Uncapped #51 | Joe Lonsdale from 8VC

Shopify's Tobi Lütke on running an AI-first company with small teams

Shopify treats AI as a forcing function for how a company is run, with mandated use, unlimited tokens, smaller teams and a bet that markets will price the spending sensibly. Lütke sees the payoff in more people starting businesses, and in products with real craft rather than room-temperature sameness. He says the learning comes from using the tools on real problems.

Takeaways

• Shopify made AI use mandatory across the company. Lütke told employees AI use mattered, changed performance reviews to net impact reviews, and gave everyone an unlimited token policy. Staff see their token usage and department percentile on Vault, the internal wiki. He cites BlackBerry as a company that missed a shift.
• Token spend is huge and Lütke trusts markets. Shopify buys tokens at a rate that is a large share of revenue, growing token purchases tenfold and GPU purchases threefold each year. Lütke says markets find the clearing price. Altman argues companies cannot spend 70 percent of revenue on tokens and stay valuable.
• Small teams of three to five now win. Lütke says everyone is now a 7 out of 10 on every skill, which lets Shopify shrink teams. He praises Parkinson's Law, that work expands to the time allotted, and now thinks Shopify's six-week review cycle is too limiting.
• AI can let anyone start a business. Lütke rejects fears of a permanent underclass. Shopify's customers are entrepreneurs, from town-centre shops to Alo Yoga. He says 60 to 80 percent of people work for small businesses, and someone gets a first sale every 36 seconds.
• Originality and craft beat copying and mediocrity. Lütke says companies collect barnacles of expectations that dilute their craft. Mediocre products feel like room temperature, and copying others bounds quality to a couple of percentage points either way. Silicon Valley, he argues, has discouraged distinctiveness for a decade.
• Learning by doing beats studying from a distance. Lütke says he learns best by facing real problems and found it hard to learn what he had not needed. He argues that using AI tools teaches more than working in an AI lab, and that success costs time and commitment more than money.
• Going public gave Shopify legitimacy and wide ownership. Shopify listed at about 1.5bn dollars and has returned roughly 100 times to early investors. Lütke calls shares tickets to take part in what people believe in, thinks it a shame companies stay private so long, and says listing won over large customers.

What comes next

• Altman predicts it will take about 10 years before robots can build a house from a prompt.