Eric Ries: Why Investors Destroy Your Business (And How to Stop Them)

23:52Ryan Hanley:I don't mean strong man, like strong like gender. I know what you mean. I know what you mean. Like, let's just hope you're the, you're the one who can navigate through it, you know? Yeah. Yeah. Boy. Okay. There's a lot to unpack there and listen i i thank you for sharing the the ups and downs of this because i think it's just so important for entrepreneurs to be honest with each other about like what happens the real world consequences of this stuff i don't think speed is actually a problem in itself what happens is um there are a class of investors who really enjoy negotiating with high leverage okay so like if you put yourself into a low leverage situation um there are people who will take advantage of that.

24:29But even, and I tell a couple of these stories in the book, even if you're in that kind of situation, there are tools that you can use sometimes to nonetheless end up with a really strong structure. It's just, it's really difficult to reach for them when you're feeling like, almost like you're being coerced, right? Like you need to, if you need to make rent, you need to like pay for your kid's healthcare. You need to like pay for, like it's just like a certain point, transactions become non-voluntary. And one of the key ideas in the book is that corruption swiftly follows anyone who breaks the moral logic of capitalism, which is that when a transaction is fully informed and fully voluntary, that is the transaction that magically creates value because both parties are better off.

25:09And anyone who violates one of those two criteria, they can make money, sure, but we can't know if they're actually creating value. In fact, that's a path, a lot of times a path to destroying value even while you're making money. So, but another idea, so that's kind of like when you're in the crisis moment, your life is very difficult. But I will tell you one story just to give people a little bit of hope. This is like a completely crazy story to me. Everyone knows Patagonia today is this behemoth of environmental activism, but they were a really crazy company in their early years and spent a lot of time trying to figure out how to run a business with these really, really intense values, which, by the way, were originally about product quality before they were ever about environmentalism.

25:48That was kind of an outgrowth of this obsession with product quality. So anyway, when they became environmental activists, they gave a lot of money away every year in non-profit grants. They just thought that was an important part of their ethos as part of what they promised to their customers. And in the 90s and early 2000s, they went through a terrible time of over-expansion. They got greedy. The outsourcing boom was on. They outsourced all this product to Asian factories and stuff. And they kind of lost the quality focus in pursuit of growth, like a classic corruption story. And all things really came to head.

26:18The company almost went bankrupt. They realized their mistake. They had to do a layoff. They laid off 20 % of the staff. They still to this day call it Black Wednesday. Like they really felt really bad about it, but they had to do what they had to do. And they had to get a bank loan to restructure all their debts. You know, they had to basically do a restructuring of the business. Everyone was like, well, just take outside investment. We'll do a recap. But they refused. They were worried that that would lead to corruption. So they were negotiating with banks. And the banks came in and they were negotiating, negotiating, negotiating to get their loans restructured.

26:45And eventually they get, I think it was HSBC or somebody, to agree that they'll assume the debt, they'll restructure it, and they start working on a restructuring plan. So like this is like your classic, like it's an emergency. the company's on the brink of death they have absolutely no leverage they have to do what the bank says everyone knows this right so that they get the deal almost done and the bank's like look okay we're on board we'll do the restructuring we'll do the thing but just during the time of the restructuring okay while you're spending the money from this loan you have to suspend your non-profit grants because come on and and i just this is such a fascinating story to me Patagonia said no deal and they're like no the purpose of this loan is to save Patagonia and if we're not who we are at the end of it we'd rather just go bankrupt now and I wouldn't have the courage to do that no way, you know like to me it's such a crazy, you're like you're risking everything for what, for this like abstract principle but I think people misunderstand this as courage or like cojones when actually to them this was just we have these principles the business is just an embodiment of this ethos so there's simply no business without the ethos so we'll never sacrifice just we won't sacrifice it it's not it's not available and they they said no and the bank had to and they put i the bank must have been so surprised no one ever does this but it put the bank in this situation like look call the loan or do it our way if you call the loan you're getting nothing so it was like it It was some way like turn the leverage around on the bank and the bank relented.

28:19Now, they had a lot of other things going for them, including a bunch of employees and customers and even former employees and like tons of people who are like, we'll give you a loan. We're like, we're here for you. We'll do what it takes to make this happen. I tell the same story of something very similar happened to the early years of Whole Foods. It was like massive flooding one year in Austin. And their original store was like flooded with like three feet of mud. everything was destroyed at a time when they had no investors, no nothing. It should have bankrupted the company for sure. And yet their customers came in on a volunteer basis and helped them bail out the store.

28:52Their bankers gave them... What people sometimes see backwards, they're like, oh, well, if you're really special, then you get these special things happen to you. Instead of realizing that having these commitments is what makes these companies special, which sometimes allows them to escape these traps. But one more thing. That's what happens in the crisis moment. But one of the other really most important ideas in the book is a principle I call, it's always too early until it's too late. The best time to build structural defenses is when you don't need them. As you said, the moat, when you're building a castle, you don't wait until someone's sieging you to build a moat.

29:29It's too late. You need to build it ahead of time. And this is the biggest problem I see founders run into is because, like if you talk to most lawyers, investors, investment bankers, any of these experts, and you just be like, like, hey, I want to think about protecting myself in this kind of far-off scenario. They'll be like, don't worry about that. Go get successful. Build up leverage. You can always do it later. It'll be a lot easier to do it later. And then next thing you know, something unexpected happens, like what happened to you? And now you're having to do it in a crisis. It's much more difficult.

29:56So I actually think the best solution is to think about this stuff from the beginning and set it up when it's easy. It's so easy at the beginning. You can write whatever you want in your corporate charter. And so to me, the battle is mostly about having founders know that these tools exist so that they can reach for them in advance. So yeah, that can make life a lot easier.

30:15Ryan Hanley:It's funny. I'm listening to the story about Patagonia, and what came to my mind was it's the Mamba mentality. You never negotiate with yourself once you make a decision. I did not appreciate Kobe Bryant when he was alive. and I have you know I appreciate him as an athlete obviously in his but I didn't appreciate his mentality and then after he died I spent a lot of time watching interviews that he had done especially post his retirement because yeah um he did a lot of interviews he did he's a um I think Emmy winning and not Emmy's TV uh he made a he made a kids documentary series or something that like won uh an award you know he did all this stuff and people would ask him like how did you translate, you know, you're a bestselling author, you got, it's not an Emmy, but it's one of the movie awards, you know, and you know, you did all these other things and, and he's, and he comes back to this idea of this Mamba mentality, which is what you're describing, which is once you make a decision in this case, part of our mission is this charitable non, that's part of who we are.

31:21Ryan Hanley:Like to him, it was, I get up at 3am and work out every day, right. And for basketball. Okay. Once you make that decision You don't negotiate with yourself You can negotiate with other people But you don't negotiate with yourself Once you make a decision And that is so incredibly difficult to do Especially, and this is why I love what you're talking about Do it early Because the more voices there are The more people are trying to get you To start negotiating with yourself Well, Eric, you said But, you know Really is incorrupt Maybe the book shouldn't be titled incorruptible. Cause can you defend that?

31:57Ryan Hanley:Like if someone were to come to, could you really defend, you know what I mean? And now you're starting to ask yourself all these questions. You're like, nah, like I, I decided that this is what it was and I believe it. And it's not negotiable and you can say whatever you want. And you know, the, the interesting part about that is after I was acquired, you know, going back to my kind of the story that I have, it's, if this was the part when I was going through your book that I'm like reading this thing, like kicking myself at the whole time thinking, God, where, you know, God dang you, Eric, why didn't you write this book five years ago?

32:27Ryan Hanley:And I started my company because literally I'm watching you describe the things that happen, you know, cause once, so I had this special, special, I had this very unique process for the insurance industry that allowed us to scale as fast as we did. There were a few core ideas that I had contrarian views on that we implemented and what allowed us to be successful. And to your The point about best practices in particular, the minute I lost control of the company by selling it, the corruption – like it was like it couldn't wait to get in. All of a sudden, I started having best practice meetings or meetings that they called professionalizing your business, which essentially meant taking all the things that made us special, tearing them out and putting things in that made us look and feel like every other business in the country and here's the part that I think founders don't that when I now talk to founders I share this story with them and try to help them see is look they're going to change your business but have the same expectations as when they bought you so what they were saying to me is we want to see the continued trajectory that you had when you were this unique thing doing things a unique way that allowed you to separate yourself, yet we're gonna tear all that stuff out, put all this generic shit, corporate stuff in, but expect you to still hit those exponential results, which became almost impossible.

33:53Ryan Hanley:And now you're living in this situation where you feel completely handcuffed. It was like, I don't understand. You bought me for this, but you're trying to make me this, but you still want me to hit this target. I don't, like physics doesn't allow that to work. And I guess my question there is You find yourself in this situation You haven't You haven't read Incorruptible One because it's not out yet But you're standing in this situation Is there a way back out? Can you pull the ripcord And say okay I've gone down this corruption path I'm looking around I don't like where I am Maybe it's because of investors Maybe it's because of employees Decisions we made Compromises we made That we shouldn't have can you fix it?

34:38Ryan Hanley:Like, is this fixable? And how deep down the rabble hole can you be before it's not fixable? Yeah. I wish I could say it's always fixable, but the truth is sometimes it's too late. I mean, if you, you know, like people get in these crisis situations and sometimes it finds out it's too late. But here's what I think is really hopeful about that. It's never too late to try. And just like us, like we fetishize vision so much in the startup world for good reason. Like so many companies, you know, that was the initial spark, the seed. An individual person had some kind of insight that, you know, sometimes I think we over fetishize that it's the founder who had the insights.

35:16Often it's just as likely to be an early employee or sometimes even a lead customer. You never know. But like the spark had to come from someone. This is kind of the same thing. Like the first step, no matter how doomed you think you are, the first step is just to be like, where do I need to get to? and do I have the courage to open my mouth and say this is where we need to go and this is not just true for the founder I don't care if you're a board member founder investor employee foreman factory worker I even I was talking to someone the other day who was going in for a job interview and they had one of my early one of my early test readers for incorruptible and they were asking me what I like I'm just a lowly person I'm desperate for a job I'm out of work for a little while I want to get a job but surely i have no power what can i do i said hey no worries and they're like and i'm not courageous okay i'm like i'm not that kind of person i was like you don't need to be a superhero but can you do the following can you do this in the in the job interview when they ask you any questions ask them if they're a mission-driven company just ask if they say yes they say no obviously go get a job somewhere else you know what you want from me but like if they say yes they oh they're gonna say yes ask them how they know just like oh tell me about that and the person will be like, oh yeah, we're a great place.

36:29We have drinks on Fridays and we have free yogurt in the fridge or whatever they say, you know, or maybe they'll say something really, really inspiring. Like, oh yeah, we were all true believers in this cause or what do you hear what they have to say? And then the, oh, that's cool. Is that also our legal mission? Is that written in the corporate charter?

36:44Ryan Hanley:Just ask. You don't have to say anything that you think it should be or just ask. And you're going to get one of three answers. They're going to say, yes, of course it is. You're like, oh, cool. Can I see? Or they're going to say no. And you can be like, oh, that's odd. Why? The person you're talking to, they probably don't know why. You're going to force them to go ask someone else. They're going to ask. Believe me, you ask them, they're going to ask their boss. Hey, boss, what's it? He's not going to know either. He's going to ask his boss. And she's going to be like, I don't know. Like no one's ever asked us that question before.

37:14And it is not uncommon for a ripple like that. Next thing you know, they're having a meeting at the board of directors about it. Does anyone here know what our actual corporate purpose is? Or the third possible answer you might get is, I don't know.

37:26Ryan Hanley:Isn't that interesting? Huh. i'm gonna make a note to ask someone about that and you just dropped a little ripple in a pond or you've just dropped a pebble on the top of a mountain can i guarantee it will become an avalanche that will do a lot of good in the world i can't guarantee anything that's how it works but just that first step of like you since you know where things need to be you can start to ask questions now as you get braver and more courageous you can say things like oh that would make a big difference to me in choosing whether to work here or not if I knew. And believe me, every time you make a choice, because one of the most important ideas in the book comes at the end, every choice you make in our modern world, because we live in the age of surveillance capitalism.

38:06So every choice you make is somebody's OKR. I don't care how minor it is. You think nobody's watching. You think nobody knows. I guarantee you every choice you make, somebody's got a metric they're trying to optimize that you just showed up in their report so you don't have to do you don't have to go to a secret meeting you don't have to join a union you don't have to necessarily pro you can do those things if you want to if you want to amplify collective action god bless go for it but just by yourself you choose to do the thing or you don't do the thing that that choice um causes gravitational ripples that that like a pond surface radiate out from you so now going back to your question of is it too late let's say you're a founder and you're in a really really dire situation like you're describing and it can feel like man mission is now a nice to have and and investors i think when investors become board members they're trained unfortunately to kind of treat mission like like the dessert you get after you eat your vegetables no longer the vital thing that is the reason they invested in the first place so you're like okay i'll just compromise a little bit to get through this crisis or whatever but like great clay christensen said it is easier to do the right thing 100 % of the time than 98 % of the time.

39:20And that's what popped into my head when you're talking about Mamba mentality, that like, if you have to negotiate and decide every time, it's just exhausting. And so if you're just like, no, if we're going to make a turnaround, if we're going to get through this crisis, the only way is if everyone is truly committed to the thing that is going to galvanize our whole team to make it through. And therefore, we have to do the thing. Sometimes you're going to get laughed out of the room. You might get fired. The thing you fear, it may happen. I promise you nothing, no guarantees. But sometimes, and I've seen it, sometimes just speaking that into existence can cause people to be like, oh, really?

39:57Is that one of the options? I never even considered it. So, yeah, I think educating people about the magnetic pull of a profound mission-driven company, of aligning a mission with human flourishing and with having a principled ethos, making honest, high-integrity decisions. Like there's this package of actions or character traits that if we reach for, no matter how dire the situation my experience has been, it gives us the power we need to accomplish sometimes seemingly impossible things.

40:29Ryan Hanley:That Clayton Christensen quote, it's really tough to swallow. I mean, I believe it 100%. It's just a tough one to internalize because what immediately makes you start thinking about is all the places where you negotiated with yourself and moved away from the principles that in your quiet moments, you decided wanted to be part of either who you were personally or who you wanted to be as involved in a business. and, you know, that can create a lot of self-doubt. And I see, you know, when I'm dealing with, you know, I deal with a lot of early stage founders, mostly in the insurance industry, but a few others.

41:09Ryan Hanley:There's this sense of like, even if they've done something spectacular, obviously you get the few who are born with or somehow had ingrained in them a level of self-confidence that oftentimes borderlines on delusion, Which, if manageable, can be a superpower, right? No doubt. But I think most of us are always managing some level of self-doubt. And, you know, when we're, I guess, how do you coach, talk, advise when they are in these low, you mentioned low leverage, low leverage negotiations. When you know you're in a high leverage spot, even if you generally have self-doubt, most of the time, I think you can navigate through that.

41:53Ryan Hanley:But it's these more low leverage situations where combined with a level of insecurity or self-doubt, seemingly you are very open to suggestion and often suggestion that is not in your favor or at least not primarily in your favor. How do you recommend that founder or executive, et cetera? How do they manage that situation? Is it finding a good mentor? Is it going and getting a consultant? Is it bringing in your executive team, et cetera? Like how do you navigate that particular situation? Because that seems to be more and more the case. It's super hard. And I think we should name the emotion of shame that a lot of people feel when they feel like I was supposed to be the Goliath who protected this thing.

42:42And now I've been like, and now I failed. And the problem is that investors and a lot of advisors and bankers, they encourage this magical thinking. They want the story to be all about you. So when things are going well, I tell the story in the book, I'll never forget one of these founders I talked to who came to me very concerned about this stuff. And I gave him a bunch of advice and he was really shook by what I told him. Because I was like, look, you're going to take this company public and you're about to get utterly screwed. I need you to understand what you're up against. And he called his various advisors and bankers and lawyers and CFO and everybody and they were like, oh man, Eric's such a downer.

43:18If he really believed in you, if he saw what a visionary you are, He wouldn't talk like that. And he got me back being like, sorry, we're covered. That's the advice for normal companies, but we're special. He didn't last even six months as CEO post IPO. His company is now like completely destroyed. And I don't feel good. I wasn't like, oh, told you so. I was like, this keeps happening. I feel like I'm like the Cassandra who this keeps happening to. I tell people it's going to happen. They don't believe it. So the key first thing you got to do is you got to figure out who in your life, in your team, in your cap table, just who in your life are what I call torchbearers.

43:54Torchbearers are people who are there for the mission and they don't care about other stuff. So like they will be of real, in good times, they can be a real pain because you're like, I just want to do this easy, quick thing. And they're like, but what about the mission? And you're like, God damn it. You're just like, right? Like get out of my way. Do the right, like they could be a pain in the butt. But when you're in a crisis, that's who you need. So you need to pay, I would just, I watch people in a crisis like a hawk who is actually sincerely committed to the mission and who is either looking out for themselves or like trying to make me feel bad so they can get something.

44:27You've got to pay attention. And a lot of fancy people, the most famous, fancy, biggest name people are actually like the worst, even though they seemed great. When they, you can just feel the, I remember meeting with this one investment banker who was just a genius at sales. And I felt like by the end of the meeting, I was like, this is like the most selfless person who just, he just loves technology for its own sake. The fact that, you know, the fact that he's a banker is almost like he's a little bit embarrassed about it. He's not trying to make money. He's trying to change the world. And I walked out of his office being like, this guy is basically like Mother Teresa.

44:58And like only once the charismatic, like magic spell faded a little while later, I was like, wait a minute, what did we actually talk about? And what did he ask me to do? I was like, I was like, going back, I was like, wait, hold on, hold on a second. Like I got totally, I was completely bought. It's like, yeah, I see why people go with him and trust it. Like, it's just like, he was really good at it. I was like, wow, this is impressive. So you got to pay attention to that kind of stuff, figure out who are the torchbearers. And then in a crisis, you got to circle the wagons of those people and just figure out like, who is actually, actually here to defend the mission that we're on.

45:29And you can tell right away, the people who are like, I don't know, if they give you vague objections, like people not like it, or what about this? Like, you know, are we going to make any money? It's just like the concerns that are on their mind, the things that are keeping them up at night. they're not and i'm not it's not a criticism like some people need money okay i'm not there's nothing wrong with that just saying they're not torchbearers the torchbearers are people who like this is they're irrationally committed to this thing and those are the people you need to be able to go to for advice in these crisis moments because they're the only people who are actually going to put your long-term interest ahead of their own and so again if you wait for the crisis to happen before you seek those people out you know that could be tricky but i'll give you an example like there's the best practices we teach people can be really antithetical to this so a very common idea here that comes out of white combinator and places like that is that startups should not have advisors if someone is prominent enough to be an advisor they should just be an investor right because they're like why would you why give them equity for free when they obviously could pay for it so don't let them talk you into free equity only have investors which i totally makes a certain amount of time i understand the logic of it but also what you're saying is never have anybody on your side of the ledger on your cap table no common shareholders but you everybody else you get advice from needs to be a preferred shareholder it's like wait a second do so everyone i go to advice is going to have class solidarity with the preferred investors really is that really a good idea like it seems so reasonable on the surface and then in a crisis you're like holy shit who can i talk to who's not a preferred shareholder i got nobody only my employees and i want to freak my employees out so i really believe i'm a huge believer in cultivating relationships with people whether they're formal advisors or not you know figuring out which of your employees really really really like understand this and like and steve jobs was famous for this he would conduct what he called i think other people called it skip level meetings i know what he called it he would just he would have these meetings with people down in the org chart to drive his executives crazy but like he understood a lot of his executives they're not there for the mission they're there to be a big-time executive at apple computer it's pretty sweet job it paid really well you get all this social capital it's like it's an amazing job and they're good at their job he's not like i'm not it's not that he didn't like them or he hired them but he didn't really want to hear what they had to say he needed to talk to someone who actually knew what the hell was going on and who actually was there for the reason of belief in the mission the ethos the product whatever it was so surround yourself with those people know who they are so that you can go to the Met Crisis.

48:01Ryan Hanley:I want to finish our conversation today because I just wouldn't be doing my duty as a podcast host here if having you on, I didn't ask you this question. So all of what we've talked about today, but framed in a world where with a$20 a month Claude code subscription, you can spin up your own business and it feels like there's less moats and there's more information and there's 10 million companies being started every single day. And, you know, everyone's got a side quest and a side hustle and a side insert, whatever buzzword you want to put on additional jobs and projects in a world seemingly that's only moving faster, right, with AI, with information in a place where it's very hard to distinguish good advice for bad advice.

48:55Ryan Hanley:I mean, I, I, I talked to a lot of what I call normies. Um, and I don't mean that derogatory at all. I just mean normal human beings who don't think about the stuff that you and I think about every single day at the depth that we do. Um, civilians. Yeah. Yeah. Civilians. Yeah. When they're starting businesses and I'll throw a few of these kinds of thoughts, uh, maybe not exactly the same that you, the way you put them here, but just some of the, some of the thoughts we've discussed today in front of them have no clue. And if they do, oftentimes you find they're using just standard, very surface level, best practice information as a first step, how do we parse through this to make sure that we're not stepping on some of the most easier common landmines.

49:34Ryan Hanley:Um, as we begin, maybe as we begin our journey into starting maybe our first side quest business, we've been a plumber all our life and we want to start a plumbers CRM app that we've had in our head. And we want to go do that. Oh yeah. If you're the person you just described, this is like the greatest time ever for such things. It's amazing. So I have been a big believer for many years now of first principles thinking. And the reason, and in other eras, it's been harder for me to explain to people why. It's always just seemed intuitively right to me that at the end of the day, copying tactics, listening to advice, like you never really know if it's going to work for you.

50:12But if you study underlying principles, you can reason about what's supposed to happen you can make predictions so i think a lot of the problem we have today is people are like follow this technique and then you'll get rich so then people are like i don't know so and so followed the technique and he got rich but so and so other person followed the technique he didn't get rich so is it true or not like we don't have we have very coarse-grained ways of thinking about these things and i'm like hey man better to take a more scientific approach like try to understand what the underlying principle is and then see if you can apply it yourself and not just look for you know people are like you know if it works it means i'll become an instant overnight millionaire?

50:46No, that's not how it works. The reason why Lean Startup has had staying power, Lean Startup was written 15 years ago now. I think the reason it has staying power is it was derived from these more eternal principles. And so people are able to make predictions about what's supposed to happen and then you can evaluate what actually happened compared to what's supposed to happen. You'd be like, oh, okay, yeah, I didn't become an instant millionaire but I did learn a lot, I did get better. It makes very concrete predictions and the new book is the same way. So in AI it's the only way forward. I can't tell you how many so-called best practices we've seen come and go.

51:17I've been really in the revolution from the beginning. So I'm like, I'm not a civilian. I'm really deep in with these guys. I know all of the major players. And I started an AI research lab and I've worked with a bunch of the big companies too. So I spent a lot of time with AI and I know the scientific papers and everything. But even I and people who are way deeper than I am have a really hard time predicting what's going to happen. So we've been through already multiple waves, just in the last two years, at least 10 different waves of best practices that were like absolutely the best for a minute and are now discredited.

51:48So if you're like, oh, okay, I found the solution. All you have to do is like do prompt engineering. All you have to do is do agent, like whatever thing you think, oh, I just discovered this thing. First of all, you didn't just discover it. Okay, millions of people are discovering at the same time. And second of all, it's not some internal best practice. It just happens to be a thing that is working right this minute. So it's much better off to try to understand the technology in a deeper way. What are the principles that are driving this technology? What is it capable of and why? And it's funny, people are like, that sounds like you're having to grapple with like postmodern philosophy.

52:20It's like, yeah, guess what? All those questions about the self, about language, about intelligence, about seeming these really arcane things, it seemed like they were not important at all to most people are now the most practical areas of study in the world. And so many business outcomes are gonna hinge on questions about whether language is intelligence or intelligence has some more capacity beyond language. I think that's exciting and cool. If you're someone who likes learning and self-improvement, what an excuse to go deep into these fundamental questions. But for people who are like, oh, that doesn't sound good to me, I hear you.

52:53There's another path, and that is try to get hands-on with the models themselves. So I strongly recommend, like, there's all these companies you can buy AI-enhanced, whatever, vertical for you. Don't buy that stuff. If you have to, fine. But as much as possible, try to get access to the underlying models. Claude, ChatGPT, Gemini, the underlying models are available for about$20 a month. We're not talking about some massive investment. Learn how to use Claude Code or Anthropic Cowork. Those are my personal favorites at the moment. But if you want to use Codex or any of these other interfaces that get you direct to the model, if you want to learn how to use an open source model, whatever.

53:27There's a lot of ways you can go about this. But whatever it is, try to spend some time with the model. Try to understand its capabilities. And there's a couple of tips I would give you. First thing is these models are teaching machines. Like your mental model for what these things are, it's like your most verbose and overconfident friend who like loves some obscure thing that they're super into, but it's everybody's friend. Every person on the planet who loves to talk and talk and talk and talk about the thing that they know a lot about, whether they're right or wrong, they'll still keep talking.

53:58That's what we're talking. So ask it, have it teach you things, have it build a curriculum for you, have it ask it if your understanding is correct, especially with the more recent models, especially like things like the high thinking new models from Anthropic. They're very good at teaching. So use it for learning, not just for making artifacts. And the second thing is try to get a sense not just of its strengths but its severe limitations. This technology is very good at some things and horrendous at others. And the challenge we all have to deal with, it's called dark flow. This is a term that comes from the psychology of gambling.

54:35people who play slot machines if you put them in an mri machine it's not that different from people who are like having tremendous creative output like flow at work so like a great poet or a writer like in that moment of channeling the divine you know muse their brain is lightened up kind of the same way as a person playing a slot machine so it's very easy for vibe coding and all these tools to become a slot machine and you're just like not thinking at all just like oh monkey do my work for me right like make this thing for me make it for me make it for me and as soon as you catch yourself in that pattern, you've got to break it.

55:04These things are super addictive and super dangerous in that way. Because if it's doing the thinking for you, then you are adopting its weaknesses. And remember, it has one of its most dangerous weaknesses. Just like your friend who's overconfident, it has the ability to convince you of any plausible sounding thing, whether it's true or not. It's just insanely good at that because it's a language model. It's not a truth model. It's not a reasoning model. Deep down under all the light, we add reasoning and facts. We add all these stuff to it. But if you go down, what is this thing at the base base layer?

55:34It's the same base crap hardware we carry around back here too. It's just a language processing engine. It's trying to produce tokens that sound plausible. So as long as you understand those weaknesses, play with the actual technology. And remember that if you try today, you may feel like you're too late. But for the vast majority of the human population, they've never even heard of this yet. So you're actually super, super, super early. But don't let it operate you. You got to learn to operate it.

56:01Ryan Hanley:Guys, I can attest to the addictive nature of this because I am I have been building and destroying things over and over again with Claude code and open claw. And I've tried I'm trying I just find it to be I just find it to be fascinating for someone who, for whatever reason, could never figure out code. I'm sure if I gave it more of a college try, I could have eventually figured it out. But it's fairly obvious to me fairly quickly that fingers on keyboards coding was never going to be my superpower. But holy shoot, what this thing can do for you when you can articulate a problem, articulate what you hope the answer could be, and are willing to do the research to find the tools, skills, plugins, you know, et cetera, that can help you get there.

56:50Ryan Hanley:Man, it's a wonderful time to be alive. Eric, I appreciate you so much. The book is Incorruptible. We'll have links to the book. We'll have links to your website. Do you have a favorite social media where people can follow along if they're not already? Someplace to send them? Oh, sure. Yeah, I'm on all the usual platforms. I probably post myself personally most to Blue Sky these days. But I'm also on Twitter, LinkedIn, everywhere else you'd expect. And for latest, if people want the latest updates, you can join the mailing list at incorruptible.co. We have a whole bunch of special offers and cool events and stuff happening.

57:22for people who are fans. So if you want to come hang out in our community, just go to incorruptible.co, where all the layers will be.

57:30Ryan Hanley:Guys, whether you're watching on YouTube or wherever you listen to podcasts, scroll down. I'll have those links. Sign up for the newsletter. I appreciate you so much. I know the book's going to be amazing. And thank you so much for your work, my friend. I appreciate it. Thanks for the kind words. This was a great conversation. Thank you.