Lenny's Podcast: Product | Career | Growth
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.
00:08:55 · Eric Ries
[00:08:55] S0: No, I was just wondering about that. Oh, okay. Now that's my new favorite example. That's really fun. I didn't even know that. But yeah, it's so common. It's the point now where I was doing an interview with someone who was telling me about a certain natural foods brand and the name of the product is the name of the founder. It's like, I can't remember her name now. It's just her name. That's the name of the product. And she gets ousted by investors and he's about to tell me the story. I said, "Let me guess what happened next. The board pushed her out in pursuit of higher growth, higher margins. As a result, we've seen lower quality and customers are super pissed, employees are pissed, and now it's starting to shrink market share." And he was like, "How did you know? I thought you said you didn't know this company." This pattern is so pervasive. We don't even have a name for it. We live it every day, but we don't know what to call it. Well, I know what to call it. I know what our grandparents would've called it. They would've called this corruption. Not legal bribery or embezzlement. No. This is like you're building a bridge. And if your bridge collapses, and Lenny, I say you're an engineer and I say, "Lenny, why did my bridge collapse?" If you're like, "Well, because of gravity," I'm going to be like, "Dude, yeah, thank you for that genius insight." I understand that that is correct in some very real way. We say, "Well, it's inevitable. It's greed." I call it financial gravity. "There's this thing of human nature when companies get big, whenever..." "Yeah, but I want to know why did this bridge collapse? And more importantly, how come other bridges didn't collapse?" Then they say, "Oh, for that, we need to study the load, load factor, wind load, shearing tension." And we go look up close, we say, "Oh, look, all the metal bolts have been corroded. They're rusted. No wonder it collapsed." And then if you say, " Well, I want to build a new bridge, but I don't want this one to collapse. What can I do?" You won't say, "Well, gravity, what can you do?" No. You'll say, "Why don't we use stainless steel next time on the bolts so they don't get corroded?" "Oh yeah, good idea." So this book is about what are the organizational equivalents of stainless steel.
00:10:51 · Eric Ries, Lenny Rachitsky
And the book is structured, not like a traditional business book, as you say, you picked up on that. It's much more like a mystery, a double mystery. First of all, why has this been going on for hundreds of years when we all think that the market selects for value creation, so this shouldn't happen, yet it happens all the time. But secondly, if it's inevitable, if it's caused by greed or age or size, why are there exceptions? [00:11:13] S1: You're actually going to give us answers and solutions because it sounds like, okay, this is impossible. But you actually have- [00:11:18] S0: I promise. [00:11:18] S1: ... you have some answers for what founders can do. Real quick, I'll just say on the viral X thing, I'm not exactly sure if the toxins are real. There's a whole viral thing on it. I haven't looked into it super deeply. [00:11:29] S0: Okay. All right. We both have homework to do now because it's what you feed your kids. You care. I'm definitely worried. Definitely worried to hear that. [00:11:35] S1: I want to talk about two things that are probably in people's minds as they listen to this conversation and even think about buying your book. One is, okay, I am not going to let this happen to my company. This is- [00:11:45] S0: Oh, sure. Sure.
00:11:45 · Eric Ries, Lenny Rachitsky
[00:11:45] S0: Oh, sure. Sure. [00:11:46] S1: ... oh, other people, they're weak, maybe they're of loose values. The other is just like, do I really need to do this? There's so many companies that are killing it. I don't think they've done any of this. Why do I even need to pay attention to this? So maybe let's start with that first one or this idea of, and this is a core thesis of your book. This is not like an ethical values thing. This is a structural element of building businesses in the US.