Kaz Nejatian: How Shopify Built a $90BN Business to Last 100 Years | E1189

Intro (0s)

• The role of a product manager at Shopify is to ensure the right product is built, in the right way, and at the right time.
• The book "Lean Startup" may have unintentionally led to the creation of a large amount of poor software.
• Remote work is generally not a good idea for most companies.
• People often overestimate the importance of "what" is being built and underestimate the importance of "how" it is built.
• Product managers should understand how code is written, even if they don't write code themselves.

Takeaways from Working with Keith Rabois (1m6s)

• The speaker admires Keith Rabois's aggressive approach to execution and ambition.
• The speaker learned from Rabois to be perpetually hungry.
• The speaker believes that the book "Lean Startup" has been misinterpreted, leading to the creation of poor software.
• The speaker argues that companies should focus on shipping products they are proud of, rather than constantly testing and iterating.
• The speaker believes that the "Lean Startup" approach can turn people off from products, as they do not want to be tested upon.
• The speaker emphasizes the importance of shipping high-quality products that users will enjoy.

Building Complete & High-Quality Software (3m11s)

• The speaker emphasizes the importance of shipping complete and high-quality software, even if it is a constrained version of the final vision.
• The speaker draws a comparison between software development and woodworking, highlighting the need to build complete products that are enjoyable to use.
• The speaker argues that incomplete software, like a chair with three legs, is unusable and lacks the quality of a finished product.

The Role of Vision in Building Company (5m2s)

• Vision is essential for creating something new, but it can also be limiting. While a vision can help define a goal, it's important to be open to change and adapt as you learn and grow.
• Shopify's core values prioritize building great products, making money, and using that money to build more great products. This prioritization structure helps ensure that the company remains focused on its long-term goals.
• Shopify believes in building its own internal tools rather than relying on off-the-shelf solutions. This allows them to tailor their tools to their specific needs and maintain a high level of quality.
• Shopify values a learner's mindset and encourages questioning and disagreement. This fosters a culture of continuous improvement and innovation.
• Hiring for experience alone can be detrimental to a company's growth. While experience is valuable, it's crucial to hire individuals who are willing to learn and adapt to new challenges.
• Shopify believes that most businesses are built on experience rather than learning. This can be a limiting factor for growth companies, especially in the software industry.
• Questioning established beliefs is essential for learning and growth. Companies that discourage questioning can stifle innovation and limit their potential.

Shopify’s Unique Approach to Hiring (17m59s)

• Shopify's hiring process is designed to attract and retain individuals who are deeply aligned with the company's mission and values.
• The company prioritizes finding individuals who are passionate about the work they do and who are eager to learn and grow within the organization.
• Shopify encourages its employees to embrace a culture of continuous learning and development, expecting them to be proficient in various technical skills, such as coding and SQL, even in roles that are not traditionally considered technical.

Lessons from Mark Zuckerberg & Meta (20m44s)

• Mark Zuckerberg and Meta are underappreciated for their ability to take risks. Meta has a higher risk tolerance than most companies, and this has led to some of their most successful products, such as the Newsfeed.
• Meta's investment in AR/VR technology, specifically the Rayban glasses and the upcoming Quest headset, is a bold move that is likely to be successful in the long run.
• Meta's biggest mistake was not being more public about Mark Zuckerberg's personality and the company's values. This allowed negative perceptions to spread, which has hurt the company's reputation and led to regulatory challenges.
• Meta has been a breeding ground for successful entrepreneurs, with more founders coming from Meta than any other tech company. This demonstrates the company's positive impact on the world, which is often overlooked.

Why Do Great PMs Blame Themselves for Everything? (24m48s)

• The text discusses the role of product managers (PMs) and why they should take responsibility for everything.
• The text explains that product management is a relatively new field, originating in the early 2000s with companies like Netscape, Google, and Meta.
• The text argues that the primary responsibility of a PM is to understand and represent the user's best outcome, not just their wishes.
• The text emphasizes that PMs should focus on building the right thing, the right way, at the right time, and that most companies prioritize the "right thing" over the other two aspects.
• The text highlights the importance of "how" something is built, arguing that it is often underestimated compared to "what" is built.
• The text suggests that PMs should have a technical understanding of how code is written, as it is crucial for making informed decisions about the "how" of product development.
• The text criticizes the excessive focus on brainstorming and discussions in many companies, arguing that a clear vision and decisive execution are more effective.

The Value of Talk & The Cost of Meetings (28m18s)

• The speaker argues that "talk is not cheap" because it requires the listener's time and attention, which is valuable. To emphasize this point, Shopify calculates the cost of every meeting and includes it in the meeting invite.
• The speaker believes that the world is moving towards a preference for written communication and code over live meetings, which aligns with Shopify's approach. This is beneficial for training AI models, as it provides valuable data.
• The speaker strongly discourages remote work for most companies, arguing that it is only successful for Shopify due to their extensive investment in systems, tools, and software specifically designed for remote work.
• The speaker attributes Shopify's success to two core values that differentiate them from other companies: thriving on change and being a learner. Shopify is built to excel in times of change, while most companies are designed for stability. Additionally, Shopify embraces a learning mindset, which means that they are willing to take longer to learn and adapt, even if it means slower growth initially.

What Was Shopify's Toughest Change & Key Lesson Learned? (34m1s)

• Shopify's Toughest Change: Transitioning to a fully remote workforce was the most challenging change for Shopify. The initial 6-12 months were particularly difficult, with communication breakdowns and cultural challenges.
• Key Lesson Learned: Shopify learned that cultural elements that worked in a co-located environment did not translate well to a remote setting. The company also learned that significant changes require a strong commitment and a willingness to burn bridges behind them.
• Shopify's Unique Approach to Compensation: Shopify implemented a unique compensation structure that allowed employees to allocate their compensation between salary, equity, and other benefits. This change was complex and required significant adjustments to Shopify's equity policies, but it ultimately led to a more flexible and employee-centric approach.
• Shopify's Growth Model: Shopify's growth is driven by the success of its merchants. This makes it difficult for analysts to model Shopify's growth because it is dependent on the unpredictable success of a large number of small businesses.
• Shopify's Enterprise Strategy: Shopify initially avoided working with large enterprises, but over time, the company realized that its software was well-suited for them. Shopify's approach to enterprise clients is different from traditional enterprise software companies, as it does not build bespoke software or offer dedicated enterprise support.
• Shopify's Partnerships: Shopify has strong partnerships with companies like Stripe, Affirm, and Meta. These partnerships are based on shared values and a belief in building high-quality software. Shopify is willing to partner with companies that share its vision, even if it means relinquishing some control.
• Shopify's Vision: Shopify believes in building software that is accessible to everyone, regardless of size or industry. This vision has led to a unique approach to software development and a focus on building a platform that can support a wide range of businesses.

Most Underappreciated Part of Shopify's Product Vision (47m47s)

• Shopify's product vision is often underestimated in terms of its breadth and scope. The product is more akin to an operating system than a singular application.
• Shopify is not a point solution, meaning it can be used for a wide variety of purposes and applications. This makes it difficult for analysts to model its potential because it is not easily categorized.
• The speaker emphasizes that Shopify is a tool maker, not an application builder. They believe that tool makers are essential for success, drawing a comparison to the importance of tool makers in the World of Warcraft gaming community.

The Importance of Information Flow (49m42s)

• The speaker believes that limiting information flow within a company is a major mistake. This can lead to situations where crucial information doesn't reach the right people, resulting in poor decision-making.
• The speaker advocates for open and public information sharing within a company. This allows for diverse perspectives and helps to prevent misunderstandings.
• The speaker acknowledges that there are situations where information needs to be managed. However, the default should always be transparency and open communication.

Value of Marriage (54m30s)

• Marriage is beneficial for men: Data shows that men who graduate high school, gain work experience, and marry soon after are more likely to experience success in health, wealth, and happiness compared to other groups. This includes lower bankruptcy rates, improved health outcomes, and higher cancer survival rates.
• Marriage is not a guarantee of success: While marriage can be beneficial, it is not a guaranteed path to success. Individuals should consider their own circumstances and goals when making decisions about marriage.
• Marriage requires effort and attention: A successful marriage requires effort from both partners. It is important to prioritize the relationship and make time for each other, even when busy with work and family.
• Popular culture often misrepresents marriage: The idea that marriage restricts personal freedom or happiness is often perpetuated in popular culture. However, data suggests that married men experience more happiness and fulfillment than single men.
• Marriage is a three-party relationship: A successful marriage involves caring for three entities: the individual, their spouse, and the marriage itself. It is important to prioritize all three aspects of the relationship for long-term success.

Quick-Fire Round (1h0m18s)

• The best and worst companies to hire leaders from are discussed. Hiring from Meta has generally worked well due to their strong training program. Industry switching, such as hiring marketers or finance professionals from outside of software into software, is often difficult.
• The speaker has changed their mind about the "gold standard," previously mocking it but now recognizing its value.
• The speaker's favorite character trait is being a "hacker," but they wouldn't want their children to have this trait due to the potential for misuse.
• The speaker's advice to product leaders starting a new role is to focus on shipping as many products as possible in their early years, rather than career progression.
• The speaker does not follow political news closely, preferring to check in once a week rather than daily to avoid getting caught up in the "horse race."
• The speaker is impressed by Microsoft and OpenAI's work with search, Exon Mobile's optimization of production, Canva's product design and development, and Figma's continued innovation despite being acquired by Adobe.