In The Loop Episode 11 | Shopify Memo: No Humans Hired Without AI Approval—Tobias Lütke's Vision

This week, a memo has shocked the world. In an internal memo, Shopify’s CEO, Tobias Lütke, made a stark new rule: no one in the business is allowed to hire a human without first proving that AI cannot do the job.

Some people are excited, many are horrified. The real question: Is this going to become the new norm for CEOs? Will others encourage their business to replace people with AI? And this has all come at a time when there are a lot of questions about wealth inequality, tax, and big business.

Today, I will deep-dive into this memo and what it means for the next few years of AI and automation. This is In The Loop with Jack Houghton. I hope you enjoy the show.

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The infamous Shopify memo about AI

This story blew up when Tobias Lütke, the CEO of Shopify, released an internal memo that he later decided to publish publicly so it won’t be misquoted or misinterpreted. Read it below or on X.

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“Team,

We are entering a time where more merchants and entrepreneurs could be created than any other in history. We often talk about bringing down the complexity curve to allow more people to choose this as a career. Each step along the entrepreneurial path is rife with decisions requiring skill, judgement and knowledge. Having AI alongside the journey and increasingly doing not just the consultation, but also doing the work for our merchants is a mindblowing step function change here.

Our task here at Shopify is to make our software unquestionably the best canvas on which to develop the best businesses of the future. We do this by keeping everyone cutting edge and bringing all the best tools to bear so our merchants can be more successful than they themselves used to imagine. For that we need to be absolutely ahead.

Reflexive AI usage is now a baseline expectation at Shopify

Maybe you are already there and find this memo puzzling. In that case you already use AI as a thought partner, deep researcher, critic, tutor, or pair programmer. I use it all the time, but even I feel I'm only scratching the surface. It’s the most rapid shift to how work is done that I’ve seen in my career and I’ve been pretty clear about my enthusiasm for it: you've heard me talk about AI in weekly videos, podcasts, town halls, and… Summit! Last summer I used agents to create my talk, and presented about that. I did this as a call to action and invitation for everyone to tinker with AI, to dispel any scepticism or confusion that this matters at all levels. Many of you took up the call, and all of us who did have been in absolute awe of the new capabilities and tools that AI can deliver to augment our skills, crafts, and fill in our gaps.

What we have learned so far is that using AI well is a skill that needs to be carefully learned by… using it a lot. It’s just too unlike everything else. The call to tinker with it was the right one, but it was too much of a suggestion. This is what I want to change here today. We also learned that, as opposed to most tools, AI acts as a multiplier.  We are all lucky to work with some amazing colleagues, the kind who contribute 10X of what was previously thought possible. It’s my favorite thing about this company. And what’s even more amazing is that, for the first time, we see the tools become 10X themselves. I’ve seen many of these people approach implausible tasks, ones we wouldn’t even have chosen to tackle before, with reflexive and brilliant usage of AI to get 100X the work done.

In my On Leadership memo years ago, I described Shopify as a red queen race based on the Alice in Wonderland story—you have to keep running just to stay still. In a company growing 20-40% year over year, you must improve by at least that every year just to re-qualify. This goes for me as well as everyone else.

This sounds daunting, but given the nature of the tools, this doesn’t even sound terribly ambitious to me anymore. It’s also exactly the kind of environment that our top performers tell us they want. Learning together, surrounded by people who also are on their own journey of personal growth and working on worthwhile, meaningful, and hard problems is precisely the environment Shopify was created to provide. This represents both an opportunity and a requirement, deeply connected to our core values of Be a Constant Learner and Thrive on Change. These aren't just aspirational phrases—they're fundamental expectations that come with being a part of this world-class team. This is what we founders wanted, and this is what we built.”

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So let’s break it down.

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Takeaways from the Shopify memo

Let’s break the Shopify AI memo down, because there’s a lot in there. It’s one of the first memos where a big-name CEO from a major company came out and clearly stated what he thought. His ambition is to supercharge Shopify. The fear is that some people won’t be able to keep up.

He wants an organization fluent in AI and capable of big gains in output, which also means pruning roles that AI can now do cheaper or faster.

We can group the industry and public reaction into three main areas:

• Excitement: Plenty of people are watching this closely, and they are curious to see how well it works.
• Outrage: Some are horrified, seeing this as another example of a big corporation exploiting its workers.
• Skepticism: Others think it’s all smoke and mirrors, a distraction from the company's uncertainty or struggles, and an attempt to avoid spooking Wall Street.

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The excited camp

As soon as Tobias Lütke shared that memo, the internet lit up. People posted about it on X, LinkedIn—you name it. A journalist at Fortune even wrote that Shopify is "saying the quiet part out loud," meaning AI will replace new hiring, and other CEOs just aren’t admitting it yet.

Lütke’s memo seems to reveal a strategy that a lot of companies are probably already planning behind closed doors. I respect that he came out and said it. Plenty of people have applauded him for being honest. Some commentators even praised him for leading from the front and not apologizing.

That phrase—"hire your AI before a person"—makes for uncomfortable reading, but many believe it’s simply the truth. He’s just saying what other leaders feel but haven’t publicly said.

And there’s merit to that. I’ve said it before on this podcast: shortly, we’re going to see two kinds of companies:

Some will focus purely on job cuts and efficiency;

But the ones that ask: Can AI do this better?—and then scale human output and grow—those are the ones that will win. If your team is 10x more productive and you’re growing fast, you’ll hire more people and outperform the rest.

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The critics

On the other hand, critics see this as another big step toward job loss. They argue that AI is simply displacing people. Many have said it feels cold and lacking empathy. Some users on X said they’d resign on the spot if their company told them to prove AI couldn’t do their job.

It’s a hot-button issue, especially right now, as wealth inequality, taxation, and similar topics dominate headlines. It’s sparked a lot of strong reactions online, and understandably, it’s made many people feel anxious about the future.

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The skeptics

Then there’s the theory that the Shopify memo is just a clever way to announce a hiring freeze. Some say it’s a smokescreen to cover cost-cutting without alarming investors. I won’t dwell on that too much—companies often try to stabilize stock prices by managing headcount or costs. Tobias Lütke says it’s not about economics, but clearly, that’s still a factor.

His memo came out during what can only be described as a period of major global market uncertainty. Shopify could be bracing for slower consumer spending or other pressure points.

Still, he emphasized that this is about growth and deeply integrating AI into how people work. He sees AI as a productivity multiplier, and he mentioned that some employees are getting 100x the work done with AI tools.

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Job market and economic impact

So reactions have been mixed. But what’s fascinating is that this might signal where the future is headed. The real question is whether Tobias Lütke’s memo is an extreme move for one company or a glimpse of what’s coming for everyone.

Many analysts believe it’s the latter—a snapshot of the future.

What he’s really saying is that AI will allow Shopify to grow, and when companies grow, they hire more people. I’d actually expect to see more hiring from Shopify. There will always be periods of cuts, but if a company can adopt a revolutionary technology quickly and integrate it into every employee’s workflow, it’ll have a huge advantage while others are catching up. Those are the companies that will grow fast.

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Junior roles will be changing

This shift could have a real impact on junior roles. If a new job mostly involves tasks AI can do, it’s easy to imagine early-career candidates not being offered roles. That might mean less talent entering the business, because there are fewer entry-level positions. At big companies, junior roles often involve routine tasks that help build basic skills or confidence—but if AI handles all that, what are those newcomers being hired for?

I think people sometimes overthink these shifts. I keep saying: when something becomes easier and cheaper, more of it gets produced. So we’ll probably see a shift in the kinds of tasks early-career employees take on—but fewer total opportunities for them overall.

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AI use will become part of performance reviews

Another interesting point is that AI use will be part of performance reviews. Some people will criticize this kind of leadership as authoritarian. But change doesn’t happen with gentle suggestions at a company of that scale. Tobias Lütke’s memo said they’ll include AI usage in performance and peer reviews—a straightforward approach. Employees will be assessed on how well they’re using AI. He wants this to become second nature—part of your daily habits, not just something you dabble with.

He also mentioned promoting Slack channels where people can share ideas, inputs, and prompts. He’s trying to build a team of AI enthusiasts. I think that’s the right move. This memo might be the canary in the coal mine for how many companies will begin encouraging—or even forcing—people to adopt AI or move on.

The big question is whether this becomes the norm: AI use in reviews, peer feedback, embedded in processes.

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My take

My personal view is that replacing people shouldn't be the goal. It should be about growth, happiness, and welfare. This tech is disruptive—it causes job losses and personal stress, especially in tough economic times. Our responsibility isn’t to stop that change but to soften the landing for those who are negatively affected.

That means putting people first. It means offering new education and welfare, being open and honest about why roles are being automated.

When we do that, we accept that reskilling and evolving are part of life and culture. It’s about planning for the future instead of clinging to the past. It’s about making empathy, happiness, and support a core part of the mission—and the culture everyone’s proud to be part of. There’s always going to be tension between innovation and job security. But that tension is necessary. When you share a goal of innovating and valuing people, you usually end up heading in a good direction.

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Economists’ take

We can also zoom out and look at what economists are saying.

Take Daron Acemoglu, for example. He’s an MIT economist who studies technology’s impact on jobs. In his 2024 book Power and Progress, he argues that automation isn’t the enemy—excessive automation is. Replacing humans at scale erodes prosperity. His view is that AI should augment people, not sideline them. And when displacement happens, education and retraining need to be front and center.

Another voice is Gilbert Houngbo, Director-General of the International Labour Organization. Speaking at the World Economic Forum in 2024, he said he doesn’t believe AI will trigger a massive unemployment crisis. Millions of jobs will be created, and millions will be lost. The key takeaway from their research is that most roles are only partially exposed to automation. That means AI will handle many tasks within a job—but not the whole job itself.

However, even partial automation can be brutal for people who are unprepared. Some areas will see downsizing. The benefits may take years to materialize. The Industrial Revolution is often used as an analogy here: a disruptive period that eventually brought growth, but not without pain.

The World Economic Forum’s 2025 Jobs Report found that:

• 41% of employers expect to downsize their workforce by 2030 due to technology
• But 77% also plan to reskill or upskill employees

So while downsizing is coming in some sectors, there's also a massive need—and opportunity—for investment in reskilling. That’s where both government and business should be focusing their resources.

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Predictions for the next five years in AI

So what does all this mean for the next five years?

First, Shopify’s memo could signal a broader wave of AI-first policies. We’ve already seen companies encourage AI usage, but Shopify made it mandatory. If this approach works, others will follow. AI skills will shift from a nice-to-have to a must-have. Job seekers will need to showcase their AI fluency on CVs. People who resist will likely have fewer options. It's a lot like the moment computers became a required workplace skill.

Second, it suggests a rethink of how organizations are structured. Shopify’s CEO wants people to do 100x more. That level of productivity may lead to smaller, high-performing teams. For those who adapt, work might become more engaging and strategic. But for those who struggle, it could mean burnout—or being pushed out.

Third, this could shrink entry-level opportunities. In five years, routine tasks may be fully automated. Traditionally, junior roles have been built around those tasks. Without them, early-career pathways—like apprenticeships or internships—might fade. That could lead to a talent gap down the road.

Fourth, performance reviews may change. If more companies follow Shopify’s lead, employees will be judged not just on outcomes, but on how effectively they used AI to get there. That’s a major shift in culture—from rewarding effort or creativity to rewarding smart AI integration.

Finally, this won’t necessarily lead to fewer jobs. In the short term—say, the next 12 months—hiring might slow due to the economic climate. But in two to five years, companies like Shopify that prioritize innovation and growth could be hiring more, not less. Ambitious businesses will push to outpace competitors, and that productivity arms race will likely drive headcount up. The competitive pressures of capitalism still apply: if your rival can do 10x more, you’ll be forced to match them—or fall behind.

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Closing thoughts

So what do I personally take away from all this?

I think Shopify’s memo is a bold stroke of leadership—and probably a sign that the AI wave is unstoppable. For people worried about job losses, this can be hard to hear. It’s easy to jump to the negatives, and over the next few years, we will see pain and disruption. But Shopify’s CEO frames this move as a way to stay ahead in a fast-changing world.

In five years, we’ll likely look back and see this as both visionary and extreme. The takeaway is clear: learn AI, use it in your workflows, experiment, and adapt. Take an online course. Talk to someone at work who’s ahead of the curve. But whatever you do, don’t bury your head in the sand. That’s how you stay relevant in this new world.

If this episode helped you to think differently, share it with someone else. Obviously, that helps me and the podcast—but more importantly, it’s a way to help others learn about and keep up with AI.

Thanks for joining me for today’s deep dive. Stay curious—and I’ll see you next week.