Here's a comprehensive summary of Toby's opinions and stories from the conversation, covering all the points discussed:
**I. Companies as Technologies & Social Constructs**
* **Companies as Social Technologies:** Toby views companies as a "social technology" that allows individuals to dedicate intense focus (e.g., 14 hours a day) to a single pursuit, which is otherwise socially unacceptable outside of education. It provides a "perfect excuse" for deep exploration.
* **Running Counterfactuals:** A company allows one to build something that "ought to be there" and test it against the market. If the market agrees, energy (money) flows back, enabling further pursuit of the vision. This is self-financing and an "incredible intelligence to tap into."
* **Modern Company History:** The concept of the modern company is relatively new (500-year run, derived from quasi-governments like the East India Company). This suggests that current company structures are "path-dependent solutions" to social and legal problems, not necessarily optimal.
* **Companies are "Terrible":** Toby believes "all companies are terrible, including mine." He foresees that in 20 years, we'll look back at current company building practices with embarrassment, much like a programmer cringes at old code. This perspective drives continuous improvement and prevents stagnation.
**II. Shopify's Evolution & Toby's Leadership Journey**
* **The "Cosplay" Period:** After Shopify's IPO (around 2015), Toby admits he "cosplayed" as a serious public company CEO, trying to emulate a conventional 60-year-old, suit-wearing executive. He trusted others' advice and delegated heavily, which almost "killed the company."
* **COVID as a Catalyst for Change:** The pandemic forced a radical re-evaluation. Toby realized his approach was failing when he discovered "boondoggles" – random, disconnected projects (e.g., a supermarket feature) lacking strategic alignment.
* **The "Re-derive Everything" Principle:** COVID invalidated core assumptions. Toby's engineering mindset led him to believe that if any axiom changes, one must "re-derive the entire thing" (like pruning a decision tree).
* **Executive Turnover:** He personally reviewed every project, canceled 60% of them, and replaced every executive over a year, realizing trust was broken and core skills (like finding efficient solutions) were missing.
* **The "Founder Offsite" Insight:** In a moment of crisis, he turned to a Slack channel of founders from acquired companies, recognizing their shared experience of "being responsible for people's livelihoods." He observed that founders were often "irritants" in larger companies because they don't "settle" and speak absolute truths.
* **Hiring Founders:** He promoted founders into executive roles, realizing that their high agency and deep conviction were invaluable, especially in a crisis.
* **Shopify OS: Engineering the Company:** Toby treats company building as an engineering project.
* **Python Code for Company Structure:** He literally built Python code with configuration files (e.g., "how many people should report to a manager") and a "set solver" to model Shopify's optimal structure (departments, levels, headcount).
* **Desire State Systems:** Inspired by UI development (e.g., React), he implemented a "desire state system" for the company. The model represents the ideal state, and HR's job is to reconcile the current state with the desired state with minimum steps.
* **Reducing Politics:** This system brings legibility and removes politics. Decisions like hiring 15 salespeople can now be modeled to show the trade-offs (e.g., loss of engineers) based on agreed-upon constraints.
* **Mastery/Individual Contributor Track:** The model revealed inconsistencies, such as the lack of a strong individual contributor (IC) track outside of engineering. Shopify now emphasizes a "mastery system" where specialists can earn as much as VPs, allowing talented engineers to code rather than manage.
* **Compensation Philosophy:** Shopify's stock price dropping 80% during COVID, despite strong fundamentals, led Toby to revamp compensation.
* **Relief at Stock Drop:** He felt "relieved" by the stock drop, viewing the previous 50x revenue valuation as unsustainable "betting market" inflation, not real value.
* **Employee Agency in Compensation:** Shopify now offers employees full agency to choose their compensation mix (salary, stock, RSUs, "Shop Cash") and adjust it quarterly. This helps rebalance stock options against current value and gives employees control.
**III. Personal Philosophy & Growth**
* **Books as "Cheat Codes":** Reading books is the closest thing to "cheat codes for real life," allowing access to entire careers in hours. He emphasizes reading broadly and changing subjects frequently.
* **Disappointment in Business Books:** He found many business books written by "people who have time," not necessarily those who built companies, leading to biased advice (e.g., a salesperson writing that "every problem can be solved with sales").
* **Affirmations & Identity Change:** Toby believes affirmations work by actively changing the "neurofrontal cortex." He used this to overcome his fear of public speaking by writing "I love public speaking" for 10 minutes a day for a week.
* **"Message in a Bottle":** He writes scheduled messages to himself (e.g., after keynotes) to document insights, reflect on process, and set future intentions, emphasizing "spaced repetition" of ideas.
* **Stoicism:** He aligns with stoic philosophy: "control what's under your control, know what is," and focus on doing the best possible job.
* **Critiquing Past Work / "Hit Pieces":** Toby enjoys finding problems in Shopify's current state, even if he built it. He calls this writing "hit pieces on the past." This isn't self-loathing but excitement for improvement, viewing problems as "obvious blueprints" for a better future. He intentionally "roasts" past work to ensure no deference and encourage creative solutions.
* **Avoiding Sunk Cost Fallacy:** He stresses the importance of overcoming sunk cost fallacy and not being "prideful" about past work, as it hinders progress. The "corporate raider" mindset helps disconnect from past decisions.
* **"Is everyone here to look good or be good?":** He values changing one's mind with better information over "character consistency," believing it's the "cheat code to always being right."
* **Embracing Contradictions:** He acknowledges that his own statements might contain contradictions, explaining that different "layers" or "frames of reference" (e.g., tactical vs. strategic decisions) require different operating systems and approaches.
**IV. Talent, Environment, & Culture**
* **"Corporate Baby Proofing":** Toby eschews "corporate baby proofing" (excessive policies/processes), which he believes limits high performers to protect against low performers. Instead, he aims to create an environment where the "right thing is intuitive" and hires people with well-honed intuition.
* **Creating a "Box" for Creativity:** He defines problems as "boxes" for teams to explore, providing tools and space, but allowing autonomy within that space. He assumes the risk as projects transition from "prototyping" to "build" phases.
* **"Worthy of the Best & Brightest":** His job is to make Shopify a company "worthy" of top talent, focusing on minimizing "bullshit" (politics, bad processes) and creating an environment where a large company feels small and impactful.
* **Hiring for "Spikes" & High Agency:** Shopify doesn't prioritize credentials (Toby is a high school dropout). They look for "high agency" by examining how candidates reacted when "something went wrong" in their past. They seek "entrepreneurial impulses."
* **Admiration as a Product:** The greatest product a company can offer employees is to be surrounded by people they "deeply admire" and can learn from.
* **Geographical Consensus (Not Silicon Valley):** He intentionally built Shopify outside Silicon Valley to avoid "cross-pollination" and mimetic behavior. This allowed Shopify to develop its own distinct culture and attract talent by being "the best company to work for" on the Eastern seaboard.
* **"Not going public, creating a public version":** Shopify approached its IPO not as conforming to norms but as extending its identity to the public markets, looking for ways to differentiate within SEC constraints (e.g., the roadshow video).
* **Formula 1 Rulebook Analogy:** He sees himself (and the talent he seeks) as engineers who read the "rulebook" (e.g., SEC regulations) not to comply, but to "beat it" and find creative ways to operate differently.
* **Office Design (Daniel Weinand's Influence):** His co-founder, Daniel Weinand, designed office spaces based on the philosophy that "no one can be more creative than the space around them."
* **Pods:** They created "pods" for 5-person teams – private enough but open, making it intuitive for teams to self-organize to the optimal size.
* **Serendipity & Flow:** Coffee areas are placed to encourage chance encounters, and floors are cut through with stairs to foster interaction between infrastructure and product teams.
* **No "Norman Doors":** Toby is "fundamentally allergic" to Norman doors (doors that mislead users). This reflects a broader principle of meticulous attention to detail, ensuring the environment facilitates the intended behavior and reinforces the quality standard.
* **"Everything in our offices is from Shopify stores":** They use products from their own merchant base, even going so far as to onboard suppliers onto Shopify to acquire specific office materials.
* **"Unshared Attention Company":** Shopify is not a "highest compensation play," but promises rapid career compound returns through skill development. Employees are expected to be "all in" because they will gain immense capabilities and mental models.
**V. The Future: AI & The Mission of Entrepreneurship**
* **Video Games as Simulation:** Toby sees good video games, especially strategy games like Starcraft, as simulations that teach about decision-making, resource management, imperfect information, and attention management – skills directly applicable to business.
* **AI as a "Starcraft Simulation":** He finds current AI development (agentic loops, autonomous models) feeling exactly like playing Starcraft, with agents coordinating and requiring his "attention management." He highlights the incredibly fast pace of change ("world changes every three weeks").
* **Hard & Interesting Years Ahead:** Toby believes 2026 and beyond will be the most "hard and interesting" years in Shopify's history due to AI, measuring individuals by their adaptability and speed of re-deriving everything.
* **Company Expectation: Use AI:** Shopify has an internal expectation for employees to reflexively use AI to solve problems, a concept he put out in a memo, which he believes will soon seem like stating the obvious.
* **Personal Mission: Cause More Entrepreneurship:** Toby's personal mission, clarified around 2014, is to "cause more entrepreneurship." He sees his job as building things – from code to products to companies that build products – and accelerating that process for others.
* **Entrepreneurship as Self-Actualization:** He views entrepreneurship as a deeply "honest" way for people to self-actualize.
* **The "Information Gap":** Toby credits David (the interviewer) for bridging the "information gap" by sharing entrepreneurial stories. He realized from past surveys that having exposure to entrepreneurship (e.g., someone to ask questions) was a causal factor in successful entrepreneurship, not just a consequence.
* **Future of Entrepreneurship with AI:** He envisions a future where AI, just-in-time manufacturing, and 3D printing make "making things" much simpler, more common, and more exciting, enabling far more people to become entrepreneurs. He sees his and David's work as contributing to this future by making the concept accessible and understandable.