Empowering Decision-Making Through First Principles

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Tobi Lütke’s leadership playbook: Playing infinite games, operating from first principles, and maximizing human potential (founder and CEO of Shopify)

Lenny's Podcast: Product | Growth | Career

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CHAPTER

Empowering Decision-Making Through First Principles

This chapter emphasizes the significance of a first principles approach in leadership, blending deep knowledge with adaptability in decision-making. It advocates for open debate and collaboration among all employees, showcasing how courageous disagreement fosters better team dynamics and innovative solutions. Lastly, the conversation highlights the necessity of balancing short-term objectives with a long-term vision to create a sustainable and thriving business environment.

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Episode notes

Tobi Lütke is the founder and CEO of Shopify, a $130 billion business that powers over 10% of all U.S. e-commerce. Starting as a snowboard shop in 2004, Shopify has become the leading commerce platform by consistently approaching problems differently. Tobi remains deeply technical, frequently coding alongside his team, and is known for his unique approach to leadership, product development, and company building. In our conversation, we discuss:

• Why complexity kills entrepreneurship

• How to develop and leverage your unique talent stack

• How specifically Tobi approaches thinking from first principles

• The importance of focusing on unquantifiable qualities like joy and delight

• Why Tobi works backward from a 100-year vision

• Why metrics should support decisions, not make them

• The power of following your curiosity

• What Tobi believes it takes to be a great product leader

• Much more

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Find the transcript at: https://www.lennysnewsletter.com/p/tobi-lutkes-leadership-playbook

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Where to find Tobi Lütke:

• X: https://x.com/tobi

• LinkedIn: https://www.linkedin.com/in/tobiaslutke/

• Website: https://tobi.lutke.com/

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Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

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In this episode, we cover:

(00:00) Welcome and introduction

(04:17) The Tobi tornado

(07:10) Maximizing human potential

(11:05) Education and personal growth

(16:47) Operating without KPIs

(25:00) First-principles thinking

(40:04) Remote work

(45:59) Why Tobi never stopped coding

(54:46) Embracing disagreement

(01:01:27) The 100-year vision

(01:09:29) Balancing tactics and positioning

(01:17:15) Encouraging entrepreneurship

(01:19:34) The power of good UX

(01:28:42) The talent stack and unique opportunities

(01:34:30) The role of passion in product development

(01:36:39) Final thoughts and farewell

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Referenced:

• How Shopify builds a high-intensity culture | Farhan Thawar (VP and Head of Eng): https://www.lennysnewsletter.com/p/how-shopify-builds-a-high-intensity-culture-farhan-thawar

• Breaking the rules of growth: Why Shopify bans KPIs, optimizes for churn, prioritizes intuition, and builds toward a 100-year vision | Archie Abrams (VP Product, Head of Growth at Shopify): https://www.lennysnewsletter.com/p/shopifys-growth-archie-abrams

• The ultimate guide to performance marketing | Timothy Davis (Shopify): https://www.lennysnewsletter.com/p/performance-marketing-timothy-davis

• Brandon Chu on building product at Shopify, how writing changed the trajectory of his career, the habits that make you a great PM, pros and cons of being a platform PM, how Shopify got through Covid: https://www.lennysnewsletter.com/p/brandon-chu-on-what-its-like-to-build

• IRC: https://en.wikipedia.org/wiki/IRC

• Goodhart’s law: https://en.wikipedia.org/wiki/Goodhart%27s_law

• Glen Coates on LinkedIn: https://www.linkedin.com/in/glcoates/

• How Shopify builds product: https://www.lennysnewsletter.com/p/how-shopify-builds-product

• The Last Dance on Netflix: https://www.netflix.com/title/80203144

• Autoregressive Models for Natural Language Processing: https://medium.com/@zaiinn440/autoregressive-models-for-natural-language-processing-b95e5f933e1f

• Archimedean property: https://en.wikipedia.org/wiki/Archimedean_property

• Tabula rasa: https://en.wikipedia.org/wiki/Tabula_rasa

• Daniel Weinand on LinkedIn: https://www.linkedin.com/in/danielweinand/

• World of Warcraft: https://worldofwarcraft.blizzard.com

• Harley Finkelstein on LinkedIn: https://www.linkedin.com/in/harleyf/

• Monorepo: https://en.wikipedia.org/wiki/Monorepo