Tobi Lütke: preference

Transcript context

…This is very close to what I just talked about before with [inaudible 00:17:28]. Goodhart's law is real. The moment a metric becomes a goal it's no longer a useful metric, right? I think that's more or less a precise wording. Why? Because no metric by itself is a complete heuristic for a complex business because business are complex. There's a million of different tensions in a company and you can't all keep them in harmony by optimizing for one fix. It's true that we don't have KPIs and we don't have at least OKRs in the Silicon Valley sense but we are extremely data-informed. We have invested enormous amounts of money and time into systems that give us basically everything at our fingertips. I sent this demo to other founders and they're completely bowled over by the way we can dig into basically every constituent atomic bit part that makes up the cohort that just got formed 15 minutes ago by the end of a ... At the end of a quarter or month or week. In a lot of different places, this is one of them but also in its products, it's just not overfitting for the quantifiable. Everyone competes for everything but it's highly quantifiable because it's ... It's fun, it's like a game. You tweak a number and 0.1 more is better than 0.1 less. That's an immediate gratification thing. But I just think the overlap of most valuable things you can do with a product, and for things that happen to be fully quantifiable, it's like maybe 20% which leaves 80% of a value space unaddressable by the people who will only look at quantifiable things. Shopify is comfortable with the unquantifiable things such as tastes, quality, passion, love, hate. It's with the strong emotions that people have. The sort of deep satisfaction that a craftsperson feels when they've done a job well is actually better proxy if you allow it to be then the ... Do a unit test pass. A unit tests might not pass. And the unit tests will pass 15 minutes later because we already fix them or adjust the one or two things so they support us. We have systems that tell us exactly if something goes the wrong way. There's an extremely sophisticated rollout system in Shopify that forever holdouts and correlates everything with everything for ... In every experiment and so on and so on and so on. But if you think about it as a cockpit for a pilot. The decisions are still made by pilots and we think this leads to better results. It's just the same with our product. There's plenty of A/B testing tools and all these things for commerce, and it's, of course, really important to figure out what your conversion rates are. But are you representing your brand is an unquantifiable question? Are you proud of the thing that you have built? Do you feel it's your own, right? And so I think there needs to be more acceptance in businesses or for unquantifiable things. The most powerful, not unquantifiable things in the world of business are fun and delight. your own, right? And so I think there needs to be more acceptance in businesses or for unquantifiable things. The most powerful, not unquantifiable things in the world of business are fun and delight. If people have fun when they're doing something that is just upstream from so ... Sorry, downstream from so many other things. I think that if all the metrics are pointing down but everyone says, "My God, I'm having so much more fun," I think that the very next thing that will happen with some time delay is all metrics will start going up. And if that doesn't happen then we adjust course. The reason why we specifically don't have OKRs and these things is because ... If you want to hold the unquantifiable as things that are stable and exist ... That people actually do really defer to them and really actually learn to be okay with someone just saying, "Hey, this is actually just really great and they're shipping this" then you need to make certain edits to a business that don't remind everyone too much of the companies they might have come from which the only way to get promoted is by driving the metric up. It's a bit of a [inaudible 00:22:24] conversation I suppose. Good on the fortune cookies saying, "Shopify doesn't do OKRs or doesn't do metrics" and so on. But it's actually just because the metrics take us [inaudible 00:22:37] function where we often defer to just more ... Sometimes a little bit emotional but generally less quantifiable things. I imagine if someone were to hear you describe this of focus on joy, and fun, and love, and delight, maybe ... It's easy to dismiss that.…

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