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Eric Ries: Bold Systems that Keep Companies Incorruptible · The Bold Lounge

• 0:07
  SPEAKER_00: Welcome to the Bold Lounge Podcast.
• 0:09
  SPEAKER_00: My name is Lee Burgess and I will be your host.
• 0:12
  SPEAKER_00: If you're anything like me, you love hearing inspiring stories of people who have gone on bold journeys and made a positive impact in the world.
• 0:20
  SPEAKER_00: This podcast is all about those kinds of stories.
• 0:23
  SPEAKER_00: Every week we'll hear from someone who has taken the leap or embarked on an extraordinary journey.
• 0:28
  SPEAKER_00: In addition to hearing their stories, we'll also learn about their bold growth mindset that they use to make things happen.
• 0:34
  SPEAKER_00: Whether they faced challenges or doubts along the way, they persisted and ultimately achieved their goals.
• 0:41
  SPEAKER_00: These impactful stories will leave you feeling motivated and inspired to pursue your own bold journey.
• 0:46
  SPEAKER_00: I believe everyone has a bold story waiting to be free.
• 0:50
  SPEAKER_00: Tune in and get ready to be inspired.
• 0:59
  SPEAKER_00: Welcome to the Bold Lounge.
• 1:01
  SPEAKER_00: Today we have Eric Reese.
• 1:03
  SPEAKER_00: Over the last two decades, Eric Reese's ideas about continuous innovation, long-term thinking, governance, and market reform have reshaped company building and management practices.
• 1:14
  SPEAKER_00: He is the creator of the Lean Startup Method and the author of the New York Times bestseller, The Lean Startup, the Leader's Guide and the Startup Way.
• 1:23
  SPEAKER_00: As a founder, he has put his own ideas into practice with the long-term stock exchange, Answer AI, and AIRD Lab, the Lean Startup Company, which teaches and supports implementation of lean startups.
• 1:36
  SPEAKER_00: Virgil, a legal services startup in IMVU, where the ideas that became the Lean Startup method were forged.
• 1:43
  SPEAKER_00: On his own podcast, the Eric Reese Show, he talks to guests, including world-class technologists, thought leaders, and executives, working to build profitable companies for the long-term benefit of society.
• 1:53
  SPEAKER_00: Eric has served as an entrepreneur in residence at Harvard Business School in IDO.
• 1:58
  SPEAKER_00: He lives in San Francisco Bay Area with his wife and three children.
• 2:01
  SPEAKER_00: Welcome to the bold lounge, Eric.
• 2:03
  SPEAKER_03: Hey, thanks so much for having me.
• 2:05
  SPEAKER_00: So we're going to jump right into your definition of bold.
• 2:08
  SPEAKER_00: What does it mean to be bold in your life?
• 2:11
  SPEAKER_03: Gosh, for me, I would say it's about making a principled decision when you not only don't know if it's going to work out or you're going to get something out of it, but actually when you're pretty sure that you're not.
• 2:23
  SPEAKER_03: So it's like you, you're pretty sure that you're doomed, but you do what you think is the right thing anyway.
• 2:28
  SPEAKER_00: Yeah.
• 2:28
  SPEAKER_00: How does that work in your brain?
• 2:30
  SPEAKER_00: Like I'm doomed, but I'm going to do it anyway, or I don't know the outcome because a lot of people want certainty before they move.
• 2:37
  SPEAKER_03: Yeah.
• 2:37
  SPEAKER_03: Yeah.
• 2:38
  SPEAKER_03: People think that being courageous is like you, you know, you don't mind or you know it's going to work out somehow for you.
• 2:45
  SPEAKER_03: And then, you know, you somehow figure out everything what to do.
• 2:48
  SPEAKER_03: But that's not what it's like in real life.
• 2:49
  SPEAKER_03: You can see how, in retrospect, like any decision I've made in my life that you would call bold, in retrospect, I can see how it worked out.
• 2:56
  SPEAKER_03: And that if I hadn't had the courage to do that thing, you know, then I would have gotten all these immense rewards that followed.
• 3:02
  SPEAKER_03: But I can also think of plenty of times when I did it and nothing good happened.
• 3:05
  SPEAKER_03: And you know, I got the negative consequence just like I was expecting.
• 3:08
  SPEAKER_03: Right.
• 3:09
  SPEAKER_03: Or where the consequence was delayed by years sometimes.
• 3:13
  SPEAKER_03: I meet people even still where I thought, oh man, I screwed that up.
• 3:17
  SPEAKER_03: And then it's like 10 years later, someone's like, oh, well, I really appreciated what you did that time.
• 3:21
  SPEAKER_00: And you're just like, oh, really?
• 3:22
  SPEAKER_03: You could have mentioned it any time in the last 10 years.
• 3:25
  SPEAKER_03: That would have been nice, you know.
• 3:26
  SPEAKER_03: Okay.
• 3:26
  SPEAKER_03: But and I just I realized, you know, as I got older, as I've had more experience with this, that most people, they're just playing very small.
• 3:33
  SPEAKER_03: And so even when they think they're being bold, when they think of something that they like, why do you think it's something that sounds big or grandiose?
• 3:39
  SPEAKER_03: Like I think about people who are trying to use AI to get ahead.
• 3:42
  SPEAKER_03: Of course, a lot of people are doing amazing stuff with AI, but there's a lot of people that are doing this thing that's like the most obvious possible application of it.
• 3:48
  SPEAKER_03: And they call me, like, I want to tell you that this grand vision I have.
• 3:50
  SPEAKER_03: And I'm like, I've gotten the same call like 20 times.
• 3:53
  SPEAKER_03: If you define bold with regard to the outside world, you get in trouble.
• 3:56
  SPEAKER_03: But if you see it as an inner state, as something that you choose that's based on your own sense of integrity, I think that is a much better guy.
• 4:04
  SPEAKER_00: Yeah, I love that.
• 4:05
  SPEAKER_00: It is personal, you know, it shouldn't be someone else's definition or even examples, like being bold for someone, maybe you know, getting around the block today, you know, because they haven't been out or they've been in the hospital.
• 4:16
  SPEAKER_00: And it's like, that's freaking bold.
• 4:18
  SPEAKER_00: You know, you being bold a little different, right?
• 4:20
  SPEAKER_00: In the sense of the continuum of that.
• 4:22
  SPEAKER_00: But you understand those are moments where I think most of our bold moments happen between our ears, honestly.
• 4:28
  SPEAKER_00: It's how we talk to ourselves, it's our belief, right?
• 4:31
  SPEAKER_00: A lot of the times as entrepreneurs, we're creating things that no one's ever seen before.
• 4:35
  SPEAKER_00: So it's hard to believe that it's possible, right?
• 4:38
  SPEAKER_02: Yeah.
• 4:38
  SPEAKER_00: We know you think about all the different bold moments.
• 4:41
  SPEAKER_00: Which ones or which one comes to mind for you aligned with that definition for you?
• 4:46
  SPEAKER_03: You know, it's so interesting you ask it that way because there's of course a lot of big moments, you know, stepping out into public stages and stuff.
• 4:52
  SPEAKER_03: But I but one that comes to mind immediately is before I was at all famous, and very early in my career, I was in a startup, and I was like the most junior person on the team of co-founders.
• 5:03
  SPEAKER_03: There were five of us.
• 5:04
  SPEAKER_03: And when I look back on it now, I can't believe how much leeway my co-founders gave me.
• 5:09
  SPEAKER_03: Like they really supported me in building that company in a very, very unusual way.
• 5:13
  SPEAKER_03: And of course, now I can say that those techniques have been fully validated.
• 5:17
  SPEAKER_03: That became the lean startup, you know, that became its whole thing.
• 5:19
  SPEAKER_03: But at the time, it was just Eric's crazy stuff that he likes to do.
• 5:23
  SPEAKER_03: And, you know, they would always ask me, like, now why are we doing it this way?
• 5:25
  SPEAKER_03: Or like, what other big companies have done it this way?
• 5:27
  SPEAKER_03: And I'd be like, I don't think that I got nothing.
• 5:29
  SPEAKER_03: I got nothing for you.
• 5:30
  SPEAKER_03: All I can say is I think this is gonna work out.
• 5:32
  SPEAKER_03: And they could see after a while that it was really working.
• 5:34
  SPEAKER_03: Anyway, it was driving our investors and our board crazy.
• 5:37
  SPEAKER_03: I very distinctly remember a board meeting where I was pretty sure I was gonna be fired because like things had come to a head.
• 5:43
  SPEAKER_03: People are getting very frustrated.
• 5:44
  SPEAKER_00: Were things not working?
• 5:45
  SPEAKER_00: Like, why did you think you were gonna get fired?
• 5:48
  SPEAKER_03: Well, it was a classic situation where I thought it was working.
• 5:50
  SPEAKER_03: So we had different definitions of success.
• 5:52
  SPEAKER_03: I could see the leading indicators of our future success, but we weren't getting the big outward that, you know, hadn't turned up in the what later called the vanity metrics, right?
• 6:00
  SPEAKER_03: We weren't like up into the right hockey stick growth, everything going great.
• 6:03
  SPEAKER_03: We were struggling with a lot of internal stuff.
• 6:04
  SPEAKER_03: What I realized is when you're doing something different, every problem the company has is blamed on the thing you're doing that's different.
• 6:09
  SPEAKER_03: Whether that makes any sense or not, they'd be like, look, if we were just doing things the standard way, the best practices way, this wouldn't have happened.
• 6:15
  SPEAKER_03: And I was like, I don't think that's true.
• 6:16
  SPEAKER_03: Anyway, it was getting on everybody's nerves.
• 6:18
  SPEAKER_03: And we're gonna have a meeting about it.
• 6:19
  SPEAKER_03: I knew it was gonna be a big meeting about our our future direction.
• 6:22
  SPEAKER_03: Are we gonna keep doing things this unusual way or are we gonna try to conform to more best practices?
• 6:26
  SPEAKER_03: And everyone made very clear to me that all I have to do really is come to this meeting and say, Yes, I've heard you.
• 6:32
  SPEAKER_03: Of course, we're gonna do the best practices and we're gonna, you know, get with the program.
• 6:35
  SPEAKER_03: It was a board agenda item that would just, we would check the box and move on.
• 6:38
  SPEAKER_03: And so I had this moment of crisis.
• 6:40
  SPEAKER_03: I remember right before I was like, you know, got my like gigantic, you know, Starbucks latte or whatever it was, you know, like with scope.
• 6:47
  SPEAKER_03: I had like 40 grams of sugar.
• 6:48
  SPEAKER_00: Or whatever, you know, whatever you need in there.
• 6:50
  SPEAKER_03: Yeah, I gotta, I gotta, I gotta fuel up for this meeting.
• 6:52
  SPEAKER_03: I didn't know a lot about health at that time.
• 6:54
  SPEAKER_03: And and I'm sitting there being like, what am I gonna do?
• 6:57
  SPEAKER_03: I'd never been fired before.
• 6:58
  SPEAKER_03: I'd never even had a career, like, I'd never been criticized.
• 7:02
  SPEAKER_03: You know, I was a good student.
• 7:03
  SPEAKER_03: I was used to getting approval for my authority figures.
• 7:05
  SPEAKER_00: How old were you when you're having this experience?
• 7:08
  SPEAKER_03: Gosh, I must have been 25.
• 7:09
  SPEAKER_03: Yeah, yeah, not not not even 20, probably even younger than that.
• 7:13
  SPEAKER_03: And so, yeah, like it was scary to me.
• 7:15
  SPEAKER_03: Although a lot of people listening will be like, come on, I eat that kind of thing for breakfast.
• 7:18
  SPEAKER_03: Now it wouldn't be scary, but at the time it was very scary.
• 7:20
  SPEAKER_03: And I realized here was my realization.
• 7:22
  SPEAKER_03: I said, okay, if I go into this meeting and I do what they say, yes, I'll keep my job, but then it's not gonna work.
• 7:28
  SPEAKER_03: I know the conventional practices aren't very good.
• 7:31
  SPEAKER_01: Yeah.
• 7:31
  SPEAKER_03: And then I'm gonna get blamed for what happens anyway.
• 7:34
  SPEAKER_03: On the flip side, let's say I go in there, I say what I think, and they fire me.
• 7:38
  SPEAKER_03: You know what?
• 7:39
  SPEAKER_03: At least I'll have stood for something.
• 7:40
  SPEAKER_03: And I had this moment where I realized, oh, one day in the future, those same people who were so mad at me, they're gonna be like, in some other company one day.
• 7:48
  SPEAKER_03: They're gonna be like, you know what we really need?
• 7:49
  SPEAKER_03: Man, we need to find someone who's obsessed with speed and experimentation.
• 7:52
  SPEAKER_03: You know, like this company's too slow.
• 7:54
  SPEAKER_03: Do you need to know anybody like that?
• 7:55
  SPEAKER_03: And I'll be like, remember that guy we fired?
• 7:57
  SPEAKER_00: Yeah.
• 7:57
  SPEAKER_03: You know, he was annoying as hell, but he would be great for this, right?
• 8:00
  SPEAKER_03: It was like if you stand for something, you become that irregularly shaped piece that could fit into a puzzle one day that somebody so I was just like, you know what?
• 8:08
  SPEAKER_03: I'm gonna go in there and I'm not gonna be grandiose about it.
• 8:10
  SPEAKER_03: I'm not gonna scream and yell, I'm not gonna quit in protest.
• 8:12
  SPEAKER_03: If I'm asked, what do I think?
• 8:13
  SPEAKER_03: I'm just gonna tell the truth.
• 8:14
  SPEAKER_01: Yeah.
• 8:15
  SPEAKER_03: And I went to the meeting and I did the thing and I didn't get fired.
• 8:19
  SPEAKER_00: You didn't get fired.
• 8:20
  SPEAKER_03: I didn't get fired.
• 8:20
  SPEAKER_03: No, it actually turned out to be fine.
• 8:21
  SPEAKER_03: I made it a lot bigger than I had it, but also I didn't, and again, I can see this in retrospect, having been in this situation on the Other.
• 8:26
  SPEAKER_03: Yeah, when you're not gonna do it.
• 8:27
  SPEAKER_03: It's not that easy to fire the key person.
• 8:29
  SPEAKER_03: I'd done all the work.
• 8:30
  SPEAKER_03: You know, it actually would have been a real pain for like it was a mutually assured destruction kind of situation where like firing me to get a new person in there would have set the company back, also.
• 8:38
  SPEAKER_03: And I realized afterwards that although we were having these arguments and conflicts, I was having it out of like a deep sense of an inner principle.
• 8:47
  SPEAKER_03: The other people were just spouting off.
• 8:48
  SPEAKER_03: You know, they didn't feel it that strongly.
• 8:50
  SPEAKER_03: They were just like, this is annoying.
• 8:52
  SPEAKER_03: I wasn't calibrated to how important this was to them.
• 8:54
  SPEAKER_03: They weren't that committed to it.
• 8:55
  SPEAKER_03: In fact, that's one of the big things I've learned all through my career is when people are blindly parroting the best practices, they sound so confident and sure of themselves, but it's totally like it's it's paper thin.
• 9:07
  SPEAKER_00: Yeah, I was gonna say you can see through it, and there's so much of that in the world, especially now because everyone has access to the information and data now.
• 9:17
  SPEAKER_00: Now it's discernment, judgment, you know, pro-con, the higher level thinking of what we need to do, which is what we're all about or should be about as humans.
• 9:27
  SPEAKER_00: And but it is like it gets very monotonous, right?
• 9:30
  SPEAKER_00: You know, and it is paper thin, as you said.
• 9:32
  SPEAKER_01: Yeah.
• 9:32
  SPEAKER_00: So when you think about that moment and what you learned in it, you didn't get fired, you moved on, obviously continuing to be successful.
• 9:40
  SPEAKER_00: What do you think they didn't understand about the the lean startup principles specifically to get to that point of agitation over something really that was working?
• 9:51
  SPEAKER_03: Yeah.
• 9:51
  SPEAKER_03: These everybody I was arguing with pretty much was an MBA or someone who had like really come up in the software business.
• 9:57
  SPEAKER_03: I was in a technology company and they had come up with a very specific idea of how you make progress.
• 10:02
  SPEAKER_03: And I call it the dollhouse theory of startups, okay.
• 10:04
  SPEAKER_03: Which is basically the theory is that a startup is just a shrunken down version of a big company.
• 10:09
  SPEAKER_03: Whatever you would do in a big company, you do it in miniature in a small company.
• 10:14
  SPEAKER_03: So if if big companies make big plans, startups make small plans.
• 10:17
  SPEAKER_03: You know, if you have a huge sales team, you know, with a fancy executive, you have a small sales team, but still with a fancy executive.
• 10:23
  SPEAKER_03: And most importantly, you're able to forecast what's supposed to happen.
• 10:26
  SPEAKER_03: This is the thing that drives me the most crazy in startups.
• 10:29
  SPEAKER_03: People come to me about a certain startup, they say it doesn't seem like it's going fast enough or it's it's not going as well as it should.
• 10:33
  SPEAKER_03: And I'm like, well, how do you know how well it should go?
• 10:35
  SPEAKER_03: No one's ever done this before.
• 10:36
  SPEAKER_03: Right.
• 10:37
  SPEAKER_03: Like, well, I should, we should have had this much revenue by this time.
• 10:39
  SPEAKER_03: Says who?
• 10:40
  SPEAKER_03: Well, that's what it said in the business plan.
• 10:42
  SPEAKER_03: Where'd that come from?
• 10:43
  SPEAKER_03: Well, that's what you said in the forecast.
• 10:44
  SPEAKER_03: Yeah, but how did you make the forecast?
• 10:45
  SPEAKER_03: What did you extrapolate from?
• 10:47
  SPEAKER_03: Like the fundamental realization that drove so much of my early career was simply that startups are driven by uncertainty.
• 10:53
  SPEAKER_03: And when you are in a situation of high uncertainty, the traditional general management playbook doesn't work because it's fundamentally based in planning and forecasting.
• 11:00
  SPEAKER_00: Yeah, and it's all about playing it safe, isn't it?
• 11:02
  SPEAKER_03: Yeah.
• 11:03
  SPEAKER_03: And and I think that sounds so negative when you say it that way.
• 11:06
  SPEAKER_03: Like we're criticizing.
• 11:07
  SPEAKER_00: Yeah, there's nothing wrong about being safe, but no, right.
• 11:10
  SPEAKER_03: And I remember reading a book about uh it was actually the autobiography of Alfred Sloane, the giant CEO of General Motors in the early 20th century.
• 11:17
  SPEAKER_03: And he tells this story about a time in the 1920s where GM almost went bankrupt because not because of some crisis or they messed up, like not due to competition or some, you know, tariffs or some crazy situation.
• 11:27
  SPEAKER_03: No, they just made too many cars by accident because they didn't have a management system to play it safe.
• 11:33
  SPEAKER_03: Like everyone was a was loose cowboy, and it was all no metrics, no analytics, no forecasting.
• 11:37
  SPEAKER_03: So, like they had to build this system that we now see as kind of like a little bit slow and bureaucratic and yet safety-oriented.
• 11:44
  SPEAKER_03: That was a really important breakthrough.
• 11:45
  SPEAKER_03: And the fact that it's worked so well for such a long time, I think has left us blind to the fact that it's just a tool, useful in certain situations, but not in all situations.
• 11:54
  SPEAKER_00: Yeah.
• 11:55
  SPEAKER_00: What is it about uncertainty that you're okay with?
• 11:58
  SPEAKER_00: Like if we would look at your genome and look at your DNA, is there something special about you, or do you think it's more an entrepreneurial mindset that is just okay in moving forward in making decisions on uncertainty?
• 12:11
  SPEAKER_00: It is not a flex everybody has.
• 12:13
  SPEAKER_03: No, but I think the idea that it's some kind of innate ability is wrong.
• 12:18
  SPEAKER_00: I agree with that.
• 12:19
  SPEAKER_00: Yeah.
• 12:20
  SPEAKER_03: I personally suffer from tremendous anxiety about uncertainty.
• 12:23
  SPEAKER_03: When the situation is uncertain, I find it very stressful and I feel it physically.
• 12:26
  SPEAKER_03: I had early childhood experiences that left me very uh traumatized in the face of uncertainty.
• 12:32
  SPEAKER_03: So I think for me, I and I look, and there are people who are just congenally wired that they don't feel the stress.
• 12:38
  SPEAKER_03: But the research shows that that is not necessarily an advantage.
• 12:41
  SPEAKER_03: It's something that makes you more likely to become an entrepreneur, but it because you less successful as an entrepreneur.
• 12:46
  SPEAKER_03: The academics call it things like ability to ignore inconvenient facts, very useful in helping you become an entrepreneur, not so useful when you have to run in the business.
• 12:55
  SPEAKER_03: And so for me, the key for me was really to be able to accept that there are things more important than judging the situation as right or wrong.
• 13:03
  SPEAKER_03: There are things more important than my personal comfort or discomfort.
• 13:06
  SPEAKER_03: And so when I was able to focus on those things, I could say, all right, I can accept this uncertainty because that's what it takes to do something new.
• 13:14
  SPEAKER_01: Yeah.
• 13:14
  SPEAKER_03: It's gonna require uncertainty.
• 13:16
  SPEAKER_03: So we may as well live with it.
• 13:17
  SPEAKER_03: And the second thing that's helped me a lot is the recognition that although we want to say when something happens, whether it's good or bad, you can't tell.
• 13:25
  SPEAKER_03: So some of the worst things that have ever happened to me, my first startup failed in a humiliating way, was one of the best things that ever happened to me.
• 13:31
  SPEAKER_03: I've had other successes, quote unquote, where I, you know, made a lot of money or I had some vic temporary victory that I realized set me back years.
• 13:38
  SPEAKER_03: And right, so like the other thing is like we stress about uncertainty, and in our mind, it our mind is saying, I if only this one thing will happen, then it will be good.
• 13:45
  SPEAKER_03: But maybe you realize you don't even know what to wish for if it's uncertain.
• 13:49
  SPEAKER_03: So you wish for the wrong thing.
• 13:50
  SPEAKER_03: So so learning to have acceptance, equanimity, and to see how you can still have agency in the world.
• 13:56
  SPEAKER_03: You can still push for what you think is the right thing without being totally obsessed with trying to control every last thing that happens as a result.
• 14:02
  SPEAKER_00: Yeah.
• 14:03
  SPEAKER_00: I think one of the things I see is learning through failure is not something that is valued as much as I feel like it should be.
• 14:11
  SPEAKER_00: Not that I'm like, hey, I'm looking forward to failing so I can learn.
• 14:14
  SPEAKER_00: I don't want to fail, but I definitely know there's uh on a good day, 50-50 chance that a move I make or something I'm planning and thought very pragmatically about could not work, but we'll learn.
• 14:25
  SPEAKER_00: It's something that when I was at Duke, so I ran all the clinical research in cancer and I was the ops person.
• 14:31
  SPEAKER_00: So I was uh the chief making sure everything was moving through the system.
• 14:35
  SPEAKER_00: And obviously we want to move as fast as we can because these are cancer patients and we have a clinical trial for them that we hope we can match, right?
• 14:42
  SPEAKER_00: But we had these, I would say, spaces and places that were slowing down and they didn't need to be as slow as they were.
• 14:49
  SPEAKER_00: And it wasn't like a magical solution.
• 14:51
  SPEAKER_00: It was, you know, I just broke it down into gates and handoffs.
• 14:55
  SPEAKER_00: So if you think about like how things move through a system, like anytime you hand it off, there's potential, certainly in medicine, for it to go bad, for something to go wrong.
• 15:04
  SPEAKER_00: And so it was very similar in the sense of like, oh, someone thought X, Y, or Z, or they needed to do something with someone else and ask them, and or they didn't think that was their job.
• 15:12
  SPEAKER_00: I mean, it was a myriad of reasons.
• 15:14
  SPEAKER_00: And so being able to like cut our activation time in half from 180 days to 90 days, so that we can open a study very quickly.
• 15:22
  SPEAKER_00: But I think what I realized was a lot of it, at least initially, was communication.
• 15:27
  SPEAKER_00: It wasn't even process, it was communication.
• 15:29
  SPEAKER_00: It was like, no, you don't have to do that.
• 15:31
  SPEAKER_00: Why did you, you know, think that?
• 15:32
  SPEAKER_00: Do you see that is something also that people don't see as a potential solution for some of the challenges that are happening, even in our world today, around, you know, whether it's speeding up or getting to that revenue or getting to that milestone that they created, that sometimes it's something that hasn't been communicated potentially, but it's in their head, or is it, you know, some other communication type of breakdown potentially?
• 15:56
  SPEAKER_00: Like, what do you think the value of communication is in the process of what you're trying to do when you're doing it in an innovative way or creating a change for a system?
• 16:05
  SPEAKER_03: Yeah, I wish people spent more time on improving their communication and not just the tactics of communication, but the interpersonal side of it too.
• 16:12
  SPEAKER_03: Like, you know, I think about people like the conscious leadership group, you know, or there's a lot of like coaching and facilitation, personal growth.
• 16:20
  SPEAKER_00: Yeah.
• 16:20
  SPEAKER_00: But even like you, you know, the ideas that you have, how do you communicate that here's what I want or here's what I need to do?
• 16:27
  SPEAKER_00: Because even between I think sometimes I'll implement something and then I'll even learn more as we're in the process of Oh, you learn so much.
• 16:34
  SPEAKER_03: Yeah, exactly.
• 16:35
  SPEAKER_00: Yeah, so that communicating back in.
• 16:37
  SPEAKER_03: So to me, the keys are you have to have a learning orientation.
• 16:40
  SPEAKER_03: So you have to see, I mean, and this is a big part of lean startup, is you have to see your progress as what is learned, not just what is built.
• 16:47
  SPEAKER_03: You really have to be focused on trying to learn as much as you can.
• 16:49
  SPEAKER_03: And then you have to just constantly update.
• 16:51
  SPEAKER_03: So a lot of founders I take this a little bit too far.
• 16:54
  SPEAKER_03: Like I'm I meet founders that can't actually remember that they ever used to think something different.
• 16:58
  SPEAKER_03: And I'm like, you told me something totally different one week ago.
• 17:00
  SPEAKER_03: Yeah.
• 17:01
  SPEAKER_03: Now you're telling me this other thing, like, which is it?
• 17:03
  SPEAKER_03: You know, what is it?
• 17:03
  SPEAKER_03: So you gotta be careful about.
• 17:04
  SPEAKER_03: But I think that is actually very positive.
• 17:06
  SPEAKER_03: You're updating the plan every meeting.
• 17:07
  SPEAKER_01: Yeah.
• 17:08
  SPEAKER_03: Every time you learn something new.
• 17:09
  SPEAKER_03: You're you put it instantly into action.
• 17:11
  SPEAKER_03: And you know, sometimes when you get a new insight, you won't know what to do about it, but sometimes you do.
• 17:15
  SPEAKER_03: And so don't sit on it and like, well, I gotta convene the team, I gotta have a meeting, I gotta do this.
• 17:19
  SPEAKER_03: Like, put it into action right away.
• 17:21
  SPEAKER_03: And just the key to being a founder, I think, is to be very transparent about what you're doing and why.
• 17:25
  SPEAKER_01: Yeah.
• 17:26
  SPEAKER_03: You know, you can't be a jerk about it, and you can't be mad that other people didn't have the insight, but just say, hey guys, I realized I had this meeting, I realized this thing, I want to try this experiment.
• 17:34
  SPEAKER_03: Like, let's go, let's do this thing.
• 17:36
  SPEAKER_03: And then the other thing that's helped been helpful to me, and I don't know if this is true for other people, but it's certainly been my experience, a lot of problems are caused by a lack of shared conceptual vocabulary.
• 17:46
  SPEAKER_03: We just don't know what to call things.
• 17:48
  SPEAKER_03: Yeah, we don't have terminology for the thing in question.
• 17:50
  SPEAKER_03: And it took me a long time to feel comfortable that I could just call things what I want and then explain to other people what they were.
• 17:58
  SPEAKER_03: You know, so like I started using terms like minimum viable product long before I had this insight.
• 18:04
  SPEAKER_03: So, in fact, I didn't even write the first blog post about minimum viable product.
• 18:08
  SPEAKER_03: I was having an interview with somebody and he has asking me about lean startup stuff, and I'm just explaining a bunch of concepts.
• 18:14
  SPEAKER_03: And I used the phrase minimum viable product, not even consciously aware that I had done so.
• 18:18
  SPEAKER_03: Just like it was it entered into my vocabulary, my thinking had become clarified in this point.
• 18:23
  SPEAKER_03: And he was like, Oh my God, I need to run home and write a blog post about this.
• 18:26
  SPEAKER_03: And I was like, about what?
• 18:27
  SPEAKER_03: He's like, About minimum viable product.
• 18:29
  SPEAKER_03: That's the greatest term I ever heard.
• 18:30
  SPEAKER_03: I was like, okay, go nuts.
• 18:31
  SPEAKER_03: You know, like I didn't even know that was a breakthrough.
• 18:33
  SPEAKER_03: I didn't even know it.
• 18:33
  SPEAKER_03: He was only intent to tell me it was a breakthrough.
• 18:35
  SPEAKER_03: And that's happened to me a bunch of times in my career.
• 18:37
  SPEAKER_03: Otherwise, I've I've learned to do it, I've learned to get more specific about it and to, you know, just to name things, to say, look, if we're having an argument or disagreement or we can't figure it out, it might be that we're not even using words the same way.
• 18:48
  SPEAKER_03: So when I was building long-term stock exchange, for example, I got really hung up with people about what is the meaning of good governance.
• 18:55
  SPEAKER_03: And if you're in Los Angeles, San Francisco, New York, or DC, and you ask people what is good governance, you will get four different answers.
• 19:01
  SPEAKER_03: Like they're completely different ideas about it.
• 19:04
  SPEAKER_03: And yet when we argue, we don't argue about those definitions.
• 19:07
  SPEAKER_03: We argue about the downstream consequences of our upstream disagreement.
• 19:11
  SPEAKER_03: So we say, oh, you know, board members should have more or less control, founders are too much control, too little control.
• 19:15
  SPEAKER_03: Well, we fight over the minutiae of that instead of being like, wait, wait, wait, wait, what do we think the purpose of an organization is?
• 19:22
  SPEAKER_03: And that's a lot of what I, you know, have grappled with in this new book is trying to figure out how do we create vocabulary and concepts that mission-driven builders, people who want to build for a living, which is I think is more than just founders, can agree on like this is what we're actually doing.
• 19:37
  SPEAKER_03: These are the intuitions that we've been carrying around.
• 19:40
  SPEAKER_03: And then by doing that, by making that explicit, we can help people realize that their deepest intuitions are often at odds with the formal definitions they've been indoctrinated to carry around in their heads.
• 19:50
  SPEAKER_03: And we can use that disconnect to interrogate are these formal definitions actually any good?
• 19:55
  SPEAKER_03: Are they taking us where we want to go?
• 19:56
  SPEAKER_03: And I think I'm obviously tipping my hand here, I think the answer is no.
• 20:00
  SPEAKER_00: Yeah.
• 20:01
  SPEAKER_00: I had a conversation with Marcus Collins a while back when his first book came out, and we were talking about ascribed beliefs and belief systems and culture.
• 20:09
  SPEAKER_00: And some of the things that when you were just talking, was like, you know, someone told me that was the truth.
• 20:14
  SPEAKER_00: I, you know, I was raised in a family that was like, stay where you are, have insurance, do the thing, you put your head down, retire.
• 20:21
  SPEAKER_00: You know, I never even thought of being an entrepreneur.
• 20:23
  SPEAKER_00: So when I first started, I was like, I don't know what I'm doing, but I'm, you know, I'm smart.
• 20:27
  SPEAKER_00: I can figure this out.
• 20:28
  SPEAKER_00: I believe I can figure this out in a way that, you know, I can make it work.
• 20:32
  SPEAKER_00: And I don't know if every entrepreneur feels like that when they first start.
• 20:36
  SPEAKER_00: Did you feel like you didn't know what you were doing sometimes?
• 20:39
  SPEAKER_03: All the time.
• 20:40
  SPEAKER_03: I definitely still feel like that.
• 20:42
  SPEAKER_03: Oh my god.
• 20:43
  SPEAKER_03: The first startup I did, I had no, I really had no clue.
• 20:46
  SPEAKER_03: There wasn't even anything written about entrepreneurship in those days.
• 20:48
  SPEAKER_03: Yeah, it wasn't like a thousand movies and blogs and you make it seem like it was like the 1920s.
• 20:53
  SPEAKER_00: We're talking what, like early 2000s?
• 20:55
  SPEAKER_03: No, like yeah, like I did my first startup during the dot-com bubble.
• 20:58
  SPEAKER_03: So, like the media was all about startups all the time, but that every media story was like this breaking news.
• 21:05
  SPEAKER_03: Three kids in a garage in Scranton, Pennsylvania have like come up with an idea.
• 21:09
  SPEAKER_01: Yeah.
• 21:10
  SPEAKER_03: Dot dot dot.
• 21:11
  SPEAKER_03: Now they've made 10 million dollars.
• 21:12
  SPEAKER_03: Let's go interview their mom about what I just thought they were like, it was just like completely surface level.
• 21:18
  SPEAKER_03: And I was like, oh, if anyone who can make technology can make a lot of money, that sounds pretty good to me.
• 21:22
  SPEAKER_03: Like I had no clue what we were doing.
• 21:24
  SPEAKER_01: Yeah.
• 21:24
  SPEAKER_03: And it was a total disaster.
• 21:25
  SPEAKER_03: I mean, we really, we really screwed up so many things.
• 21:28
  SPEAKER_03: But that feeling that I don't know what I'm doing didn't go away for a long time.
• 21:32
  SPEAKER_03: I mean, and even now, like I still feel it often because again, the point of entrepreneurship is to go do something you don't know how to do, it's to go do something new.
• 21:40
  SPEAKER_00: Yeah, well, I'm so happy to hear that.
• 21:41
  SPEAKER_00: Obviously, I've I've heard others say that they do feel like that, but I think it just means you're innovating, you're doing something new, you're doing something that's not been done before.
• 21:49
  SPEAKER_03: And in our classical management theories and culture, if you don't know what you're doing, if you admit that you don't know what you're doing, or if you make a plan and don't hit the plan, or if your plan is not very Those are all assumed to be errors of preparation.
• 22:03
  SPEAKER_03: So measure twice, cut once, failure is not an option.
• 22:06
  SPEAKER_03: Like Six Sigma, like you have a lot of these ideas that if you are sufficiently disciplined and smart and you gather the data and you do the homework, you can prevent failures.
• 22:16
  SPEAKER_03: You can predict what's going to happen.
• 22:17
  SPEAKER_03: And I think it's very unsettling if you've been trained that way to enter into a domain where sometimes, yeah, like when I say I don't know what I'm doing, sometimes it's because I'm ignorant, sometimes it's because I'm not skilled, sometimes I made a mistake.
• 22:28
  SPEAKER_03: But sometimes it's because the underlying thing nobody knows how to do.
• 22:32
  SPEAKER_00: Yeah.
• 22:32
  SPEAKER_00: Nobody knows what's next.
• 22:34
  SPEAKER_03: And so the mistakes are unavoidable sometimes.
• 22:36
  SPEAKER_03: And so is it even really a mistake?
• 22:38
  SPEAKER_03: Like they have like we have to reframe the whole question of what is success or failure look like.
• 22:41
  SPEAKER_03: And that's you know big part of what lean startup was about.
• 22:44
  SPEAKER_00: Yeah.
• 22:44
  SPEAKER_00: How did you know you were ready for the second book?
• 22:47
  SPEAKER_00: So obviously, you know, tremendous success with the lean startup, and now you have incorruptible.
• 22:52
  SPEAKER_00: When did you know it's time?
• 22:54
  SPEAKER_03: Yeah, I I did not want to write another book because it's so pain, such a painful process.
• 22:57
  SPEAKER_03: It really is.
• 22:58
  SPEAKER_03: This this one took more than two years and was really a labor.
• 23:01
  SPEAKER_01: Oh, okay.
• 23:02
  SPEAKER_01: Okay.
• 23:02
  SPEAKER_03: But it was hard.
• 23:03
  SPEAKER_03: It was hard, hard work to get it done.
• 23:05
  SPEAKER_03: What happens is look, my like daily basic reality is pretty much every day of the year somebody comes to me and asks me for advice to start a company.
• 23:13
  SPEAKER_03: That's the privilege of being the guy who wrote the lean startup.
• 23:15
  SPEAKER_03: Like it's wonderful.
• 23:16
  SPEAKER_03: I love it.
• 23:16
  SPEAKER_03: I love helping people start companies.
• 23:18
  SPEAKER_03: And sometimes they're big companies already and they want to help revitalizing them.
• 23:20
  SPEAKER_03: Sometimes they want to help raising money.
• 23:22
  SPEAKER_00: Is there a favorite phase of that that you like?
• 23:24
  SPEAKER_03: No, they're all great.
• 23:25
  SPEAKER_03: I like every phase and stage of it.
• 23:26
  SPEAKER_00: Well, you like them all.
• 23:27
  SPEAKER_00: Okay.
• 23:27
  SPEAKER_00: Like I like the ideation.
• 23:29
  SPEAKER_00: Like that's probably where like I just the most, I mean, it's obviously a lot fun.
• 23:33
  SPEAKER_03: It's more fun if they haven't made any mistakes yet.
• 23:35
  SPEAKER_03: You know, so there's something to clean up.
• 23:36
  SPEAKER_03: That that is, I do appreciate that's kind of clean.
• 23:38
  SPEAKER_03: But you know, every stage has its own rewards, I think.
• 23:40
  SPEAKER_03: Including like I've taken companies public or talked to companies that are already public or even companies that are quite old and are dealing with a lot of complexity.
• 23:46
  SPEAKER_03: Like it's each one is is really interesting in its own way.
• 23:48
  SPEAKER_00: Yeah, it's a problem to solve.
• 23:50
  SPEAKER_03: Yeah.
• 23:50
  SPEAKER_03: So as I started to question this kind of orthodoxy of best practices, I started to experiment with giving people advice about it.
• 23:57
  SPEAKER_03: So, for example, like people would come to me and ask me about lean startup, but uh, if I thought it was appropriate, I would ask a question like, Well, have has anyone talked to you about your governance yet?
• 24:06
  SPEAKER_03: And you'd be surprised how big a company you can have.
• 24:09
  SPEAKER_03: And the founder will be still be like, My what?
• 24:11
  SPEAKER_03: Huh?
• 24:12
  SPEAKER_03: They're like, you know, the constitution of your republic.
• 24:15
  SPEAKER_03: Have you ever read it?
• 24:16
  SPEAKER_03: You have any idea what it says?
• 24:17
  SPEAKER_03: No, my lawyer told me I have best practice documents.
• 24:19
  SPEAKER_03: I'm like, okay.
• 24:20
  SPEAKER_03: Do you realize how screwed you are?
• 24:22
  SPEAKER_03: And they're like, What?
• 24:22
  SPEAKER_03: What are you talking about?
• 24:23
  SPEAKER_03: I'm like, oh yeah.
• 24:24
  SPEAKER_03: Did you know that if the person you think is the most evil company in the world tries to buy you, you have to sell to them?
• 24:28
  SPEAKER_03: They'd be like, No, I don't, I would never do that.
• 24:30
  SPEAKER_03: I'm like, why don't you call your lawyer and ask him?
• 24:32
  SPEAKER_03: So it was really interesting to me to see this disconnect between what people's aspirations are.
• 24:38
  SPEAKER_03: You know, companies have these lofty mission statements.
• 24:40
  SPEAKER_03: They often have a corporate purpose, a legal corporate purpose that is at odds with their actual mission and ethos.
• 24:46
  SPEAKER_03: And so I started to learn, I became kind of like uh eccentric collectors of obscure and alternative governance ideas, you know, how companies could be structured, how culture could be driven.
• 24:55
  SPEAKER_03: I literally had a 52 card deck that I used to carry around with me before the pandemic because I have a meeting with so many CEOs and I'd be like, look, pick a card, any card, and I'll tell you how to implement it, you know?
• 25:03
  SPEAKER_03: And after a while, I got pretty good at convincing people they had a problem.
• 25:06
  SPEAKER_03: I got pretty good at getting them to be willing to try something new.
• 25:10
  SPEAKER_03: But I ran into this buzzsaw that they would go talk to their lawyer, their CFO, their VC, their banker, whoever.
• 25:16
  SPEAKER_03: They go for advice, and they'd all be like, Eric is such a downer.
• 25:20
  SPEAKER_03: If he really believed in you, he wouldn't tell you these spooky stories.
• 25:23
  SPEAKER_03: You're not gonna have those problems.
• 25:24
  SPEAKER_03: You're a genius, that kind of thing.
• 25:26
  SPEAKER_03: Or they get talked out of it.
• 25:27
  SPEAKER_03: People would say, Oh, I don't know.
• 25:29
  SPEAKER_03: Are you sure that's a good idea?
• 25:30
  SPEAKER_03: It sounds a little weird.
• 25:31
  SPEAKER_03: I don't know.
• 25:32
  SPEAKER_03: Like, no one would ever say, like, this is a bad idea.
• 25:34
  SPEAKER_03: They'd be like, kind of talk around it.
• 25:35
  SPEAKER_03: Yeah, talk around it, exactly.
• 25:37
  SPEAKER_00: They wouldn't want to hurt your feelings, but I don't know.
• 25:39
  SPEAKER_00: I'm not sure I'm gonna do it.
• 25:40
  SPEAKER_03: Yeah.
• 25:41
  SPEAKER_03: And the net result is the founders would always be convinced to put it off till later.
• 25:45
  SPEAKER_03: And one of the ideas in the book is that it's always too early until it's too late.
• 25:48
  SPEAKER_03: And so I got better and better and better at this and convincing people to do it.
• 25:50
  SPEAKER_03: And I'd be like, let's go meet your investors and let's go meet your.
• 25:53
  SPEAKER_03: I would go with them.
• 25:53
  SPEAKER_03: And so I was like doing hand-to-hand combat, trying to get individual companies to adopt these techniques.
• 25:57
  SPEAKER_03: I got pretty good at it.
• 25:58
  SPEAKER_03: But after a while, people would ask me at the end of these meetings, hey, is there anything I can read about this?
• 26:02
  SPEAKER_01: Yeah.
• 26:03
  SPEAKER_03: And believe me, when someone asks you a question like that, you don't want to say no.
• 26:06
  SPEAKER_03: It makes you sound like you're a totally a total lunatic.
• 26:09
  SPEAKER_03: You know, it's like if it was such a good idea, surely.
• 26:11
  SPEAKER_00: And I think that's gotta be something to point to, right?
• 26:14
  SPEAKER_03: I got hundreds of academic papers you could read.
• 26:16
  SPEAKER_03: And they'd be like, Really?
• 26:17
  SPEAKER_03: What else you got?
• 26:18
  SPEAKER_03: I mean, like, I can read there's so many case studies in individual companies that have been profiled in books.
• 26:22
  SPEAKER_03: They'd be like, what else you got?
• 26:23
  SPEAKER_03: And I was just like, and I got a shelf full of manifestos about the importance of being purpose-driven or whatever.
• 26:29
  SPEAKER_03: And they'd be like, Yeah, I've read those too.
• 26:30
  SPEAKER_03: So what you're saying is nobody's written a book about this.
• 26:32
  SPEAKER_03: And eventually I just was like, Oh my God, I guess nobody's written a book about this.
• 26:35
  SPEAKER_03: We have to do it.
• 26:36
  SPEAKER_03: That's how I wound up writing this book.
• 26:38
  SPEAKER_00: Yeah.
• 26:38
  SPEAKER_00: So really it was about what you had learned, your 52, you know, page deck and the problems that were being solved and how to kind of move through the process of doing it and not doubting it so much.
• 26:49
  SPEAKER_03: Yeah, you got it exactly right.
• 26:51
  SPEAKER_00: Okay.
• 26:51
  SPEAKER_00: So when you think about profit, which is something you talk about specifically in the book, in the definition of it, how has it changed and why is it important to really talk about this at the front?
• 27:02
  SPEAKER_03: So, this is one of the most important ideas in the book.
• 27:05
  SPEAKER_03: And for most people listening, I'm gonna guess it's gonna sound very bold, but it's actually not.
• 27:09
  SPEAKER_03: Let me try to convince you that it's not as bold as it sounds.
• 27:12
  SPEAKER_03: The idea is that the correct definition of profit is actually not just how much money you have left over after you account for expenses.
• 27:18
  SPEAKER_03: It is actually about the maximization of human flourishing.
• 27:22
  SPEAKER_03: That's literally what it means to be a for-profit company.
• 27:25
  SPEAKER_03: People hear that for the first time, they're like, whoa, whoa, whoa, whoa.
• 27:27
  SPEAKER_03: I'm just trying to make money here, buddy.
• 27:29
  SPEAKER_03: What are you talking about?
• 27:30
  SPEAKER_03: If you study economics at all, if you're around people who grapple with how do we account for profit, it's the problems with that, with our conventional definition are actually widely known.
• 27:39
  SPEAKER_03: Although we generally teach them as like a throw up your hands that can't do anything about it kind of problem.
• 27:44
  SPEAKER_03: So, for example, is a Ponzi scheme profitable?
• 27:47
  SPEAKER_03: You talk to people who make things for a living, they do not want to say yes.
• 27:50
  SPEAKER_03: They're always like, no, no, of course it's not profitable.
• 27:52
  SPEAKER_03: Like, but hold on.
• 27:52
  SPEAKER_03: You said it's what's left over after my expenses are accounted for.
• 27:56
  SPEAKER_03: In this quarter, I took in a lot more revenue than my expenses.
• 27:59
  SPEAKER_03: So didn't I make a profit?
• 28:00
  SPEAKER_03: And they'll be like, no, no, no, but you created all these liabilities.
• 28:03
  SPEAKER_03: The liabilities are on your books, even if you don't account for them.
• 28:06
  SPEAKER_03: So you're like, ah, I see.
• 28:06
  SPEAKER_03: So if I have deferred liabilities, those have to be counted against my profits.
• 28:10
  SPEAKER_03: Right, exactly.
• 28:11
  SPEAKER_03: Okay, great.
• 28:11
  SPEAKER_03: But what if I have a toxic waste dump and I hide it?
• 28:14
  SPEAKER_03: Is that a deferred liability?
• 28:15
  SPEAKER_03: Sure.
• 28:15
  SPEAKER_03: So am I profitable if I do that?
• 28:17
  SPEAKER_03: And they're like, I guess not.
• 28:18
  SPEAKER_03: Okay.
• 28:19
  SPEAKER_03: What if I poison the community down the river and I get away with it?
• 28:22
  SPEAKER_03: They don't even know.
• 28:23
  SPEAKER_03: So I have all this profit, but I've moved the expenses onto somebody else, what's called negative externalities in economics.
• 28:29
  SPEAKER_03: But if you do this exercise, people will eventually be like, oh no, that's not profit.
• 28:32
  SPEAKER_03: Because our intuitive understanding of profit, what I call the builder's intuition, profit is supposed to be about making the world a better place, about creating net new value.
• 28:41
  SPEAKER_03: When I move value around in the world without creating new value, that's more like theft than it is like making a profit.
• 28:48
  SPEAKER_03: And the worst one is we get really confused about the input factors of production.
• 28:53
  SPEAKER_03: Here's what I mean.
• 28:54
  SPEAKER_03: If I take a$50 piece of wood and turn it into a$200 table, everyone agrees that I made a profit, right?
• 28:59
  SPEAKER_03: But if I stole a$200 piece of wood from somebody else and made it into a$100 table, my net income from that transaction is$100.
• 29:08
  SPEAKER_03: But most people would say, no, that's not profit.
• 29:10
  SPEAKER_03: You destroyed$200 of value to make$100.
• 29:12
  SPEAKER_03: That's negative.
• 29:13
  SPEAKER_03: Are these your like fireside chat questions that happen when you're I have done this exercise with hundreds of leaders over the years, like so many times, and no one ever wants to call it profitable, but according to the formal definition carry on your brain, it is.
• 29:26
  SPEAKER_03: So we have this disconnect.
• 29:27
  SPEAKER_03: So anyway, if it's widely understood that the conventional definition of profit cannot see deferred liabilities, it can't see negative externalities, and again, it treats human beings as disposable, what good is it?
• 29:38
  SPEAKER_03: Like, why are we so wedded to this definition?
• 29:40
  SPEAKER_03: It's better to have a definition that shows that the purpose of making a profit is to enrich human lives.
• 29:45
  SPEAKER_03: That's what we do.
• 29:46
  SPEAKER_03: That's what it's for.
• 29:47
  SPEAKER_03: And if you press people on like, why is our financial system good?
• 29:50
  SPEAKER_03: Why is capitalism?
• 29:51
  SPEAKER_03: Why should it be defended?
• 29:52
  SPEAKER_03: They always retreat to this moral bedrock that voluntary uncoerced transactions leave both parties better off.
• 29:58
  SPEAKER_03: So value is created, not stolen.
• 30:01
  SPEAKER_03: It is generated.
• 30:02
  SPEAKER_03: It's a magic trick.
• 30:03
  SPEAKER_03: And I'm like, great, okay, good.
• 30:04
  SPEAKER_03: If we agree that that's the moral foundation, then why are we celebrating transactions that don't create value?
• 30:10
  SPEAKER_03: Addictive transactions, coercive transactions, misinformed transactions, transactions where the value is moved silently.
• 30:17
  SPEAKER_03: Even if those things become legal, we shouldn't call them profitable.
• 30:20
  SPEAKER_03: Instead, we should say that those are forms of corruption.
• 30:23
  SPEAKER_03: And what's interesting to me is that our grandparents and great-grandparents would not have found this idea complicated.
• 30:28
  SPEAKER_03: They had a much clearer sense that there were better and worse ways of making money.
• 30:32
  SPEAKER_03: And some ways of making money are downright dangerous and should not be sanctioned by a society.
• 30:36
  SPEAKER_03: And for some reason, our society has taken this wrong turn where we're all supposed to pretend that we all think that all the different ways of making money are equally good.
• 30:44
  SPEAKER_03: So much so that when I talk about people who are having really malign influence in the world, I'll often be told, well, you gotta hand it to him.
• 30:50
  SPEAKER_03: You know, it seems to work.
• 30:51
  SPEAKER_03: Look how much money he's making.
• 30:52
  SPEAKER_03: And I just feel like, no, we don't got to hand it to him anymore.
• 30:56
  SPEAKER_00: Is there a certain industry or in is across industries that you think this is happening and we're not paying attention to it as well?
• 31:03
  SPEAKER_03: Yeah, I think this is an endemic disease, all up and down business.
• 31:05
  SPEAKER_03: It's actually because of financialization, it has infected our civic institutions also.
• 31:10
  SPEAKER_03: And I talk about this in the book.
• 31:12
  SPEAKER_03: Nonprofits and governments and all kinds of organizations have fallen under the spell of this.
• 31:16
  SPEAKER_00: I just did a podcast on foundations and hearing what you can do with a foundation and move the money and then not really only have to spend five percent.
• 31:24
  SPEAKER_00: Yeah, that was an example.
• 31:25
  SPEAKER_03: Yeah, yeah, yeah.
• 31:26
  SPEAKER_03: I give the example in the book of foundations that literally like they're investing five percent of their assets in doing charitable good works.
• 31:34
  SPEAKER_03: 95% are invested in public equities, often in places and industries that are undoing the good work that they're doing with the 5%.
• 31:43
  SPEAKER_03: So actually doing more harm with the 95% than good they're doing with the 5%.
• 31:46
  SPEAKER_03: It's a it's it's something we've kind of, I think, really lost track again of what is the purpose of all this?
• 31:52
  SPEAKER_03: Why, yeah, why do we do the things that we do?
• 31:54
  SPEAKER_03: I think we have become entranced by this zombie idea of shareholder primacy, of growth at all costs, and we've reduced organizations from these like vital living organisms that are beautiful.
• 32:05
  SPEAKER_03: We see them only as like financial instruments for their enrichment of their shareholders.
• 32:08
  SPEAKER_03: I think that's like a degraded view of what an organization is.
• 32:11
  SPEAKER_00: Yeah.
• 32:12
  SPEAKER_00: So is it the mission that they need to get reacclimated with?
• 32:15
  SPEAKER_00: Is it, you know, if someone's like feeling that tug or reading your book and knowing that, yeah, it's it's going the wrong direction, is there an off-ramp to start at?
• 32:25
  SPEAKER_00: Like where do they start?
• 32:26
  SPEAKER_03: There is.
• 32:27
  SPEAKER_03: I have a what I call a blueprint in the book that really focuses on two things that we have to do.
• 32:32
  SPEAKER_03: The first is we have to build something worth protecting.
• 32:35
  SPEAKER_03: I think this is a step that gets overlooked in almost all discussions of organizational structure.
• 32:40
  SPEAKER_03: We forget that in order to have a what I call it the architecture of institutional longevity, an organization that can last a long time, it requires a purposeful mission that human beings can feel excited about coming to work for, that customers want to buy from.
• 32:54
  SPEAKER_03: That's like the thing that made the organization worth investing in in the first place is often lost when we start engaging in these kinds of corruption.
• 33:01
  SPEAKER_03: So, yes, you can call that mission, you can call it purpose.
• 33:04
  SPEAKER_03: You know, I call it in the book ethos.
• 33:05
  SPEAKER_03: The character of the place has to be something aligned with human flourishing, has to be worth protecting.
• 33:10
  SPEAKER_03: And when we create such an organization, when we make the principled and bold choices that such an organization uniquely can make, we will accumulate this really valuable asset, maybe the most underrated asset in business today called trustworthiness.
• 33:23
  SPEAKER_03: When an organization can be trusted, and this is not my assertion, okay?
• 33:27
  SPEAKER_03: We have masses of academic research on this point.
• 33:29
  SPEAKER_03: When an organization can be trusted, it's more competitive, it has better retention, it has better customer outcomes, better profitability.
• 33:35
  SPEAKER_03: So many superpowers become unlocked by trustworthiness.
• 33:38
  SPEAKER_03: But this is where we get to the second part of the problem.
• 33:40
  SPEAKER_03: In the book, I explain that if you build up this massive asset of trustworthiness, someone will try to take it away from you because it's valuable.
• 33:48
  SPEAKER_03: We preach a doctrine today that you gain leverage from success.
• 33:52
  SPEAKER_03: And that is true, but you also gain liabilities from success because the more gold in the goose, the stronger the temptation will be to butcher it.
• 33:59
  SPEAKER_03: So if you want to prevent that from happening, we have to put a lock on the door to the vault where the asset is.
• 34:04
  SPEAKER_03: We have to be able to build with structural integrity.
• 34:07
  SPEAKER_03: So building a high integrity organization means one that can keep its promises because it's one that can't be bullied or pushed around by outside forces.
• 34:15
  SPEAKER_03: And so for leaders who are interested, you know, each of the specific techniques in the book lays out how to do one of these two things.
• 34:22
  SPEAKER_03: And my promise to every reader of this new book is every technique in the book is useful by itself.
• 34:27
  SPEAKER_03: So you don't have to do the whole package if you don't want to.
• 34:29
  SPEAKER_03: You could just, every single one, if you just cherry pick that one thing and do that one thing, it will help you.
• 34:33
  SPEAKER_03: Every technique is backed up by real case studies of actual companies who have done it.
• 34:37
  SPEAKER_03: So we can actually study examples, no theories, no like hypothetical things that might work.
• 34:41
  SPEAKER_03: These are all things that are proven to work.
• 34:42
  SPEAKER_03: And they're all backed up by a lot of evidence and research that shows that they produce these um superior outcomes.
• 34:48
  SPEAKER_03: Now, they also happen to work really well together as a system.
• 34:51
  SPEAKER_03: That's of course why I think people should do it.
• 34:53
  SPEAKER_03: But I recognize that a lot of leaders, when they encounter these ideas for the first time, because they seem so radical, they will be intimidated by the whole thing and say, oh gosh, since I can't do all the things, I can't do any of the things.
• 35:03
  SPEAKER_03: And it's very important to realize that you can adopt these things piece by piece.
• 35:07
  SPEAKER_00: Yeah.
• 35:07
  SPEAKER_00: And the thing that popped in my head is like, well, will the board be on the same level that I am?
• 35:13
  SPEAKER_00: If I'm turning the ship or strengthening the ship or locking, you know, in what we've created, which is so special, and and want to nurture and continue to do that, that asset of trustworthiness.
• 35:24
  SPEAKER_00: How do you convince the board that it isn't profit that they they need to be seen, or these other large milestones of build and scale and all these other things?
• 35:33
  SPEAKER_00: It's it's really about this particular asset.
• 35:36
  SPEAKER_00: Is it is it hard to do that?
• 35:37
  SPEAKER_03: Oh, yeah.
• 35:38
  SPEAKER_03: Boards are a huge, huge part of the problem.
• 35:40
  SPEAKER_03: Huge part of the problem.
• 35:41
  SPEAKER_03: And I have a lot, a lot of writs written about boards in the book.
• 35:43
  SPEAKER_03: I have a whole section called the independent director problem, and of course, its corresponding solution.
• 35:48
  SPEAKER_01: Yeah.
• 35:48
  SPEAKER_03: I think the biggest issue is that we are training boards to a series of best practices that literally destroy value.
• 35:55
  SPEAKER_03: I have a whole chart, a troll chart in chapter nine of the book.
• 35:57
  SPEAKER_03: You just flip to the chart.
• 35:58
  SPEAKER_03: It's literally just called best practices destroy value.
• 36:01
  SPEAKER_03: And it's just we name one practice after another and we show, again, that's not my opinion that they destroy value, the evidence that we have that they're value destroying.
• 36:09
  SPEAKER_03: One of my favorite stats in the whole book is that since 2008, companies that are rated to have bad governance have outperformed those rated to have good governance on average.
• 36:18
  SPEAKER_03: Like, what are we doing?
• 36:19
  SPEAKER_01: Yeah.
• 36:20
  SPEAKER_03: This is crazy.
• 36:20
  SPEAKER_03: These practices are supposed to be in defense of shareholders and shareholder value, and yet they're value destroying.
• 36:26
  SPEAKER_03: So we have to retrain boards.
• 36:29
  SPEAKER_03: And the good news is I call this the new governance.
• 36:32
  SPEAKER_03: I think we have to have a much more expansive, frankly, much more exciting view of what governance can be.
• 36:37
  SPEAKER_01: Yeah.
• 36:38
  SPEAKER_03: So that governance is not just about checklists and compliance and shareholder primacy, but there's more.
• 36:42
  SPEAKER_03: Have you been in one of those meetings?
• 36:43
  SPEAKER_03: They're so boring.
• 36:45
  SPEAKER_03: It's rough.
• 36:46
  SPEAKER_03: They're stomach-turningly boring.
• 36:47
  SPEAKER_03: I don't know how people do it.
• 36:49
  SPEAKER_03: When you incorporate purpose, coherence, and integrity into governance, not only do you make more money, not only do you build more dynamic organizations, not only will you sleep better at night, the meetings are just a lot more interesting.
• 37:00
  SPEAKER_03: I think boards have a huge role to play in advancing progress in this area.
• 37:03
  SPEAKER_00: Yeah.
• 37:04
  SPEAKER_00: There's a ton of talk about governance.
• 37:06
  SPEAKER_00: So you use Novo Nordisk as you know, an example.
• 37:09
  SPEAKER_00: And there's just so much noise right now.
• 37:11
  SPEAKER_03: Oh, sure.
• 37:12
  SPEAKER_03: Yeah.
• 37:12
  SPEAKER_00: In the world right now with AI and governance, and people are going, it feels like 10 people a day are doing the same thing over and over and writing about it.
• 37:21
  SPEAKER_00: So not that it's boring, it's just that it's the same.
• 37:23
  SPEAKER_00: And so I'm wondering if they're getting it right because I just worry about that.
• 37:29
  SPEAKER_03: We all should be worried about it.
• 37:30
  SPEAKER_03: Yeah.
• 37:30
  SPEAKER_00: Okay.
• 37:31
  SPEAKER_03: Yeah.
• 37:31
  SPEAKER_03: Yeah.
• 37:31
  SPEAKER_03: And again, because of our best practices are so bad.
• 37:34
  SPEAKER_03: So, for example, I did this event, very surreal event I was invited to do last year at the Vatican of all places, a meeting on AI and governance.
• 37:41
  SPEAKER_03: It was actually super cool.
• 37:42
  SPEAKER_03: They really saw themselves as this convener, and they were because it's the Vatican, they were able to get a lot of really cool people to come and also me for some reason.
• 37:48
  SPEAKER_00: Think tank at the Vatican.
• 37:49
  SPEAKER_03: Yeah.
• 37:50
  SPEAKER_03: So I was on this panel.
• 37:51
  SPEAKER_03: It was like classic, like Italian-style panel with like, I don't know, it was a huge long table, you know, so many of us on it.
• 37:56
  SPEAKER_03: And I was, it was me for some reason, and then peep representatives from all of the major AI companies all in one room.
• 38:02
  SPEAKER_03: So we had Anthropic, OpenAI, Google, Palantir, Cohere.
• 38:07
  SPEAKER_03: Um, I'm leaving some out, but it was like, you know, go down the list.
• 38:10
  SPEAKER_03: It was really cool.
• 38:11
  SPEAKER_03: And I realized when I looked down the row, I was like, oh wow, not a single one of these companies has standard governance.
• 38:18
  SPEAKER_03: They've all done something experimental or different to deviate from governance orthodoxy.
• 38:22
  SPEAKER_03: And I think that's characteristic of AI.
• 38:24
  SPEAKER_03: People, I think, have an intuitive or instinctive understanding that AI is too dangerous to be put in the hands of a sociopathic shareholder maximizing company that makes scares people.
• 38:33
  SPEAKER_03: And in fact, the sci-fi writer Ted Chang said that most of our fears about AI are really fears about organizations.
• 38:38
  SPEAKER_03: We're afraid of rapacious organizations.
• 38:40
  SPEAKER_03: And we see AI as an organization amplifier.
• 38:43
  SPEAKER_03: So if they're rapacious, AI is going to make it worse.
• 38:45
  SPEAKER_01: Okay.
• 38:45
  SPEAKER_03: What's so interesting to me is I think we have gotten locked into a governance monoculture of these really degraded best practices.
• 38:54
  SPEAKER_03: And we've kind of forgotten the political side of company building.
• 38:58
  SPEAKER_03: I mean political in the sense of like political philosophy, going back to the like the Greek polis.
• 39:03
  SPEAKER_03: Part of our birthright as human beings is to experiment with different forms of self-organization.
• 39:08
  SPEAKER_03: Every organization is actually like a little bubble of utopia as defined by somebody.
• 39:13
  SPEAKER_03: Somebody said, I think this is the right way that power should be shared and distributed between human beings.
• 39:19
  SPEAKER_03: And so organizational forms differ very widely, just like cultures differ very widely.
• 39:24
  SPEAKER_03: That's actually a diversity we should embrace and be excited about, not something we're trying to eradicate or standardize.
• 39:31
  SPEAKER_03: And when you open your eyes to this diversity, you realize that even in today's economy, there are just a wild number of companies that deviate tremendously from our modern best practices.
• 39:42
  SPEAKER_03: And even people who tell me, like, I talk to people about this corruption, and they'll say, well, that's just inevitable with scale.
• 39:47
  SPEAKER_03: It's inevitable when people make so much money, right?
• 39:49
  SPEAKER_03: It's like take a company public, the metric.
• 39:51
  SPEAKER_03: People have these stories that everything is inevitable.
• 39:53
  SPEAKER_00: It's almost like accepting it, right?
• 39:55
  SPEAKER_03: Yeah, we just accept, like, well, because I think it's too painful to imagine it could be different because if it could be different and we're complicit in the way it is, then in some ways we bear moral responsibility for all the horrors of the modern world, which who wants that?
• 40:07
  SPEAKER_03: But we have to accept that complicity.
• 40:09
  SPEAKER_03: It is a fact that these things can be different.
• 40:12
  SPEAKER_03: And what's interesting is even the people who tell me it's inevitable also know the exceptions.
• 40:16
  SPEAKER_03: So someone just the other day was telling me about how every company that goes public gets degraded, every company that gets big, you know, once you have a huge valuation, you can't keep your promises anymore.
• 40:25
  SPEAKER_03: Only the private family-run companies can be trusted.
• 40:28
  SPEAKER_03: And they were going through a list of all these companies that that was true of.
• 40:31
  SPEAKER_03: And at the end, they were like, oh, but also Costco.
• 40:33
  SPEAKER_03: For some reason, Costco is an exception to the rule.
• 40:35
  SPEAKER_03: I'm like, oh, I see.
• 40:36
  SPEAKER_03: So this force is inevitable except for Costco?
• 40:39
  SPEAKER_03: What's up with that?
• 40:39
  SPEAKER_03: Costco's a$400 billion public company, but it doesn't seem to have the problem.
• 40:43
  SPEAKER_03: Well, how can something be inevitable if Costco exists?
• 40:46
  SPEAKER_03: And you mentioned Novo Nordisk and Patagonia and Vanguard and Hershey's and REI and Wallace and Gromit and the Green Bay Packers.
• 40:53
  SPEAKER_03: And you just start going down the list of these alternative structures.
• 40:56
  SPEAKER_03: And you're like, wait a second, if it's inevitable, how can there be so many?
• 40:59
  SPEAKER_03: So to me, the book is about answering a double mystery.
• 41:02
  SPEAKER_03: First, why does this corruption happen so often?
• 41:05
  SPEAKER_03: Why does it operate in spite of our truly like deeply held beliefs about how a market economy should work or does work?
• 41:12
  SPEAKER_03: But then if it's so inevitable, how can there be exceptions?
• 41:16
  SPEAKER_01: Yeah.
• 41:16
  SPEAKER_03: And when you study the exceptions, you start to realize the possibility for a new way.
• 41:21
  SPEAKER_00: I think there's so many things inside of that.
• 41:23
  SPEAKER_00: One is just this acceptance that bad things will happen and it's just the way it's going to go.
• 41:28
  SPEAKER_00: But like you have pointed out that there's so many outliers that don't go that way.
• 41:32
  SPEAKER_00: So how could you just say it's inevitable?
• 41:34
  SPEAKER_00: I think for me, when I hear that, I think about AI and what we don't know.
• 41:40
  SPEAKER_00: Because it feels like as a regular person out in the world, like you know 10 gazillion more times, you know, more about it than I do, in the sense of just I think relational as well as being closer to it, right?
• 41:52
  SPEAKER_00: And and being an expert within the field of technology.
• 41:55
  SPEAKER_00: But what is it that you are excited about and just like this is gonna change the world for good if we just get it right?
• 42:03
  SPEAKER_03: Yeah, I'm I'm a congenital optimist.
• 42:06
  SPEAKER_03: I can't help it.
• 42:06
  SPEAKER_03: That's it.
• 42:07
  SPEAKER_03: And look, I know how that sounds.
• 42:08
  SPEAKER_03: No, that's I mean, you look at the news, I I I can't even read the news anymore.
• 42:11
  SPEAKER_03: It's so depressing.
• 42:12
  SPEAKER_03: So I hear you.
• 42:13
  SPEAKER_03: You know, I think about our grandparents and the horrors that they lived through, how dark it must have seen in those darkest moments.
• 42:20
  SPEAKER_03: They somehow got through and they were able to keep the faith.
• 42:23
  SPEAKER_03: And when the moment came, they used that horror to power a determination to build a better world and to create a set of institutions that govern us to this day.
• 42:32
  SPEAKER_03: Now we have ruined and degraded these institutions to a shocking degree.
• 42:36
  SPEAKER_03: And there's no going back.
• 42:38
  SPEAKER_03: The changes, the economic, the globalization, the technological disruption, like the changes from in the past century are immense.
• 42:44
  SPEAKER_03: So I'm not saying you can go back, but rather we have to see this moment as an opportunity for a new, completely new revitalization of our civic infrastructure.
• 42:53
  SPEAKER_03: I have a chapter in the book on civic infrastructure, the basic institutions that determine what is possible in society.
• 42:59
  SPEAKER_01: Yeah.
• 42:59
  SPEAKER_03: And you take your pick.
• 43:00
  SPEAKER_03: Like people love to complain about journalism or unions or political parties or hotels or stock exchanges.
• 43:07
  SPEAKER_03: You know, I know.
• 43:10
  SPEAKER_03: Right.
• 43:10
  SPEAKER_03: Think about the universities and big law firms that have like clowned themselves this past year, just showing a complete lack of integrity, the big tech companies that abandon every principle they seem to have, like this institutional weakness, this inability to stand for anything.
• 43:24
  SPEAKER_03: I think the battle here, this is going to sound strange, I think, but because we live in a world where shareholder primacy is seen as the dominant idea of our time.
• 43:33
  SPEAKER_03: But that idea is a paper tiger.
• 43:35
  SPEAKER_03: I actually think the era of shareholder primacy is already over.
• 43:38
  SPEAKER_03: And so, yes, we are reaping the rewards now of roughly 50 years of neglect of our civic infrastructure, our civic institutions.
• 43:47
  SPEAKER_03: We have allowed them to degrade.
• 43:48
  SPEAKER_03: And now we don't have the collective will to fix the things that we have.
• 43:52
  SPEAKER_03: So we're going to have a lot of pain as a result of this collapse.
• 43:55
  SPEAKER_03: But the combination of the political fallout of that destruction, plus these new technologies.
• 44:00
  SPEAKER_03: Technological possibilities, I think, gives us the opportunity, a rare opportunity among generations for a complete renewal.
• 44:06
  SPEAKER_03: And if we can build that next generation of institutions, for profit, nonprofit, government, public, private sector, everything with this idea of human flourishing at the center instead of extraction and exploitation at the center.
• 44:17
  SPEAKER_03: I think we could leave our grandchildren a world they'll be proud that we were able to give them.
• 44:21
  SPEAKER_00: Yeah.
• 44:22
  SPEAKER_00: What does human flourishing look like within an organization?
• 44:25
  SPEAKER_03: So this is something that a lot of people have a problem with with this book, because I talk about human flourishing a lot, and then I kind of refuse to define it because the beauty of living in a market economy, I think, and a democracy, is that every organization is not only free, but should be required to define which slice of human flourishing is the one that they want to focus on.
• 44:45
  SPEAKER_03: And they have to define it for themselves.
• 44:46
  SPEAKER_03: So, of course, I in the book I do give my definition.
• 44:48
  SPEAKER_03: It is about people, you know, coming into their true potential, not just materially, but spiritually, emotionally in every dimension.
• 44:55
  SPEAKER_03: But that's not a mission statement.
• 44:56
  SPEAKER_03: It's too broad for an organization.
• 44:58
  SPEAKER_03: An organization has to say, well, we, our slice of human flourishing that we're working on is something to do with being like different people love different things.
• 45:06
  SPEAKER_03: If I say that my mission is about bringing more beauty into the world, does that mean I also hate efficiency?
• 45:10
  SPEAKER_03: Not necessarily, but like your thing might be about efficiency, my thing might be about beauty, someone else is about health and longevity.
• 45:16
  SPEAKER_03: I've worked with organizations that are working on just the craziest things you can imagine.
• 45:19
  SPEAKER_03: And some are trying to solve the climate crisis and have very lofty ideals.
• 45:22
  SPEAKER_03: And others are like, I just want to get people from point A to point B safely, you know, or I just want to help the seniors in my community feel a little bit more safe.
• 45:30
  SPEAKER_03: So every organization is free to define human flourishing as they see fit.
• 45:34
  SPEAKER_03: However, that doesn't mean that every definition is equally good.
• 45:38
  SPEAKER_03: And in the later chapters of the book, especially for people who are very serious about this question, the social questions behind this, I encourage them to read the third part of the book, the end of the book, uh, maybe even read it first and then go back and read the other chapters.
• 45:50
  SPEAKER_03: Because I try to grapple with this question of what does it mean to both allow pluralism of all these different definitions of flourishing, yet have the inner conviction that the superpowers that I talked about before, the superpowers that create that trustworthiness, that allow for all these advantages, really only accrue to organizations that truly, truly, truly put their customers, their employees, their communities first, ahead of their own interests.
• 46:14
  SPEAKER_03: And why is it that we can say that there is both a universal instinct that powers these things and yet allow for a diversity of ways to try to harness or capture that magic?
• 46:24
  SPEAKER_00: Yeah.
• 46:25
  SPEAKER_00: It's a different type of leader, I think, that are in these types of institutions.
• 46:29
  SPEAKER_00: Do you think there's one dominant characteristic that they have or something that they do that's different than those that fall into being in a corrupted space versus there they just almost have a force field of like it's not possible here?
• 46:42
  SPEAKER_03: Yeah, I think I think being principled is just such an underrated leadership characteristic.
• 46:47
  SPEAKER_03: And and even when you see someone who's principled, what's interesting about it is even if you disagree with them, you respect them.
• 46:54
  SPEAKER_03: Like I can think of lots of people and organizations where I think I'm like, I wouldn't have done it that way, or even my values are different.
• 46:59
  SPEAKER_03: Like I that pisses me off.
• 47:01
  SPEAKER_01: Yeah.
• 47:01
  SPEAKER_03: But I can see that they're consistent about the principle.
• 47:04
  SPEAKER_03: It's not just a self-serving thing.
• 47:06
  SPEAKER_03: You have to be careful because people people use the language of principles all the time when they're making bad faith arguments.
• 47:11
  SPEAKER_03: What's that expression?
• 47:12
  SPEAKER_03: The tribute that vice pays to virtue.
• 47:14
  SPEAKER_03: Like they want the benefit of being seen as highly principled when in fact they're not.
• 47:18
  SPEAKER_03: They're just doing something that's convenient for them.
• 47:20
  SPEAKER_03: So you gotta be careful not to be duped.
• 47:22
  SPEAKER_03: But when you see someone, you're like, look, over a long period of time, they have done things in defense of this principle that cost them.
• 47:28
  SPEAKER_03: If it's beneficial, yeah, obviously.
• 47:29
  SPEAKER_03: But if it cost you something, you didn't know it was gonna work out.
• 47:32
  SPEAKER_03: That's what we started with in this conversation.
• 47:34
  SPEAKER_03: Yeah.
• 47:34
  SPEAKER_03: If they do something truly bold, you say, Oh, I respect them because, and I can even trust them because I can predict what they're gonna do in the future.
• 47:42
  SPEAKER_03: And right now we're living in an age of demagogues and bad faith leaders, just everywhere in our economy, in our politics.
• 47:49
  SPEAKER_03: It's disgusting.
• 47:50
  SPEAKER_03: And the number one reason you can't trust those people is you just don't know what they're gonna do next.
• 47:55
  SPEAKER_03: They revel in their unpredictability because they're unprincipled.
• 47:58
  SPEAKER_03: So today, war is peace.
• 48:00
  SPEAKER_03: Tomorrow, you know, it's not.
• 48:01
  SPEAKER_03: It's like, wait, hold on.
• 48:02
  SPEAKER_03: It's like 1984.
• 48:03
  SPEAKER_03: You know, it's like, well, what what is the truth of the situation?
• 48:06
  SPEAKER_03: What do you really stand for?
• 48:07
  SPEAKER_03: And I think, again, people intuitively understand that if someone is just telling you what you want to hear, if they're just pandering to you, they're not trustworthy.
• 48:15
  SPEAKER_03: Whereas the people that stand for something and act in a principled way, I give a lot of examples of the book of leaders who have done this and the consequences of making those kind of choices.
• 48:22
  SPEAKER_03: It's very counterintuitive, I think, to most leaders that this can be so valuable.
• 48:26
  SPEAKER_00: Yeah.
• 48:26
  SPEAKER_00: I think for me, like I think about as you're talking, like for me, it was always where I would know I would take a stand is when we had the ethical line hitting the moral line with the political Kool-Aid.
• 48:38
  SPEAKER_00: And it was like, you know, ethics and morals are always going to beat the Kool-Aid.
• 48:42
  SPEAKER_00: And I knew I would be setting something on fire and smoke would be going up in the sense of I'm not doing that, especially I think in any industry, but I'm in human clinical research.
• 48:51
  SPEAKER_00: So like these are people, these are live.
• 48:53
  SPEAKER_00: No, we don't do that.
• 48:55
  SPEAKER_00: No, yes, we do it this way.
• 48:56
  SPEAKER_00: We you know, I never thought of it as like that.
• 48:59
  SPEAKER_00: I never thought of like, you know, where I stand, you'll know the decision I'll make the next time, too.
• 49:04
  SPEAKER_00: You know, like that principled person, that person is going to be the one that you can trust.
• 49:08
  SPEAKER_00: Like you said, you might not always agree with them or like their style or whatever, but you know where they stand, and it's not going to be a surprise.
• 49:14
  SPEAKER_00: But we don't get a disc assessment on that.
• 49:17
  SPEAKER_00: We don't, we don't have we have all like I think everything's like all jacked up after I talk to you.
• 49:21
  SPEAKER_00: I'm just like, well, we do it, we measure everything wrong.
• 49:24
  SPEAKER_03: Yeah, we sure do.
• 49:25
  SPEAKER_00: Yeah.
• 49:25
  SPEAKER_00: So in closing, you know, there's so much to be learned in the time that we're in, and your book helps us kind of get there faster.
• 49:31
  SPEAKER_00: So everyone wants to pick up Incorruptible.
• 49:33
  SPEAKER_03: Here's a cool new cover.
• 49:34
  SPEAKER_03: Design by my friend Marcus Gosling.
• 49:36
  SPEAKER_03: You can see it.
• 49:37
  SPEAKER_00: I love that.
• 49:37
  SPEAKER_00: Just a quick question.
• 49:38
  SPEAKER_00: There's so much to learn.
• 49:39
  SPEAKER_00: How do you learn?
• 49:40
  SPEAKER_00: And do you learn fast, or how do you pick even like what to be ahead on?
• 49:44
  SPEAKER_00: Uh in this.
• 49:45
  SPEAKER_03: Well, this is a time that rewards learning velocity more than anything else.
• 49:48
  SPEAKER_03: And in fact, this is, you know, I get asked about LLMs and AI and everything, you know, all the time.
• 49:53
  SPEAKER_03: And this is one of the biggest, biggest, biggest um opportunities right now is LLMs, because they're language models, you know, under all the fancy talk about AI and all this stuff, like, you know, you peel the layers down and there's a little token predicting language model at the bottom.
• 50:08
  SPEAKER_03: And so if you don't, if you're trying to use AI and you don't understand the thing at the heart of it, you go get educated about that.
• 50:15
  SPEAKER_03: It's like this is the thing that's on the inside of these models.
• 50:18
  SPEAKER_03: And it's it's extremely important to understand that they are fundamentally language machines.
• 50:22
  SPEAKER_03: So calling them intelligence, calling them, but if we by calling them artificial intelligence, we're actually resolving in like the postmodernists' favor a bunch of like weird, really weird abstract uh theories about intelligence and language that like 10 even 10 years ago would have been seen as so far out the mainstream to be totally discredited.
• 50:39
  SPEAKER_03: So the next time you complained about Derrida or postmodernism or whatever, be like, those guys are being so thoroughly vindicated left and right, it's unbelievable because it turns out that what we call intelligence, maybe it is just language.
• 50:49
  SPEAKER_03: We'll see.
• 50:50
  SPEAKER_03: Anyway, these language models, they are teaching machines, they are great for learning.
• 50:56
  SPEAKER_03: So if you can use, but unfortunately, people are getting real excited about using AI to replace human beings, which I think is a big mistake.
• 51:04
  SPEAKER_03: We shouldn't be using them to replace human creativity, we should be using them to amplify human creativity.
• 51:08
  SPEAKER_00: I almost feel like that's a distraction on purpose for some reason.
• 51:10
  SPEAKER_00: I don't know.
• 51:11
  SPEAKER_03: I don't know.
• 51:11
  SPEAKER_03: It's it's a grim, I think it's a grim vision of the future.
• 51:14
  SPEAKER_03: And just like a very like people who are like laying people off because of AI, I'm like, man, think about what you could do, how much more you should be able to do.
• 51:20
  SPEAKER_03: If you have any vision, AI should be amplifying your productivity, not slashing labor.
• 51:24
  SPEAKER_03: Anyway.
• 51:25
  SPEAKER_03: So I think that like a big, big tip for people who are encountering this technology for the first first time, trying to figure out how to navigate it.
• 51:31
  SPEAKER_03: The next time someone asks you to make a thing with AI, like everyone's gonna have experience.
• 51:35
  SPEAKER_03: It's super cool the first time you do it.
• 51:37
  SPEAKER_03: You go to one of these machines and you just say, make me a presentation, right?
• 51:41
  SPEAKER_03: Make me a website, make me a this, make me a that.
• 51:43
  SPEAKER_03: Like they'll do it.
• 51:44
  SPEAKER_03: They'll make incredible artifacts.
• 51:45
  SPEAKER_03: You're like, wow, that was so cool.
• 51:47
  SPEAKER_03: But when you're ready to use the tool for real, instead go to that same machine and say, I want you to teach me how to do this thing at a master level.
• 51:55
  SPEAKER_03: Help me, like ask me the questions, teach me, use it as a learning machine.
• 52:00
  SPEAKER_03: And every time you encounter something you don't know, have the courage to say, I don't know.
• 52:04
  SPEAKER_03: Find me a resource about that.
• 52:05
  SPEAKER_03: Yes.
• 52:05
  SPEAKER_03: Um, and when you get it into learning and teaching mode, you're focused not on how do I get the most out of the AI, but rather how do I have maximum learning velocity?
• 52:15
  SPEAKER_03: How do I have maximum self-improvement?
• 52:16
  SPEAKER_03: And as always, the focus on self-improvement, so much more valuable than any artifact.
• 52:20
  SPEAKER_00: I love that.
• 52:21
  SPEAKER_00: And then that doesn't feel as scary, I think, for some as well as they start off.
• 52:24
  SPEAKER_00: And I think as we close out, I think the the key thing, obviously, the books are different, right?
• 52:29
  SPEAKER_00: In the sense of the lean startup to the incorruptible.
• 52:31
  SPEAKER_00: How are they the same?
• 52:33
  SPEAKER_03: Well, gosh, you know, it's interesting because some people have said to me, well, lean startup seems like it's about going fast and everything's an experiment, and incorruptible seems like about these immutable principles.
• 52:42
  SPEAKER_03: So is it a contradiction?
• 52:44
  SPEAKER_03: Which I think is funny.
• 52:45
  SPEAKER_03: And I guess I didn't make it really clear.
• 52:46
  SPEAKER_03: I thought lean startup was super clear that in order to go fast, you have to have a foundation, a philosophy of underneath.
• 52:52
  SPEAKER_03: So, yes, if we're gonna make, if you say, I'm gonna make everything into an experimentation, and I say, okay, great, including the decision to make everything an experiment.
• 53:00
  SPEAKER_03: Oh, no, no, no, not that.
• 53:02
  SPEAKER_03: Because in order to make everything an experiment, we have to already have a bunch of immutable agreements that we're gonna use data to find out the truth.
• 53:10
  SPEAKER_01: Yeah.
• 53:11
  SPEAKER_03: We're gonna actually use the scientific method.
• 53:13
  SPEAKER_03: So if you want to use like funny, the scientific method is about rapid experimentation and iteration and learning, but you can't experiment with it itself.
• 53:20
  SPEAKER_03: You have to first have the commitment that you're gonna be scientific in your decision making.
• 53:23
  SPEAKER_03: So to me, this is one common project of trying to understand what are the deeper, I call them like the physics of organizations.
• 53:31
  SPEAKER_03: What are the things, the deeper truths that power how organizations operate that affect their behavior?
• 53:36
  SPEAKER_03: And that we as managers, as leaders, as board members, as customers, as employees, as investors, what are those levers that we can learn to harness, powers that we can learn to harness to see our values realized in the world?
• 53:47
  SPEAKER_00: Yeah.
• 53:47
  SPEAKER_00: Awesome.
• 53:48
  SPEAKER_00: I love we end on that too.
• 53:49
  SPEAKER_00: Thank you so much for being on the Bold Lounge, for sharing your story, the lean startup, and your new book, Incorruptible.
• 53:56
  SPEAKER_03: Thanks so much.
• 53:56
  SPEAKER_03: Really appreciate the time.
• 54:00
  SPEAKER_00: Thank you for listening to the Bold Lounge podcast.
• 54:03
  SPEAKER_00: Through the continuum of bold stories, vulnerability to taking the leap, you will meet more extraordinary people making a positive impact for others through their unique and important story.
• 54:14
  SPEAKER_00: By highlighting these stories, we hope to inspire others and share the journey of those with a bold mindset.
• 54:19
  SPEAKER_00: We hope you've enjoyed this podcast and look forward to sharing the next bold journeys with us.