How to build a company that withstands any era | Eric Ries, Lean Startup author
5/10/20261 hr 39 min
Eric Ries is the author of The Lean Startup, a book that reshaped how a generation of founders think about building companies. His new book, Incorruptible, explains how successful companies are destroyed by failing to protect what makes them valuable, and how to change it.
In our in-depth conversation, we discuss:
1. Why 80% of venture-backed founders are ousted within three years of going public
2. The governance structures that protect companies like Anthropic, Costco, and Novo Nordisk
3. The simple legal filing that takes two pages and could save your company
4. Financial gravity: why successful companies predictably get corrupted into mediocrity
5. Why mission-aligned companies like Anthropic reap major benefits from protecting their mission through governance
6. Why success won’t protect you—it instead makes you a bigger target
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Episode transcript: https://www.lennysnewsletter.com/p/how-to-build-a-company-that-withstands
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Archive of all Lenny's Podcast transcripts: https://www.dropbox.com/scl/fo/yxi4s2w998p1gvtpu4193/AMdNPR8AOw0lMklwtnC0TrQ?rlkey=j06x0nipoti519e0xgm23zsn9&st=ahz0fj11&dl=0
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Where to find Eric Ries:
• LinkedIn: https://www.linkedin.com/in/eries
• Website: https://www.incorruptible.co
• Newsletter: https://news.theleanstartup.com/
• Podcast: https://ericriesshow.com
• YouTube: https://www.youtube.com/@theericriesshow
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Where to find Lenny:
• Newsletter: https://www.lennysnewsletter.com
• X: https://twitter.com/lennysan
• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/
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In this episode, we cover:
(00:00) Introduction to Eric Ries
(02:26) Introducing Incorruptible
(06:26) Protecting what you’ve built
(11:35) Why founders get ousted
(14:58) Too early, too late
(19:32) The blueprint: ethos plus integrity
(20:49) Novo Nordisk’s 100-year governance fortress
(26:41) The Vectura Group and Philip Morris
(33:16) The “harder is easier” principle
(37:22) Cloudflare’s mission emergence story
(42:43) Groupon’s email frequency death spiral
(45:37) How to define your purpose
(51:09) Mission-driven vs. mission-hopeful companies
(54:46) Integrity: structural and personal
(57:47) Shareholder primacy: the 40-year-old “natural law”
(01:00:04) Public benefit corporations: the easiest protection
(01:04:24) Downsides and objections
(01:06:08) The Anthropic example: fastest-growing company ever
(01:08:39) The torchbearers in every organization
(01:10:37) The culture bank: deposits and withdrawals
(01:12:28) OpenAI and Anthropic governance
(01:16:21) Mission guardians explained
(01:18:29) Spiritual holding companies
(01:21:53) The founder control trap
(01:25:25) Three things to do this week
(01:30:10) AI alignment and human alignment
(01:34:00) Conway’s law: org charts in architecture
(01:37:31) Book resources and farewell
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References: https://www.lennysnewsletter.com/p/how-to-build-a-company-that-withstands
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Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.
Lenny may be an investor in the companies discussed.
To hear more, visit www.lennysnewsletter.com
Clips
Showing 10 of 13Transcript preview
First 90 secondsEric Ries· Guest0:00
All kinds of famous companies. The thing that destroyed them was not competition. Their very success became a liability.
Lenny Rachitsky· Host0:07
I wanna hear the, uh, OpenAI versus Anthropic story.
Eric Ries· Guest0:09
Dario was a first-time founder. Wasn't a hot company at all. The boom hadn't happened yet. ChatGPT hadn't been invented yet. Nonetheless, they were true believers in this safety mission, and so one of their investors suggested they come talk to me. I told them, "Look, if you don't get this right, here's what's gonna happen." They were very determined to do something about it. They wrote into their charter, Anthropic has directors on its for-profit board who are appointed by and are accountable to an outside group of trustees who are AI safety experts, who do not have equity in Anthropic. Whenever you see Anthropic do the right thing, like when they refuse to release a model because they think it's too dangerous, think about how much that's costing them.
Lenny Rachitsky· Host0:43
This new book, Incorruptible, is about helping you protect what you've built. What is it that you need protection from?
Eric Ries· Guest0:48
We all know this force. I call it the force that no one controls but everyone obeys, that tends to drag organizations down into mediocrity to the point that we lose control of them.
Lenny Rachitsky· Host1:00
What's a broad stroke solution to this?
Eric Ries· Guest1:02
Harder is easier. If you're willing to be principled in your decision-making, you will get these unexpected rewards. But most leaders, when asked to defend their principles, can't do it because they've been taught ROI-based thinking, shareholder primacy. That's the path of maximum profitability. That's nuts.
Lenny Rachitsky· Host1:20
Today my guest is Eric Ries, author of the most influential and impactful book in startup history, The Lean Startup.