’The more successful an organization is, the more valuable it is as a target. So the more golden the goose, the more the temptation to butcher it. We actually create the conditions for our own failure by blindly pursuing success.’
Eric Ries wrote the bible for many entrepreneurs: The Lean Startup. But in recent years, he’s turned his attention to what happens to startups as they mature – having showed us how to create something worth protecting, he’s now focusing on how we protect it once it’s built. Why do so many founders who had such a positive vision for their new company, and who achieved such success with that approach, find themselves sidelined or overruled as it slides into mediocrity or even malignancy?
The result of his quest to understand this seemingly inevitable, faceless force is a new book, Incorruptible: Why good companies go bad and how great companies stay great.
As one of the leading thinkers and activists of our day, Eric discovered the surprisingly simple way to create the infrastructure necessary to reimagine value by founding the Long Term Stock Exchange. And as a tech entrepreneur himself, he has great advice on how to use AI effectively and ethically in the writing process.
One of Eric’s most fundamental lessons is that trust is the most valuable asset of all, and that applies to your book just as much as your business. NOT an episode to miss – trust me on this.
Incorruptible site: Incorruptible.co
Eric on LinkedIn: https://www.linkedin.com/in/eries/
Alison on LinkedIn: https://www.linkedin.com/in/the-alison-jones/
The 10-day Business Book Proposal Challenge: www.proposalchallenge.com
Link for submitting your clip for Episode 500: https://bit.ly/45RfpdY
Alison Jones: This is a really exciting moment, actually, because I’m here today with Eric Ries and over the last two decades his ideas about continuous innovation, long-term thinking, governance, and market reform have reshaped company building and management practices.
He’s the creator, as if you didn’t know, of the Lean Startup Method. He’s the author of the New York Times bestseller, The Lean Startup and The Leader’s Guide and The Startup Way. And as a founder, he’s put his own ideas into practice with initiatives such as The Long-Term Stock Exchange and Answer.AI, an AI R&D lab. We’re going to talk about that. And he’s served as an entrepreneur in residence at Harvard Business School and IDEO.
And his new book – this is exciting, isn’t it? – is entitled Incorruptible: Why good companies go bad and how great companies stay great.
So first of all, welcome to the show, Eric. It’s very good to have you here.
Eric Ries: Hey, thank you so much. It’s a pleasure.
Alison Jones: I was just telling Eric in the green room that The Lean Startup is hands down the most cited book when I ask my guests for a recommendation. It’s great that you’re here, it’s great that you’ve written another book. We’re all very hungry for that.
Eric Ries: Thank you. Thank you. Yes, I wish I could do it a little faster. I admire the people who have a more, who are not so busy with other things and are able to crank them out, great to hear that.
Alison Jones: They’re worth waiting for, which is the important thing.
What I’ve really enjoyed reading Incorruptible. I was shouting Yes quite loudly at various points in it. It’s important.
But what really struck me was the relationship between these two, as you say, quite temporally separate books. Because you talk about how in The Lean Startup you are encouraging people in how to build something worth protecting. And then in Incorruptible it’s okay, once you’ve built the thing, how do you protect the thing? And it’s full of horror stories of good companies gone bad. I mean it really is toe curling.
So what was going through your mind when you were thinking about those two and the relationship between them?
Eric Ries: Yes, it’s interesting, to me all the different projects I’ve done over the years are just one thing, one thing with many manifestations. It’s always felt to me like starting when I was relatively young, I started pulling on the thread of the sweater to try to understand like, how do we make things that work. It’s a very simple question.
Like I want to ,I love technology. I love computer programming. I loved when I first got into it. I loved entrepreneurship. I loved management. Each of these things, if you read the genre of literature about it, they promise you that if you do the thing, you’ll change the world. We will have all these positive outcomes for you and for the world. And I kept not having that experience. I kept having things go wrong and I couldn’t understand why.
And I kept, and especially as I came out of Silicon Valley and I started to have friends who were all trying to do the same thing too. They started to see it go wrong. And, in the early days we were just focused on the waste of people’s times of building things that nobody wants or the waste of money of these companies that were doomed from the start because they couldn’t bring the scientific method to bear.
But I always thought that, as I started to get going with this, that we ought to make company building, organizational life in this world more scientific, more humane and more effective, more likely to create positive value creating change. And I thought that was a very simple idea that surely everybody would be on board with that, right?
But it’s turned out to be a lot more complicated than that, and many of the dogmas and inherited ideas about what are the best practices for how companies should be built, run, and governed, turn out to be value destroying. And that was true about waterfall development as much as, all the more complicated stuff that we’ve tackled in the years since.
Yes, so I’ve tried to tackle that problem as an author, as an entrepreneur, as you mentioned, as an advocate for policy change. I’ve worked with governments and nonprofits and all kinds of big companies, small companies trying to transform legacy companies. I feel like I’ve just had the privilege to try my hand at these kinds of reforms in many different contexts.
And so I think I have an unusual vantage point. I feel like I got issued a backstage pass to business itself, like the play of business, to see how the sausage is really made. And on the one hand, it’s horrifying because there’s so much waste and so many inhuman processes that are absolutely out of control. On the other hand, it’s very inspiring because the world of business is almost unimaginably vast, and the scale, the potential for positive change is almost mind boggling. When I get down about the difficulties, I try to remind myself that the scale of the positive impact we could make is correspondingly large.
Alison Jones: And the fact that you have got so many people buying in to the Long-term Stock Exchange, for example, is really exciting. I want to talk about that in detail. It’s interesting that, sort of, it’s almost like you’re positing the sort of the rationalist view. Everybody should be on board with this because it’s really obvious that we’re creating… and you make such a profound point in the book that, what is going on? Nobody wants this, nobody wants to be destroying value and yet, here it is happening.
And you almost, it’s almost like an invisible hand except it’s the sort of the antithesis of the invisible hand. It’s a really malignant force, isn’t it? What is going on?
Eric Ries: Yes. No, I’m…
Alison Jones: … destroy value?
Eric Ries: It’s actually utterly baffling. If you spend too much time thinking about it, which is why I think cognitive dissonance kicks in, and most of us don’t spend that much time thinking about it because it’s actually really awful. I remember, when I was first trying to put my finger on this, in the book, I call it ‘ the force that no one controls, but everyone obeys’. And I was trying to put my finger on what is it? Who’s in charge? That’s really one of the big questions that goes through the book is who is in charge of these systems? So who designed them this way? Why are they the way that they are?
And it’s funny, like I was working, I did a lot of corporate transformation work, big companies, some of the world’s largest companies have asked me to come in and help them improve their management system. And if you sit with a middle manager of any company and you ask them Do you have any ideas for how this company could be improved? You better have a lot of time on your hands ,you know, a stiff drink because they will unload on you and it doesn’t matter, industry, sector, country, culture, the top problems will always be the same. Short term thinking, the company is like eating the seed corn canceling innovative projects. When in the name of efficiency that doesn’t really make sense.
The lack of trustworthiness between senior management and regular management and the customer. Just, it’s like you’ve just, you’ve pushed play on a script. It’s the same everywhere. But then if you ask them, okay, what are we going to do about it? They go totally quiet. They’re like, what do you mean? And I started to say, it was almost like I’d ask people like, what are we going to do about gravity? That’s not a question that makes sense to ask. No, you don’t do anything about it, they look at me like that’s just the way that it is.
But I have never been willing to accept that. I just can’t believe that we’re going to live, like our grandchildren are going to inherit from us an economic system that combines immense value creation with all this insane value destruction. Surely there’s a better way.
So that’s been my odyssey to try to understand it and because I had spent so much time thinking about gravity as a metaphor, I started to actually take that seriously and be like, it does feel like there’s this almost invisible force that is pulling organizations down into mediocrity, into lethargy, into bureaucracy, but into malignancy in a lot of cases. And of course, I’ve now been at this long enough that I’ve gotten to watch the dark underbelly up close. I’ve gotten to help people build immense value, immense companies, and see their idealism stripped away, see their strength wither and their sense of purpose be lost. And including many people I know who are incredibly rich today and totally miserable. So if the end result for the people who do the work is misery and for the planet and for their employees and for their customers, who is it for?
That’s really what set me on the course, ultimately, that led to the book and LTSC and so many other things, which was just what would it look like if we didn’t treat this as just how the way it is, but if you wanted to do it properly, what would that even look like?
What if you wanted to build organizations that had the strength to resist this force?
Alison Jones: I want to come onto that structural integrity point, actually. How do you do that from the start? Because I think that’s a really key thing for listeners, but just before we do, I want to make a writerly observation, which is that point about your gravity metaphor is brilliant because it has got that… you recognize it and it feels right, that sort of weight, that thing that constrains you and then you make the point that it’s only because of gravity that planes can fly and so on. And it’s about understanding it. Once you understand it, then you can design around it. And it’s just a brilliant example of how to use a metaphor to help think differently. I loved that. Now, let’s talk about structural integrity. How do people bake into an organization, the guide, the guardrails that are going to keep it from being corrupted because it really is horrifying just hearing the stories in the book.
Eric Ries: Yes. There’s a chart in chapter one, which is like 200 years of case studies, just I really wanted to hit over the head with how predictable this pattern is, how consistent it is, how much worse it’s getting.
Yes. So let’s talk about how to do it. The gravity metaphor works very effectively because it allows us to make statements like this. I talk about this in the book. If we’re looking for what I call the architecture of institutional longevity, but how can we create an ethos, a culture, a purpose in an organization and then have it endure beyond just the human lifespan. Although these days we’d be lucky if it lasted even 10 years.
To do that, we have to understand what structural integrity would look like for an organization. And I make the analogy that if a bridge collapses and you’re talking to an engineer and you say, Hey, why did the bridge collapse? And they say because of gravity. He’d be like, Yes no. Bleep like, Yes, no kidding, right? Oh, that’s brilliant. A brilliant insight, Sherlock. Yes. Great.
But what I really wanted to know is not, because there was gravity yesterday when the bridge was standing and there was gravity for these 25 other bridges that are still standing. Why did this one collapse? So then, a real engineer would study, okay was the bridge properly designed for the conditions it existed in, could it handle shear and tension and wind load and regular load, and was there material fatigue or, Hey, let’s look at these metal joints. Oh, are they all corroded and rusted? That’s the state of affairs with most companies today. There’s just corrosion at every joint.
But yet some organizations are like built with the equivalent of stainless steel and there’s just, there’s no rust on the joints, even though they’ve been going for decades or even centuries. And what’s really interesting to me is we talk to people and say why does this happen? Most people will say it’s inevitable, human nature,
Alison Jones: gravity.
Eric Ries: scale. That’s just how it is.
And then you’re like, are there any exceptions to that rule? They’ll be like, no, it’s just how it is. And you’re like, okay. But can you think of an organization that you interact with in your life that you feel differently about? If you get them out of the like financial theory part of their brain into the like customer part of their brain, they’ll be like, oh Yes, Costco, like, what?
Costco’s a $400 billion company. If scale and money were automatic corruptors, how come they’re doing like, what’s going on with that? And they’ll be like, oh Yes, that’s true. That’s true. And oh Yes. And also Patagonia, you’re like excuse me. Patagonia is also like a 5 billion company. I can’t remember how many billions now, that also seems like should have been corrupted.
And if you look around. You’ll find in every industry there are these outliers, Vanguard in finance, Patagonia in retail, Costco but also like Novo Nordisk, Ikea, John Lewis Partnership for those who know it. HEB in Texas, there’s just, there’s actually zillions and zillions of these companies that, for whatever reason, don’t seem to succumb to this universal force. And that is what really got me interested. How can there be exceptions to such a universal rule? It seems almost inconceivable.
And so if you study the exceptions, you will notice something very striking about all of them. Every single company I just mentioned does not conform in any way to our modern ideas of best practices for how companies should be structured. They deviate. Not in little ways, but in profound ways. In the book, I’d give lots of examples of for example, Costco routinely gets the worst possible governance rating you can get from governance agencies and it’s constantly under attack from Wall Street for its unusual governance practices.
But they’re actually not that unusual if you limit your search to companies that have longevity. So that’s where a lot of the practices in the book come from. We have enough exceptions to have built a data set. From that dataset, we can learn patterns for what this structure looks like. And to give a very, I feel bad almost giving such a high level overview, but we’ll hopefully get into the details.
The blueprint of this longevity has two major components, and the book is divided into these two challenges that we have to attack. The first is what I call the path of ethos. I tried really hard in this book to avoid modern, trendy consultant language, like stakeholder or even culture, wanted to use old fashioned words that reminded us that this is not new, we are trying to reclaim a part of our human heritage that has been lost.
So ethos is an ancient Greek word that means character, the way someone behaves, even when nobody’s watching. And organizations too have a character. They are consistent or inconsistent. Coherent or incoherent. So aligned with human flourishing or malignant, and this is not some metaphor, this is actually something that we have shown scientifically.
We have a lot of evidence that this is a real thing that can be measured and tracked. And so I wanted to understand how do we build an organization that has a character that is truly committed to its purpose, that is capable of making sacrifices even if it’s hard, even if it’s unpopular or countercultural to do and therefore is a company, an organization that customers, employees, and investors can trust because you know that when the chips are down, it will do the right thing as it itself defines it. And that’s where the operational managerial, sorry, go ahead.
Alison Jones: I say that’s the character piece, isn’t it?
Eric Ries: That’s character
Alison Jones: the constitutional piece,
Eric Ries: Yes. Yes. So that’s the path of ethos.
The second path is what I call the path of integrity. How can we build a high integrity organization and integrity, not just integrity in the sense of can keep a promise, but structural integrity. A company that when it comes under pressure or temptation, has the power to resist the legal tools at its disposal to resist, but also the internal deliberative structure so that no individual person can foment a civil war and take it over. And this is maybe the most obvious and yet the most shocking thing I, I want to say discovered or realized in the course of writing this book, taught me a lot in the creation of it.
And it’s this very simple idea. We teach everybody today in business and in almost every sphere of life that success is an end in itself because whatever other thing you want to do, if you first have success, it will give you the power, the leverage, and the freedom to do that what you want to do.
So we teach people, get to product market fit first, worry about the details later. As your company gets bigger, then you’ll have the power to set things right, to do things the way you want them to do. And this is just catastrophically wrong in a way that when I tell you, I think, I hope your listeners will find really obvious. I did when it finally occurred to me. But notice I lived the vast majority of my life without making this realization.
Which is simply this the more successful an organization is, the more valuable it is as a target. So the more golden the goose, the more the temptation to butcher it. We actually create the conditions for our own failure by blindly pursuing success.
And it’s only those who have figured out how to protect this most valuable asset, what I call the most underrated asset in all of business, trustworthiness. It’s not a metaphor, it’s not a nice to have manifesto. No, it is a tangible, extremely lucrative asset that the best organizations covet and most organizations piss away because they don’t protect it in a vault. They allow anyone who wants to just come up and grab some and take for themselves.
So the book is a little bit dark because there are parts of it where I really want to warn people, look, the path that you’re on is going to inevitably lead to you losing control of the thing that you most value. And yet that’s not inevitable. We can do something about it.
Alison Jones: And what’s interesting and generous and I think bit revolutionary about this as well, is that you talk about that as a personal revelation. I understood this point and that applies to you and what you are building, and you scale it up to organizations as a principle, as a way of designing an organization.
And then, you design it up with what you’re doing with the Long-term Stock Exchange into what you call civic architecture, I think. Is that the phrase you use.
Eric Ries: Civic infrastructure.
Alison Jones: Civic infrastructure that’s it, I knew it wasn’t quite right and there’s suddenly a mechanism. I did actually laugh out loud when you pointed out that you were like, how, I don’t know how you build a stock exchange, this must be a really hard thing. And they were like, oh no, we have a form for that. And you completed the form and this is putting in place the infrastructure that allows other people to put all this in place as well, doesn’t it?
I think this is fascinating. So tell us a little bit about your experience there.
Eric Ries: Yes. I’ll tell you a story. LTSC is one of these audacious and just such an impossible project that people ignore it because they can’t comprehend that it would even be attempted, like numerous people over the years, including our own investors and a lot of our supporters they keep forgetting that it exists still, and they’ll even, I remember when I would go when we first got our SEC approval to operate the exchange, it’s in the same regulatory category as ICI Nasdaq. And I would go to people and say, look, congratulations, remember that thing I told you about? It’s approved, it’s live. And they’d be like, oh, let me know when it’s live. I’m like no it exists. So no. I’m sure it doesn’t, but let me know when it does. And it was like, I’ve never had a product where people would say they really wanted it, but they couldn’t be convinced that it exists.
It’s because it’s so contrary to their ideas about what’s possible. And of course, I think the dark side of this is we all feel a little bit complicit in this financial system causes so much harm, and we tell ourselves the story, that there’s no alternative to comfort ourselves, that it’s not our fault.
And as soon as you present, I remember I actually did an interview with a really powerful CEO who was taking his company public before we had gotten approved. And he was like, I’m glad we’re doing our IPO before we would have to face the test of whether we would list with you. Like I’m glad I don’t have to face that question.
And I was like, what are you talking about? Surely. Isn’t it obvious that you, because he was like, thank you so much for working on this. It’s so important to me. And I was like will you lend your support? He’s like no, I really can’t. Don’t feel,
And I’m…
Alison Jones: that says it all
Eric Ries: like you’re richer than… like none of your, like seven generations of your children will never have to work because of how rich you are.
And even you don’t feel free to enact your own values with your choices as a customer. How interesting. I just was like, how interesting. So it’s this very difficult, very difficult project and yet, I just felt if we just put one foot in front of the other, we’ll see how far we can get.
And as say, I did eventually have this like very funny moment of, because people would, I spent years, literally years talking to anyone who would talk to me, Hey, How do you create a new stock exchange? Does anyone know? And then people would be like, no, you can’t do it. No, it’s impossible. No, that’s illegal. People had every kind of reason why I couldn’t do it, but the arguments they would use for why it wouldn’t work didn’t make sense to me. They didn’t seem like very good arguments. So I was just like, okay, thanks for the takes the tip. I’m going to keep going.
And when I finally found out what it actually takes. There’s an interesting moment I had where I was talking to someone who used to be a finance journalist and then had become an entrepreneur himself, so understood the systems from his days in journalism, but also had an operating company and really was very committed to treating his employees and being a high integrity partner to his customers. And I sat with him and I explained my vision for LTSE and for the book and all this stuff, that was going to come in the years to come. And he just looked at me and he said, I’m sorry, but it just seems too hard. How do you know this is going to work?
And I was like, what business of that is yours or mine? What does that matter? He’s like, be very honest, we don’t know. Does anyone know what’s possible? Our world that we live in today would’ve been unimaginably different to our grandparents. They couldn’t have conceived of where we are. So presumably our grandchildren’s world will be unimaginably different to us.
So all we can do is the things that make sense to do, that seem like they could be and like create the possibility for transformative change. And I was so sad. I left that meeting so sad because he was like, I can’t do that. I need to know it’s going to work before I could get involved in something.
Alison Jones: Which doesn’t sound very entrepreneurial. Let’s face it, actually.
Eric Ries: Isn’t that interesting? It’s the world of bold innovators and especially among VCs, the bold contrarians of VCs, the number of VCs that have told the founders that I’ve worked with over the years, trying to get them to do the things we’re talking about in the book. And they’ll be like, listen, you’ve got to be a bold contrarian.
Oh, but also you don’t want your corporate governance to look any different than anybody else’s.
Alison Jones: Not too bold. Not too contrary. Yes.
Eric Ries: Yes. Not so it’s oh, okay, contrary and bold, only in certain very narrow places and when we want to investigate, for example, the financial structures upon which this whole ecosystem is built.
Oh no. Look away. Look away. Look away.
Alison Jones: A bit less bold there. I really want to talk to you about writing as well. I want to talk to you about everything actually, but, we’ve only got a certain amount of time, so I do really want to talk, you said something really interesting a few minutes ago you said about how the book changed you, and I really want to lean into that.
So what does, you never need to write another book again in your life, I imagine. But you’ve chosen to, why? What does it do for you?
Eric Ries: Why indeed I ask myself that question the time.
Alison Jones: Really good question, Alison.
Eric Ries: Really good, boy, if I knew the answer. No, so someone asked me the other day and I was like writers that’s what we do.
Why do they climb mountains? Why do they rob banks? because it’s there.
That’s what we do.
Alison Jones: Because it’s not there, isn’t it? It’s because it’s not there.
Eric Ries: For this book especially and to the lesser extent, Lean Startup was this way too. I basically spend every day of my life talking to people about creating companies. So that’s the most common phone call I do in a given day is someone calling me, being like, I have this crazy idea for a company. Will you help me?
And so I just, I have a lot of practice, a lot of reps trying to be helpful to people so that when I encounter a new idea in the world about how companies could be structured, organized, built. I get to put it into practice right away because, just the next person that calls me who has that kind of problem, I can be like, Hey, have you considered doing this?
People would call me for Lean Startup advice, but over time I started to ask them questions about their corporate purpose, because I really was like, you can’t do Lean Startup without a vision. So what’s the vision? And I started to learn about the idealism that drives people to create organizations almost universally. Very rarely would people say, my vision is to make a lot of money.
They wanted to do something that they thought would have making a lot of money as a side effect. And that subtle difference I’ve learned over the years makes you a business revolutionary, whether you admit it or not.
Because just as simple and aspirational as I want to create a high quality product instantly puts you at odds with our dominant business culture and the era of shareholder primacy. So I started to become almost like a collector of obscure governance ideas. Everyone has a weird hobby.
Like someone, some people collect butterfly wings or whatever. Some people collect the old dolls. I collected governance and nobody cared. It was like, oh, Eric, the eccentric
Alison Jones: quite niche. Yes.
Yes, that’s
Eric Ries: quite niche. And I’d be like, have you heard of the Alibaba employee voting trust? Pretty interesting. People are like, sure, sure.
But what happened was over time I started to encounter companies who had bonafide problems. Like, really this technology that is both has a lot of promise, but also a lot of danger to it. I’m trying to convince my employees that we’re going to be the good guys. I want people to join my company, but they won’t join because they’re afraid of the danger.
Meanwhile, investors, if I tell them that we’re trying to do something socially beneficial, immediately think I’m a communist and not a serious person about business. Like it was like this tension was really hard. And so I started, oh, have you considered. And I started telling people about these ideas.
So I got, in the early days people would be like, no, I haven’t considered, no, that’s absurd. But I started to get better and better at talking to people about their governance, about their structure, about their culture, about their… like I just started to add those tools into my repertoire.
And you reach this point when you’re doing this kind of hand to hand combat, changing the world like literally one person at a time, where I got pretty good at getting founders to yes. They’d be like, oh Yes I’m interested in this. I’d be get pretty good at helping them navigate the negotiation with their investors, with their boards, with their lawyers, just all this stuff.
But a lot of these phone calls and meetings would end with this sounds really great, what else can I read about it? And believe me, if you are an advocate, just pro tip, you want to become an advocate for an idea, you really don’t want to say nothing. It makes you sound like you’re off your rocker, what do you mean? Nothing? Surely something. So I would try desperately to be like there’s these great academic studies. Can I interest you in some research? No. I’d be like, there’s these cool case studies about individual companies. Would you like to, I don’t have time for that. Okay I’ve got a whole shelf full of manifestos. They’re like, Yes, but I already know that I need to do it. You’re just supposed to tell me how.
And I realized that there was just this gap. That I was like lacking the informational architecture, the conceptual vocabulary to talk about these issues intelligently with people. And I was having, if I have an hour meeting with someone, I have to spend the first 53 minutes giving what I would now call a summary of the book.
And so I was like, God, it’d be really helpful if I could be like, look, read this first, and then using these concepts we can reason about your situation. And that’s exactly how Lean Startup came together. And I was like, oh no, it’s happening again.
Alison Jones: Happening again. So I’m getting, there’s three things going on here. Part of you is going, oh crap, I’m going to have to write a book, aren’t I? And part of you is going, do you know it’d be really helpful to write a book so I don’t have to have this conversation? And part of you is going, ah, this is so cool I get to write about this.
Are they all going on at the same time?
Eric Ries: All at the same time. You know it someone, there’s a quote, I forget, there’s a YouTuber, I think who’s making a joke about, how about writing a book is the saddest, loneliest kind of work in the world. And boy, is that true? It has a real, there is a mental and spiritual testing of it that is challenging if you’re especially writing something that’s like personal and you’re really trying to do something meaningful for this.
Alison Jones: Yes. When you really care about it.
Eric Ries: Get it right. But yes, it’s also one of the most rewarding things to do in the world. And now that I’m on the other side of it. It’s great. I’m like, oh, I’m so glad I spent the last two or three years, digging through because proud of the result and I’m really happy to see people respond to it so positively.
But the actual, there’s definitely, it’s so easy to lose the thread of doing it because it’s such a daunting project and you most days you can’t tell if you’re making progress or not.
Alison Jones: Let’s dig into your process a little bit because honestly I can’t tell you how excited I am to do this because, I know what writing a book looks like for me. It’s not pretty, and I’ve talked to a lot of people who’ve told me about their process, but, how do you go from the spark of the idea to the finished manuscript?
What’s your, what are the big stages for you? What do you love most?
Eric Ries: Yes, the most fun part for sure is there’s what I call the Downhill Slope Phase, where you finally crest the top of the hill and you realize you now actually understand the scope and shape of the final product. And although there’s a lot of work to be done, now it’s like now you’re just bringing everything into alignment with that extremely clear vision and so you do the work. That’s the hardest working phase.
I was, my poor kids were like, I was on my laptop every minute of every day. We were traveling around Europe and then they’d be, we’d be in some like beautiful villa or whatever and I’d be like go be in the pool. I’ll be looking at the beautiful scenery while I’m on my laptop. I would take it into every cafe. I just, I was glued to this thing because every day I was like, I have to chip away at this problem. I’m running out of time. It was like…
Alison Jones: I’ve got a deadline.
Eric Ries: Got to go. Yes.
And the hardest part of it for sure is the early murky bits where you’re trying to figure out what is this book about? What’s the thesis with the through line?
And for this book, unlike my previous books, which all had a title and a clear thesis from the beginning, this book did not even have a title until very late in its development. My poor publisher, when I sent them the first proposal, they just put it in their system as untitled on governance. And they were like, please, can you please do better than that? I was like, yes, we’ll come up with something better than that, for sure.
And I’m very blessed. I want to be super clear now that I have the resources, I have a whole writing team and researchers and people that help me. So I’m able to do my daily work, like my work in the world of doing LTSE while still making progress in the book in a way that I really couldn’t have before. It would require me to cancel everything else that I was doing.
So I had a year or two years, it was quite a long time in this kind of like gestation phase where honestly, most of the writing was happening mentally more than at the keyboard. I was just going over it and over, talking it through again and again.
While I was doing the research, trying to figure out the stories, and I started to sense the structure of how this would go. The book is ultimately in three parts with three very distinct structures and messages to it. And then you start to have the most difficult conceptual breakthroughs, like the metaphor of gravity.
The book is structured, the second part of the book especially, is structured as a journey from inner to outer, from small to macro, micro, macro. I
Alison Jones: beautiful illustration as well. You do visualize that beautifully.
Eric Ries: Thank you. Oh, thank you. My good long term, my good friend Marcus Gosling is a genius designer, and he designed those for me and they capture visually what we’re trying to explain.
And anyway so I put those pieces together, started to develop the terminology civic infrastructure. Harder is easier and at a certain point. I got to this point where I was like, uh oh, I have actually overwritten the book. So this book actually is half the length of its first draft.
I had created so much detailed instruction. I had actually created, it was like a tumor. I created a whole second book’s worth of material that I had to cut out of the book. And that was very difficult. So those were the phases, like there was this extremely generative phase of compiling this massive research archive. This book required a lot more research than my previous books, it required a lot of stuff, studies and fact bases and all this stuff. And then we had this like big explosion and then it just required a really difficult cutting back to get it down to a reasonable length and to make it readable.
And even at that point it was so bad, like I’d been working it for so long, but you, it was like the ideas were like roughly in the right, it was more like a storyboard than a book. It was like a hundred thousand word, 150,000 word storyboard. And that’s just, that is not good. So then when I feel like, when I really got the hang of it is I started to really cut down each chapter and really to conceive each chapter as a journey in itself and start to attend to the literary creation of it.
I was like, okay, now I’ve got the information architecture, the conceptual vocabulary. I think these, it felt like building a house, it’s like now I can work on the interior design and actually start to really make it a fun read, make sure that the stories really land. Cut, I had to cut so many stories that were like great illustrations, but just couldn’t make them interesting. They’re just boring.
There were certain companies I wanted to profile that when I had test readers look at the early drafts, they would just refuse to accept stories about that company. You know, these guys are villains. I don’t want to hear about it. That was really surprising. There was like so many twists and turns. But that, for me, it was like this process of whittling it down carving it down to its final form
Alison Jones: But that is important, isn’t it? Because you couldn’t have written it cold at the right length in that, you had, in a sense,
I don’t think any
writing is ever wasted. Yes. All of that stuff…
Eric Ries: Yes, none of it wasted. I don’t regret any of it. All I wish I’d been able to do it faster. The process of going through that pain is what allowed me to really understand the material. Like in a much more profound way. Like even questions about of the thousands of studies that have been done that prove each of these points, which are the most salient ones, and which are the ones that are persuasive and easy to understand and rigorously design.
Just, you need, it needs to be really crisp and clear in a way that it wasn’t even in my own mind. So in addition to the reader feedback and my own feedback of my sense as an author what do I like about the product? At the same time, I also was still getting to put the ideas into practice every day.
So the other piece of feedback that’s very important to my process is I could tell as I was getting better at writing these chapters, I was getting better at teaching the material to real people. And I even tell one of the stories in one of the later chapters, an entrepreneur came to me. I was working on the chapter about standards and the power of standards, one of the later chapters, and an entrepreneur came to me with this really difficult problem. I tell this story in the book. It was what’s called the AI Underwriting Company. Now it’s a basically AI catastrophic risk insurance, really brilliant business idea.
At the time, he was really struggling with what am I trying to build? What is this company? And I was like oh my friend, sit down at the whiteboard. I just wrote this. I literally, I didn’t say this to him. I was like, in my mind I’m like, I just wrote this chapter. Let me try this. I was like, let me try it on you. I was like, oh, this is incredible. What an opportunity.
And I’m sitting at the whiteboard sketching for him exactly what I had just written. And he was like, it was really helpful to him, helped him put… crystallize for him the pieces of what his company actually is and set him on a really good path. But for me, I was like. Okay. It’s okay, yes, this chapter works. I’m keeping it in. tested, Get those moments of validation. So important.
Alison Jones: Yes, that’s so cool. I want to talk about AI as well, because you’re an AI tech entrepreneur along everything else. What’s the role of AI for you in the process of writing a book now? Because that’s something I’m imagining that was completely different from Lean Startup
Eric Ries: Very different and different over the course, this book was written over the course of this transformation, so the tools, every year of this book’s development, the AI tools were in a completely different state of capability, like monumentally different, and I am extremely glad it worked out the way that it did because, and I know that this is very controversial, so I have to be super careful how we talk about it.
But I found it exceptionally helpful to have an AI assistant with me on this journey. Now I want to be super clear. AI did not write this book, nor do I think AI written prose is any good. Please stop sending me emails written by AI.
Alison Jones: Oh man. Stop it. Yes.
Eric Ries: We can all tell, so please stop doing it. It’s not just the em dashes.
Alison Jones: LinkedIn post, by the way, just stop.
Eric Ries: Please, yes. Don’t have AI write your LinkedIn posts. You sound, it makes sound like the total tool. Don’t do it.
One of our thesis at Answer AI, because I was very reluctant to bring AI into my process for fear that it would change my voice. And although you see this a lot with vibe coding and the kind of like people who are using AI agents to do things, that you lose control of your project. Like you’re no longer its artistic director, even though you think you are. And I was afraid, really afraid of that. But luckily at Answer AI, we have this theory that AI and LLMs in particular should only be used to augment human creativity, not to supplant it. So we built this tool that allowed me to… the way I thought of it was I would take a chapter or a research question or some thing I was working on in the book, and I would mount it on a canvas, as an artist would , and the AI would help me work on it for a while, and then I would put it aside and then I’d bring the next piece and I’ll work on it but I was always in the driver’s seat. And what was really powerful about it was it allowed me to synthesize large amounts of information that was more than my wetware can handle.
I’m not actually a PhD level researcher on any of these topics. I’m not a lawyer. I sometimes have to play one on TV. Like I’m not actually the primary kind of expert that you would need to write a book like this. And this book crosses like 15 different areas of expertise that I didn’t have.
So to be able to say, look, I need you to pull together, here’s my current draft, here are all the citations that I could draw on for this topic. Here are all the reader comments that relate to this section, help me sort through, help me prioritize what to do and keep track of things. That was super helpful. And the other thing I think is really underrated, and maybe it’s because I have a little bit of ADHD, I don’t know.
But the hardest thing I always find with writing, once you’ve written a draft, in drafting you don’t have this problem because you just write, just vomit it down into the page. But once you have a draft, the hardest thing is just keeping track of what to do next. There’s now an infinity of things you can do next.
So what I found is I could write myself a to-do list of okay, here’s 25 things I want to accomplish in the next draft of chapter three. And the AI would just keep track of which ones I had done. And so what happened was, I was talking about I’ll carry my laptop around. The reason I could be so hyper productive is I could be anywhere in the world on a train. I remember taking a train through the Alps from Vienna to Venice. Beautiful train ride, lovely, very crappy wifi. But it was enough for me to stay in touch with my AI assistant. So like I could just sit there and if my then 2-year-old needed apple juice, I could get an apple juice, I’d go get her apple juice and I could do the thing that was interrupting me.
And normally when I would go back to the blank page, I’d be like, oh, where was I? And that’s like every interruption would be the loss of a whole day’s work. I could just be like, now where was I? And it would be like you said, you needed to make this paragraph more interesting. And I’d be like, did I? And it would be like, not really, not very interesting actually. You should probably keep, and I would just, it would bring the context I needed to get back to work and boom, it just allowed me to make the book so much better than I could have made using my more old manual processes. And the other thing, and this…
Alison Jones: that’s a great use of it.
Eric Ries: I had the benefit of a human research team and many human editors, I know I had a lot of human beings that could help, but there were certain tasks that the AI is simply better than the human beings at, and especially in the research domain, it was very difficult for me to get what I needed when the researcher had to go outside their own field of expertise. I’d spend a lot of time arguing with them about whether they would or wouldn’t go look up a certain thing, or they’d just be like, I don’t believe in this thesis, and I’d be like, I know I’m not asking you, like I understand, but could you just pull the papers for me so that I could read them for myself?
Or they would get sidetracked on some paper that they thought was really exciting or a certain case study. I got a certain researcher who was always trying to tell me about this one case study, which was great. I was like, I love that case study it’s in the book, but we have to also just some other, like I was just like, I had certain, and once deep research was invented, the ability to be like in the middle of the night, can’t sleep, jet lagged, whatever, and just be like, I need a deep dive into this academic area. Pull all the papers for me, help me, help me get up to speed on the thing. It’s just such a great learning machine.
And I think for writers, again, because I think it’s very dangerous for writers, you can lose your authorial voice so easily. And in the early days of experimenting with this I wasted a lot of time and I had to throw out so much work when I’d be like, oh my God, I let it write for me garbage. Or I had a lot of hallucination issues.
Like I remember one time I pushed it too hard to go find me something that doesn’t exist. And it started hallucinating it and it like had me convinced that there was a research archive that it had found the special documents in. And I had built this whole elaborate story in my mind that was all fake. So dangerous.
The number one piece of advice I will give is if you see it as a tool for increasing your own capabilities, it is unmatched. So instead of saying, write for me a chapter about standards, I could be like, teach me about the history of standards. What’s been written on this topic before? Who are the major thinkers? What are the controversies? This study, how rigorous is it? Help me think through whether it’s appropriate. What is it really… like you could just, I got, I became like a temporary expert on so many topics and not expert enough to then figure out, okay, of this like a hundred year body of research I need three sentences.
Okay, this is a point I’m going to make in passing, okay, but whereas in the old days, I would’ve done my best using like a very limited amount of context, here I could do a much better job on drawing on a lot more wisdom.
And so I think a lot of those, a lot of those sections, asides, points of connection between like there’s a lot of that interstitial stuff, I think is a lot better in this book than it would’ve been otherwise.
Alison Jones: Oh, that’s really fascinating. And I love the productivity use of it as well as the research use. I haven’t heard that technique before. It’s so good. This is what I’m doing.
Eric Ries: I’ll never write long form without that ever again. It’s…
Alison Jones: genius.
Eric Ries: …it’s so helpful.
Alison Jones: It’s such a great tip and I’m going to be really greedy actually. Because my next question for you, Eric, is I always ask my guests for their best tip for somebody who is maybe at the starting line of their first business book.
What do you wish you’d known back then? If you can remember? What would you want people to know.
Eric Ries: Yes. Oh, I can remember it very well. I spent almost two years studying publishing before I decided to write a book, okay. Because I was not sure it was a good idea, and I wasn’t clear what am I going to get out of it? And so, a lot of people were very generous with me. A lot of other authors, editors, agents, I met with a lot of people to be like, I need to understand what am I getting myself into?
And what I learned talking to people was most authors wind up unhappy with the outcome that they get in publishing. It’s just, it’s a tournament system and most people don’t win the tournament. But worse than that there are levels to it. And depending on what level you get to, your experience of publishing is so different. That almost the advice that you give is level dependent.
So like you meet someone whose book was a flop but was still got published and they’ve done that a couple times. The advice that they’ll give you about what to do and what you should do with your publisher is like very different from someone who was a one hit wonder like me or someone who’s had a whole bunch of number one bestsellers.
And I’m sure it’ll be very different if you go, there’s people like way beyond me, right? Like you’d talk to someone who sold 25 million books. It’s just a very different universe. And if you’re Oprah Winfrey, it’s a very different universe, right? Like each of these levels of success you can have in publishing is very different from the others.
The way you are treated is really different. That level of agency you have is really different. The problems and issues, and in particular the advice. The things that will help you at certain level are not really, not good. And generally what I noticed was as you go up the levels, people go from seeing publishing as experts, oracles, gatekeepers, knowledgeable priests of a Mercurial God, to a piece of machinery that you can use effectively or not to achieve your goals.
And I think probably, I’m sure if you go even, I never got, only got to a certain level, but I’m sure if you go beyond that level, there’s even more different ways of thinking about it, including I’m sure people who are just like, what? I just push a button and all this good stuff happens for me.
Because like occasionally I would meet people, like even I was, remember talking to an editor who I was having a really hard time getting to do a certain thing. They were like, sorry, I’m not available to do the thing you want because I have to fly to some exotic European country because I have to go spend a week with a certain author. And I was like how do I get that treatment? Why, what does, okay. Yes I’m trying to get you to give me five minutes of your time. You’re going to go spend a week in wherever with this guy. What’s up with that? So it’s just very different depending on who you are and how the system sees you.
When I did The Lean Startup, I was just very focused on like, how do I use this machinery to serve my goals? And that requires being very clear about what your goals are. And talk to a lot of authors for people call me for advice about writing, not as often as about starting a company, but like pretty often still.
And the vast majority of them simply refuse to match means to ends.
They’re not clear about what they’re trying to get out of the publishing process. Like why is their life going to be any different or better because they wrote this book. They say they want to be a bestseller. They say they want everyone in the world to read their book. They say they want to make money from writing. And I’d be like that’s three different things. So if you had to choose one, which one? And they’ll be like I also want it to help my company and I also want it to help me launch a consulting business. And I also like, I hear you, there’s a lot like, so could we pick one goal and then are you willing to match means to those ends?
So for example, people talk about wanting to have a bestseller and it’s do you know how much work it is to promote a book to a level it can be is extremely difficult. Are you prepared to do the work? And people are like, no, I don’t really want to do that. I want it to be like slow burn, organic, just magically. And I’m like listen, that does happen sometimes, but statistically speaking, not very often.
And so those kinds of things I think are the like classic mistake. And I helped someone, just to give another example, I helped someone get an agent for their book. They wanted to publish a book and the agent kept coming back with feedback about the proposal and they just refused to change it. They’re like, no, I don’t want to change anything about what I’m doing. I have, and I’m like, look, we’re not talking about the book, we’re talking about the proposal, okay. The proposal was a tool to get a certain outcome. Can you figure out how, like just no, I want to write the book I want to write, and I’d never seen this before. Their agent could not get them a book contract, which is like cardinal sin for an agent. Agents are supposed to know what is possible. And so like generally speaking of agent who, if agent goes out, it’s because they know that and they couldn’t, they literally couldn’t do it.
And it was just so interesting to me, like I think this kind of like willfulness to try to make writing into this fantasy, it just leads to a lot of suffering because it’s not… I know for some people, like some people it is a fantasy process, but for me anyway, it was very much like it is work to use this system to accomplish and not as an end in itself.
And yes, I think…
complicated, slow moving
Alison Jones: system. Yes, with all its arcane
Eric Ries: Can’t let it drive you. You have to drive it because at the end of the day, it’s an artistic process and no gatekeeper, no evaluator, no other person can ever predict what’s going to happen with a piece of art.
So if you have those people in your head diminishing your creativity and your sense of confidence as you go, then you can’t do the work anymore. And that’s no good. And I know people are like, business book is a work of art. Come on man. But
Alison Jones: But no, it should be, is a literary endeavor. Absolutely, yes.
Eric Ries: If you don’t see it that way, I think that’s why a lot of business books are so bad.
Alison Jones: Yes because people don’t put the time into the craft
Eric Ries: They just, they don’t see it as a craft, it’s a means to some other end. I understand that, but at the end of the day, it works because a human being spends like a not inconsiderable fraction of their life to sit with your words and consume them. So, I feel like that you have a responsibility to make that worthwhile.
Alison Jones: Put the work in. Yes, I love that. And the clarity about what it is you’re trying to achieve with this book as well because it could be only one of a hundred things. That’s brilliant.
I also, this is the point at which I say to my guest what book would you recommend to us? And they go, oh, have you read Eric Ries The Lean Startup?
And I say, yes, I have actually, yes. So you are not allowed to recommend that.
But what I’m really interested what book you would recommend us.
Eric Ries: Recommend for what though? Give me give me,
Alison Jones: So I guess it’s a kind of, it doesn’t have to be a business book, but you get the chance to recommend to an audience of people who love their business books, a book that you think, not one of yours, sorry, is just really well written or really helpful for a business person in leadership or in setting up a company.
Eric Ries: I’ll go on my shelf over here, which book I would recommend. I feel like it’s, there’s so many great books. I read, I’m a voracious reader and I read a lot of books in the construction of this one. If I had to pick one, gosh. It’s too hard of an assignment. Let’s do a classic book rather than… I feel like, because I know even books coming out this year, I know so many great books that I’ve really enjoyed. But because this is going to, hopefully people will be listening to this for a time to come.
Here’s a okay, okay. Sorry. I love, I just love business. I like to love the business book genre. And yet, so few of the books truly, stand the test of time, but I was just asked the other day, that’s why I have it in my mind for a book that if I had to, people were compiling a list of, if our civilization had to be rebooted and we could only build an archive of 35,000 books. What would you contribute? And I was, I love that standard. It’s oh Yes. Okay, lot of that’s going to be taken up by technical manuals for like how to do agriculture and things that. So we can’t, no, no fluffy books can make the cut.
Alison Jones: Jane Eyre presumably has to be in
Eric Ries: Truly great and so I had been talking about certain books that I feel like are really foundational pieces of the modern canon but that nonetheless get overlooked. So obviously we need a book about statistical process control and mass production. But you want something that’s about how to maintain craftsmanship and quality at scale.
So of course you could put, you could have Out of the Crisis by Deming or you could have Lean Thinking by James Womack or The Toyota Way. There’s a lot of these books you could include, but I was like, what we really need is Toyota Production System by Taiichi Ohno, which even translated into English is a very philosophical look at the human side of mass production, and I remember reading the book for the first time as a young person and just being utterly infuriated. Because I was like, I need to know the technical details of this thing and he’s have you ever considered automation with a human face? You are like, no, I haven’t considered that. Tell me how to use robots to make things buddy. He’s so famous for, that’s his thing. And he’s the person who developed Five Why’s and a bunch of these other like techniques that were very influential for Lean Startup.
And he would do this thing with new recruits where he would draw a circle on the floor of the factory and he would be like, you must stand in this floor and watch until you understand this particular step of the production process and after you’ve stood there for, it was a very Japanese way of doing this instruction then you’ll come and tell me what you saw. So learning to see, like to go and see for yourself thing and understand it. There’s a lot of great wisdom and although this is not, there’s not actually an individual book I could recommend.
I’ll do two, just because I’m on a roll here. The other person that I really enjoyed learning a lot more about in the course for this book that I just wrote, there’s this management theorist named Mary Parker Follett and she was a contemporary of Frederick Winslow Taylor and unfortunately there isn’t really like the one definitive book about her or of her writing, although there was one that was published in the nineties. It’s very good called The Profit of Management. And it’s out of print, but you can still find it.
And that’s the one I would recommend if you’re going to go to want to read her work. She was so far ahead of her time. She would be writing stuff in the 19 teens and 1920s that if I told you what was written today, you’d be like, wow, cutting edge. You’d be like, whoa, who’s this person? We’ve got to get them on a podcast, right? She was awesome. She talked about power with not power over. She said the responsibility of a leader is to make more leaders. She had this idea, she called the law of the situation. So she said, in a given situation, who must obey the superior or the subordinate, neither both obey the law of the situation. The situation dictates what must be done subordinate and the superior together collaborate to discover what is the thing that must, just absolutely mind boggling. And I took one the…
Alison Jones: and nobody has heard of her?
Eric Ries: She was utterly erased from history, as happened to a lot of women in history unfortunately. I think it’s the biggest What if in all of business, what if the world had listened to her instead of Taylor, we might live in a very different world today. I’m glad that she’s being rediscovered and getting some of the attention she deserves, but not even close to what she deserves.
Read these essays, they’re mind boggling. She used to confound her contemporaries by saying stuff like this. She would say, Mr. Rowntree, the owner of the Rowntree Chocolate Factory, is not the leader of the Rowntree Chocolate Factory.
Be like, lady, his name is literally on the door. His family has owned this factory. Who else could it be? No, he is an excellent leader, but it’s because he’s so good at instilling in his employees a sense of common purpose. And it is the common purpose, not Mr. Rowntree himself, who is their invisible leader.
And anyway, so yes, if you can find one of her books or hopefully someone will write the definitive biography of her for a modern audience.
That’s the book we really need.
Alison Jones: Amazing. Thank you so much. What a great recommendation. I had high hopes for your recommendation and thank you for not disappointing me. That’s brilliant.
Eric, if people want to find out more about you, I’m sure they’re like we know about Eric, but if they do want to find out more about you, more about Incorruptible, more about your other stuff, more about the Long-term Stock Exchange, where should they go?
Eric Ries: Yes. Best, the very best thing to do is to join my mailing list, which you can do on any of my websites. But Incorruptible.co is the one for the new book. And there we have all kinds of bonuses and extra content…
Alison Jones: So many resources.
Eric Ries: chapters and stuff that I had to cut. So like a lot of stuff we talked about, there’s like implementation guides and reader’s guide.
We try really hard to make it as worth your while as possible to go to this website and get as much value as we can possibly give you. Including you can find local independent bookstores that are carrying the book. And so if you want to order the book at a local independent bookstore, then you’re not only helping me, but you’re helping your own local community, maybe try that.
And of course, the book is available everywhere books are sold in hardcover, in ebook and in audiobook. I read the audiobook myself. The audiobook has really cool bonus content in it that I’m excited about. So yes, very proud of how these different versions have turned out.
Alison Jones: Amazing. And will you come on again in another 20 years when you’ve written your next one?
Eric Ries: God forbid. I look forward to it. Thank you.
Alison Jones: Amazing. Thank you so much for your time today. It’s been an absolute joy.
Eric Ries: Thank you.
