Shopify CEO Tobi Lutke explains Goodhart’s law and why he doesn’t like KPIs or OKRs
“Goodhart’s law is real. The moment a metric becomes a goal, it’s no longer a useful metric… No metric by itself is a complete heuristic for a complex business. There’s a million different tensions in a company, and you can’t keep all of them in harmony by optimizing for one thing.”
For this reason, Shopify doesn’t use KPIs or OKRs. But as Tobi explains, this doesn’t mean they don’t value data and metrics.
“We are extremely data informed. We have invested enormous amounts of money and time into systems that give us basically everything at our fingertips… But what Shopify attempts to do is just not over-fit for what’s quantifiable.”
People love optimizing for highly-quantifiable things because there’s immediate gratification that comes from seeing a number go up. But Tobi thinks that the most important aspects of a product are rarely quantifiable:
“The overlap of the most valuable things you can do with a product and the things that happen to be fully quantifiable are like maybe 20%. Which leaves 80% of a value space unaddressable by the people who only look at quantifiable things.”
He continues:
“Shopify is comfortable with unquantifiable things like taste, quality, passion, love, hate… The sort of deep satisfaction that a craftsperson feels when they’ve done a job well is actually a better proxy if you allow it to be.”
They then have robust analytics systems that tell the company if something’s wrong or a new rollout breaks something.
“We think about it as a cockpit for a pilot. The decisions are still made by pilots, and we think this leads to better results… I think there needs to be more acceptance in business of unquantifiable things… And then metrics take a support function.”
Source: @lennysan (Feb 2025)
Shopify isn’t really SaaS. It’s a headless walled garden of APIs whose real value is the business logic, operational workflows, payments, and ecosystem embedded deep in those APIs over time.
People dramatically underestimate how hard that is to recreate. You can’t just vibe code your way into replacing it.
Today is a hard day. I shared this note with the @linear team today: We’ve made the difficult decision to increase our workforce. This is not a cost-cutting exercise or a reflection of anyone’s performance. We’re simply reimagining every role for the agentic AI era. We’re hiring. We’re sorry about that.
Pues ya tenemos el primer #githubday en A Coruña!! El día 22 de mayo por la tarde, si estás en la ciudad o alrededores anímate!! C.C. @david_bonilla
https://t.co/VT8d7PZppp
"I have not looked at the ticker in April.
The ticker has nothing to do with the company.
I work on the fair market value of the company.
The ticker is just other people's game to make trades based on their few assumptions of a future compounding fair market value." @tobi
What do you know now that you wish you had known when you went public about your relationship as CEO to the "the ticker"? @eldsjal@klarnaseb@levie@mcannonbrookes@jeffiel@arielcoco@RamaswmySridhar@lefkofsky
Today's controversial take.
Everyone hates meetings so you make the meetings shorter. Now you never get to a conclusion so you need a follow-up meeting. Let's just take the time to close it out and move on.
I want more 1-hour meetings.
I can't imagine that people running it are happy, and I choose to believe that they've tried to improve it but something got in the way... I find it interesting to see what could be happening to allow something like this
I'm fascinated:
56 weeks is the ETA for the embassy to review and respond an email related to citizenship. No case number to track, no site to track window of processing, and email follow-ups discouraged.
just... how? isn't it interesting that something like this exists?
@ultralisco@javisantana puede ser circunstancial a la empresa por su mix de cultura people y herramientas, pero en los sitios en los q he estado se ha visto mejora. En mi empresa actual intentamos q haya al menos un par de dias al mes de irl entre interns y managers. habra sitios donde no haga falta :)
@ultralisco@javisantana en aquel entonces yo llevaba el equipo de developer experience y nos pasamos casi un año recopilando datos de satisfaccion, telemetria y performance. En aquella empresa en concreto y en un par despues los numeros mejoran cuando los juniors tienen a alguien cerca.
@ultralisco@javisantana te entiendo, llevo 6 años remoto ya :) en mi experiencia las herramientas son un factor pero tb esta como el management gestiona al equipo, la cultura de la empresa y la disposicion del individuo. Teniendo juniors colocalizados con al menos el manager teniamos mejores resultados
@ultralisco@javisantana Segun aprenden en rol, el dominio y la dinamica ya no es tan critico q tengan a alguien a mano para apoyarles. Cada empresa es un mundo y no me gusta generalizar. Donde yo he trabajado desde covid si se ha notado la diferencia (y la hemos medido) m2c
@javisantana seems a good choice, hope you guys make it work. worked in measuring rto impact back in the day and colocation was critical for entry level productivity/happiness and being set up for long term success