S13 E8 DB|BD at Aspen: Eric Ries Would Like to Apologize

Eric Ries would like to apologize.

In 2011 he published a book called The Lean Startup. Most of you have probably heard of it. It sold over one million copies and became something of a Bible for the Silicon Valley set. And Eric himself became something of a prophet.

The Lean Startup gave a generation of founders a methodology to build quickly, scale quickly, and build value quickly. He encouraged his readers to build businesses to change the world…

He forgot to say for the better.

And many readers took his omission seriously. The companies The Lean Startup birthed kept going bad.

15 years later, Eric is back with a new book. It’s called Incorruptible. And it is both a sequel and a correction. In it, Eric explains how organizational systems push founders and companies to abandon their values and lead them to prioritize short-term thinking.

Incorruptible also offers a blueprint for how to design a company with unshakeable integrity that can still be profitable. Really, Eric is telling founders that you can make money while still maintaining a soul.

Eric joined me live onstage at the Aspen Business and Society Summit to talk about his 15 year journey to writing Incorruptible. It is both a personal and professional one. It’s a story filled with emotion and metaphors and praise for companies who are really getting it right…Costco gets a big shout out.

And, as you’ll hear in the audio, the audience was really moved. Eric has a knack for motivating business and businesspeople move forward, this time he is hoping it’s in the right direction.

Here is my live conversation with Eric Ries…

On this season of DB|BD, we are thinking about radical collaboration. Host Ellen McGirt sat down with visionary designers, leaders and thinkers at the 2026 Aspen Business & Society Summit to ask them about the radical act of collaborating with others in a time when it often feels impossible to find common ground.

TRANSCRIPT

Ellen McGirt: Hey everyone.

Eric Ries: Hello, hello.

Ellen McGirt: Can you hear us okay? Excellent. Everyone having a good summit? Yes. I saw a moose this year. I have video to share. This is year five. I’m always impressed and delighted, and it feels like coming home. So thank you in advance for all of the contributions you’re gonna make to the world as you leave here today.

Eric, I loved your book. I wanna start with the love. That’s my thing. I found it very emotional. I’ll tell a story about when I really understood the emotion of it as we begin to speak. You’re in for a treat. You’re in for an emotional reckoning, as I was as I read it. You’ve given me the opportunity to think more carefully about my own role in society, and where I may be complicit and where I can make different choices.

Your epilogue made me cry. Don’t skip to it. And I will say that to prep for this interview, I did read the book, but I also listened to it. You’re remarkably good company, and it was wonderful to hear your stories and your voice, because this book felt like a reckoning for you as well. It felt like a 300-page review of your life, in kind of an amazing way.

Eric Ries: That’s so nice of you to say.

Ellen McGirt: I appreciate the candor, I appreciate where you were holding yourself accountable, and I appreciate where you encourage us all to do the same thing. So let’s talk a little bit about what’s in the book and the structure of the book, because it does provide the blueprint for thinking about design going forward with some integrity, and then just talk about where this could be relevant to the amazing people who are here today.

My first question, which I sent over when we were in our prep, is this: You gave the world the how-to manual for building companies fast. As a person who did a lot of business reporting, particularly around Silicon Valley, I spoke to a lot of people who spoke your language. And it was exhilarating in a very interesting way. But 15 years later, you’re teaching us again, because the companies we build keep going bad. So is Incorruptible a correction, a sequel, or an apology?

Eric Ries: Yeah, a little bit of all those things, I guess. It’s weird to have a business book that needs a spoiler alert. But yes, don’t skip. Because part of the book is my frustration with the genre of business books in the first place, and an attempt to break the rules of the genre.

And partly for this reason… there’s this joke on the internet. I used to think this was the funniest joke on the internet. It’s a Reddit meme. Have you ever seen Anakin and Padmé? Anakin says, “I’m gonna change the world.” In the next frame, Padmé says, “For the better, right?” Third frame, he doesn’t say anything at all. Fourth frame, she says, “For the better, right?”

I used to think that joke was really funny, and I don’t find it funny anymore, because I’ve lived through the same reckoning that we’ve all lived through. How many people saw the companies that were promising to change the world, and they didn’t bother to specify for the better?

I thought it was really obvious: of course, for the better, right? I didn’t think you even needed to say it. Anyway, I was feeling a sense of real shame about this, and I was upset about it, but I felt a sense of moral superiority, ’cause I understood it was for the better. And I had this moment of terrible realization where I said, “Wait a minute, I did specify for the better,” right?

And so I picked up one of my own copies of The Lean Startup. I don’t read it that often anymore, but I was flipping through. Did I say in the book that people should try to change the world? And I did. If you get to the end of the introduction to the book, the last sentence says such and such, so that the next generation of entrepreneurs will have the tools they need to change the world. Period. That’s the end of the sentence.

So I was just floored. It was so obvious, it didn’t even occur to me to specify for the better. So yes, of course, that’s a massive blind spot that we as a whole industry had. And I don’t wanna paint too negative a picture. I’ve gotten to see the very best that entrepreneurship can produce, the very best that leadership and governance can produce.

I’ve been part of creating so much value in the world. It’s been a wonderful ride. But I’ve also seen the darkness that this system contains. And how many companies can we all name, as consumers, as board members, as leaders, as founders, whatever your role is, that have been murdered in the name of profit?

It’s so common, we don’t even notice it anymore. We view it as this inevitable force of nature. But when you take a step back, it’s kinda strange. Why would this happen? And so, yeah, I have been reckoning with that force for a long time, and through my own work, trying to create companies like the Long-Term Stock Exchange to try and do something about it.

But one of the reasons I wanted to write this book was that I feel like we’re fighting against a force. In the book, I call it the force that no one controls but everyone obeys. Something we can’t quite name. We can’t put our finger on it. We don’t even know what it is. And so I’ve said that until we bring these ideas into the light, until we learn to see these forces and understand their fundamental laws, only then will we be able to find a path forward, a blueprint to build organizations that can resist this force.

So yeah, a little bit of all the things, and that’s why it took me such a long time to write it.

Ellen McGirt: How long did it take?

Eric Ries: I’ve been working on it for years. I don’t know, three years at least. But the events described in the book are really, as you said, a capsule of my life over the last 15 years, since The Lean Startup was written.

Ellen McGirt: So let’s go into the abyss together. Shall we start there?

Eric Ries: Oh, sure.

Ellen McGirt: So there are three sections that really help us understand the situation that we find ourselves in. And you start by making sure that we understand that one person’s short-termism is another person’s agility, and it’s the kind of thing that gets you on the cover of business magazines all the time. Feel free… I’m in the mix with you. But you call it financial gravity, when really it has a much more established word that we don’t use very much anymore, which is corruption.

Eric Ries: Yeah. It took me a long time to work up the courage to put corruption right in the title of the book, and to call this thing what it is.

And the realization I had… if you talk to ordinary people, not people in the business like we are, any ordinary person, and say, “Tell me a story about a favorite brand of yours, or a favorite company, that got taken over by private equity, or that went public, or got acquired by a bigger company. Can you think of one? Can you tell me a story about a time when, given the vast financial resources of the private equity firm, surely the food got tastier and the product got better, the quality was improved?” They just laugh in your face. “Are you kidding me? No, I can’t tell you any stories like that, but I’ve got plenty of the other kind.”

We just live with this all the time. We watch our favorite companies, our favorite brands, the places we work, have these moral, financial, and sustainability collapses right in front of our eyes, and we don’t have a word for it. We can’t call it anything. We can’t even talk about it, ’cause we don’t know what it is.

Was it mission drift, like a navigation error? No. Is it bureaucracy? Give me a break. What is it? And I finally had the insight that our grandparents and our great-grandparents would not have found this conversation difficult at all. They would’ve said, “Oh, that’s corruption. Thanks for mentioning it. That’s really terrible.”

And our modern sense of the word corruption is so catastrophically narrow. It’s been narrowed down to a very small set of financial crimes, and it’s being narrowed more every day, because now you can commit those crimes and get away with them. So what does it even refer to? I don’t even know. We’ve lost the plot completely.

And I realized, think of it in the original sense of the word corruption, which is more like corrosion, a word we still have. Imagine a bridge collapses because the metal bolts got corroded. It’s a creeping physical decay within the bones and sinews of the thing that we build. Once you learn to name it, you see it everywhere.

And the book is structured like a double mystery. The first mystery is why do we tolerate this? So many of the stories in the book, going back 200 years, are stories of companies ruined by their own investors, who had a profit motive for them to keep being great and yet chose instead to destroy them. Why does that happen? That seems strange. Why would investors want to destroy the golden goose?

Why would you kill it? It’s laying you golden eggs. We’ve been telling that fable for thousands of years for a reason. So why do we do that? But the second mystery, I think, is the one that’s even more important for us to grapple with. Again, if you talk to normal people and ask them, “Why did that happen?”…

And since the book came out, it’s only been out a few months, but already I’m starting to be the go-to person in a lot of people’s lives to send their corruption stories to. So my inbox is now overflowing with people saying, “Surely you know about this company.” I’ve been researching this topic for literal years, and no, I haven’t heard of it. I’m like, “That’s a new one. I’m adding it to the list.”

Ellen McGirt: That’s depressing.

Eric Ries: It’s incredible. One of the most recent ones someone sent me was a tortilla company. Go on the Reddit forums for any of these companies and you can find the customers up in arms about how the tortillas are disgusting now and they don’t taste good. It’s this predictable pattern.

If you go on those forums, or any of these places where people talk about this, everyone says this is inevitable. Why does it happen? It’s inevitable because money’s involved, because of human nature, because of greed, because of quarterly capitalism, because of the public markets, because of this, that, the other.

But the second mystery in the book, the one I think is the most important for us to grapple with, is if this is inevitable, why are there exceptions? ‘Cause if it was inevitable, there would be no exceptions, and yet there are many. We interact with them every day. And most of us could not say why they’re different.

But if you take those exceptions as a class of companies and say, “What do they have in common?” it’s kind of hard to put your finger on it. It’s not really their values, ’cause they have very different values. It’s not their culture, or the country they come from, or the decade they were founded, or how old they are. Some are decades old. Some are hundreds of years old.

What do they have in common? The one thing is that they violate our modern best practices around governance. The ones that are public routinely get the worst possible score you can get from governance ratings agencies. In fact, since 2008, and the data set’s getting pretty big now, companies that have been rated as having bad governance have outperformed companies rated as having good governance. So what are we doing here?

So once you have that realization, you start to ask, “Where did these best practices come from? Why do we show obeisance to them? And why are the alternatives so little known, when they’re old, they’re established, and they have whole branches of academia that study them and their performance?” To me, that was all part of the stew to answer these mysteries. That’s how the book is organized.

Ellen McGirt: So we should probably talk about the governance piece, which gets us to section two, the blueprint: how to build with structural integrity. And you give us quite a few examples. I had not heard of Devoted Health before. It’s a wonderful, love-driven healthcare company that serves seniors, which is nice, since the connection to Medicare makes building fairly straightforward.

And yet it’s the counterpoint to the private equity nursing homes, which are destroying the families and the wellbeing of families, and they’re distributing it for parts. What is the governance difference there? And one of my favorite lines in the book is how you define profit in this section.

Eric Ries: Sure. Okay, so part one of the book is called The Shape of the Abyss, so you can see where my head was as I was writing this thing.

And I promise, I was like, “I’m not gonna sugarcoat this for anybody. I have been to the belly of the beast, and this system that we’re all complicit in has terrible moral failings.” And for most of us, it’s psychologically comfortable to think that this is inevitable, because then we don’t have to reckon with the fact that we’re complicit in it.

So I just wanna put that out in the open and recognize that for most of us, that is a deeply uncomfortable conversation. Me too. In fact, I’ve even had quite a few mission-driven leaders who were test readers of the book react very negatively to it, because they were like, “Wait a minute, are you saying that I could have done differently, and therefore it’s my fault all these horrible things happened? I don’t really like that part of the book.” So yeah, sorry.

But I really wanted the book to be hopeful, because I do believe it is possible to get ourselves out of this mess. When I first started working on these issues, I thought it was gonna require some kind of massive intellectual breakthrough, to invent new forms that are unheard of.

But no, it really isn’t. What’s happened is that our governance class has been captured by a set of ideas which you’re all very familiar with. You all know the history of shareholder primacy, I presume. You all understand the catastrophe that that idea has become, and we understand that that is the moral contradiction at the heart of the ESG movement.

Because what governance best practices have actually produced good environmental or societal outcomes? Our governance best practices are designed to create weak companies that are extremely vulnerable to outside pressure, therefore lacking in integrity, therefore subject to this kind of collapse.

So if we want to build organizations that can last, that have what I call the architecture of institutional longevity, we need a new idea of what it means to have good governance. In the book, I lay out four criteria for the new governance. Compliance, just like before; that’s of course important.

The second is purpose, which you’re all very familiar with, but I think we have to think much more radically about that. We’ll get back to the very definition of what it means to be a for-profit company in a second. But then we add two operational disciplines to governance. One, coherence: to what degree is every resource that an organization controls directed towards achieving its purpose?

And then last, integrity. Structural integrity: to what degree is it capable of resisting both external pressure and the internal temptation to betray its promises? And when you start to see governance in this way, the blueprint becomes clear, both for how we have to change how we teach leadership on the inside of organizations, and how we have to change how we teach governance, the structure on the outside.

So maybe we start with the definition of profit, because what’s interesting to me is that when we talk about these issues, it sounds very philosophical and abstract, but I am not interested in abstraction. My job every day is to counsel people who are trying to build companies. So this is not an abstract debate to me.

This is highly practical. Literally every day of my life, someone calls me up and says, “I need your help,” whether they’re starting a new company, revitalizing an old company, or protecting a company that’s planning to go public. I did three of those phone calls yesterday, during the lunch break of this conference.

And so I need to be able to tell people what to do, and yet these seemingly abstract choices we make have tremendous consequences. So let’s take what it means to be a for-profit company. What is a profit anyway? Most entrepreneurs, you ask them this question, and it’s like, “Duh, that’s the most obvious thing you’ve ever asked.

Of course I know what a profit is. I run a for-profit company. It’s how much money is left over, right? Revenue minus expenses, very simple. I take a fifty-dollar piece of wood, I make a two-hundred-dollar table out of it. I make a hundred and fifty dollars of profit.” But as you all know, and I don’t have to belabor this point, but let’s just quickly review…

Take an Econ 101 class, or maybe an Econ 201 class, and you will discover all the problems with this definition. What about a Ponzi scheme? Is that profitable? No, of course not, because of deferred liabilities. Oh, I see. So when we said it was simple, what we actually meant was revenue minus expenses minus deferred liabilities.

Got it. What about negative externalities? What if I pollute the river and the people downstream get sick? Have I created more value, or have I just shifted the expenses onto somebody else’s balance sheet? Is that really a profit? No, of course not. Ah, I see. So the simple definition is actually revenue minus expenses minus deferred liabilities minus negative externalities.

But what about the input factors of production? What if I steal a two-hundred-dollar piece of wood and make a one-hundred-dollar table out of it? Have I made a profit? Most people will be like, “No, of course not, ’cause you stole. And you won’t get away with it.” But again, imagine I did get away with it.

Did I make a profit? Again, most people have this intuitive sense that no, that’s not right. It’s like a kid who gets $200 worth of organic lemons from Whole Foods from their parents, opens a lemonade stand, makes $25, and thinks they made $25 of profit. No, we understand that we have to account for the true value that was destroyed in the making of the thing.

Okay, so it’s very simple. Revenue minus expenses, minus deferred liabilities, minus negative externalities, minus the input factors of production. But what if one of the input factors of production is a human life? What if I make money by murder? Is that profitable? Most people will be like, “Well, but that’s illegal.”

Ah, but what if I made so much money doing that that I could make it legal? Now is it profitable? “It’s profitable, but unethical.” People struggle with this so much, because they don’t wanna call it profitable, because of course we know a human life is precious, and making $100 from murder just can’t possibly be right. The whole enterprise collapses.

So in the book, I say, look, if we all carry this intuitive understanding of profit, that it’s supposed to be about creating more value than you capture, why do we nonetheless show obeisance to this formal definition, which is so flawed? Why don’t we use a better definition, one that’s more aligned with what I call the builder’s intuition: the idea that to make a profit is to maximize human flourishing? So simple. So much easier. And we have the tools to measure it. Don’t worry, there’s a whole chapter on how it can be measured.

When you do that, a lot of these problems go away. We’re able to unlock things that today we find impossible. For example, many mission-driven companies that I work with can’t decide whether they should really be incorporated as a for-profit or a nonprofit. That’s because that category makes no sense when you see the definition of profit properly.

Nonprofit versus for-profit is an arcane element of the tax code. That’s not fundamental. What we should be thinking about is that today, most nonprofits are fundamentally self-controlled, or autonomous, corporations. And today, most for-profit companies are investor-controlled companies. What most of us really wanna build is what I call mission-controlled companies.

What would it be like to build an organization where the mission is truly at the center, taking that purpose pillar of governance and reclaiming it from the idiots who turned it into shareholder primacy, and saying, “No, almost every organization that we admire has extra-financial concerns at the core of what they do”?

And they’re very different. It could be sustainability, I’m sure, for many of you, but even something as simple as, I just wanna build a quality product. I just wanna make my customers’ lives a little bit better. I just wanna make tortillas that taste good, for God’s sake. Even that simple commitment makes you a business revolutionary, whether you admit it or not.

So why don’t we acknowledge that that is the reason why we form corporations in the first place? In fact, prior to the 1980s, for the hundreds of years that we’ve had joint-stock corporations, every person on this planet thought it was completely obvious that these things were far too dangerous to be incorporated and allowed to exist without some level of public purpose to bind them.

So we’re not the revolutionaries here. We are trying to restore what was seen as common sense for how long?

Ellen McGirt: Judy needs a hug.

Eric Ries: What’s so funny to me about this… Judy, God bless you, right? Thank you for carrying this torch for such a long time. This is not a new idea. There’s nothing new here at all. But we have to make it practical for people to implement, and the vast majority of people that I meet have never heard of any of this.

They’ve never heard of B Corps. They haven’t heard about any of our capitalism reform organizations. They don’t know what ESG is, other than a bunch of forms that people send you to fill out. They have zero awareness of any of the alternative forms that have been driving this change for hundreds of years. So we, as a class of people who want to advocate for these changes, have failed them, and it’s time for that to stop.

Ellen McGirt: You okay, Judy? I told you the book was emotional.

Eric Ries: I’m sorry.

Ellen McGirt: No, it’s wonderful. I wanna ask about some of the work that people in this room do as internal change-makers in particular, or wayfinders, to use Linda Hill’s really helpful term. Innovators looking to find a way within a broader umbrella that may not fit the definition of a company focused on maximizing human flourishing, which is a phrase that you worked very hard to find. How can teams like many of the people here thrive within an organization that may not have the same kind of coherence? Is that even possible?

Eric Ries: Yeah, it is, but most people don’t like the answer. Financial gravity is a psychological force. It is a mechanism for transmitting values from those who have resources to those who want resources.

That’s how it works. We can get into the mechanism of it if you want, or obviously, you can just read the book. Again, this is not my original contribution. This is well-established research. What happens is when you enter into a corporate hierarchy, you become subject to its gravitational pressure.

And because the value transmission is unconscious, your values change without you even being aware of it. I have watched this happen. I have watched people rise through the ranks of the most elite circles that our world can provide. And if you ask them, “Have your values changed now that you’ve become a centimillionaire or a billionaire?” they’ll be like, “Of course they haven’t.” But if you point out things that they used to do that they don’t do anymore, the cognitive dissonance of it is too hard, so they’ll just align.

So the first step is simply to become awakened to our own power. Gravity is not a law of nature; it is an artifact of human systems. What values are transmitted is a choice, not an inevitability. And so whenever we show our compliance to one of these systems, we lend our gravitational weight, as large or small as that may be, to those systems of value.

Maybe in this room it’ll be very obvious, but people listening to the podcast may not know this. Most people cannot fathom how obsessed modern corporations are with what you will or won’t do, and what they can get away with. “We make the product a little worse. Will they still buy it? How about now? How about now? If we treat the employees a little worse, will they leave? How about now? Oh, went a little too far. Let’s back it off a little bit.”

The addiction that companies have to these metrics, to ROI thinking, to quarterly reporting: this is an addiction, and they are as addicted as any smoker to getting you to do what they want. In fact, in our modern world, in the era of surveillance capitalism, there is no decision you can make that is small enough that it’s not some middle manager’s OKR somewhere in the world to make sure you do that thing, or someone else’s responsibility to make sure that you don’t.

Every choice sends gravitational ripples out into the world. Now, we’d normally frame this as a collective action problem, as if there’s no point in doing the right thing unless you can be assured that other people will also do the right thing. That’s fine, but I think it misses the point.

Each of us, in the hierarchies and structures that we’re in, is faced every day with these choices. Are we going to go along with it, align with it, or say something different? Most of us secretly hope that our organization will do the right thing when the time comes, but we’re waiting for it to happen.

And having written the book now, I’ve seen how people react to it. A very interesting reaction I get from a lot of OGs in different fields, including, interestingly, in the design field, has been people writing these incredible reviews of the book, for which I’m incredibly grateful, that say something like, “I’ve watched this happen over the course of my career. I never knew we had any chance to do anything about it. I always thought it was inevitable. This book has given me great hope that there’s a new way forward. I sure hope people listen to it, and I sure hope this turns out to be right.”

And it’s such an interesting way of saying it. You who are writing this review, you who are listening to me right now, some of you are saying, “I sure hope this wins.” But you have a role to play in making that happen. I’ve done my part. I’ve done all that I can. What happens next is whether people say, “I will will this into reality by acting in accordance with these principles,” or not. If you wait, and everybody else waits, it doesn’t happen.

Have you noticed that our enemies don’t seem to wait? They just go do whatever they wanna do. And they make every possible effort to create incentives and rewards for those who ally with them, no matter how temporarily, or in however small a way. Whereas we like to police the purity of our allies and fight with them. So each of us as individuals has a chance to ask these tough questions and insist on these standards in our own everyday work.

Can I give one example?

Ellen McGirt: Of course.

Eric Ries: A young person came to me after reading the book, and they said, “I’d like your advice about how to be an advocate for these ideas, but I want you to know that I don’t have any courage. I need a job, okay? I’m doing job interviews. I need a job. Do you have a no-courage activism recipe for me?” It was almost like asking for a no-bake cookie recipe.

And what’s funny about this is that, having mastered the principles in this book, it was easy for me to answer this question. I said, “Here’s what you’re gonna do. You’re gonna go to a job interview. At the end of the interview, they’re gonna ask you, ‘Do you have any questions for us?’ Everyone knows you’re supposed to say yes. Your question’s going to be, ‘Is this a mission-driven organization?’ What are they gonna say? Of course they’re gonna say yes. You’re like, ‘Great. How do you know?’

‘Oh, well, we give free T-shirts to the poor,’ or, ‘We have free beer on Fridays,’ or whatever they say. Be like, ‘Awesome. Is that also in the corporate charter? Is that our legal purpose, or just our mission statement?'” Now, 99% of the people you ask this question to will have to say, “I don’t know. Good question.”

Now, many of you have been involved in designing modern employment processes. You know that in a modern recruiting process, there is somebody whose job it is to make sure that any question a candidate might ask in an interview gets answered. We have to have a list of the answers to these questions.

Some of you have had the job of compiling this list. So if you ask this question, I guarantee you just made it somebody’s problem to find out the answer. She’s gonna have to ask her boss, “Hey, what is the answer to this question?” And her boss isn’t gonna know either. So she’s gonna have to ask her boss, and he’s not gonna know.

I have actually sat in board meetings where this kind of stuff comes up. “Hey, we’re getting this question from candidates. What is our answer?” Now, look, maybe they won’t care and will be like, “Well, so what? Who cares?” But every once in a while, you’ll have a CEO who’s been looking for a chance to become a public benefit corp.

And they’re like, “Ooh, here’s my chance to get my board to do the right thing for the wrong reasons.” We love that for some reason. Tell people we should do something ’cause it’s morally right, and they’re like, “Blah, blah, blah.” Tell them they can get an economic advantage from doing the right thing, and it’s like, “Ooh, tell me more.” Okay, I don’t care. Do the right thing. I don’t care why.

So you can actually move whole corporations just by asking one correct question. That’s if one person asks. What if two people asked? What if the people who already work there asked? It doesn’t take that many people before this becomes a problem.

And so every chapter of this book, every technique that I advocate for, is designed to be used two different ways. You can use it yourself as a leader: “Here’s a leadership technique, a cultural principle, a business model.” There’s a lot of practical stuff in the book you can use, I assure you. But another way to use it is as an employee, as a consumer, as a board member, as an investor, to say, “I’m gonna condition my support on getting satisfactory answers to these questions.”

And the next time someone claims to be mission-driven, you can call easy bullshit on them. Say, “No, no, you’re more like mission-hopeful. That doesn’t count.” Or maybe you’ll meet the real thing. I document many companies in the book that are the real thing, and there you’ll actually know that it’s real, and you’ll be much more confident in aligning your gravitational force with theirs.

Ellen McGirt: You are a natural movement builder, it’s so clear, and so are so many people in the room here. As a governance nerd, I love the fact that you are now sort of the face of this. But I have to ask the most business-and-society question there is. You tell a harrowing story about the founding of the Long-Term Stock Exchange, and I know that you put everything into it. That story alone is the price of admission.

Eric Ries: Thank you.

Ellen McGirt: But my question, which I know you’ve all wrestled with, is can we really get there without taking on executive compensation and stock options?

Eric Ries: No, obviously not.

Ellen McGirt: Is the charter gonna be enough?

Eric Ries: No. And the tricky thing is, being a business author in our highly polarized age sucks for a lot of reasons. One of which is that people don’t feel good about business anymore, so books are taking their business sections out, because nobody wants to be seen browsing the business section anymore.

I learned, by the way, that in Menlo Park, California, at Kepler’s Books, where I did an event, they have a huge problem with people stealing books. People steal books from an independent bookstore. I asked them which category has the most theft. You wanna guess? Business. In Menlo Park, California.

Ellen McGirt: Good God.

Eric Ries: Good God, right? What is this world coming to? Anyway, the problem is, as a business author, if you say anything good about any company, people consider it a gotcha if they can ever find an example of that company doing anything bad. And it’s like, well, I didn’t say they were perfect, God’s gift to humanity. And conversely, if I say something bad about a company, they’ll be like, “But they saved a puppy one time. Gotcha.”

We’ve gotten to the point now where we can’t say that a company did the right thing unless we agree with them one hundred percent. Can you find me two people who agree on anything one hundred percent? It’s gotten completely out of control. So we have to develop a much stricter definition of what it means to do the right thing, and here’s my proposal to you. A company is doing the right thing if, first of all, it acts consistently with its own values, if those values are aligned with human flourishing, and if it has the strength to stand up for itself when someone tries to bully it.

Think about Costco resisting that ridiculous DEI thing not that long ago. Costco has millions and millions of retail shareholders, as I’m sure you all know. Think about how many cities and political environments Costco operates stores in. When they ran that anti-DEI campaign against Costco, Costco got ninety-eight percent of the vote in its favor.

Are you telling me that 98% of people who shop at Costco are woke? Give me a break. No, obviously not. There must have been millions of people who probably don’t love DEI that much who nonetheless said, “The real question is who gets to decide?” They were voting for Costco’s autonomy to make this decision in line with its own values, even if they disagreed.

You see that pattern over and over again with organizations that have the strength to resist, to stand up for themselves. We don’t have to agree with them 100% to admire what they do. So I just think this is an underappreciated force in the world that we have to tap into. Is it enough? We don’t know.

But it only took us a few generations to get into this mess, so I refuse to believe that it’s permanent. Our grandparents lived in an economic reality unrecognizable to us, and so our grandchildren could inhabit an economic reality unrecognizably different from ours. So I don’t care what our probability of success is.

I think it’s a waste of time to ask. No one has any idea. Until we try, we won’t know. My personal experience with this system is that it’s a fricking paper tiger. Its intellectual contradictions are causing it to collapse left and right, so why be afraid of it? But, you know, it’s easy for me to say. They tried to kill me, and I lived through it. You can read the book and find the story.

But when I look back on it, I think that we are spending so much time debating the merits or the moral center of shareholder primacy and these other idiotic ideas that we’re not spending enough time on what comes next. I actually think the era of shareholder primacy is already over, because the idea was that it was supposed to be beneficial to investors, and it isn’t.

The data shows it. There’s a whole chart in the book called Best Practices Destroy Shareholder Value, not according to me and my opinion, but according to the vast body of academic research that has been done, thankfully, over the past decades to demonstrate how insane this whole system is.

So we’re more in the era of extraction primacy now, which is not good for anybody. And if you talk to young people, they’ve had it. So I don’t think there’s any question about whether we’re gonna continue with the status quo. It is totally unsustainable and, again, mired in its own contradictions.

We have to be focused on what comes next. I suggest mission primacy as the next era we should be working towards. And will it take us a year, or a decade, or a hundred years to get there, or will our civilization collapse before then? I don’t know, and neither do you. But what’s the alternative?

Ellen McGirt: Thank you, Eric. We’re about to go back off the record and give you a prompt to spend some time reflecting on this conversation, and your role in the world, and all the things. Just as a reminder, Eric is gonna be signing books, so you can continue the conversation with him after that. And thank you so much, as always, for your kind attention, and for all you do for the world.

I thought I would give you a chance to give us just a nugget along the lines of courage. As I mentioned, I was listening to your book when I was in Louisiana doing some reporting that really matters to me, for a podcast on voting rights, and I was in Cancer Alley.

So it was a different kind of dystopian listen. The first time I toured Cancer Alley, I was listening to Parable of the Sower, so I thought I’d listen to a business book this time. And yet it was the same thing. It’s the greatest concentration of petrochemical plants in the world. Generations of Black families poisoned, and there are these two little families fighting these big corporations, and sometimes they’re winning, but mostly they’re dying.

And I’m thinking to myself, “My God, business is defined by people deciding not to care who they hurt.” So that stuck with me. And of course, in the book, you end up in a much happier place. But given that that’s true, that humans are challenging animals, and that courage is required to even ask the question, can you give us just a quick “Here’s what you need to do to keep going”? Eric, please save us. The moderator needs a hug now.

Eric Ries: Yeah. I feel like this has been kinda negative in tone. But you know, we’re living in a reality that our grandparents would’ve called dystopian and unrealistic if you’d written fiction about it. But no, I remain very hopeful, and it is precisely because of this.

If you talk to the academics who study these problems, so many of the things we consider absolutely irreconcilable, impossible problems that nobody knows how to solve, corporate structure, executive compensation, mission longevity, environmental sustainability… There are so many problems that we view as intractable where, if you find the person who’s been studying it their whole life, they’ll be like, “Oh, this is a solved problem. Everyone knows that.”

And you’re like, “Everyone knows it?” “Well, in my field.” “Ah, I see. Does it bother you at all that none of the practitioners seem to know about this?” They’re like, “Not really. That’s not really my responsibility. My job was to find the solution, and we have the research. Maybe you can do something about that.” It’s been a very surreal conversation.

So there’s issue after issue after issue where we actually do know what to do. I’ll just give you one example. One of my favorite facts in the whole book is about companies that have the industrial foundation structure. This is like Novo Nordisk, where a nonprofit serves as the mission guardian for a for-profit subsidiary.

There are enough of these companies in the world that they form a dataset, and we can ask how they perform. Such companies are five or six times more likely to live to year fifty compared to conventional structures. Yet when founders are starting companies, if they’ve even heard of this, which most have not, and they have the temerity to go to their investors or advisors or bankers or lawyers, this vast array of people who advise them, and say, “Hey, I’m thinking about doing that Novo Nordisk thing,” can you imagine the disdain that this is met with?

“That’s a ridiculous, radical, new, wonky idea.” New idea? The German optics company Zeiss had this structure in 1885. [Editor’s note: The Carl Zeiss Foundation was established in 1889.] Just ’cause it’s new to you doesn’t make it new. And yet we don’t teach people to do this. Whether I’m talking about Hershey Chocolate or Vanguard or Patagonia or the John Lewis Partnership or Mondragon in Spain, I could do this all day.

Companies that you’ve shopped at, like REI or IKEA, have this weird structure, and yet we treat it like an unattainable thing that we’ve grandfathered into the modern economy, but we don’t do that anymore. Why? Why not? We know the answer. We know how to do this. All we have to do is have the courage to say that we will do what has been proven to work, instead of these so-called best practices that have been proven not to work.

It’s not really that complicated when you get right down to it. So I leave it to you to make that choice, if you will.

Ellen McGirt: Thank you, Eric. Thank you so very much.

Eric Ries: Thank you. And Ellen, thank you.

Ellen McGirt: Oh, my pleasure.