PodcastsAll-In with Chamath, Jason, Sacks & FriedbergAll-In Summit: Tobi Lutke on consumer spending, teams, Amazon, AI, and more
All-In Summit: Tobi Lutke on consumer spending, teams, Amazon, AI, and more
All-In with Chamath, Jason, Sacks & FriedbergTue Sep 12 2023
Founder Success Story of Tobi Lütke and Shopify:
- Tobi Lütke is the CEO and founder of Shopify, an $82 billion public company.
- The origin story of Shopify involves Tobi starting a store to sell snowboards and then abstracting that into selling the software that sold the snowboards.
- Shopify has had a lot of success in raising money, going public on the NASDAQ, and experiencing COVID tailwinds.
Consumer Spending and Economic Landscape:
- Tobi mentions that while Shopify has transacted about half a trillion dollars in its lifetime, it does not provide a credible witness to the entire economy.
- He notes that the products sold on Shopify may not necessarily be what people want or need, which can shift the landscape.
- Tobi discusses how behavior changes during a recession, with people often shifting one quality level downwards in their purchases.
- He gives examples of customers dropping out of the Shopify ecosystem to purchase clothing at Walmart or opting for challenger brands instead of luxury brands.
Shopify's Mission and Entrepreneurship:
- Tobi explains that while Stripe's mission is to maximize the GDP of the internet, Shopify's mission is focused on entrepreneurship and giving people independence through building businesses.
- He emphasizes that friction plays a significant role in enabling entrepreneurship, as making it harder will result in less entrepreneurial activity.
- Tobi believes that simplifying processes and reducing friction are essential for fostering entrepreneurship.
The "Team vs Family" Memo:
- Tobi wrote a memo titled "We Are a Team, Not a Family," which leaked but resonated with many people.
- He explains that this memo was written during a confused time in 2020 when distractions were causing complexity within the company.
- The memo aimed to remind everyone at Shopify about their core mission of supporting entrepreneurs rather than preselecting certain ideas or values.
Comparison Between LVMH and Amazon:
- Tobi compares his business model at Shopify to LVMH, highlighting the similarities in empowering businesses and plugging them into a larger infrastructure.
- He mentions that while there may be temptations to vertically integrate further, Shopify's focus is on making it easier for others to look amazing rather than being the front-facing brand.
Shopify's Dealings with Amazon:
- Tobi explains that Shopify's deal with Amazon primarily revolves around BuyWithPrime, as prime is a trusted brand that customers may prefer over individual brands.
- The partnership with Amazon ensures that Shopify can provide services aligned with customer preferences without losing customers who want to purchase through Prime.
Engaging with Amazon as a Competitor:
- Tobi advises entrepreneurs not to view competitors differently but instead see them as inspiration to become better.
- He believes that focusing on percentage points or competition between companies can hinder analysis and opportunities within the space.
Payment Gateways and Opportunities in Fintech:
- Tobi discusses the existence of 86 payment providers on Shopify and highlights their importance in addressing issues such as card acceptance rates and performance.
- He suggests that opportunities lie in new rails being built in the crypto world and potential collaborations between existing players in the credit card network industry.
Shopify's AI Initiatives:
- Tobi talks about Co-Pilot, an AI tool launched by Shopify, which aims to help entrepreneurs by providing answers and guidance related to business questions.
- The goal is for Co-Pilot to act as someone sitting next to users, asking questions, offering suggestions, and helping users achieve their goals.
Operating Principles at Shopify:
- Tobi emphasizes creating great environments for crafters within Shopify and ensuring teams have everything they need to excel at their craft.
- He mentions having an anti-status quo bias within the company and constantly striving to make improvements.
- Tobi believes in fostering a culture of ownership and accountability at Shopify, where individuals take responsibility for their actions and outcomes.
- He emphasizes the importance of diversity and inclusion within the company, recognizing that different perspectives lead to better decision-making and innovation.
- Tobi highlights the value of continuous learning and growth, encouraging employees to constantly develop new skills and expand their knowledge.
- He also mentions the significance of maintaining a strong work-life balance, ensuring that employees have time for personal pursuits outside of work.
Shop Pay and Shipping Features:
- Tobi discusses Shop Pay, an accelerated checkout option provided by Shopify, which has seen significant adoption among customers.
- He explains that Shop Pay is not only about convenience but also about sustainability, as it enables carbon offsetting with every purchase made through the platform.
- Tobi also talks about shipping features on Shopify, including real-time carrier rates and label printing capabilities, which help businesses streamline their shipping processes.
The Future of Ecommerce:
- Tobi envisions a future where ecommerce continues to grow rapidly, with more small businesses entering the market and leveraging digital tools to compete with larger players.
- He believes that technology advancements such as augmented reality will play a crucial role in enhancing online shopping experiences.
- Tobi also predicts increased collaboration between physical retail stores and ecommerce platforms, creating seamless omnichannel experiences for customers.
Challenges in Entrepreneurship:
- Tobi acknowledges that entrepreneurship comes with its challenges, including uncertainty, risk-taking, and navigating through failures.
- However, he encourages aspiring entrepreneurs to embrace these challenges as opportunities for growth and learning.
- Tobi advises entrepreneurs to focus on building something meaningful rather than solely chasing financial success.
The Role of Leadership:
- Tobi emphasizes the importance of strong leadership in driving organizational success.
- He believes that leaders should set clear visions for their teams while empowering them to make decisions autonomously.
- Tobi advocates for leaders who are empathetic, supportive, and able to create a culture of trust and psychological safety.