but um uh the I think the books are they still play the same role they have but changed for me personally is that um I don't think I don't know if that it was probably already true when we talked is that at least for non uh fiction I walked away from books written recently I think everything written recently is really just like the product of its time and it's kind of trying to put a bit more information into something that's currently evolving. I think books that have stood the test of time are just as valuable and I think they will will always be. >> So what are like three old books that you've read that have fundamentally changed how you think? >> Books I come back to is like I I often talk about Pakistan's law which I love. Um it's such a quick read. I I I I almost always will mention the lessons of history which is I just think the densest like the highest token quality book in existence like given for the length James Bernham's books are fantastic I think um um and extremely relevant. >> What did he write? >> He wrote um the managerial revolution first and then a book called the Macavalians which is unbelievably good. I mean obviously I am a meditations fan. I know stoicism is falling out of favor a little bit right now but like it's been um a lifelong thing for me and um I have a copy of uh meditations in most rooms I spend time in. So like I just like do some random reading and it's like magical how it's somehow relevant to something I'm wrestling with. brand um books just in general. The lessons of philosophy, the lessons of uh history is of course the end of life distillation of it all, but um his longer book is good fiction and foundation series is so good. >> You read the three body part too, right? >> I guess that's sort of tripping into older book now too. But like um that's a recent sci-fi which is incredibly good. >> Final question. We always end with the same thing. This is your third time answering this question now. I'm interested. I'll go back and look at how it changed. What is success for you? My success is just like um to cultivate skills like become good at more things and uh um in doing so create products uh or toys or things that other people uh that can can make other people's like day a little bit better at at at the minimum or um go and uh allow people to get power or motivation or ambition beyond what they would otherwise have. >> [music]