Eric Ries. Why Building Again Can Be Harder After Success

Sep 6

Written By Anastasia Koroleva

Episode - 61

Building a second company after a successful exit can look easier. You have experience, a network and financial freedom. But one of the forces that carried you through the first company may no longer be there: financial necessity.

Eric Ries, author of The Lean Startup and Incorruptible, joins Anastasia Koroleva to examine what changes when founders build again after success. They discuss why the motivation that worked the first time can stop working, why experience does not automatically become useful learning, and why founders can leave a difficult exit with a story about what they personally did wrong without changing the structures that allowed it to happen.

The conversation also gets into fear of failure, experimentation and first principles in Post-Exit life, what repeat founders fail to preserve from their earlier success, Eric's idea of “financial gravity,” why values eventually need structural protection, and how metrics can become false proxies for what we actually care about.

Later, Eric and Anastasia discuss another question that becomes more relevant when work is optional: can we become more content without becoming less ambitious? And how do we distinguish genuine contribution from simply finding another form of status?

What We Discussed:

0:00 - Introduction

1:54 - How Lean Startup changed Anastasia's second company

4:24 - Eric Ries on what success actually means

8:10 - Selling a company, loss and the urge to build again

13:12 - Did successful founders really start only for money?

15:02 - Shareholder primacy and the builder's intuition

21:30 - Why fear of failure blocks experimentation

27:01 - Why experimentation still needs first principles

28:28 - Applying Lean Startup thinking to Post-Exit life

31:12 - What founders fail to learn from a painful exit

34:25 - Are repeat founders actually better?

37:58 - Saul Price, Costco and protecting what matters

42:56 - Eric's four dimensions of governance

48:45 - Vanity metrics and false proxies

51:33 - Writing and teaching after business success

52:20 - Equanimity without losing urgency

55:29 - Contribution or status farming?

1:01:20 - What actually drives Eric Ries

1:03:19 - The founder as conduit, not the whole system

1:07:48 - Eric's contrarian view on AI and human creativity

00:00:00:01 - 00:00:11:18
Eric
Most days I still feel like a failure. I can think of all the mistakes I've made and all the other things I could have done that would be worth so much more money today. Like, I could have been a seed investor in so many companies that are worth billions or tens of billions or hundreds of billions of dollars today.
00:00:11:18 - 00:00:12:16
Eric
And I missed my chance.
00:00:12:17 - 00:00:35:06
Anastasia
Yes, we feel very sad after we sold our business. We want to rush back in. The problem, however, that I found, is that often times when we do rush back in, we do it too early in terms of our own personal and spiritual development. And here's what happens if by that time we are already financially free. Usually I see it about two years into the second business.
00:00:35:06 - 00:00:46:03
Anastasia
When it becomes really hard, people go like, why the hell am I doing this? I can be somewhere on an island, right? So so that financial freedom comes back to bite us because it eats into our motivation.
00:00:46:04 - 00:01:03:03
Eric
The first really big talk got invited to give. I was super nervous. Me in front of 800 people. I had never given a talk to an audience that large ever before in my life. I actually had a moment of crisis right before I realized I had to come up with a reason why I was doing what can justify the suffering that I'm going through right now.
00:01:03:04 - 00:01:24:18
Eric
Why am I doing this? And I thought, okay, but in that audience, if there's even one founder who, because of what I share today, will avoid the pain that I experienced in failing. If I help one person, this suffering is worth it. That was my Northstar. If it helps one person, it'll be worth it. A lot of people who want to become more famous, they want their wisdom to be acknowledged.
00:01:24:19 - 00:01:36:01
Eric
They have to really get clear. It's like, well, are you actually trying to help people or is this just a new kind of status farming for you and a lot of people who become wealthy, they want to be treated with respect. They want to be listened to. They want to have influence. They want to run for office. They need more.
00:01:36:03 - 00:01:54:15
Eric
They already have more money than they can possibly use, but they want more. And I think although those motivations sometimes work, it works out. I think that is a really sad path. So for me, trying to figure out like, who is this for and how can I be satisfied? Even if it fails, quote unquote, I'll still be satisfied because it will have been useful to somebody.
00:01:54:17 - 00:01:58:08
Anastasia
Hi, Eric, and thank you so much for joining me today.
00:01:58:10 - 00:02:00:00
Eric
It's my pleasure. Thanks for having me.
00:02:00:05 - 00:02:07:02
Anastasia
Can I start with a huge personal thank you? Because I literally wouldn't be here if not for you.
00:02:07:04 - 00:02:07:11
Eric
Oh.
00:02:07:12 - 00:02:34:12
Anastasia
Thank you. I read your your first book, The Lean Startup, before I even started my entrepreneurial journey. But I only started applying your wisdom in my second business, and only because I absolutely had to out of desperation. But thank God. And or actually thank you. Not good. I remembered your principles and out of sheer desperation, I started applying them.
00:02:34:12 - 00:03:07:06
Anastasia
And literally the most magical thing happened. So a company that was failing in literally no time turned into this incredible product market fit miracle. And we grew from basically a negative situation onto 15 million in revenue in the matter of months. But most importantly, in this unbelievable place where your customers cannot get enough of your product. And that was literally not because we had some crazy vision, but because we made sure we asked people for what they actually wanted.
00:03:07:06 - 00:03:24:05
Anastasia
And once we've built what customers actually needed, they couldn't get enough of it. So I've been a huge fan ever since I applied, promoted and trained people on the Lean Startup, and I just can't believe I'm finally talking to you. So for give me, if I may be a little bit nervous.
00:03:24:07 - 00:03:27:21
Eric
That's very kind of you. That's very nice with us, and I'm glad you found it helpful.
00:03:27:21 - 00:03:57:09
Anastasia
Extremely helpful. But I also now obviously talk to people who are very experienced founders, and most people in my audience already sold businesses, many of them successfully, and either are on the next venture or thinking of how to approach it and how to think about it. And I know that as any true, truly, you know, powerful thinker, you have done quite a lot of evolution on how you think about things.
00:03:57:09 - 00:04:24:21
Anastasia
And I absolutely loved the things I heard from your recent interviews, and to see how you changed your view on certain things. And I think a lot of it is very much aligned with how I think and how I hope our audience will be thinking to. So I would love us to start with you telling me a bit more about the evolution of your view on success from very personal place.
00:04:24:22 - 00:04:40:02
Eric
Okay. Yeah, I'm getting right into it. Yeah, I didn't understand. When I first became an entrepreneur, I didn't know what entrepreneurship was, so I didn't know what success meant. If you had asked me at the beginning, what does it mean to be an entrepreneur? What a success look like? It was my understanding of it. I was, you know, my first startup was during the.com bubble.
00:04:40:03 - 00:04:55:02
Eric
Okay, that's how old I am. And I was watching TV and Rita magazines and there were all these stories, you know, two kids in their garage build a piece of technology. Something, something, something. Now they have millions of dollars. And I just was like, why not me? That seems like they can do it. Why not me? I would.
00:04:55:03 - 00:05:09:23
Eric
I had no clue what I was doing or even like even as simple an idea as like that. We should really be serving the customer. Who is the customer? I mean, I really didn't know very much about it. You know, I was eager, I was hungry, I wanted to be famous. I wanted to be rich. I wanted to be successful.
00:05:09:23 - 00:05:26:10
Eric
I wanted to feel like the work I was doing was making a positive impact. And what's funny about that is notice how I just said three different things I would have said those are all the same thing. That's what that's that is success. But of course, any of us who's been around this business enough knows that, like there are a lot of ways to become rich without having a positive impact.
00:05:26:10 - 00:05:39:08
Eric
There's plenty of ways to have a positive impact. We all becoming famous. The comedian Bill Murray, I think, is the one who had this famous joke where someone would come up to him and say, hey, I want your advice, I want to become rich and famous. And I'd say, well, why don't you try becoming rich first and see if that does it for you?
00:05:39:08 - 00:06:00:01
Eric
Because there's a lot of downsides to being famous too. Like, anyway, I didn't really understand, and certainly I took it for granted that no matter what form of success you have in a capitalist system, success always means at least that you created value for customers, right? Like you made the world a better place in some way. And that is the older, you know, conception of capitalism that people used to have.
00:06:00:02 - 00:06:25:20
Eric
And we've kind of lost it in our modern economy. In fact, today there are many celebrated ways of making money that our grandparents would have viewed as borderline or actual crimes. So there's a lot of ways to make money without making the world a better place. And unfortunately, I've seen so many companies that started out with that intention to really to do something that is to be of service, to create something valuable, to make people's lives better.
00:06:25:21 - 00:06:53:05
Eric
Who wind up being pulled off course over the course of their life. And I think it's frankly sad, including many people I know who have become incredibly rich and are super miserable. And that's really for me, like such issue with the definition of success. If your people make these terrible compromises to their most precious values in order to, quote unquote, be successful, it works, quote unquote, in the sense that they become successful according to their own definition.
00:06:53:05 - 00:07:10:05
Eric
They make a lot of money, and then they're not even happy. Then what was it for? Like if they made their customers miserable and they made their employees miserable and they made themselves miserable? So I think, yeah, one of the most important things about entrepreneurship, now that I'm a little bit older, I can see how entrepreneurship is first and foremost a truth seeking discipline.
00:07:10:06 - 00:07:25:12
Eric
Like, it's like being an artist or a scientist. It is a way to discover, like what? How the world really works and how it could be changed. Yeah, for the bet. Well, that's that's a choice, you know, as the old internet meme goes, right? You know, you know, the Anakin and Padmé meme and akin says, I'm going to change the world.
00:07:25:12 - 00:07:43:05
Eric
Padmé says, for the better, right? And smiles. And she says, for the better, right. Like that. That is the joke of our time. It's not even really that funny anymore. We seem to have, like, forgotten this simple idea that the whole idea of business is supposed to be that when you make a profit, it's because you have created new value in the world.
00:07:43:05 - 00:08:01:15
Eric
So yeah, as I've gotten older, my definition of success has very much changed. First of all, to have I created value, not just capture, to move it for myself and have I lived a life that is true to my own values? Am I my acting with authenticity and integrity, and therefore does the company? There's the organization that I have birthed.
00:08:01:17 - 00:08:10:18
Eric
Does it reflect that integrity deep in its bones or not? So in the book I write that we birth organizations, we do not own them.
00:08:10:18 - 00:08:14:19
Anastasia
Well, that's why it feels like losing the child when we sell them.
00:08:14:21 - 00:08:32:02
Eric
And that's why the data says something like 75% of business owners who sell their company regret it within one year. And it's why so many people are miserable post exit when they should be. Our modern culture tells you if you make that much money, you should be hanging out on an island. You should be, you know, should be super happy and peaceful and at rest.
00:08:32:02 - 00:08:41:05
Eric
And yet some of those people are back in the studio making a new album as soon as possible because they feel the loss so acutely, they want to recapture. What?
00:08:41:09 - 00:09:03:01
Anastasia
Yeah, it's an interesting dilemma, though. Even even the paradox that, yes, we feel very sad after we sold our business. We want to rush back in. The problem, however, that I found, is that oftentimes when we do rush back in, we do it too early in terms of our own personal and spiritual development.
00:09:03:02 - 00:09:03:20
Eric
We are not.
00:09:03:20 - 00:09:26:12
Anastasia
Ready with the old motivation. And here's what happens if by that time we are already financially free, chances are usually I see it about two years into the second business. When it becomes really hard, people go like, why the hell am I doing this? I can be somewhere in an island, right? So, so that that financial freedom comes back to bite us because it it eats into our motivation.
00:09:26:12 - 00:09:53:16
Anastasia
And what often happens is that if someone by that time has already evolved to the level where they work for meaning and out of the genuine desire to solve problems, then they are fine. Embrace the challenge. But those who haven't done this step up in motivation, suffer, walk away, and then feel miserable because it's very hard to process a failure after success.
00:09:53:17 - 00:09:57:09
Anastasia
Failure after success becomes even even more painful. Would you agree?
00:09:57:10 - 00:10:12:15
Eric
Oh, I've seen that. That so many times. I remember an entrepreneur who I really admire once told me he was talking about a different entrepreneur, but of course what he was saying applied to himself also. So it was like I was like, is he self-aware or not? He was talking about a different, also very successful entrepreneur who had a big success.
00:10:12:16 - 00:10:31:17
Eric
His first company, a big failure, and his second company was starting a third company. And this my friend was saying he must be really stressed out. I said, why? I said, well, depending on what happens with this third company, people are going to judge two out of three successes needs a success. Two out of three failures. Maybe he just got lucky the first time and you could see the stress on his own face.
00:10:31:23 - 00:10:50:11
Eric
He was totally projecting, but he could feel this incredible stress. And I just realized, oh, if you're what I think a lot of founders don't even realize about themselves because a big part. I write about this a lot in the book The Psychology of Being an Entrepreneur, a founder, a leader in our modern financial gravity. Is your own values change unconsciously.
00:10:50:12 - 00:11:06:09
Eric
You don't even realize what it's done to you. So what happens is people start a company, they have this idealism. And when I talk about mission driven, purpose driven, sometimes people hear that it feels very kumbaya, like only a company trying to solve climate change is purpose driven. No, even if you have a humblest possible beginnings, I just want to make a great product.
00:11:06:09 - 00:11:07:15
Eric
I just want to create beauty in the.
00:11:07:18 - 00:11:11:18
Anastasia
I completely agree, the humblest businesses are solving the most real problem to.
00:11:11:19 - 00:11:33:08
Eric
Those are the real problem. You don't realize when you start out building a company like that, you have no idea what a revolutionary you are. You are already so at odds with our dominant business culture. It will eat you alive. So you start out with this purpose. You want to make a company to make a thing. But over the course of the scaling of this company, financial gravity works its magic on you, and you start to subtly see the purpose of a company as to enrich shareholders.
00:11:33:08 - 00:11:57:15
Eric
You start to subtly see money, fame, size as ends in themselves, as forms of success rather than the original thing. So you started out as a mission driven founder. The mission, the purpose was in fact your primary motivator, and it also was the source of the magnetic power that your organization had to attract talent and customers and money and all the things you needed to have worldly success.
00:11:57:16 - 00:12:14:14
Eric
You try to do it again, and you don't realize that you've already lost this most essential element. Because in your heart of hearts, you've become a little bit cynical. You no longer see mission as necessary. You see it as kind of a nice to have, which is how your board members saw it. It's how every investor saw it.
00:12:14:14 - 00:12:33:12
Eric
You're so used to being a little bit defensive about it when in your second company. I see this a lot. You wind up building a purely mercenary engine and then a lot of founders. That's what causes them to wake up and realize that they've lost a bit of their soul because they actually hate this thing. So it used to be when they encountered difficulties, the purpose driven leaders, when they encountered difficulties, love it.
00:12:33:13 - 00:13:01:05
Eric
It's like, oh, here's an opportunity to show off my ethos, to teach my employees what right looks like. But if you don't have that purpose, you can't do it, and therefore you cannot summon the inner strength to navigate these difficulties and find the breakthroughs. And so oftentimes in that company, you've lost something really essential. And I think people who are not used to seeing entrepreneurship through this lens of self-development or self-discovery, this can be a major crisis, but it can look at it that way.
00:13:01:05 - 00:13:12:07
Eric
You can realize, oh, I lost something to financial system like our financial system causes this damage. It is actually causing a mental health problem for founders. And then you can ask yourself, how do I avoid that next time?
00:13:12:08 - 00:13:40:07
Anastasia
Eric, it's fascinating that you see it from this angle because I actually want to push back. Or maybe challenge your thinking a little bit if you don't mind, because while you're 100% true or 100% right. And what you are saying, there is actually another pattern that that I've seen a lot of founders start very mercenary because they actually need to solve a financial problem to support their families, or sometimes they need to prove themselves, whatever it is.
00:13:40:08 - 00:14:04:21
Anastasia
Right? But a lot of people are starting from either ego validation or chasing money place. But as they get very, very, very busy with their businesses and then they sell very successfully, they never have a chance or reason to stop and think, is it still my genuine motivation? They know they started for money and they sell, and actually they feel like horrible people.
00:14:04:22 - 00:14:24:04
Anastasia
Like I have these conversations all the time. They're like, oh, I need to grow spiritually because I am this person who, you know, built this business for money. Like, how do I think different? And you know what? I find a lot if I start asking them questions like, but later in your business, did you care about your employees?
00:14:24:05 - 00:14:46:09
Anastasia
And like, of course I cared about my please. Did you care about your customers? Like, of course I cared about my customers. And then I. You sure it was just for you to get rich all the way through, whatever, 15 years of building? Because what I found is that actually, when you talk to super successful exited founders, it's literally impossible to find someone who didn't care about their customers.
00:14:46:09 - 00:15:02:09
Anastasia
And that brings us back to your philosophy. Because without building a product in whatever way, lean on lean. But unless you get to that point that you actually deliver value, you probably won't get to a serious success. It doesn't work.
00:15:02:10 - 00:15:19:07
Eric
It's interesting. So I really appreciate you bringing this up, because it's the psychology of this is really, really, really fascinating. And the truth is, so we live in the era of what's called shareholder primacy. That's the fancy term for the corporate governance paradigm that has existed in this country since the 1970s, didn't really become like formally legal doctrine until the 1980s.
00:15:19:07 - 00:15:35:21
Eric
He dated Delaware as the as 1986. So certainly we're 40 years in, depending on who you count. 50 years into this idea of shareholder primacy, the idea of shareholder primacy is that the purpose of a corporation is to enrich its shareholders, full stop. That's what it exists to do. So I'm talking about we birth organizations that are these vital things with the purpose of the primacy would be like, what are you smoking?
00:15:35:22 - 00:15:57:00
Eric
The purpose of a corporation is to make money and make money for shareholders. That's what it is. It's just a financial instrument. And so in that mental model, entrepreneurship is just another kind of banking. There's like, you can become an investment banker or you can become an entrepreneur banker, all an entrepreneur banker is a person who assembles resources that they do not currently command, and somehow tricks people into arranging the world such that they and their investors make money.
00:15:57:01 - 00:16:18:01
Eric
And so in such an under shareholder primacy, if I start a company whose basic purpose is just to steal money from another company and take it from myself, we all make money. Everyone's like, that's great, that's super profit. Even though, of course, most orders cannot believe me that this is the theory. But it is. And it's actually very important because many entrepreneurs convince themselves that this is their motivation, because this is the motivation you're supposed to have according to this theory.
00:16:18:01 - 00:16:31:18
Eric
So I actually know a lot of I remember talking to a founder once who was just like, I don't want to hear about stakeholders. I think stakeholders is bullshit. You know, I only care about making money for my investors. It's like, okay, well, I will not use the word stakeholder, but how do you feel about your employee? I was like, I would do anything for my employee.
00:16:31:19 - 00:16:51:11
Eric
Oh, really? But they're not stakeholders. No. Okay, so here's the problem. I tried to write this book. It was very difficult, but I tried to write this book without using the word stakeholder even one time, because I want to use the old fashioned term fiduciary instead. Now, today, people think fiduciary is a financial term. That means we only ever hear it anymore in the context of the fiduciary duty to shareholders, but actually fiduciary.
00:16:51:12 - 00:16:52:14
Anastasia
Shareholder premises.
00:16:52:15 - 00:17:09:04
Eric
Which is the whole idea of shareholder primacy, is the only fiduciary duty is the one to shareholders. But an older idea, a actually very common idea in earlier generations of business. A fiduciary just means someone who whose interests come before your own. So, for example, in the book, I tell a story of a famous entrepreneur named Sol Price who created Fed Mart, which is the predecessor to Costco.
00:17:09:04 - 00:17:23:16
Eric
And he said that his job, he was a lawyer before he became an entrepreneur. And when you're a lawyer, you have a fiduciary duty to your client. You put the client's interest ahead of yours. So when he became a retailer, he said, I'm a fiduciary to the customer. That was what he want to know. Why is Costco a $400 billion company today?
00:17:23:16 - 00:17:42:00
Eric
It's because not only but primarily because Saul Price understood a retailer is a fiduciary to the customer. So he had a hierarchy of his fiduciary commitments and went like this. Customers first, employees second, shareholders third. Most founders have. I tell him to say this out loud today couldn't even form the words so heretical. Does it sound well?
00:17:42:02 - 00:17:52:16
Anastasia
And at the same time, one of the most successful companies of our time, Amazon does have it as their mission. We are the world's or we are trying to build a world, the world's most customer centric company.
00:17:52:19 - 00:18:13:18
Eric
So at successful companies, you'll find this pattern all the time. And yet we're all supposed to pretend that this is not what we believe. So anyway, I bring all this history up because a lot of founders think their self-concept is actually kind of mercenary, and they even think badly of themselves as a result, because they think I did this to make money, and I simply don't believe it because and here's why I don't believe it.
00:18:13:19 - 00:18:29:23
Eric
If your goal is to make money, become an entrepreneur is one of the worst ways you can do it, where you're just your expected value of how much money you're going to make is so much higher than becoming an entrepreneur. Like, I'm not sure if the odds are better. If you're like Osmani, even be better if your goal is to be a social media influencer.
00:18:30:00 - 00:18:47:21
Eric
Okay, entrepreneurship. Your odds are quite low from the beginning. But certainly compared to being a lawyer or an investment banker, right? Like think about odds of because so so I actually think like the only reason you would have the illness that would tell you I need to go on entrepreneur is that there's something else in there. And a lot of people, because of shareholder primacy, have been trained not to admit this.
00:18:47:22 - 00:19:01:02
Eric
Generally. Don't admit it to your board, don't admit it to your employees, but maybe don't even admit it to yourself. So yeah, I see a lot of, you know, in the old days we would have called that false consciousness a false understanding of our own motivations. So this is one of the many reasons why shareholder primacy is so dangerous.
00:19:01:03 - 00:19:18:17
Eric
It doesn't actually create space for entrepreneurs to understand what they themselves are doing. I call this the builders intuition, the idea that the best way to make money is to create genuinely new value in the world, and capture a little bit of it for yourself. Most people who build things for a living, when I say that to them, they're like, well, how are you going to make money?
00:19:18:17 - 00:19:31:21
Eric
It's like, okay, as soon as you said that, I know you think you're a mercenary. I know you think, but as soon as you said that you are a revolutionary, because in today's economy, we're supposed to pretend that all ways of making money are equally good. So how many times have you been told about some exploitative, terrible person?
00:19:31:21 - 00:19:43:06
Eric
Well, you got to hand it to them. At least it works. And you know what? My goal in writing this book is that all of us who make things for a living can just say, you know what? We don't gotta hand it to him. We don't. We? It's okay. We all actually believe in the builders intuition. We don't know.
00:19:43:06 - 00:19:57:01
Eric
We're supposed to pretend that we don't, but we all do. So it's actually okay to just say it out loud. We're builders, and we think building things is a great way to make money. It's not saying that other people, you know, that can be other ways too, but our way is the best way. That's what we think. That is like the bedrock moral foundation of capitalism.
00:19:57:01 - 00:20:05:08
Eric
And we have to get comfortable saying it. And then of course, not just saying it, but then putting it into action by protecting that intuition at the core of the organizations we birth.
00:20:05:09 - 00:20:45:20
Anastasia
And I think this shift that you're talking about in how we see entrepreneurship is so unbelievably timely, because AI allows so many of us, like everyone, actually, to become an entrepreneur, if that's what we want. It removes so many, so much friction, and it allows experimenting and creating minimum viable products so much easier. Right? So if we don't have a clear ethical and philosophical foundation for this very new type of entrepreneurship that technology allows us to do, then we may lose a whole generation of amazing founders who have their own idea about why they're doing things.
00:20:45:20 - 00:21:08:07
Anastasia
So I'm very grateful for you to continue your beautiful education from a place of the authority that you've earned through the years, because it's so incredibly important, both the entrepreneurs themselves, who will feel so much more meaning and purpose in their work, so much more energy and natural pool, and less burnout in the work because it will be so much more inspiring.
00:21:08:07 - 00:21:30:06
Anastasia
But also, how much will the society benefit when these people are driven primarily by the unleashed desire to do good? Because I agree with you, we have that right. We just need to unblock it. We need to realize, like for example, what you're saying about shareholder premises. Absolutely, 100%. One of the biggest blocks, but in other block is also the fear of failure.
00:21:30:06 - 00:21:48:08
Anastasia
And I would love to hear you speak about it, because I know that you connect the reluctance of entrepreneurs to build MPV, and to follow the lean Startup philosophy to this fear of failure. And I would love you to go deeper into this, and then we'll connect it to fear failure in our success life as well.
00:21:48:14 - 00:22:09:16
Eric
Sure, sure. Yeah. So so for this, not just for entrepreneurs. Everyone in modern organizations are taught to evaluate things by ROI, and therefore any negative ROI action is by definition of failure. So that means that every experiment is almost guaranteed to be a failure because most experiments don't work. So I just, you know, I tell the story briefly in the book that I was once working with a team in a pretty large company that was trying to do, you know, an innovation project.
00:22:09:16 - 00:22:24:17
Eric
And this team had $1 million budget to build a product, and they were doing Lean Startup, so they, hey, why don't we build an MVP for $10,000? And they did. They spend $10,000 and the MVP. It was like they were like, oh, this product doesn't look like a very good idea. Like the MVP came back with very negative information about what customers want.
00:22:24:18 - 00:22:42:07
Eric
So they iterated a few times. They went up spending 100,000. These are ten MV really like trying to understand like is there a business here is this plan that our senior leadership has assigned us to make this thing? Is it a good plan? $100,000 in. They were like, this is of genuinely bad idea. And they went back to leadership and said, listen, our recommendation is not to spend this million dollars.
00:22:42:07 - 00:22:56:03
Eric
This project is a failure. Now, I was like, what a great example of Lean Startup thinking in action. Spend $100,000 to discover that the million dollars we were going to. Of course, it wouldn't have just been $1 million. It would have been $10 million at least, because the first time you would have been like, that's not the one.
00:22:56:04 - 00:23:12:03
Eric
This is great. So I'm all excited. I'm telling the executives that they're really great. Meanwhile, they all got in big trouble. They all got dinged on their performance reviews because they failed to plan accordingly. They're like you said, you're going to spend $1 million and you failed to spend $1 million. But also why, if this was a bad idea, why did you work on it?
00:23:12:04 - 00:23:25:23
Eric
Well, if we don't, it was a bad idea. We wouldn't have funded it. But we didn't know. Well, why didn't you know? See, in traditional business, and this is a business issue, modern management practice, you know, it's about a century old, depending on where you date it to. You know, like some people date it to Frederick Winslow Taylor in like 1911.
00:23:25:23 - 00:23:44:12
Eric
I think it's also really important to look at that. Alfred Sloan and the development of what he called decentralized management with centralized control, which is a fancy way of saying, like our modern idea that the way you work is you delegate to teams, you give those teams a target, you estimate what's supposed to happen, and then you judge them by their say do ratio.
00:23:44:12 - 00:23:57:11
Eric
Do they achieve what they said they were going to achieve? Like, that was actually like, we now treat that kind of like obvious. Of course everybody does that. You have to understand this was invented. This was an idea that was not handed down by on Mount Sinai by Moses. Okay. This is an idea. It was invented by a certain guy at a certain time.
00:23:57:15 - 00:24:18:16
Eric
You go read it. I strongly recommend The Autobiography of Alfred Sloan. It's an amazing book. And part of what's amazing about it is you just realize how primitive business thinking was in the 1920. It just didn't have the modern ideas that we take for granted, thanks to the people who figured it out. Well, the issue with this and this has been going on a long time now, is it presupposes that we can predict in advance what success is supposed to look like.
00:24:18:16 - 00:24:34:10
Eric
And for people who are entrepreneurs, they often are like, when can you ever do that? Like, what are you talking about? Right? I remember meeting somebody, you know, who was like a Six Sigma, you know, black belt. And he had this mug that that said failure is not an option on his desk. And I was super distracted because I was like, failure is not an option.
00:24:34:10 - 00:24:51:10
Eric
I was like, yeah. I was like, if I had a mug, my mug would say, I eat failure for breakfast. Like, if I don't fail ten times my lunch, that's a good day. And of course, like the reason we have such different values is he works in a world where success can be forecasted, and therefore failure is always due to inadequate planning.
00:24:51:10 - 00:25:07:12
Eric
Always. Whereas for us, failure is due to the fact that we're doing something highly uncertain. So fear of failure is deeply ingrained in our modern business culture in a way that is very, very unhealthy. Not only psychologically unhealthy, but illogical. Because if we want to do innovation, we won't do experiments. We're going to have to have quote unquote failures.
00:25:07:12 - 00:25:21:09
Eric
Now, you ask me the key question, the very beginning of this interview, what is success? And so you can't define failure unless you define success in our business culture. Success is what you predicted will happen is what happened. But if you're gonna do an innovation that cannot be your if that's your goal for success, you're such big trouble.
00:25:21:09 - 00:25:30:02
Eric
It's better, of course, not to see an experiment as a failure. Like, imagine you told a scientist that every time they had an experiment go in an unexpected direction. That's a failure. Most scientists would be like.
00:25:30:02 - 00:25:32:03
Eric
That would be no innovation ever.
00:25:32:04 - 00:25:48:14
Eric
You know, like if you study the history of science, some of the most important breakthroughs came from the most ridiculous experimental failures. I think it was the discovery of the X-ray, or I forget which one of the fundamental forms of radiation that was discovered because a certain guy had an apparatus, it was doing experiment on something totally unrelated.
00:25:48:14 - 00:26:05:13
Eric
And he happened to notice that when he did the experiment in this part of the lab, a different part of the lab would start glowing. You know, that's that's how it was discovered. And what's funny about that story is he wasn't the first one to notice the glow. He was just the first one to not dismiss it as something random and be like, that's not what I expected.
00:26:05:13 - 00:26:25:08
Eric
I need to go investigate this other thing. He I think you want to know about prize, because he actually had the curiosity to understand the failure. He wanted to know what's going on. So our most important attribute when we're doing innovation is curiosity, not judging failures and ROI and efficient. Our first question is curiosity. Something unexpected happens. I need to know why now, just like in regular business sometimes.
00:26:25:08 - 00:26:43:05
Eric
Why? Because we suck. Why? Because sometimes it will be a failure of execution or a failure of planning. That happens to. I'm not saying that all failures are good, but like sometimes we'll have executed beautifully and customers still don't want it. That's interesting. We have to learn to get curious about that, to get interested in that. And when we do that, we start to develop a different fear.
00:26:43:06 - 00:27:01:03
Eric
Not a fear of failure, but a failure of imagination, failure of curiosity, a failure of integrity. And this is something I think people really miss with Lean Startup, because I've been getting this question a lot, you know, with the new book, because people are like, well, I thought Lean Startup was about going fast and rapid experimentation. And the new book is about enduring principles and commitments in a startup.
00:27:01:03 - 00:27:25:04
Eric
Shouldn't everything be subject to experimentation? And just in that question already, the person asking has revealed their confusion. Because if you say everything should be determined by experimentation, well, that means that some things must not. By definition, the fact that we're going to experiment the definition of what makes a good experiment, our commitment to scientific truth is, by definition, not subject to experimentation.
00:27:25:04 - 00:27:47:09
Eric
We must have some priors. We must have some first principles that we are committed to. That's what makes iteration scientific discovery. Anything important has to be powered by those principles, and those principles have to be enduring. So a huge part of dealing with this psychology that you're describing is trying to connect with, well, what are those enduring or higher principle that we're committed to no matter what?
00:27:47:09 - 00:28:03:20
Eric
And when you feel that way, if you commit yourself, even forget mission driven purpose, all that stuff that like simply in lean startup terms, if you can commit yourself to science as a form of truth seeking. So we're not going to accept astrology as fact. We're going to insist on data driven, scientific based decision making.
00:28:03:21 - 00:28:28:13
Anastasia
Yeah. So you're creating constraints that actually also save you a lot of time and resources, because you're not going to bump your head against those constraints unnecessarily. Right. So I find people who follow first principles thinking when they can also ahead of time to define constraints, which is very dangerous. Right? Because yeah, you don't want assumptions. You really want to have to have proper constraints there.
00:28:28:14 - 00:28:58:12
Anastasia
But Eric, I would like you to help me apply your emails and wisdom and thinking about experimentation and first principles, thinking and all of that to our personal life after success. Here's why. Because I personally believe that this kind of thinking is exactly what happens. What helps us to untangle all the confusion and this feeling of being overwhelmed and sad and emotional after we sell our business.
00:28:58:12 - 00:29:26:05
Anastasia
This is what helps us untangle all of this. If we give ourselves permission to paramount wisely and to come up with hypothesis that actually makes sense, then we can go through this journey in a way that is less difficult because it is, and you know how hard it is and how people get completely lost for years. Actually, on average, it takes us ten years to just adapt to post exit life, which is such a horrendous waste of human potential from my standpoint.
00:29:26:06 - 00:29:38:19
Anastasia
So may I ask you to go on this journey with me and treat an exited founder as an experiment or a startup that has to deal with confusion, uncertainty, cows? How would you think about it?
00:29:38:19 - 00:29:59:00
Eric
I've counseled a lot of people in this exact situation, so this is no hypothetical to me. And, well, I guess it's okay to talk about people might find this to be a little bit strange, but I think one of the first things we have to admit is that in an exit situation and it's the same, whether that's a successful exit, a startup failure, or the most common case is actually the founder was kicked out of the company.
00:29:59:00 - 00:30:17:11
Eric
That happens to doesn't matter in any of those situations. Yeah. We voluntarily involuntary positive negative. We also see a lot of cases that are called by the press positive. But then the actual thing is destroyed. Horrible. So we have to deal with the trauma of it. Okay. Let's just be honest. This is you mentioned like why do you feel sad when your baby is destroyed?
00:30:17:11 - 00:30:35:14
Eric
Well, that's actually really natural. That's a very natural experience. And I don't mean to make light of real quote unquote, real trauma. People obviously have their actual child killed, and that's truly terrible. But there's something like that here, too, that it can be traumatic to have your life's work ripped away from you. And we have to understand, this is the thing I really feel sad about.
00:30:35:14 - 00:30:56:00
Eric
Most founders I've talked to who've been through an exit, who have regret, or there's some kind of angst about it. If you ask them what went wrong or how did it happen, they always blame themselves. So I was talking to a founder the other day who I really respect, someone I just, I have deep admiration for, made so much money for their investors and got completely screwed.
00:30:56:00 - 00:31:12:04
Eric
And so their company is nominally a success. They made plenty of money. Companies still like everything was great, but they their ability to be part of it. They were like very in a very cruel way, kicked out. And they were starting a new company, as they tend to do. And I said, given what lessons did you learn from last time?
00:31:12:04 - 00:31:27:21
Eric
And he said, all the things I hear every time. Well, I should have trust. I trusted the wrong people. I should have been stronger. I shouldn't have compromised. I was all, I should have done this. I should have done that. I should have done this. I said, great, given what you've learned, what governance changes are you going to make in the new company to make sure none of those things happen again?
00:31:27:22 - 00:31:51:15
Eric
And he looked at me with a completely blank expression and said, like what? He had not identified even one systemic factor about what had happened to him, which means it's going to happen to him again. I was really very sad to have this conversation, and part of my goal in writing this book is to help founders identify these structural, systemic factors that are causing them to have all this trauma and misery and teach them structural, systemic protections, solutions that can prevent it.
00:31:51:15 - 00:32:01:05
Eric
So that would be the thing we really need to understand is like, what is the trauma and what is needed to heal that trauma, and then what is needed to protect the next creation from having that happen again.
00:32:01:05 - 00:32:30:00
Anastasia
I very much agree with you and I love it. I think that's exactly why, in the beginning of the interview, we talked about how it's actually very important to take some time to process our experience, crystallize it into something that will help us going forward. So in case of failures or some kind of self-blame, we can transfer it into those protective policies, for example, in the next business, but also in our personal portfolio, for example.
00:32:30:01 - 00:32:34:04
Anastasia
Right, there are lots of places where we could build structural.
00:32:34:04 - 00:32:35:09
Eric
Build protections.
00:32:35:10 - 00:32:49:15
Eric
Not to pay this trauma forward. How about that? How about the founders that you invest in and mentor? How about if you protect them from what happened to you? Well, we all know that cycles of abuse don't always work that way. Sometimes we become the traumatized as a way of processing what happened to ourselves. Well, don't do that.
00:32:49:15 - 00:32:53:23
Eric
Break the cycle. Let the next generation of founders benefit from protections you never had.
00:32:53:23 - 00:33:31:00
Anastasia
And I love that. And I think that's one side of how we absolutely need to process our experience before we move forward for success. But there is also a brighter side, which also very often gets overlooked because we are often in this pain. Something went wrong during the exit. We didn't quite get to the point financially or emotionally that we expected, but I think we tend to overlook the positive results of experiments because when we build our company and at the same time experiments with our own psychology, if you wish, there are so many experiments going on, we'll learn very fast.
00:33:31:00 - 00:33:52:09
Anastasia
And yes, we learn from failure what doesn't work, but we also learn what works. And for me, this is even more precious because what doesn't work is still a hypothesis in a way, right? Because you still need to find what actually works, right? It's just the next hypothesis. It leads you to the next hypothesis. But when we find what definitely works, that is precious.
00:33:52:09 - 00:34:25:01
Anastasia
And what I see again and again and again is that founders, when they start another company, they completely ignore what they've learned through these precious experiments about what actually, definitely, clearly works. But it took so much effort. It probably took so many failures to find this out about yourself. How do I personally win? And also about how companies like this win and this kind of a positive side, but it becomes a very negative kind of sad side of repeat businesses if we don't use what we learned through experiments.
00:34:25:02 - 00:34:40:18
Eric
You know what's really crazy? It's funny you mentioned how Lean Startup was helped you so much in your second company and Lean Startup in the early days, especially, Lean Startup had a lot of people on their second company who are our highest early adopter of people, were not first time founded, but second time founders now, now with conventional wisdom.
00:34:40:18 - 00:34:53:23
Eric
But back when it was still a very controversial theory, I met so many founders who'd be like, I don't need that. Yeah, this is for people who are wrong. I'm not wrong. You know, these are people who don't have Steve Jobs would never have done this. But I'm like, if you read any books by Steve Jobs, he was really into this stuff anyway.
00:34:54:00 - 00:35:10:08
Eric
And then a lot of those people and I always tell people the same thing was, listen, I hope you're right. And when you make it big on your first try, I hope you'll call me back and gloat. I actually want to hear it. Tell me because I want to know like I want. Maybe I'm wrong about something. And so many of those people, they did call me back to be like, I'm on my new startup now, and I'm going to do things a little differently.
00:35:10:08 - 00:35:23:01
Eric
You know, I'm like, oh, whatever happened to that startup? I was like, well, I thought I was right, but actually I'm not right. You know, I wasn't right. That's not that uncommon. That's fine. But I remember doing a lot of research for Lean Startup in. One of the things I was really curious about is, is it better to invest in first time founders or repeat founders?
00:35:23:01 - 00:35:42:21
Eric
And I thought, oh, because of my experience with startups, surely repeat founders would be better. But no, statistically speaking, there's no difference between first and second time founders. And when I looked at the research, I found it really surprising. They said, well, the reason is because, yes, you have some founders who learn from their first time mistake and therefore their subsequent startups are more likely to succeed as they go.
00:35:42:21 - 00:36:02:06
Eric
And each one is more. But the vast majority of founders are so stubborn that they just hang their head against the wall, making the same mistakes they made the first time. So statistically speaking, those people are dragging the average down enough that it makes no difference whether you go first time or second time. And yeah, it's actually more like a trade off first time people, you know, I think in the evidence are more likely to try something a little bit more wacky and bold.
00:36:02:06 - 00:36:18:09
Eric
And repeat founders are tend to be a little bit more conservative, but that conservatism can actually not be good. So I think it's actually really important to learn the right lessons from your experience, not to over generalize, but to really reflect. And it goes back to the inner part of entrepreneurship, which is like, what is your motivation? What did you you know, what really, really worked and didn't?
00:36:18:09 - 00:36:29:01
Eric
And don't let it just be an ego story of like, well, if I'd only been smarter, if I'd only been this, I only been that, it would have worked out or like or some people are like, it's everybody else's fault but me. This guy screwed me, and that guy screwed me and this guy. And therefore I learned nothing.
00:36:29:02 - 00:36:48:02
Eric
Like you have to be able to not take on all the responsibility, but really try to understand what what happened. And that's why I'm so focused these days on systemic forces. Because the other thing that is really interesting to me is if everything was personal, the outcomes would be basically random, but they're not random. Companies wind up in the same place, even though they started out very different.
00:36:48:03 - 00:37:04:21
Eric
Like think about most companies today. Most successful companies say if they sent you a press release and I blacked out the name of the company, you couldn't even tell me what company it was. They all right? The same crappy, boring press releases. You know, their employee comms are all the same. Their mission statements are indistinguishable. Like, how did they wind up so homogeneous?
00:37:04:22 - 00:37:38:17
Eric
The only way that can be is if there's some force behind the scenes aligning their trajectories. So if we see ourselves as the superhero prime mover, we're the only one who made it happen. We become blind to these more physical forces that act on organizations. And a big part of my goal these days is to help founders, especially who have exited, who have some freedom and discretion as they think about what they're doing next, who frankly have power that they can exercise to help them see the structural patterns, the structural forces that are acting upon them, and so that they can use their power not to just blindly promulgate or perpetuate the values that got
00:37:38:17 - 00:37:43:00
Eric
them where they are, but they can see their own personal values more likely to be realized in the world.
00:37:43:01 - 00:37:58:19
Anastasia
I'm very, very curious about this. So can you give me a bit more examples of how it would play out in real life, positively or negatively? For example, if people are not aware of this versus when people are very intentional about this, especially exited found.
00:37:58:20 - 00:38:13:03
Eric
I think one of my favorite stories in the book is a guy named Saul Price. Saul Price created a company called Fed Mart in the 1950s. And I talked about, you know, he was a lawyer before he became a retailer. So he saw his job as having a fiduciary to the customer. So he started and I think in 1954, something like that.
00:38:13:03 - 00:38:31:03
Eric
And over the course of the next 20 years, it was a huge success. It started in San Diego, where I grew up and expanded all over the southwest United States. I can't remember the numbers now, but it was a super successful company. He took it public, and he hated being a public company because he was constantly under pressure from his investors to cut corners, to basically break the ethos that had gotten him where he was.
00:38:31:03 - 00:38:47:04
Eric
So he arranged a new set of investors to take the company private and took it private. And yet the attacks continued. His investors were always dissatisfied because he was so stubborn. He only wanted to do the right thing, and they were like, we could make a lot more money if we did the wrong thing. So he was constantly fighting with them, fighting with them, fighting with them, and finally they kicked him out of the company.
00:38:47:04 - 00:39:03:20
Eric
He literally came to work one day and the locks on his office were changed. He couldn't get into the building and he was super pissed. You can imagine how traumatic this was for him. Now let's separate out what happened next to Fed Mart and what happened to him. First of all, Fed Mart switched to a more conventional business playbook.
00:39:03:22 - 00:39:18:14
Eric
You know, no longer a fiduciary. The customer didn't do the cap margins and all the other stuff that made it great. So within seven years it was bankrupt. The investors got what they wanted and they killed the golden goose. It's like as clear an example of like killing the golden goose as you'll ever see in business. But Saul was not satisfied to just go quietly into the night.
00:39:18:15 - 00:39:34:19
Eric
He called the same realtor who he had used to open the original Fed Mart office and said, do you have another office in that same building? And so he literally opened a new he took one week off. He opened a new office, literally upstairs from the fed office that he used to work at, started a new company called Price Club, and was back at it a week later.
00:39:34:19 - 00:39:53:17
Eric
And he basically wall Fed Mart was setting itself on fire. He just rebuilt that ethos and had success. Now, what's interesting about this story is ask yourself, like, why would investors be so neat? Why would investors be so evil, to destroy the golden goose? Or sometimes be like, why was he so naive? I can't believe he lost control of his company.
00:39:53:18 - 00:40:12:15
Eric
Right? So we see these stories as personal dramas salt price versus evil investors. Who's the villain? And therefore we miss the structure. Well, anyway. Meanwhile, Fed Mart had a one year he hired a stock boy, like, literally an entry level employee named Jim Senegal, who worked his way up to become an executive at Fed Mart over the course of its history.
00:40:12:15 - 00:40:29:16
Eric
When Saul Price was fired, he and a bunch of other executives quit in protest, and they all went to work at Price Club. But Jim Senegal wasn't satisfied with either of the stories that I just told you. He didn't. He wasn't willing to see Saul Price as a victim, nor was he willing to see him see the investors as the villain.
00:40:29:16 - 00:40:51:16
Eric
And so he actually went up creating his own company called Costco. And eventually Costco would merge with Price Club. And the company you now call Costco was actually the price was called Price Costco. Now it's just called Costco. Anyway, Costco was built on the same principles as Fed Mart and Price Club, but with a different governance structure. So people know a lot of famous stories about Costco, like the famous dollar 50 hot Dog.
00:40:51:16 - 00:41:09:05
Eric
If you know that story, or just the fact that they pay higher than average wages and all their markets, that they have a different effect on the communities they operate in than, say, Walmart, they create a lot of economic prosperity wherever they go. Their employees have tremendous retention. During the Great Recession in 2008, when everyone else was slashing wages, they gave their employees a raise.
00:41:09:05 - 00:41:30:15
Eric
They did it over three years instead of over a longer period, even though that cost them an extra $20 million, they just didn't care. And as a result, Costco has had all the same problems with investors that fed had. Investors constantly are complaining about Costco and like activist investors and governance experts, have for decades been attacking Costco, trying to get it to change to become a more conventional company.
00:41:30:15 - 00:41:50:01
Eric
One of my favorite quotes I think this was from a Deutsche Bank analyst. It said Costco is spending money that rightfully belongs to investors on improving the customer experience. That's supposed to be a criticism. Then what I said about the builders intuition. People do not understand what creates value. So anyway, this has been a big fight. I remember a story that the CFO of Costco told this is years ago.
00:41:50:02 - 00:42:06:09
Eric
One of these times when Wall Street had a freak out about Costco, the stock price plummeted 20% or whatever, and the CFO went to Jim. Senegal was like, listen, we have to do a roadshow. You got to go around and meet the investors and reassure them. He was like, fine. And they wouldn't have these meetings. And the meetings were a disaster because in every meeting, CFO was telling the story.
00:42:06:10 - 00:42:20:20
Eric
Years later, Jim Senegal would hear the person's complaint and Jim would say, I don't care. Now, everyone who hears the story, it's like, you can't say that. What are you talking about? If you're the CEO and you're a public company, you have to do what Wall Street wants. Everyone knows that, right? Except Costco is not structured like an ordinary company.
00:42:20:20 - 00:42:40:11
Eric
It has what's called a governance fortress that protects it from having to care what these people think. And I won't get into all the mechanics of it. You can obviously read the book and learn all about it, but the key is that Jim was there the day that investors turned on Saul Price. So he understood that he needed to do something more than just be smarter and savvier and more clever.
00:42:40:11 - 00:42:56:18
Eric
He had to invest in structures that would protect what he had built. And one of my lessons of the last 20 years building companies is that in this world, everything that is worth protecting will eventually need protection. So we'd better learn how to do that as builders and stop being so naive about it.
00:42:56:18 - 00:43:07:16
Anastasia
So what would you say is worth protecting in any company that doesn't want to just be mercenary, that actually wants to be a missionary company creating value and impact?
00:43:07:17 - 00:43:23:22
Eric
Yeah. So there are four dimensions of what I call the new governance. So today when founders hear that we're going to talk about governance, they're like, oh, right. Sounds like I'm like, let's talk about building permits. Let's talk about like the importance of brushing your teeth. Right. Like it's just this like administrative hassle, something for lawyers and bankers to fuss over.
00:43:23:23 - 00:43:39:13
Eric
Yet the governance decisions you make about a company are the most fundamental, foundational decisions you will ever make. And in fact, I would go so far as to say, for most companies, if you don't get your governance choices right, no other decision you make ultimately will matter in the long run. You will not be the one making the decision in the end.
00:43:39:14 - 00:43:58:10
Eric
So if you don't care, okay, but if you carry better, pay attention. So I think that today most people will talk about governance. Think governance just means compliance. And compliance is definitely one of the four dimensions of governance. Compliance is very important, but I think we also need to be thinking about purpose, coherence and integrity as the essential building blocks of an organization.
00:43:58:10 - 00:44:16:08
Eric
Now, today, purpose people are like, oh God, purpose. It sounds like some vague hippie thing, like so what? Right, like or some like personal growth thing, like, you know, people are like, not that keen to take it seriously because today we have bamboozled people into thinking that companies have no purpose, what we call it, we mostly incorporate using what's called a neutral charter.
00:44:16:08 - 00:44:26:13
Eric
So if I pull your corporate charter for most companies and I say, and I like to say, what does it say in your charter? First of all, most founders are like, I don't know, what is my charter? I never looked at it. I have to be like, I'm I feel like Perry Mason sometimes, like, is this your signature?
00:44:26:13 - 00:44:57:07
Eric
Right here on this document? You sign this. It says here the purpose of the Acme Corporation is it's the first sentence of every corporate charter it is incorporated to. And today we usually use a boilerplate formulation, something like, to pursue any lawful act or purpose, which sounds super neutral. Now, I can pretty much do whatever I want. That sounds great, except, and this is going to sound crazy to some listeners who are hearing this for the first time in today's world, most governance experts would say that this supposedly neutral charter means that the purpose of the company actually is to maximize shareholder returns.
00:44:57:07 - 00:45:16:14
Eric
So there's no neutral. You got to serve somebody, as the old song says. So if you don't choose, it will be chosen for you. And what it will be is choosing investors. Which means literally, this is the hypothetical you have to really consider if you just whoever's listening right now, just take a minute. Don't have to tell anybody your answer, but just privately think to yourself, who do you think is the most evil company in the world today?
00:45:16:15 - 00:45:29:12
Eric
The one company that you would rather die than have to go work for? You don't have to tell you not to tell anybody, but just for me, I my father's a pulmonologist, so I always use Philip Morris as my, like, cigarettes. Like, that's really evil anyway, you could use. But your values are different than mine. Maybe you think somebody else.
00:45:29:12 - 00:45:45:04
Eric
Fine. Whoever you choose. Now, I want you to imagine that that evil company shows up one day and offers you to buy your company from you for $1 more per share than it's worth. I always ask founders to do this hypothetical with me and say, would you sell? Every single person is like either no, hell no or something I really probably shouldn't say on your podcast.
00:45:45:05 - 00:46:02:15
Eric
Okay, people get real agitated at this hypothetical, like, of course we're not doing it. Okay, cool. That's great. But did you know that most governance experts would say that actually, if this ever happened, you have a fiduciary duty to say yes. Most founders are shocked to hear that. They're like, that can't be right. It's like, you can't. I was like, call your lawyer, ask him, and then call me back.
00:46:02:15 - 00:46:17:10
Eric
And they call me back and they're so shocked. They feel betrayed. Like, why would he do this to me? But the lawyer doesn't understand why they're upset. The lawyer gave them the best. This is the best practice. This is what you get by default anyway. So what passes for purpose today is just you sell out if investors demand you sell out.
00:46:17:10 - 00:46:39:04
Eric
I understand why some people feel like the word purpose is a little bit silly. Like a lot of ESG debates are kind of surreal. So I get it. Like I remember I was one of my favorite quotes from a big investor. I think he's in the UK, he wrote. When Unilever was doing this big campaign to infuse purpose in all their products, at the point that we're trying to discuss the purpose of Hellmann's mayonnaise, something we've clearly lost the plot, you know, like it was like so derisive about it.
00:46:39:04 - 00:46:54:15
Eric
And I was like, oh my God, what an incredible quote. First of all, because I hear you, bro. Like, I know things do get a little bit ridiculous. People start talking about their the virtue signaling crap and I hear you. But on the other hand, humble though it may be, Hellmann's mayonnaise is food. Its purpose is actually super clear.
00:46:54:15 - 00:47:12:15
Eric
It's food. It's supposed to delight and nourish the people that eat it. So I think how the people that work at Unilever think about the purpose of helmets mayonnaise matters a great deal because let's say an efficiency consultant shows up one day and says, hey, why don't we replace one of the ingredients in Hellmann's mayonnaise with something cheaper, more addictive and carcinogenic?
00:47:12:16 - 00:47:13:03
Eric
We can say.
00:47:13:04 - 00:47:14:06
Eric
Happens all the time.
00:47:14:07 - 00:47:27:09
Eric
Happens all the time. You need the product manager to be like, no, of course we're not doing that. But the problem is, if you see your purpose as maximizing shareholder returns, you can do this calculation. You can like. Well, in the long run this might be bad, but in the short term it's going to make our stock price go up.
00:47:27:09 - 00:47:51:21
Eric
And my stock options vest in four years. So as long as the bill doesn't become due in that time right. Like the efficiency consultant will be long gone by the time the bill comes due. So that's the kind of thinking that we routinely see in companies left, right, center because they're confused about purpose. I won't go through coherence and integrity in the same level of detail, but just to say that, like I think they're equally important coherence is to what degree is the whole organism, all its parts swimming in the same direction?
00:47:51:21 - 00:48:17:10
Eric
Is our business model aligned with our mission? Is our culture aligned with that strategy? Like, are we all moving together to achieve this purpose? And integrity is like, can we keep a promise? And do we have structural integrity? And we resist outside pressure of someone tries to force us to do the wrong thing. Do we have the strength to resist if we build with those four dimensions compliance, purpose, coherence, and integrity, we build an organization that can actually be an incorruptible force for good in the world.
00:48:17:10 - 00:48:36:13
Anastasia
How do you think about incentive structure here? Because you are talking about constraints, and it sounds very much like a fortress. And I get it because it's a fortress to protect what we stand for, right? Why we are doing what we're doing, why we're creating the value and how we do it. And I have huge respect for it.
00:48:36:13 - 00:48:45:00
Anastasia
But I also wonder if there is some flexibility built into your thinking in terms of how we incentivize people to be aligned with that.
00:48:45:01 - 00:49:01:14
Eric
Yeah, incentives are super important, and obviously we're not going to get into the whole there's a lot of detail about this in the book, you know, because analytics and metrics, that's a big part of my work. And I've always wanted to really believe in getting it right. In Lean Startup, you remember remember we introduced a term called vanity metrics, which are metrics that make you look good but don't reflect actual success.
00:49:01:14 - 00:49:22:00
Eric
So the vanity metrics of this book are called false proxies. In academic literature, this is called surrogacy, where the metric becomes a surrogate for the thing itself. So think about stock price. People are like, I understand that my company is being successful at its mission. The stock price should go up, but that's a very short step from that to whatever makes the stock price go up is, by definition, success.
00:49:22:00 - 00:49:37:03
Eric
And that's danger. Will Robinson right. Like that's a dangerous idea. So again, like, you know, I give the example in the book how come customer service has gotten so much worse over the last 50 years? We have really good evidence that customer service and average is twice as bad as it used to be. It's not your imagination. Customer service really is collapsing.
00:49:37:03 - 00:49:55:00
Eric
Well, during that time the customer service profession has become professionalized. So we didn't have customer service as a distinct corporate function that 100 years ago. But we started abruptly 50 years ago to really invest in it. And, you know, we have all these metrics that we've been trying to optimize around customer service, like think about average hold time.
00:49:55:00 - 00:50:14:02
Eric
If I call in, like the idea is if I have a strong relationship with a customer and I take care of their problem quickly, they're happier. Therefore, the faster I get to each customer and the less time I take with each customer, the better. That's true. That's like the exhaust from the engine, right? If I my engine is working well and it has and there's some exotic like the faster I go, the more exhaust I have.
00:50:14:03 - 00:50:34:22
Eric
But that's not the same as saying the more exhaust I have, the faster my engine is turning. There are lots of things that cause exhaust that are not velocity. Well, this is the same thing. Unfortunately, while trying to make customer service better, we have actually made it worse because it turns out the best way to improve average hold time is to be rude to customers and make them hang up and like, not like fundamentally be so unhelpful that they're less likely to call in the first place.
00:50:34:22 - 00:50:52:18
Eric
So we've discovered accidentally, and we've incentivized all these behaviors that make customer service worse while patting ourselves on the back that we're making it better. So in the book, I talk about an alternative, which is called holistic metrics, a way to actually measure incentivize mission aligned behavior at every level of the organization. And it's a really important discipline if we're going to.
00:50:52:18 - 00:50:53:15
Eric
Do this. Yeah, yeah.
00:50:53:16 - 00:50:56:11
Anastasia
Brilliant. I'm happy to hear that. When is the book out?
00:50:56:15 - 00:51:16:01
Eric
The book is out May 26th. Wherever books are sold, you can get it obviously, on Amazon in hardcover, audiobook, e-book, but especially those who are listening. If you wouldn't mind supporting your local independent bookstore and buy it there, you just have to walk in and tell them you want this book. You know, local bookstores are such an important community resource, you could be strengthening them if you want, but I also understand the convenience of other paths.
00:51:16:01 - 00:51:32:00
Eric
Whatever you need to do, you can get it. And for those that are watching this right around release day in May, if you go to incorruptible CEO, we have a bunch of preorder bonuses. We're going to do a special author Q&A. We have a bunch of special like secret chapter that got cut from the official manuscript, and a bunch of other cool stuff available only to those who preorder.
00:51:32:00 - 00:51:33:14
Eric
So go to incorruptible CEO.
00:51:33:15 - 00:52:02:03
Anastasia
There is something very important, very personal, that I want you to share with us. So many successful exited founders don't want to go and build another business, especially these days. They want to go and write books and teach and mentor and share their experiences. And you are a big inspiration naturally for all of us. But I know that your path through fame wasn't all that simple and easy and caused quite a lot of spiritual growth.
00:52:02:04 - 00:52:20:19
Anastasia
And I admire how you've gone through this, but I really want my audience to hear it from you. What it actually meant for you to write that book, to experience being an author, and then also, very importantly, experience kind of losing control of your ideas and how people use them.
00:52:20:20 - 00:52:37:06
Eric
I'm from the Bay area, so when I start talking about spiritual topics, I know some people will be like, oh, it's another woo woo Californian, like I hear you. And I was as skeptical as anybody about trying to mix even psychology, let alone spirituality, into business. And it's for me anyway, business has been very much a spiritual path.
00:52:37:06 - 00:52:54:13
Eric
And I think there's just I talked about how entrepreneurship is a truth seeking discipline. That really is how I've experienced it. And as a result, like just like someone who's dedicated to art or to science, the truth can crack you right open. You know, the suffering that you get by trying to make things be the way you want them to be, when in fact reality is not like that.
00:52:54:14 - 00:53:13:07
Eric
You know, you crack your teeth against that. Eventually your whole sense of self, your whole identity can be split right open when that happens. And that definitely was my was my experience. So as a result, you know, I've learned to try to cultivate equanimity. You know, I could name one thing that's been the most helpful to me because in entrepreneurship especially, but this is true in all of life, we want to judge things as good or bad.
00:53:13:07 - 00:53:31:22
Eric
So it's like I'm trying to raise money and I couldn't raise money. That's bad. So I made a compromise. Now I can raise money. Oh that's good. Oh, but the person I put on my board is a raging, you know, horrible person. Now, I have not stuck with him. That's bad. But then, like, we have a crisis that rocks the business, you know, that's bad.
00:53:31:23 - 00:53:47:14
Eric
But then the person I hate the most, he gives up on the business and he quits. Oh. That's good. Oh, but now I can't raise money anymore because he's a bad reference for me, so that's bad. But actually, no, that forces me to convert into a new business model that doesn't use venture capital. Oh, that's good, but then I'm out of favor with the press.
00:53:47:14 - 00:54:02:07
Eric
And they write takedowns about like each thing, when you look back on it, you can say, oh, that was the best thing that ever happened to. But at the time you're judging it as really bad and vice versa. And eventually I think the path of sanity is to recognize that since you're always wrong about whether something is good or bad, maybe stop doing it.
00:54:02:07 - 00:54:20:09
Eric
You don't need to tell that story to yourself. You could just experience what is actually happening. And I'll tell you. You ask me about, you know, when I was younger, my definition of success. When I was younger, I would have found this terrifying because I was worried that being equanimity is like being calm. Being willing to accept what is would lead to passivity.
00:54:20:10 - 00:54:40:11
Eric
I would have said my judgments about good and bad, my fear of failure, my my ache to be successful. Those are important motivators. And they were, but they were also tremendous distractions. So I can tell you so many stories about times when I did the wrong thing, because I just I couldn't bear to miss out on some critical, you know, opportunity that I was that was the wrong thing.
00:54:40:11 - 00:54:58:22
Eric
So over time, what I've learned is to accept that you can have acceptance about what is happening. You can have equanimity about what's happening while still acting with urgency. In fact, in some ways it's easier to do the right thing, and it's easier in a crisis, in an emergency, to let those fears and all those stories go and just be really present to like, this is what I must do right now.
00:54:58:22 - 00:55:06:13
Eric
But I'd be lying if I said, I find this easy to do, even today. You know, it's always a struggle. But I do think that is is an important part of the entrepreneurial journey.
00:55:06:14 - 00:55:29:22
Anastasia
It's fascinating because I have a rather similar framework that helps me. Instead of equanimity, I'm thinking of contentment actually. Was quite shocked when I realized that it's when I am tint then my decisions are better, but also then I actually have more driven energy because I'm not wasting all this beautiful energy and drive and things that don't matter.
00:55:29:22 - 00:55:56:03
Anastasia
So it's very similar, I think, in how you think of equanimity that gives you more energy and drive. But Eric, I still want to hear your personal story of how you wrote the book, how you became famous, and how that fame transformed you into, I would say most person are today from how I see it. But I really want you to talk about this from the perspective of someone who is thinking, you know what, I am done with my business.
00:55:56:03 - 00:56:06:07
Anastasia
I've learned so much. I feel this desire to crystallize my thoughts and experience, which is great, right? And maybe I'll go and I'll write the book as good as the Lean Startup.
00:56:06:08 - 00:56:06:23
Eric
Oh, I hope so.
00:56:06:23 - 00:56:08:06
Eric
Please do.
00:56:08:08 - 00:56:08:19
Eric
Sure. Yeah.
00:56:08:22 - 00:56:09:18
Eric
Listen, I the.
00:56:09:18 - 00:56:10:17
Anastasia
Reality of.
00:56:10:17 - 00:56:12:20
Eric
Being successful.
00:56:13:00 - 00:56:14:02
Eric
And worse. Yeah. And even.
00:56:14:02 - 00:56:17:02
Eric
Worse, widely successful. Yeah. Well thank you.
00:56:17:03 - 00:56:17:20
Anastasia
Can you share that?
00:56:17:20 - 00:56:18:20
Eric
But not just the.
00:56:18:20 - 00:56:21:01
Anastasia
Fact but also how you change.
00:56:21:02 - 00:56:21:19
Eric
Yeah I'll tell you.
00:56:21:19 - 00:56:37:10
Eric
Exactly what it was like for me. And I appreciate being able to talk about this because of course, this new book has a esoteric or deeper dimension to it. So I'm excited for those who like such things, hopefully to encounter the book and to feel that deeper presence while still, I hope, being extremely practical and useful for everybody else.
00:56:37:11 - 00:56:37:15
Eric
Well.
00:56:37:16 - 00:56:40:22
Anastasia
Because you evolved and this is the book that you you write.
00:56:41:01 - 00:56:43:06
Eric
Like you are today and where I am today.
00:56:43:06 - 00:56:59:03
Eric
Yeah, exactly. Very. It's a very difficult. I hope people will find it deeper and more nourishing than what I wrote before. I'll see. Okay. But for me it was not an easy like today. It's considered a common knowledge that founders and CEOs blog and tweet and on social media and are desperate for attention and fame and books and whatever.
00:56:59:04 - 00:57:15:01
Eric
You got onto how different the landscape was, you know, 20 years ago, it was very different. I mean, entrepreneurs did not blog. They did not tweet. There wasn't this kind of like rampant attention seeking that we see today. And we didn't live in an attention economy the same way we do today. So it was just a very different reality.
00:57:15:01 - 00:57:29:07
Eric
So when I thought about blogging, let alone writing the book, all of my key advisors and mentors told me not to do it. They were like, that's an old man's game. Do that when you're retired. In the meantime, go to another company. And so I was like, already very countercultural thing for me to do, to share what I had learned.
00:57:29:07 - 00:57:33:04
Eric
But I liked I liked it, I enjoyed doing it, and I wanted to do it.
00:57:33:05 - 00:57:34:08
Anastasia
How old were you?
00:57:34:08 - 00:57:37:10
Eric
I would have been 20, 25, maybe 20.
00:57:37:10 - 00:57:37:19
Eric
Six.
00:57:37:20 - 00:57:39:01
Anastasia
Super early for somebody.
00:57:39:01 - 00:57:41:07
Eric
To write. Yeah, yeah, way too early. Fair.
00:57:41:09 - 00:57:55:16
Eric
Yeah, exactly. I guess I didn't blog until I was 30, now that I think about it. Yeah, yeah. So like but I had started to think about and talk about these things like very, very early. I always wanted to learn from what I was doing. I was that that was very natural and, you know, didn't come out until 2011.
00:57:55:16 - 00:58:10:01
Eric
So, you know, I was 33 when that happened. Yeah. So I was 33 with the book came out still way too young by the conventional view to be doing this kind of thing. But I just wanted to get to the truth. I didn't at that point. I was like, I don't care. I think this is true and people don't agree, and I'm just going to tell them how it is.
00:58:10:01 - 00:58:26:08
Eric
But I remember I'll tell you a story. I very vividly remember the first really big talk got invited to give. I was super nervous, you know, it was like me in front of 800 people. I had never given a talk to an audience that large ever before in my life. And I actually had a moment of crisis right before.
00:58:26:08 - 00:58:39:06
Eric
Or I was like, what am I doing with my life? I'm an engineer, you know, I was a computer programmer. I was like, wait a minute, I'm not a fame seeking person. I'm not a celebrity. I don't want to be a celebrity. Like, what have I done with my life? I just, why am I doing this talk? Why am I so nervous?
00:58:39:06 - 00:58:52:03
Eric
And I was, like, hyperventilating in the bathroom backstage, like, what am I doing? I realized I had to come up with a reason why I was doing. I was like, okay, what can justify the suffering that I'm going through right now? Why am I doing this? And I was like, am I trying to get famous? Am I trying to get this?
00:58:52:03 - 00:59:14:23
Eric
Am I trying? I can remember being like, okay, okay, clear all that stuff aside, I didn't even know if anyone was going to come to the talk simultaneously. Nervous. There'll be too many people there and also nervous there'll be nobody there nervous and embarrassing myself. It's just the fear of failure again, right? I was going to humiliate myself at this time and I thought, okay, but in that audience, if there's even one founder who, because of what I shared today, will avoid the pain that I experienced in failing.
00:59:14:23 - 00:59:32:10
Eric
If I help one person, this suffering is worth it. And I just. That was my North Star as I went through this transformation of like, I was just like, okay, I can't solve everybody's problem for everybody. I can't guarantee that I'll be a success or whatever, but I can help one, I can help one person, and maybe this will be the last talk I ever give, but if it helps one person, it'll be worth it.
00:59:32:10 - 00:59:45:07
Eric
So it allowed me to move away from this. Like, what is the long term plan here to just like, let me just put one terrified foot in front of another and see what happens. Now it blew up. It became this whole phenomenon. Of course, the book sold millions of copies. Like all these good things have happened to me as a result.
00:59:45:07 - 01:00:00:17
Eric
And you have to realize how unusual that is. Most people who write a book about entrepreneurship doesn't sell any copies at all, and it does not provide the career acceleration that it did for me. And you got to understand is I had no idea that was going to happen. I had no inkling about it. I had to choose to do it for its own sake.
01:00:00:18 - 01:00:15:11
Eric
And I think that is the thing. A lot of people who want to become more famous, or they want to become more their wisdom to be acknowledged, they have to really get clear. It's like, well, are you actually trying to help people, or is this just a new kind of status farming for you? And a lot of people who become wealthy, they don't like it.
01:00:15:11 - 01:00:28:15
Eric
They want more people. They want to be treated with respect. They want to be listened to. They want to have influence. They want to run for office. They want to run the world. You know, like they need more. They already have more money than they can possibly use, but they want what they want more. And I think although those motivations sometimes work, it works out.
01:00:28:15 - 01:00:44:04
Eric
I think that is a really sad path. So for me, trying to figure out like, who is this for and how can I be satisfied? Even if it fails, quote unquote, I'll still be satisfied because it will have been useful to somebody. I'll be proud to tell my kids that this is something I did. Whether or not a quote unquote works like that.
01:00:44:04 - 01:00:48:03
Eric
That has been a very helpful question for me as I've plotted my next steps all through this journey.
01:00:48:04 - 01:00:49:03
Eric
That's amazing.
01:00:49:06 - 01:01:18:21
Anastasia
I love it so very early on in your early 30s, he already focused on whether I'm I'm quietly creating value for the world as opposed to what am I getting out of it? Because this brings us to the question of meaning and purpose. On the personal level, we talked about purpose for products and businesses, but I'm actually very curious to hear evolution of your thinking of meaning and purpose as you were going through this unexpected fame and success.
01:01:18:23 - 01:01:20:21
Anastasia
And where are you today on that?
01:01:20:22 - 01:01:36:02
Eric
Well, you know, most days I still feel like a failure. So, you know, just to be honest, like, yeah, I, you know, I can think of all the mistakes I've made and all the other things I could have done that would be worth so much more money today. You know, like you're on Silicon Valley. The opportunity cost of all your mistakes is super high, right?
01:01:36:03 - 01:01:43:03
Eric
Like, I could have been a seed investor in, like, so many companies that are worth billions or tens of billions or hundreds of billions of dollars today. And I missed my chance. You know, it's.
01:01:43:03 - 01:01:43:16
Eric
Like.
01:01:43:17 - 01:01:45:04
Anastasia
So how do you deal with that?
01:01:45:05 - 01:01:57:13
Eric
Yeah, yeah. It's listen, the first time it happens, it's super hard. And then, you know, you start to get used to it, start to be like, oh, this is just this is just what it means. And there are people, a lot of people, even in Silicon Valley, who think what I do is very disreputable because I don't spend all my time building companies.
01:01:57:13 - 01:02:11:00
Eric
I waste a lot of time talking and writing and doing those other stuff. And, you know, and then some people would say, I'm not a very good CEO. You know, I'm not good at this. I'm not good at that. Okay. Like I accept all those criticisms as, as perfectly valid. You know, for me, I love ideas. I want to get to the truth.
01:02:11:00 - 01:02:13:09
Eric
That's that's more motivating to me than making money.
01:02:13:09 - 01:02:13:17
Eric
So.
01:02:13:18 - 01:02:21:18
Anastasia
So you basically found what it is that drives you personally on a very deep level and will continue driving it probably for, for a long time.
01:02:21:19 - 01:02:28:20
Eric
Yeah, I would say it's not so much that I found it as I accepted it once I realized that, like, I'm going to do what I'm going to do, like that's just who I am.
01:02:29:00 - 01:02:31:05
Anastasia
And it found inside of yourself, essentially.
01:02:31:06 - 01:02:32:13
Eric
Yeah. It was I felt more of a.
01:02:32:13 - 01:02:49:01
Eric
Discovery than a choice. And I'll give you just since we're talking about it like this is another thing about being a founder, I feel like people who I work with, they expect me to be able to do this magic trick. Like when I'm really working on a company especially, it's just I can somehow manifest all these incredible things, right?
01:02:49:02 - 01:03:02:05
Eric
Like people invest all this money in what we're doing, that people have all this belief in where we're at, you know, be incredible. People want to come work with us. And so there's so many times when someone comes to me and they say, look, we have this impossible problem. Can you solve it? I'll come up with a solution that, like, blows their mind.
01:03:02:07 - 01:03:19:10
Eric
Like how on earth like and to them it's like a magic trick. And when I was young, I was like, I'm a genius. I can do this magic. I have this magic power. I must be so much smarter than everybody else, like I thought I was the one doing. But then what you discover. I found this a couple of times in my life where all of a sudden the magic stops because I'm being called to do something else.
01:03:19:10 - 01:03:32:08
Eric
And it's very painful, actually, because I was like, all in 100 on this thing, and now it's time for me to do something different. And a lot of founders struggle with this. I've had to exit. I had to leave the company. I've had to bring somebody else in. I've had to hand over the reins. It's not. I don't even want to.
01:03:32:09 - 01:03:47:03
Eric
I'm like, it's so frustrating. I liked what I was doing before, like, why do I have to do this new thing? But that's just that's how it is. That's that's the superpower of an entrepreneur. It's only present when you have that real, authentic alignment with what you're doing. It can go away. And I've had a lot of people in my life who don't understand that they feel betrayed.
01:03:47:04 - 01:04:08:10
Eric
They're like, how come you won't do the magic trick for me anymore? And I'm like, I'm not really in control. I don't make the magic happen. And in the book, I actually try to explore the deeper question of where does this magic come from? What creates it? And I'm trying not to be mystical or supernatural about it. I actually think it has a material, scientifically valid explanation, but you can also interpret it in a different way if.
01:04:08:10 - 01:04:08:18
Eric
You choose.
01:04:08:18 - 01:04:11:15
Anastasia
I'm really intrigued. Any chance you can actually share?
01:04:11:16 - 01:04:27:00
Eric
Oh, sure. Yeah, I'm happy to talk about it if it's of interest. Take, for example, how come the French restaurants in France are better than the French restaurants in America? Because anyone can learn to cook French food. You can. You can go to the Cordon Bleu. You know, you can learn from a book. You can watch Julia Child, you can get excellent ingredients, you can make food.
01:04:27:01 - 01:04:43:21
Eric
And in fact, or if you want to create a French business, French food business, you could go higher. The best chef in the world in France and convince them to come to America and set up shop here. And yet it won't be. Even the best French restaurant in America is like, maybe on a par with like the average French restaurant you can go to on the street, walk down Paris, okay?
01:04:43:22 - 01:05:01:10
Eric
Like it's just there's this disparity in quality that people make up, all kinds of stories about why, you know, the food is better, they use better. There's something in the jumping genetically about being in France, but it's like none of these explanations make any sense. But I took the actual chef, we imported the special and we did everything the same, and yet it's still not as good.
01:05:01:10 - 01:05:20:12
Eric
And you see that? Of course I'm not. This is not unique to French cooking. This is true for almost any kind of regional product where like being in the place that that's the that's the company town of that thing. It's better there than it is anywhere else. Why? And you eventually if you study this, you'll eventually come to realize that it is actually not the chef that makes this happen, but the customers.
01:05:20:12 - 01:05:38:11
Eric
The reason it's so much better there is because to be successful at an even a minimal level, there you have these extremely discerning and demanding customers who have all these options. And it's just you have this pressure, this natural selection, this gravity that is pushing everybody to up their game. Whereas if you're the only one in town, you just can't.
01:05:38:12 - 01:05:57:09
Eric
You try your hardest, but you don't have to actually do it that well to be successful. And like I was actually in Italy this last year doing some entrepreneurship stuff, which was super, super cool. And of course they were very keen to feed me really well, but it was really funny to hear them talk about what it's like to travel to America and eat the food here and like what we call Italian food in America, they find inedible.
01:05:57:10 - 01:05:57:18
Eric
They just.
01:05:57:19 - 01:05:58:01
Eric
Like, I.
01:05:58:01 - 01:06:20:03
Eric
Can't believe anyone with. It's like, what is wrong with you? They're just they can't understand it. But it's just like, so, you know, and there's this. The people of a place, the customers, the employees that like everything about that exerts a force on the people in that ecosystem. And we understand this as a kind of collective intelligence. For those who study this scientifically, an organization is actually literally alive.
01:06:20:03 - 01:06:41:09
Eric
It's elegant in the same way that you or I is. That's also true at the ecosystem level. So if you want to try to understand, like where does this magic come from? You have to understand that it is a synthesis. It is a combination of your innate like the entrepreneur is not useless, they are a conduit for this other thing happening and neither can exist without the other.
01:06:41:09 - 01:06:58:12
Eric
So when you see people have kind of confusion about entrepreneurship, it's because we have dueling stories about who is the actor in the story. You know, you heard an entrepreneur talk about it. You talk about like you go to Silicon Valley, like, how does how does a startup form but like the the genius visionary person plants the flag and says, I will do this thing.
01:06:58:12 - 01:07:20:02
Eric
And then all the other things happen. But if you go to an economics professor or you go, you know, in New York and ask people like how to start up form, they'll be like, well, first there's a market need. The market needs summons forth the firms to compete in that need. Those firms create networks and ecosystems. And the last part of the story, like some founder, winds up being the person who arranges things to their benefit to make it happen.
01:07:20:02 - 01:07:44:14
Eric
So in one story, the founder is the first part of the story and the other they are the least important part of the story. And one of the things that I've learned in my life is that these two stories are the same. They're linked together in a circle. They're both true. And the dynamism of this situation is that entrepreneurship is ultimately a collaboration of which the founder is the conduit or the orchestrator, but they're not the one who makes the music any more than the conductor is the one who makes the music.
01:07:44:15 - 01:07:46:22
Eric
On the other hand, it's pretty good to have a good conductor.
01:07:46:23 - 01:07:47:22
Eric
So anyway.
01:07:48:00 - 01:08:00:08
Anastasia
Talking about conductors, do you think in the age of AI, entrepreneurs will be more conductors of AI orchestras rather than those who channel human effort into an outcome?
01:08:00:09 - 01:08:10:17
Eric
No, I think that's ridiculous. We'll see. Look, I understand that there's a contrary view right now, but I think that ultimately AI is going to be a technology that we use to amplify human creativity, not to replace it.
01:08:10:17 - 01:08:12:04
Anastasia
Eric, thank you so much.
01:08:12:05 - 01:08:12:23
Eric
This was such an.
01:08:12:23 - 01:08:38:05
Anastasia
Amazing interview, and thank you for opening up on the very personal level. And I'm so excited about reading the book. I going to go right now and preorder it. Thank you so much for doing this, because I'm sure this book will be at least as impactful as the first one, even though it's hard to imagine. But I think it's timely and needed and deeply important, and I love that it's so deeply personal.
01:08:38:05 - 01:08:42:23
Anastasia
I think only deeply personal businesses and books truly succeed at the end of.
01:08:42:23 - 01:08:43:11
Eric
The day.
01:08:43:11 - 01:08:54:19
Eric
Thank you for the kind words. Thank you for saying that. Congratulations to all of your listeners who have had success in their careers and thinking about what's next, and I wish them the very best of luck. I hope they will also choose to be incorruptible forces for good.
01:08:54:20 - 01:08:55:11
Eric
Thanks a lot.
01:08:55:16 - 01:08:56:13
Anastasia
Absolutely.
01:08:56:14 - 01:08:57:05
Eric
Thank you.
01:08:57:08 - 01:08:58:15
Eric
All right. Take care everybody. Thank you.

Featured

Anastasia Koroleva

Eric Ries. Why Building Again Can Be Harder After Success

Read Full Transcript

Omar Haroun: “Outsized Impact is Incredibly Rewarding”