Lenny's Podcast: Product | Career | Growth
01:00:58 · Eric Ries
And most of the best companies today are using this structure, like all the major AI labs are incorporated as PBCs, Anthropic most famously of all. It doesn't guarantee that you're the good guys. Okay? Just writing it down doesn't do that much, but it does solve one very specific problem, which is if someone one day sues you saying you breached your fiduciary duty to investors, you could say, "Nope, investors agreed that this is our purpose to do this thing." Why has Anthropic been able to resist all this pressure? This is one of several of the interlocking components of the armor that protects Anthropic from outside pressure. If you don't do this, I can't help you, man. This is the very minimum. You got to do at least this. Now, if you're not at the founder, you probably are wondering, have we done this at my company? This is going to sound so dumb, I know, but you can just ask. Even if you're in a job interview, I remember someone once came to me and asked me for advice. They wanted to advocate for these ideas, but they were like, "I need a job. I don't even work anywhere yet." And they were like, "Caveat." I was about to give them some advice and before you give me your advice, you need to know that I'm not courageous. So I can't do anything scary. I'm not willing to be an activist. I just need a job, man, but I am willing to do something. But I felt like they'd asked me for a no bake cookie recipe. It's like a no courage. What can I do? And I was like, "Okay." And you can do this if you're in a job interview or just ask your boss either way. Then at the end of your interview, we're going to ask you, do you have any other questions? You can say, "Is this a mission driven company?" They're going to say yes. Okay, but how do you know? What kind of things do we do that are mission driven? They'd be, "Oh, we have free beer on Fridays and we clean up the local park on Saturday." I don't know what they're going to say. Maybe something great, maybe something... But whatever they say, just nod and be like, "Great." And just ask. Cool. Is that the legal mission also? Is that in the charter? Almost certainly the person you're asking this question to is not going to know the answer to your question, but it's a legitimate question because if you're working in a company that doesn't have this in the charter, you're going to be betrayed eventually.
01:03:04 · Eric Ries, Lenny Rachitsky
You deserve to know. But more importantly, just by asking, you've now forced them to get the answer. I mean, you've been part of hiring processes. Every hiring process at a well-run company, it's somebody's job to make sure every question a candidate might ask, there's a frequently asked questions document with the answer. So she's going to have to ask her boss, who's going to have to ask her boss and her boss. I've been in boardrooms where this kind of thing comes up, where someone's like, "We're getting this really irritating question from candidates and we don't know how to answer it." Now, maybe just by asking the CEO also listens to Lenny, because everyone listens to Lenny. The CEO's also been thinking about doing it too, but he was like, "I don't know if I have the support of the board. I'm not really that courageous to bring it up." Now you've created an excuse. A, we got to do it because I mean, it's the thing that everyone's doing it. Employees are even starting to ask about it." If you read these postmortems of some of these crazy things that are going on in the AI wars, a surprising percentage of the motivation of leadership is like, we want to keep our employees happy. So be an unhappy employee who wants to know what's our mission. Is it the real thing? So of course, that's not the only thing you can do, but that is the beginning, the easiest one on the integrity side. And again, a company that hasn't done it is very much at risk of eventually being betrayed. [01:04:24] S1: Are there any downsides to filing this charter?
01:04:27 · Eric Ries
[01:04:27] S0: No. This is the one thing that has no trade, truly no trade-offs at all. I mean, maybe you'll meet an investor who's suspicious about or doesn't like it. But again, the only situation that would ever become relevant is if the investor is trying to force you to sell the company and you don't want to. So you could just tell them, "Are you telling me that in that situation you believe you should get to decide instead of me?" Is that what you're saying? And then you can ask yourself, "Is this really the right partner for you?" Someone who would say yes to that, "What are we doing here?" All these feces are like, "I'm founder friendly. I believe in your vision." Do you? Do you? Or what's going on here? So that's really important. The other downside, the main downside of almost every technique in this book is that people will waste your time trying to talk you out of it. You have to be ready for that. The book actually has a whole section called how to talk to your investors and a whole separate section about how to talk to your lawyers, detailed exactly what to say, what are the questions you're likely to get because in the years I've been... I worked in the book for years. I have been writing down all the objections I've heard from all the companies I've helped. I always tell me, if someone objects, please call me and tell me what they said. I just wrote them all down. So all the answers are there. But if you talk to your lawyers, they'll say something like, "Well, you might want to just keep your options open. You don't want to prematurely commit to your purpose." And I remember if I hear that, I'm like, "Really? Keep my options open? That's how you get maximum value? What about the option to convert my customers into Soylent Green and eat them? Do I have to keep that option open?" You ask your lawyers this question, they will say something like, "You never know what you might need to do." And then we're like, "Why does nobody trust me?" Well, because you won't even take that off the table. Come on, man. No, if this one has no downside, absolutely, absolute no-brainer.
01:06:08 · Lenny Rachitsky
[01:06:08] S1: This sounds like a great single takeaway. If there's anything you take away with this conversation, you should do this. The fact that Anthropic did this is such a huge deal because I think a criticism of all of this that people probably hear is this is going to limit our growth, this is going to hurt our potential. We want to be this touchy-feely business. Capitalism has worked in creating a lot of very successful companies and value and innovation. Capitalism has worked in many ways. Why would we need to do this? And Anthropic being the fastest growing company of all time, just like absurd, breaking all records is a Public Benefits Corporation should make you feel okay about doing this.
01:06:49 · Eric Ries
[01:06:49] S0: Oh, yeah. Anthropic has helped so much because they do many of the things in the book, including this, what they have. We can talk about the long-term benefit trust. They had that two-tiered governance structure that we were talking about before. But it's so funny, even now, even with Anthropic having such success, people still say stuff like this like, "Oh, I'm worried that I'm not going to be able to raise money." I'm like, "Anthropic's been able to raise some money." That has not been an obstacle. In fact, if you ask people, why is Anthropic winning? They will often cite some surface characteristic. Anthropic very famously has lower inference costs than their competitors. They have faster product velocity than their competitors. What do I hear? Sometimes they say that they have more focus, better focus than their competitors. Those are the most common ones I hear. And for each of those, if you say, "Well, why?" Well, they have lower inference costs. They have better technical infrastructure. Why? Well, because they had some kind of internal breakthrough. Why? If you keep asking why eventually something like, "Well, because they have the best talent." Why? Because people want to work there. Why? And you [inaudible 01:07:52] because people very much want to work. They want to work for the good guys. They think these people, they have the mission to save the world. Why do they have that mission? Because that was the ethos. But why have they been able to protect it? Because they paired the ethos with the integrity. This is at the heart of almost every breakthrough success story you've ever heard. You will find this lurking there as the thing that gave them the competitive advantage to drive that differentiation.
01:08:18 · Lenny Rachitsky
[01:08:18] S1: It's funny you say that. So I just had Cat, the head of product and Claude code, and I asked her just how are you able to ship so fast? They're shipping a massive product or feature every week. Essentially, they were going through a period of force every day. And a big part of our answer was exactly what you're describing, which is we are so mission aligned. It is so easy for us to decide this is something we will do or not.