Tobi Lutke's mental model

George Mack tweeted 6 mental models from Shopify CEO Tobi Lutke.

1 Follow the "Crocker" Law

Crocker is the editor of Wikipedia and encourages people not to apologize for editing his page. If he was offended, it was himself and not others.

Tobi takes the importance of "feedback" very seriously, and wants to get real, clear feedback.

"If I've been insulted, it's because my brain made a decision to implant the thought of being insulted by that person in my memory and thoughts....
I made this decision of my own volition. This is my own choice. My brain has already handed this power to the other side"

"If I'm insulted it's because my brain made a decision, to implant in my memory and thoughts the idea of being insulted by that person...

I did that under my own volition. It was my own choice. My brain has assigned the power to the other person.”

2 Always follow "first principles"

Tobi's mental model

"Global Maximum > Local Maximum

Local Maximum = Optimising a cog in the machine

Global Maximum = Optimising the machine itself”

First principle: "A first principle is a foundational proposition or assumption that stands alone. We cannot deduce first principles from any other proposition or assumption."

An example of "first principles"

When transporting goods at the port, it is much more efficient to directly move everything to the ship at one time than to unload and load the goods one by one.

This is the origin of the "SHIPPING CONTAINER" shipping container. His inventor was a port truck driver, Malcolm McLean, one of the last century's most underrated entrepreneurs and the "godfather" of modern global trade.

So Tobi always thought that what he was doing could be wrong.

"I think the best company (that exists right now) is a 6/10 on the scale to what is a perfect company"

He believes that the best company in the world can only be regarded as a 6, and he wants to build a company that is close to 6 and a target of 7.

We always think that the things of the moment are reasonable and correct, but we never thought that people in 50 years will laugh at us now as we laugh at people 50 years ago.

3 Thinking about the problem from a long-term perspective

Sacrifice short-term gains for long-term gains. Tobi believes that every decision should answer the question "are you optimizing for each individual transaction or for the LIFETIME transaction?"

Are you playing a limited game or an unlimited game with your users?

Shopify has not forced "Powered By Shopify" to be printed on the products of their platform stores, as investors hoped, although doing so will form a positive feedback on the brand effect.

Tobi's take on this is that they want to make the store's products look better. And this is the "LTV Thinking" proposed by Tobi. On a long enough time axis, play a "positive-sum game" with your users instead of a "zero-sum game".

4 Embrace transfer learning

Tobi sees video games as a great way to learn.

In the real business world you probably only get one chance a year to make a big bet. But in games our brains can train thousands of times on similar situations.

"Factorio" is Tobi's favorite game.

5 Decisions

Every time he made the wrong decision, Tobi realized that he was missing out on information that he could have obtained.

Tobi values the difficulty of making decisions after the fact, and takes decision-making seriously as a job.

Every time Tobi makes a decision, he records it with information about why he made the decision.

Chess master Kasparov used to use "systems thinking" to analyze his mistakes when playing chess. For example, taking a move A leads to losing the game.

"Consequence thinking": Don't take the move A in the future.

"Systems Thinking": What was my line of thinking before making this decision? Don't make similar mistakes again.

"Consequential thinking" prevents us from making a certain mistake again, and "systems thinking" prevents us from making more similar mistakes with similar ways of thinking.

6 Curiosity-Driven Talent Stack > MBA

Tobi has never done an MBA and doesn't work like crazy every day. Instead, he likes to play games (and thus code) and ski (and thus build an online snowboard store).

Tobi believes that following her true curiosity is the basis for a better career, rather than blindly following what makes money right now. The process may be lengthy and not successful quickly, but it can lead to better returns in the long run.