It's been fifteen years since I wrote The Lean Startup, and in that time I've seen some things. In both big companies and tiny startups, NGOs and governments, in almost every industry you can name.
I've helped a lot of people create a lot of amazing companies, but I've also seen so many ways this can go wrong. There's a darkness in our industry that we often don't talk about.
I kept watching good companies drift away from the missions they were founded on. Not because anyone woke up one day and decided to be evil, but because the structure they were built on slowly pulled them there. I call that pull "financial gravity."
We've all experienced watching a company we love or admire be warped and broken beyond recognition; until it's a husk of its former self, or worse. I wanted to understand why. And I wanted to know what all of us can do to stop that from happening.
My new book _Incorruptible_ is my attempt to explain the invisible forces that shape organizations, and how a handful of companies (like Costco, Patagonia, and Novo Nordisk) have successfully been structured to resist gravity and thrive for decades -- or even centuries.
Along the way, I founded the Long-Term Stock Exchange, co-founded an AI R&D lab called Answer.AI with Jeremy Howard, and helped a number of notable companies with their governance (yes, including Anthropic).
I won't pretend I have this all figured out, but I've probably spent more time than is healthy on the "why do good companies go bad" question. Ask me anything!
https://www.harpercollins.com/products/good-to-great-jim-col...
I wrote a blog post called "Revenue Model is More Important than Culture" (it made the #1 spot on HackerNews a few years ago) arguing that the way to avoid that corruption is by making sure the business model is immune to it, but having read your thoughts, I'd say your argument (structure being the dominant term) is even stronger.
"I came to (Jim Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty," Jelineck recalled[..]. "We are losing our rear ends.’ And he said, ‘If you raise the effing hot dog, I will kill you."
That's not structure, that's leadership. They were about to change the price, but one guy at the top with authority and an opinion said no. You could say "it's structure" that there was one guy at the top with authority, but it still depends on him having the right opinion. You need both a good structure and an unwaveringly idealistic (and correct) leader.
Yeah, there's no rule structure that can't be skirted and subverted by new owners with different objectives. The most resilient way to preserve your values is to:
Your successors don't need to be your literal children, but if you turn your company over to "strangers with money" you can't be surprised when they do what they want with their new possession.You can also see the various accolades, reviews, and awards that it's accumulated so far.
I listened to a podcast interview you did where you talked positively about the Novo Nordisk Foundation as a successful governance story, but when I think of long lived foundations, I think of the Ford Foundation and the Hewlet Foundation that have significantly drifted from the founders' visions despite being non-profits. Many people think it is better for foundations to spend down all their resources before the founder is gone to prevent this drift and loss of efficacy.
Have you done any studies of what made long lived foundations drift on their mission despite no profit incentive?
One question I have for you is on finances, I think that still remains an afterthought in startup hustle culture, and perhaps even by design, I feel like the system is designed so that VCs keep winning and founders rarely get the exit they deserve. What is your take on that?
That and, don’t accept money from strangers. :)
You're quite right. There are many, many problems with the current "best practices" including that many founders wind up with nothing even if the organization succeeds. In fact, one study I cite in the book found that something like 80% of founders of venture-backed companies will no longer be CEO even three years after an IPO.
Do you have any recommendations for entity formation infra that caters to mission driven companies? Something like Stripe Atlas that can form the more complex structures? Forming a PBC is becoming more standard but tthe other structures seem more esoteric (and expensive).
What do you think an experiment needs before it can actually be called learning? And what kinds of product questions should not be done as experiments at all?
By contrast, I can say pretty much anything about Facebook and nobody seems to care. Yet, if you go back and read their S-1, you can see how they very much wanted to be seen as the mission-driven good guys.
It's all quite sad, really. There are plenty more stories of corruption in the book. To be honest, it was a challenge to avoid having the whole thing read as bleak given how pervasive this corruption is today. I did my best to balance it out. You'll have to let me know if you think I got it right.
Can you say more about this? Do you think those tender feelings towards Google track some strain of values which Google still carries? Or does this statement reflect some fear of retaliation or conflict that would drown out the rest of your message?
Genuinely interested in how you think about this, especially in the context of this new book’s topic. Thank you for this AMA.
The idealism that has been sucked out of the tech industry. It was so (naively) hopeful at one point, and now the arms race and profit-maximization has eroded it all. Your observations really resonate with me.
I'm surprised I hadn't heard of the Long-Term Stock Exchange, it seems like a much healthier direction for the market.
This mean you are now under gag order as you rise on the bestseller list? :)
Lean Startup is awesome, can’t wait to read your new. Excited to read about the ostensibly-not-evil Costcos of the world and hope the smartest & wealthiest amongst us grok it, that we win more when others win.
How much do you blame our values of our society for creating corrupt businesses? Are corrupt businesses just a mirror of our own values?
How do you think Lean Startup principles could be applied to ordinary families looking to navigate the existing economic stresses we're experiencing?
I've been a bit reluctant to over-generalize from my own theories, and so am not sure I would want to speculate about how to apply them in a family context.
I'm curious if you think cooperative businesses leveraging non-voting preferred shares, community shares and other coop investment instruments are more resilient against this type of corruption.
I'm wonder how you see the tradeoffs these models have against traditional LLC/VC models and how you would mitigate them.
I address your question in much more detail in the book, using examples as varied as Mondragon in Spain, John Lewis Partnership in the UK, and Vanguard and credit unions here in the US.
We actually have pretty good evidence that these other structures are more resilient and more stable than the classic "best practices" we have all been indoctrinated into.
Unfortunately, most of us have been told that these approaches are incompatible. You either go "big" and try to make a lot of money, have investors, have a grand vision, etc. Or you go "small" and do something "ethical" and non-extractive. So many of us have been taught that it is the fate of the small to be destroyed by the big, since they are more ruthless and more powerful.
But the evidence doesn't really support this just-so story. My goal with the book is to help those who want to build mission-driven companies to realize that this is a source of strength, not weakness, and act accordingly.
This is the comment I came here to read. Thank you, I already have a copy of the book and intend to dig in more on these themes specifically.
I think we need a "middle path" culture that finds a good balance between these pressures and values.
Let's say this has already happened and ossified across large, formerly-innovative companies that now have so much size and inertia behind them that it might take decades for one to "fail" in a traditional sense. What can be done to reverse the process?
Unfortunately, a lot of leaders who do have the moral authority and power to attempt such a thing do not really know what structural changes to demand. in fact, they tend to focus on the typical management/leadership stuff: business model, org chart, strategy, vision. These things are important. But there is a deeper layer that tends to get overlooked or ignored: structure, governance, boards, the relationship with investors.
In the new book, I try to tackle both topics in a new way, so that future leaders will know what to ask for when and if they have the opportunity to try.
Example of a company where this has happened?
Corruption = the symptom Gravity = the force that causes it
In the book, I give the example of a bridge that collapses. If you ask an engineer "why did it collapse" you'll be annoyed if they say "gravity" even though that is technically correct. If we go examine the wreckage and notice that the metal bolts have been corroded beyond recognition, we can start to think through what went wrong and what to do about it going forward.
Sometimes clients asked IDEO to design under this shitty-MVP model (we generally refused), other times we were brought in to clean it all up.
Why do you think the concept of "MVP" was almost universally misunderstood? And, thinking about Incorruptible, how did the best companies out there internalize it?
and since everyone widely agrees that what we are attempting is "impossible" I am pretty impressed that we've managed to make any progress at all :)
I understand the idea that they were after, but it seems like they could have wrapped that up in an ETF.
I've noticed that VCs try very hard to separate the world into "VCs + founders" and "everyone else" and that the more time a founder spends in the VC+founders bubble the more distorted their worldview can become.
Of course, many of the tactics and examples in the book are now a bit dated, so if I did an "AI edition" I guess we would update it with new stories and new tips on how to use various AI-powered tools to accelerate. But I think the principles have stood up pretty well.
But a great mission generally combines three things: 1. a long-term commitment to maximize some aspect of human flourishing (in the book I explain how this is the true definition of what it means to create a for-profit venture) 2. a set of values that include a determination to make principled decisions aligned with this goal, such that every decision the org makes is coherent 3. the strength to resist both the inner temptation and the outer pressure to defect, betray, or otherwise abandon the long-term goal
In the book I go into a lot more detail about how to do this, including how to make fiduciary commitments to the human beings you'd rather die than betray.
How does this square with the widely taught business-school definition of a for-profit entity being something that aims to maximize shareholder value?
Let me clarify one thing, though, which is that when we call a company "good" or "bad" we can't mean something like absolutely good or evil. No human enterprise can ever be truly perfect.
So, rather, we have to identify what an organization is trying to do and whether the means it has chosen are actually appropriate to that goal. Then we can judge if the goal is aligned with human flourishing (good) or not (bad), and whether the org is consistent in pursuit of that goal (good) or not (bad), and whether it has the strength to continue (good) or not (bad).
> We've all experienced watching a company we love or admire be warped and broken beyond recognition; until it's a husk of its former self, or worse. I wanted to understand why. And I wanted to know what all of us can do to stop that from happening.
Those who can do, those who can't teach?
I wanted a word that was much broader, capturing how this tech behavior is one symptom of a larger illness that has been afflicting our economy for some time. So I settled on the old-fashioned term "corruption"
https://medium.com/eric-ries-stewed/sympathy-for-the-devil-i...
I spoke to Ries in 2024 (he's a former investor of mine) about the genocide, and he used every pro-Israel trope ("oh, it's so complicated") to dissuade me from speaking about it.
If you publicly are shilling for a state that has for 76 years committed massacres against Palestinians, you don't get to be the voice of "why good companies go bad".
That is deeply disappointing.