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It has been over a decade since Eric Ries published The Lean Startup, a book that fundamentally shifted the lexicon of Silicon Valley and global business. Concepts like the "Minimum Viable Product" (MVP), A/B testing, and pivoting moved from obscure engineering tactics to the default operating system for new ventures. Yet, as the startup ecosystem matures and faces new challenges—from the rise of artificial intelligence to a growing mental health crisis among founders—Ries argues that the methodology must evolve.
In a wide-ranging discussion, Ries reflects on the state of the movement he helped spark, corrects persistent misconceptions, and turns his gaze toward his current focus: the structural and ethical governance of companies. From the psychology of pivoting to the "zombie company" trap, the conversation offers a masterclass in first-principles thinking for modern builders.
Key Takeaways
- The Lean Startup won by becoming invisible: The methodology is no longer a radical insurgency; it is the default vocabulary of entrepreneurship, often used without realizing its source.
- MVP does not mean "cheap": A Minimum Viable Product is strictly defined by the amount of work required to learn, which varies wildly between an iOS app and a jet engine.
- Vision is discovered, not just declared: Founders often have false memories of their original vision; true product direction is usually forged through the friction of real-world testing.
- Governance is the new frontier: To build companies that truly align with human flourishing, founders must engineer their corporate structure (legal, board, voting rights) as carefully as their product.
- The "Zombie Company" is worse than failure: A startup that generates just enough revenue to stay alive but not enough to succeed is a mental health trap that founders should avoid at all costs.
The Evolution of the Lean Movement
When The Lean Startup debuted in 2011, it felt like a religious revival. It was an insurgent movement challenging the "waterfall" development methods of the old guard. Today, the landscape is different. Ries notes that he no longer leads a horde into battle because the battle has largely been won by default. The practices of continuous deployment and customer development are now considered obvious by new founders.
However, ubiquity comes with a cost. As concepts become mainstream, they often lose nuance. Critics frequently argue that the methodology encourages a lack of vision or low-quality products. Ries counters that these are misunderstandings of the core scientific principle: the goal is to discover the truth about a business model as quickly as possible.
Correcting the MVP Misconception
Perhaps no term is more misused than "Minimum Viable Product." A common critique is that user expectations have risen too high for "buggy" MVPs to work in today's market. Ries argues this stems from a fundamental misunderstanding of what an MVP is. It is not a specific tactic, nor is it an excuse for lack of craft.
"MVP is simply for whatever the hypothesis is that we're trying to test, what is the most efficient way to get the validation we need about whether that hypothesis is true or not."
If a founder believes their customer requires a high-fidelity, beautifully designed experience, then the MVP must be high quality to test that hypothesis. However, the scope should still be minimized. Ries suggests that most founders overestimate what is "essential" by orders of magnitude. His advice is practical: write down every feature you think you need, cut the list in half, and then cut it in half again.
He shares a telling example from his time at IMVU. The team believed high-quality 3D avatar movement (inverse kinematics) was essential. Because they couldn't afford it, they used a "hacky" teleportation method instead. To their shock, customers preferred the teleportation because it was faster than walking. A "flaw" in the MVP turned out to be a superior feature, a discovery they never would have made had they waited to build "perfect" movement.
The Psychology of the Pivot
A pivot is defined as a change in strategy without a change in vision. However, Ries highlights a psychological phenomenon that complicates this: founders often rewrite their own history. The vision itself evolves through the process of building, but human memory tends to smooth over these changes to create a narrative of consistent foresight.
Ries recounts finding an old whiteboard from the early days of a startup. He had a distinct memory of fighting for specific features that became successful. Yet, the physical evidence on the whiteboard showed the opposite: he had argued for the bad ideas, and his co-founder had championed the good ones. This "buggy" nature of human psychology reinforces the need for scientific methodology. Writing down hypotheses and testing them provides an objective record that ego and memory cannot distort.
Successful Pivots Often Look Like Failures First
Data suggests that roughly 20% of consumer startups and 40% of B2B startups pivot to a completely different product. Famous examples include:
- Segment: Started as a university classroom lecture tool.
- Slack: Began as a video game called Glitch.
- Loom: Originally a marketplace for hiring subject matter experts.
From the outside, these shifts look drastic. From the inside, there is usually a thread of continuity—a tool built to support the original bad idea turns out to be the good idea. Ries emphasizes that pivoting requires the courage to abandon sunk costs and the humility to admit when a current path is a dead end.
AI as a Management Technology
As the industry faces a new wave of technological disruption through Artificial Intelligence, Ries views AI primarily as a management technology. It changes the span of control and how intelligence is organized within a company. Just as the Lean Startup helped companies navigate market uncertainty, a new framework is needed to navigate the ethical and operational uncertainty of AI.
Ries proposes a framework for "ethical action in the face of high uncertainty." Since no one knows whether AI will lead to utopia or dystopia, founders should choose actions that are ethically sound across the widest "aperture" of possible futures. This includes investing in transparency, capability, and values-aligned governance.
Practically, AI allows for hyper-experimentation. Ries envisions a future where AI agents manage procurement, filtering out marketing noise and presenting decision-makers only with products that genuinely solve their problems. This could create more meritocratic marketplaces, though it will fundamentally alter sales and marketing.
Corporate Governance and Human Flourishing
Ries is currently dedicating much of his energy to the Long-Term Stock Exchange (LTSE) and the concept of deep corporate governance. His thesis is that the standard operating procedure for startups—incorporating in Delaware, raising venture capital, aiming for an IPO—defaults to a governance structure that prioritizes short-term shareholder returns over everything else, often destroying the company's original mission.
"Organizations are actually alive... We don't own them; they're not slaves. We nurture them... If you want your organization to be trustworthy... you have to embody those promises in the structure of the organization itself."
He argues that "profit" should be redefined as the maximization of human flourishing. Currently, the system struggles to differentiate between extractive profit (e.g., selling addictive products) and value-creating profit. Founders often rely on "being a good person" to protect their company's soul, but founders are replaceable.
The "Philip Morris" Test
Ries suggests a litmus test for founders. If a company like Philip Morris offered to buy your startup for $1 over its current valuation to use your technology for something harmful (e.g., marketing cigarettes to children), would you have a fiduciary duty to say yes? Under standard governance, the answer is often "yes."
To combat this, Ries advocates for:
- Dual-class stock structures that protect the mission.
- "Spiritual holding companies" or foundations that control the voting rights, ensuring long-term alignment (similar to structures used by companies like Patagonia or OpenAI).
- Asking lawyers difficult questions early in the company's life, before the pressure of an IPO makes structural changes impossible.
Mental Health and the "Zombie Company"
The conversation closes on the critical topic of founder mental health. While failure is painful, Ries identifies a worse fate: the "zombie company." This is a startup that creates enough revenue to sustain itself but has no path to growth or impact. Founders in this position often feel trapped, unable to leave but hating their daily reality.
Ries urges founders to recognize that "time" is their most precious resource. If a company is stuck, he recommends a radical approach: set a fixed timeline (e.g., six weeks) to radically pivot or solve the core problem. If it cannot be solved, it is better to return capital to investors and shut down with integrity than to waste years in a state of living death.
Conclusion
The thread connecting the MVP, the pivot, and corporate governance is the acceptance of uncertainty and the responsibility of the builder. Whether testing a feature or designing a board of directors, the goal is to create systems that withstand the chaos of the real world.
Ries reminds us that the current system of "late-stage capitalism" requires a steady supply of new companies to replenish what it destroys. This gives founders leverage. Builders have the power to set the terms of engagement. By integrating rigorous experimentation with deep ethical governance, the next generation of founders can build companies that do not just survive, but actively contribute to human flourishing.
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