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

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with George Mack

George Mack Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @george__mack

Mar 28
Underrated rule of thumb: Don't put another human on a pedestal.

Even the greats had human flaws:

1. ‍‍Steve Jobs delayed nine months of medical treatment of pancreatic cancer for a carrot juice diet and acupuncture. Image
2. Mozart overspent his income, lived miserably in mountains of debt and regularly wrote letters to friends begging for money. Image
3. Isaac Newton spent thirty years of his life writing 1 million words on alchemy.

Hidden for years by his heirs because they were too embarrassed to publish it. Image
Read 14 tweets
Mar 24
After 7 months of writing, I finished my essay!

I think agency might be the most important idea of the 21st century

highagency.com
High agency in a meme: Image
High agency in a moment: Image
Read 9 tweets
Mar 23
After 7 months, I finished my essay on high agency.

So I asked myself: "What's the most high agency way of promoting it?"

Last night, I took over the iconic Times Square in New York for $0.

Hilarious story... Image
I spent 7 months trying to simplify high agency in the essay:

Optimism = Glass is half full

Pessimism = Glass is half empty

High agency = You're a tap Image
When it came time to promote it, I used the high agency tricycle:

1. Clear thinking
2. Bias to action
3. Disagreeability

Like a tricycle, if you take away any of the wheels -- it stops working. Image
Read 17 tweets
Aug 12, 2024
"Most people die at 25 and aren't buried until they're 75" - Benjamin Franklin

Why?

4 reasons and solutions: Image
Reason 1 - Milestones

0-25 is a well-designed video game.

You level up each year.

There are regular milestones as you go from infancy to school to entering the workforce.

You constantly feel like you're making progress -- and have reflective milestones.
After 25, it's a terribly designed video game.

Society places you on your own.

If you don't have the agency to design your own 25+ video game, the only milestones life will give you are the funerals of your loved ones -- followed by your own funeral.
Read 23 tweets
Jun 16, 2024
What idea do you think is true AND underpriced?

Here's mine: The most productive people turn life into a video game.

Let's go deep into this...Image
I had this red pill moment when I saw the following:

The laziest person I’ve ever met play a video game for 16 hours straight, 7 days per week.

My brain began to hurt: The laziest person I knew just did more focused work than I’d seen anyone ever achieve.
I’d hit level 100 of cognitive dissonance:

The laziest person in my life is also the hardest working person in my life?!

I needed a software update for my broken worldview:
I realised this person wasn’t lazy…

Instead, their reality was just a poorly designed video game.
Read 23 tweets
May 30, 2024
How to choose where to live and what locations to visit:

12 non-obvious thoughts:
1. The 3 big decisions: Where you live, what you do, and who you're with.

Location might be the most important one because the other 2 are often downstream of location.
2. Good rule of thumb for locations to avoid: What places has the most amount of sofa people? (People that drain your energy you need to lie down on a sofa to recharge)
Read 15 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(