Eric Ries on What Investors Get Wrong About Governance

Eric Ries — author of The Lean Startup and The Startup Way, and founder of IMVU and the Long-Term Stock Exchange — joins Cheryl and Maxine to talk about his new book, Incorruptible, which examines why companies drift from their mission once investors and boards take over, and what founders and early investors can do to prevent it.

Eric unpacks what he calls “financial gravity”, the force that pulls companies toward extractive, value-destroying behaviour even when everyone believes they’re pursuing profit. He explains why many widely taught governance best practices are actually shareholder-value destroying, and why the earliest stage of a company is the easiest time to build in protections against this drift.

He breaks down the “spiritual holding company” structure, using Novo Nordisk’s century-old nonprofit foundation as an example of why mission-guardian structures make companies far more likely to survive long term, tells the story of a startup that took a million dollars from Purdue Pharma to push opioids and why it destroyed the company, and closes with the board meeting early in his career where he expected to be fired — and the lesson that “harder is easier” when you stand for something you believe in.

About the guest

Eric Ries is the author of The Lean Startup and The Startup Way and the founder of IMVU and the Long-Term Stock Exchange. His latest book is Incorruptible.

About the show

First Cheque is hosted by Cheryl Mack and Maxine Minter and produced by Day One®, trusted partners in the technology space and the team that helped build Blackbird Ventures’ Wild Hearts.