Tobi Lutke (@tobi) is the CEO of Shopify

He's one of my favorite CLEAR thinkers

I spent some time in lockdown going through his interviews

Here are 6 mental models I got from it

THREAD...
LUTKE LEARNING 1 - OPERATE ON CROCKERS LAW

Crocker is a Wikipedia editor who asked people to NEVER apologise about editing his pages.

He just wanted them to focus on making his pages BETTER.

He took 100% responsibility for his mental state. If he was offended, it's his fault.
"Just give me the raw feedback without all the shit sandwich around it." - Tobi

"Feedback is a gift. It clearly is. It’s not meant to hurt. It’s meant to move things forward, to demystify something for you. I want frank feedback from everyone." - Tobi
"If I'm insulted it's because my brain made a decision, to implant in my memory and thoughts the idea of being insulted by that person...

I did that under my own volition. It was my own choice. My brain has assigned the power to the other person" - Tobi referencing Aurelius
LUTKE LEARNING 2 - ALWAYS BE A STUDENT TO FIRST PRINCIPLES

Tobi's most consistent used mental model throughout his interviews is:

Global Maximum > Local Maximum

Local Maximum = Optimising a cog in the machine

Global Maximum = Optimising the machine itself
Tobi's favorite example of FIRST PRINCIPLES is a Truck driver.

His truck was sat still for 8 HOURS on THANKSGIVING waiting for his cargo to be unloaded when he realized...

"Why not take the WHOLE trailer off the back of my ship rather than unloading + reloading each item?"
This Truck driver was called Malcolm McLean

His first principles approach created the SHIPPING CONTAINER

The results?

Global shipping costs went from $6 a tonne to $0.16 a tonne 🤯

The most underrated entrepreneur of the last century AND the godfather of modern global trade. Image
Tobi seems to try to operate under the assumption that everything he is doing could be WRONG.

"I think the best company (that exists right now) is a 6/10 on the scale to what is a perfect company" - Tobi

His goal is to get near a 6/10 and push towards a 7/10.
Humanity's most consistent fallacy is assuming the present moment has it figured out.

We look back and laugh at our assumptions from 50 years ago.

Whilst simultaneously forgetting that 50 years from now they be will be laughing at us.
LUTKE LESSON 3 - THINK ABOUT THE LONG TERM

The media narrative is often a dichotomy of Shopify vs Amazon.

Few talk about the similarity both CEO's have for LONG TERM thinking.

Both consistently warn shareholders that they will sacrifice short term revenue for long term value.
Tobi states that almost EVERY DECISION your business makes can pivot on JUST one question:

"Are you optimizing for every individual transaction or the LIFETIME transaction?" - Tobi

Are you playing INFINITE games or FINITE games with your customers?
Growth Marketers would tell Shopify to force "Powered By Shopify" branding on their Merchants stores.

Everyone who then visits the stores would then know Shopify builds stores like these.

This is the sort of "Growth Loop" that VC's dream of.

Shopify DIDN'T DO this.
“We want to make other people look good. We want to make merchants look good." - Tobi (2017 AMA)

Lutke calls this "LTV thinking" in his interview with @garyvee

On a long enough timeline, playing positive-sum games with your customers is the ultimate growth hack.
It's hard to find a more positive-sum company.

There are few (legal) highs that compete with the "1st Shopify Sale Moment".

Every 60 SECONDS somebody makes their 1st sale on Shopify 🤯

They are trying to help reverse this graph by reducing the friction of entrepreneurship Image
LUTKE LEARNING 4 - EMBRACE TRANSFER LEARNING

"Video games are very distilled environments in which you can learn things." - Tobi

He believes that playing certain games can help your brain rehearse thousand of repetitions for situations that are scarce in the real world.
In the business world, you might make a strategic bet every year.

It may take you 10 years to get the experience of strategic 10 bets.

In the poker world, you make a strategic bet every hand.

It takes you less than one evening to get the experience of 10 strategic bets.
"I'm a card-carrying member of the video games are really good club" - Tobi

"Every employee at Shopify can expense Factorio" - Tobi on one of his favorite games

^^^ He sees the mental effects of playing Factorio as a worthwhile business expense for his company
LUTKE LEARNING 5 - DECISION MAKING

"Every single time I got a decision wrong, I realised that the piece of information that was missing was actually in fact totally available to me." - Tobi

“We tend to underestimate how difficult it was to make a decision in hindsight” - Tobi
"If your job is to make decisions, it’s worth treating it like any other subject to get better at." - Tobi

Whenever he makes a decision, he keeps a small log file with one paragraph explaining what information he used to make that decision.

He reviews it every 6 months
Kasparov had a "SYSTEMS MINDSET" for analyzing his chess mistakes, e.g. Pawn to E4 lost the game

Outcome mindset = "Don't do Pawn to E4 again".

Systems mindset = "What was the mental routines that occurred before I made that decision? Don't do them again"
OUTCOME MINDSET prevents you from making that ONE mistake again.

SYSTEMS MINDSET prevents you from using the mental models that caused that mistake.

SYTEMS MINDSET prevents that one mistake AND 100's of other potential mistakes by addressing the root cause.

H/T @SafiBahcall
LUTKE LEARNING 6 - TALENT STACK LED BY CURIOSITY > MBA

He didn't have an MBA. He didn't grind 100-hour workweeks.

Instead, he played video games (which led to coding) and he snowboarded (which led to an online snowboarding store).

This 'Talent Stack' led to Shopify.
"Following your genuine intellectual curiosity is a better foundation for a career than following whatever is making money right now." - @naval

Pursuing your unique talent stack and curiosity is often inversely correlated with appearing successful early on.

Stop caring.
TOBI'S FAVOURITE BOOKS:

- 'Courage To Be Disliked' by Kishimi

- 'High Output Management' by Grove

- 'The Box' by Levinson

- 'Thinking In Systems' by Meadows

- 'Meditations' by Aurelius

- 'Guide To The Good Life' by Irvine

(Don't forget Factorio and Starcraft!)
I occasionally send out a newsletter of new ideas I'm exploring.

100% high signal. 0% spam.

Check it out - bit.ly/MentalModelsBD

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More from @george__mack

Nov 16
1. One idea I've been obsessed with: Life is a video game.

• Hardware (Brain)
• Software (Beliefs)
• Bugs (Errors)
• Cheat codes (Knowledge)
• NPC's (Low agency)
• Video game designers (High agency)

Thoughts on switching from 1st person frame to 3rd person...
2. Understand the hardware (Brain)

The hardware evolved over millions of years and hasn't changed since our ancestors played life's video game in hunter-gatherer tribes

There's little you can do to improve it -- but there's a lot you can do to damage it: Drugs, Concussion, etc
3. Understand the software (Beliefs)

Within the hardware, there's malleable software that exists: Beliefs, values, and mental models of how the world works.

It's an open-source project with many contributors: Parents, friends, bullies, ex's, teachers, rejection, society etc
Read 14 tweets
Nov 14
1. High Agency is the most under-discussed personality trait.

It's the sense that the story given to you by other people about what you can do is just that - a story.

And that you have control over the story.

I keep examples in my notes called "The High Agency Library"... Image
2. @EricRWeinstein opened the portal of "High Agency". It's one of those ideas that once you see it, you can't unsee it.

It appears to combine the following 3 things into one mega trait:

1. Resourcefulness
2. Skepticism towards "best practices"
3. Locus of control Image
3. The best 2 questions I've found for identifying high agency thought & individuals:

Thiel Question: How can you achieve your 10-year goal in 6 months?

Bezos Question: If I was stuck in a 3rd world prison and had to call someone to get me out, who would I call?
Read 19 tweets
Nov 9
Life's currency is time.

But some live 100 lives in 1 life.

I call these people "Time Travelers".

Here’s 8 ways to time travel:
1. Volume - If you do a task daily rather than weekly, you achieve 7 years of output in 1 year.

If you apply a 1% compound interest rate each time, you achieve 54 years of output in 1 year. Image
2. Assume The Cringe Now

Most people look back 5 years at past self and cringe.

Most don't assume that their future self will cringe at their present-day self.

Thought experiment to speed up time: What will future-me cringe at present-me for?
Read 9 tweets
Nov 3
I fixed my phone addiction by having 2 phones:

1. Cocaine Phone - Full stack dopamine. Twitter. Instagram. TikTok. WhatsApp. Anyone can contact.

2. Kale Phone - Full stack serotonin. Notes. Kindle. Uber. Maps. Emergency number for 2-3 contacts.

Lemme explain... Image
Here's how society currently thinks about how to deal with phone usage:

1. Phone Addict 24-7 - Carries phone everywhere.

2. Phoneless Luddite - Give up on the best technology of this century so far.

There's so much downside to both.

Neither solution is optimal. Image
Capex > Opex:

1. Will Power Capex = A one-off will power investment (E.g. 2 Phones)

2. Will Power Opex = A recurring diminishing investment. (E.g. Fight one addictively designed phone 24-7)

If you can invest in willpower Capex to prevent willpower Opex, do it every time.
Read 8 tweets
Oct 31
13 rules for thinking clearly (via inversion):

1. Never say "I don't know". You need an opinion on everything.
2. Always trust the words "Science says". Never ask for the underlying logic or data.
3. Whenever you engage in a discussion or debate, do not define the underlying words you're talking about.
Read 13 tweets
Oct 28
18 semi-controversial thoughts on the future:

1. The World Is Flat - The winners of remote work will be skillful people in the developing world. The losers of remote work will be unskilled people in the developed world.
2. The First Teenage Self-Made Billionaire:

Trend 1 - Homeschooling growing rapidly

Trend 2 - Ability to start a business online without anyone's permission

Conclusion: A teenager will become a self-made billionaire in the next decade
3. The Dating Vacuum:

Fewer people in offices and bars lead to a vacuum for dating options

Expect a tonne of dating app innovations to fill this void

I suspect we will look back on today's dating apps like we look back on 1970's video games
Read 18 tweets

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