AMA: I'm Eric Ries (The Lean Startup) & Author of New Bestseller Incorruptible
170 points by eries 2 hours ago
170 points by eries 2 hours ago
Hey gang, you may remember me from such books as _The Lean Startup_ and _The Startup Way_.
It's been fifteen years since I wrote The Lean Startup, and in that time I've seen some things. In both big companies and tiny startups, NGOs and governments, in almost every industry you can name.
I've helped a lot of people create a lot of amazing companies, but I've also seen so many ways this can go wrong. There's a darkness in our industry that we often don't talk about.
I kept watching good companies drift away from the missions they were founded on. Not because anyone woke up one day and decided to be evil, but because the structure they were built on slowly pulled them there. I call that pull "financial gravity."
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.
My new book _Incorruptible_ is my attempt to explain the invisible forces that shape organizations, and how a handful of companies (like Costco, Patagonia, and Novo Nordisk) have successfully been structured to resist gravity and thrive for decades -- or even centuries.
Along the way, I founded the Long-Term Stock Exchange, co-founded an AI R&D lab called Answer.AI with Jeremy Howard, and helped a number of notable companies with their governance (yes, including Anthropic).
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. Ask me anything!
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... 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 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. 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. 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. 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? 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? 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? > 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. > 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: 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? 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'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? 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. :) 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. 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). 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. > 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. 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. 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? 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. thank you! I appreciate you sharing. As an author, you never get tired of hearing stories likethis. 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? 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? Hey Eric, I loved The Lean Startup! One of my favorite books. Really looking forward to reading Incorruptible. 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. 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. To what extent are the mechanisms you identified causing companies to go bad the same for non-profits, associations, political parties, etc.? 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. 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. 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? 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? 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? 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? does this apply for a company of every type? does it work for companies like apple as well? 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. What does "Best Seller" mean in this context? Who says it's a best seller? 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? 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 :) 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? genuinely curious, why is the other question https://news.ycombinator.com/item?id=48477817 flagged to death here? what am i not getting, seemed like a perfectly reasonable thing to ask whether you agree with premise or not 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? 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. yoo, what's up gng, had breakfast?? (Can't think of any questions to ask) 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). 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? 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? 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? I find it pretty ironic and pathetic that Eric Ries is talking about a darkness in the industry when he's part of that darkness. Here's Ries in 2024 writing a propaganda piece for Israel on his blog: https://medium.com/eric-ries-stewed/sympathy-for-the-devil-i... I spoke to Ries in 2024 (he's a former investor of mine) about the genocide, and he used every pro-Israel trope ("oh, it's so complicated") to dissuade me from speaking about it. If you publicly are shilling for a state that has for 76 years committed massacres against Palestinians, you don't get to be the voice of "why good companies go bad". 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.
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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. 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.
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