Eric, really interested in how you pick the things you work on. I'm a really big fan of the concept of the Long Term Stock Exchange, but projects like that seem to me at times like paddling a canoe upstream using a spoon.
Whats your criteria? Is there an analytical component? Are you willing to work on something even if "success" is unlikely? And with all of this going on how do you have time to work on books!
thank you for your work by the way. It continues to be useful year after year to me and people around me!
It will be interesting to see how many of those companies remain "incorruptible". Your new book seems a bit like a sequel to Jim Collins's 2001 book Good to Great. Several of the "great" companies including Circuit City, Fannie Mae, and Wells Fargo later ran into serious problems. And from an investor perspective, as a group they have underperformed the S&P 500.
> And from an investor perspective, as a group they have underperformed the S&P 500.
This should be kind of obvious -- if they are avoiding doing awful things in the name of money, then they are leaving something on the table. You can't have your cake and eat it too. This is why the real solution is some kind of governance/regulation, because otherwise the market incentivizes being awful.
well, eric's book tries to make the point that these good companies DO overperform the market. after reading the book this past week, im not convinced. feels like heavy selection bias.
yeah, this is very much the challenge with writing any kind of business book: the book is frozen in time yet the companies grow and change. I tried really really hard not to put any company up on a pedestal, or even make any forward-looking predictions, but merely to show how each company illustrates a specific concept from the book.
Eric - I've worked for NASA, ATT, IBM, HP, Amazon, and Google, not to mention a couple of startups that I started in between. None of them (except the startups, but they were brief) stayed true to their original mission. I haven't read your new book, but IMO, it's because the founders leave and the next leadership don't share the vision or values of the founders in the same way. After all, a company is a collaboration among people who want to make a contribution. When the people change, the company changes. It's inevitable.
That said, you seem to have archetypes above Costco, Patagonia, and Novo Nordisk that avoided it.
Can you comment on not what it takes to build such a company, but rather how to transform companies like those that I worked for into ones that resist gravity? Or is it too late?
I haven't read the new book yet, but I'd be interested in your take on Disney's trajectory over the last, say, 2 decades. It seems to have strayed pretty far from Walt's original vision, largely due to the actions of Bob Iger. He took what used to be a company that was fueled by creativity and turned it into a machine that strip mines IP and extracts value. Iger purchased IP (Pixar, Lucasfilm, Marvel, Fox) as a risk mitigation strategy since you get an established brand you can exploit on day 1. But in doing so he killed the soul of Disney, which was built on big creative bets (literally sell the car to make a movie, mortgage the house to build a park).
Just curious what other types of 'gravities' exist in organizations? In a negative gravity example, something I've seen as a social contagion is when some people start resigning it tends to spread and then the organization slowly decays (or quiets quits)
Just dropping in to thank you for writing this book and raising awareness around it. A lot of builders are really disillusioned by how "corruptible" the tech industry has been.
I wrote a blog post called "Revenue Model is More Important than Culture" (it made the #1 spot on HackerNews a few years ago) arguing that the way to avoid that corruption is by making sure the business model is immune to it, but having read your thoughts, I'd say your argument (structure being the dominant term) is even stronger.
I wish I had read that blog post because that is one of the chapters in the new book. I actually think that the phrase "mission-driven" for most companies is a total lie. They are at best "mission-hopeful". In fact, I tried to create a new term for the work that is required: the management system, leadership techniques, and structural elements that are required to 100% align the business model with the mission. I call it "mission drive," as if it was an engine you could install and maintain.
Maybe "mission-chauffeured." Revenue/business model is in the driver's seat and the mission just comes along for the ride and adapts to wherever the car is going.
Your first book was my like my bible, used many of the concepts when building gomacro.ai, at the same time found it so easy to get sucked into non-lean methodology. Very hard these days to come up with a sound idea, so many people building things that nobody asked for to begin with and in the age of AI its even more so the case. Best of luck with the new one, will give it a read!
Any thoughts on bootstrapping a SaaS in the AI era? Is it more manageable because a single person can leverage more? Or more difficult because of increased resource needs and customer demands? And also how that factors into starting an "incorruptible" company today.
Any time you have a technological change, it's kind of confusing to figure out how it can apply to entrepreneurs. On the one hand, it makes it so much easier to create a new MVP, makes it easier to create distribution and to get connected to customers, to do many of the techniques that lean startup demands. On the other hand, that same capability is now in the hands of thousands or even millions of other people, including other people creating startups to compete with you and the incumbents you're trying to disrupt. It's always an open question whether the so-called attacker's advantage will overcome the so-called defender's advantage with any given technology.
In terms of the thesis of Incorruptible, though, I do think that LLMs in particular should be really, really advantageous for managers and leaders who want to create alignment and coherence within their own company. If there's anything that LLMs are extremely good at, it's summarization. So much of the modern leadership challenge is simply figuring out the answer to the question: what is my organization actually doing right now? That's a summarizing problem.
Isn’t “what” the easy part? I thought the leadership is more about why they are doing what they are doing and why is that important/not important. Something which LLMs are not great at today, but aren’t terrible and can make some good guesses at times.
> how a handful of companies (like Costco[..]) have successfully been structured to resist gravity
"I came to (Jim Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty," Jelineck recalled[..]. "We are losing our rear ends.’ And he said, ‘If you raise the effing hot dog, I will kill you."
That's not structure, that's leadership. They were about to change the price, but one guy at the top with authority and an opinion said no. You could say "it's structure" that there was one guy at the top with authority, but it still depends on him having the right opinion. You need both a good structure and an unwaveringly idealistic (and correct) leader.
I love that you asked this question, although, of course, you didn't actually phrase it as a question, because this quote is literally in the book. I addressed this particular misconception as it relates specifically to Costco, because I myself once fell victim to the same misconception.
If you think Costco has endured only because of leadership, because of its strong ethos and its immense size, because you think it's just too big for Wall Street to mess with, you are not correct. My friend, nothing is too big for Wall Street to mess with. Wall Street has tried many times to dismantle Costco's ethos, and every time the unique structure of Costco is what has allowed them to resist.
> That's not structure, that's leadership. [...] one guy at the top [...] said no.
Yeah, there's no rule structure that can't be skirted and subverted by new owners with different objectives. The most resilient way to preserve your values is to:
Only take care, and keep your soul diligently,
lest you forget the things your eyes have seen,
and lest they depart from your heart all the days of your life.
Teach them to your children and to your children's children.
Your successors don't need to be your literal children, but if you turn your company over to "strangers with money" you can't be surprised when they do what they want with their new possession.
For those that want to go deeper with _Incorruptible_, I've spent the past few months doing hundreds of interviews and events discussing its various themes and topics. I'm having Claude Code summarize this progress along the way at https://howisincorruptiblegoing.com/
You can also see the various accolades, reviews, and awards that it's accumulated so far.
I used AI extensively in the research, editing, and promotion phases of creating the book (and even shared screen with a few podcast hosts who wanted to see the solveit platform from Answer.AI up close). To be clear, I never let the AI write for me; I am not a fan of "vibe creating" of any kind. Instead, I tried to use the AI to improve my own skills so that the final artifact was better than it would have been before.
I know people are up in arms about this right now, but shouldn't at least some of blame for that fall on the tech industry itself, for how these tools are designed, promoted, and sold? I think in the long run, society will achieve a more healthy equilibrium. But in the meantime, it's gonna be a bit rocky.
Hey, Eric! I read Lean Startup many years ago when I was in my "let's do a startup" phase. My idea didn't make it, but I learned a lot and am glad I took the chance. Thanks for the motivation!
You said to "Ask You Anything," so here's my question: I have mostly stopped buying from Amazon. That includes books. I'd like to buy your next book. What's the best way to support you if I don't want to purchase through them? More generally, what's the best way to support authors that _only_ publish on Amazon without supporting Amazon itself?
As AI becomes more capable, it seems like a company can be a founding charter and a pool of cash to be spent on tokens to achieve the aims of that charter.
How do you feel about these AI only companies, and how do you think they could affect the wider market?
What can a founder do to safeguard his position, interests, and company? A couple of things that come to my mind are: have an aligned/friendly board who believe in you; second, have dual-class shares (like Meta, SpaceX, Google). Anything else you would like to add?
You frame corruption as financial gravity, fixable by governance design at the firm level. But the dollar's strength has been reinforced for fifty years by oil trading in dollars. Tying our money to a conflict asset implicated in war, pollution, and enormous suffering. Can any company be incorruptible inside a monetary system that isn't?
Is it realistic to make organizations that stay on mission long after the founder is gone?
I listened to a podcast interview you did where you talked positively about the Novo Nordisk Foundation as a successful governance story, but when I think of long lived foundations, I think of the Ford Foundation and the Hewlet Foundation that have significantly drifted from the founders' visions despite being non-profits. Many people think it is better for foundations to spend down all their resources before the founder is gone to prevent this drift and loss of efficacy.
Have you done any studies of what made long lived foundations drift on their mission despite no profit incentive?
I'm not an academic, so no, I have not done any of these studies, but good news, everyone: other people have. The specific structure of Nova Nordisk is not just a foundation. I think the two-entity structure, where a foundation oversees or governs a for-profit company, is uniquely suited to longevity of a mission precisely because it combines the stewardship orientation of the foundation with the performance orientation of the for-profit subsidiary. The data shows (for what it's worth) that such structures are five or six times more likely to live to year 50 compared to a standard for-profit company. I give examples in the book also of pure foundations that have lost this structure or have lost their mission integrity too. I really think you need both for it to endure.
I've read The Lean Startup during undergrad and it was a bible to me at the time, thank you for your work, you got me into startup culture in a place where everyone else did not support of it.
One question I have for you is on finances, I think that still remains an afterthought in startup hustle culture, and perhaps even by design, I feel like the system is designed so that VCs keep winning and founders rarely get the exit they deserve. What is your take on that?
The way around that is to not take VC money. There are some (not many) startups that got to unicorn status by bootstrapping and not taking outside money. It's harder, yes, but in a way a more pure effort.
Thank you for saying that. When I wrote that book, people like you were very much in my mind at the time. I'm really glad to hear you found it useful, even if the people around you didn't understand or support what you were trying to do.
You're quite right. There are many, many problems with the current "best practices" including that many founders wind up with nothing even if the organization succeeds. In fact, one study I cite in the book found that something like 80% of founders of venture-backed companies will no longer be CEO even three years after an IPO.
> In fact, one study I cite in the book found that something like 80% of founders of venture-backed companies will no longer be CEO even three years after an IPO.
Why? Is there something that inherently prevents founders to remain in control after IPO?
When starting a company, perhaps it’s best to consider something you love doing so much that staying there and nurturing the business is more important than exiting.
Thanks for doing this, Eric. I'm about halfway through Incorruptible and loving it so far.
Do you have any recommendations for entity formation infra that caters to mission driven companies? Something like Stripe Atlas that can form the more complex structures? Forming a PBC is becoming more standard but tthe other structures seem more esoteric (and expensive).
I got so frustrated that this is so difficult for people at the early stages to do with most law firms that I actually helped start a new law firm (called Virgil) to do it properly.
Virgil is an AI-powered law firm, but it doesn't let the AI do the legal work for you. It actually hires and trains human lawyers to become AI-powered superhumans. It handles lots of the really unpleasant back-office crap that early-stage companies absolutely hate dealing with, from payroll to compliance and a lot of finance stuff.
Of course it also does full-service legal work. Because I'm involved, it is specialized in setting up mission protective structures for startups. We have worked really hard to drive the cost of such structures down.
In fact, many of the implementation guides that you can access from the book if you scan the various QR codes were developed in partnership with Virgil. If you want to DIY it, I think we've given you enough information to do so, including sample templates, term sheets, documents, etc. If you prefer a low-cost, flat-fee subscription, Virgil is also there to help you at any time. The URL is tryvirgil.com.
(And you are welcome to use Virgil alongside your established high-prestige high-cost firm, too, if you prefer to do that. It will still save you considerable amounts of money)
Coming from the blockchain space, but wanting to build something with bright patterns, while also using DLT and crypto, has been painful, to say the least.
I would like to know how best to stand out from the toxic, finance-driven world that is defi and crypto generally, without getting rolled in with all the clowns. Of course, I know that clear messaging and verifiable, evidence-driven claims are good, but I am thinking about the more abstract, strategic side to things, which I still feel under-prepared for.
I appreciate that you're being honest about this challenge. In the book, I actually say that one of the problems with our modern economy is that we've created too many ways to make money without creating any value at all, in fact sometimes even by destroying value. When I give this talk in public settings, I'll sometimes have someone yell out "crypto" from the audience. That is how the public perceives the whole sector.
The good news is that we all know that being a bold contrarian is the key to returns. If you can figure out a way to structure your initiative such that it literally cannot betray the public, it literally cannot betray your mission, it literally cannot betray human values, you might be able to create something that people are awfully excited about.
Any examples of corrupted companies that you’d like to share? I’m especially curious about your thoughts on Meta and Google, the biggest startups of their time and how they evolved.
I write about both companies (briefly) in the book. I've noticed in the comments I get from readers that people still feel very tenderly towards Google, remembering that incredible sense of idealism they instilled in so many of us when they went public. So I had to be very careful what I wrote about Google; I actually mostly left the critique to ex-Google employees, by quoting a dataset of people who had been at Google 10+ years and then wrote about their experience after leaving. Put together, those essay are heartbreaking.
By contrast, I can say pretty much anything about Facebook and nobody seems to care. Yet, if you go back and read their S-1, you can see how they very much wanted to be seen as the mission-driven good guys.
It's all quite sad, really. There are plenty more stories of corruption in the book. To be honest, it was a challenge to avoid having the whole thing read as bleak given how pervasive this corruption is today. I did my best to balance it out. You'll have to let me know if you think I got it right.
> So I had to be very careful what I wrote about Google
Can you say more about this? Do you think those tender feelings towards Google track some strain of values which Google still carries? Or does this statement reflect some fear of retaliation or conflict that would drown out the rest of your message?
Genuinely interested in how you think about this, especially in the context of this new book’s topic. Thank you for this AMA.
> Do you think those tender feelings towards Google track some strain of values which Google still carries?
I suspect that it's largely just that brand reputation tends to be very sticky in the minds of people.
It's the same reason that Pyrex, Harley-Davidson, and Dyson are still high reputation brands even though the product they make today is tragically worse than what gave them their initial reputation.
(I tend to think of private equity as often existing as an arbitrage system to take advantage of the fact that they can buy a loved brand, slash the quality and increase the profit, and continue to sell at its original price based on that brand stickiness for a while until people eventually wise up.)
The idealism that has been sucked out of the tech industry. It was so (naively) hopeful at one point, and now the arms race and profit-maximization has eroded it all. Your observations really resonate with me.
I'm surprised I hadn't heard of the Long-Term Stock Exchange, it seems like a much healthier direction for the market.
This mean you are now under gag order as you rise on the bestseller list? :)
Lean Startup is awesome, can’t wait to read your new. Excited to read about the ostensibly-not-evil Costcos of the world and hope the smartest & wealthiest amongst us grok it, that we win more when others win.
Thank you. I really appreciate your kind words, and I consider myself deeply fortunate that I've been able to speak my mind freely on these topics, at least so far.
I think you’re spot on. Facebook employees have accepted its fate. It has become a company of mercenaries. I’m surprised they folded more quickly than Google.
A company's values become even more important with AI accelerating and expanding the mission of traditional Delaware Corporations.
Do you have advice on how to use AI to help teams stay true to their values?
Having not read your book yet, in my mind there's the obvious legal support AI can provide to help navigate complex situations, but maybe there's some other groundwork in the value creation and implementation itself?
If those are your questions, I'm confident you're going to like the book a lot as it gets into precisely those topics.
I will say, in general, I think AI is an amplifier of values, and so it will make the good companies better and the bad companies worse. Or maybe more accurately, it will make the good parts of companies better and the bad parts of companies worse.
Either way, I do think that LLMs can solve many of the leadership challenges that we have to solve today with hierarchy and dashboards and bureaucracy, because LLMs are extremely good at summarizing the context of a given situation. One of the hardest leadership challenges of all is simply answering the simple question: What is my company doing right now?
A lot of big organizations have absorbed a Lean Startup POV -- don't debate, just ship an MVP and measure. But in practice, we're usually measuring a proxy metric, it's a short-term test, the audience may be unrepresentative and because of all this, the result doesn't generalize.
What do you think an experiment needs before it can actually be called learning? And what kinds of product questions should not be done as experiments at all?
Looking forward to reading this. Still have a signed copy of The Lean Startup from an event in Seattle from 15 years ago. The book had a big part in pushing me towards doing my own lean startup just a year later, so, thank you.
First, I have not read the book.
You mentioned Novo Nordisk, but given the current context and so many changes that employees/company has undergone recently and the way it is performing, do you still think that it was a good example to include here. What factors played for it to suddenly undergo so much when you have mentioned they have been structured to resist gravity and thrive for decades -- or even centuries?
I've been reading the book. The important part is in 2004 they were offered to be acquired by serono. Because of their governance they were able to say no to the acquisition. Meanwhile serono was later acquired by merck and largely shut down. Back in 2004 novo was about $2.5 a share. Now at its current price even after a huge downturn it is $43.3 So that 17x gain you can attribute advantages with how they governed themselves at that time. Is it a silver bullet or always make stock go up and to the right? No of course not. Are they making governance mistakes now? I'm not sure. But most companies probably would have sold for a ton of cash and if so everyone would have missed out on huge gains, not just in money but in technology and public good.
Thanks for doing this - I'm an author, and my working theory is that every author is a one-person startup, so I try to think about lean startup principles when I think about the business of being an author.
How do you think Lean Startup principles could be applied to ordinary families looking to navigate the existing economic stresses we're experiencing?
Re: your point about being an author, that has always been my approach, too. For this new book, I took in a metric ton of customer feedback (I had over 600 test readers generate more than 10,000 comments) and it really helped the final product. The challenge, of course, is always how to take in external feedback without losing your vision
I've been a bit reluctant to over-generalize from my own theories, and so am not sure I would want to speculate about how to apply them in a family context.
I've long been suspicious of the conflicts of interest induced by exit-orientated investment models.
I'm curious if you think cooperative businesses leveraging non-voting preferred shares, community shares and other coop investment instruments are more resilient against this type of corruption.
I'm wonder how you see the tradeoffs these models have against traditional LLC/VC models and how you would mitigate them.
I hate the word "exit" altogether. It's only the investors who are leaving Middle Earth; the rest of us are still try to make this thing work.
I address your question in much more detail in the book, using examples as varied as Mondragon in Spain, John Lewis Partnership in the UK, and Vanguard and credit unions here in the US.
We actually have pretty good evidence that these other structures are more resilient and more stable than the classic "best practices" we have all been indoctrinated into.
Unfortunately, most of us have been told that these approaches are incompatible. You either go "big" and try to make a lot of money, have investors, have a grand vision, etc. Or you go "small" and do something "ethical" and non-extractive. So many of us have been taught that it is the fate of the small to be destroyed by the big, since they are more ruthless and more powerful.
But the evidence doesn't really support this just-so story. My goal with the book is to help those who want to build mission-driven companies to realize that this is a source of strength, not weakness, and act accordingly.
> So many of us have been taught that it is the fate of the small to be destroyed by the big, since they are more ruthless and more powerful. But the evidence doesn't really support this just-so story.
This is the comment I came here to read. Thank you, I already have a copy of the book and intend to dig in more on these themes specifically.
Hi Eric, I worked for IMVU shortly after you left and tbh I didn't see a ton of "lean startup" ideas implemented well. And today, company is not healthy.
Thanks Eric - been a fan of your work for years! I remember Steve Blank bragging in his early courses that you evangelized his work to the masses. I applaud writing a book on the challenges of making a business that is net good for society. I've personally found that there are just so many forces pushing towards the status quo (make more $$), that it's really hard to create a company that prioritizes public good.
How much do you blame our values of our society for creating corrupt businesses? Are corrupt businesses just a mirror of our own values?
You said build-measure-learn principles survive AI. But when an MVP costs hours instead of months, doesn't the bottleneck move entirely to distribution and customer development?
The question has been also on our mind. We restructure now towards a https://steward-ownership.com/ company structure (in CH). The hard challenge will be fundraising - so we are actually considering selling "Partizipationsscheine" which are stocks without a vote, but still a dividend. On a open market (maybe through polygon / base coins). I just wonder how to resolve the initial funding question on those companies. Any ideas?
I'm about to launch a startup, do you do consulting for small companies with what I'd like to think is a big mission (likely similar to all startups lol)? In other words, is there some way to contact you and do you work with non-billion dollar startups if you find it worthwhile? Or is it more in line with 'read my books and call me when you raise your first million'?
I am a few chapters into the book, so maybe this is answered later. Don’t most people who play a part in corrupting companies get away with it? You mention Jack Welch and James McNerney, but it feels like explicit examples of corruption are rare. I imagine that many of the perpetrators move on to other boards and profit off of the decline at the expense of others?
it's funny, people constantly criticize LTSE because it hasn't made "enough" progress (you can see one such example already on HN below). But since nobody has ever done anything remotely like this before, I am not sure how we are supposed to judge how much progress it "should" have made by now.
and since everyone widely agrees that what we are attempting is "impossible" I am pretty impressed that we've managed to make any progress at all :)
Does "financial gravity" imply that noble missions are generally less profitable? Is there a way to align that (maybe by governments structuring the market with taxes / regulations)? Is that realistic?
Let's say this has already happened and ossified across large, formerly-innovative companies that now have so much size and inertia behind them that it might take decades for one to "fail" in a traditional sense. What can be done to reverse the process?
I won't sugar-coat this, for many companies this will be extremely difficult. but, as I wrote about it my previous book, sometimes conditions conspire to make radical transformation possible. it usually takes a crisis or an extremely bold leader to decide to take such a big swing.
Unfortunately, a lot of leaders who do have the moral authority and power to attempt such a thing do not really know what structural changes to demand. in fact, they tend to focus on the typical management/leadership stuff: business model, org chart, strategy, vision. These things are important. But there is a deeper layer that tends to get overlooked or ignored: structure, governance, boards, the relationship with investors.
In the new book, I try to tackle both topics in a new way, so that future leaders will know what to ask for when and if they have the opportunity to try.
> sometimes conditions conspire to make radical transformation possible. it usually takes a crisis or an extremely bold leader to decide to take such a big swing.
Eric, The Lean Startup had a huge influence on how I think about startups and product work, so first: thank you.
Given the current wave of AI-assisted coding (Claude Code/Codex) and the broader enshittification of SaaS/platforms, do you think B2B SaaS founders now face a new "we can just build this ourselves" problem?
How would you think about testing for that risk early?
What do you think of the current efforts to go from quarterly to semiannual corporate reporting in the way it is playing out in the current administration?
Are the lessons you have distilled applicable to other institutions in society which decline due to corruption? How is corruption different from your concept of financial gravity?
Yes. In the book, I do my best to explain how our current for-profit and non-profit labels don't really make sense, and that therefore these issues are pervasive in society (public/private sector has similar issues, as I discuss in the later chapters).
Corruption = the symptom
Gravity = the force that causes it
In the book, I give the example of a bridge that collapses. If you ask an engineer "why did it collapse" you'll be annoyed if they say "gravity" even though that is technically correct. If we go examine the wreckage and notice that the metal bolts have been corroded beyond recognition, we can start to think through what went wrong and what to do about it going forward.
Hi Eric, former IDEOer here. I know you spent some time at IDEO observing how we work. In my time there (2014-2024), it felt like most clients misinterpreted "MVP" to mean "the absolute lowest-effort barely-working code that we can rush out to say we shipped something." When they did manage to ship a low-quality MVP, they had no budget for maintenance or iteration. Basically, they shipped a rushed, crappy product, and some of them concluded "well, Lean, Agile and Design Thinking are all BS. We should go back to waterfall."
Sometimes clients asked IDEO to design under this shitty-MVP model (we generally refused), other times we were brought in to clean it all up.
Why do you think the concept of "MVP" was almost universally misunderstood? And, thinking about Incorruptible, how did the best companies out there internalize it?
Right now I actually think an MVP should be Maximum Viable Product. Partly because of AI but also because it shifts one's perspective to what Viable means.
Huge fan of lean startup. With being able to build MVP in hours with AI, has the "build-measure-learn" loop collapsed into something fundamebtally different? Or did the bottleneck moved elsewhere?
How much of the "financial gravity" do you attribute to VCs?
I've noticed that VCs try very hard to separate the world into "VCs + founders" and "everyone else" and that the more time a founder spends in the VC+founders bubble the more distorted their worldview can become.
Of course, many of the tactics and examples in the book are now a bit dated, so if I did an "AI edition" I guess we would update it with new stories and new tips on how to use various AI-powered tools to accelerate. But I think the principles have stood up pretty well.
I want to distinguish between a mission and a mission statement. I will not help you wordsmith your mission statement. I frankly don't think it matters.
But a great mission generally combines three things:
1. a long-term commitment to maximize some aspect of human flourishing (in the book I explain how this is the true definition of what it means to create a for-profit venture)
2. a set of values that include a determination to make principled decisions aligned with this goal, such that every decision the org makes is coherent
3. the strength to resist both the inner temptation and the outer pressure to defect, betray, or otherwise abandon the long-term goal
In the book I go into a lot more detail about how to do this, including how to make fiduciary commitments to the human beings you'd rather die than betray.
"1. a long-term commitment to maximize some aspect of human flourishing (in the book I explain how this is the true definition of what it means to create a for-profit venture"
How does this square with the widely taught business-school definition of a for-profit entity being something that aims to maximize shareholder value?
Not eries (obviously) but if you switch out shareholder for stakeholder i.e. maximise stakeholder value, you gain a wider set of responsibilities more aligned with Eric's comment. This is in itself not a new idea, it partly emerged out of the work of R. Edward Freeman. His original book on stakeholder management was published in 1984 and over the last decade has become at least a regular discussion topic at many business schools. However, the idea needs to gain far more momentum. Hopeful Eric Reis's new book also helps move the discussions forward - looking forward to reading it.
I've noticed a lot of founders are building bigger and bigger things and still calling it MVP. Thoughts on how to focus the energy to more customer development than product development early on? Wasn't that the point? Focus on the high risk part?
I've just seen this problem up close and personal for a lot of years in a row. I'm sick and tired of helping people become rich and miserable, creating great companies only for them to be destroyed out of the gates. What is the point of all this carnage? Who is it for?
Let me clarify one thing, though, which is that when we call a company "good" or "bad" we can't mean something like absolutely good or evil. No human enterprise can ever be truly perfect.
So, rather, we have to identify what an organization is trying to do and whether the means it has chosen are actually appropriate to that goal. Then we can judge if the goal is aligned with human flourishing (good) or not (bad), and whether the org is consistent in pursuit of that goal (good) or not (bad), and whether it has the strength to continue (good) or not (bad).
HR has been receiving a lot of positive and negative attention over the last 8 years, culminating lately with some CEOs notably eliminating the HR org entirely. Do you see HR as a positive , negative or mixed force for driving “Incorruptibility “ ?
Why do you anthropomorphize companies? Is it to absolve individuals of responsibility?
> We've all experienced watching a company we love or admire be warped and broken beyond recognition; until it's a husk of its former self, or worse. I wanted to understand why. And I wanted to know what all of us can do to stop that from happening.
I didn't want to be seen as trying to co-opt Cory's thesis or (very memorable) phrase. His critique is more focused on the tech industry and its particular illness at this time.
I wanted a word that was much broader, capturing how this tech behavior is one symptom of a larger illness that has been afflicting our economy for some time. So I settled on the old-fashioned term "corruption"
"I won't pretend I have this all figured out, but I've probably spent more time than is healthy on the "why do good companies go bad" question."
Those companies, Costco, Patagonia, Novo, were founded by "good" people
These people had legitimate business models, not something like "data collection from/about computer users, surveillance of computer users and online ad services"
"There's a darkness in our industry [what "industry"?] that we often don't talk about."
Look in the mirror. Maybe the "darkness" is you
Maybe you've spent too much time on the computer and not enough in the real world
Eric, really interested in how you pick the things you work on. I'm a really big fan of the concept of the Long Term Stock Exchange, but projects like that seem to me at times like paddling a canoe upstream using a spoon.
Whats your criteria? Is there an analytical component? Are you willing to work on something even if "success" is unlikely? And with all of this going on how do you have time to work on books!
thank you for your work by the way. It continues to be useful year after year to me and people around me!
It will be interesting to see how many of those companies remain "incorruptible". Your new book seems a bit like a sequel to Jim Collins's 2001 book Good to Great. Several of the "great" companies including Circuit City, Fannie Mae, and Wells Fargo later ran into serious problems. And from an investor perspective, as a group they have underperformed the S&P 500.
https://www.harpercollins.com/products/good-to-great-jim-col...
> And from an investor perspective, as a group they have underperformed the S&P 500.
This should be kind of obvious -- if they are avoiding doing awful things in the name of money, then they are leaving something on the table. You can't have your cake and eat it too. This is why the real solution is some kind of governance/regulation, because otherwise the market incentivizes being awful.
well, eric's book tries to make the point that these good companies DO overperform the market. after reading the book this past week, im not convinced. feels like heavy selection bias.
yeah, this is very much the challenge with writing any kind of business book: the book is frozen in time yet the companies grow and change. I tried really really hard not to put any company up on a pedestal, or even make any forward-looking predictions, but merely to show how each company illustrates a specific concept from the book.
Eric - I've worked for NASA, ATT, IBM, HP, Amazon, and Google, not to mention a couple of startups that I started in between. None of them (except the startups, but they were brief) stayed true to their original mission. I haven't read your new book, but IMO, it's because the founders leave and the next leadership don't share the vision or values of the founders in the same way. After all, a company is a collaboration among people who want to make a contribution. When the people change, the company changes. It's inevitable.
That said, you seem to have archetypes above Costco, Patagonia, and Novo Nordisk that avoided it.
Can you comment on not what it takes to build such a company, but rather how to transform companies like those that I worked for into ones that resist gravity? Or is it too late?
I haven't read the new book yet, but I'd be interested in your take on Disney's trajectory over the last, say, 2 decades. It seems to have strayed pretty far from Walt's original vision, largely due to the actions of Bob Iger. He took what used to be a company that was fueled by creativity and turned it into a machine that strip mines IP and extracts value. Iger purchased IP (Pixar, Lucasfilm, Marvel, Fox) as a risk mitigation strategy since you get an established brand you can exploit on day 1. But in doing so he killed the soul of Disney, which was built on big creative bets (literally sell the car to make a movie, mortgage the house to build a park).
I recently had the chance to meet Abigail Disney, who has been a very vocal critic of what's happened to her grandfather's ethos. It sounds quite sad.
Just curious what other types of 'gravities' exist in organizations? In a negative gravity example, something I've seen as a social contagion is when some people start resigning it tends to spread and then the organization slowly decays (or quiets quits)
Just dropping in to thank you for writing this book and raising awareness around it. A lot of builders are really disillusioned by how "corruptible" the tech industry has been.
I wrote a blog post called "Revenue Model is More Important than Culture" (it made the #1 spot on HackerNews a few years ago) arguing that the way to avoid that corruption is by making sure the business model is immune to it, but having read your thoughts, I'd say your argument (structure being the dominant term) is even stronger.
I wish I had read that blog post because that is one of the chapters in the new book. I actually think that the phrase "mission-driven" for most companies is a total lie. They are at best "mission-hopeful". In fact, I tried to create a new term for the work that is required: the management system, leadership techniques, and structural elements that are required to 100% align the business model with the mission. I call it "mission drive," as if it was an engine you could install and maintain.
Maybe "mission-chauffeured." Revenue/business model is in the driver's seat and the mission just comes along for the ride and adapts to wherever the car is going.
Your first book was my like my bible, used many of the concepts when building gomacro.ai, at the same time found it so easy to get sucked into non-lean methodology. Very hard these days to come up with a sound idea, so many people building things that nobody asked for to begin with and in the age of AI its even more so the case. Best of luck with the new one, will give it a read!
Any thoughts on bootstrapping a SaaS in the AI era? Is it more manageable because a single person can leverage more? Or more difficult because of increased resource needs and customer demands? And also how that factors into starting an "incorruptible" company today.
Any time you have a technological change, it's kind of confusing to figure out how it can apply to entrepreneurs. On the one hand, it makes it so much easier to create a new MVP, makes it easier to create distribution and to get connected to customers, to do many of the techniques that lean startup demands. On the other hand, that same capability is now in the hands of thousands or even millions of other people, including other people creating startups to compete with you and the incumbents you're trying to disrupt. It's always an open question whether the so-called attacker's advantage will overcome the so-called defender's advantage with any given technology.
In terms of the thesis of Incorruptible, though, I do think that LLMs in particular should be really, really advantageous for managers and leaders who want to create alignment and coherence within their own company. If there's anything that LLMs are extremely good at, it's summarization. So much of the modern leadership challenge is simply figuring out the answer to the question: what is my organization actually doing right now? That's a summarizing problem.
Isn’t “what” the easy part? I thought the leadership is more about why they are doing what they are doing and why is that important/not important. Something which LLMs are not great at today, but aren’t terrible and can make some good guesses at times.
> how a handful of companies (like Costco[..]) have successfully been structured to resist gravity
"I came to (Jim Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty," Jelineck recalled[..]. "We are losing our rear ends.’ And he said, ‘If you raise the effing hot dog, I will kill you."
That's not structure, that's leadership. They were about to change the price, but one guy at the top with authority and an opinion said no. You could say "it's structure" that there was one guy at the top with authority, but it still depends on him having the right opinion. You need both a good structure and an unwaveringly idealistic (and correct) leader.
I love that you asked this question, although, of course, you didn't actually phrase it as a question, because this quote is literally in the book. I addressed this particular misconception as it relates specifically to Costco, because I myself once fell victim to the same misconception.
If you think Costco has endured only because of leadership, because of its strong ethos and its immense size, because you think it's just too big for Wall Street to mess with, you are not correct. My friend, nothing is too big for Wall Street to mess with. Wall Street has tried many times to dismantle Costco's ethos, and every time the unique structure of Costco is what has allowed them to resist.
> That's not structure, that's leadership. [...] one guy at the top [...] said no.
Yeah, there's no rule structure that can't be skirted and subverted by new owners with different objectives. The most resilient way to preserve your values is to:
Your successors don't need to be your literal children, but if you turn your company over to "strangers with money" you can't be surprised when they do what they want with their new possession.Are you using Vale? Or is this just default Fable?
this made me laugh, thank you for brightening my day. this is not just humor -- it's therapy.
For those that want to go deeper with _Incorruptible_, I've spent the past few months doing hundreds of interviews and events discussing its various themes and topics. I'm having Claude Code summarize this progress along the way at https://howisincorruptiblegoing.com/
You can also see the various accolades, reviews, and awards that it's accumulated so far.
As an author, I'm navigating SO many angry people who are enraged at the idea of using AI tools in writing. How are you managing that?
As the old joke goes, "Very, very carefully."
I used AI extensively in the research, editing, and promotion phases of creating the book (and even shared screen with a few podcast hosts who wanted to see the solveit platform from Answer.AI up close). To be clear, I never let the AI write for me; I am not a fan of "vibe creating" of any kind. Instead, I tried to use the AI to improve my own skills so that the final artifact was better than it would have been before.
I know people are up in arms about this right now, but shouldn't at least some of blame for that fall on the tech industry itself, for how these tools are designed, promoted, and sold? I think in the long run, society will achieve a more healthy equilibrium. But in the meantime, it's gonna be a bit rocky.
Hey, Eric! I read Lean Startup many years ago when I was in my "let's do a startup" phase. My idea didn't make it, but I learned a lot and am glad I took the chance. Thanks for the motivation!
You said to "Ask You Anything," so here's my question: I have mostly stopped buying from Amazon. That includes books. I'd like to buy your next book. What's the best way to support you if I don't want to purchase through them? More generally, what's the best way to support authors that _only_ publish on Amazon without supporting Amazon itself?
As AI becomes more capable, it seems like a company can be a founding charter and a pool of cash to be spent on tokens to achieve the aims of that charter.
How do you feel about these AI only companies, and how do you think they could affect the wider market?
ref: https://www.ft.com/content/b8cc4bf4-6d3c-4974-8428-9a091983c...
Eric - enjoyed your talk: https://www.youtube.com/watch?v=7VKliOQXQ9M&t=1s .
What can a founder do to safeguard his position, interests, and company? A couple of things that come to my mind are: have an aligned/friendly board who believe in you; second, have dual-class shares (like Meta, SpaceX, Google). Anything else you would like to add?
You frame corruption as financial gravity, fixable by governance design at the firm level. But the dollar's strength has been reinforced for fifty years by oil trading in dollars. Tying our money to a conflict asset implicated in war, pollution, and enormous suffering. Can any company be incorruptible inside a monetary system that isn't?
Is it realistic to make organizations that stay on mission long after the founder is gone?
I listened to a podcast interview you did where you talked positively about the Novo Nordisk Foundation as a successful governance story, but when I think of long lived foundations, I think of the Ford Foundation and the Hewlet Foundation that have significantly drifted from the founders' visions despite being non-profits. Many people think it is better for foundations to spend down all their resources before the founder is gone to prevent this drift and loss of efficacy.
Have you done any studies of what made long lived foundations drift on their mission despite no profit incentive?
I'm not an academic, so no, I have not done any of these studies, but good news, everyone: other people have. The specific structure of Nova Nordisk is not just a foundation. I think the two-entity structure, where a foundation oversees or governs a for-profit company, is uniquely suited to longevity of a mission precisely because it combines the stewardship orientation of the foundation with the performance orientation of the for-profit subsidiary. The data shows (for what it's worth) that such structures are five or six times more likely to live to year 50 compared to a standard for-profit company. I give examples in the book also of pure foundations that have lost this structure or have lost their mission integrity too. I really think you need both for it to endure.
I've read The Lean Startup during undergrad and it was a bible to me at the time, thank you for your work, you got me into startup culture in a place where everyone else did not support of it.
One question I have for you is on finances, I think that still remains an afterthought in startup hustle culture, and perhaps even by design, I feel like the system is designed so that VCs keep winning and founders rarely get the exit they deserve. What is your take on that?
> the system is designed so that VCs keep winning
The way around that is to not take VC money. There are some (not many) startups that got to unicorn status by bootstrapping and not taking outside money. It's harder, yes, but in a way a more pure effort.
Thank you for saying that. When I wrote that book, people like you were very much in my mind at the time. I'm really glad to hear you found it useful, even if the people around you didn't understand or support what you were trying to do.
You're quite right. There are many, many problems with the current "best practices" including that many founders wind up with nothing even if the organization succeeds. In fact, one study I cite in the book found that something like 80% of founders of venture-backed companies will no longer be CEO even three years after an IPO.
> In fact, one study I cite in the book found that something like 80% of founders of venture-backed companies will no longer be CEO even three years after an IPO.
Why? Is there something that inherently prevents founders to remain in control after IPO?
When starting a company, perhaps it’s best to consider something you love doing so much that staying there and nurturing the business is more important than exiting.
That and, don’t accept money from strangers. :)
Thanks for doing this, Eric. I'm about halfway through Incorruptible and loving it so far.
Do you have any recommendations for entity formation infra that caters to mission driven companies? Something like Stripe Atlas that can form the more complex structures? Forming a PBC is becoming more standard but tthe other structures seem more esoteric (and expensive).
I got so frustrated that this is so difficult for people at the early stages to do with most law firms that I actually helped start a new law firm (called Virgil) to do it properly.
Virgil is an AI-powered law firm, but it doesn't let the AI do the legal work for you. It actually hires and trains human lawyers to become AI-powered superhumans. It handles lots of the really unpleasant back-office crap that early-stage companies absolutely hate dealing with, from payroll to compliance and a lot of finance stuff.
Of course it also does full-service legal work. Because I'm involved, it is specialized in setting up mission protective structures for startups. We have worked really hard to drive the cost of such structures down.
In fact, many of the implementation guides that you can access from the book if you scan the various QR codes were developed in partnership with Virgil. If you want to DIY it, I think we've given you enough information to do so, including sample templates, term sheets, documents, etc. If you prefer a low-cost, flat-fee subscription, Virgil is also there to help you at any time. The URL is tryvirgil.com.
(And you are welcome to use Virgil alongside your established high-prestige high-cost firm, too, if you prefer to do that. It will still save you considerable amounts of money)
What do you think are the most important problems that the US is currently facing?
Coming from the blockchain space, but wanting to build something with bright patterns, while also using DLT and crypto, has been painful, to say the least.
I would like to know how best to stand out from the toxic, finance-driven world that is defi and crypto generally, without getting rolled in with all the clowns. Of course, I know that clear messaging and verifiable, evidence-driven claims are good, but I am thinking about the more abstract, strategic side to things, which I still feel under-prepared for.
I appreciate that you're being honest about this challenge. In the book, I actually say that one of the problems with our modern economy is that we've created too many ways to make money without creating any value at all, in fact sometimes even by destroying value. When I give this talk in public settings, I'll sometimes have someone yell out "crypto" from the audience. That is how the public perceives the whole sector.
The good news is that we all know that being a bold contrarian is the key to returns. If you can figure out a way to structure your initiative such that it literally cannot betray the public, it literally cannot betray your mission, it literally cannot betray human values, you might be able to create something that people are awfully excited about.
What type of software businesses survive and thrive in the era of AGI? Which ones get wiped out? Is there any moat in the era of AGI?
Any examples of corrupted companies that you’d like to share? I’m especially curious about your thoughts on Meta and Google, the biggest startups of their time and how they evolved.
I write about both companies (briefly) in the book. I've noticed in the comments I get from readers that people still feel very tenderly towards Google, remembering that incredible sense of idealism they instilled in so many of us when they went public. So I had to be very careful what I wrote about Google; I actually mostly left the critique to ex-Google employees, by quoting a dataset of people who had been at Google 10+ years and then wrote about their experience after leaving. Put together, those essay are heartbreaking.
By contrast, I can say pretty much anything about Facebook and nobody seems to care. Yet, if you go back and read their S-1, you can see how they very much wanted to be seen as the mission-driven good guys.
It's all quite sad, really. There are plenty more stories of corruption in the book. To be honest, it was a challenge to avoid having the whole thing read as bleak given how pervasive this corruption is today. I did my best to balance it out. You'll have to let me know if you think I got it right.
> So I had to be very careful what I wrote about Google
Can you say more about this? Do you think those tender feelings towards Google track some strain of values which Google still carries? Or does this statement reflect some fear of retaliation or conflict that would drown out the rest of your message?
Genuinely interested in how you think about this, especially in the context of this new book’s topic. Thank you for this AMA.
> Do you think those tender feelings towards Google track some strain of values which Google still carries?
I suspect that it's largely just that brand reputation tends to be very sticky in the minds of people.
It's the same reason that Pyrex, Harley-Davidson, and Dyson are still high reputation brands even though the product they make today is tragically worse than what gave them their initial reputation.
(I tend to think of private equity as often existing as an arbitrage system to take advantage of the fact that they can buy a loved brand, slash the quality and increase the profit, and continue to sell at its original price based on that brand stickiness for a while until people eventually wise up.)
> that incredible sense of idealism
The idealism that has been sucked out of the tech industry. It was so (naively) hopeful at one point, and now the arms race and profit-maximization has eroded it all. Your observations really resonate with me.
I'm surprised I hadn't heard of the Long-Term Stock Exchange, it seems like a much healthier direction for the market.
You might want to ask yourself why, in all these years, you haven't heard of it. There's quite a few people invested in keeping it that way.
> I write about … [Meta] in the book.
This mean you are now under gag order as you rise on the bestseller list? :)
Lean Startup is awesome, can’t wait to read your new. Excited to read about the ostensibly-not-evil Costcos of the world and hope the smartest & wealthiest amongst us grok it, that we win more when others win.
Thank you. I really appreciate your kind words, and I consider myself deeply fortunate that I've been able to speak my mind freely on these topics, at least so far.
I think you’re spot on. Facebook employees have accepted its fate. It has become a company of mercenaries. I’m surprised they folded more quickly than Google.
Neither of those have been corrupted . They both seem to be carrying out their long term strategy extremely well.
A company's values become even more important with AI accelerating and expanding the mission of traditional Delaware Corporations.
Do you have advice on how to use AI to help teams stay true to their values?
Having not read your book yet, in my mind there's the obvious legal support AI can provide to help navigate complex situations, but maybe there's some other groundwork in the value creation and implementation itself?
If those are your questions, I'm confident you're going to like the book a lot as it gets into precisely those topics.
I will say, in general, I think AI is an amplifier of values, and so it will make the good companies better and the bad companies worse. Or maybe more accurately, it will make the good parts of companies better and the bad parts of companies worse.
Either way, I do think that LLMs can solve many of the leadership challenges that we have to solve today with hierarchy and dashboards and bureaucracy, because LLMs are extremely good at summarizing the context of a given situation. One of the hardest leadership challenges of all is simply answering the simple question: What is my company doing right now?
That is a summarization challenge.
A lot of big organizations have absorbed a Lean Startup POV -- don't debate, just ship an MVP and measure. But in practice, we're usually measuring a proxy metric, it's a short-term test, the audience may be unrepresentative and because of all this, the result doesn't generalize.
What do you think an experiment needs before it can actually be called learning? And what kinds of product questions should not be done as experiments at all?
"Darkness we don't talk about" — sir, that's just every Slack thread after an all-hands. Pre-ordering anyway!!
Looking forward to reading this. Still have a signed copy of The Lean Startup from an event in Seattle from 15 years ago. The book had a big part in pushing me towards doing my own lean startup just a year later, so, thank you.
thank you! I appreciate you sharing. As an author, you never get tired of hearing stories likethis.
First, I have not read the book. You mentioned Novo Nordisk, but given the current context and so many changes that employees/company has undergone recently and the way it is performing, do you still think that it was a good example to include here. What factors played for it to suddenly undergo so much when you have mentioned they have been structured to resist gravity and thrive for decades -- or even centuries?
I've been reading the book. The important part is in 2004 they were offered to be acquired by serono. Because of their governance they were able to say no to the acquisition. Meanwhile serono was later acquired by merck and largely shut down. Back in 2004 novo was about $2.5 a share. Now at its current price even after a huge downturn it is $43.3 So that 17x gain you can attribute advantages with how they governed themselves at that time. Is it a silver bullet or always make stock go up and to the right? No of course not. Are they making governance mistakes now? I'm not sure. But most companies probably would have sold for a ton of cash and if so everyone would have missed out on huge gains, not just in money but in technology and public good.
Thanks for doing this - I'm an author, and my working theory is that every author is a one-person startup, so I try to think about lean startup principles when I think about the business of being an author.
How do you think Lean Startup principles could be applied to ordinary families looking to navigate the existing economic stresses we're experiencing?
Re: your point about being an author, that has always been my approach, too. For this new book, I took in a metric ton of customer feedback (I had over 600 test readers generate more than 10,000 comments) and it really helped the final product. The challenge, of course, is always how to take in external feedback without losing your vision
I've been a bit reluctant to over-generalize from my own theories, and so am not sure I would want to speculate about how to apply them in a family context.
I've long been suspicious of the conflicts of interest induced by exit-orientated investment models.
I'm curious if you think cooperative businesses leveraging non-voting preferred shares, community shares and other coop investment instruments are more resilient against this type of corruption.
I'm wonder how you see the tradeoffs these models have against traditional LLC/VC models and how you would mitigate them.
I hate the word "exit" altogether. It's only the investors who are leaving Middle Earth; the rest of us are still try to make this thing work.
I address your question in much more detail in the book, using examples as varied as Mondragon in Spain, John Lewis Partnership in the UK, and Vanguard and credit unions here in the US.
We actually have pretty good evidence that these other structures are more resilient and more stable than the classic "best practices" we have all been indoctrinated into.
Unfortunately, most of us have been told that these approaches are incompatible. You either go "big" and try to make a lot of money, have investors, have a grand vision, etc. Or you go "small" and do something "ethical" and non-extractive. So many of us have been taught that it is the fate of the small to be destroyed by the big, since they are more ruthless and more powerful.
But the evidence doesn't really support this just-so story. My goal with the book is to help those who want to build mission-driven companies to realize that this is a source of strength, not weakness, and act accordingly.
Did you look at Patagonia Inc. as an example? I wasn't aware of the new book but am more interested in it now.
Thank you, I'm happy to hear you address these models and will definitely be reading your book!
I think we need a "middle path" culture that finds a good balance between these pressures and values.
> So many of us have been taught that it is the fate of the small to be destroyed by the big, since they are more ruthless and more powerful. But the evidence doesn't really support this just-so story.
This is the comment I came here to read. Thank you, I already have a copy of the book and intend to dig in more on these themes specifically.
Hi Eric, I worked for IMVU shortly after you left and tbh I didn't see a ton of "lean startup" ideas implemented well. And today, company is not healthy.
Why do you think IMVU never hit escape velocity?
Thanks Eric - been a fan of your work for years! I remember Steve Blank bragging in his early courses that you evangelized his work to the masses. I applaud writing a book on the challenges of making a business that is net good for society. I've personally found that there are just so many forces pushing towards the status quo (make more $$), that it's really hard to create a company that prioritizes public good.
How much do you blame our values of our society for creating corrupt businesses? Are corrupt businesses just a mirror of our own values?
You said build-measure-learn principles survive AI. But when an MVP costs hours instead of months, doesn't the bottleneck move entirely to distribution and customer development?
The question has been also on our mind. We restructure now towards a https://steward-ownership.com/ company structure (in CH). The hard challenge will be fundraising - so we are actually considering selling "Partizipationsscheine" which are stocks without a vote, but still a dividend. On a open market (maybe through polygon / base coins). I just wonder how to resolve the initial funding question on those companies. Any ideas?
I'm about to launch a startup, do you do consulting for small companies with what I'd like to think is a big mission (likely similar to all startups lol)? In other words, is there some way to contact you and do you work with non-billion dollar startups if you find it worthwhile? Or is it more in line with 'read my books and call me when you raise your first million'?
I am a few chapters into the book, so maybe this is answered later. Don’t most people who play a part in corrupting companies get away with it? You mention Jack Welch and James McNerney, but it feels like explicit examples of corruption are rare. I imagine that many of the perpetrators move on to other boards and profit off of the decline at the expense of others?
Intellectual dishonesty is corruption
Right, and we developers will rant about it over beer, but the dishonest ones stumble into their next success before we know it.
Hey Eric, I loved The Lean Startup! One of my favorite books. Really looking forward to reading Incorruptible.
To what extent are the mechanisms you identified causing companies to go bad the same for non-profits, associations, political parties, etc.?
Is LTSE working the way you hoped?
it's funny, people constantly criticize LTSE because it hasn't made "enough" progress (you can see one such example already on HN below). But since nobody has ever done anything remotely like this before, I am not sure how we are supposed to judge how much progress it "should" have made by now.
and since everyone widely agrees that what we are attempting is "impossible" I am pretty impressed that we've managed to make any progress at all :)
I'm of the opinion that the LTSE was built by people who didn't understand market structure which is why it continues to struggle.
I understand the idea that they were after, but it seems like they could have wrapped that up in an ETF.
How do you use AI on a daily basis, and are there times when you don't?
AMA, AN
Does "financial gravity" imply that noble missions are generally less profitable? Is there a way to align that (maybe by governments structuring the market with taxes / regulations)? Is that realistic?
Big fan of your work!
Let's say this has already happened and ossified across large, formerly-innovative companies that now have so much size and inertia behind them that it might take decades for one to "fail" in a traditional sense. What can be done to reverse the process?
I won't sugar-coat this, for many companies this will be extremely difficult. but, as I wrote about it my previous book, sometimes conditions conspire to make radical transformation possible. it usually takes a crisis or an extremely bold leader to decide to take such a big swing.
Unfortunately, a lot of leaders who do have the moral authority and power to attempt such a thing do not really know what structural changes to demand. in fact, they tend to focus on the typical management/leadership stuff: business model, org chart, strategy, vision. These things are important. But there is a deeper layer that tends to get overlooked or ignored: structure, governance, boards, the relationship with investors.
In the new book, I try to tackle both topics in a new way, so that future leaders will know what to ask for when and if they have the opportunity to try.
> sometimes conditions conspire to make radical transformation possible. it usually takes a crisis or an extremely bold leader to decide to take such a big swing.
Example of a company where this has happened?
Eric, The Lean Startup had a huge influence on how I think about startups and product work, so first: thank you.
Given the current wave of AI-assisted coding (Claude Code/Codex) and the broader enshittification of SaaS/platforms, do you think B2B SaaS founders now face a new "we can just build this ourselves" problem?
How would you think about testing for that risk early?
Thoughts on the modern trend of "AI tokens used" as a metric for performance, growth and efficiency by both startups and multi-national giants alike?
What do you think of the current efforts to go from quarterly to semiannual corporate reporting in the way it is playing out in the current administration?
Are the lessons you have distilled applicable to other institutions in society which decline due to corruption? How is corruption different from your concept of financial gravity?
Yes. In the book, I do my best to explain how our current for-profit and non-profit labels don't really make sense, and that therefore these issues are pervasive in society (public/private sector has similar issues, as I discuss in the later chapters).
Corruption = the symptom Gravity = the force that causes it
In the book, I give the example of a bridge that collapses. If you ask an engineer "why did it collapse" you'll be annoyed if they say "gravity" even though that is technically correct. If we go examine the wreckage and notice that the metal bolts have been corroded beyond recognition, we can start to think through what went wrong and what to do about it going forward.
This feels like this is exploring the reasons for what Doctorow calls "Enshitification" which is really exciting.
yes, indeed! not only exploring, but (in the long run) fixing!
Well, what does "lean startup" mean in this AI age? what changes? what stays the same?
You can just watch Lenny's Podcast and you'll see how those principles are alive and well :)
can you share a TLDL for the sake of the AMA?
What have you always wanted to achieve but haven't managed to do (yet)?
Hi Eric, former IDEOer here. I know you spent some time at IDEO observing how we work. In my time there (2014-2024), it felt like most clients misinterpreted "MVP" to mean "the absolute lowest-effort barely-working code that we can rush out to say we shipped something." When they did manage to ship a low-quality MVP, they had no budget for maintenance or iteration. Basically, they shipped a rushed, crappy product, and some of them concluded "well, Lean, Agile and Design Thinking are all BS. We should go back to waterfall."
Sometimes clients asked IDEO to design under this shitty-MVP model (we generally refused), other times we were brought in to clean it all up.
Why do you think the concept of "MVP" was almost universally misunderstood? And, thinking about Incorruptible, how did the best companies out there internalize it?
Good question - I hope he gets to answer this.
Right now I actually think an MVP should be Maximum Viable Product. Partly because of AI but also because it shifts one's perspective to what Viable means.
does this apply for a company of every type? does it work for companies like apple as well?
Huge fan of lean startup. With being able to build MVP in hours with AI, has the "build-measure-learn" loop collapsed into something fundamebtally different? Or did the bottleneck moved elsewhere?
Book recommendations?
What does "Best Seller" mean in this context? Who says it's a best seller?
"Instant New York Times Bestseller" [0]
[0] https://www.amazon.com/Incorruptible-Good-Companies-Great-St...
How much of the "financial gravity" do you attribute to VCs?
I've noticed that VCs try very hard to separate the world into "VCs + founders" and "everyone else" and that the more time a founder spends in the VC+founders bubble the more distorted their worldview can become.
What parts of The Lean Startup would you update for the AI era?
none of them, really. Watch this video about the development of Claude Code and tell me if it sounds familiar: https://www.linkedin.com/feed/update/urn:li:activity:7470133...
Of course, many of the tactics and examples in the book are now a bit dated, so if I did an "AI edition" I guess we would update it with new stories and new tips on how to use various AI-powered tools to accelerate. But I think the principles have stood up pretty well.
What do you think are the hallmarks of a great company mission?
I want to distinguish between a mission and a mission statement. I will not help you wordsmith your mission statement. I frankly don't think it matters.
But a great mission generally combines three things: 1. a long-term commitment to maximize some aspect of human flourishing (in the book I explain how this is the true definition of what it means to create a for-profit venture) 2. a set of values that include a determination to make principled decisions aligned with this goal, such that every decision the org makes is coherent 3. the strength to resist both the inner temptation and the outer pressure to defect, betray, or otherwise abandon the long-term goal
In the book I go into a lot more detail about how to do this, including how to make fiduciary commitments to the human beings you'd rather die than betray.
"1. a long-term commitment to maximize some aspect of human flourishing (in the book I explain how this is the true definition of what it means to create a for-profit venture"
How does this square with the widely taught business-school definition of a for-profit entity being something that aims to maximize shareholder value?
Not eries (obviously) but if you switch out shareholder for stakeholder i.e. maximise stakeholder value, you gain a wider set of responsibilities more aligned with Eric's comment. This is in itself not a new idea, it partly emerged out of the work of R. Edward Freeman. His original book on stakeholder management was published in 1984 and over the last decade has become at least a regular discussion topic at many business schools. However, the idea needs to gain far more momentum. Hopeful Eric Reis's new book also helps move the discussions forward - looking forward to reading it.
I've noticed a lot of founders are building bigger and bigger things and still calling it MVP. Thoughts on how to focus the energy to more customer development than product development early on? Wasn't that the point? Focus on the high risk part?
Why did you decide to write this book?
I've just seen this problem up close and personal for a lot of years in a row. I'm sick and tired of helping people become rich and miserable, creating great companies only for them to be destroyed out of the gates. What is the point of all this carnage? Who is it for?
I would love to know more example of good and bad companies
The book is loaded with examples, I promise.
Let me clarify one thing, though, which is that when we call a company "good" or "bad" we can't mean something like absolutely good or evil. No human enterprise can ever be truly perfect.
So, rather, we have to identify what an organization is trying to do and whether the means it has chosen are actually appropriate to that goal. Then we can judge if the goal is aligned with human flourishing (good) or not (bad), and whether the org is consistent in pursuit of that goal (good) or not (bad), and whether it has the strength to continue (good) or not (bad).
The only thing that can topple Patagonia is Pattie Gonia
yoo, what's up gng, had breakfast?? (Can't think of any questions to ask)
HR has been receiving a lot of positive and negative attention over the last 8 years, culminating lately with some CEOs notably eliminating the HR org entirely. Do you see HR as a positive , negative or mixed force for driving “Incorruptibility “ ?
Why do you anthropomorphize companies? Is it to absolve individuals of responsibility?
> We've all experienced watching a company we love or admire be warped and broken beyond recognition; until it's a husk of its former self, or worse. I wanted to understand why. And I wanted to know what all of us can do to stop that from happening.
You give advice on startups, yet the two Startups mentioned raised lots of money and have not achieved any real success.
Those who can do, those who can't teach?
How are corruption and enshittification related?
I didn't want to be seen as trying to co-opt Cory's thesis or (very memorable) phrase. His critique is more focused on the tech industry and its particular illness at this time.
I wanted a word that was much broader, capturing how this tech behavior is one symptom of a larger illness that has been afflicting our economy for some time. So I settled on the old-fashioned term "corruption"
Do you not think using a word in this way undermines its actual meaning?
[edit] Removed as my link was to a different Eric Ries.
Wrong Eric Ries? The writer of that blog claims to be a 65 yo Baby Boomer (would be 67 today), the one here is much younger than that iirc.
yes, this is the author: https://en.wikipedia.org/wiki/Eric_Ries
Thanks for catching that, should have done a better job vetting that. The rest of my post is still true.
Yeah, the bio in About specifically mentions that they are not the famous one
Wow I didn’t know that.
That is deeply disappointing.
"I won't pretend I have this all figured out, but I've probably spent more time than is healthy on the "why do good companies go bad" question."
Those companies, Costco, Patagonia, Novo, were founded by "good" people
These people had legitimate business models, not something like "data collection from/about computer users, surveillance of computer users and online ad services"
"There's a darkness in our industry [what "industry"?] that we often don't talk about."
Look in the mirror. Maybe the "darkness" is you
Maybe you've spent too much time on the computer and not enough in the real world