Uncapped with Jack Altman
· Jack Altman, Tobi Lutke
[00:00:00] S0: You’ve gone through another employee mindset change in the last couple of years with AI. From what I recall, you were one of the first CEOs to say, “Everybody, however hard you think you’re adapting, triple it, quadruple it.” I’m curious about that journey. How did it go? Is it still going on? Do you have it where it needs to be? Is there an end to how AI-pilled we should be? [00:00:00] S1: I’m actually really proud of how Shopify is with this. I think this worked extremely well. I made a choice. There’s a type of situation you get in running companies, or any large group, where something becomes clearly true and then you need to make a decision. First of all, do you act on it? Sometimes people are already feeling bad. In fact, very often people fail the figure-out-what’s-true part. I’m sure BlackBerry thought they were doing really well. I think they had their best year of sales ever the year the iPhone was released, and they thought they were pretty safe. [00:00:00] S0: Sometimes it’s not that people aren’t smart enough to see it. Sometimes they don’t want to believe it or see it, because the implications are— [00:00:00] S1: They’re not predisposed for it. They maybe, through no fault of their own, create an organization where every layer inside of a conversation prioritizes kind lies over hard truths, often because there’s a culture of everyone being nice to each other.
· Tobi Lutke, Jack Altman
[00:00:00] S1: They’re not predisposed for it. They maybe, through no fault of their own, create an organization where every layer inside of a conversation prioritizes kind lies over hard truths, often because there’s a culture of everyone being nice to each other. [00:00:00] S0: There’s also, when you have a big enough organization—you talked about this with how teams make originality difficult—with big groups of people, it’s hard to get everybody to agree to go through an uncomfortable change. [00:00:00] S1: In a way, people are somewhat overestimating the founders of companies, and then they are massively underestimating what you can do when the founder is still present and in charge. It’s not so much about the individual as it is about the piece of infrastructure, the slot of having the founder-slot filled. It’s an odd distinction, but as the founder, you get so much social credit for having started the company. You can just invest this. [00:00:00] S0: It’s a bank. [00:00:00] S1: It’s like a bank. Every time someone onboards, they hear how the company was created, and that deposits a little bit of credibility, tokens I suppose, into a virtual bank account that is hard to reason about but sort of virtually exists. And then I get to cash that in. [00:00:00] S0: You can spend it on big, important changes.
· Jack Altman, Tobi Lutke
[00:00:00] S0: You can spend it on big, important changes. [00:00:00] S1: And change management, that’s one of the best ways. I can speed up something that would take years of small culture change or internal training with sometimes a memo. I take that really seriously. It’s not the easiest thing. It leads to more work or sometimes unpleasantness. But I find that is what I owe the company. It’s my best way to help the mission. So when something like the AI thing becomes true, we are saying, “Hey, we have two people. They were both equally good programmers 15 minutes ago, but one of them has completely jumped onto the AI train.” Back when I wrote this, it was really hard to actually get real value out of AI. It was more that the premise of AI was important. What do we do in performance reviews? The moment we said it… It’s an impact rating. It’s called net impact reviews at Shopify. What’s your net impact on the company and the mission? It’s just very demonstrably true that one of the people was of more impact. The moment that is said, it feels incredibly unkind not to tell people. So, “Hey, let’s write it out and send it to everyone.” [00:00:00] S0: It’s really unfair if you’re like, “This person has the exoskeleton on, and I’m not going to point out that the exoskeleton’s making him 10 times faster.”
· Jack Altman, Tobi Lutke
[00:00:00] S0: It’s really unfair if you’re like, “This person has the exoskeleton on, and I’m not going to point out that the exoskeleton’s making him 10 times faster.” [00:00:00] S1: If we act on this thing, we should tell people. And so we did. I included a bunch of other things that are true. I’ve invested lots in making sure that everyone has everything they need. We have an unlimited token policy that I’m sure your brother is thrilled with. We want people to tinker. We want people to play with this. We want people to use it a lot. It’s super good. It skyrocketed the second this message came along. What Shopify did with this, the speed of diffusion of this tool was remarkable. I’d like to think Shopify is predisposed for this. We have “thriving on change” as one of our core values, and we really mean it. [00:00:00] S0: It’s good that you talked about net impact. One of the blunter instruments that’s getting used a lot right now is just tracking token consumption. People are like, “I want to see token consumption go up 20% a month.” There are founders who say that. It’s not an obviously terrible idea, in the same way that judging people by lines of code… We could debate, is there anything to it? Probably something, but…
· Jack Altman, Tobi Lutke
[00:00:00] S0: It’s good that you talked about net impact. One of the blunter instruments that’s getting used a lot right now is just tracking token consumption. People are like, “I want to see token consumption go up 20% a month.” There are founders who say that. It’s not an obviously terrible idea, in the same way that judging people by lines of code… We could debate, is there anything to it? Probably something, but… [00:00:00] S1: I think it’s fine. At some point we had a leaderboard and so on of token consumption. Of course, that leads immediately to bad effects, so we don’t have that. On Vault, which is our internal system—it’s probably not a term that anyone’s ever heard, but it’s our internal wiki and everything—on your profile, it shows what your token usage is and which percentile you are in your department and group and so on. Just because that’s interesting, because we are tracking it. We have to, because at some point we have to allocate finances to OpEx and whatnot. Therefore, we show it to people so that they know. [00:00:00] S0: This is probably different numbers because you’re at such a scale, but there are private companies whose token spend as a percentage of revenue is going into pretty wild places right now. I think that’s fine if you’re an earlier stage company and you’re just trying to win the market at all costs. But I am curious how this might play out. I’m sure even you’re seeing token spend at numbers that are probably not a huge deal relative to your revenue, but— [00:00:00] S1: It’s a huge deal compared to revenue. It’s unbelievable.
· Tobi Lutke, Jack Altman
[00:00:00] S1: It’s a huge deal compared to revenue. It’s unbelievable. [00:00:00] S0: It’s a many percentage points kind of thing? [00:00:00] S1: It’s extremely high. [00:00:00] S0: It’s many tens of percentage points for some of these private companies. So I am a little curious. Right now we’re in that part of the journey with AI coding where it’s just so valuable that people are like, “I have no choice but to spend, because it’s too productive.” I do think we can’t spend 70% of revenue on AI tokens forever and have valuable companies. So how do you think this might go? [00:00:00] S1: It’s complex. I’m very grateful for the stage Shopify’s at, because we are a profitable, public, trusted company. Right now, we really, really like the tokens we are buying. They’re incredibly valuable, and we are doing incredible things with them. It accelerates us in roadmap, and therefore in ambition. I think it just causes so many good things. [00:00:00] S0: You’re getting leverage on your spend. [00:00:00] S1: It’s a no-brainer. I have a very high opinion of markets. Markets are extremely good. They will figure out what the correct clearing price for these tokens is, and right now there’s few providers and maybe there’ll be more in the future. There’s all sorts of interesting moves around distillation and so on. I think companies will know how to wield these tools within their budgets. We are actually doing a good deal of this kind of thing as well, but we are still charging ahead because frankly, we like the tokens we are buying. It’s that simple.