How The Best Companies Defend Against Mediocrity And Rot

**Eric Ries** (0:00)
The best way to make money is to create more value than you capture, to build something that people want. And yet, we're all supposed to pretend these days that we think all kinds of making money is equally good. And there's so many ways of making money in our economy today where you can get rich without creating any value at all. And I just think, why don't we just stop pretending that we think that's good?

**Garry Tan** (0:25)
Today, we have a very special guest, Eric Ries, author of The Lean Startup, which was a New York Times bestseller and a crucial playbook for all founders. Eric has a new book coming out called Incorruptible, Why Good Companies Go Bad And How Great Companies Stay Great. And he's here to dive into some of those core themes with us. Welcome, Eric.

**Eric Ries** (0:45)
Hey man, good to see you. Always fun to hang out.

**Garry Tan** (0:47)
I mean, The Lean Startup taught our whole generation and the new generations how to build.
Now you're back with a new book called Incorruptible. What made you decide to start it?

**Eric Ries** (0:58)
All my books come from pain. I never ask anybody to do something in a book that I haven't done myself. And man, we've been around this a long time. Like how many companies have we seen built and created where the thing that made them special gets lost? How many founders lose control of their company, get kicked out? It doesn't become what they hoped it would be because they don't understand how to protect what they created. So I feel like Lean Startup, we created so many companies worth protecting, but we didn't give them the tools they needed to actually stay in control, to actually protect the trustworthiness of the thing that they made. So I'm sick of that.

**Garry Tan** (1:31)
Going from zero to one, a lot of people spend a lot of time thinking about zero to one. And I think Lean Startup is one of the Bibles for being able to figure that out.

**Eric Ries** (1:38)
Thank you for saying that.

**Garry Tan** (1:39)
There isn't really a playbook that is written until now around, how do you make it last for 100 years?

**Eric Ries** (1:46)
Absolutely. And unfortunately, the way we teach leadership and entrepreneurship today, we tell people that like, don't worry, just be successful. Just get to product market fit. Success will protect you. So once you get successful, then you'll be powerful. That will give you freedom. And what we don't tell you, and what I wish no one told me, the more successful your organization, the more valuable it is as a target. Like that's what makes it worth taking over. That's what makes it worth stealing from you is the fact that it is successful. So I think there's like a missing ingredient here that was a big blind spot for me. I didn't see this coming, but I've lived it now for quite a number of years. I've seen so many companies, have it happened to them. In the book, I tell this story about like I was coaching a new founder, I call him the professor in the book to protect his privacy. He's a genius. He's a really incredible person and building this really transformative technology on the cutting edge of AI plus bioscience. So super cool, huge upside, hella danger because you could easily use this technology for something really awful, bioweapons, pandemics, that kind of stuff. So he's trying to recruit talent. He's having to promise people that this is not going to be used for those things. That's part of why he has this massive talent advantages. People trust him, people believe that this technology is going to be used in the right way. But then people are asking these tough questions like, but aren't we a for-profit company? Yeah. What if an investor is want to do something evil? He'd be like, well, I'll tell him no. Why will you be working there then if you're telling your investors?
He didn't know how to answer those questions, but when he would meet with investors, all these VCs would just be like, oh, that's nice, honey. Oh, you're worried about that stuff.
Don't worry about it. If you're serious about business, this is not the kind of thing you should be worried about. He was feeling trapped. Anyway, I happened to be on my way, I was talking to him, to this event commemorating a founder who had a huge success, someone we both know well, had made unbelievable amounts of money for his investors, and at their earliest opportunity, they had betrayed him and kicked him out of his own company.