Tobi Lütke - Building Islands of Innovation - [Invest Like the Best, EP.393]

Invest Like the Best with Patrick O'Shaughnessy

Colossus

Investing, Business, Technology

4.8 • 2.4K Ratings

🗓️ 22 October 2024

⏱️ 69 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

My guest today is Tobi Lutke, the co-founder and CEO of Shopify. I have spoken to Tobi on this podcast twice before, first in 2020 and then again in 2022. Needless to say, a lot has changed since we last spoke, and we start by talking about the biggest change of all: AI. But I’ll remember this conversation for the next set of ideas we discuss: Founder mode, raising the temperature of an organization, and the importance of building on an island that’s distinct from the mainstream. Tobi embodies the concept of Life’s Work that I believe so much in, and this episode is a shining example of it. He, along with nine other leaders we believe are doing their life’s work, will also be featured in the first issue of an upcoming print publication we’ve been working on. If you’re interested in hearing first when pre-orders go on sale, head to joincolossus.com/print. For now, please enjoy this great conversation with Tobi Lutke. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Ramp is the fastest-growing FinTech company in history and it’s backed by more of my favorite past guests (at least 16 of them!) than probably any other company I’m aware of. It’s also notable that many best-in-class businesses use Ramp—companies like Airbnb, Anduril, and Shopify, as well as investors like Sequoia Capital and Vista Equity. They use Ramp to manage their spending, automate tedious financial processes, and reinvest saved dollars and hours into growth. At Colossus and Positive Sum, we use Ramp for exactly the same reason. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus. — This episode is brought to you by Alphasense. AlphaSense has completely transformed the research process with cutting-edge AI technology and a vast collection of top-tier, reliable business content. Imagine completing your research five to ten times faster with search that delivers the most relevant results, helping you make high-conviction decisions with confidence. AlphaSense provides access to over 300 million premium documents, including company filings, earnings reports, press releases, and more from public and private companies. Invest Like the Best listeners can get a free trial now at Alpha-Sense.com/Invest and experience firsthand how AlphaSense and Tegas help you make smarter decisions faster. ----- Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes. Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes: (00:00:00) Welcome to Invest Like the Best (00:05:38) Technological Innovations and AI (00:07:13) Experimenting with AI in Real-World Scenarios (00:15:04) The Role of Founders and Company Culture (00:24:24) Navigating Business Changes and Strategic Decisions (00:31:15) The Concept of Islands in Innovation (00:36:38) The Essence of Open Source Marketplaces (00:37:10) Building Shopify: From Personal Project to Public Company (00:38:42) Philosophy of Product Development (00:42:38) Marketing and Mainstream vs. Island Approach (00:46:52) The Glory of Entrepreneurship (00:54:17) AI and the Future of Human-Computer Interaction (01:00:30) Trust and Principles in Organizational Culture (01:04:31) Investor Insights and Long-Term Vision

Transcript

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0:00.0	Two fun facts about our newest sponsorship partner, RAMP.
0:03.6	First, they are the fastest growing FinTech company in history,
0:06.6	reaching a level of revenue in five years that I can't quote exactly,
0:09.9	but his eyebrow raising.
0:11.5	Second, they are backed by more of my favorite past guests,
0:14.6	at least 16 of them when I counted,
0:16.8	than probably any other company that I'm aware of.
0:19.0	A list that includes Ravi Gupta at Sequoia, Josh Kushner,
0:21.6	at Thrive, Keith Raboy at Founders Fund and
0:23.4	Coastal Ventures, Patrick and John Collison, Michael Ovets, Brad Gersner, the list goes
0:27.2	on and on. These facts demand the question, why? Having been personally
0:31.3	obsessed with the great businesses through history, one clear lesson is that the best of them are run by disciplined operators.
0:37.0	These operators manage costs with incredible detail and they are constantly thinking about how they can reinvest every dollar and every hour back into their business.
0:44.8	This is RAM's mission to help companies manage their spend in a way that reduces expenses and
0:49.1	frees up time for teams to work on more valuable projects.
0:53.0	First on Expenses, the average American business
0:55.3	has a profit margin of 7.7%.
0:58.2	This means saving 1% on costs
1:00.0	is the equivalent of making 13% more revenue.
1:02.8	The average ramp customer is able to save 5% on their expenses each year.
1:07.2	Of course, every entrepreneur is looking for ways to grow revenue by 50%,
1:10.5	they should just as seriously seek to save 5 percent on their expenses.
	...

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