korrents

korrents · Lenny's Podcast

How Anthropic, Costco, and Patagonia all build incorruptible companies | Eric Ries

Eric Ries · 1h 39m · youtube.com ↗

24 korrents from this recording

1h
Eric Ries did not write this page.

Every claim below is a statement made in this recording, quoted word for word and linked to the second it was said, so you can hear it rather than take our word for it. The wording comes from the transcript published alongside the recording; the sentence above each quote is our reading of the claim, not their wording.

  1. 0:06:38 · watch on youtube.com↗

    Our reading

    Organizations are dragged into mediocrity by a force no one controls but everyone obeys, until their founders lose control of what they built.

    Their wordsI call it the force that no one controls but everyone obeys that tends to drag organizations down into mediocrity to the point that we lose control of them. Now, sometimes we lose control of them because we get fired.
    Interesting
  2. 2 min later

  3. 0:08:15 · watch on youtube.com↗

    Our reading

    What destroys great companies is not competition but their own success, because the more golden the goose the greater the temptation to butcher it.

    Their wordsall kinds of famous companies where the thing that destroyed them was not competition. It was not someone else came up with a better product. No, their very success became a liability because the more golden the goose, the greater the temptation to butcher.
    Interesting
  4. 4 min later

  5. 0:12:12 · watch on youtube.com↗

    Our reading

    If you do not get your company's governance right, none of your other decisions will matter for the long term, because you will not be the one making them.

    Their wordsIf you don't get this right, no other decision you make about your company will matter for the long term because you're not going to be the one making it.
    Interesting

  7. 0:12:20 · watch on youtube.com↗

    Our reading

    Only a fifth of venture-backed founders are still CEO three years after going public, and the standard documents their lawyers gave them are why.

    Their wordsAccording to Harvard Law School, among venturebacked companies that have the standard best practices set up that you got from your lawyer, okay, only 20% of founders are still the CEO 3 years after going public.
    Interesting
  8. 6 min later

  9. 0:18:31 · watch on youtube.com↗

    Our reading

    There is never a right time to protect a company's mission: it is too early until it is suddenly too late, and success is what makes you a target.

    Their wordsWas it ever the right time? No, it is never the right time to do this. If you put this off, you will eventually find yourself in a situation where you can no longer do it. You will have lost the leverage. Success will not protect you because success is what makes you a target.
    Interesting
  10. 5 min later

  11. 0:23:58 · watch on youtube.com↗

    Our reading

    The corporate best practices lawyers and bankers push on founders are younger than the trees in the local park.

    Their wordsso many of the best practices that your lawyers, your bankers, whoever advisers you have, they're going to be pushing best practices on you that are younger than the trees in your local park.
    Interesting
  12. 2 min later

  13. 0:26:01 · watch on youtube.com↗

    Our reading

    Foundation-owned companies are six times more likely to reach their fiftieth year, and they return more to investors rather than less.

    Their wordscompanies with that structure like Novo and Zeiss, they are six times more likely to live to year 50 compared to their conventional counterparts. We they have superior return on invested capital. They make more money for investors.
    Interesting
  14. 3 min later

  15. 0:29:11 · watch on youtube.com↗

    Our reading

    Every founder on standard documents has already signed a charter obliging them to sell their company to the buyer they would least want to have it.

    Their wordsdid you know that according to the legal documents you yourself signed, your company's literal charter that you have right now, and this is not some hypothetical future thing, you've already put in motion, a rule that says you have a fiduciary duty to say yes in this situation.
    Interesting
  16. 7 min later

  17. 0:35:45 · watch on youtube.com↗

    Our reading

    Harder is easier: committing up front to quality, ethics or safety pays back in rewards you cannot get by chasing the reward.

    Their wordsharder is easier is a principle that says if you're willing to do the work upfront to commit to quality, to design, to ethics, to integrity, to safety, whatever the thing, I don't want to tell you what your values are, you tell me what they are. If you're willing to be principled in your decision-making, you will get these unexpected rewards.
    Interesting

  19. 0:36:10 · watch on youtube.com↗

    Our reading

    Trustworthiness is the most underrated asset in business, and prioritizing by ROI always ranks it last.

    Their wordsTrustworthiness is the most underrated asset in all of business. And the things that create trustworthiness by definition stack rank to the bottom if we do it by ROI because doing the right thing has intangible rewards but tangible costs.
    Interesting
  20. 1 min later

  21. 0:37:03 · watch on youtube.com↗

    Our reading

    A mission statement is not a mission; a mission is an emergent property of the organization and has to be built in rather than labelled on.

    Their wordsas leaders we get so focused on value statement mission statements we forget the mission statement is not the mission. The map is not the territory. Mission is an emergent property of the living superorganism of the thing we're birthing.
    Interesting
  22. 5 min later

  23. 0:42:24 · watch on youtube.com↗

    Our reading

    Cloudflare is worth what it is worth because of the trust it bought by giving encryption away, and most leaders cannot defend their principles at all.

    Their wordsThe trust that they gained is the reason why they're a 70 billion dollar company today. But most leaders when asked to defend their principles can't do it because they've been taught ROI based thinking.
    Interesting
  24. 7 min later

  25. 0:49:16 · watch on youtube.com↗

    Our reading

    Most companies calling themselves mission-driven are only mission-hopeful; the real test is that you cannot profit except by achieving the mission.

    Their wordsCompanies that claim to be missiondriven, most of them are just mission hopeful. Okay? It's it's It's just a candy coating on top of an extractive engine. Sorry, I don't buy it. If you're serious about being missiondriven, you have to show me that you cannot profit except by achieving the mission.
    Interesting
  26. 5 min later

  27. 0:54:28 · watch on youtube.com↗

    Our reading

    A stated value means nothing without an apparatus that enforces it, and a company without one is lying to you however good its intentions.

    Their wordsSo if someone tells you, I'm serious about something, great. Now show me the apparatus. Show me the commitments you've made to make sure that happens every time. No exceptions. And if you don't have one, then they are lying to you no matter how good their intentions are.
    Interesting
  28. 4 min later

  29. 0:58:16 · watch on youtube.com↗

    Our reading

    Shareholder primacy is about forty years old rather than a natural law, and for centuries before it a corporation existed to pursue a specific beneficial purpose.

    Their wordsthis idea is old enough that we now have a generation of people who have been raised as if this was a natural law. This is how capitalism has always been. But that's wrong. For the vast majority of the time, for hundreds of years, we have had joint stock corporations. Only the last 40 have we had this idea.
    Interesting
  30. 3 min later

  31. 1:01:09 · watch on youtube.com↗

    Our reading

    Becoming a public benefit corporation does not make you the good guys, but it does stop investors suing you for pursuing your stated purpose.

    Their wordsIt doesn't guarantee that you're the good guys. Okay? Just writing it down doesn't do that much. But it does solve one very specific problem, which is if someone one day sues you saying you breached your fiduciary duty to investors, you could say, "Nope, investors agreed that this is our purpose to do this thing.
    Interesting
  32. 10 min later

  33. 1:11:38 · watch on youtube.com↗

    Our reading

    The rule for a company's culture is to only ever make deposits and never deliberately make a withdrawal.

    Their wordsthis is the rule is really simple. only make deposits. Never make withdrawals. That's it. Because you're going to make withdrawals by accident sometimes because you're gonna make mistakes, but you never intentionally make a withdrawal.
    Interesting
  34. 5 min later

  35. 1:16:09 · watch on youtube.com↗

    Our reading

    A trust that owns the mission protects a company better than founder control does, which is why Anthropic needs no dual-class shares.

    Their wordsI think the structure frankly is better than founder control. Daio does not have dual class shares the way that Mark Zuckerberg or or Larry and Sergey had.
    Interesting
  36. 1 min later

  37. 1:17:23 · watch on youtube.com↗

    Our reading

    Not one of the companies building frontier AI is willing to accept standard corporate governance, which is how dangerous they know the technology to be.

    Their wordsI looked down the panel and I realized not a single one of these companies has standard governance. That's how bad it is.
    Interesting
  38. 1 min later

  39. 1:18:00 · watch on youtube.com↗

    Our reading

    Letting shareholders govern AI means whoever can borrow the most money controls the technology, and that cannot be how it works.

    Their wordsIf you say that shareholders should run it, then you're saying literally whoever can borrow the most money should be able to control this technology, it's just that's nuts.
    Interesting
  40. 13 min later

  41. 1:30:30 · watch on youtube.com↗

    Our reading

    The number one unsolved problem in AI is not technical alignment but human alignment, because we cannot agree on the values to align to.

    Their wordsThis is the number one unsolved problem in AI. It's not the tech. We're making great progress on the technical alignment problem. But we haven't made jack progress on the human alignment problem
    Interesting
  42. 1 min later

  43. 1:31:21 · watch on youtube.com↗

    Our reading

    Corporations are the oldest artificial intelligence on the planet, superorganisms running on the same emergent principle that makes a transformer appear intelligent.

    Their wordscorporations, organizations are the oldest form of artificial intelligence on the planet. They are an example of this emergent intelligence.
    Interesting
  44. 2 min later

  45. 1:33:11 · watch on youtube.com↗

    Our reading

    Adding ants to a puzzle makes it get solved faster while adding humans makes it worse, unless the humans are carefully aligned.

    Their wordsThe more ants you put in the puzzle, the faster the solution. But the more humans you add, the worse. Unless the humans are very carefully aligned, this is the key lesson for organizational design.
    Interesting
  46. 3 min later

  47. 1:36:30 · watch on youtube.com↗

    Our reading

    The decisions that most affect an organization are made when no manager is present, so a common purpose is the only real control a leader has.

    Their wordsif you want to manage something like as a leader, you have to understand that the most consequential decisions that will affect any organization's life are almost by definition made when no manager is present.
    Interesting