#2307 Eric Ries: Why Anthropic Won and How To Build Incurruptible companies

Eric Ries (0:00)

I met the Anthropic team when they first left OpenAI. They were really committed to the idea that this new generative AI should be used and commercialized for the benefit of all humanity. The irony of this whole situation is one of their early backers was FTX.

Vibe coding era is gonna be remembered for a Chernobyl style disaster, is my prediction. The transformer technology that is the basis of all modern LLMs was invented at Google. If you look at the co-authors of that paper, all, every single one had to leave and do it elsewhere. I know, I mean, someone sends me an AI generated thing, I always know it instantly. It's always garbage. Too many people are excited about using AI to replace human creativity instead of augmenting it.

Andrew Warner (0:42)

Eric Ries, who helped so many entrepreneurs build phenomenally successful businesses based on his lean startup philosophy is back with a new book called Incorruptible, where he talks about why some companies succeed, do well over the long term and others just keep dwindling. And that's what we're here to talk about today, specifically related to AI startups to see what's working, what's not, and also what he's building himself. Let's get into it.

Presented by Zapier, the AI automation company. What's Anthropic's mission and how have they been able to do well because of it?

Eric Ries (1:13)

I met the Anthropic team when they first left OpenAI. And they left over a dispute with OpenAI over exactly how to pursue the question of AI safety. So they were really committed to the idea that this new generative AI should be used and commercialized for the benefit of all humanity. And they were very worried about certain specific safety scenarios that at the time seemed like far out science fiction. I remember being like, whoa, are we really imminent? Is this, is this imminent or is this like a law? And they were like, no, man, it's imminent. We need to be working on this right now. So they were farsighted in caring about that stuff. And again, everyone wants to be like, okay, the AI safety is now a super polarized debate. And of course I have my own opinions about AI safety. I'm happy to talk about that. But I would ask for the purpose of this conversation, like put that aside for a second. They were committed to it. So my position with them was like, let me help you encode these commitments into your company structure. Because that's really what they were worried about. It's like, well, we're gonna raise all this money. And I remember they first were like, we think the solution would be to raise money from really, really values aligned people, which they did. They were in a position to really curate their initial cap table. They were very selective about who they took money from. But I remember, we had this conversation about, but what if you're wrong? What if somebody who seemed really values aligned turns out not to be? And what if, like, what if investors who are aligned, like naturally, when the amount of money we're talking, because they were talking about AGI before that was in the news every single day. We're talking about technology that could be worth trillions of dollars, but maybe hundreds of trillions of dollars. And I was like, are you really so confident that these people will be able to maintain their principles even in the face of this overwhelming temptation?

And they took it really seriously. Okay, we need to figure out how we're gonna build a structure that is resilient even if someone tries to betray the values, even if someone turns out to be unaligned. Now, the irony of this whole situation is one of their early backers was FTX. So they thought those guys were super aligned because of their supposed commitment to effective altruism. And it actually turned out to be a total disaster when that company imploded.

Huge chunks of Anthropic stock were sold at auction to any investor who wanted them, including people who are super, super unaligned. So it actually turned out to be extremely important. And we can talk about the structural stuff, the elements of building a company that can be truly strong.

Andrew Warner (3:31)

Did you help them do that? Did you help them actually codify? You did. Yeah.

Eric Ries (3:35)

But I mean, I don't want to take credit for what they've accomplished. I played a very big part in this whole story.

Andrew Warner (3:40)

Yeah. So you helped them codify their beliefs.

They then said, we only want investors who align with what we stand for. They ended up with an investor who said he did, Sam Bankman Fried, very famously. Turns out he didn't. And then random people were able to buy his shares. Why were they still able to maintain their, I mean, why were they able to still continue standing for what they meant, for what they did before? Yeah.