I'm Eric Ries, author of "The Lean Startup" and new book "Incorruptible" – AMA

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.

I don't really think there's a short way for me to answer this question without having to summarize the entire book. This is what it's about. I'll simply say that the second part of the book, what I call "The Blueprint," is about both the governance and leadership tools that we have available to us to turn these organizations into the long-term, mission-driven, incorruptible places we all want to work at.

This, of course, makes on boarding and new user acquisition harder, and can severely limit product growth. And this also leaves space for simpler products to come along and cater to the novice market. Or, companies can fight this tendency, and remove features, or make them harder to use, in order to cater to less demanding demographics.

What I'd be curious about is what spotify looks like as their market share levels off. Do they keep catering to the automatic playlist crowd, or does their average user get more sophisticated over time?

I think these changes very rarely have to do with what customers want shifting, but when people say "the market," they are often confused about whether they're talking about customers or our financial markets. Frankly, it's far more often for this kind of correction to originate in the pressure from financial markets than any other single source.

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.

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.

It sounds like a really toxic working environment. I sincerely hope they made up this story as an ad about how cheap their hot dog is.

However, I have to express some skepticism that through regulations and reforms, we can reverse the entire incentive structure for public investment to be aligned with stewardship rather than extraction. How do you plan to defy the "financial gravity" between you and this dream?

Finally, I think that Claude Code has misinterpreted your request to summarize your interviews and events. Instead, it created a marketing and promotional website with not a summary to be found!

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.

Yes. Of course.

You cannot trust anyone to have a rounded mind unless they have actually done more than one thing, broadly speaking.

Having worked at one of these companies, I don't buy for one second, that these companies are not obsessed with financial benefit. You would be an absolute idiot to believe that.

1. Yes, I am aware Patagonia has made some mistakes with maufacturing

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 happened in the years since? I don't really know. The company has not been in close touch with me, so I can only speculate or guess.

Though I did get a pretty funny piece of pushback on one consulting company's podcast. The person said, "But wait a second, I learned in business school that everything you're saying here is wrong. Are you asking me to rethink that?" Something like that. I said, "Well, are you interested in looking at the evidence that what I'm saying is the truth?"

I think he was really genuinely struggling, because I don't think he was that interested. Many of us are not that interested in seeing the evidence that the things we believe or were taught are not quite true.

Q2: shareholder primacy is a bad idea on its own terms, as I lay out in the book. It doesn't prevent people from adopting any of governance structures I recommend, it just makes it more difficult, by creating career incentives that add friction to doing the right thing. That's partly why it's so value-destroying.

Q3: I don't understand this question, sorry. Maybe it's because I've spent many lonely years being berated for this subject matter and am only getting the sympathetic treatment lately...

Tony's make some of the most delicious chocolate in the world, but their mission is actually to eradicate child slavery in the production of cocoa. I bring this up because before Tony's, it was widely assumed that "the market" didn't care about child exploitation. They just wanted delicious chocolate. Yet Tony's found a way to prove that this was not true.

The more general lesson is that many of the stories we tell ourselves about "what the market wants" are mere fabrications or just-so stories designed to make us feel better about how crappy our alternatives are. Sometimes it just takes a bold entrepreneur to show us that we already collectively are committed to a different set of ideals. We've just never had the opportunity to vote with our wallets to make it happen.

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.

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.

That and, don’t accept money from strangers. :)

For reasons I try to explain in the book, open source in particular is an example of the kind of mission-driven positive externality type of business that our modern best practices make it hard for people to see and understand. This is going to be a recurring problem in the free software and open source movements for years to come unless we get smarter about these forces.

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.

Honestly, I don't have formal criteria. I have young kids now, and I try to ask myself every once in a while, when they're old enough to really understand what I do for a living. When they ask me: "at that moment in history, what were you doing?" I want to be able to answer them and give them an answer that I and they will find satisfying.

I'll also be honest that I've my fill of conventional "success" in my life. I don't feel obligated to use the likelihood of success as a criterion anymore. I tend to just do the things that, in the moment, seem right to me. Or where it seems like, for whatever reason, no one else is willing or likely to try it, and I have been given that lonely assignment.

Many of the things that I've tried haven't worked out, but that's okay. I accept that that is a precondition of the kind of work I like to do.

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.

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.

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.

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.

More importantly, my goal in the book is to teach the reader how to see these deeper underlying forces that operate below the surface of most organizations. Once you see and identify them, you can learn how to wield them.

There used to be a lot of wisdom in the entrepreneurial ecosystem about how to survive such a platform in a more durable way. For example, if you own the customer, then you can play the major platforms off against each other. Or, if you study the case, for example, of Intuit, which survived the attempt of Microsoft to absorb that product feature into their own platform monopoly at the time, there are lessons to be learned. But of course, every platform war is different, and I'm sure there will be new lessons that we will learn from this one.

What's funny is when the book was published, I remember someone telling me that I should have included more examples of failed startups in the manuscript. I remember answering them, "Oh, I have. We just don't know which ones yet."

This is the difficulty of writing any kind of business book. There's just no way to use any company as an example to illustrate some principle without people misunderstanding that you're holding them up as the perfect or even great company. I use case studies to illustrate the concepts that I think are useful. I can't guarantee success any more than an athlete can tell you that if you study the way that Tony Gwynn hits the baseball, you too will be able to hit 300 in the big leagues.

The sad fact is that most VCs are not even consciously aware that they're doing this. They are simply the agents of a deeper force.

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 understand the idea that they were after, but it seems like they could have wrapped that up in an ETF.

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.

He's not exactly an introvert, but one good example is from the founder of my client. He wanted to stay doing the technical work he enjoyed, so he recruited a CEO above him (although he actually still shares a lot of that role and now they nominally share the role), and also hired others the lead the development teams, leaving him to focus on the one specific area of tech that he really enjoys. I'd say his job is about 80% tech and about 40% CEO (and total 120% load because he never seems to sleep!)

I guess the point is to try to fight the urge to do everything yourself. If you're not an extrovert, you'll need to hire a good sales and marketing team to take that side of the business, or you'll end up hating it and/or having no customers no matter how good your product is.

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.

However, the details matter a great deal, and I don't know that much about what the actual proposal the SEC is going to adopt is going to be. The last draft that I saw left me pretty worried.

What's interesting to me is that, in all the hubbub, neither the journalists nor the policymakers seem that interested in the actual evidence that we have amassed in academia on this question. For example, one important study suggested that moving from semi-annual to quarterly reporting costs companies something like 5% of their market cap. It's incredibly expensive, not because generating the reports is expensive, but rather the evidence seems to be that companies under quarterly reporting start to run the company for the benefit of the report rather than for customers.

That this is bad for investors, I hope you will see as self-evident.

I don't think you can put an idea out into the world without understanding that some people are going to willfully misunderstand it. We live now, especially in the age where literally ignorance is optional. When you see someone who misunderstands what an MVP is, you know that they haven't spent even five minutes reading the Wikipedia page or made any effort to try to understand it. I don't consider such people to be good faith interlocutors, and therefore I don't really think the fact that they criticize or don't understand the concept is that relevant to the rest of us who are capable of thinking for ourselves.

At the end of the day, I try to lay out in my first book the reasons why the theory that gives rise to MVP and the rest of the Lean Startup makes sense, is logical, and is consistent with a set of first principles. As a result, that theory is capable of making predictions which you can test for yourself.

Writing now for other founders who might encounter this page: If you look elsewhere in this thread, you will find lots and lots and lots of entrepreneurs who are saying how much they found these concepts helpful. You shouldn't do it because other people said so. Rather, you should take that as inspiration to think for yourself, try it, and see if the theory strikes you as valid.

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.

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.

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.

or you can look at this handy infographic: https://www.linkedin.com/posts/eries_incorruptible-new-york-...

[0] https://www.amazon.com/Incorruptible-Good-Companies-Great-St...

I don't think there's any way to talk about this without running into the problem of anthropomorphization. So I tried to be really careful with it in the book. You'll have to judge for yourself if you think I got it right.

And I'm especially sensitive to the question of accountability because you're right: today we mostly want to see these problems as being done by individual villains, because at least we can hold individuals accountable. How well is that going? It seems like we are breeding a class of people that are completely above accountability. I don't think that's tenable. I think in the long run, this system will collapse if it cannot hold the people responsible for atrocities accountable.

Personally, I think the best way to do this is to understand the systems that are causing these behaviors today so that we can locate responsibility in the right place.

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).

If people had paid more attention to the pioneering management theorist, Mary Parker Follett, who wrote more than a century ago, we wouldn't be in this mess. But of course, her work was almost entirely erased and forgotten, only rediscovered in the 1990s.

Don't worry, I have a whole chapter about this in the new book.

And if you really want to live in a world where people should be listened to on the basis of how rich they are, well, you don't really need to change anything, now do you?

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"

That is deeply disappointing.