George Mack Profile picture
May 18, 2020 25 tweets 6 min read Read on X
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

Mar 24
The history of technology by Brad Jacobs: From fire and shelter, to the internet and AI.

I wish I was taught this at school...

More than 2 million years ago - Early humans in Africa make the first stone tools from split pebbles

1 million years ago - Humans begin to use fire as a tool

500,000 years ago - Humans build the first shelters

350,000 years ago - Humans begin to hunt with spears

100,000 years ago - Humans begin to trade using beads made of shells

60,000 years ago - Humans begin to use spears for hunting, protection, aggression

1000 BC - Early accountants in Asia create the abacus

635 BC - The Chinese produce the first coins

600 BC - The Romans build the first public sewer system

200 BC - The Chinese invent the compass

AD 725 - Buddhist monk Yi Xing creates the first mechanical clock

900 - The Chinese first use gunpowder in war

1182 - The Chinese invent the magnetic compass

1284 - The Italians invent eyeglasses

1328 - The Europeans invent the sawmill

1440 - Johannes Gutenberg invents the printing press

1530 - Europeans invent the spinning wheel

1609 - Galileo Galilei invents the telescope

1662 - Blaise Pascal invents the public bus

1698 - Thomas Savery invents the basic steam engine

1769 - A French military tractor becomes the first self-propelled road vehicle

1793 - Eli Whitney invents the cotton gin

1795 - Nicholas-Jacques Conté invents the modern pencil

1838 - A British steamship makes the first transatlantic crossing

1839 - Charles Goodyear develops a way to make rubber strong, durable, and elastic

1850 - Isaac Singer introduces the sewing machine

1857 - William Kelly invents the blast furnace

1865 - Giovanni Caselli introduces the first commercial facsimile system

1869 - John Wesley Hyatt invents synthetic plastic

1874 - Remington Company introduces the mechanical typewriter

1876 - Alexander Graham Bell invents the telephone

1877 - Thomas Edison invents the phonograph

1880 - Thomas Edison invents the incandescent light bulb

1882 - America opens the first hydroelectric power plant

1883 - England constructs the first electric railway

1885 - Gottlieb Daimler builds the first four-wheeled automobile using an internal combustion gas engine

1886 - Josephine Cochran invents the first practical dishwasher

1892 - Rudolf Diesel invents the diesel engine

1894 - Nikola Tesla invents radio signal coils

1896 - Gottlieb Daimler builds the first truck

1901 - Henry Booth invents the vacuum cleaner; Thomas Edison invents the alkaline storage battery

1902 - Marie and Pierre Curie discover the existence of the elements radium and polonium

1903 - Willis Carrier introduces the first electric air conditioner

1908 - Henry Ford uses the assembly line to introduce the Model T; Thomas Edison develops a moving picture with sound

1910 - A plane transports commercial freight for the first time

1913 - England manufactures the first stainless steel

1914 - Electric traffic lights are invented in the United States

1920 - James Smathers invents the electric typewriter

1921 - Karel Čapek invents the robot; Western Union introduces the telegram

1923 - Clarence Birdseye invents frozen food

1927 - Erik Rotheim invents the aerosol can; Philo Farnsworth invents the all-electric television

1933 - Eric Fawcett and Reginald Gibson invent polyethylene

1935 - Robert Watson-Watt pioneers the development of radar

1936 - A rail provider transports a truck trailer for the first time

1937 - Frank Whittle invents the jet engine

1938 - Philip Wiles invents the stainless-steel artificial hip

1939 - Sikorsky builds the first viable helicopter; The United States builds the first mass-produced remote-controlled aircraft, or drone

1940 - England uses the first operational computer in WWII

1943 - America begins operating the first nuclear reactor

1945 - Raytheon Corporation introduces the microwave oven

1946 - The first general-purpose, programmable computer (ENIAC) is developed for the U.S. Army

1947 - William Shockley, John Bardeen, and Walter Brattain invent the transistor

1949 - De Havilland Aircraft builds the first commercial jet airliner

1951 - Charles Ginsburg develops the videotape recorder

1952 - America develops the first hydrogen bomb; Swedish scientists Åke Senning and Rune Elmqvist implant the first cardiac pacemaker

1953 - NBC begins broadcasting television programs in color

1955 - IBM introduces the first transistor calculator

1956 - The “Ideal X,” the world’s first commercial container ship, sails; IBM develops the FORTRAN computer programming language

1957 - Russia launches Sputnik 1, the first artificial satellite

1959 - Jack Kilby and Robert Noyce
invent the silicon chip; Xerox introduces the first commercial copier

1962 - NASA launches the first privately built satellite; Nick Holonyak Jr. invents the first visible light LED

1963 - Digital Equipment Corporation introduces the minicomputer; Philips introduces the compact audio cassette

1965 - The first robotic exoskeleton for assisted walking is created; Stephanie Kwolek invents Kevlar

1966 - Marie Van Brittan Brown invents the first video home security system

1968 - Ivan Sutherland implements the first virtual reality system

1969 - The internet is created through the ARPANET network

1971 - Intel introduces the first microprocessor; Texas Instruments introduces the first pocket calculator

1972 - Landstat 1 creates the first comprehensive mapping of Earth

1973 - Xerox develops the first personal computer

1977 - The VHS video recorder is developed

1978 - The first human is born through in vitro fertilization (IVF)

1979 - Nippon launches the first 1G wireless network in Tokyo

1980 - Gerd Binnig and Heinrich Rohrer invent the scanning tunneling microscope (STM)

1981 - The mobile phone is invented

1982 - The compact disc player is developed

1983 - Apple introduces the Graphical User Interface (GUI); Bill Gates introduces Microsoft Windows; GPS technology is made available for civilian use; Charles Hull invents stereolithography

1984 - Carnegie Mellon University develops the first truly autonomous vehicles

1991 - Ann Tsukamoto identifies and isolates stem cells

1992 - Apple introduces the first PDA; Vodafone sends the first SMS text message, “Merry Christmas”

1994 - Jeff Bezos founds the first purely online retail company; Dan Kohn completes the world’s first secure credit card transaction over the internet

1995 - Gary Kremen launches Match. com, the first online dating service

1996 - Email communication is widely adopted; Scientists at the Roslin Institute in Scotland clone “Dolly” the sheep

1997 - AOL makes instant messaging available; Videophones are first used in business settings; IBM supercomputer Deep Blue defeats chess champion Garry Kasparov

1998 - Google is incorporated; MP3 files begin to be transmitted on the internet; Microvision introduces the virtual retina display; IBM introduces the first speech recognition software; The first high-definition television is sold

1999 - The first wearable continuous glucose monitoring system is approved by the FDA; The first human organ, a bladder, is artificially engineered using 3D printing; TiVo introduces time-shifting broadcast recording

2000 - The “ILOVEYOU” virus infects 50 million computers

2001 - Apple launches the iPod; The first artificial heart is implanted in a human; Capsule endoscopy technology is introduced

2002 - The birth control patch is first released in the United States

2003 - The U.S. government establishes the National Cyber Security Division; Skype launches videoconferencing applications

2004 - Mark Zuckerberg and fellow Harvard students launch Facebook

2005 - YouTube launches its video-sharing website; Scientists complete the first comprehensive comparison of the genetic blueprints of humans and chimpanzees

2006 - Amazon Web Services is launched; Twitter is introduced; Nintendo introduces motion sensor–controlled technology; The first commercial drone is permitted by the U.S. FAA; Food is 3D-printed for the first time

2007 - Apple introduces the iPhone; Amazon introduces Kindle

2008 - Blockchain is introduced for bitcoin transactions

2009 - Emmanuelle Charpentier and Jennifer Doudna invent CRISPR; Google launches Waymo

2010 - Apple introduces the iPad; The first ever Uber trip is completed; Palmer Luckey completes his first VR headset prototype

2011 - Apple introduces Siri

2012 - The Higgs boson particle is discovered; Australian surgeons implant the world’s first bionic eye

2013 - The Apple App Store exceeds a million apps; The FDA approves the first retinal implant in the United States

2014 - A robotic lander built by the ESA makes the first soft landing on a comet

2015 - NASA’s New Horizons spacecraft reaches Pluto; PayPal’s Venmo reports 40 million annual users

2016 - The FDA approves the first artificial pancreas; AlphaGo defeats Lee Sedol at Go

2017 - SpaceX reuses a Falcon 9 rocket; Ericsson introduces support for the 5G network; Apple launches facial recognition on the iPhone X

2018 - Instagram reaches 1 billion monthly users

2019 - Astronomers release the first photo of a black hole; IBM unveils the first quantum computing system for commercial use; Israeli researchers print a 3D heart using human tissue

2020 - Zoom is downloaded a record 2.13 million times in a single day

2022 - OpenAI releases ChatGPT; The first full-color images from the James Webb Space Telescope are released; A robot performs laparoscopic surgery on a pig without human assistance.

2023 - Google releases Bard.
Thought 1 - I wish I was taught this at school

It connects subjects: Physics, maths, chemistry, biology, business and geography through an interconnected timeline -- with practical implications.
Thought 2 - The current education model defies how we learn

Having random subjects with no interconnection, timeline or narratives -- is awful for learning.

You could scrap 90% of the education system and replace with a detailed breakdown of this full timeline.
Read 7 tweets
Jan 28
What idea changed how you view the world?

Here's mine: High Agency.

The high agency library: (19 best examples I've found in 4 years)Image
1. High agency in a video: This guy.

Watch how the low agency crowd goes from judgemental to joining in, once everyone deems it acceptable.
2. High agency in a photo:

Some historians believe this to be August Landmesser.

He refused to join the german crowd in the Nazi salute in 1936.

He was eventually imprisoned and killed by the Nazi party for dating a Jewish women, Irma Eckler.Image
Read 26 tweets
Dec 18, 2023
16 differences between USA and UK:

(Written by a Brit) Image
1. Accents

In America, if you drive for 2 hours -- people's accents don't change much.

In Britain, if you drive for 2 hours -- people's accents change a lot.

UK is way smaller than Texas -- but has 40+ accents. Image
2. Apple vs The UK

Apple (US company) is worth more than the entire UK stock market. Image
Read 25 tweets
Dec 17, 2023
What idea do you think society is wrong about?

Here's mine: Cognitive biases are actually superpowers.

9 examples: Image
My problem with the term "Cognitive Bias":

1. It's pessimistic - It assumes humans are stupid. Actually, we're the only thing in the universe we're aware of with consciousness

2. It's low agency - It assumes cognitive biases use you. Rather than tools to be used.

Let's go... Image
1. Impostor Syndrome - Individuals doubts their skills and have a fear of being exposed as a fraud.

Cognitive Superpower: Good news... You have defeated complacency syndrome.
Read 11 tweets
Dec 8, 2023
How to get creative (without doing drugs): Image
At a first principles level:

1. The brain has inputs and outputs

2. Creativity is an output that is both novel and useful Image
The mistake people make is treating creativity like productivity

We try to work harder and expect creativity to appear

Instead, add new inputs... Image
Read 15 tweets
Nov 10, 2023
Who is the most high-agency person you've never heard of?

Rudolf Vrba.

He escaped Auschwitz by soaking himself in gasoline -- to give a memo to Churchill, Roosevelt, and the Pope.

Meet the man who saved 200,000 lives from the Nazis... Image
Rudolf Vrba was 18 when he entered Auschwitz

His name was removed and replaced with a number: 44070 Image
When Vrba was 19, he lost his virginity in Auschwitz to Alice Munk.

The next day Alice was killed in the gas chambers.

It's impossible to fathom Vrba's level of heartbreak. Image
Read 22 tweets

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