Lenny's Podcast: Product | Career | Growth
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.
01:08:39 · Eric Ries
[01:08:39] S0: That is the thing. Remember how we talked about how people say business is hard? Most people have never worked in a mission-aligned company. It is the organizational equivalent of being in the flow state as an individual person. It's a great feeling. And it just makes everything easier. You don't have to have meetings about stuff. You don't have mission misalignment. In most organizations, you have people who I call the torchbearers, which are like the rare person in an organization who's simply committed to doing the right thing no matter what. Steve Jobs very famously would have skip level meetings. He wanted to meet not with his direct subordinates. He didn't care. He wanted to meet with the torchbearers throughout the organization. Those are the people that are going to drive us forward. And if you're a torchbearer, you're just like, think about the designer who simply won't ship slop no matter what. The engineer who will not sacrifice quality or performance. You meet these people every once in a while, product manager who just... They are prioritizing the right things, even if people complain. In a traditional company, if you have that job, if people listening, if you've ever had this job, man, life sucks. Every fricking day, someone's in your office with a spreadsheet being like, "But what is the ROI of doing the right thing?" And you're just like, "I don't know. It's just the right thing." In a mission-aligned company, this doesn't happen two different ways. There's two different antibodies that protect against this. First of all, since everyone's mission aligned, no one's bothering to make the spreadsheet. There's no need. The late great Clayton Christensen once said that it's easier to do the right thing 100% of the time than 98% of the time. Just like because now you don't have to have a meeting about it. At Anthropic people, someone's like, "Oh, I came up with this crazy unsafe thing that will make us an extra dollar." We don't have to have a meeting about it. I already tell you we're not going to do it. We already know. So everyone's incredibly aligned. But the second thing that I think is less appreciated is a practice I call the culture bank, which is when you start to see trustworthiness as an asset, you start to realize that certain actions build that asset and others take it away.
01:10:40 · Eric Ries
So let me teach you a rule I learned from one of my favorite founders, Todd Park. He created Devoted Health, the health insurance company I was mentioning before. But he learned it from Howard Schultz who built Starbucks. If you see in strong culture companies, you always see this pattern where you've taught people that whenever you do the right thing, that is you do something in defense of the company's values that has a sacrifice to it. Saying the values, enchanting them, making a song out of them, that's not it. But if you do something, I tell a story about this grocery store in Texas called H-E-B, where the power went out, there was an ice storm, and the manager let all the customers just take their groceries home. No charge, because the point of sale system wasn't working. People say, "Oh, what a courageous manager." No. That's what they train people in at H-E-B, that you're making a deposit in the culture bank when you do the right thing. So deposits, you make a sacrifice. A withdrawal is the opposite. You do something greedy, self-interested for the organization. The Todd Park rule, as I call it, everyone who hears this rule, the first time they hear it tells me it's impossible and you can't do it. It doesn't make sense, but this is the rule, is really simple. Only make deposits, never make withdrawals. That's it. Because you're going to make withdrawals by accident sometimes because you can make mistakes, but you never intentionally make a withdrawal. And that I think is the true power. When you hear someone who's living that flow, like Cat, you were talking about in Anthropic, that has been internalized in the organization. It's what the pioneering management theorist, Mary Parker Follett called the invisible leader. The person, the thing that people follow even when no manager is present. So no one has to be in the room to remind you to do it. You just do it because you've internalized that this is what we're all about. And when everyone around you is doing that same thing, the whole velocity of the whole organization increases exponentially.