November 29, 2018

Episode 22: Daniel Weinand: Building A Company, Defining Success, and Finding Happiness

November 29, 2018

Welcome back to The Rational Reminder Podcast. Today we are joined by Daniel Weinand. Daniel is the cofounder of Shopify, which is a company based in Ottawa that has had enormous success, not just in Ottawa or Canada, but all over the world in the last few years as a public company. Shopify is a great commerce platform that supports over 600,000 different stores worldwide. It is an incredible success story, and the best way that we can describe the conversation was that it was very intense. Everything from the way Daniel thinks about things to what he’s been able to achieve comes down to his intensity, and you can actually see the wheels turning in his head while he speaks. So for an incredible interview, keep listening to hear more!

Key Points From This Episode:

How Daniel chose Canada and got involved in Shopify. [0:02:13.0]
Decisions that were transformational for the company. [0:04:21.0]
Daniel’s transition into retirement from Shopify. [0:06:07.0]
The role of happiness and self-fulfillment. [0:10:18.0]
The beauty of poker — a game of incomplete information. [0:11:19.0]
Creating a company culture. [0:19:16.0]
The impact financial security has on productivity and engagement for employees. [0:25:04.0]
How Daniel defines success. [0:26:25.0]
Why Daniel chose to work with PWL. [0:29:41.0]
The impact of money in Daniel’s life. [0:33:53.0]

Read the Transcript:

Daniel, you've been a great friend of our team and myself now going back, I think, at least seven years and seven years ago, you were the one that invited me to give some financial advice, seminars and one-on-one meetings to a few of your employees of Shopify, which frankly ended up being very transformational for both me and for our team and for our whole company. So for that, we're very grateful. It's also safe to say that you had a huge impact on Ottawa and Shopify's had a huge impact on the country as well. Now you're from Germany.

So I'm curious, how did you choose Canada? How did you choose Ottawa?

Well, Canada chose me more than I chose Canada. Toby and I were good friends back in Germany and he was already living in Canada. And at the time his girlfriend, now wife, they were living in Ottawa and Toby wanted to start a new company. So one day I got a phone call from him, I was still living in Germany and he told me about this idea that later would become Shopify. I was so intrigued by what he said that I decided I dropped out of university, moved to Canada, and try help Toby to build up this company.

At what point in the company was that, was that still, when it was a snowboard store?

It was shortly after it was a snowboard store. So personally, I wasn't involved in selling any snowboards, I got to experience the tail end of that, but it was just at the transformation of, hey, let's take the software that Toby's written for the snowboard store and turned it into a software to service company.

So when did you know you were onto something?

The reason why I moved to a different country was that I've strongly believed that we were onto something, just the brain child was already onto something. And I think part of what made our early success was also us being oblivious to the fact that startups have such a high risk. We never thought about, "Oh, what happens when we fail?" We never thought about failing, we just thought, "This is a brilliant idea. We just got to do it." We work everyday, we work everyday, pretty much had no weekends, but it was great fun and we were lucky and we were fortunate that the timing and everything was right. So I have no illusions about that. But I feel like a lot of people, they may fail because they think too much about, what would it be like to fail? It just wasn't an option. Especially for me, it wasn't an option because I just risked not having a degree and giving up my previous life and just going 100% all in into this idea.

Can you talk about some of the decisions along the way, maybe some early decisions that when you look back were transformational for the company?

Oh, there were lots of decisions. I mean the beauty of startup, or the way how we ran our startup was that we made many, many important decisions every day. There were a few critical ones, probably the most nerve wracking one was when we changed our pricing model. So I don't know how many people notice, but when we started out Shopify, we had a, we called it the commission. So there was 3.75% that any merchant would pay us on any sale that they made. In exchange, we would give them accounts for free. And we figured that wasn't really sustainable. While have we got a lot of signups, the merchants wouldn't actually sell that much in the beginning, and so we thought, "We need to do something in order to survive as a company, in order to grow and make some revenue."

And so the big decision was to say, "Well, we would like to charge our customers monthly, lower the revenue share." And that was a big one because we didn't know how it would be perceived, how many signups would we lose by doing this? the great thing is we didn't actually see a big loss in signups, but what we did see was the quality of our customers went up because now when people pay monthly for a product, now they're committed, now they want to make the business succeed as well. As opposed to just having a free plan, like it's a Tumblr or anything that you can just go and sign up and you may not care about or forget about it, but as soon as you start paying for something, now it exists in your mental model.

So Daniel, you retired from Shopify a little over a year ago, which must've been a big transition. Can you talk a little bit about how that transition was for you?

It was huge. I mean, I've been working for well over a decade and working really hard, and it is a weird thing to be at a company and put so much of your heart and soul into it, grow your teams. And I had an amazing team and I spent a lot of time working on my team. Now leaving that all behind, that was a huge step. There were some other things that were going on in my life where I just felt like I needed an absolute change, I needed to change everything about me and start a second career and start a second life. And leaving Shopify, sadly, was part of that. The transition, it was really weird in a way that you have those habits, so when you wake up, I check my emails, I check Slack on all these things. And it was strange not checking Slack, strange not going and getting back to people.

And the hours that I used to spend my days with, suddenly changed and became empty. And then there was this overwhelmness of opportunity, of like, "Okay, here are all the things that I want to do, but there are no restraints. So what do I actually do?" Let me step back just a little bit, because some more details on how I made that decision was, I felt not in love with technology anymore. So I caught myself that back then, I used to be excited about everything new that came out, new technology, read up about everything from design to company culture and pretty much everything that I was responsible for at Shopify.

And there came a point in time when I was still doing my diligence and following up on things and keeping up to date, but I found myself not enjoying it as much anymore as I used to. So I thought, "Hmm that's odd." So I don't want to use the word burnout because it's been overused and I don't know if I had burnout out. I don't think so because I had so much fun at work that I'd never felt like what other people would probably feel when they go through this. But there were some red flags and I thought, "I need to do something because this is not sustainable. I see a trajectory that's going down hill." And in order to mitigate that, I asked for leave of absence, and luckily that was granted, which is also nice because I haven't really taken much vacation in all this whole time.

So I thought it would be good take a couple of months, clear my head, do something else. And it was a month or so, a month and a half in, into my leave of absence and I realized, would I be happy going back and would I contribute? And the answers to that where, I could probably contribute, but not as much as I wanted to. I wouldn't have the impact that I wanted to. And frankly, I don't know if I would be happy. And then, so for me, that decision was made that I felt it was the most fair to say, halfway through my leave of absence, talk to Toby and say, "Look, you're expecting me to come back this time, but I figure it's best to be frank and I have to leave the company, as sad as that is, as big of a step as it is."

That leads perfectly into the question I've been dying to ask you for so long, which since I've known you, you've always had so many varied interests outside of Shopify, like composing music and then making movies and then you're blacksmithing and whatnot. And can you talk more about the role of happiness, especially going through a transition like this? So happiness and self-fulfillment.

That's a big one. I mean, we can probably fill an entire hour just talking about that. I mean, I'm fortunate in many ways, one of those is that I have lots of interests, lots of passions. Some other people would say it's a short attention span, but I just like doing a lot of different things. And I like to do one thing at a time, get to a certain level, so get good to where I'm happy with myself and then move on to the next one. And I feel like I can pull knowledge and information from all these different fields and do whatever I do next, have that influence me, which is really interesting.

So one of your interests that I find extremely interesting about you is poker, and you're not just interested in it, but you actually play at a very high level, quite successfully. Can you talk a little bit about how you got interested in poker and what's brought you to that next level that you're playing at now?

Poker, it's a funny game. I never really was interested in playing the game. I thought very little of it, almost my entire life. And while I really love games, I love video games, I love board games and I thought, well, poker's, I don't know, it's kind of gambling and I wasn't really that fond of that, but we used to play poker during company offsites. So every quarter, so we would go and strategize and in the evenings, we would go and have a friendly game poker. While I knew the rules, I mean, they're not very difficult, I wasn't doing great, I wasn't doing terrible, but I never really had any interest. And funny thing enough, Toby taught me about this website and he said, "Just read it, it's interesting."

And so it was a one page primer on how to play better poker. And all the fundamental concepts were being talked on, when it comes to position, bet sizing, hand strength and so on. So that fascinated me because I felt the game's so much deeper than I thought, there's so much more strategy than I thought and so much more analytics. And when I realized that poker is not just a game of luck and a little bit of skill, I realized poker is a game of a lot of skill and some luck, I got hooked on the game. And then it became the challenge to myself to see, well, how well would I do? Because people say in order to be good at poker, you need to be good at bluffing, or if you're not good at bluffing, you need to be good at lying. I never thought myself as being a good liar. So I thought, "I'm not going to be a good poker player."

I realized that's overrated, I don't think you need to be a good liar in order to be a good poker player and there's different approaches to playing the game. And so my game is fairly analytical and I don't want to alienate the readers by going too deep into the theory, but there is that concept, what I call, game theory, optimized play. And now people use things like solvers, and there's a lot of math involved in order to realize and figure out what's your best move, what should you be doing at any given time? And on the bluffing side, I'd like to turn it around and set up focusing so much on being the stoic person at a table, which surprisingly enough I am.

And I didn't realize that about myself, but when I play poker, I oftentimes get the comment that, "You're really intimidating." And I don't know, I heard the weirdest names, like someone called me a pouncing cheetah and things like that. It doesn't feel like it to me, but I do feel like I'm very stoic when I play. And that's just because I don't let the emotions get to me, so it doesn't really matter if I win lots or lose lots, I don't get very emotional when I play the game. And I think that helps me keep my emotions and my reads in check. But on the side of reading other people, I have worked in psychiatry for quite some time and I've always been interested in human psychology.

So I mean, that was like the perfect blend of, here's marvelous analytics and there's also the human psychology part where I can figure out, okay, why would someone act a certain way? And it comes down to you're trying to figure out how much money the person has. How much is that watch worth? There's anecdotes and jokes, but people say like, "Okay, if his watch is 50 grand and up, then don't try to bluff him because money doesn't mean anything to them personally. But you're just trying to get good impressions on people when you play with them and trying to categorize them, because, you can only go so much into detail.

So in my mental model, I have all these different personalities and I will assign them to play against. And that helps me make decisions really, really quickly because I put them in a certain draw and sometimes I'm wrong and then I have to reevaluate. Also part of the beauty of poker, the other thing that made me stick to poker and why I was so excited playing higher and higher stakes and trying to get as good as I can, was that I learned so much from poker that I can apply to my life and things that I could apply to my business, basic decision-making. Poker is a game of incomplete information, as opposed to chess. Chess, you see the entire board, you know exactly what's going on, there's no hidden hand, there's no things you can't see. Whereas in poker, you don't quite see the entire information.

So similar to financial markets where it's incomplete information, you have to make decisions based on the information that you get and that information can change. And the best poker players will change their decisions based on new information that they get. And I feel like it's the same with managers working in a company, that you reevaluate your opinions, you reevaluate your decisions when you get new information. And if someone is too proud and too stubborn, then they're not going to do that and they're going to be a bad manager, they're going to be a bad finance guy, they're going to be a bad poker player. So it's learning how to become humble and not take yourself too important.

And I think it queues up something else that was on our mind, which you were the chief culture officer at Shopify.

Can I say one more thing about poker? Because some people may have seen me playing on TV and playing for really high stakes or they see me in big tournaments. The really cool thing for me, and that's how I like to challenge myself, is when I started playing poker, I had a really small bankroll. I had like couple of hundred bucks and of course I can afford to play higher stakes and I can jump in much bigger games, but I didn't want that. So I played the smallest stakes that I can, and build myself a bank role and work my way up to the higher stakes, until I could afford to play at a higher stakes. And I never wanted to be that rich business guy that jumps in games where they don't belong.

So I think that's true for when you want to learn anything, even if you can get ahead of yourself, it's better to not do it and earn your right to progress to the next stage. And I think there's such a beauty in going through that whole experience, because you also learn what it means to anyone else who got there. You know the journey that they were on to get there because you were on it yourself, you weren't just the guy who dropped in at stage eight and started playing really high stakes. So I think that's an important thing, be humble enough to admit to yourself, it's okay to start at the bottom and work your way up.

That is also a great lead into a question we had about when you were the chief culture officer at Shopify. Safe to say culture was legendary in that environment, certainly- I don't know where you got this culture ideas from when you moved here from Germany. So can you talk about how you built the Shopify culture and where it came from?

Yeah. I mean, so I have to explain a few things. One is, at the time we were about 70 people at Shopify, and we thought, "Hey, what we've created is amazing. It works really well. We love our team. We love how they work together, how they collaborate." We're also seeing our trajectory. We're seeing our hiring. We're seeing we are growing 100% year over year. And next year we're going to be over a hundred people, and the year after, and the year after and so on, and at some point were going to be 500,000 plus people. So we don't want to grow having a blind eye towards what it feels to be working at the company. And we don't want to wake up one day and realize that we created a company that we don't really want to work in anymore.

And the decision was made that we should be focusing on this, but we don't really know what to focus on, and what that means. But Toby and I talked and he said, "Okay, you should be the guy." And I said, "Yes, I would like to, let me figure out what it means." At the time, there weren't really any books on company culture. There were a few psychology books that are still relevant today, that I can recommend like Grit by Angela Duckworth. But when you saw newspaper articles about company culture, most journalists would talk about perks and benefits. They would talk about the Google offices, that they have catered lunches, that they have a slide, that they have, you name it. And then something that didn't quite sit well with me saying like, "Oh, this is the company culture."

So I went on an exploratory mission and tried to figure out what is this in the first, place trying to identify it. And it took me a while but I read a lot of books on anything that would talk about culture. There's this one definition that really resonated with me, and that was from anthropology where they define culture as culture is the willing behavior and beliefs of a group of people. So it's a group of people, and beliefs is something you can't really tell them what to believe, they believe what they want to believe. And willing behaviors is what they're willing to do, not what you tell them to do. And so if you start from that and you figure out, "Okay, well, can I even shape that in any way?"

And I think the answer is yes. There's some terrific quotes from people like Churchill who said, "First, you shape your buildings and then your buildings shape us." And so I thought, "Okay, well, let's create a really good work environment." And one part of the puzzle was to realize, okay, who do we have in the company? How do they tick? And they are not like me. Realizing, not everyone is like you, so not everyone likes the things that you like. And so how can we create a work environment where everyone can work to their fullest potential? One of the realizations was that very simply they're introverts, extroverts. Extroverts like being around people, they get energy from that. Introverts recharge when they are either alone or with loved ones.

And if you are an extrovert, you won't fully understand how an introvert thinks, unless you make an effort. I myself am introvert, so I have more trouble understanding extroverts. But that is to say that it was important for us to then go and say, "Well, let's create a work environment where someone who doesn't want to be in a bit crowd can hide away somewhere. Take the laptop and work a few hours undisturbed, from some other place." So when we looked at new office designs, we put in nooks and crannies where people can just go and it's okay, and they're going to be working undisturbed. And some other people would love being in a crowd, so we created a cafe where the entire company can hang out and mingle and so on. It's just one example.

I still don't see all the perks and benefits of a company as part of culture, even though they were my responsibility and I created them. And I also wanted to create everything for a purpose, not just because another company did it. And I think that's another really important thing when building a company, is that you need to understand everything you put in place. Especially with something like internal, how the internals of a company work, it's dangerous to try things and see what sticks without fully understanding what effect they can have to the people working inside. So you make some conscious changes. I mean, that's true, basically for any business decision, but I saw myself as being the product manager and the product was the company.

So, so interesting. One of the things that Shopify has been doing for a long time in terms of perks and culture and things like that, is having somebody from our firm, from PWL, come into the office to give talks and meet with employees, one-on-one to talk about their individual personal finance. So the question I want to ask you is what impact do you think financial security has on productivity and engagement for employees?

So you look at Maslow's pyramid and securities is at the bottom and that's like job security, financial security, you have enough to eat, you have a house to sleep in, and so on. And so if you don't have that, your mind is going to be occupied by other things, so you can't fully focus on your job. So there's all this cognitive overhead that you want to get rid of. You just want to get a dump of that all and have it being taken care of. Right. So I think it's huge that people don't ... At the time Shopify wasn't publicly traded, but now it's publicly traded, so I think it's a really big benefit that someone doesn't have to go on the stock tick app on their phone and check the price in order to see how well they're doing, but offloading some of that, and not having to think about it or someone to give them the peace of mind that, "Hey, it will be all right."

Having co-founded Shopify, which is a, 14, $15 billion plus public company, I can only imagine how fulfilling that ride must have been for you. Now that you've transitioned from Shopify, how do you now define success for the rest of your life?

That's a very difficult question. I mean, I feel like I achieved such great success already and not just by the numbers. People will say like, "Oh, we are an X billion dollar company. My net worth is X." And to me, that doesn't mean success. Success to me means, I was able to hire the right people, shape the company by hiring the right people, and then hopefully that my part to grow the people that I hired, to turn them into something that's better than myself. That's always what I strived for. So I always wanted to enable people around me to become better than myself and push them into an area so they would perform at a level that alone without help, they may not be able to push themselves. Those are some of the things where I feel like, okay, that's success to me.

And funnily enough, I was struggling for a long time to realize that that was important to me because when I was an individual contributor and I was a developer, and then I was a designer and I was many things, but I used to create for myself and becoming a manager was a very difficult transition and it's an unnatural one if you're not prepared. But then learning how to live vicariously can be extremely fulfilling if you realize why you're doing it. You're not doing meetings because you're supposed to have meetings, you're supposed to have one-on-one, you're doing them because you realize what kind of profound impact that can have on the people that you work with. That's one success, I mean, and then it really depends on what we're talking about.

Whether that's poker, [inaudible 00:28:19] smithing, composing music, writing stories, or what else I have. I'm building a house right now, and I have different metrics for what success means to me in all these different areas. And unfortunately, with my background, so I mean, I'm German and I have an Asian mom, and so that's a really bad combination because with that combination, we are never happy with anything. It can be an A minus and it could be the best mark in the whole class. I am always going to hop on what's the remaining 5%, what could I have done better? So in a way that's a curse and a blessing. Curse because when I reach the 95%, I don't really celebrate. I focus on why wasn't it 100%, at the same time, it makes me better, I try to push myself as much as possible every day.

As an individual, you have endless options of who to deal with for financial advice, obviously. I'm curious because this podcast is for our clients and people who might choose to be our clients, can you articulate why you work with us? Why we're the privilege of being able to help you?

I mean, there is a few reasons. One, I don't keep to myself, the results are extremely solid, but first and foremost, I like to surround myself with really strong people. That again, can clear my cognitive overhead, so I can focus on the things that I really want to do. And that's my financial advisor, that's my accountant, that's my lawyer. That's pretty much everyone else that I need to be competent because I don't know about those areas and I need to 100% trust the person in their respective areas. And with PWL, I found that person with Cam and not only is all the financial advice, extremely sound, but he's also been my psychiatrist, if you will, and probably for many others. It's difficult to describe, but there's something very fulfilling in having parts of your life figured out that you don't really want to spend that much time on or deal with.

I can just contact him, "I want to do the following things, please connect with my accountant on the other things." And I know it's going to be done, and that's exactly what I need. And I don't want to coach someone, I don't want to wrestle with someone. So I mean, my advice to finding, whether that's a financial advisor or lawyer or accountant is like, find someone that you really get along with, that you can trust and that you don't have to fight over every little thing. So you want to be on the same page, you want to learn from them when you're ready and you also want to be doing your own things when you don't have time to think about those things. And PWL and my philosophy are extremely aligned and so it was a very obvious choice for me.

Is there anything that you worry about from a financial perspective?

Worry is too strong of a word. I mean, when you think about when I started with PWL, pretty much had all my entire net worth in just one holding, and it was the company I worked for, it was Shopify. And so, I mean, whether I worked for the company or not, that's a huge risk. Because as great as the company is, and I strongly believe in it, I still do, it's not what a sane person would do. If you take every dollar and just put it in one stock, it's probably not a smart idea. So early on, to me it was just like, "Okay, well, how can I create some diversification and hedge certain things?" I like to be prepared when certain events that could occur in the news, what would it do to us?

So I mean, full disclosure, my vast majority of holdings is with PWL, but I also have created some minor diversification by investing in various other areas. Some of these are startups, which are extremely high risk. Some of these are real estate. Some of these are ... I don't want to disclose my full financial portfolio, but I think it's just taking some time and getting an idea of what's important to you and how much of a stomach do you have when, it's not, if, but when the recession comes and when there is a bear market and suddenly you lose double digit to your net worth, are you okay with that? Did you put any money aside to buy dips? I just think that everyone has to make decisions for themselves.

So interesting. Knowing what you know now about the impact of money on your life, what would you change about your life, say pre Shopify, has your perspective on money changed over time?

Well, I mean, in order to understand that answer, you have to understand that I come from a lower middle class family background. So we never had the fanciest things, we got a lot of hand-me-down clothes, there never was a lot of money in my life growing up. It only continued when I was a university student and then when I came to Canada, I found the pretty much the cheapest apartment in a basement I could find. I sustained myself on ramen noodles for months. I really learned how to make every dollar count. And in some ways I still have that very prudent mentality, just as an example, I mean, I was playing poker with these guys and those were like over a hundred thousand dollars per head on the table and everyone flying in private and they were trying to figure out what my private jet is.

And I told the guys, "Look, I flew in here economy because I didn't want to pay for the upgrade and it seemed to make more sense." Still, I'm pretty finicky when it comes, I don't want to pay more than I have to for getting something. And I don't know if that's false pride, I just don't spend much time thinking about it. At the same time, I mean, money enabled me to not having to worry about money anymore, and I spent a lot of time when I was younger, worrying about money. Worrying about where do I get another $20 to buy the following thing, whatever hobbies I had. So that's great about money, that you don't have to do that anymore. And it enables me to get something if I really want it, to then pull the trigger and say, "Okay, well, I've been eyeing this thing for five years and I still want it, so I'm going to get it."

Are there any downsides?

Oh, for sure, yeah. There are downsides. I mean, I don't want to get into all the downsides, but one is, now we're thinking about a family. And when you think about family and think about, well, I would like to have kids one day, what kind of impact does money have to your kids and what are the strategies that they can employ so you don't raise them spoiled brats.