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Shopify's CEO Thinks Companies Are the Greatest Social Hack Ever Invented

By Tobi Lutke · Mindset & Career · 2 min read

The only time you're really allowed to spend 14 hours a day singularly pursuing a thing is in a company. Once you call it a company, it's not tinkering anymore. You get to explore things. If companies didn't exist and someone proposed the idea now, it would sound insane.

Key Points

A company is the only socially acceptable way to spend 14 hours a day singularly pursuing one thing
A company lets you run the counterfactual to the world — build what you think ought to exist, then test it against the market
The modern company is only about 500 years old — if you proposed it from first principles, none of it makes sense

If companies wouldn't exist for some reason and someone would propose the idea now, it would sound insane. From first principles, none of this makes sense.

The Only Socially Acceptable Obsession

Lutke: Companies are social technology. The only time you're really allowed to spend — I'm going to say eight because that's the right number to say — really like 14 hours a day singularly pursuing a thing is in a company.

You can't just not have a job and be really, really into things. It's socially not acceptable. Company building turns out to be the perfect excuse. Once you call it a company, it's not like tinkering around anymore with your ideas. You get to explore things.

The only time you're really allowed to spend 14 hours a day on one thing. Company building is the perfect excuse.

Running the Counterfactual

Lutke: What a company fundamentally allows you to do is run the counterfactual to the world you see around you. You get to try to build the thing that you think ought to be there, and then you means-test it against the market.

If the market agrees with you that this thing needs to exist, it moves energy in the form of money back to you so you can do more of the thing you were pursuing all along. And it's self-financing — I started a company I didn't think was going to have this very big market, and along the way the market just pulled Shopify out of the project I started. That's an incredible intelligence to tap into.

Build what you think ought to exist. Test it against the market. If it agrees, money flows back. It's self-financing.

500 Years Old — From First Principles, It's Insane

Lutke: The concept of companies is not that old. We're on a 500-year run, and they were extracted from things like the East India Company, which were actually more like quasi-governments. The modern company is not that old.

Companies are a path-dependent solution to social and somewhat legal problems. They allow thousands of people to join your project — it's called a job, and therefore everyone accepts it. And at the end of the day, if you are lucky, you work with other people who are really all in, inspiring, taking it further than you ever thought.

I marvel at the institution of a company. Because if it wouldn't exist for some reason and someone would propose the idea now, it would sound insane. From first principles, none of this makes sense.

If someone proposed the idea of a company from scratch today, it would sound insane. None of it makes sense.