The Lean Startup and the Long-Term Stock Exchange (with Eric Ries)
Dec 30, 2019
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Eric Ries, author of "The Lean Startup" and CEO of the Long-Term Stock Exchange, dives into the evolution of startup methodologies. He discusses how his concepts like product-market fit have shaped the industry since the financial crisis. Ries highlights the LTSE's role in addressing startup ecosystem issues, such as excessive capital raising and governance challenges. He emphasizes the need for long-term investment strategies and better corporate accountability. The conversation also touches on navigating the chaotic startup landscape and empowering early-stage companies with innovative tools.
LTSE aims to address short-termism and lack of shareholder visibility with long-term focus.
LTSE promotes lasting partnerships by offering voting rights incentives for long-term investors.
LTSE challenges traditional market structures with flexibility for sustainable growth in public markets.
LTSE introduces a balanced governance system by prioritizing sustained value creation over short-term gains.
Deep dives
A New Stock Exchange with a Long-Term Focus
Creating a new stock exchange with a long-term focus was the ambitious vision behind the LTSE. The concept emerged from the idea hatched while writing 'The Lean Startup.' The LTSE's approval as a national securities exchange marked a significant milestone, attracting investments from prominent funds like Andreessen Horowitz and Founders Fund. By allowing companies to align with long-term investors and commit to operationalizing guiding principles, the LTSE aims to address issues such as short-termism and lack of visibility into shareholder identities.
Empowering Long-Term Investors with Voting Rights
The LTSE proposes a unique approach where long-term investors can earn voting rights over time, akin to multi-class share structures. By offering incentives for long-term commitment, such as progressive dividends or additional voting powers as shares are held longer, companies aim to build lasting partnerships with stakeholders focused on sustained value creation. This model breaks away from the extreme positions of distinct classes with varying voting privileges and fosters a gradual, inclusive path for investment stewardship.
Challenging Conventional Market Structures with Flexibility
In a world influenced by algorithmic trading and index funds, the LTSE challenges traditional market structures by embracing flexibility. Companies listed on the LTSE can tailor mechanisms to reward long-term commitments, promoting stability and alignment with strategic goals. From separating economics from governance to enabling adaptable voting systems based on individual company contexts, the LTSE encourages innovative approaches to foster sustainable growth in public markets.
Creating a Duopoly Between the LTSE and Historical Methods
The LTSE introduces a paradigm shift by offering an alternative to dual-class share structures and extreme governance models. By promoting shared decision-making with long-term stakeholders and prioritizing sustained value over short-term gains, companies listed on the LTSE can establish a balanced system of governance and ownership. This approach aims to bridge the gap between founders' control desires and investors' governance expectations, heralding a new era of collaborative capitalism in public markets.
Evolution of Webflow from a Side Project
Webflow evolved from a side project in 2005 to finally finding success in 2012 as a viable business. Starting with seed funding and achieving profitability in late 2015, Webflow's journey showcases persistence despite past failed attempts at launching the same business. With a collaborative effort involving co-founders and leveraging available technology advancements, Webflow overcame previous challenges to establish a reliable web-based WYSIWYG editor.
Optimizing Web Design with Webflow's Direct Manipulation
Webflow differentiates itself by allowing direct manipulation through its in-browser interface, offering a real-time visual representation of changes to web elements. By emphasizing core web design principles and leveraging CSS abstractions like Flexbox and CSS Grid, users engage in a more code-centric design process that mirrors actual code alterations. This approach enhances accessibility and functionality for users familiar with design basics, leading to deeper learning curves but more sustainable design outcomes.
Browser Advancements Enabling Webflow's Success
Webflow's success partially stems from leveraging advancements in browser technology, particularly during the emergence of Chrome as an interactive application platform in the early 2010s. Supported by modern browsers embracing robust interactive capabilities, Webflow capitalized on the ability to showcase real-time previews within the browser itself, a feat unattainable in earlier browser iterations. The convergence of technology and design principles elevated Webflow's effectiveness and usability, marking a pivotal shift in web design tools.
Season 5, Episode 10: The Lean Startup and the Long-Term Stock Exchange (with Eric Ries)
Acquired closes out Season 5 and 2019 with a radical look into both the past and future decades of startup company building, investing and - yes, exiting - in conversation with legendary Lean Startup author Eric Ries. Nine years on from pioneering the now-canonical concepts of product-market fit, minimum viable products, and pivots during the aftermath of the financial crisis, Eric’s new venture at the Long-Term Stock Exchange represents an equally ambitious attempt to rewrite the orthodoxy of how companies and their investors manage liquidity, governance and alignment around longterm value creation. Like Lean Startup a decade before it, can LTSE help address some of the endemic problems in this generation’s startup ecosystem — excessive capital raising, stay-private-longer, dual-class founder hegemony, extreme illiquidity and quarterly earnings myopia? Tune in to find out!
