Lenny's Podcast: Product | Career | Growth
00:00:00 · Eric Ries, Lenny Rachitsky
[00:00:00] S0: ... all kinds of famous companies. The thing that destroyed them was not competition. Their very success became a liability. [00:00:07] S1: I want to hear the OpenAI versus Anthropic story. [00:00:09] S0: 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 going to 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. [00:00:43] S1: This new book, Incorruptible, is about helping you protect what you've built. What is it that you need protection from? [00:00:48] S0: 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. [00:01:00] S1: What's a broad stroke solution to this?
00:01:00 · Lenny Rachitsky, Eric Ries
[00:01:00] S1: What's a broad stroke solution to this? [00:01:02] S0: 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. [00:01:23] S1: Today, my guest is Eric Ries, author of the most influential and impactful book in startup history, The Lean Startup. Today he is back with a new book 15 years later called Incorruptible: Why Good Companies Go Bad and How Great Companies Stay Great. The way Eric describes the connection between these two books is that The Lean Startup was about helping you build a successful company, and this book is about helping you protect what you've built. Eric wrote this book because he's seen way too many founders lose control of their company and end up being very disappointed and depressed about how things turned out. This is not something that you hear a lot about, but it's a problem that basically every successful founder will face. Eric shares a ton of powerful stories and specific tactics and very specific advice for what you need to understand and do as a founder if you want to build something lasting. [00:02:34] S0: Ah, it's an honor to be back. Congrats on everything that's happened since I was here last time.
00:02:34 · Eric Ries, Lenny Rachitsky
[00:02:34] S0: Ah, it's an honor to be back. Congrats on everything that's happened since I was here last time. [00:02:38] S1: Wow. Thanks, Eric. So for people that have been living under a rock, you famously wrote The Lean Startup 15 years ago at this point, maybe the most impactful, successful founder startup book out there. And it feels like over this 15 years, if you think about it, it's gone through all these waves of just like, this is correct the way to do it. And no, no. This is completely wrong. Why would anyone build this way? This doesn't work anymore, to, okay, this actually is right. I was actually just thinking about this as I was preparing for our chat. It feels like the way the top AI companies are building now is actually exactly Lean Startup. I just had the head of product of Claude Code in the podcast, Cat. [00:03:17] S0: I saw. Yeah. [00:03:18] S1: The way they operate. Okay, we're going to ship the MVP. They don't call it that, but we're going to ship the MVP research preview, get it out there, see if people care at all about this thing. We're going to tell you it's not ready for everyone, but it's out there. And then they iterate and build. I feel like people don't give you credit for this is actually the way AI companies are operating now.
00:03:34 · Eric Ries
[00:03:34] S0: I appreciate you saying that. And it is funny how every wave there's a backlash and somebody writes the article, "Because of this, you don't need to do lean startup anymore." I remember when people wrote that about Quibi, they're like, "Quibi proves that you don't need lean startup." I was like, "Well, why don't we wait till the companies are successful and then see if it proves it?" But also, people forget this is not a religion. So what matters to me is not if people use the term minimum viable product or whatever. By the way, those aren't customer facing terms. So a lot of companies that use these concepts, they don't talk about how they use it. They just use it internally. To them, it's just the obviously right way to go. And it's funny to me, one of the most important aspects of it that I think stands up really well, and it's been 15 years, is that so many of these AI products that leaving the models and the underlying technology aside, these specific products that have taken the world by storm, you can really tell that the AI labs themselves did not know they were going to be as popular as they turned out to be. Obviously ChatGPT, they had no idea. Claude Code, Cowork. These were small experiments in the grand scheme of things. They weren't the companies like, "This is our big bet. Let's go." And that's just so classic that that's a universal aspect of product development, that you do not have the ability to predict the future. And when you pretend, you get yourself in trouble. If you hold everything like a hypothesis, you get the benefits of the scientific method. It's pretty helpful. Yeah, we all know this force. In the book, 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. Now, sometimes we lose control of them because we get fired. We get ousted from our own company. Sometimes it happens because we're like Frankenstein and his monster. It starts to become malign or bureaucratic or frankly evil and we can't figure out how to stop it. And all kinds of other ways. I had a front row seat at this. I've been helping people build companies now for a long time. I've helped people create unimaginable amounts of wealth for themselves and for society. And I'm really proud of the work that they've done.
00:06:39 · Eric Ries
I'm really proud of the bit part that I played in so many of these companies, and yet I've also seen this darkness. And it's not just founders getting fired, although we're obviously, we're going to talk about that. But the other day, I was out to dinner with some friends. We were not at home. We were away from our usual spots. And so someone said, "Oh, there's this restaurant. I haven't been there in a couple years, but it's really good. Let's check it out." We go, we sit down at dinner. They take one bite of the food and then they're on their phone and we're like, "Dude, you're being rude. Why are you on your phone?" "It's just one sec, one sec. Yep. I thought so." He turns it around. "I could tell that this restaurant got taken over by private equity. I could taste it." And I've told that story a bunch of times now, and so many different people have told me, "Oh yeah, I know what restaurant you're talking about." And then they name like 12 different restaurants. So what's going on that you can taste the ownership structure of a company in the food? How many people had a famous brand that they love get ruined? I tell hundreds of years of these stories in the book, all kinds of famous companies where the thing that destroyed them was not competition. It was not someone else came up with a better product. No. Their very success became a liability because the more golden the goose, the greater the temptation to butcher.
00:08:34 · Lenny Rachitsky, Eric Ries
[00:08:34] S1: Wow, that's a very visceral example. I think about vital eggs as a great example of this. It was in the news, I don't know, on Twitter, TikTok a while ago. It's the eggs that we've been getting forever. It's like pasture-raised, organic. [00:08:46] S0: Sure. Sure. I have all these in my fridge. [00:08:47] S1: Okay. I don't know if you saw this, but everyone's complaining of how they've gotten worse and they have all the highest level of toxins and then they're owned by BlackRock now, it turns out.