Ries argues that when private markets offer unlimited capital with no disclosure or accountability, it becomes rational for companies to avoid going public — a predictable consequence of policy, not a mystery.

A VC challenged Ries five years earlier on why any company would go public given lax private-market terms
Ries compares market equilibrium to gas in a chamber shifting toward whichever side is relatively more attractive
Large, opaque secondary transactions at high valuations are a growing risk with little disclosure

#private markets#staying private#IPO delay

Explainer· 3

Explainer30:00

What the LTSE actually is: fixing capitalism's short-termism problem

Ries lays out the founding motivation for LTSE: after a decade advising companies of every size, he found short-termism to be a near-universal complaint with financial market structures treated as unchangeable facts of nature.

Ries worked with companies from garage startups to multinationals and governments over a decade
Short-termism, lack of constancy of purpose, and bad ownership emerged as a near-universal complaint
LTSE targets aligning financial infrastructure with a new generation of mission-driven leaders and employees

“We've attributed, especially in Silicon Valley, we treat the facts of our capital markets and the infrastructure of our financial reality as facts of nature…”
Eric Ries · 32:00

#LTSE#short-termism#public markets

Explainer38:00

How algorithmic trading and index funds hollowed out active market voices

Ries and the hosts discuss how the rise of algorithmic trading and passive index funds reduced the number of active human voices in the market, amplifying the influence of loud activist investors and short-term traders.

Trading decisions have shifted from humans to machines that care less about the long term
Passive index funds move the active decision-making from fund managers to index-formula providers
Reduced active voices mean loud short-term activists can move stocks disproportionately

#algorithmic trading#index funds#market structure

Explainer1:01:30

LTSE's business model: no take rate, serve issuers as the real customer

Ries explains that unlike traditional exchanges that profit from trade volume, LTSE makes money by selling products/services to companies (issuers) and their long-term investors, not by maximizing trading activity.

Traditional exchanges are incentivized by transaction volume; LTSE is not
LTSE positions the listed company as the actual customer, unlike exchanges that serve traders
LTSE offers capital-raising services like large block placements with existing long-term investors

“We are the only stock exchange you will ever meet where you're the customer. We make our money by selling you products and services that…”
Eric Ries · 1:01:30

#business model#stock exchange#issuers

Story· 6

Story02:00

The test reader who said the LTSE idea would 'piss away' the book's credibility

Eric Ries recounts sending the Lean Startup manuscript to test readers and receiving a scathing note demanding he cut the final page-and-a-half idea about a stock exchange — which he took as a signal he was onto something.

The stock exchange idea originated as the very last idea in The Lean Startup manuscript
A test reader insisted it be cut, calling it a credibility-destroying idea
Ries interpreted the polarizing reaction as validation rather than a warning

#lean startup#origin story#LTSE

Story08:00

Dropping out of Yale to build a doomed 'social network for jobs'

Ries describes his first startup out of his Yale dorm room during the dot-com bubble — a resume-database social network for Ivy League students that could have become Facebook but wasn't conceived that way.

Ries dropped out during the dot-com bubble to build a college-profile resume database
The idea was structurally similar to what became Facebook and LinkedIn but framed as a serious B2B resume business
Classmate Matt Kohler, who later joined LinkedIn and then Facebook, was in the same Yale cohort

“If we had actually understood the concept of a pivot, and if someone had even suggested to us the idea that we could pivot into…”
Eric Ries · 09:30

#dot-com bubble#early career#pivots

Story12:00

There.com: $50M raised, zero customers, and waterfall development

Ries recounts joining virtual-reality startup There.com, which raised $50 million and hired ~200 employees before launch, using pure waterfall development with no lean concepts, and the surprising number of successful founders who emerged from its layoffs.

There.com raised $50 million with no customers before a big nationwide launch
The company had zero concept of MVP, pivots, or continuous deployment
Alumni went on to found/join Arista Networks, Asana, and early Google

“We raised so much more money now for starting to be.com is that raised 50 million dollars with no customers.”
Eric Ries · 13:00

#waterfall development#startup failure#talent alumni

Story16:30

Steve Blank's Berkeley customer development class and the IMVU connection

Ries describes how IMVU investor Steve Blank asked him and his co-founder to audit his newly-created Berkeley customer development class, and how skeptical MBAs reacted to the idea that engineering-driven products needed rigorous customer discovery.

Steve Blank invested in IMVU and asked the founders to audit his early customer development class at Berkeley
Blank came from an enterprise (Epiphany) background and MBAs dismissed his ideas as inapplicable to consumer products
The class became a foundation Ries would later build on when writing The Lean Startup

#customer development#Steve Blank#IMVU

Story24:30

An anonymous blog called 'Startup Lessons Learned'

Ries explains how he began blogging anonymously after getting yelled at in VC-arranged coaching meetings, and how early Silicon Valley bloggers like Dave McClure, Sean Ellis, and Andrew Chen tracked him down within a month.

Ries wrote up his IMVU engineering stories to avoid getting yelled at in repeated VC-referred coaching meetings
His blog was titled 'Startup Lessons Learned' and initially anonymous
Prominent early startup bloggers identified him via referrer logs almost immediately

“It was called Startup Lessons Learned in the Passive Voice, not by anybody. They had been learned.”
Eric Ries · 25:00

#blogging#lean startup history

Story45:30

The quantitative trader who didn't understand why governance mattered

Ries recounts explaining to a quantitative trader that shorting a stock can trigger real corporate strategy changes (using the Disney Plus stock-drop example), and the trader's genuine confusion about why he should care about governance.

A 10-minute average holding-period trader was baffled that his short position could indirectly influence corporate strategy
Ries used Disney's 2015 stock drop and accelerated Disney+ plans as a real example of stock price driving strategy
Many institutional traders are forced to vote proxies despite having no interest in governance

“When I short cattle futures, the cows don't care.”
Quantitative trader (relayed by Eric Ries) · 47:00

“His average holding period in a security is 10 minutes.”
Eric Ries · 47:30

#quant trading#governance#Disney example

Q&A· 1

Q&A1:05:30

The A+ and F cases for LTSE a decade out

The hosts push Ries on best- and worst-case outcomes for LTSE, and he candidly separates the mission's success (fixing a trillion-dollar problem in capitalism) from whether the business itself will ever be a great financial investment.

Ries acknowledges LTSE could succeed at its mission while still being a mediocre investment compared to buying an established exchange early
Primary failure risks: entrenched incumbents profiting from the status quo, political/regulatory sabotage, and customer hesitation to 'go first'
LTSE hires people willing to accept mission success independent of guaranteed financial reward

#risk#mission-driven company#grading

Tool· 1

Tool55:00

Free startup tools: captable.io, hiringplan.io, startupwunway.io

Ries describes LTSE's suite of free/freemium tools for early-stage companies — cap table management, runway planning, hiring plans with free compensation benchmarking data, including bias detection in offer letters.

LTSE runs the largest startup corporate governance platform under separate consumer-friendly brand names
Tools include captable.io, hiringplan.io, and startupwunway.io, aimed at founders without needing a GC or CFO
Hiringplan.io offers free market compensation data and can surface demographic bias in offer letters

#startup tools#cap table#hiring data#free tools

Frameworks in this episode

Build-Measure-Learn: The Waste-Elimination Lens

LTSE Long-Term Alignment Framework

Insights & moments

◆Hot Take· 1

Why companies are staying private for 15 years

✶Explainer· 3