The Lean Startup and the Long-Term Stock Exchange (with Eric Ries)

**Ben Gilbert** (0:00)
Before we start, Eric, I did have to say, did you intentionally pick a building with gigantic stone pillars in a marble lobby to start your stock exchange in?

**Eric Ries** (0:10)
obviously. I was like, what building is he talking about? I'm completely blind to that stuff. No, I did not weigh in on the decor of the place.

**Ben Gilbert** (0:33)
Welcome to Season 5, Episode 10 of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert and I'm the co-founder of Pioneer Square Labs, a startup studio and early stage venture fund in Seattle.

**David Rosenthal** (0:46)
And I'm David Rosenthal, and I'm a general partner at Wave Capital, an early stage venture firm focused on marketplaces based in San Francisco.

**Ben Gilbert** (0:54)
And we are your hosts. Today, we tell the story of an incredibly ambitious undertaking, creating a new stock exchange, a long-term stock exchange, that is. Earlier this year, the LTSE was approved by the SEC as only the fifth body with such a license. And we have with us today, none other than the founder and CEO, Eric Ries, to talk about it. Welcome, Eric.

**Eric Ries** (1:18)
Thanks, guys. Thanks for having me on.

**Ben Gilbert** (1:19)
Yeah. Yeah, yeah. Listeners, you may know Eric's name from his popular 2011 book, The Lean Startup. The LTSE was actually started from an idea that Eric had while writing the book, and there are a couple of paragraphs at the end that explore it. And eight years later, here we are with the LTSE as an approved national securities exchange and having raised $68 million from venture funds, including Andreessen Horowitz, Founders Fund, Floodgate, and many other top investors.

**David Rosenthal** (1:49)
It was super fun. I was on the plane on the way back from visiting my family for Thanksgiving, pulled out my digital copy of The Lean Startup, went through, and there it was, about a page and a half right at the end.

**Eric Ries** (2:03)
Right at the end, the very last idea in the book, practically.

**David Rosenthal** (2:05)
Yeah.

**Eric Ries** (2:06)
Yeah, and I knew it was going to be polarizing from the start. When I was writing the book, so this is now go back to 2010, before the book even came out, this is when the idea hatched for me. And part of writing The Lean Startup, you can imagine I felt a lot of pressure to eat my own dog food and use the techniques of Lean Startup in writing the book. So it was a very iterative process and I did a ton of testing and experimentation and A-B testing. And one of the final stages was I sent the full manuscript out to a lot of test readers from different audience archetypes of people I wanted to influence. And I'll never forget one of the test readers wrote me back. He said, the book is fine, except that there's one thing you have to take out. There's this idea at the end of the book about this stock exchange thing. And listen, you basically piss away the credibility you've carefully built up over 299 preceding pages. You flush it all away in one page. It's that bad. You must take it out of the manuscript. So that was its auspicious first reaction from a test reader. So that's when I knew I was on to something.

**David Rosenthal** (3:05)
Yeah, that reminds me of the Google story where Larry and Sergey were working out of the Wujicke's garage and an investor came by, a friend of the Wujicke's, to meet them. And they said, hey, we got this company working out of the garage. You want to meet them? He's like, no, sneak me out the back. I don't want to talk.

**Eric Ries** (3:25)
Yeah, every once in a while the conventional wisdom really serves you very, very poorly. And it's funny now because it's always been very polarizing, but what people don't remember is that Lean Startup was very polarizing in the early years. Now everyone's like, oh, obvious, of course, we're going to at least pay lip service to it, whether people actually do it or not for a different conversation.

**Ben Gilbert** (3:45)
Yeah, Eric, did your book coin the phrase minimum viable product?

**Eric Ries** (3:49)
You know, I had never heard that phrase before, but in the years since, people every once in a while will dig up like an academic paper from 1984 or whatever somebody used. So apparently it has been used before. But I think I am primarily the one to blame for the overuse of the phrase MVP. So I apologize. Anyone who's sick and tired about hearing about pivots or whatever, that's also my fault.