Tobi Lütke - Embrace the Unexpected

**Patrick O'Shaughnessy** (0:00)
This episode of Invest Like the Best is sponsored by Canalyst. Canalyst is the leading destination for public company data and analysis. Founded by a former buy side analyst who encountered friction sourcing, building and updating models, Canalyst is now used by over 400 institutions, including the largest money managers globally and by a number of guests on the show. With detailed company specific models and data on virtually every public company, Canalyst clients are able to ramp up faster, update models instantly and incorporate the highest quality fundamental data into any workflow. If you're a professional equity investor and haven't talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalist.com/patrick. That's canalyst.com/patrick. Stay tuned after the episode for my conversation with Canalyst customer Giuseppe Coco of LK Advisors. We talk about how Giuseppe has built Canalyst into his process as an international investor and much more. Today's episode is sponsored by Brex, the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest growing companies. With Brex, you can move money fast for instant impact with high limit corporate cards, payments, venture debt and spend management software all in one place. Ready to accelerate your business? Learn more at brex.com/best. That's brex.com/best.
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best.
This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money.
Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:48)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:13)
My guest today is Tobi Lütke, co-founder and CEO of Shopify. Having first spoken to Tobi at the beginning of the pandemic just two months into it, this felt like an opportune moment to revisit Shopify and the world through Tobi's eyes.
Among many things, we discussed Shopify's evolution into the world of atom space building through Shopify's fulfillment network, the value of infrastructure writ large, and the impact of market volatility on day-to-day business building.
Please enjoy my conversation with Tobi Lütke.
So Tobi, it is almost exactly two years to the day since we last did this. It was early May in 2020 There was still a ton of uncertainty related to COVID. I guess there still is to some extent today. And the world and Shopify and lots of things have changed a tremendous amount. I know certain things haven't changed too. So I've been really excited to do an updated version of our conversation and we'll bounce all over the place. But before we hit go here, we're having this fascinating conversation around the concept of infrastructure, generally speaking. I think it started with this idea that we might be about to come on stream to a lot of good, useful, new history books written by people who are really there to see this stuff get built in the digital world. I'd love you to sum up that idea of what your interest is in infrastructure and the way that history is written, even things like payback on infrastructure and the ways in which we might underestimate it. I think this is a great tone-setter for what we're going to be talking about today.

**Tobi Lütke** (3:38)
I'm thrilled to be back. Thanks for having me. And also quite some two years.
A lot has happened.
I think people are just underestimating the value to society of infrastructure by some incredible factor. Because you see these kinds of things like the interstate system. How do you imagine this thing would have worked if these things wouldn't have been built? I'm not an Adams person. I'm more like a Bytes person. I find that infrastructure, especially with software, has this incredibly unreasonable leverage and unreasonable payback period.
And often we have these conversations about what's the state of planet Earth? What are things truly like? Are things getting better? Are things getting worse? There's a lot of people sharing excellent opinions on these things. As a website, I hope I say this right, I think what happened in 1971 might be a different year, but something around that time. Sort of collection of charts where once the right year comes around, a lot of numbers sort of disconnect from their previous correlations. I have no idea what happened in that year. But as a student of history and especially of digital history, increasingly I'm thinking about a very, very tangible thing that happened is that just simply most of the value creation in the world has slipped out of the things that are represented in GDPs. Where a whole bunch of people built the upper net around this time, when we got modern operating systems, we've built a lot of second base computers in the 90s, but none of this was reflected anywhere. Dotcom happened and everyone tried on the idea that this tech thing could be very big and then found some of the ground truth to be wanting. But really, early mid 2000s, Web 2.0, I think we call it, or at least coinciding with the emergence of that term, I think was the moment where the world of technology said, hey, we actually know exactly how to provide value for everyone. We know exactly how to deliver services and goods and things over the internet. And by the way, there's a lot of tweaks on the intuitions that people develop in the physical world. Physical world is very rivalrous. If you build a bridge in one place, you probably don't build a bridge somewhere else.