Eric Ries: Incorruptible by Design

I want you to look out the window. If you can see a tree, you are almost certainly looking at something older than this idea that companies exist to maximize financial profit. Welcome to the Long Now podcast. I'm your host, Rebecca Lendel, Executive Director here at the Long Now Foundation. So today's episode is a fireside chat with Eric Rees. Eric is a legend for those of us fascinated by these questions of institutional longevity. How do we grow institutions that are aligned with human flourishing that can thrive for decades or even centuries? And I don't use that word grow lightly. Eric has this way of seeing institutions as sacred organisms, which invites us to think about governance as a way to steward and nurture and protect more so than own and control. One of my favorite things about Eric's work is the way he operates as a kind of Silicon Valley lexicographer. He invents precise, sticky new language for these concepts to help shift how we think about these things. And Eric reminds us that these ideas we treat as permanent are actually astonishingly young in our history. And they're also of our own imagining, so they can be reimagined as needed in service of a better world. This conversation is moderated by Long Now's Denise Herne, who gave her own Long Now Talk a few years back on embodied economics. You'll find that and a ton of great resources in our show notes, along with a link to Eric's excellent new book, "Increptable." Now before we dive in, a quick note. Here at the Long Now Foundation, we are a counterweight, deepening our capacity to move wisely in these times of uncertainty. If you feel so inspired, we hope you'll join us. Head over to longnow.org/donate to become a member and get connected to a whole world of long-term thinking. With that, we're excited to share with you "Increptable" by design with Eric Rees. Welcome Eric. Thank you. And I'm Eric, was here six years ago. Our last Long Now talk right before we shut down for COVID. I remember it well. Yes. And you say that that sort of emblazoned in your mind, actually? That was my last event also before. I mean, it was really right before the pandemic shut everything down. So yes, I have it. It's nostalgia tinted in my mind. It's a very special night, so. Well, we're so glad to have you back with us. So I'm going to start with a little bit of a lob. I feel so fortunate that I was a pre-reader on your incredible book, along with hundreds of other people. I can't claim that I was special. But I'd love for you to orient our audience tonight by just giving a sense of why this book why now, why after the six years that have passed since you've all been here, why did you feel it was important to bring this into the world in this moment? Yeah, thanks. And thanks for having me. It's always a pleasure to be with Long Now. Yeah, this book has been many years in the making. And it was very difficult to write. It took a really long time. It was very painful. So it wasn't like I had the thought, oh, that'll be fun to write a book about corruption. And I didn't anticipate it becoming topically relevant in the way that it has. I don't have that kind of timing or pressure, unfortunately. But this has been like the natural outgrowth of my other work. My daily practice is still people come to me for advice starting companies, building companies making them more innovative, improving their management system. That's the privilege, I guess, of being the lean startup guy. And so for many years, I've had the privilege of getting to help people, usually in a very small way, build these incredible companies and create all this value and become incredibly wealthy and go from obscurity to becoming movers and shakers in the world. So I've had a front row seat and a lot of value creation for which I'm very proud and think it's wonderful. And I've also seen the dark underbelly of this business. And more and more and more, I felt like I was watching a slow motion tragedy. These companies that used to be so special all wind up in the same, really boring, indistinguishable place. Some of them, like, downright malignant. Others just bureaucratic as if that was okay. And others wear the founder, the leader, utterly lost control of the company, either because they got kicked out against their will or just because they were like Frankenstein and his monster. No longer able to command or control the thing that they had made. And so that wasn't like, now I can talk about this in a philosophical way. And it's just like global societal problem. But at the time, as it started to happen to me, it was very personal. It was just I'm trying to help people avoid this fate from happening. And I felt like I was up against this invisible force that I couldn't name. I thought management was the most powerful force in the universe. And turns out it isn't, you know? Who knew? So we would create these incredible management systems. Both, sometimes in a startup and we would take it public and build this incredible thing. And then we would watch it like be deformed. Like one of those time-lapse videos of something being crushed in a slow motion crusher or falling into the gravity well of another planetary body. And on the other hand, I was also at a front row seat. I did a lot of work in very large companies helping them transform and become more innovative. And I just, I was, was maddening because when I would talk to people about the problem, they would be like, what problem? This is just how it is. Like gravity's not a problem. It's just the thing that pulls you down to the earth. Everybody knows that. But I don't know. I'm wired to be like, no, every problem can be solved. We have to first understand it. And so this was a long time coming for me to try to figure out what is this force? It is more powerful than all of my rich and powerful friends combined. That seems to change them without them even necessarily having the conscious awareness that the change has happened. And at the same time is causing immense and catastrophic value destruction on top of ecological catastrophe and these other problems too. So that's how it started for me as like, I need a practical solution that I can help people get out of this bind. And then after a while, you know, it's kind of like hand-to-hand combat. You know, you talked to one founder at a time, one company at a time, and you're like, hey, I think you should do something different. I think you should change some of your business practices. You should violate the best practices that everyone's telling you are the best. And you get better at it, slowly over time. You start to get people being like, oh, yeah, that sounds interesting. I think I'll try that. And eventually you reach a stage where people start saying, that sounds like a great idea. I'm going to go talk to my co-founder or my board or my lawyer about it. What else has been written on this topic that I can read to prepare for that meeting? And just pro-tip. You don't want to say nothing in a situation like this. Your credibility like instantly evaporates. You're like, nothing that can't be like, oh, you had me, I was doing fine, but nothing surely something has been written. And so I've tried everything I could think of to avoid having to write this book. So you can read these incredible academic papers. There's these incredible case studies written about these individual companies. There's endless number of manifestos that will exhort you to do the right thing. Would you find that helpful for your meeting with your board? And the answer is no. And so I was like, oh, god, it's happening again. But I think this is what is going to be required. And of course, a lot of authors talk about this. Writing is really first and foremost for your own sanity to try to understand and give name to and work out this stuff. So my own thinking improved a lot through the course of writing the book, to the point where I got to that really special point when you're trying to advocate for a new idea. You want to get to a level of mastery of it where everyone asks you the same questions. Every company is like, what about this? And you're like, what about that? Yeah. Oh, good. He's just like, oh, let me get, let me now give you a pre-can pre-fabricated, like perfectly attuned answer for the objection that you have. And then I started to get not just good at the questions that founders would ask me. They'd be like, well, I talked to my investor. And I'm like, let me guess. He said it's probably too early to worry about that. And I'm like, how did you know? Yeah. So you get to really deeply understand a problem. And that to me, it's like, OK, now it's time for a book. Well, and I want to talk about that process of finding clarity and also finding clarity in languaging what you're coming to realize about the system. Because I found in your book, on the one hand, you use a lot of very visceral language to describe what's happening to companies. You say companies are getting surgically deboned, or that it's like they're entering a meat grinder. You know, these very sort of violent-- The real circle book. Yeah, these are sort of violent analogies. So I want you to talk about that. And I also want you to talk about you propose in your book, this notion of financial gravity, being this kind of energy, this sort of dark matter, if you will, of our systems that's always present, that is drawing, drawing certain outcomes out of the system in ways that we don't even realize. And so I want you to talk us through that concept and how you gave language to what you are seeing companies experience. Yeah, there is a lot of very violent language in the book because this is a very violent system. And, you know, like I mentioned, that I really see organizations. So I think a lot of people who are founders or builders at heart, artists at heart, we see organizations as vital living things. And so what we live in the era of what's called shareholder primacy, which says that an organization is actually just, you know, psych, not a living thing at all, actually just a financial instrument for the-- for maximizing returns for shareholders. And so this is a form of violence to reduce a living thing into this like very material, very mechanical thing. Something really precious is lost when we do this. And I think that's what we're talking about. I think it's important, big part of the book for me was it's kind of an old fashioned book trying to reclaim language and concepts that I think our grandparents would have been much more comfortable applying to this situation, starting within the title with the word corruption. So when we talk about management, when we talk about companies, we tend to focus on the surface characteristics. Things that, and they're not unimportant, but things like business model, strategy, culture, even vision. These are the things that we can see in control. And I wanted to get at, well, what are the underlying forces that act on organizations, whether you want them to or not? And so I borrowed a lot of metaphors from biology and from physics to try to talk about what is going on? Like, why do all these companies wind up in the same pathetic place? When they started with different founders in different eras, from different countries, with different cultures, different industries, different missions, why are they all the same lame and state? If I take two public companies, and I erase the names from their press releases and show them to you, you won't be able to tell me which one. We were produced by the same crisis, communication consultants, okay? Like it's the same, like, Pablo that says nothing, we're used to that. But the very fact that everyone winds up in the same place, to me, it was evidence that there must be a force behind the scenes aligning them to that particular set of values, that particular set of behaviors. And so I call the force financial gravity by metaphor to the thing that pulls us all down to the ground. And in the book I give the analogy that if you see a bridge collapse, if someone says, well, why did the bridge collapse? You ask an engineer, you saw this bridge design collapsed, why did it collapse? You say, oh, gravity. That's not a very good answer. It's like, well, it's not untrue, that's facile, but, you know, I guess that's true, but is that really all we can say about it? No, we can say, well, hold on, was it properly designed for the load it was meant to carry? How about the materials were they fatigued? Had there been corrosion on the metal? Like, we can, with all these questions, we can ask about the design of the bridge and then by studying why it collapsed. Yes, in some ways, gravity is the proximate cause, but by seeing how that pressure and stress affect the structure, we can learn to build stronger and better structures. And that, to me, is the goal of the book to create what I call the architecture of institutional longevity. What can we do to deal with the fact that we have built a financial system that has gone ever, ever larger? We live, you know, in the era of total financialization of everything, and that thing has a scale and a size all its own. And the laws of financial gravity that I work out in the book have to do with how financial systems transmit values unconsciously to the people who live in them. And what's interesting about that is it's not about particular values. Like, we have a financial system that is really hard-wired for extraction and short-term thinking. But there's no, that's not a law of nature. That's just a side effect of the kind of system that we have built today. So if we're going to build organizations that have to exist in this very hostile climate, they better be geared up to be very strong to resist all that pressure. Like being on a planetary body with a gravity's too high, that's not inconceivable, but you better bring strong materials with you when you build your spacecraft. That's kind of the idea of the book. There's another book that I really enjoy called the Unaccountability Machine by Dan Davies. And his diagnosis is essentially that our systems have now become so complex. And as you say, financial ownership is so diffuse. It goes through layers and layers of ownership that are often very opaque. And because of the complexity of our systems, we have these accountability sinks, where it's very difficult to hold anyone responsible really for what the system itself is producing. And not only that, but that the system itself is producing these emergent outcomes that nobody really wants. But no one's responsible for fixing. And I'm curious how his diagnosis threads with how you're articulating the notion of financial gravity. Yeah, yeah. It's a very similar idea. The problem of accountability comes up a lot in the book, because if you believe that an organization is a super organism-- I have a section of the book called "Can a super organism say I'm sorry?" Because is there anything more ridiculous in modern life than a corporate apology? We all know they don't mean it. What is the point of issuing this? Like you're talking to a customer service rep on the phone and they're explaining some completely horrible evil policy to you. And they're like, I'm very sorry. Are you? They may in fact be very sorry. But what does that matter? They're not empowered to do anything about it. And yet, Contra, Davies, I think, we do have mechanisms for corporate accountability, actually. And we can get into the history of how we got here if people are interested. But one of the things that's really interesting is although our modern life is full of these complexities and we have all these companies that have spiraled out of control and all this bad stuff, if you ask people, why does it happen? Normal people, not governance junkies like us. Normal people. They'll be like, well, it's just inevitable, I guess. It's like why do things fall down? Because gravity. Yeah, when there's a lot of money and greed and scale and size, these things just happen. Your accuracy, these things just happen. But then you're like, oh, really? Is that true for every organization you interact with in your life? And I'm like, yeah, it's inevitable. I just said it was inevitable. I said, what about Costco? I was like, oh, yeah, not Costco. Oh, it's not interesting. And you're like, what about Patagonia? No, no, not them. They're great. And so how is that possible? And it turns out that in almost every industry, we have these outlier exceptions that everybody knows. And they're just exceptions. They're the exceptions that prove the rule. We pass right by them. I'll even noticing that they're there. But if you press, why don't we make a new one of those? Everyone you talk to would be like, oh, we can't do that. That's from the past. That's how we used to do stuff like that. I remember meeting one of the executives at Vanguard. Vanguard has a super weird structure. A lot of you have a Vanguard mutual fund. Probably don't even realize how weird their structure is. And I remember talking to their general counsel, and he was telling me they were celebrating their 50th anniversary. I think this year, maybe last year. And he was like, yeah, it was so weird that we had to get a special exemption from the SEC for permission to form it, because it's kind of too customer-centric. It's not extractive enough. People were come reflexively very suspicious about it. But it was only 1975, so it wasn't yet like illegal to do that. It was just suspicious. So they got this exception. And I asked him in the 50 years since, is anyone else applied for that exception? He's like, oh, no. Who would copy Vanguard? Certainly not. And there's just a million things like this, where we have the evidence right in front of us that there's some alternative way, but we don't feel empowered to make those things anymore. So I think it's important to study the negative, like the downer feeding the meat grinder bad stuff. We had to understand where that comes from, the financial gravity can be kind of depressing. The first part of the book is called the shape of the abyss, so you know where my head's face was at when I wrote it. But we have to confront how evil and terrible the situation is, because it's very dark. But we also have these outlier examples that prove that something else is possible. And what's so interesting to me is these outlier companies exist in today's fallen environment. They're facing the same pressure, the same gravity, the same-- whatever you say is the reason why it's just so. These companies also face and are somehow immune. So I made a study of those companies and started to incorporate techniques from those companies into my own practice of advising people. And it was like utterly fascinating to watch, because remember, like, one of the stories in the book is about how I work with Anthropic, the AI company. And we set up a very unusual governance structure by modern standards called the long-term benefit trust, which we can talk about through Co-interested. And again, I don't take any special credit for their success. Obviously, I picked only a very bit part. But when we talk to-- and we're talking to investors about it, and they're like, this sounds really weird and new. You know, are you sure you want to do something new and different? It's like, oh, I thought you were a bold contrarian. Really? But you wanted to do this bold and new subraminal. I was like, well, actually, this structure, like the German optics company, Zeiss, anyone have Zeiss lenses in your glasses? Zeiss has had this structure since 1885. So it's not that new, actually. Just because it's new to you doesn't mean that it's new. And that's what's so interesting is that not only we have these exceptions, each type of exception has its own body of academic research that shows that these alternative structures, even though they violate every modern best practice, are better. I'll summarize for you. Just better. We'll get into the details of the line. They're just flat out better. They have better longevity. They have better financial performance. They have better-- they treat their employees better. They're better for the environment. You name the metric someone that studied it and found out that it's better. And if you talk to the researchers who study these things, and you say, does it ever bother you, that you have this better thing? And nobody does it. They're like, oh, I don't know. That's my lot in life. I study this thing that nobody does. But it's absurd, and then you have to accompany builders, and they've never heard of it. So how can it be known-- some of these things known for hundreds of years to be better, and the people making new organizations have never heard of it? That, to me, seems like almost like an open secret, an impossibility if markets were efficient, if they were really about selecting for value creation, if the myths we tell ourselves about what our financial system is really doing were true, then we wouldn't see any of these symptoms. Yet we see them every day, so sums up. Well, that's what I think the true power of this book is and is in day lighting these examples. And I've had a number of friends that have worked in alternative corporate governance because that's the company I keep. And yeah, it's just so exciting to see you with your incredible network and platform day lighting these alternatives. And I wanted to say, the book sort of traces these almost widening circles of leverage. You start with a founder's dedication to mission and vision, and often they feel like that's going to be enough to carry them through. through the meat grinder or the financial gravity that they're kind of sheer force that will alone is going to help them withstand these pressures. And of course, you say, no, that's not enough that you need to go through almost these fractal levels of design, of institutional design, including organizational culture, different governance mechanisms, finding aligned investors, even then you sort of lead towards the end of the book looking at standard settings, using your supply chain power once you've actually gained leverage as an institution and ultimately building civic infrastructure. So I wanted you to just help trace for us how you set up the book that way, why you kind of go in these concentric circles and how you see them fitting together. - Okay, yeah, yeah, that is how the book is constructed. Like almost like zooming out, if you remember the old Ames video powers of 10. - Yeah. - Kind of how I see it. - I love that film. - As like a tiny spec and then you just zoom out, zoom out, zoom out, zoom out till you encompass more and more and more of the world. Because ultimately, part of the issue here is our feeling of lack of agency. Everyone just tells me this is too hard, it can't be done, everyone knows that it's impossible. Blah, blah, blah, we've been here in that a long time. And so I wanted to start with the things we have the most agency over. So whatever else you do, you can decide what is the purpose of your own work. That's a fact that exists only between the years. No one has any say over that and no one can influence or control. You don't even have to tell anybody what the purpose is. You're your own private secret if you want it to be. And it turns out just at that level, we have evidence that having an actual purpose, not just making financial returns, already is a source of competitive advantage. And if you've never looked at any of this data, there's like reams of it. So we can, we can talk to you to talk about the mechanics of how this works and what it is. So in the book, I start with, when we get into the solutions, talking about the definition of what it means to make a profit. Because that's something that we can just choose for ourselves. We don't need anyone's permission to do it. We don't need to get, we don't even need our employees to consent. We as the leader can just decide that my view is that a four-profit company is one that maximizes human flourishing. That's what it means to make a profit. And our formal definition that we carry on in our heads doesn't make very much sense. The one that's about revenue might as cost. And in the book, I go through all the problems that, I'm sure many of you are familiar with, with deferred liabilities and negative externalities. And more importantly, the idea that you can consume a human life as an input factor of production and call that profit. These are absurdities. And we all know it. If you take an econ class, I'll tell you all these problems. But then it'll be like, never mind, anyway, back to our regular conventional definition. And yet, we have the evidence. We have the evidence that if you commit yourself to some higher purpose-- and I know that sounds-- uh-oh, what I was going to talk about. But even if your purpose is as simple as I want to make a high-quality product, I want to make my customers lives a little bit better. I want to bring a little beauty into the world, let alone if you want to solve climate change or some other mega problem. The second you say that the purpose of organization is to do any particular thing at all, you are a business revolutionary, whether you know it or not. Because we live in a business climate that is utterly hostile to that simple statement. So that's the beginning. We have to reclaim what I call the builders intuition to Morale calls this build more-- create more value than you capture, which is that there are better and worse ways to make money. And the good one is the one where you create net new value in the world and capture something for yourself. Other ways of making money that we valorize and glamorize today are grandparents and great-grandparents. Would have seen them not only as morally dubious, but they would have been crimes. Not that long ago, like share buybacks were illegal until like 30 years ago. And I could list you a bunch of other things like that that would have been actual bona fide crimes. Yet we're now celebrating. And yeah, I constantly being told, well, you got a hand at to him. At least it works. Made a lot of money. Got a hand at to him. Like, you know what? No, we don't got a hand at to him. Actually, the reason it's dangerous is because it works. That's why we don't do it. So anyway, I feel like our grandparents had a wisdom that we seem to have forgotten. So we start with the stuff we have complete and total control over. And then we gradually make the problem a little bit more difficult. And I kind of felt like for people can walk this road with me in this book as long as they want. They can go all the way to the end if they have the courage. But if they just want to take a few steps, every technique in the book stands alone as a useful thing you can do. And yet, together, they have a symbiotic power. So yes, then we talk about the management system, the fact that we have companies that claim to be mission driven. But I would call them more like mission hopeful. Like they hope that they do some good sometime in the future. Maybe they have this lofty mission statement, but they are committed to a legal purpose that is very different. Anyway, there's all these problems that enlist. And then as we widen further, we get into what are kind of the cultural issues. I try to really hard not to use trendy modern words like culture and stakeholder. All the words choices in the book. I try to be as old-fashioned as I could. We talk about fiduciary duties, not stakeholders, and talk about ethos, not culture. But in this domain, we have to deal with the fact that if we want to have institutional longevity, you have to be prepared for people to make decisions in line with the mission when no manager is present. How can you control such a thing? Well, it can be done. And then we zoom out even further. We get into issues of shareholders and boards. So many of the stories in the company are just a board full of independent directors, just for no apparent reason deciding to betray the company and sell it out. That's like a recurring problem that happens all the time. And yet, it's considered a best practice to have a board full of independent directors. One of my favorite tidbits I learned in the book is that Enron was named one of the five best boards in America, because it was all had all these awesome independent directors. So a lot of the difficulty in the book is just to accept. It was hard for me. It took me years to accept this, that most of the best practices we've been taught are value-destroying. And that's not just like my personal opinion. But we have reams and reams of research. At this point, there's a whole chart in chapter nine. It's literally just best practices to destroy value. Practice. The reason is supposed to be good, what the evidence shows, and we just do it over and over and over again. And then as we get further and further out, then yeah, then we get into alternative corporate forms, the power of standards, and the ability to create organizations that are not just resisting the force of gravity, but using it to create positive externalities. And I think that is actually the most exciting part of the book by recognized. This is not for everybody. That's OK. When you were doing the process of writing, what was one case study or example company that surprised you and that was exciting to include? Gosh, there's so many. That's really hard to choose, because part of the fun of this book was I got to learn a lot of new stories I didn't know in part of the research. Because if you want to write about institutional longevity, you can't only write about trendy new companies that have been around for two minutes. You have to talk about companies that have been around for a while, which has led to interestingly among early readers, we've had people who are like, why are there no startup stories in here, and other people who are like, why are there only startup stories in here? And it's like, yeah, well, we have to talk about startups that are still around. So now they're really big, but actually, you got to remember that this was just two guys in a garage, not that long ago. One of my favorite stories in the book is the story of Novan Nordisk. To be well, Novan Nordisk, the makers of GLP1. And it's a crazy story, because they've been around for more than 100 years. And they've been owned by a nonprofit foundation this whole time, even though they're a public-lusted company on the New York Stock Exchange. And the story begins when one of the first women to become a doctor in Denmark diagnosed with diabetes at a time when that was a fatal diagnosis. Her husband was a Nobel laureate. And despite her fatal diagnosis, she agreed to go with him on a tour, is like, lecture tour of North America from Denmark. And they came to North America. They're going to a lecturing. And one night at dinner, one of the scientists at their table told them about these crazy scientists in Canada who had just synthesized insulin for the first time. Could be a cure for diabetes. And so she convinces her husband that they should go visit this laboratory in Canada. They do. They see the technology with their own eyes. And they're like, we've got to bring this technology back to Denmark, not just to cure Marie, but to cure many, many people. This could end a fatal illness once and for all. And they make an agreement with the Canadians. They were like, look, we don't believe it's fundamentally right for the manufacturer of a life-saving medicine to ever have the temptation to be corrupted as follows. I have your life-saving medicine. I could charge you a fair price for it, or I could charge you whatever I want. So like way ahead of Martin Scrowley, they knew what was coming. They had tremendous foresight that that was a really dangerous and evil thing. So they were like, and this solution to them was super obvious. Well, we'll create a non-profit foundation to put that at the center, what I call a spiritual holding company, not a religious thing. The spirit, the animating spirit or essence of this thing will be science as a public trust. And around that, we will build a subsidiary that is a for-profit company. So it's called an industrial foundation or steward ownership in the academic literature. And they have put that structure in place in the 1920s. And it has endured all the way till now. Like I said, it is a multi-hundred billion dollar company. It has gone public. It has had all the crazy stuff. And we can tell these stories if you want, because they're really wild. The crazy stuff that's destroyed all your favorite brands and all the companies you know that have gone bad. People have tried all that same stuff in Novenora. It's going to just doesn't work. They're just like, no, thank you. Thanks for coming by, but no, we won't sell the private equity or whatever crazy thing you want us to do. We have a mission to do this thing of science as a public trust. That mission has created literally more than five hundred billion dollars of shareholder value, even though it was done by nonprofit trustees. Anyway, I like the story so much, because when people tell me about their corporate structure, they're like, who advised you? And they're like, I got this great bank or I got this great lawyer, I got this great VC. I got all these super smart people. I get to be like, oh yeah, that sounds great, but are you sure that you're smarter than a Nobel laureate? (laughs) Because before you get all excited about that, why don't you go study with these guys figured out? In 1920, it's not some recent thing. They worked this out from first principles and it manifestly worked. So what's so great about our best practice that we came up with five minutes ago? I don't really understand the appeal. So, I'm not sure if you're going to be able to do that. That was really fun to like to get those kinds of stories. They're not just fun stories to read, but they're super practical useful meet stories to use in a meeting. Because I can just tell that story and be like, now what we saying about how it can't possibly work? Marie and August Crow would like a word. That's interesting because in that story, a company is choosing to-- essentially to open source or to cap its own profit margins on something. There's also, I come from an anti-trust background, and there's precedent in the past when there were the big-- the trust-busting era-- that the government imposed mandatory licensing of IP. Oh, yeah, obviously. And so I'm curious, do you have an opinion on whether it's more effective to come from the state to do mandatory-- kind of like open source in-- Oh, it's better we would be off right now if we had mandatory licensing of creative works for LLMs, right? But yeah, anyway, that would solve 25 different problems at once. OK, so I think-- I had to be careful when I answered this question-- I think the policy implications of this book are quite obvious. So I decided not to spell them out. The book does not address policy questions directly at all. Yeah. Because I feel like in our hyper polarized age, we have become obsessed with the question of what companies should and should not be allowed to do. Which is a very important question. I'm not saying we don't need to talk about that, but we got-- feel like plenty of ink been spilled about that. And comparatively little, or maybe even no ink spilled, over the kind of old-fashioned question about what we as company builders ought to want to do. And when I opened up that space for myself to just say, I'm going to write a book about what we ought to want to do. What is actually value maximizing? What, in fact, is profit maximizing as I define it? It to me, it gave me like a superpower. So I'd be like, OK, well, in the meantime, while the world is debating this policy, like, what can we do today right now to build an organization that does the right thing? And take Capped margins. It's funny. You mentioned that because Capped margins come up a lot in the book. And margin is a really interesting economic concept. Because generally speaking, we teach in business schools and just in general in business that more is better. So higher margins are better than lower margins. Everyone knows that higher margins are better than lower margins, right? The more margin you have, the higher your stock price will be, the more power you will have, the more freedom you will have, the more every good thing you will have. But we also, in a different class, teach people Jeff Bezos' dictum that your margin is my opportunity. So how can both things be true? Jeff Bezos would say having an excessively high margin is a corporate liability. It makes the space opens up the space for competitors to enter. So I feel like there's these contradictions like lying around everywhere in-- will be teach. And the core idea, this blew my mind when it occurred to me. And maybe you'll find it mind-numbingly obvious. Because I feel like in retrospect, it was super obvious. But I lived-- the majority of my life without ever noticing it is that we teach people that success will give you power. So when you talk to someone about doing one of these wacko things that Eric's suggesting, they'll be like, oh, that's so nice. But why don't you wait and get product market fit first? Have a bunch of success, have the leverage. And once you have the leverage, you can make everything the way you just the way that you want it. And we call it, oh, OK, good. I can put it off till later. Well, one of the ideas in the book is that it's always too early until it's too late. So don't recommend you follow that advice. But the reason eluded me for a long time and it finally occurred to me, the problem is that the more successful you are, the more valuable you are as a target. So if you create something really valuable, if you met human nature, you're familiar with it, people will try to steal it from you. And we are teaching a whole generation of people to build these really trustworthy, really beautiful organizations. And there's like, their building is massive vault of the most underrated resource on the planet, trustworthiness, and most valuable asset in business. And they're just leaving it lying on the floor everywhere for anyone to just grab who wants it. So there's no doors, there's no locks, there's nothing. Because we can't even account for this asset, we can't visualize it at all, we don't even realize that it's there. So yeah, no wonder we preach margin and success and these sources of power. And then we want to lose in control of the thing because we've made something worth stealing. Well, that brings me to arguably one of our most important design challenges of building incredible institutions right now is with our AI companies. Sure. Both OpenAI and Anthropic, in essence, to varying degrees and sounds like you were involved, attempted to build structures that would insulate them from the financial gravity that you're talking about. That has worked somewhat well so far for Anthropic, although the industry itself requires so much capital, investment, of course, that they need to take on a huge amount of capital and that can skew the cap table. But then with OpenAI, of course, we all watch that drama play out in terms of the structure kind of dissolving. And so what are the ways that you would advise founders who are at the beginning of that journey? They do want to go on this exploration of trying to create a kind of iron-clad structure that can retain the mission and avoid the perils of having your cap table dissolve your original mission. What do you recommend that they do? And in particular with our AI companies, are you hopeful, at least with Anthropic, if you're comfortable sharing, that the structure that they've set up will be able to withstand the kind of mission. Well, so far so good. But we're talking about Gale Force, a level of pressure and insanity that is truly genuinely unprecedented in the history of the world. I think they just crossed $30 billion in revenues for port or something like that. It's crazy over there. So we'll see. And the Pentagon antagonizing them and everything else. A lot of really cool stuff happening. I will say, though, that the day that they stood up to the Pentagon and said no to that contract, someone sent me a video of people had gone to their office in San Francisco and put written chalk messages all around the office thanking them for taking a stand and doing the right thing. Wow. I was like, wow, that is not usually-- if I hear that there's chalk markings outside of San Francisco tech company, that's not generally how it's done anymore. It was actually very interesting. So yeah, it is super complicated. But what's interesting about AI-- so I've been advising companies for a while now. So I lived through the social media era. And I've been through a lot of these areas. I somehow managed to make no money in Bitcoin, which I'm very proud of. But the other era is pretty much all of them. I have done some level of work with the companies that you've heard of. And I've been talking about these kind of-- I was kind of like an eccentric collector of obscure governance ideas. I was like, my eccentric hobby, that people like, oh, that's nice. Some people collect butterflies. You collect this. You collect this. Petrile purpose dress. Yeah, exactly. And actually, I-- before the pandemic, at the time when we did the last thing, I used to carry around with me in my pocket. I actually made a deck of cards, a 52 deck of cards. A 52 card deck. I would sit with founders and be like, you want to turn to the structure? I got one for you right here, because I was like, I was trying to figure out how to communicate these ideas. That could be your next big business. Yeah, those cards could be-- they're going to be hot sellers. But that was back when people used to meet in person. So it was really helpful to have it. And then all of a sudden, it wasn't useful anymore. So what's interesting about the AI companies is there's something about AI that people intrinsically understand that it's super dangerous, like from the beginning, that all the AI founders, even the ones you like and the ones you hate, all started out from a place of understanding this thing as tremendous, but tremendous peril wrapped up in one. And so a lot of the standard governance, like tropes and ideas, just those founders are immune to the temptation to do it. And I was telling the story-- you know the story-- well, I was at the Vatican of all places that convened the conference on AI governance. And I found myself, definitely, what was record scratch moments? What am I doing here at 20 feet from the last supper? Having this meeting talking about AI governance. And I was on this panel. It was like classic Italian panel of me and like eight more people all on this giant panel. And it was like all the major AI companies were there. It was like OpenAI, Anthropic, Google, Meta, Palantir, Coher. I can't remember who else was there. I was like, every major AI company and then me. And I was like, what am I doing here? And I realized in the course of the meeting that every single person on this panel had been given instructions by corporate communications, not to make any news on this panel, except for me. I could say whatever I wanted. So I had a really good time. It was a lot of fun. But I noticed-- and I was pressing the panelists on this. I was like, look, we all have to acknowledge. Because it's supposed to be a conference about governance. Can we all just take a moment and notice that not a single one of the companies on this stage with me today has standard governance? Not one. Because it would be almost immoral to give this technology to a profit maximizing, paperclip maximizing sociopathic organization. Even the really evil AI founders were like, that's too evil for me. You've got to be kidding me. No, obviously we're not doing that. What are you nuts? So there's this intuitive understanding about. So the AI companies have been way more interested in alternative governance structures than the previous era. I think a lot of it's because a lot of people watch social media unfold. And it's just very obvious that what happened in social media that happens with AI were in really big trouble. Of course now we're seeing it happen. So maybe we're all in really big trouble. We can get to that if people have questions. But I think what's interesting is because the AI companies did that, because Anthropic created the long-term benefit trust and popularized that, they inadvertently created this proof point that this can work. Because when I used to tell people they should create this trust structure like that, everybody would be like, well, you're not going to be able to raise any money with that. It's like, well, Anthropic seems like they raised somebody. So maybe actually the talking point is not true. So it's been super helpful. And it turns out that more and more and more companies outside of AI. I think AI helped them see the danger of their own technology. And I tell a story in the book about someone who was like, I'm meeting with him. And he's like, I swear I'm not trying to create autonomous murder robots. But I don't know why everyone keeps saying that about my product. He was like, why does everyone keep asking me about that? I promise I'm not trying to murder anybody. And I was like, well, that promise doesn't make me feel that much better. Let's talk about what would actually make you trust-- like you asked me to trust you with this really dangerous technology. We're seeing that more and more and more as our companies become more capable. We're seeing more and more and more technologies that have this upside, but also what it means downside attached to. >> Okay, so we've got an interesting audience question here to extend this conversation a bit from Joseph who says extend your concept into an all AI run organization with few people. What sort of functions methods or guidance will establish an incorruptible operation? >> Okay, and nobody likes this answer, but it's just the same. It doesn't matter because there's going to be some human being somewhere. And we all know, I think people who like, utterly want to use AI to replace human beings completely, like I think are crazy and bad. So that's not-- and it's also not going to work. Technology is not even close to being ready for that. But also, like, it's like a category mistake about what is our goal? Like, what are we trying to create? If we build an economy of AI agents for other AI agents, who's it for? Like, why are we doing it? >> We can turn the whole planet into the Sims if we want. We have the power, but we could also turn it into a giant titanium cube if we wanted to. But why? What's it for? So I think that is silly. So if there's going to be some mix of humans and AI working together, then this is like an old thing that everyone in the software industry is known for a long time, that the values of the organization are passed automatically to the software it creates. So you see that like the org chart of a company shows up in the architecture diagram of the software it makes. Like, everyone's known this for a long time. What we're seeing now very clearly with AI, the hot problem in AI is the problem of AI alignment. How do you get the software to align its behavior to certain human values? But the problem of alignment is the problem of governance, going back a long time. I always ask people who's aligning the aligners. The people doing the alignment, if they themselves can't agree on what is the purpose of the work that they're doing, then we wind up in this really incoherent state. And when we watch, we've now gotten to watch, there was just an 18,000 word profile in Mount Sam Altman in the New Yorker this week. Like, we're going to get to watch the decoherence of this idea right in front of us. You know, it's being leaked like crazy, so there's soap, opera, and drama. So it's fun to get into the soap opera part of it. But to me, the much more existential question is, how do we create an organization that has coherent values in the first place? If you do that, any software you make or use will naturally be an extension of those values. I call it in the book, the phenomenon of mission transmission. And I can give examples of how it works mechanically. But again, this is not a metaphor. These are real operating procedures that we can learn to master. And I think that would be true if we had one employee in 1,000 AI agents or the reverse. It doesn't make any difference. We've got another audience question here from Larissa who says so much of how we work, particularly using lean tactics is focused on velocity. Yeah. Looking back, do you think the speed of change at a company impacts its ability to avoid corruption? And if not, would you change anything about your lean methods with this new structures in mind? No, I think Lee sort of has held up pretty well, but what else would I say? But actually, but I've been getting the question a lot. Also for fail on the lobby? Yeah, yeah, exactly. You can read it for yourself. You can, in that book, you will find there is one thing I got wrong, but I'll get to that second. A lot of the people who have been interviewing, I've been doing podcasts and stuff for the new book and talking about it for the first time. I keep getting the question, do I feel vindicated by what's happened since Lee startup was published? And I started to really like getting that question. I was like, yeah, yeah, I do feel vindicated. That's right. And I was the first time, but the first time I asked, I was like, "Vindica, what are you talking about?" I was like, well, you said that the change in technology that we're going through this is in 2011 is going to continue to accelerate. And we'll have two very specific effects. One, we will see the increased democratization of the means of production. So that cycle time in every industry will get faster. It will be faster and faster and faster to build pretty much anything. And secondly, partly as a result of number one, we're going to see increasing uncertainty in every business and every business plan. I was like, oh, yeah, that sounds pretty good. That is what we've been just like, it's not just true of this era, but that's been true of every single year of the last 15 years. We've seen nothing but a monotonic increase in both of those dimensions. And Lean Startup is a system for coping with the velocity of that change. And I think a common misunderstanding of Lean Startup is that Lean Startup is about creating that velocity. But actually, Lean Startup is a response to the capability of that velocity, the rate of change of the underlying thing. Another way of saying it is, people just want to say, well, okay, now you're talking about these immutable principles. But isn't that at odds with Lean Startup, which is about experimenting with everything? And I realized when I been getting the question a lot lately, like, oh, I guess I didn't make it clear. In order to experiment with things, you have to have certain immutable principles. This is the whole point. It's like if you're going to follow the scientific method, then the scientific method itself is not one of the things that is subject to experimentation. Because we've already said, we've committed ourselves to the principle that we're going to use data and not astrology to make our decision. You can't be like, well, let's just, yes, we made that commitment, but now I want to use astrology. It's like, well, no, sorry. That's not, well, I want to want an experiment about using astrology. It's like, nope, sorry. Like, we've already committed ourselves to these principles. And I thought it was very obvious from Lean Startup that we were talking about a philosophy of long-term thinking, for which there's tremendously good evidence that that is the foundation of all economic prosperity. We were talking about a humanistic set of values about changing the world for the better, and a scientific set of values about how we discover and share knowledge about the truth. Now, I will say I made a mistake, and I learned the mistake from a Reddit meme. Some of you may know that Anakin Padme meme on Reddit. Anakin says, I'm going to change the world, and she says, for the better, right? He doesn't say anything, and then she says, for the better, right? When I first saw that joke, I thought that was the funniest joke on the internet. And then as the years went on, I found it less and less and less funny. And one day, I had this moment of crisis where I was like, wait a second, I always specified for the better when I told people to change the world, right? I did, right? And I was like, oh, so actually, if you go into the lobby and you grab the copy of Lean Startup, you will find to my everlasting shame at the end of the introduction. It says such and such and things so that the next generation of entrepreneurs will have the tools they need to change the world, period. So I just thought it was obvious. I thought we were all on the same page about why we wanted to change the world, and I got that, I did get that 100% wrong. So we'll be ever doing a new addition. That will definitely be the first thing we change. I love that. Okay, so one of our audience questions is about how these principles apply to government. And I was going to ask you as well because in the book, and you mentioned Costco earlier, you talk about how Costco is the single retailer that controls 9% of grocery sales. Yeah. But simultaneously, it performs about 30% of the nation's food safety audits because its supply chains are so large. And it brings up this notion of also the kind of private regulatory power. Of firms that we now have. So just talk to us about that and how you see these principles of incorruptibility actually applying to the public sector. Yeah. And that we need them also more than ever. No, well certainly much more than ever. And the issue, like I said, of public corruption is all of a sudden in the news. So first of all, I want to just go back to the Costco thing for a second because was Costco affects the lives of hundreds of millions of Americans who have never shopped in a Costco. Because not only do they have higher food safety standards in the federal government requires and not only do they audit more frequently and to and make all kinds of additional requirements, they have what a different company calls the no cherry picking rule. If they audit your facility to make a certain product, they don't just audit the products that you send to the Costco warehouse. They audit the whole facility and the whole facility has to pass or you can't sell it Costco. So we, every single one of us in this room, benefit from this incredible shield of food safety. They do almost as many inspections every year as the FDA does. And actually with the FDA numbers have been going down since these stats were published. It's actually probably even higher now, although new data is not available because they stop publishing. I'm sure that's because it's getting a lot better and there's nothing to hide. Don't worry. Don't worry. I'm sure it's fine. So yeah, like you can say thank you to Costco for keeping your food safe and a bunch of other things. And we see this phenomenon all over our economy where private actors do things take on the burden of creating these positive externalities for others, even though they don't directly benefit like in the immediate, in the immediacy of the transaction. But I will say, so back to, but the question of like private public sector, I have a very nuanced view there, partially because I spent a lot of years in my life trying to build the stock exchange. And stock exchanges are in a special category of company called the self-regulatory organization, which is a private company that has received a grant of sovereign power from the US federal government. Like literally stock exchanges enjoy sovereign immunity from some kinds of lawsuits. Because to sue them, you'd effectively be suing the SEC, which I don't recommend. So, so those people always ask me like, is that a public sector or a private sector entity? And it's like, those concepts don't really make sense here, actually. Like this clean division, our grandparents thought of the different spheres of civic life as being very independent. Like there was a public sector, a private sector, but there was also a civic sector. They viewed sports as its own thing. They like, each of the things that you would do in your life, if you've read like bowling alone, or any of the kind of sociological writings about earlier generations, it's kind of hard for us to even understand. Like there were whole categories of organizations. I remember like, growing up being like, what is the ELK's lodge? Like what is it? I don't understand. Like there's not, it's not in any of the categories that I understand or know. And those other things have all gone into decline in our modern world because we financialized everything. So now we're just like, yeah, of course, there's corruption in sports because it's all about the money. Of course, they're putting gambling parlors in the stadium. What would you expect? But like, go away. watch a movie about the Black Sox scandal or Kennesaw Mountain Landis, like they put down the hammer on that kind of behavior. They would have had absolutely no tolerance for that. And now you hear people be like, well, the commissioner just works for the owners. That they all about the money. What do you expect? And it's like, man, where's Kennesaw when you need him? He'd be like, what are you guys talking about? So they had this really strict separation of spheres that we do not have anymore. So I think we, like, that's not coming back. We can't, we can't undo. That's not the, you can't put the toothpaste back in the tube. So I think it's better for us to just build new, better categories about what we're doing. And in the book, I write, like, I mentioned before that my view of, but it needs to be a for-profit, is to maximize human flourishing. This simple definition allows us to break down these categories. I think in a much more effective way. Today, nonprofit and for-profit is like has to do with an obscure bit of tax law. And that's not the most, like, the tax status is non-organization's most fundamental characteristics. So I would say the Smithsonian Institution, Goodwill, those are massively for-profit organizations. And Philip Morris is the ultimate not-for-profit organization. Because they're $9 billion in supposed net income is dwarfed by the $600 billion in negative externalities they create for our health system every year. So yeah, thank you. My father's a pulmonologist. So it makes him really happy every time I say something bad about Philip Morris. I think there's also been, there's like, I think Harvard had this impact-weighted accounting. Yeah, that's great. But also others have, depending, because all of this is, depending on how you measure it, but there have been some studies that have shown, like, essentially, if you accounted for negative externalities, every company would be unprofitable. Oh, yeah. People are like, you can't change the definition of profit because it would mean that most companies are not profitable by that definition. I'm like, right, have you looked out the window? Look at the catastrophe that is our world today. This is why these companies have been converted into value-destroying extraction machines. And that's why the food tastes bad after private equity buys your favorite restaurant. And that's why your favorite brand was ruined. It's why these companies that were like super successful spontaneously go out of business for no discernible reason when I call unusual failures. So we're living the catastrophe of this idea like every day in our lives, you know, all over the place. So I think it's better to just admit that that's what's going on. Say that that activity is not profitable. It is actually a form of corruption, not profit-taking. And that allows us to then ask the question, well, what would a different or better way work? I've come to think this will sound outlandish, I know to some people, but I actually think the era of shareholder primacy is already over. So it's the most dominant idea in the world today. We are supposed to pretend we have obeyassons to it, but first of all, I'll talk to any young people, and they think it's completely insane, and they've got the right of the argument because they've grown up in a world where shareholder primacy only rule they've ever known. But also, shareholder primacy was supposed to be about making money for investors, and now that it's turned into extraction primacy, like it's not even good for investors anymore. It's actually causing its own self-destruction. So we're watching this order collapse all around us, and it's our responsibility, I think, those who build things for a living especially, to articulate a new doctor and a new idea that we can move towards. So we don't just spend all our time negatively talking about how that idea is no good, but what can we move towards? So the book is my attempt to identify the new best practices and the philosophical underpinnings that make it possible for us to all rally around some new affirmative vision of a better future for our entire economy. One of the things I appreciate the most about the book is that, yes, exactly. First, I said I'm not thank you. That's lovely. It's essentially this notion that we made all of this up. Therefore, it's not carved in stone tablets. I remember even thinking about, if we stick with this notion of profit for a while, that actually the modern conceptions of profit are relatively young in human commercial time, only 100, 150 years old, and also have gone through their own regimes of accounting practices and so on. Oh, totally. I wonder if you could project 50 or 100 years into the future. How do you think our notions of profit may have evolved or changed, and how would you like them to evolve and change? Oh, I love this question because we're living the very dark period in human history. And I always have to remind myself that like our grandparents lived through an even darker period so far. And they somehow kept the faith through evils and horrors that I can hardly imagine. And when they came out of that darkness, they went to work on an incredible building spree of what we would call civic infrastructure. Most of the institutions that govern modern life were invented by our grandparents at a very specific time of a tremendous energy and output. And it's almost like I feel like we're like those people in Star Trek that planet where they have the machinery that they've forgotten how to operate, so they live in an Eden, but it's breaking down. I kind of feel like that sometimes where we've just forgotten how to operate this machinery. We don't know how to make it anymore. We don't know how to fix it when it breaks. And we're like chopping up the foundations for firewood and being like, "Well, guess it's fine." So we're going to need to go. We need to build that muscle back up and we're going to have to go a list of darkness passes. We will have to go on a building spree like they did. And what's interesting is a lot of people who have encountered the book so far who are kind of. If they're especially kind of more in the system persuasion, especially like financial journalists or people who are in the New York DC orbit, they have had a more. They have a reaction that's often like, this just seems too hard. The system is unimaginably powerful and how can we hope that it could be changed in our lifetime or our children's lifetime. And I have to be like, "Well, you acknowledge that the system is unrecognizably different from our grandparents' day." So couldn't it also be unrecognizably different again by our grandchildren's day? Like the fact that it was done means that it can be done again. Just like, I'm not. Whether my idea is right or wrong, obviously it can be changed. But unfortunately, I just think a lot of us have this learned helplessness about this. And one thing that's really interesting to me, I spend a lot of time studying the people that advocated for and successfully convinced everybody to do shareholder primacy. Which is a very young idea. We're in a window this room here. But if there was a window, I would tell people like, "If there's a window wherever you are, look out the window if you can see a tree, you're now looking at a biological organism older than this idea." Most likely. It's a very young idea in history. It is not a pillar of capitalism. It is not some ancient wisdom that Adam Smith figured out at whatever, like, as with what I've been like, you talking about shareholder, what would have found it completely enane? Despite it being the most powerful idea in the world that governs all modern industrial economies, it has never once in the history of humanity ever one time been subject to any manner of popular referendum or vote. Nor was it enacted by any legislative body. So why do we all live under what's called a normative consensus in the legal world? They always just say, "Well, this is what everyone agrees is how it is and is how it should be." They just decided it one day and a very small cadre of lawyers, judges, academics, and board members just decided, "This is how it's going to be going forward." So first of all, first step to breaking a normative consensus is just to have the courage to just say out loud, "Oh, yeah, I don't agree. That's not what I think the purpose of an organization is. Simple. I'm doing it right now, but you could do it too. You could tell a friend tomorrow just by the way, I also think shareholder primacy is stupid. Just say it out loud. It's okay. They agree with you already. Nobody thinks this idea is any good except in a very narrow slice of our society. I assure you, but we've all been told you're not allowed to say it out loud. You know, what would other things like we all like are like, what would other people think? So you could just say it out loud. Look everyone. It's like a misinterpretation of the law. It's not so ridiculous. It is not the law in any way except it binds every company on earth. So yeah, I don't know. That is the law. If you read the legal literature on this, it's hilarious too because they can't really explain why it is and is not the law simultaneously. So they come up with these like incredibly convoluted stories that it's like actually it is a legal duty, but it is not a legal obligation. Okay, but anyway, every board member I know has been told that this is their fiduciary duty. So I say it is the law and I say we could change the law. Luckily, we don't need an active legislation to do it, but we are obsessed. Those of us who want to reform this system are obsessed with factional infighting. I guess it's the human condition. So like how many variations on double bottom line, triple bottom line, quadruple bottom line, 12 level bottom line do we have? We have good profits and bad profits. We have eco profits and regular profits. We have extra like we have fragmented and split and there's like among even among people who are a favor of alternative corporate forms. The B court people don't like the steward ownership people who don't like the employee ownership people because they're all doing our separate things and we all have our separate terminology and our sense of fragmentation. Read Milton Friedman. Okay. He never once said you know what we should do? We should have a new kind of company, the extractive exploitative company and then that will be different from regular companies. Now we have two kinds of companies and I think my kind of company is better. No. He said the purpose of business is to maximize its own profits. He didn't say it should be. It could be maybe one day in the future it would be no. He just said it is and made it so because people found that argument persuasive and for some reason in our era people even test readers of the book, not Denise, but others in the section where I redefine profit so many people are like the comment they would leave is you can't do that. It already has a definition. It's like says who? Right. According to what authority? First of all, every company already defines profit its own way. Have you read financial statements? No. Two companies agree on what it means to make a profit. We already do that. So it's like not only even if it was true that there was only one definition that we all agreed on. We could still change it even so but it's like a double triple quadruple level of like we've talked ourselves into this helplessness that is completely So I think we have to just get much more comfortable as builders reclaiming these words and concepts for ourselves to bring them in line with what we actually Honestly in our hearts believe which is there are better and worse ways to go about this and our way is the better way Yes Simple simple right revolution starts here. Hey man right here right here in the cal theater. I love that. Thank you Well, at long now we are students of history and I think it can show us that these institutional forms even The nation state was not a foregone conclusion even a hundred years ago Which is remarkable like when the League of Nations came in you know There were I don't know there were 30 nations that were a part of it or something in the 1940s and then now that's You know, it's or there were 80 sorry and now that's tripled But that was that's been less than a hundred years and now we think that this is the inevitable form of all you know government governance so I think that's such a hopeful description for us that it's really up to our own ingenuity and imagination and willingness to claim space and to say these paradigms that we have inherited are not the ones that we Necessarily need to carry forward into the future and actually I love also in the book and I want to end with this that You essentially say that the secret architect of the entire economic system is not some secret cabal You know in a smoky room somewhere. It's actually you and me and all of us in this room And so what would you leave us with as we you know as we go about our night tonight as we walk away What what is one thing that you would have or recommend the folks in this room that want to be a part of Changing this how can we go about doing that and recognizing our own agency in the process? Okay, I really appreciate the question and I know some people are like it a little bit disappointed It's like after a whole hour and however long of systemic Problems with systemic solutions now you're telling me I can solve climate change with recycling Right like like a few seriously. I know I know somebody had the thought you don't have to raise your hand or anything But I know it I know it for sure because a lot of books end this way And it's just like come on man really? Okay, but that's not what I'm talking about Here's what I want to it was what I want to leave you with every story like I'm a founder by by nature So every story I tell always I can't help it. I read a story about a company I tell the story from the company's point of view so I tell people build a mission driven company That will give you a huge talent advantage build a mission driven company be purpose driven you customers will be more loyal Your investment returns will be superior if you take a long-term view like I can't help but but frame it as company building advice But in the later chapters of the book I try to to show how every one of these stories Can be told in the opposite way and still be true so for example modern companies are Attacks okay as much as they make addictive products they themselves are addicted to quarterly returns and to just like making their algorithms go up into the right They'll do anything for a hit They're pathetic But that means as powerless as you feel Sometimes they are as obsessed with you as you can possibly imagine these are like the stalkers from hell Every action you take in the modern world thanks to surveillance capitalism and all these forces every action every decision You make whether even if you tell not a single living person about it is somebody's bonus metric If somebody's job to make sure you did that thing or didn't do that thing There's somebody who's just compensation depends on Survelling you and finding out if you did it or didn't do it. I can't tell you I've been in the room with these companies I can't tell you how obsessed they are with the question of what they call willingness to pay Okay, if they make the thing 3% worse and 3% more expensive will you still pay for it? What about 4% 5% what is the number after which you'll finally be like nah? I won't buy it anymore. They calculate it down to the 12 decimal place They are obsessed with what can they get away with doing and you'll still work there Like can can we mistreat them in this way? Well, they quit. No seems like they'll still stay there. Okay. What about this? What about this? It's an obsession. They can't stop. They can't help themselves. They are addicts so Every choice you make Ripples out into the economy with these waves of gravitational force even if you never engage in any collective action Even if you never go to a secret meeting even if you never learn the secret handshake Even if you never join a union even if you never vote for the right part what every choice you make about where you're willing to shop Who you're willing to work for where you're willing to invest those choices are surprisingly powerful and Once you learn to wield this power you can cause all kinds of miraculous things to happen I tell the story a bunch of stories in the book that have this flavor where it seems like a company did a great thing But then you realize later actually know it's the company's customers who did a great thing the company just set this Action in motion So I'll tell a story I got someone came to me for advice the other day and I was given a ma was on my high horse giving this kind of riff And like you have the power on whatever and they were like excuse me, but I'm not courageous So I can't I'm sorry. I can't do that. What else you got? And I was like oh sorry I'm sorry I didn't mean to make you feel that you had to be courageous to do this You don't and I gave him this example They say which they did and it's an interesting interesting thing that happened But I won't reveal their private conversations with me, but I said look just do me this favor. You're going for a job interview You don't have to get up on the table and scream about profit and the maximization of human flourishing You don't have to say anything that sounds weird to talk about the spiritual holding company You can book just at the end of the meeting when at the end of the interview when they say do you have any for any questions for us? Just ask them if they're a mission-driven company Just ask they're gonna say yes Be like great. How do you know? Just you just ask it is a question. What what evidence do you have to support this contention? And they're gonna be like oh well, we have free beer on Fridays and we all get together at the Whatever when we give out free t-shirts and we volunteer now who knows what they'll say blah blah blah blah blah great I know what they're not going to say they're not going to be like oh and also we've written that mission into our corporate charter So why don't you ask oh? That's so interesting is it in the corporate charter? I? Guarantee the person you ask is not going to know the answer to your question And let me tell you if any of you been on the employment brand side of one of these employment processes It is absolutely necessary that every person who interviews a person in one of these corporate processes They must know the answer to every question that a candidate might ask so I guarantee if you just ask this question The person you ask it to is gonna have to ask their boss what the answer is She's not gonna know either I'm not kidding I have been in the room where these kinds of questions go straight all the way to the board room Because somebody needs to know the answer and nobody knows Now the good news is corporate charters are all public records You actually could just go look it up yourself and you'll find out that spoiler alert. It's not in the charter. Okay, so that's But just by asking the question in the most innocent way possible you have now created a problem Now I told you it's somebody's job to get you the answer is quite they're gonna find you an answer and they're gonna say you know No, it isn't and you can be like oh, why not? I'm just curious and they're gonna be I don't know now they got to go ask another question They don't know they don't know the fact that the company is as is a lofty mission statement about making the world better Working the world a better place to act me widget improvement efficiency whatever and they also have a legal purpose which is like paperclip maximize shareholder value and there's this yawning chasm between the two just by pointing out this contradiction You might who knows what will happen probably nothing But if the next person that comes and asks the question again because due to happen to both be at this event That's gonna be you imagine how alarmed There'll be if two people ask them the question Can you imagine what would happen if ten whole people asked this question? No one had to have any courage No one had to coordinate no one had to learn the secret handshake, but you learn to ask the right question in the book I say mission-driven companies Like outperform they have more talent loyalty That is a Guide to how to build a great company, but it is also an employment guide about where to work your career will be accelerated if you choose to work a place that has this very special attribute customers are more loyal to mission-driven companies that is also a shopping guide Companies that perform this way they outperform for their investors. That's your retirement savings. Well, where is it invested? Why not? Do you see what I'm saying? So we have more power than we realize the last chapter of the book is called you are traffic, right? You're not in traffic you are traffic you are creating the very gravitational field that you feel restricts you from making progress in the academic literature This is called structuration One of my favorite pits of academic jargon you the organizations that you encounter in your daily life They structure your life and your sense of possibilities, but you structure them right back You are in a symbiotic relationship with them and you actually have the power for you have the thing that is most scarce That they want that they are addicted to getting from you which they desperately crave like you can't imagine So you know be picky Why not? Thank you Thank you so much Eric If you enjoyed this long now talk we invite you to head over to longnow.org to learn more and of course to become a member and get connected to a whole world of long term thinking Huge thanks to our generous speaker Eric Reese along with our guest host Denise Hurne And as always, thank you to our dear listeners and our thousands of long-now members and supporters around the globe An appreciation to our podcast and video producers Justin Olafont and Shannon Breene and to our entire team at long now who bring long-now talks and programs to life Today's music comes from Jason Wool and Brian Eno's January 07003, Bell Studies for the Clock of the Long Noun. Stay tuned and onward.