The Era of the Entrepreneur — Tobi Lütke (Shopify) & Lulu Cheng Meservey (Rostra)

We're just gonna have a fun conversation about anything. We should probably be on our best behavior because, you know, it's like a very discerning crowd here and they would not want us to say anything controversial.

Oh, really going for it. My stated preference would be something like orange. My revealed preference is always a very big difference these days. My mom just showed me a picture of my room at home and it was painted black. And there was purple and teal accents. So I guess I had the cyberpunk theme nailed when I was eight.

Color of money, you know, seems appropriate. We started with shopping and we wanted to simplify it and made a green logo and that's Shopify. So easy.

Yeah.

Yeah.

Look, I think you got to nail the big decisions early and then be super flexible on the small ones. I started it not for Shopify. I started for snow, you know, selling snowboards really. It all sounds like a made-up story, but it's actually true and I don't feel like I need to editorialize it. I kind of went into this looking to just make money, right? I knew computers. I knew how they work. The internet was useful. I tried buying snowboards from the internet, wasn't possible. Felt this was something I could do. Also couldn't work because in Canada I didn't have a work permit. So no one could employ me while I was in Canada and therefore I started my own business which worked out. So you take one step at a time and the point was I did it because I needed to make money and I needed to learn. I was young, right? I wanted to cultivate some skills. The thing I knew about myself very well from early days from school is like I am unable to learn the solutions to any problem that I've never had. Which sounds really dumb, but it's actually, at least for myself, and I imagine there's other people like me, is actually a pretty profound insight you can have at some point because it's very actionable. You can just trick yourself into having basically all problems at which point you can learn everything if that's what your goal is. And so, I think as it comes to entrepreneurship, it's just the most beautiful way to expose yourself to literally all the problems anyone's ever had, right? Because now you have to deal with just trying to stay ahead of the needs of a business, you have to learn about all of finance, leading people, public speaking and all these kind of things. So I was on this path and then just went from there. On the wife thing, it is actually a remarkable thing. The early joke around Shopify, remember again we started in Ottawa, Canada. The early joke was the Shopify benefits package was marry a government worker and go on bears because that's exactly what all of us did. So that scaled until about 10 people.

I don't think it's harder necessarily, but it's harder for completely different reasons than it was, right? It was super hard because it wasn't something you did, starting companies really. There's no support network. There's literally you could walk into a bookstore, there was no book on it. I think Paul Graham's Hackers and Painters was also not about entrepreneurship but accidentally talked about entrepreneurship in a very real way that came out in I don't know, I would want to say 2006 maybe a little bit earlier. So there was basically a complete information asymmetry there. I only heard the term entrepreneur probably like three, four years into running a company, right? And so that's what we've been doing, right? Like now this seems crazy because especially because not only was I an entrepreneur, I've already caused other people to be entrepreneurs and didn't know the term, right? I mean this is partly potentially about me.

I just like you started a company, right? I guess. And then the whole thing became, I mean the thing that pissed me off most was when I started talking to venture capitalists and they sort of described my company as a lifestyle business because it was making money and apparently that makes you not a business in their minds. They had to rename us. And I pointed out, you know, I'm of European descent. We have started companies for 6,000 years. You don't get to rename companies into lifestyle businesses here suddenly. So anyway, so venture, but then I figured out we were actually probably not a lifestyle business and I guess they were right all along.

I think that's clearly going on a bit but I don't think it matters. I feel like it's very good to normalize making this easy. It used to be like you introduce yourself as entrepreneur and everyone heard unemployed, right? So that was also not great. And it still kind of is. Mom, he's an entrepreneur. I love him. Okay, he's unemployed. So I think, look, I think entrepreneurship is an enormous act of bravery. You're putting yourself out there, you're building something, you're making something for other people, right? Society is as rich as how many members it has that are adding something to the common mission of society, right? Like every country is a project. The core of a project is its economy. Its economy throws wealth of which then can be gainfully reinvested in social programs and all these other kind of things. But it's the economy which is the engine of the entire thing. And so your society becomes richer by more people contributing positive and novel ideas or goods or services to the commons. And so the only way how services or goods are being added net is through entrepreneurship. And so it's a glorious act that we should celebrate vastly more than we are and it also needs to be made as simple as possible and as convenient as possible because I think it's really hard enough. You're talking about sort of early days the difficulty was obscurity, information asymmetry and all these kind of things that were truly hard and like no one told you how to pay people, no one told you how to, like we didn't incorporate until someone told us you should probably incorporate, right? And then we incorporated with two shares, one for me, one for my co-founder, right? And we still have the incorporation document with a stamp and everything, it's hilarious. So two shares. And so you know, then we had to change that.

So you make every mistake along the way and you know there's something to this but it's really like now you're like increasing the amount of shares that your company have instead of work on your product. And so now it's hard because there's so much competition which is but that's usually that's not great for the people who are like it's obviously it's the nicest thing if you find a niche that no one has thought of and you have an instant monopoly and like or you're like Entropic and just add like Canada's GDP in a quarter to your revenue, right? Like all these things are amazing but that's not good for the consumers. Again, entrepreneurs get to play a game which is incredibly valuable and fun and full of learnings and all these kind of things. And what society gets from it is again goods and services that are novel that it then can vote on, right? It's like every single time someone purchases a product or consumes a service, comes to a venue like this, comes to an event like this, purchases an article of clothing, whatever it is, you cast a vote for not just that thing, but everything. You cast a vote for every single decision, every single meeting, every single idea that led to the event, the entire supply chain that caused the event to exist, you know, all the vendors setting the stages, the lighting, the sound, the booking, the tickets, everything. By being here today, everyone is voting for more of such events in this city by these people in the future. And so the world around us shapes by this sort of democratized collaborative multiplayer game we call the economy where the active players are the entrepreneurs. And I think that's really, really, really important for everyone to understand. By the way, just to make this a little bit more spicy and fun, you know, we all know this school is like a conspiracy to get everyone to be utterly confused about that, that's how it works, right? Like everyone's pretending that there's a fixed amount of wealth in a world that everyone else competes over and so it's just like even coming to the most basics understanding of how everything works and fits together is at this point like a gauntlet that everyone has to run when you're going through life and so that makes it doubly hard from a perspective of entrepreneurs. Of course you have all this competition now and like it's, you know, every niche is identified. Well, no, not everyone, you'd be surprised how much open terrain there still is. But there's a derivativeness. I think the people you talked about showing up, the people who are here because entrepreneurship is now sexy right now, they tend to go for the, this seems valuable. It's sort of a lean startup customer development that you usually see. It's like talking to a lot of potential buyers and figuring out their needs and then trying to fulfill their needs, which okay, that's not necessarily a bad thing, but this is how you create slightly incrementally better versions of things that already exist, right? And what we actually I think celebrate most is sort of the novel beautiful insight, right? Like the thing that no one asked for. In fact, the thing I feel like the best thing that can be done is for people to just fall in love with some kind of problem. This happened to me early and this is not my idea. This is, you know, Karl Popper writes about this and talks about this or talked about this I suppose. He talks like the best thing in life is to discover a beautiful problem early in life, like something you can fall in love with that you can then spend your career sort of toying with and playing with and acting in and trying to improve and solve. And it's the most unlucky of cases where you're so good at this that you might solve the problem because now you need a new problem to solve and the best you can hope for is that the problem has yielded beautiful problem children that you can now dig into. But like that's, you know, I think that's a beautiful idea and so I highly encourage people to just go and discover the problems that speak to them and then just go as deep as you can.

Yeah, I'm a little bit sus of a lightning bolt moment. I actually feel like there's a, I felt a gravitational pull to the combination of using technology to sell things and I know this sounds really trite here but like it just to me this was a beautiful thing, right? Like it just was like I always tried, as a teenager I bought things that my fellow classmates were really into in bulk and then sold it at a profit, right? Like it's just like, I mean again I'm a child of the 80s, early 90s so like one thing was, you remember these like magic eye books where you had to like screw up your eyes and you saw like a 3D object.

No, it's like it's just like it's like.

Like look it up. And like you know just like there was these books and they published them and it was like apparently really fun and I didn't quite get it but like I called the publisher and bought like hundred of them for like a dollar or two per thing and then sold them for eight and that was my and then I had enough money to buy new graphic cards.

I was a dealer. I was a dealer.

Yeah. Yeah.

So you know like I think like and then you know like okay well you do this a bit, yeah, play, magic was a theme, I played lots of Magic: The Gathering and so on and made lots of money with that and so but like again you realize like that you know you can do this but it doesn't scale. And the computers scale, the internet was around. This was not like, stay with the problem, the thing that I wanted to do and take it, bring all your other unique skills into it and I think that works well.

I think, yeah, I mean like Shopify is going to be the best idea I've ever had. So this is why I love building it, running it, reinventing it whenever it needs reinventing which luckily is very often thanks very much to the tech industry which constantly comes up with delightful new platforms that we get to re-explore. So what's missing, I think, I mean we certainly need to fix media, right? Like we need better stories in the world, that would be worth digging into. And we need, I just think also like delight. Like I mean it's amazing that we've managed to get 10 minutes through this without talking about AI which is like I think that's a world record right now planet earth right so. And so there's a lot of talk about what are people going to do in the future and you know like here's, I find that really, really, really funny because it's such a misunderstanding of how humans work that people think that there's not going to be enough jobs. The shape of companies is going to change. Absolutely. Companies will be smaller. And but there will be vastly more of them which is amazing because like I think the world's actually deeply impoverished in terms of how incredible the products are and what we can get by the fact that like there's only very few companies that could actually pay or create the environments for having excellent engineering and engineering was the core ingredient of all the most important, well most of the most important projects and companies of the last 20 years, but like there's just not enough engineers in the world to follow everyone's ideas. And now this is becoming much more like everyone has a seven out of 10 engineer on their phone right now for $200 a month and that'll be $20 or $2 a month very soon. And so you know this is becoming like I think the amount of creativity that can be brought in the world is just so vastly higher and so first of all we will have more companies. What are these companies going to do? And like there's so many things that like the demand for interesting things, for delight, for products, for experiences is basically infinite. No it's not basically it's literally infinite. It's like there's no more certain prediction anyone can make that then people want more interesting stuff, right? And so that's just very deeply, that's like lizard brain stuff. Like we are not talking about making people make a choice. This is like base layer, right? Like firmware stuff, which is great. That's the best thing about humans. We are infinitely interested in novelty and new things. My favorite jobs program in my mind is like Formula 1 is my favorite because it's like an entire sport named after a rule book. Like it's the only sport named after the rule book. And there's you know one single team has like 6,600 people working, 800 people on the car, 800 people on the engine. They're flying around the entire world all because we just decided to have a rule book. We are very good at coming up with jobs. And so there's going to be no shortage of people coming up with things to do and I think we should do more of this. We should invent more things. There's the enhanced games right now. I love that we're trying this. So you know I think that this direction is.

Yeah.

I think from the first second. I don't think like the ideal team size might be one but like that's definitely not the right, life's too short for that.

I think one person company is like, is it possible to build a billion dollar one-person company? Yes, it is possible. Why would you not spend some of that money to have someone else around, right? Like it's just like it seems so irrelevant, you know? So much of these stories are like we spend so much time to think if we could that no one stops to think if we should. And so yeah, like get a couple friends in there and then you're going to have a much better time. Like the best thing you can do is like do hard things that other people deem valuable surrounded by friends, right? Like that's the kind of perfect configuration for life on planet Earth. So but like I think the point sort of directionally stands that there can be billion dollar five people companies. In fact, I think they are there are some now and I think maybe not officially but like whisper numbers wise.

Yeah. It might have happened.

Yeah. Again I don't know where the sort of usually things happen and then they're denied for a long time and then at some point people are, it's too interesting to share. So I'm going to wait for that. But like I think we are on that part of the equation here. Yeah.

Yeah. So, I mean, look, Shopify is like it's very important for new companies to not compare their opening chapters to someone else's, you know, fully finished first book in a hopefully infinite series of books. Let's, I don't, I almost called myself my company a finished book. That would sound horrible to myself. So I avoided that by making this a vestology. So because like I, you know, I don't know like people, there's companies here that of people that's, many companies in fact that were started by people who used to be at Shopify and those companies are very like very successful and I compare where those companies on a timeline basis to Shopify. They're like growing 100x faster than Shopify did, right? Like so it's just Shopify's old and it's like 20, I started 21 years ago and I, you know, I just took it one step at a time but like the thing I never changed is like the reason why I built the company, right? Like the reason why I built the company is because I'm deep, like I love the people we are building for. Again, I think there's not enough people looking after entrepreneurs. Like some people need to care about entrepreneurs, otherwise this is a fragile thing and might go away. If we can make it easier for people to be entrepreneurs, then this is a cause worthy dedicating your life to. And that was very small scale at some point and happens now on larger scale. It's still entrepreneurs on the other side and they are remarkable individuals and being like one of the greatest assets of a company is just that we have customers that we admire, right? Like we built for amazing people and then the company is set up to, you know, be like a little bit of a, how do I say it like it's an island of misfit toys. It's like the sort of delightfully discontent. It's the people who are like, you know, just care about things but want to make them better. We reinvent everything up and down from internal systems to our payroll system to like it's just like we're playing, we're an active player in the world of company building, right? Because companies are not that good, like they all are just good enough for whatever their task is, right? That's where most people stop and if you pursue it further then you can have a lot of interesting discoveries and it's all about discovery for me. So I think you can keep it early by constantly trying to, you know, reinvent yourself. As dumb as it sounds, by staying very close to the people you're building for and just really try to not lean into the sunk cost fallacy. Everything can be rewritten, especially now. Look, every existing piece of software on planet Earth is now just a prompt for a better version of that piece of software. And I think like all the things that people say like wouldn't it be great if we could have this other version or wouldn't it be great if we would have not made this design mistake which Toby did 2004, you know, then we can now live in this counterfactual world a couple thousand dollars of tokens later and not just like having to put our best people for a couple months into a room working on something that we already have in a different form, right? Which is actually really, really hard to get people to motivate for. So I think you can kind of like there's so much you can do now which is really, really awesome and I think that's really fascinating. So you know get started, take one step at a time. The thing that you can't do is never not be ambitious then like you got, you have to be the best in the world at something to do it. And so the important thing here is like this sounds too much. So you have to negotiate right like best in the world is really, really hard. Well you can negotiate world that this is important. You can't negotiate best because that's what a lot of people do and I really, really, that sucks right like they, many people negotiate both of those things. They say I'm going to be the best or I'm going to be a good service provider for accounting services in downtown Toronto. Like now you negotiated the entire sentence. No, you got to, you got to want to be the best. You want to going to want to be the best product, but world can be something. It can be downtown Toronto. Especially if you're starting a restaurant or whatever. Like it can be Canada if that's the market. If you're starting something that's hard to take international, it can be a niche like building the best solution. Like Shopify was not the best e-commerce solution when I launched it. It was the best solution for people who started online snowboarding stores when I launched it because that's the only problem I knew how to address and we had none of the features needed for basically anything else and people were very quick to point that out to me. And so you know from there we figured out how to make it better and I think that journey is good so you renegotiate what world means, what is the world to you but you can never, never ever compromise on the best.

Well, seemingly the worst thing that happened in the entire history of a company is that I publicly stated that I like the Ferrari LaFerrari. That seems to be like of all the things I've ever done, that seems to be the most controversial thing. It's unbelievable.

Great. Jesus Christ. Tough crowd.

Well, this is my point on the world thing. You know, like it's just like look, you cannot negotiate the best thing because here's what happens. Like almost wherever you look in the world, there's a bell curve. There's like sort of on a scale of 10 there's nothing, one, two, three and like a sort of like I mean you've seen it a million times, right? And it turns out like all the competition for basically everything is in the middle, right? Like if you say I'm going to be good, well there's a lot of people are trying to build a good thing. A lot of people trying to go for bronze. A lot of people like just want to be part of something or you know like but if you go for best, there's actually not that much competition for that. Most people just don't allow themselves to do it, right? And so you know Shopify has never been a company for Canada. It's a company of Canada. But Canada is like, it's one of the best places on planet earth to build companies, products, services for you know the western world and frankly for the entire world. And it just like you're there's a like the meta game of global companies exists and you plug in from wherever you are. There are some places which make it harder. Canada is not one of them. And so, I think that's just the key. A lot of what I've seen like, you know, Shopify has a benefit of being having a front row seat to millions of success stories and of course millions of discoveries or things that did not work with its shops. And the people who really do really well, especially early, they're like it's like the random little intersections of different products. Again, they renegotiated world. Their world was a people who wanted to wear jewelry that was Pokemon themed. And then they built the best Pokemon jewelry store on planet Earth, right? And so, and frankly, I have some of the jewelry for the archives because that was an early store. And like it's, I'm not wearing it, but what I was really surprised by is like the quality of it. It was like legit amazing high quality work. It wasn't like novelty kind of thing, but someone really poured their everything into this. And I think.

Yeah, it's like, yeah, it's like ornamented with like, you know, Squirtle made from sparkly stone like it's like I think it's cool. And so yeah, like just aim high is what I'm saying. It's much, much less competition. Don't make a slightly better version of something that already exists. That sucks. The world has enough of it.

I mean, craftsmanship is like, to me, it's a different family tree of life philosophy than academia, which is a very big statement, I think. It's more consequentialist. It's more about the thing that is created is then value of a wall can be judged. It's not so much about ideas. Like the difference between I think academic thought and craftsmanship thought is that to academics a novel idea is everything. Like again academics dominate, academic thought dominates the western world specifically North America. And therefore we like things like you can get a Nobel Prize for an idea, right? Like which is like we should, you should, it's great, it's sort of industry way of rewarding each other. It's all good. But like it's over dominated public discourse. We believe like innovation happens by people in lab coats saying Eureka at some point. In reality, that's not at all how, well, I mean, that is part of it surely, but like it's more, it's more blue collar, right? It's like it's more make things. It's doing reps. It's like put in your time. It's like make a thousand of a thing that you care about. And you know the thousand first will be better than the 999. This is where like the apprentice to a shoe maker spends 10 years making shoes and then they can be a master shoe.

Yes.

Yeah. You're getting out of a time of like, I mean, look, like look, this is what happens really quickly. The moment power gets centralized in society, you see it like Soviet Union or so, you end up with brutalism, right? Like you must destroy ornamentation as part of it, you must push for pure utilitarianism and I think this is the biggest misunderstanding about craftsmanship. Craftsmanship is not utilitarian, it's actually centrally planned, more academic, abstract which removes humanity from everything. And craftsmanship is deeply human, it's deeply in the moment. Ornamentation is actually not, it's not frivolous because it's like the, I mean people say entire, like what's the purpose of life is create, like one of the really excellent candidates you hear is create great, create beauty, right? Like that's because that outlasts users in a very significant way. And so I think making things for real humans that actually are not quantifiable in spreadsheets but like that you feel deeply is something that just makes a real difference. The killer feature of Shopify in 2006 was that it looked beautiful. It's that's the only thing it had that was truly different from everything else. Like other software had better features, was deeper, was more insightful and but Shopify was beautiful and was legible and it was understandable. We tamed the complexity of starting a real business. And some of this taming was not just like utilitarian taming or good language or good words or actually pretty graphics. It was kind of ornamentation that invited you to explore. And so I think that's, you know, these really, really, really deep and very powerful concepts are just like not harmonically reconciled in the North American school of thought and I think that's impoverishing to a significant degree. So winding back all this entire stack here all the way to like what should entrepreneurs do. We are all getting a huge amount of spare capacity here like again like every individual is now the CEO of an entire data center worth of agents that can work around the clock. This creates the ability to get away from razor thin margins of you just need the thing and it needs to work somehow to fairly easily you can say you know what like one of those agents can really like thermonuclear front end design skill that you just download from the internet that makes everything look absolutely like a banger web design and you know just make more beauty like at least get started. While this might be sloppy beauty initially, after it exists, then have your mark on it. Like spend some of your attention which got saved like you don't again you don't need to figure out that you have to incorporate your company. Your clanker will tell you, it will even fill out the forms for the city hall. So you don't even have to spend a lot of time out. That frees up your time while you're starting a business. That time, work on the things that are unquantifiable, that are like hard to reason about, hard to make, hard to put in spreadsheets because with that you make products that actually speak more to other humans, which is what we really care about. Your entire like you do such a wonderful job. Everyone who isn't following Lulu on various social media specifically X really needs to follow and like you talk about talking direct to your customers. One of the ways you talk directly is through demonstrating the depth by which you thought about the problem domain through the way your product is created and then you need to afterwards tell them why you spend so much time and like why it matters to you and I think when you combine those things you have a real good blueprint for starting new businesses and it's a great time to start new businesses.

Yeah, I mean I like that's a fun question as the last question when we were like at zero zero thing like look it's just wrong this like it's just it's like it sounds smart but it's dumb like and it's been dumb for like I can show you newspaper articles from 1935 where people argued that we've invented everything that we need to invent and we will have to deal with a slower growth society and we will have to figure out how to redistribute the things we have. It's dumb stuff. Like you have like there's infinite value out there, you know, like the marginal value of any beach is its weight in Nvidia H100 chips. Like there's trillions and trillions and trillions of dollars of value we can bring into economies by just entrepreneurial action to remix the raw materials or the ideas into things that other people care about. And then we vote for them through the beautiful concepts of money. And then the positive sum grew the entire pie. And by the way the pie growing has no speed limit. We already seen like several countries with 5% annual GDP growth. Literally every period of history, every period of history that you can name that people describe as a golden age where things were good is simply a time where GDP grew 4% or faster. That's it. Like humans are not super happy when the economy, when they are part of something that's obviously growing because that is giving evidence that there's lots of opportunity which then encourages people to seek more opportunity which then adds to the GDP growth. And so that's the entire thing. That's like by the way every time you spend time with politicians or media remind them of that. And so there's a lot of this and like there no time as right now adding like because like every single time you use an AI you probably figure out something new it can do and none of this is metabolized in the economies that exists and all of it can be rephrased into products, services, open source projects, delights, gifts, whatever and so it's a fantastic time to build novel things and there's going to be like brilliant businesses going to come out of this. So.