As the world watches the Russia-Ukraine border situation, This bill would bar aid to Ukraine until the Mexican border is secured.
Although Mexico and Ukraine are thousands of miles apart, this legislation would link their responses.
Context
Ukraine was a Soviet republic until 1991. A significant proportion of the population, particularly in the east, is ethnically Russian. In February, the Russian military invaded Ukraine, intent on overthrowing its democratically elected government.
This could be the biggest European land invasion since WWII. In response, President Joe Biden sent 3,000 troops to NATO countries bordering Ukraine to help with Ukrainian refugees, with more troops possible if the situation worsened.
In July 2021, the US Border Patrol reported its highest monthly encounter total since March 2000. Some Republicans compare Biden's response to the Mexican border situation to his response to the Ukrainian border situation, though the correlation is unclear.
What the bills do
Two new Republican bills seek to link the US response to Ukraine to the situation in Mexico.
The Secure America's Borders First Act would prohibit federal funding for Ukraine until the US-Mexico border is “operationally controlled,” including a wall as promised by former President Donald Trump. (The bill even mandates a 30-foot-high wall.)
The USB (Ukraine and Southern Border) Act, introduced on February 8 by Rep. Matt Rosendale (R-MT0), would allow the US to support Ukraine, but only if the number of Armed Forces deployed there is less than the number deployed to the Mexican border. Madison Cawthorne introduced H.R. 6665 on February 9th (R-NC11).
What backers say
Supporters argue that even if the US should militarily assist Ukraine, our own domestic border situation should take precedence.
After failing to secure our own border and protect our own territorial integrity, ‘America Last' politicians on both sides of the aisle now tell us that we must do so for Ukraine. “Before rushing America into another foreign conflict over an Eastern European nation's border thousands of miles from our shores, they should first secure our southern border.”
“If Joe Biden truly cared about Americans, he would prioritize national security over international affairs,” Rep. Cawthorn said in a separate press release. The least we can do to secure our own country is send the same number of troops to the US-Mexico border to assist our border patrol agents working diligently to secure America.
What opponents say
The president has defended his Ukraine and Mexico policies, stating that both seek peace and diplomacy.
Our nations [the US and Mexico] have a long and complicated history, and we haven't always been perfect neighbors, but we have seen the power and purpose of cooperation,” Biden said in 2021. “We're safer when we work together, whether it's to manage our shared border or stop the pandemic. [In both the Obama and Biden administration], we made a commitment that we look at Mexico as an equal, not as somebody who is south of our border.”
No mistake: If Russia goes ahead with its plans, it will be responsible for a catastrophic and unnecessary war of choice. To protect our collective security, the United States and our allies are ready to defend every inch of NATO territory. We won't send troops into Ukraine, but we will continue to support the Ukrainian people... But, I repeat, Russia can choose diplomacy. It is not too late to de-escalate and return to the negotiating table.”
Odds of passage
The Secure America's Borders First Act has nine Republican sponsors. Either the House Armed Services or Foreign Affairs Committees may vote on it.
Rep. Paul Gosar, a Republican, co-sponsored the USB Act (R-AZ4). The House Armed Services Committee may vote on it.
With Republicans in control, passage is unlikely.
More on Current Events
Cory Doctorow
2 years ago
The downfall of the Big Four accounting companies is just one (more) controversy away.
Economic mutual destruction.
Multibillion-dollar corporations never bothered with an independent audit, and they all lied about their balance sheets.
It's easy to forget that the Big Four accounting firms are lousy fraud enablers. Just because they sign off on your books doesn't mean you're not a hoax waiting to erupt.
This is *crazy* Capitalism depends on independent auditors. Rich folks need to know their financial advisers aren't lying. Rich folks usually succeed.
No accounting. EY, KPMG, PWC, and Deloitte make more money consulting firms than signing off on their accounts.
The Big Four sign off on phony books because failing to make friends with unscrupulous corporations may cost them consulting contracts.
The Big Four are the only firms big enough to oversee bankruptcy when they sign off on fraudulent books, as they did for Carillion in 2018. All four profited from Carillion's bankruptcy.
The Big Four are corrupt without any consequences for misconduct. Who can forget when KPMG's top management was fined millions for helping auditors cheat on ethics exams?
Consulting and auditing conflict. Consultants help a firm cover its evil activities, such as tax fraud or wage theft, whereas auditors add clarity to a company's finances. The Big Four make more money from cooking books than from uncooking them, thus they are constantly embroiled in scandals.
If a major scandal breaks, it may bring down the entire sector and substantial parts of the economy. Jim Peterson explains system risk for The Dig.
The Big Four are voluntary private partnerships where accountants invest their time, reputations, and money. If a controversy threatens the business, partners who depart may avoid scandal and financial disaster.
When disaster looms, each partner should bolt for the door, even if a disciplined stay-and-hold posture could weather the storm. This happened to Arthur Andersen during Enron's collapse, and a 2006 EU report recognized the risk to other corporations.
Each partner at a huge firm knows how much dirty laundry they've buried in the company's garden, and they have well-founded suspicions about what other partners have buried, too. When someone digs, everyone runs.
If a firm confronts substantial litigation damages or enforcement penalties, it could trigger the collapse of one of the Big Four. That would be bad news for the firm's clients, who would have trouble finding another big auditor.
Most of the world's auditing capacity is concentrated in four enormous, brittle, opaque, compromised organizations. If one of them goes bankrupt, the other three won't be able to take on its clients.
Peterson: Another collapse would strand many of the world's large public businesses, leaving them unable to obtain audit views for their securities listings and regulatory compliance.
Count Down: The Past, Present, and Uncertain Future of the Big Four Accounting Firms is in its second edition.
https://www.emerald.com/insight/publication/doi/10.1108/9781787147003
Will Lockett
3 years ago
Russia's nukes may be useless
Russia's nuclear threat may be nullified by physics.
Putin seems nostalgic and wants to relive the Cold War. He's started a deadly war to reclaim the old Soviet state of Ukraine and is threatening the West with nuclear war. NATO can't risk starting a global nuclear war that could wipe out humanity to support Ukraine's independence as much as they want to. Fortunately, nuclear physics may have rendered Putin's nuclear weapons useless. However? How will Ukraine and NATO react?
To understand why Russia's nuclear weapons may be ineffective, we must first know what kind they are.
Russia has the world's largest nuclear arsenal, with 4,447 strategic and 1,912 tactical weapons (all of which are ready to be rolled out quickly). The difference between these two weapons is small, but it affects their use and logistics. Strategic nuclear weapons are ICBMs designed to destroy a city across the globe. Russia's ICBMs have many designs and a yield of 300–800 kilotonnes. 300 kilotonnes can destroy Washington. Tactical nuclear weapons are smaller and can be fired from artillery guns or small truck-mounted missile launchers, giving them a 1,500 km range. Instead of destroying a distant city, they are designed to eliminate specific positions, bases, or military infrastructure. They produce 1–50 kilotonnes.
These two nuclear weapons use different nuclear reactions. Pure fission bombs are compact enough to fit in a shell or small missile. All early nuclear weapons used this design for their fission bombs. This technology is inefficient for bombs over 50 kilotonnes. Larger bombs are thermonuclear. Thermonuclear weapons use a small fission bomb to compress and heat a hydrogen capsule, which undergoes fusion and releases far more energy than ignition fission reactions, allowing for effective giant bombs.
Here's Russia's issue.
A thermonuclear bomb needs deuterium (hydrogen with one neutron) and tritium (hydrogen with two neutrons). Because these two isotopes fuse at lower energies than others, the bomb works. One problem. Tritium is highly radioactive, with a half-life of only 12.5 years, and must be artificially made.
Tritium is made by irradiating lithium in nuclear reactors and extracting the gas. Tritium is one of the most expensive materials ever made, at $30,000 per gram.
Why does this affect Putin's nukes?
Thermonuclear weapons need tritium. Tritium decays quickly, so they must be regularly refilled at great cost, which Russia may struggle to do.
Russia has a smaller economy than New York, yet they are running an invasion, fending off international sanctions, and refining tritium for 4,447 thermonuclear weapons.
The Russian military is underfunded. Because the state can't afford it, Russian troops must buy their own body armor. Arguably, Putin cares more about the Ukraine conflict than maintaining his nuclear deterrent. Putin will likely lose power if he loses the Ukraine war.
It's possible that Putin halted tritium production and refueling to save money for Ukraine. His threats of nuclear attacks and escalating nuclear war may be a bluff.
This doesn't help Ukraine, sadly. Russia's tactical nuclear weapons don't need expensive refueling and will help with the invasion. So Ukraine still risks a nuclear attack. The bomb that destroyed Hiroshima was 15 kilotonnes, and Russia's tactical Iskander-K nuclear missile has a 50-kiloton yield. Even "little" bombs are deadly.
We can't guarantee it's happening in Russia. Putin may prioritize tritium. He knows the power of nuclear deterrence. Russia may have enough tritium for this conflict. Stockpiling a material with a short shelf life is unlikely, though.
This means that Russia's most powerful weapons may be nearly useless, but they may still be deadly. If true, this could allow NATO to offer full support to Ukraine and push the Russian tyrant back where he belongs. If Putin withholds funds from his crumbling military to maintain his nuclear deterrent, he may be willing to sink the ship with him. Let's hope the former.
MartinEdic
3 years ago
Russia Through the Windows: It's Very Bad
And why we must keep arming Ukraine
Russian expatriates write about horrific news from home.
Read this from Nadin Brzezinski. She's not a native English speaker, so there are grammar errors, but her tale smells true.
Terrible truth.
There's much more that reveals Russia's grim reality.
Non-leadership. Millions of missing supplies are presumably sold for profit, leaving untrained troops without food or gear. Missile attacks pause because they run out. Fake schemes to hold talks as a way of stalling while they scramble for solutions.
Street men were mobilized. Millions will be ground up to please a crazed despot. Fear, wrath, and hunger pull apart civilization.
It's the most dystopian story, but Ukraine is worse. Destruction of a society, country, and civilization. Only the invaders' corruption and incompetence save the Ukrainians.
Rochester, NY. My suburb had many Soviet-era Ukrainian refugees. Their kids were my classmates. Fifty years later, many are still my friends. I loved their food and culture. My town has 20,000 Ukrainians.
Grieving but determined. They don't quit. They won't quit. Russians are eternal enemies.
It's the Russian people's willingness to tolerate corruption, abuse, and stupidity by their leaders. They are paying. 65000 dead. Ruined economy. No freedom to speak. Americans do not appreciate that freedom as we should.
It lets me write/publish.
Russian friends are shocked. Many are here because their parents escaped Russian anti-semitism and authoritarian oppression. A Russian cultural legacy says a strongman's methods are admirable.
A legacy of a slavery history disguised as serfdom. Peasants and Princes.
Read Tolstoy. Then Anna Karenina. The main characters are princes and counts, whose leaders are incompetent idiots with wealth and power.
Peasants who die in their wars due to incompetence are nameless ciphers.
Sound familiar?
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Trevor Stark
2 years ago
Peter Thiels's Multi-Billion Dollar Net Worth's Unknown Philosopher
Peter Thiel studied philosophy as an undergraduate.
Peter Thiel has $7.36 billion.
Peter is a world-ranked chess player, has a legal degree, and has written profitable novels.
In 1999, he co-founded PayPal with Max Levchin, which merged with X.com.
Peter Thiel made $55 million after selling the company to eBay for $1.5 billion in 2002.
You may be wondering…
How did Peter turn $55 million into his now multi-billion dollar net worth?
One amazing investment?
Facebook.
Thiel was Facebook's first external investor. He bought 10% of the company for $500,000 in 2004.
This investment returned 159% annually, 200x in 8 years.
By 2012, Thiel sold almost all his Facebook shares, becoming a billionaire.
What was the investment thesis of Peter?
This investment appeared ridiculous. Facebook was an innovative startup.
Thiel's $500,000 contribution transformed Facebook.
Harvard students have access to Facebook's 8 features and 1 photo per profile.
How did Peter determine that this would be a wise investment, then?
Facebook is a mimetic desire machine.
Social media's popularity is odd. Why peek at strangers' images on a computer?
Peter Thiel studied under French thinker Rene Girard at Stanford.
Mimetic Desire explains social media's success.
Mimetic Desire is the idea that humans desire things simply because other people do.
If nobody wanted it, would you?
Would you desire a family, a luxury car, or expensive clothes if no one else did? Girard says no.
People we admire affect our aspirations because we're social animals. Every person has a role model.
Our nonreligious culture implies role models are increasingly other humans, not God.
The idea explains why social media influencers are so powerful.
Why would Andrew Tate or Kim Kardashian matter if people weren't mimetic?
Humanity is fundamentally motivated by social comparison.
Facebook takes advantage of this need for social comparison, and puts it on a global scale.
It aggregates photographs and updates from millions of individuals.
Facebook mobile allows 24/7 social comparison.
Thiel studied mimetic desire with Girard and realized Facebook exploits the urge for social comparison to gain money.
Social media is more significant and influential than ever, despite Facebook's decline.
Thiel and Girard show that applied philosophy (particularly in business) can be immensely profitable.
Ray Dalio
3 years ago
The latest “bubble indicator” readings.
As you know, I like to turn my intuition into decision rules (principles) that can be back-tested and automated to create a portfolio of alpha bets. I use one for bubbles. Having seen many bubbles in my 50+ years of investing, I described what makes a bubble and how to identify them in markets—not just stocks.
A bubble market has a high degree of the following:
- High prices compared to traditional values (e.g., by taking the present value of their cash flows for the duration of the asset and comparing it with their interest rates).
- Conditons incompatible with long-term growth (e.g., extrapolating past revenue and earnings growth rates late in the cycle).
- Many new and inexperienced buyers were drawn in by the perceived hot market.
- Broad bullish sentiment.
- Debt financing a large portion of purchases.
- Lots of forward and speculative purchases to profit from price rises (e.g., inventories that are more than needed, contracted forward purchases, etc.).
I use these criteria to assess all markets for bubbles. I have periodically shown you these for stocks and the stock market.
What Was Shown in January Versus Now
I will first describe the picture in words, then show it in charts, and compare it to the last update in January.
As of January, the bubble indicator showed that a) the US equity market was in a moderate bubble, but not an extreme one (ie., 70 percent of way toward the highest bubble, which occurred in the late 1990s and late 1920s), and b) the emerging tech companies (ie. As well, the unprecedented flood of liquidity post-COVID financed other bubbly behavior (e.g. SPACs, IPO boom, big pickup in options activity), making things bubbly. I showed which stocks were in bubbles and created an index of those stocks, which I call “bubble stocks.”
Those bubble stocks have popped. They fell by a third last year, while the S&P 500 remained flat. In light of these and other market developments, it is not necessarily true that now is a good time to buy emerging tech stocks.
The fact that they aren't at a bubble extreme doesn't mean they are safe or that it's a good time to get long. Our metrics still show that US stocks are overvalued. Once popped, bubbles tend to overcorrect to the downside rather than settle at “normal” prices.
The following charts paint the picture. The first shows the US equity market bubble gauge/indicator going back to 1900, currently at the 40% percentile. The charts also zoom in on the gauge in recent years, as well as the late 1920s and late 1990s bubbles (during both of these cases the gauge reached 100 percent ).
The chart below depicts the average bubble gauge for the most bubbly companies in 2020. Those readings are down significantly.
The charts below compare the performance of a basket of emerging tech bubble stocks to the S&P 500. Prices have fallen noticeably, giving up most of their post-COVID gains.
The following charts show the price action of the bubble slice today and in the 1920s and 1990s. These charts show the same market dynamics and two key indicators. These are just two examples of how a lot of debt financing stock ownership coupled with a tightening typically leads to a bubble popping.
Everything driving the bubbles in this market segment is classic—the same drivers that drove the 1920s bubble and the 1990s bubble. For instance, in the last couple months, it was how tightening can act to prick the bubble. Review this case study of the 1920s stock bubble (starting on page 49) from my book Principles for Navigating Big Debt Crises to grasp these dynamics.
The following charts show the components of the US stock market bubble gauge. Since this is a proprietary indicator, I will only show you some of the sub-aggregate readings and some indicators.
Each of these six influences is measured using a number of stats. This is how I approach the stock market. These gauges are combined into aggregate indices by security and then for the market as a whole. The table below shows the current readings of these US equity market indicators. It compares current conditions for US equities to historical conditions. These readings suggest that we’re out of a bubble.
1. How High Are Prices Relatively?
This price gauge for US equities is currently around the 50th percentile.
2. Is price reduction unsustainable?
This measure calculates the earnings growth rate required to outperform bonds. This is calculated by adding up the readings of individual securities. This indicator is currently near the 60th percentile for the overall market, higher than some of our other readings. Profit growth discounted in stocks remains high.
Even more so in the US software sector. Analysts' earnings growth expectations for this sector have slowed, but remain high historically. P/Es have reversed COVID gains but remain high historical.
3. How many new buyers (i.e., non-existing buyers) entered the market?
Expansion of new entrants is often indicative of a bubble. According to historical accounts, this was true in the 1990s equity bubble and the 1929 bubble (though our data for this and other gauges doesn't go back that far). A flood of new retail investors into popular stocks, which by other measures appeared to be in a bubble, pushed this gauge above the 90% mark in 2020. The pace of retail activity in the markets has recently slowed to pre-COVID levels.
4. How Broadly Bullish Is Sentiment?
The more people who have invested, the less resources they have to keep investing, and the more likely they are to sell. Market sentiment is now significantly negative.
5. Are Purchases Being Financed by High Leverage?
Leveraged purchases weaken the buying foundation and expose it to forced selling in a downturn. The leverage gauge, which considers option positions as a form of leverage, is now around the 50% mark.
6. To What Extent Have Buyers Made Exceptionally Extended Forward Purchases?
Looking at future purchases can help assess whether expectations have become overly optimistic. This indicator is particularly useful in commodity and real estate markets, where forward purchases are most obvious. In the equity markets, I look at indicators like capital expenditure, or how much businesses (and governments) invest in infrastructure, factories, etc. It reflects whether businesses are projecting future demand growth. Like other gauges, this one is at the 40th percentile.
What one does with it is a tactical choice. While the reversal has been significant, future earnings discounting remains high historically. In either case, bubbles tend to overcorrect (sell off more than the fundamentals suggest) rather than simply deflate. But I wanted to share these updated readings with you in light of recent market activity.
Sanjay Priyadarshi
2 years ago
Using Ruby code, a programmer created a $48,000,000,000 product that Elon Musk admired.
Unexpected Success
Shopify CEO and co-founder Tobias Lutke. Shopify is worth $48 billion.
World-renowned entrepreneur Tobi
Tobi never expected his first online snowboard business to become a multimillion-dollar software corporation.
Tobi founded Shopify to establish a 20-person company.
The publicly traded corporation employs over 10,000 people.
Here's Tobi Lutke's incredible story.
Elon Musk tweeted his admiration for the Shopify creator.
30-October-2019.
Musk praised Shopify founder Tobi Lutke on Twitter.
Happened:
Explore this programmer's journey.
What difficulties did Tobi experience as a young child?
Germany raised Tobi.
Tobi's parents realized he was smart but had trouble learning as a toddler.
Tobi was learning disabled.
Tobi struggled with school tests.
Tobi's learning impairments were undiagnosed.
Tobi struggled to read as a dyslexic.
Tobi also found school boring.
Germany's curriculum didn't inspire Tobi's curiosity.
“The curriculum in Germany was taught like here are all the solutions you might find useful later in life, spending very little time talking about the problem…If I don’t understand the problem I’m trying to solve, it’s very hard for me to learn about a solution to a problem.”
Studying computer programming
After tenth grade, Tobi decided school wasn't for him and joined a German apprenticeship program.
This curriculum taught Tobi software engineering.
He was an apprentice in a small Siemens subsidiary team.
Tobi worked with rebellious Siemens employees.
Team members impressed Tobi.
Tobi joined the team for this reason.
Tobi was pleased to get paid to write programming all day.
His life could not have been better.
Devoted to snowboarding
Tobi loved snowboarding.
He drove 5 hours to ski at his folks' house.
His friends traveled to the US to snowboard when he was older.
However, the cheap dollar conversion rate led them to Canada.
2000.
Tobi originally decided to snowboard instead than ski.
Snowboarding captivated him in Canada.
On the trip to Canada, Tobi encounters his wife.
Tobi meets his wife Fiona McKean on his first Canadian ski trip.
They maintained in touch after the trip.
Fiona moved to Germany after graduating.
Tobi was a startup coder.
Fiona found work in Germany.
Her work included editing, writing, and academics.
“We lived together for 10 months and then she told me that she need to go back for the master's program.”
With Fiona, Tobi immigrated to Canada.
Fiona invites Tobi.
Tobi agreed to move to Canada.
Programming helped Tobi move in with his girlfriend.
Tobi was an excellent programmer, therefore what he did in Germany could be done anywhere.
He worked remotely for his German employer in Canada.
Tobi struggled with remote work.
Due to poor communication.
No slack, so he used email.
Programmers had trouble emailing.
Tobi's startup was developing a browser.
After the dot-com crash, individuals left that startup.
It ended.
Tobi didn't intend to work for any major corporations.
Tobi left his startup.
He believed he had important skills for any huge corporation.
He refused to join a huge corporation.
Because of Siemens.
Tobi learned to write professional code and about himself while working at Siemens in Germany.
Siemens culture was odd.
Employees were distrustful.
Siemens' rigorous dress code implies that the corporation doesn't trust employees' attire.
It wasn't Tobi's place.
“There was so much bad with it that it just felt wrong…20-year-old Tobi would not have a career there.”
Focused only on snowboarding
Tobi lived in Ottawa with his girlfriend.
Canada is frigid in winter.
Ottawa's winters last.
Almost half a year.
Tobi wanted to do something worthwhile now.
So he snowboarded.
Tobi began snowboarding seriously.
He sought every snowboarding knowledge.
He researched the greatest snowboarding gear first.
He created big spreadsheets for snowboard-making technologies.
Tobi grew interested in selling snowboards while researching.
He intended to sell snowboards online.
He had no choice but to start his own company.
A small local company offered Tobi a job.
Interested.
He must sign papers to join the local company.
He needed a work permit when he signed the documents.
Tobi had no work permit.
He was allowed to stay in Canada while applying for permanent residency.
“I wasn’t illegal in the country, but my state didn’t give me a work permit. I talked to a lawyer and he told me it’s going to take a while until I get a permanent residency.”
Tobi's lawyer told him he cannot get a work visa without permanent residence.
His lawyer said something else intriguing.
Tobis lawyer advised him to start a business.
Tobi declined this local company's job offer because of this.
Tobi considered opening an internet store with his technical skills.
He sold snowboards online.
“I was thinking of setting up an online store software because I figured that would exist and use it as a way to sell snowboards…make money while snowboarding and hopefully have a good life.”
What brought Tobi and his co-founder together, and how did he support Tobi?
Tobi lived with his girlfriend's parents.
In Ottawa, Tobi encounters Scott Lake.
Scott was Tobis girlfriend's family friend and worked for Tobi's future employer.
Scott and Tobi snowboarded.
Tobi pitched Scott his snowboard sales software idea.
Scott liked the idea.
They planned a business together.
“I was looking after the technology and Scott was dealing with the business side…It was Scott who ended up developing relationships with vendors and doing all the business set-up.”
Issues they ran into when attempting to launch their business online
Neither could afford a long-term lease.
That prompted their online business idea.
They would open a store.
Tobi anticipated opening an internet store in a week.
Tobi seeks open-source software.
Most existing software was pricey.
Tobi and Scott couldn't afford pricey software.
“In 2004, I was sitting in front of my computer absolutely stunned realising that we hadn’t figured out how to create software for online stores.”
They required software to:
to upload snowboard images to the website.
people to look up the types of snowboards that were offered on the website. There must be a search feature in the software.
Online users transmit payments, and the merchant must receive them.
notifying vendors of the recently received order.
No online selling software existed at the time.
Online credit card payments were difficult.
How did they advance the software while keeping expenses down?
Tobi and Scott needed money to start selling snowboards.
Tobi and Scott funded their firm with savings.
“We both put money into the company…I think the capital we had was around CAD 20,000(Canadian Dollars).”
Despite investing their savings.
They minimized costs.
They tried to conserve.
No office rental.
They worked in several coffee shops.
Tobi lived rent-free at his girlfriend's parents.
He installed software in coffee cafes.
How were the software issues handled?
Tobi found no online snowboard sales software.
Two choices remained:
Change your mind and try something else.
Use his programming expertise to produce something that will aid in the expansion of this company.
Tobi knew he was the sole programmer working on such a project from the start.
“I had this realisation that I’m going to be the only programmer who has ever worked on this, so I don’t have to choose something that lots of people know. I can choose just the best tool for the job…There is been this programming language called Ruby which I just absolutely loved ”
Ruby was open-source and only had Japanese documentation.
Latin is the source code.
Tobi used Ruby twice.
He assumed he could pick the tool this time.
Why not build with Ruby?
How did they find their first time operating a business?
Tobi writes applications in Ruby.
He wrote the initial software version in 2.5 months.
Tobi and Scott founded Snowdevil to sell snowboards.
Tobi coded for 16 hours a day.
His lifestyle was unhealthy.
He enjoyed pizza and coke.
“I would never recommend this to anyone, but at the time there was nothing more interesting to me in the world.”
Their initial purchase and encounter with it
Tobi worked in cafes then.
“I was working in a coffee shop at this time and I remember everything about that day…At some time, while I was writing the software, I had to type the email that the software would send to tell me about the order.”
Tobi recalls everything.
He checked the order on his laptop at the coffee shop.
Pennsylvanian ordered snowboard.
Tobi walked home and called Scott. Tobi told Scott their first order.
They loved the order.
How were people made aware about Snowdevil?
2004 was very different.
Tobi and Scott attempted simple website advertising.
Google AdWords was new.
Ad clicks cost 20 cents.
Online snowboard stores were scarce at the time.
Google ads propelled the snowdevil brand.
Snowdevil prospered.
They swiftly recouped their original investment in the snowboard business because to its high profit margin.
Tobi and Scott struggled with inventories.
“Snowboards had really good profit margins…Our biggest problem was keeping inventory and getting it back…We were out of stock all the time.”
Selling snowboards returned their investment and saved them money.
They did not appoint a business manager.
They accomplished everything alone.
Sales dipped in the spring, but something magical happened.
Spring sales plummeted.
They considered stocking different boards.
They naturally wanted to add boards and grow the business.
However, magic occurred.
Tobi coded and improved software while running Snowdevil.
He modified software constantly. He wanted speedier software.
He experimented to make the software more resilient.
Tobi received emails requesting the Snowdevil license.
They intended to create something similar.
“I didn’t stop programming, I was just like Ok now let me try things, let me make it faster and try different approaches…Increasingly I got people sending me emails and asking me If I would like to licence snowdevil to them. People wanted to start something similar.”
Software or skateboards, your choice
Scott and Tobi had to choose a hobby in 2005.
They might sell alternative boards or use software.
The software was a no-brainer from demand.
Daniel Weinand is invited to join Tobi's business.
Tobis German best friend is Daniel.
Tobi and Scott chose to use the software.
Tobi and Scott kept the software service.
Tobi called Daniel to invite him to Canada to collaborate.
Scott and Tobi had quit snowboarding until then.
How was Shopify launched, and whence did the name come from?
The three chose Shopify.
Named from two words.
First:
Shop
Final part:
Simplify
Shopify
Shopify's crew has always had one goal:
creating software that would make it simple and easy for people to launch online storefronts.
Launched Shopify after raising money for the first time.
Shopify began fundraising in 2005.
First, they borrowed from family and friends.
They needed roughly $200k to run the company efficiently.
$200k was a lot then.
When questioned why they require so much money. Tobi told them to trust him with their goals. The team raised seed money from family and friends.
Shopify.com has a landing page. A demo of their goal was on the landing page.
In 2006, Shopify had about 4,000 emails.
Shopify rented an Ottawa office.
“We sent a blast of emails…Some people signed up just to try it out, which was exciting.”
How things developed after Scott left the company
Shopify co-founder Scott Lake left in 2008.
Scott was CEO.
“He(Scott) realized at some point that where the software industry was going, most of the people who were the CEOs were actually the highly technical person on the founding team.”
Scott leaving the company worried Tobi.
Tobis worried about finding a new CEO.
To Tobi:
A great VC will have the network to identify the perfect CEO for your firm.
Tobi started visiting Silicon Valley to meet with venture capitalists to recruit a CEO.
Initially visiting Silicon Valley
Tobi came to Silicon Valley to start a 20-person company.
This company creates eCommerce store software.
Tobi never wanted a big corporation. He desired a fulfilling existence.
“I stayed in a hostel in the Bay Area. I had one roommate who was also a computer programmer. I bought a bicycle on Craiglist. I was there for a week, but ended up staying two and a half weeks.”
Tobi arrived unprepared.
When venture capitalists asked him business questions.
He answered few queries.
Tobi didn't comprehend VC meetings' terminology.
He wrote the terms down and looked them up.
Some were fascinated after he couldn't answer all these queries.
“I ended up getting the kind of term sheets people dream about…All the offers were conditional on moving our company to Silicon Valley.”
Canada received Tobi.
He wanted to consult his team before deciding. Shopify had five employees at the time.
2008.
A global recession greeted Tobi in Canada. The recession hurt the market.
His term sheets were useless.
The economic downturn in the world provided Shopify with a fantastic opportunity.
The global recession caused significant job losses.
Fired employees had several ideas.
They wanted online stores.
Entrepreneurship was desired. They wanted to quit work.
People took risks and tried new things during the global slump.
Shopify subscribers skyrocketed during the recession.
“In 2009, the company reached neutral cash flow for the first time…We were in a position to think about long-term investments, such as infrastructure projects.”
Then, Tobi Lutke became CEO.
How did Tobi perform as the company's CEO?
“I wasn’t good. My team was very patient with me, but I had a lot to learn…It’s a very subtle job.”
2009–2010.
Tobi limited the company's potential.
He deliberately restrained company growth.
Tobi had one costly problem:
Whether Shopify is a venture or a lifestyle business.
The company's annual revenue approached $1 million.
Tobi battled with the firm and himself despite good revenue.
His wife was supportive, but the responsibility was crushing him.
“It’s a crushing responsibility…People had families and kids…I just couldn’t believe what was going on…My father-in-law gave me money to cover the payroll and it was his life-saving.”
Throughout this trip, everyone supported Tobi.
They believed it.
$7 million in donations received
Tobi couldn't decide if this was a lifestyle or a business.
Shopify struggled with marketing then.
Later, Tobi tried 5 marketing methods.
He told himself that if any marketing method greatly increased their growth, he would call it a venture, otherwise a lifestyle.
The Shopify crew brainstormed and voted on marketing concepts.
Tested.
“Every single idea worked…We did Adwords, published a book on the concept, sponsored a podcast and all the ones we tracked worked.”
To Silicon Valley once more
Shopify marketing concepts worked once.
Tobi returned to Silicon Valley to pitch investors.
He raised $7 million, valuing Shopify at $25 million.
All investors had board seats.
“I find it very helpful…I always had a fantastic relationship with everyone who’s invested in my company…I told them straight that I am not going to pretend I know things, I want you to help me.”
Tobi developed skills via running Shopify.
Shopify had 20 employees.
Leaving his wife's parents' home
Tobi left his wife's parents in 2014.
Tobi had a child.
Shopify has 80,000 customers and 300 staff in 2013.
Public offering in 2015
Shopify investors went public in 2015.
Shopify powers 4.1 million e-Commerce sites.
Shopify stores are 65% US-based.
It is currently valued at $48 billion.