Inside Kickstarter: Co-Founder Yancey Strickler on Building the Crowdfunding Giant

Yancey Strickler (00:00:00):
Once there are 50 people, an organization will begin to hire administrative and operational roles that exist not to fulfill the purpose of the organization, but to fulfill the needs of the bureaucracy of the organization itself. And as soon as you begin adding those people, the company must then grow faster than it adds those people to not die. And there's just this point where you just sort of pass this Rubicon of no longer are people here for the same reason.

Eric Ries (00:00:35):
Welcome to the Eric Ries Show. I'm your host. Today we have Yancey Strickler, co-founder and former CEO of Kickstarter. Also, author of the book, This Could Be Our Future: A Manifesto for a More Generous World. And now the founder of Metalabel. One of my favorite things about Yancey is that he understands that organization building is one of the artistic disciplines, and so he's found a unique way to blend his love of music and art, community and companies all in one really delicious bento. I first met Yancey 10 years ago when he was the CEO of Kickstarter. He was my introduction to the idea of public benefit corps. And over the years I've seen him grow as a thinker, as a company builder, as a CEO, and as someone who's deeply invested in the humanity of everybody who's trying to create art or create a company.

(00:01:26):
Yancey is unusual as an entrepreneur speaker because he's had a lot of success, but he also still has a lot of humility. And as you'll see in the conversation, he's very honest and vulnerable about the things he did well and the mistakes that he made, but also the insecurities, the psychology, and even the spiritual dimension of what he was trying to build and is trying to build now. And so I hope entrepreneurs take not just inspiration from Yancey, but also the cautionary tale about the ways in which ego can lead to organizations not really living up to their full potential. Yancey is a leading thinker in this new movement who's trying to figure out, how can companies be forces for good and how can we build a better society without having to give up on the simple idea that self-interest powers market?

(00:02:13):
We had a wide-ranging conversation about the history of Kickstarter, about public benefit corporations, about our society's addiction to financial maximization and so many other topics, it's hard to summarize. Here's my conversation with Yancey Strickler.

(00:02:28):
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(00:03:43):
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(00:04:35):
Yancey, thanks for coming on. Yancey, author of This Could Be Our Future, among many other things. Thanks for taking the time.

Yancey Strickler (00:04:43):
Always good to see you.

Eric Ries (00:04:44):
When I was reading the book, I really remember a tiny, little tidbit you included which just blew my mind, which was that the high five had to be invented. In our lifetime, like in living memory the high five was invented and people didn't do the high five before. And it's known when. Just talk about the origin of the high five.

Yancey Strickler (00:05:05):
Wow, fantastic. Yeah. That was, I believe, it was '77 or '78, there was a player for the Pittsburgh Pirates who hit a home run in a big moment. And he came running around the bases and his teammate was standing there waiting with his hands up. And the guy who hit the home run whose name I forget, he talked about how he jumped up and slapped the guy's hand because, his quote, "It seemed like the thing to do." And that then became a team celebration that they call the high five. And that became a ubiquitous gesture and greeting. And I wrote about that story in the book because it's just one of those so trivial ways of revealing how much of the world has been authored, how much of the world is accidental, how much of the world is being written now that we really fail to appreciate.

(00:06:02):
And so even something as simple as a physical greeting, I feel like we've seen fist bumps emerge in our lifetime. And just that something so minor, but yet also so ubiquitous can just spontaneously emerge out of culture, out of human interaction is I think a simultaneously liberating and terrifying way of seeing things. And so I think a lot of that book, what I'm trying to create is that feeling for people because my feeling of being a part of Kickstarter and watching an idea go from impossible to explain to ubiquitous and instantly understood-

Eric Ries (00:06:50):
And now we can't imagine how we ever lived without it.

Yancey Strickler (00:06:52):
Yeah. That process was just mind-blowing to me even sitting in that seat and watching it happen. But that is just constantly happening and our brains are evolved to constantly integrate new information. And it's amazing. It's all amazing. But it's one of those things that when you start to see it, it's like a word that just looks funny. It's just seeing a little bit of the matrix is really empowering.

Eric Ries (00:07:22):
In prep for this, I was asking various civilians just who I interact with in my life if they could believe that this story was true or if they thought I was making it up. And 100% of people thought I was making it up. Nobody could believe that the high five had to be invented. Presumably people have always had hands and they've always done that thing with the hands, and they've always called it the high... What else could it be? And it was such a great example that so much of our world had to be invented, and yet we completely take it for granted, such that when the next thing is invented, we act incredulous even if we're old enough to remember that the previous thing had to be invented.

Yancey Strickler (00:07:57):
Yes, yes. Oh, I know. Now I'm imagining at the Magna Carta signing, they high-fived. It was all hands in the middle and, "Hands out, USA." Yeah, no. We're so conditioned by the water we swim in. And we can't-

Eric Ries (00:08:17):
We can't even see it.

Yancey Strickler (00:08:18):
Yeah. And society depends on it in a lot of ways.

Eric Ries (00:08:22):
I think a really important place to start is just with the Kickstarter story. I think it's pretty well known now. You guys have been at it for a long time, and it's a pretty famous story. But first of all, for those who don't know, you can tell the story of Kickstarter. But to me, I think you had such an interesting lens on it as a co-founder and then as CEO. And then now having had some time away from the company, I just would love to here kind of when you reflect on the story now, how does the origin of Kickstarter seem to you?

Yancey Strickler (00:08:51):
Yeah. This month, April 2024 is the 15 years since it first opened its door.

Eric Ries (00:08:56):
[inaudible 00:08:57].

Yancey Strickler (00:08:57):
April 28th, '09. What really stands out was how much earlier it began than that. 2001 is when Perry Chen first had the idea of what is called crowdfunding. And the 2001 internet was like, you have to have a closet full of servers, and there's no tooling. There's no tooling. You must be a deeply technical person. And I got involved in 2005. And during that period, and Charles Adler a year later, what made Kickstarter possible, one of the things that made it possible was during those years, AWS and EC2 were created by Amazon. And there began to be these tools that allowed us who were more liberal arts people to make a website in a way that previously, I think you really had to be a tech person, capital T tech person.

(00:09:53):
And so we were able to ride this wave of tooling that just let us be able to engage. We still needed many very talented engineers to do anything, but we could get farther. And there was just years of us trying to explain the idea and really struggling to explain conditional purchasing. You have to get all these people, and then something happens. And received a lot of blank stares. But the second the site was there and people could look at it, it was instantaneous. People knew... They got it, they got what it was, they got how to use it. And it was then just a few weeks of that that the site really became alive where people we didn't know were building projects and they were making the page emote and express and be more than a form. And the internet just started doing its thing.

(00:10:57):
And yeah, I came to feel like that apparently, the world had always been waiting for this door to exist where everyone was lining up to... They're pitching a corporate boardroom or record exec to get a green light so they could get money to do anything. And everyone is waiting in this one line. There's no other institutions to get funding. You're just waiting in this line. And then suddenly we just put this door next to it that's like, "Just self-validate. Do it with your own audience. You don't need that line." And suddenly that created just this massive pouring of people to where it's now, it's almost 8 billion I think that's moved through Kickstarter at this point. And it was as if the world, it had always been waiting for that to be there. And then there it was. And we got to feel just people discover it. And it happened community by community.

(00:11:57):
It wasn't a rocket ship. I remember very distinctly, maybe a month or two in, there was an Indian classical dance performance project, one of these. So we approved everything before it went live. It went live. And then within a week there were 10 other Indian classical dance projects and we could see that, "Oh, that person put it on Facebook or hit their email list. And we have just been validated as a viable option within that community. And now they're showing up. Oh, this is how it works." It's just intra-community validation. "Oh, this tool works for you. Maybe it'll work for me." And then people iteratively learning from each other. And it was just very... organic is an overused word. But it gave a sense of if you pull back the curtain on organic, what does it look like? And it looks like word of mouth validation. And, "This solves my problem. I also have that problem. So I will also try and we'll also try that."

(00:13:02):
There was just such a truth to it. And having gone farther being involved in other projects, I could see that we were fortunate that it wasn't a rocket ship. But within a month we could see, "Oh, there's something." I know for a lot of projects, it could be a year before you get to like, "Oh, there's something." But feeling that and never leaning all the way into it, always being careful about it. There's a book I've always loved called The 22 Immutable Laws of Marketing by Jack Ries and Al Trout. And there's this one-

Eric Ries (00:13:39):
No relation to those who ask.

Yancey Strickler (00:13:44):
Yes, yes. They have something called the law of fads and trends. And they say a fad is a trend whose demand has been satisfied. A trend is a fad whose demand is never satisfied. If you create something that has success, you'll feel a first urge to satisfy all demand. This is the wrong way to think about it. Instead, you should think, "How do we satisfy a core amount of demand, but always keep a ring of people that can't get in yet?" And that the longer you just hold that, the more you elongate the fad. And if you elongate it long enough, it becomes a trend and it's an organic thing on its own. So there's this way that we have an instinct of like, "Oh, there's something. Let's pour all the gas in it."

Eric Ries (00:14:32):
"Let's maximize it to the hilt."

Yancey Strickler (00:14:33):
"Let's max that out." And laws of marketing, laws of desire, laws of how people do things say yes, there is memetic desire, there is following, there's sheep. There's all that. But those are fads. Things that stand are things that you have to work a little bit, and it's not always there for you. So we always had this thought of we're not trying to be as big as possible. We're trying to be what feels right, what feels peaceful in some nebulous way. Holding that type of line, I think builds trust and allows you to grow that ring of interest. And there's a lot of those counterintuitive things of you don't lean in all the way actually. You hold back a little bit because you have to think a customer, think about desire, think about what you as a person are drawn to and how nice it is to flirt or be flirted with versus just be told a bunch of stuff.

Eric Ries (00:15:34):
Yeah, yeah. Someone trying to maximize you, it's not actually a very enjoyable experience.

Yancey Strickler (00:15:38):
Yeah, yeah. It was a very delicate kind of journey, a real dance I feel like. And it gets harder as it goes. The bigger it gets, the harder it gets.

Eric Ries (00:15:49):
Talk about the difficulty of it because you were not a prototypical tech founder. You had been, what, a music journalist, right-

Yancey Strickler (00:15:54):
Yeah.

Eric Ries (00:15:55):
... before doing Kickstarter? And then you kind of were thrust into this tech co-founder role. And now once the thing starts to take off, you're buried can imagine in operational details, the logistics of who to let it in and not, how to navigate the intentions with investors and the fact that there's all of a sudden a significant amount of money flowing through the platform. Now you got fraud on the platform. I remember very early on when you guys started to develop standards for who was allowed to post a project and who wasn't and basically clamped down on your own growth for the sake of the authenticity of the experience for the customer. It was one thing after another. Talk about what that was like in the early days.

Yancey Strickler (00:16:36):
Yeah. There was a lot of crisis hopping of just if you're an open system on the web or open-ish and you're letting the raw internet through, it's going to be unpredictable, which is what you want, but not always. I always found the crisis moments were... in a way looked forward to them because they forced you to get to truth. Every crisis, I found there would be initial instinct of, "How do we just make this go away? How do we get rid of this?" And then if you're honest with yourself, you realize, "Oh, that's not real. That's not the real [inaudible 00:17:17]."

Eric Ries (00:17:17):
Give an example. What's an actual crisis that you remember?

Yancey Strickler (00:17:21):
Well, there's the one around when we introduced standards really for the first time. And what we found was that it was a moment when a project had raised a million dollars in 24 hours showing only a 3D rendering of a pair of VR goggles, and just a 3D rendering of a spinning video for 15 seconds. That's all it was. And it raised so much money, and it was a big story, really positive story. "Look at this great tech thing." But our sense internally was, "Hey, this is a problem because we look at this and we think this team isn't showing anything. And the reason it's getting so funded is because people are trusting us because we put care into the system. And so effectively a customer is spending our trust on their behalf." And that's a problem. That's a bad move.

Eric Ries (00:18:19):
So then what do you do about that?

Yancey Strickler (00:18:22):
One hand could be you just slap a bunch of rules or something, which was a part of it. But also there's just a deeper question of, what is it that we're really saying here? What is it that's most important? So there was a whole day where the five or six of us were locked into a room and we're talking about... just like stuck on this question. And there was a point, I find this over and over, it's a point just past the point of exhaustion where everyone is like, "Don't ask me anything. I'm so done." You're just stuffing greasy food in your mouth and you just feel like an idiot. And then at that moment, someone said, " What is it we're trying to say?" At a great early Kickstarter employee Megan O'Connell said, "Kickstarter's not a store." And we're like, "Yes. That is why we've been in this room for a whole day, is to hear those five words." And so that became a way to deeply understand what it was we were saying.

Eric Ries (00:19:17):
Explain what you meant by that.

Yancey Strickler (00:19:19):
Yeah. What we wanted say is that this is not a traditional marketplace. People might present their work as if, "Buy it now," and all these things. But we are saying we have no interest in being in store. We want to be a place where people are... Yeah. There's a bit of speculation on what will someone be able to make or not. But we want to just ground this as being not a retail space, but an early funding space, a different category. And so we ended up creating rules about what it meant to present work as a work in progress versus a finished product. And so we defined those things, but they're all laddering up to this core idea of Kickstarter's not a store. And the only way that we were able to get to that clarity was this pressure cooker of 24 hours of us just internally feeling like there's something wrong and just not letting go, not letting go of that feeling. And it brought us to a place of truth.

(00:20:19):
I remember the day, Perry and I spent that whole day writing that. Then we posted them that day. It was a Thursday. And that night it was the number one thing on Hacker News. And there were hundreds of comments of people furious at us for being like, "You are infantilizing me as a user. I deserve the right to make my decision." Responded to a lot of those comments, read them all. But I just had the strong conviction that this was a good decision for the company. And I felt that way because it was contrary to our immediate term financial interests, but it felt aligned with what the project was actually about. And I could see that that was not an easy choice. It was not the obvious choice. But it was a decision that we got to through getting to a truth.

Eric Ries (00:21:10):
And it was a sacrifice.

Yancey Strickler (00:21:11):
It was a sacrifice. Yes. In crises, companies have to sacrifice. I always say you have to get on your belly and humble yourself all the way because as most likely the biggest entity in that situation, you have a lot of the responsibility. And so what does it mean to own that, to step into that in the right way?

Eric Ries (00:21:36):
Well, and you're asking people to trust you. Kickstarter is such a great example of a business who's only real asset is trust.

Yancey Strickler (00:21:44):
But there remains a challenge for Kickstarter, which is, yeah, it relies on trust. It's also about funding the speculative things. And there is a core challenge that remains a challenge that funding the creation of creative projects, of a comic book, those are very safe things to fund because they're tight communities. You're only getting funding if you have reputation. It's like everything's aligned. But a product, a speculative product is something that you could advertise on Instagram. And a lot of people are interested in a new razor or a new whatever. And they're not vetting, who is this team? They're not thinking about that at all. They're just thinking, "Oh yeah, I normally buy Gillette and now I'm going to buy this." And so the entire incentive structure and ways of balancing out interests become a lot harder. And yet those projects are the ones that have the biggest reach, have the biggest scale, make the most money.

(00:22:53):
And so there is an inherent tension that is very hard because if you tried, there's this choice of like, "Okay. Then let's put a hard wall then." You can't do that. Well, then it's like then you end up in a store. Is it only things that have no risk that can be made? Is it okay for there to be failure? We feel like failure should be okay. But how much failure is okay? And this is true of a creative life too. Certain themes or challenges, they keep recurring. You graduate, you become a more elevated version of it. But they stay around. And a lot of the core challenges that we discovered in Kickstarter became ones that feel maybe they're inherent to the model. Maybe they reveal where maybe there's a ceiling or this is a great avenue, this is a risky avenue. And over time, just more and more of your energy goes to the things that are hard to fix and less into the green field of, "We could do this." And it's one of the many ways, I think all projects get more challenging the longer they go.

Eric Ries (00:24:07):
In a video game where the boss of one level is the goomba of the next level. Entrepreneurship always has felt that way to me about it. So going back to those early days, you didn't start out as the CEO, you were the-

Yancey Strickler (00:24:20):
I was like community... Yeah. Forward facing.

Eric Ries (00:24:23):
Yeah. Talk about the decision to take on the CEO mantle and what that was like.

Yancey Strickler (00:24:29):
We as founders had always been very closely aligned and Perry and I had always been close partners, close friends. And yeah, it was like 2013. So maybe three and a half, four years in, Perry started talking about how he just was ready to step into a chair. And I think that's not an easy job or fun job. And so we just began this long process of a transition. And it ended up working out that the-

Yancey Strickler (00:25:03):
It ended up working out that the start of Jan. 1, 2014 was my first official day as CEO, which also was our first day in our new office, which was this giant pencil factory in Brooklyn we bought that was 30,000 square feet. And we moved there, my first day as CEO, as a team of 60 people. And everyone's like "What? What is supposed to happen here?"

Eric Ries (00:25:25):
[inaudible 00:25:27].

Yancey Strickler (00:25:26):
It was quite a moment of a lot of changes stacked. But yeah, I mean, I was excited to step into that. I was anxious about stepping into that.

Eric Ries (00:25:38):
Was Jan. 1 your first day with the new business [inaudible 00:25:42]?

Yancey Strickler (00:25:43):
I think I just felt everyone watching me. If I go back, what is my memory of just every-

Eric Ries (00:25:52):
That's such a strange feeling, yeah. It is really odd.

Yancey Strickler (00:25:54):
Every emotion, everything just communicates a lot to people. Yeah, I just felt... I was always such a strong advocate for the Kickstarter community, for creative people in general. I'd been involved in hiring most of the company. I just felt, and still do, just felt a strong sense of pride and just wanting to champion everyone. And initially, I think I fell into the same trap that I think is so common, which is, "Well, I need to make my mark of what is my leadership about," which is just silly. I now see it as silly, because-

Eric Ries (00:26:38):
Yeah. [inaudible 00:26:39].

Yancey Strickler (00:26:38):
... I advise other CEOs. Yes. And it's like-

Eric Ries (00:26:41):
Do the work. Do the work. Whatever it turns out to be will be your style.

Yancey Strickler (00:26:44):
Yeah. Now, I just see like that is a seat. That seat belongs to the institution. You are the person in that seat, but it's the seat that's there, not you. You are serving that seat. And I got there. But yeah, initially, just young, just being young, it's so embarrassing, but just being young. I mean, I was CEO for almost four years, and I would say the first two and a half, I would say, were very successful. They were the biggest years in the company's lifetime, and big projects were happening. Yeah, there's just a lot of good energy.

(00:27:34):
And then, I made a few clear, obvious, in retrospect, mistakes of hiring new senior talent and having a 50% hit rate, which now I'm like, "Hey, that's about right." But back then, you're like, "Oh my God, it didn't work." I thought you just don't have the context to be... You need to be ready. You can't know everything. And so, things like that, maybe me experiencing them at that level for the first time, harder-

Eric Ries (00:28:05):
Yeah, first time. First time, it's really challenging.

Yancey Strickler (00:28:07):
Harder than they need to be. And by the end, it had reached a place of almost burnout from... It was two things, or maybe more than two, but one was just I found the recruiting leaders process to be so exhausting-

Eric Ries (00:28:29):
So tiring.

Yancey Strickler (00:28:29):
... where I was just... I was on a new first date every night of trying to convince someone that they should want to be a part of Kickstarter. And I was very good at that, passionate about it, but it empties you out. There's only so much you can do that without... If you're not feeding yourself correctly, and I wasn't. I was just all in. So, that started to bleed me. And then, at the board level, they saw my rookie flailings. And at some moments, I was judged with generosity. At other moments, I was not. And I started to get a lot of pressure there, even though, to my mind, the company is doing well and I'm just figuring it out and we're doing our best, but of course-

Eric Ries (00:29:24):
We're well compared to [inaudible 00:29:25]. I'm sorry.

Yancey Strickler (00:29:25):
We're 160 people, and we have this much revenue a year. Yeah. So, it really reached a point of, yeah, just a lot of pressure. And in the end, an agreement between the board and me that, yes, find a different leader. Find a different leader. And that was brutal. It was brutal. I mean, I was a part of that conversation and I was really trying to look out for Kickstarter, but I also was just still in my own experience. I feel like I couldn't see myself clearly enough. Yeah. And that led to a couple of the hardest years of my life of feeling like this thing that I had made and that was a core part of me, and I was a core part of it that wasn't part of me anymore. Or I've been the Kickstarter guy for 10 years, so who's Yancey? When you just-

Eric Ries (00:30:32):
Yeah. Who are you when that's taken away? Well, I'm curious actually. One thing I've always wondered is... Because if I remember it right, you actually exited the company, and then left the board and really took a break from Kickstarter after.

Yancey Strickler (00:30:45):
Yeah.

Eric Ries (00:30:46):
Do you feel like if you had ultimately not decided to step into the CEO seat, there's a chance you might still be there? We wouldn't have had this kind of tension that you then ultimately had to resolve in that way?

Yancey Strickler (00:30:57):
I don't know. I mean, yeah, I was on the board. I asked to leave the board. I didn't see how I could be half in or partially in.

Eric Ries (00:31:09):
Yeah. I know a lot of founders feel that way.

Yancey Strickler (00:31:11):
Yeah. It's just like, "Why? Who is that for really?" And just an instinct I had was I just need to throw away that part of my brain. It was a very hard call, but I had been so thankful I made that decision, even as it's had led to other moments of pain and struggle, but it gave me the freedom to create a new chapter in my life rather than-

Eric Ries (00:31:40):
Yeah, we didn't get to... I know a lot [inaudible 00:31:42].

Yancey Strickler (00:31:40):
... holding on to.

Eric Ries (00:31:43):
Yeah, yeah.

Yancey Strickler (00:31:43):
Oh, yeah. I mean, I wrote a piece a bit ago that I think you reacted to, about how to start a new thing. And I talk about in this sort of detailing the emotional journey of just like you think you have an idea, and it ends with this idea that all new things die. And that we have this desire to keep things permanent, but we shouldn't. We shouldn't think that way. And that the last step of creating something is to acknowledge that it is separate from you and that you are not it. And that took me maybe five years, four years of being gone to reach that point, and that became a new kind of... Just as creating something was a gift, it's also a gift to allow yourself to separate, is another kind of gift to give yourself.

(00:32:37):
And I have a new project now that is having me retake these steps where I'm being able to see every moment, I can feel my growth. I can sense it, and that is its own kind of gift. But the pain of having to disentangle yourself from something that to which you feel is a part of you and it is you.

Eric Ries (00:32:57):
A greater part of you.

Yancey Strickler (00:32:58):
But it is not. But also, it is not. I feel like I'm still learning from that. And again, the word that just keeps coming to my tongue whenever I think about it is a gift. It's just like you're being given the opportunity to discover and manifest who you are and what you can be and what you're not. And it feels to me like the most valuable thing there really is.

Eric Ries (00:33:33):
I appreciate you sharing about it in such an honest and vulnerable way. This is not the first time we've had this conversation, and I know you've shared with a lot of other CEOs over the years. But I think that recognition that a company is really a super organism that exists apart from any of the people who are in it, including the ones that nominally own it, control it, birth it, found it. That's really difficult for founders to process. I think it's difficult for a lot of people, but it's, to me, such a key realization going right back to the thing you were bringing up before, which is like how can anyone as a customer, as an investor, as an employee, can anyone really trust an organization in any way? Who actually can make promises on behalf of the organization? No individual person can, because any individual person might be gone. The organization presumably will live on, or the person might live while the organization die or vice versa. You have all these different possibilities.

(00:34:24):
So, once you realize that, you start to ask yourself these questions about what would it look like for an organization to make a promise that you could believe? The operational difficulty of that goes from being the sound of like paralyzing fear to a real opportunity. And I remember one of the first times that you were... I think you are the CEO at the time that we first met. Kickstarter was one of the first, if not the first, public benefit corps to do the conversion in Delaware. And certainly, for me, one of the first ones that I had ever encountered, and I think for a lot of people listening, they'll have thought, as I did, that the public benefit corps was the same as the little B with the circle in it, the B Corp thing. And you were the one who actually sat me down to be like, "No, that's something different. Let me explain to you what the-

Yancey Strickler (00:35:07):
You think I know that [inaudible 00:35:07]. Yeah, yeah.

Eric Ries (00:35:09):
It's extremely confusing. Well, it's really been good for the B Corp movement, but very confusing for the public benefit corp idea. First of all, just describe... Since you did it for me, do it for everybody else listening. What is a public benefit corp, and why did you make the decision for Kickstarter to be among the first to do it?

Yancey Strickler (00:35:26):
Yeah. A public benefit corp is a legal structure for a for-profit company, but where you basically take charge of writing your corporate bylaws in a way where you can set goals for the company that are to be held in parallel with the profit motivation. So, rather than the default C Corp assumption that everything must ladder to value profit maximization, instead you're authoring what those traits should be. We always had that ethos of Kickstarter is lots of punk rock, young person opinions. Everyone else is stupid. It's so obvious, we're going to do this. More things to look back on with embarrassment, but we had that idea.

(00:36:17):
And then, it was a USV partner, Albert Wenger, who came to us-

Eric Ries (00:36:23):
[inaudible 00:36:24] Albert.

Yancey Strickler (00:36:23):
... and said, "Hey..." Yeah, [inaudible 00:36:25] Albert came and said, "Hey, with all this stuff you're talking, there's a way you could actually do it." And this is when the law was first happening in California. Yeah. So, we started exploring it and ended out really liking the idea because... We're like, "What is a promise you can trust from a corporation or an entity?" I think you can only trust what someone does and not what they say as a corporation. Do not say is, I think, is the right emphasis. For us, we'd always like... Instead, we're different, but we're also aware that, hey, legally speaking, we're not different and we should be real about that.

(00:37:04):
So, you end up creating a charter. It's like 12, I think, provisions in there of how we would be different, and included allocating 5% to profits every year to certain causes, and prohibiting tax avoidance by the company, and various things. That then went to a vote for all of our shareholders, that had to be approved, got 100% approval by shareholders. And then, we reclassified our corporate status. You're supposed to produce an annual report, which we always do, but there's no other tax advantages, there's no other real advantage along those lines, but it's a way of asserting and being real about what your values are. So, yeah, very proud that Kickstarter was just trying to push corporate governance forward. I was CEO when we made that change, and I could feel the difference of... Whereas in the past, it would be like, "Should we engage in this issue, or what should we do?" And instead, our charter would say, "Actually, these are things you..." Rights of artists, you do need to engage on. So it's like, "Okay. We'll do that." So, it did have a practical difference. I would say today, I don't know that I think PBCs are the future. I don't know that I would say capitalism is going to do its thing wherever you are. I think there are other interesting mechanics to think about for better governance. One of my co-founders in Metalabel is Austin Robey, who's very vocal in the co-op movement, cooperative ownership of things. So, I think there's a range of-

Eric Ries (00:38:45):
Yeah, the perpetual purpose. Trust, voting trust. There's all these cool structures available,

Yancey Strickler (00:38:50):
There's lots of structures. What is most meaningful, what creates critical mass, it's still TBD I think.

Eric Ries (00:38:57):
Yeah. When you look back on it now, do you feel like you guys held it as the one weird trick? You do the PBC conversion, and then your corporate governance structural stuff is solved versus seeing it as a-

Yancey Strickler (00:39:08):
A little bit.

Eric Ries (00:39:09):
... first step in a journey. Yeah.

Yancey Strickler (00:39:10):
Yeah, I think maybe it reset a clock, and in terms of what is the outcome. Kickstarter has been profitable since month 14, and soon after we made the PBC conversion, we began paying out an annual dividend. So, setting aside a percentage of profits each year, distributing it to investors. Because part of you being a PBC, it's also inherent in that is like, "Hey, we're not trying to IPO, or we're not going to sell. We're not trying to sell the company." We just want to run a good business that just... We allocate our money well. We run a good machine. And so, just trying to establish what does that path look like as an investor, and it looks like, "Hey, well, profit sharing. We're just going to be a well- run company."

(00:40:02):
So, that's continued to generally be the model, but it's not easy. The late stages of things are hard. It works great if you're a stable, well-run business with a small team. The YNABs of the world, You Need a Budget, one of the best run companies ever. The Craigslists of the world. There are projects that have themselves together and can, in 37signals, they have a sense of how big their throughput pipe needs to be, and they're just willing to be that. And they're not trying to hyper blitz scale beyond that. That's what we aspire to at Kickstarter. It's what I aspire to with the current project in Metalabel. But those are still hard things to run because you're still-

Eric Ries (00:40:49):
It's still hard [inaudible 00:40:50]...

Yancey Strickler (00:40:50):
... in the world, every day just grinding it out.

Eric Ries (00:40:53):
Yeah. It's interesting because I was reading an article recently, kind of a Kickstarter, I don't know. But I don't remember what outlet it was in, but it was sort of what's up with Kickstarter lately and also a bit of an exposé, and it was kind of critical in tone, and it was interesting. It was going through different challenges companies had. But if you zoom out, the whole article, everything about the article would just come back to that the company was not growing as much as it should. And I had to get to the whole article where I was like, "Wait a minute, are they saying that the company's been stable and profitable this whole time?" The article didn't say, and I was like, "I think my assumption of the..." And I read articles and I meet with founders every day. I thought people we were losing so much money. It's like [inaudible 00:41:43] cash that you wouldn't believe.

(00:41:45):
But it's like somehow, we've got this world where being stable, not growing as much as you, quote, unquote, should. It's almost worse than if you were losing, maybe you were burning money. I was curious how you look back on it now. You've had a few years away from the business. Because reading the article, you're like, "Well, maybe this is just the size of the market of these kinds of projects that exist in the world." Human creativity is quite amazing, but it's not like you could just magically make more of it happen. It has to happen in this organic way. So, I'm just curious, how do you look back on it now? Do you got to buy into the idea that there's something that could have or should be different about Kickstarter? Or do you feel like it's yet another sign of Kickstarter being different from the norm?

Yancey Strickler (00:42:30):
I mean, there are a couple of forks in the road I look at and think about, if there hadn't been backlash to Zach Braff and his projects. There are a lot of big great Hollywood people that are going to release work that we were working with that got scared. What's that fork in the road like? There's a couple, but I generally trust the public and people that they know what's best for them and that... I don't want to say markets are right, but I don't know. There's an order that emerges that I just generally think is reflective of some deeper truths.

(00:43:09):
And crowdfunding is never going away. It is a part of the human toolkit moving forward. Crowdfunding works super well for charity, which we never wanted to support. I always saw that as a big business, but yeah, always saw there would be a GoFundMe. Great. That's not what we're about. And then for certain creative categories, it works great. Games works great. That's a community that the language it lines up with. And there are other more prestige-oriented creative field where the idea of publicly asking for money is just like a non-starter.

(00:43:47):
As a fine artist, as a musician, my goal is to legitimacy max everything I do. Asking for public money is delegitimizing, because it says I need money, and so that, I can't do that. So then, in certain areas, there's a little bit of a cap of the ceiling based on the current product and what the experience is, and you just arrive at those norms. So, a Kickstarter has, I think, 12 categories, creative categories on it. Maybe eight of those have strong product market fit, maybe four did and now dumped and might again. And meanwhile, when we started Kickstarter, all of our early pitch meetings were about how we're going to help creative people make things. Over and over, the world heard from investors. The world doesn't need more art. People are starving artists for a reason.

Eric Ries (00:44:45):
Oh no, really?

Yancey Strickler (00:44:46):
No one wants this. The creator, as a consumer category, was nowhere on the road map.

Eric Ries (00:44:53):
And we've come a long way from...

Yancey Strickler (00:44:56):
We have a product that's meant to serve an artist, a chef, a designer, a musician. What are these people? Even coming up with the word creator was a big thing of, "What do you call this wide group of people?" That was not a term that existed. It was like YouTube and us were the ones starting to use that term early on. So, even that as a customer base and use case worth serving was just like nowhere. Nowhere on the map. Now, we're 15 years in to our creator economy, and VCs talking their books through [inaudible 00:45:36]-

Eric Ries (00:45:35):
Yeah, yeah. Way more trendy. Way more trendy now.

Yancey Strickler (00:45:37):
Yeah. Ironically, I think that that generation of the creator economy, I think that it has reached the apex recently. I also think the current mode has reached its ceiling, where the dominant mode of the greater economy today is a subscription. It's subscribe to me. But when someone starts a Patreon or even someone starts a Substack, you will see a decrease in output decline. People feel trapped. You're on a hamster wheel of just producing more content. So, people reach a burnout point with those things. So, I think that there is that system of maximizing content production on platforms has been perfected, which is really good for those platforms. But the lived-

Eric Ries (00:46:28):
It's like a factory farming of content almost entirely.

Yancey Strickler (00:46:31):
Yes. But the lived experience for a creative person is not great. There is a lot more opportunity, but it's crowded. And what I see is that there is a different path. I think the path forward is not subscriptions. I think the path forward is splits and passive income. So, Metalabel's a new marketplace launching right now. It's a new space to sell, release creative work. And when you make a work on Metalabel, you are encouraged to put the outlines of everybody involved. It's a way for groups of people to release work together.

Eric Ries (00:47:04):
That's great.

Yancey Strickler (00:47:06):
And when you sell work, you can create a bundle of a book and a digital thing and join the Telegram. You could put a paywall in front of anything, and then you set the financial split for each release. So, it could be that four of us started something together and we've agreed beforehand, okay, 30% of the money is going to go into our shared treasury of money we can use later. Other than that 30%, all the money will be split equally between us and what we have created. And Metalabel is where you can define your split and we could just set the percentages, and from that point on, all funds will automatically flow to those bank accounts without a central account. Listen, something new, never existed before, new primitives on the web for fiat money splits to exist.

(00:47:54):
But what that gets you is instead of being a creator, it's like, "I got to get another sub and just keep putting out content," you can get a residual, a royalty passive income on anything you've made, because it could just sit there. And every time someone buys one, you get your 10%. And as a creator on Metalabel, you have your earnings table where you see for every release, here's how much your split is right now. You could withdraw whenever you want. But it's like rather than valuing content production, we are valuing the work itself. And if you make it great work and you sell it, you get paid. And it's not just about the performance of being a creator. And all of these systems we optimize and maximize and maximize to the nth degree, and then someone will be like, "Wait, but actually it's the wrong system. It should be over here," and then we [inaudible 00:48:46]-

Eric Ries (00:48:44):
We can do it better over here.

Yancey Strickler (00:48:44):
Yes.

Eric Ries (00:48:48):
In Metalabel, do you have a role for curators? I was thinking about someone who can bundle and rediscover old works, almost like a retailer to the wholesaler of the creator?

Yancey Strickler (00:48:57):
Yes. Yeah.

Eric Ries (00:48:58):
I love that.

Yancey Strickler (00:48:59):
Because we have this notion of a label, so it's taking the idea of an indie record label where you're at the [inaudible 00:49:07] records and you put out punk from the Bay Area. So, everything you put out, people have a sense of what you're about. But that same idea of a label can exist in any creative field. There could be a YouTuber label, a philosopher label, entrepreneur label. And you are self-legitimizing, because you're saying, "Hey, we stand for whatever this idea," and you can just be dropping work, putting out work by anyone that you sign. You could say, "Hey, we love what you're doing. We'd love to put out your next essay. Let's drop it with you." So, it's a different way that you can work together.

(00:49:43):
The first project we did is The Dark Forest Anthology of the Internet. I wrote a piece few years ago, and there's 10 other great writers who wrote even better pieces about same idea, like Venkatesh Rao and Josh Citarella. So, we made a book, a very nicely done book, sold out a thousand copies in a few days.

Yancey Strickler (00:50:03):
... sold out 1,000 copies in a few days. Every time someone buys a book, there's a whole complicated transaction on the back end with the first nine grand went to pay back the printers that I fronted the money for. And after that, we all get a split. And so every author is going to end up getting more than $1,500 for an essay they wrote years ago. And we're also creating a label out of it. We're publishing other people's things now, too, because other people are also writing about these ideas that we want to support.

(00:50:32):
So it seemed that is a different model for how creative people cannot be so isolated, but it's like at the top of the food chain, too, there's a group debuting next week called Hard Art. All their work's going to be on Metalabel, first time they're debuting, but it started by Brian Eno, the designer Es Devlin, the filmmaker Danny Boyle, like Jarvis Cocker, Pulp, like 50 of the most important artists in the UK have formed this group together to put out work that's meant to bring the British public together. And they're putting out releases, different ones by different members. Brian Eno will put out a book on Metalabel through those.

Eric Ries (00:51:08):
How exciting.

Yancey Strickler (00:51:10):
But these are the best artists in the world who are like, "Yeah, we're limited by just being these solo people. We want a place to be a tier, we want a place to center

Eric Ries (00:51:21):
[inaudible 00:51:22].

Yancey Strickler (00:51:22):
... what we care about and not just our career. So how big can that wave get? How long does it take to evolve that behavior? My guess is a couple of years, but I think people are hungry for it. And to jump from the sub model to a split model, to jump from the solo model to the cooperative model, those are things I'm investing my energy, and we'll see how successful it ends up being. But yeah, it's very exciting, very exciting.

Eric Ries (00:51:57):
It really reminds me of... So many people listening, before we leave the Kickstarter entirely for the conversation, there's a lot of people listening to this right now who were the beneficiaries of the Kickstarter that we did. What was it, 2015 or '16 for the Leaders' Guide. I remember calling you for advice about it, and you told me exactly what was going to happen, that it would be a huge success, and that it was the best-selling book, Kickstarter of all time up to that point. And anyway, but it was like it completely catalyzed a work that would not otherwise have been able to exist, could never have been traditionally published.

(00:52:29):
And to this day we did we exactly what you described. We just grabbed one print run only. To this day, I still get people coming up to me and asking me, "Is there any way to get their hands on a copy?" It's like, "No, I have a few left over, but that's really it." And we eventually did an audiobook with Audible, and it led to a lot of good stuff. And course for me, really important part of the foundational research for what eventually became The Startup Way. So first of all, thank you for being the curator and the host of that process, but I totally see what you're talking... I can very much relate to what you're talking about, because I work with so many related thinkers, and writers, and entrepreneurs. I'm always trying to find ways to support other people's work.

(00:53:08):
I did an imprint with a publisher and did a lean series, but that, which those are great, but it was limited in what we could do. So I love that, I love the concept, and I totally buy into the idea, the content production pressure of having to be a quote/unquote "official creator", cranking it out, that seems like a horror to me. And yet, yeah, how do you find ways to connect with other creators? How do you work together? How do you support each other's work? How do you release things together? That's a very cool [inaudible 00:53:37] to have in the toolbox.

Yancey Strickler (00:53:40):
With all these things, with the things you've made, there's a danger that we see on the web and that social media creates, it's been well documented, especially recently, but of audience capture, where if you think of every piece of content we're putting out, it's like a sonar, and that we're hearing back from what gets likes of like, "Well, you should be this," or, "You should be that." And so this is the way social media has evolved the voice of how we speak, and it's like this playback mechanic, but [inaudible 00:54:09]-

Eric Ries (00:54:09):
Totally, but that is [inaudible 00:54:10] conditioning,

Yancey Strickler (00:54:11):
Yeah, and that is a way to have a lot of success, or way more success than I've had on the internet. So whatever, I'm a hater, but a jealous hater. But at the same time, I think it's kind of a road to nowhere. And what we need, I think what we need to more strongly defend is doing it for yourself. Like, Metalabel started with me being burnt out as a guru, running a community, and just I found being a guru so boring. And I just longed for a peer, I just longed for a peer. And it was like, that search led me to research how the scientific revolution started. And I realized that the Royal Society was the first label, and this whole thing unlocked. But it has entirely been me trying to speak to just this broken voice that's just like, "Hey, you're doing what you want, but you're unhappy. This, you can't accept this."

(00:55:11):
And I think for everyone's work, a friend of mine's a painter, he always says, "What's most personal is what's most universal." And if we try to express our deepest, most specific personal fear, desire, whatever, that is what touches people. When we try to speak universally, I'm going to I'm going to cover, imagine, I'm going to put it on social media, because I want to end world conflict, and no one believes you, no one. It's not real. And doing it for yourself, it requires being in touch with yourself, it requires loving yourself, it requires being patient with yourself, and doing that as a group of people.

(00:55:55):
That is, I think, a fertile place for truth. And it's more from, yeah, it's listening to what's going on inside, and it's not listening to the pings of the internet. Maybe you find the other people who have, maybe you do finally express, "Oh, my God, here's what I feel." And whatever, 10 people come back feeling the same, and you're like, "Oh, my God, we're a squad now." But it starts with a self-knowledge. It doesn't start with just tweeting about it or whatever. And I think that's where the models of the internet that we've gotten used to over the past couple of years, where they do run out of steam, and where there is an opportunity for, I don't know, I just think a new generation of how we're doing things, but that's maybe me being hopeful.

Eric Ries (00:56:47):
Well, I like it a lot. I certainly relate to that. It's kind of a spiritual idea that you have to go to dig down deep in the well of your own connection to the source, and through that, access a universal truth that then can be expressed. And when you try to stay, you wind up staying surface level. You lack authenticity, you lack that connection.

Yancey Strickler (00:57:08):
Yeah, I mean, every great idea I've ever had, I don't know where it came from. It was just there. And it is the oneness of the source that you can make your mind soft enough to hear. And the piece about starting a new thing, it's about feeling that. And I think, as a founder or as an entrepreneur, you have that mix of curiosity and drive that's like you're attuned, or as an artist, you're attuned to hear those things. You are exercising to hear those things.

(00:57:45):
And then, as you said, those things we hear, they are alive on their own. I think of Metalabel, there's eight of us on Metalabel, we all talk about Metalabel as being something we're listening to. It's like, what does it need? It exists beyond us, without question. It has its own physics, its own personality that you need to listen to, be humble before. You're supporting it, you're serving it. And there's just so much art and humility, and really hard work that I think comes with seeing it through.

Eric Ries (00:58:22):
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(00:59:29):
I really appreciate, especially it comes through so much in your writing, that you see organization building as one of the artistic disciplines. So you talk so much about making music, and we should tell the Royal Society story, because that's totally fascinating. But there's a unity of understanding that all these creative disciplines have in common, and that entrepreneurship, institution building, aligning groups of people to accomplish something great like that, that is an artistic enterprise, and has a lot in common with the things we mostly, we think of as quote/unquote "traditional" art. So talk a little bit about, as I think really fascinating to have caught you in this moment in your life, where I think Metalabel, you're launching imminently.

(01:00:14):
I think by the time this airs, Metalabel will have just launched or it's about to launch, so people should definitely check it out. But you have a moment where you can take all that you've learned from your previous overnight success that was 10 years in the making and pour it into this journey. So just to reflect on that a little bit, what are some of the lessons you've taken into the design of Metalabel itself, as you obviously talked about seeing it as an independent being. That's such a critical first step, but then what do you want its journey to be?

Yancey Strickler (01:00:43):
Again, I'll return to the word a gift, but early on I just thought about, I saw the experience of later-day Kickstarter, where I'm at the top of a hierarchy, very hierarchical, making a lot of decisions, and just feeling that that was not the optimal way to do things. And so coming about it this way, much like with Kickstarter, we had a lot of intentional ideas about what we wanted to be and didn't want to be. But with Metalabel, try to design a different [inaudible 01:01:17], just right from the beginning.

(01:01:20):
So the idea is that we are a heterarchy, and a heterarchy is a fluid hierarchy. So you have to have hierarchies, you have to have decision makers, but the idea is that there's a different, most appropriate decision maker based on what the decision is. And so as the partners, we have partners and associates in the group, as partners, we are all the top of the heterarchy in the different part of what we do, of design, of engineering, of product, of operations. And every one of those people is expected to make a final call. And they don't need to consult the rest of the group unless they want to.

(01:01:54):
But you're here, you're in that seat. You are the right person to be making that judgment. And so let's not have a single leader, let's be full of leaders, and let's optimize for quick decision-making based on who feels most right to make a call. Along with that, created everyone getting paid the same, had an interesting way to think about equity, where I thought the default is you think about equity is like, well, you're just trying to keep as much as you can and sell as little as possible. But if I thought instead of what is the value of founding a company? What is the value of having the idea of a company, and talking this through with my co-founder, Rob Kalin, who started Etsy, we came up with a funny math of saying, "All right, the idea, the value of having the idea is 5%, the value of being a founder is 5%."

(01:02:52):
And so we ended up creating this structure where there were six of us right there from pretty much the beginning. And so it's like, all right, so ended up being 40% was split between us as a founding share, and there's retention rates, other things that will let that grow, and we raised capital. But it's really just thinking of this, yeah, just really just trying to think and anticipate how does this grow? What does this look like? What is our value versus a community's value? And so getting to do it a second time, you just get to ask these types of questions.

(01:03:24):
And then, I get to feel, on an emotional basis, moments where I know a past me might've been threatened or defensive, whereas a current me, it's like, "Oh, you should listen to this. This is going to hurt. Listen." And you just get to manage your own self more. And I still have moments where I got to need 24 hours to get clear, and those kinds of things always happen, but I just can feel that I know what's down certain roads, and they might not be exactly the same, because things change, but you can kind of see how some things will play out, and so you can make a different choice.

(01:04:10):
And I'm just a lot humbler, I'm a lot humbler. The first time around you just think, "Oh, all these old people are so dumb. This is so obvious." And then, you come to respect them and you have a lot more humility. And I talk a lot about both humility and fearlessness. Everything is harder than you think. To do anything well is so hard, so hard. You cannot underestimate, anything done well, but you can do anything well, if you put in the work. Don't need to fear it, you got to be honest about it. And yeah, so it's all been very truthful and honest so far, and all these things work great in failure scenarios, actually. It's in success scenarios where they get hard.

(01:05:10):
This is what happened at Kickstarter. We had a whole plan of this whole plan, this whole bespoke thing, and then we became a top 10 company on the internet for, like, this one-year period. And then, it's like all of your plans get blown up, because you're like, "Oh, my God, we have to. How can you not?"

Eric Ries (01:05:25):
Yeah, how can you not?

Yancey Strickler (01:05:26):
And we'll see if this project puts us in a position like that again, we'll see if I would make the same decisions again. But yeah, I didn't seek to start another company. I actively fought it, I did not wish for this. But the idea just didn't stop speaking to me. It just wouldn't let me go, and-

Eric Ries (01:05:52):
[inaudible 01:05:53] that feeling very well. It's a curse, in some ways. People imagine it like they show it in the movies, like, "Hurrah," but it's not like that at all.

Yancey Strickler (01:06:02):
I mean, you're constantly... Because I'm trying to manifest something that doesn't exist, I'm living in a place of constant doubt, and that, if you listen to, is completely debilitating. You have to listen to it some.

Eric Ries (01:06:16):
If you need some extra, just go tell some other people about your idea.

Yancey Strickler (01:06:19):
Yeah, yeah, yeah, just try something [inaudible 01:06:21]-

Eric Ries (01:06:23):
[inaudible 01:06:21] terrible idea, that's a terrible idea, no problem.

Yancey Strickler (01:06:24):
But I'll tell the Royal Society story, you mentioned that. So this is part of what brings me so much comfort. So in 1660, in London, there's a group of professors who all teach natural law, which was the term for things only God would help. And one of them was someone named Christopher Wren later became Sir Christopher Wren. So they started meeting at a pub every Thursday, and [inaudible 01:06:48]-

Eric Ries (01:06:48):
Pub's still there, right?

Yancey Strickler (01:06:50):
Yes, yes. And eventually, someone said, "We should start a club, and the club should be based on wanting to prove facts through evidence, rather than by the decree and the Church or the King. And so we should just start a club around that." "Okay, cool, let's start a club." And within about a year, they decided, "We should start publishing..." I would call it a zine, but they started publishing a pamphlet called Philosophical Transactions. First one was in 1664, and it was a monthly, or I think quarterly and then monthly zine, in which the members just wrote their attempts at conducting an experiment. Experiments hadn't existed before, but there is this iterative process where they would just try, and the next issue someone else would try. And this iterative process of just writing and detailing their attempts at what we now call science is what invented the scientific method. It is what invented peer review. They started pooling money together to let people do bigger projects. This is how the Babbage machine was made, this is how the first microscope was made, this is where Benjamin Franklin published the kite experiment. Everyone knows the kite experiment, how do people find out? He put it in Philosophical Transactions-

Eric Ries (01:08:05):
It was published, he published.

Yancey Strickler (01:08:05):
... the Royal Society's paper. And so this incremental process of just feeling out this future manifested science, manifested it, not with a single product, not with a Steve Jobs TED Talk or business-like pitch talk.

Eric Ries (01:08:20):
Right, no PR-driven launch of the thing.

Yancey Strickler (01:08:23):
Yeah, it just-

Eric Ries (01:08:24):
It must have seemed so ridiculous in those early days, their experiments-

Yancey Strickler (01:08:27):
[inaudible 01:08:28]-

Eric Ries (01:08:28):
... were terrible by our standards, yeah.

Yancey Strickler (01:08:30):
Yes, yes.

Eric Ries (01:08:30):
They were just trying random stuff, that's not science.

Yancey Strickler (01:08:33):
And it's just this iterative process. And what I came to see was there was a name, the Royal Society, there was a point of view that represented facts through evidence. And then, there was anybody who had something to contribute was welcome. And to me, that is the essence of a label.

Eric Ries (01:08:54):
Royal Society's a label, I just love that metaphor.

Yancey Strickler (01:08:57):
Yes, yes, I like reggae, I'll put out any great reggae by anybody. And that this is how, for centuries, this has actually been the dominant, most successful form of cultural production. And there's examples all over the place. Right now, they're very institutionalized. There's a book publisher, there's a gallery, there's a VC firm. There's different categories of groups of people aligned around a shared worldview, and just trying to manifest that worldview. And I think the insight I had reading about the Royal Society and then connecting it to a project like Mischief or the music labels I was a part of in the past was just to see that there is a super structure underneath here that is quite powerful and durable.

(01:09:49):
And the internet does not see the value of it, because the internet is all individual, author oriented. And it's the same broadcasting model of the 20th century. But internet native values are... The internet shows how we're all connected, even if we're entirely different in every other part of life. And the internet is what breaks through these individual silos. And so this model is like, it's actually, it's what we need. And it's been here forever, but it just got boring and less cool. It got extractive in the case of major labels and film studios. It became too extractive. We're too removed from the grassroots start of these things.

(01:10:35):
It's hard not to be an extractor at a certain point. And yeah, and so it's trying to re-inject that energy and that model. So where to me, if you take the casualness of a split, the casualness of like, "Just sign onto the form and publish," you get a low-key creative org where you don't have to file a 501(c)(3), you don't need a bank account. Yeah, we do things together. Yeah, we're real. But yeah, no, we all have our own bank accounts. It's like, it's cool, it's cool. We're all free. We're all like sovereign, but the group is sovereign, too. And so I think we're at that point where the internet is ready for that, but there is that long history, and science itself starting the same way.

Eric Ries (01:11:26):
Have you thought about a mission trust, or a co-op, or a foundation, like some of the structural things that we were talking about before for Metalabel?

Yancey Strickler (01:11:35):
Yeah, we did. We've done a lot of research around those things. I think the model that is interesting is there are ways to have a co-op of users within your cap table. So you can make the whole thing not a co-op, but you can create aspects of it that are cooperatively owned. I'm very interested in financial outcomes being something that people can participate in in the future, maybe governance participation in a much later stage. I think early on, it should be the team leading governance decisions for the most part. But yeah, but we've done a lot of research on these things. Don't have a specific answer, have a lot of interest, but to me, you have to make something of value first. So let's get over that hurdle of-

Eric Ries (01:12:28):
That's definitely job one, yeah.

Yancey Strickler (01:12:28):
It's a machine that's worth distributing ownership of. And then, we could think about what are the instruments that feel most appropriate.

Eric Ries (01:12:38):
Yeah, the equivalent of a sovereign wealth fund for Metalabel nation is going to be really cool, when the time comes. Obviously, it's early for [inaudible 01:12:47], but yeah, I'm excited to see what you do with it.

Yancey Strickler (01:12:49):
Yes, yeah.

Eric Ries (01:12:50):
Well, and the reason is obviously it's going to be cool to have broadly shared prosperity and all that. Not to minimize that, it's obviously important. But there's also, you've seen, you're entering into the belly of the beast, again, of a thing that could inevitably become extractive, unless you make different foundational choices now. And to me, and I haven't plugged your book nearly enough. I hold it in my hands, I got to figure out how to plug it. It's really, it's terrific.

(01:13:16):
And one of the things I really liked about it is just really making a clear distinction, making money is not itself the problem, but money has this gravity to it, and it's all too easy in our society, especially, to see making money through extractive or exploitative means as the same as making money through additive or generative means, and that those are actually two different activities. And once we account for them separately and we structure around them separately, it really has a transformational effect on what it even means to make a profit in the first place. And I think we need a lot more of that in our world.

Yancey Strickler (01:13:50):
Well, I've come to see, it makes it even harder in my mind, but I've come to feel like it is at the founding initial team stages of projects. I don't think that there is an extraction problem. I think that the founders are-

Eric Ries (01:14:03):
A success problem.

Yancey Strickler (01:14:03):
You're creating value, and that's the whole point. But it's once you get multiple generations of owners in, or of leaders in, it's like the default goes to extraction, because everyone needs to be a grownup and everyone needs to whatever. And there's, even if private equity is not involved, its values are involved, and-

Eric Ries (01:14:24):
And how many great products have we all used as consumers that have been ruined that exact way? I mean, pick up the paper. You can read a story about that every day. And as a creator, it's just heartbreaking.

Yancey Strickler (01:14:36):
I mean, and Napoleon III was meant to lead France. The Puritans moved to America to create a perfect utopia, and then their kids rejected it. They didn't want it. Succession planning is an eternal challenge, and it's hard for businesses. I don't know the answer, but it's something I definitely think-

Yancey Strickler (01:15:03):
It's hard for businesses. I don't know the answer, but it's something I definitely think a lot about.

Eric Ries (01:15:05):
Yeah, working on it.

Yancey Strickler (01:15:06):
Yeah, that's you. That's you exactly.

Eric Ries (01:15:11):
I know. Yeah. I mean, not to be facetious about it, but there's a governance side to this and an operational side to it, and as long as we see those as two separate problems we'll never solve it. So we got to get there. One of the things I really liked in the book is you talked about just in a very eloquent way about how our society has become obsessed with financial maximization and we swim in that water so much we can't even imagine it any other way. And to me it's just very refreshing to hear somebody who's saying, "Look, it doesn't mean that we have to burn everything to the ground, but we can ask ourselves what is the purpose of these tools that we use every day and these organizations that we build, and we've inherited this unbelievable infrastructure from our grandparents and their grandparents. We're the beneficiaries of this unbelievable system and yet what are we using it for?" And would they be proud of what we've done with it? I don't know. I think you're asking really important questions. So talk a little bit about just why you felt like that was such a core theme you wanted to write about and if that isn't the central organizing principle, what could be?

Yancey Strickler (01:16:18):
I think I was reflecting around my experiences in a leading executive team or at a board level being in conversations where is it Path A or Path B and there's not a clear answer. And what would often be the case is Path A might have a clear financial outcome that we can talk about, Path B might have an outcome that's a lesser financial outcome, but is good in other areas that-

Eric Ries (01:16:48):
Or even an uncertain, a more uncertain financial outcome, not even necessarily-

Yancey Strickler (01:16:51):
More uncertain financial outcome and more positive in other ways. And my sense was that in every case, the exception of an emergency, the group is going to opt for the financially maximizing outcome and they're going to do it because the CFO, the COO are going to opt that way and they're going to be seen as the voice of reason. Other people will be seen as more emotional led judgment, and how much can you trust that? And there's just a casual unthinking default to, well, whatever one is going to make the most revenue is the right choice. And within a corporate context, it certainly makes sense with how we think corporations are run, but it's just often in the corporations not in their best interest.

Eric Ries (01:17:39):
Right. That's what so interesting to me about it. It's more about not maximizing.

Yancey Strickler (01:17:43):
Yes. And the challenge is that there is not... I struggle to find a way to really have that conversation. And as a founder, you can do that because the founder has voice of God power and so you can say, "No, we're not going to do that." It's really only-

Eric Ries (01:18:01):
Moral authority.

Yancey Strickler (01:18:02):
Yeah, that has that, exactly that moral authority. I see in a crisis, people do opt for the less financially advantageous, do the more social good thing because they know they're being watched. Because they know they're being watched and that's when they will always choose that option.

Eric Ries (01:18:19):
That's often also the reason they're in the crisis is because a previous meeting they had where they made the wrong choice, in retrospect, the supposedly safe choice is a thing that led them to be in crisis.

Yancey Strickler (01:18:28):
Yes. And so what I kept imagining being in multiple of those conversations and being the moral authority, but also having very smart people who I trust and push back on the moral authority, and you're swimming in uncertainty. You're like, "What grounds do I grab onto?" And so when I tried to imagine what is a different way, how does that conversation go differently? It just speaks to, you need to have a clear map of forms of value essentially. And I came to see financial value as just a numerical expression of values of an organization, but that perhaps, initially I thought maybe those other values can also be numerically defined. You can create proxies. I think that's dangerous and gets you in weird zones, but that's one way to do it. But another way is to have what the book ends up going into is a framework of, that's something I call the bento, which is a two by two matrix to see beyond the near term orientation of a decision that's just trying to give you a sense of the real landscape that's at play.

(01:19:36):
And just to speak to that bento thing for a minute, so the idea was I imagined the hockey stick grass of the line sloping up into the right as the most important icon of our time. This is all you're trying to get to is that. And there's a day I drew that hockey stick graph on a piece of paper and then I just extended the X-axis of time to make it not much farther and the Y-axis measuring value, I made it extend way farther to where suddenly this hockey stick was this little slatted line in the bottom left corner of this big expanse and-

Eric Ries (01:20:13):
What's in the white space, what's in the white space?

Yancey Strickler (01:20:15):
Yeah. And I drew it two by two and saw like, "Oh, so this hockey stick, that lives in now me, what I as an individual or as a company, what we want for ourselves right now." That's where money, growth all that lives, but there's also future me. What is the legacy? What is the brand? What is the identity we're trying to create? There's also in the top left Now Us who are all the constituents that are part of this. It's not just me, it's my family or customers and then future us. What is this world we're trying to reach to a generation from now? And so it was seeing that actually all four of those spaces are true dimensions of self-interest not even being generous or whatever. It's like your self-interest actually.

Eric Ries (01:21:04):
Contains those elements.

Yancey Strickler (01:21:06):
Yeah. And so I just trying to put that right on the map so that people would see it.

(01:21:10):
And so that was my way of trying to speak to that quality. Interestingly, I've just found in the past six months that the bento, which is the thing I quit being a guru of because I just got burnt out, is very much alive now. And I've met a professor who's teaching it at Cornell and at Wharton and that it was used in New York state. There was a disagreement among the hospital system on how to decarbonize. And the person had been trained in the bento and used a bento to map out everyone's self-interest in which they saw that it was only their now me that disagreed and they could see the other dimensions and they made a deal that they could sift through what all is at play. So I tend to still think that it reveals something that is true, it is a truth about us, and it's just making it more, just more in our face. And I've taught that model to thousands of people at this point, to a number of organizations. The one standout generalization I would make from this is that when men see the bento, there is this action of, "Holy shit, there's something more than now me. Whoa." It's like Keanu in The Matrix. "Whoa, I'm shocked. This is blowing my mind." Women, women who see the bento say, "This is what I'm always thinking about. I can use this. This is helpful. Thank you-"

Eric Ries (01:22:49):
You can help me organize all the thoughts I already have.

Yancey Strickler (01:22:54):
Yeah. Oh yeah, this is why I can't sleep. I'm worrying about all these things all the time. And it's just so striking over and over and over it's all those opposite outcomes over and over and over. So I think it reveals something about where we need to grow.

Eric Ries (01:23:12):
I mean that's life under patriarchy. That's right there. It's not really good for anybody. And what I appreciate about the way you've written about this and talked about it is just to see the connection between the personal spiritual dimension of what am I and what am I for? And to see that also as the same as the organizational dimension, what is my organization, what is it for, I think is so important because as you said, this is not even getting into generosity. We're still in the realm purely of self-interest, even at the organizational level, what is good for the organization? Acting into these extractive ways, that's a liability, that's a creating future vulnerabilities that some other startup is going to exploit one day. So it's actually not profit maximizing no matter what definition you use to behave that way. And yet we've been hypnotized to look only at that tiny little quadrant and to do it that way.

Yancey Strickler (01:23:59):
Yeah. It's made me think that the answer is not to make the world more altruistic, it's actually to make the world more truly self-interested in a way. And it's just-

Eric Ries (01:24:09):
Well, to redefine what we mean by self, that would help a lot.

Yancey Strickler (01:24:12):
Yes, exactly. Exactly. But we can all still look out for our best interests and you know what? We can create a better world by doing that. And it just requires widening the scope just a little bit.

Eric Ries (01:24:26):
I want to do a lightning round of just a couple of things we didn't get to because we could do this for four hours, no problem. You've got so many interesting things that you've talked about. And I want to start by reading to you something you read because we touched briefly on the New Thing essay, but this is the quote that really stuck with me, so I'm just going to read it to you and have you explain. You said, "The goal then is to make a new thing that stays true, that stays lean and immune to the forces that will naturally slow and distract it, that keeps away the people who love money and will tear it apart to get it, a new thing that stays committed to its reasons for existence."

Yancey Strickler (01:25:05):
That to me, I've come to see organizations as forces much greater than me. And as Kickstarter got bigger, as it got more professionalized, there was just this accrual of power and people into certain areas of the organization. It was like you'd hire one person and they hired 18 people, and it somehow all felt beyond your grasp. And you do these things because you say, "Well, this I think is what you're supposed to do. This is what the business books I read talk about things like this." But that those things are actually not in the interests of the organization. And those things are just a drift, an inertia, a momentum that is, it's a bureaucratic momentum and that you have to actively resist that every single day. And it's like you have to wake up every day and be willing to fight to say, "No, we're not having another meeting. No, we're not adding another body. No, we're not doing this." And it's a relentless push that you have to keep making because those forces are just way more powerful than you, and they are rational, they're logical, they're deeply embedded in culture, but I think they end up being problematic.

(01:26:38):
And a lot of my first thinking for this came from a white paper by a physicist named Jeffrey West, and he wrote, he had a paper, it was like 2005, 2006 and he talks about the golden ratio in biology, which is the idea that if you know an animal's weight, you can tell its gestation period, everything about it basically just based on its weight. And so he tried applying the same logic to human systems. And so he's found for cities, if you told him how many gas stations were in a city, he could tell you it's population and there are all these ratios he found.

Eric Ries (01:27:09):
Yeah, I'm sure.

Yancey Strickler (01:27:10):
And then he tried doing the same thing to organizations. And what he found with organizations is that organizations are organic life forms by which he means they mature and at the point of maturity, they begin to die. And so what is the point to which an organization matures? And so he did all this research and he ended up saying that 50 people, at 50 people an organization matures. And what he means by that-

Eric Ries (01:27:35):
[inaudible 01:27:36] at that point.

Yancey Strickler (01:27:36):
Yes, is that once there are 50 people, an organization will begin to hire administrative and operational roles that exist not to fulfill the purpose of the organization, but to fulfill the needs of the bureaucracy of the organization itself. And as soon as you begin adding those people, the company must then grow faster than it adds those people to not die. And that there's just this point where you reach, where you just pass this Rubicon of no longer are people here for the same reason.

Eric Ries (01:28:13):
It's like the problem of senescence in biology. Yeah, it's the same.

Yancey Strickler (01:28:17):
And so for Kickstarter, that was where I mentioned we got huge and our plans got blown up, but we were working on a model that were never bigger than 50 people. We had it written on a board where our last 23 hires what they would be, and then suddenly it's like, "Oh, we can't afford to do that." But I think that to maintain that specialness, that intimacy, that hunger, that drive, the entrepreneurial spirit, I think you have to resist these things as much as possible. Now, again, success scenarios make this so much harder. Stripe has always tried to be small, but now Stripe's like 4,000 people and it's like, "Could you..." Is that possible to do it less? And if Stripe instead said, "Our market is as big as the 60 of us can support." Is that a failure? It's like they're hard things, but I just-

Eric Ries (01:29:09):
We're all grappling with those problems.

Yancey Strickler (01:29:11):
I just feel humbled and I feel like accepting a place of humility and thinking, these forces are stronger than me. And so I must design systems that protect me from it. That instinctively feels to me like-

Eric Ries (01:29:29):
And it from you.

Yancey Strickler (01:29:31):
And it from me. That instinctively feels to me like a more successful path. But again, if Metalabel hits it big, it will all be challenged. But-

Eric Ries (01:29:41):
Well, these are the most avant-garde topics in corporate governance and really in company building and startup building. I know a lot of founders who are grappling with these questions now, and I think it's actually an exciting time. We're going to see a lot of innovation in the form of the thing and not just...

Yancey Strickler (01:29:57):
I mean they're controversial for their governance, but I pay a lot of attention to what Coinbase does for example, because I feel like there are certain people, Coinbase 37 signals, that are asking, they're asking questions.

Eric Ries (01:30:11):
Yeah, it's important.

Yancey Strickler (01:30:13):
And they are the right questions.

Eric Ries (01:30:17):
Okay. You mentioned the Dark Forest in the context of the Dark Forest Anthology, but just talk, I love that I say, "was so interesting." Just explain what the Dark Forest is and why it was worth making an anthology about.

Yancey Strickler (01:30:30):
So yeah, five years ago I wrote an essay about how I felt afraid to be myself online. And I compared it to an idea in Fermi's Paradox, which says, "If we look into the heavens, things are quiet. We send out beacons of signals to say, 'Hey, here we are,' and no one else answers." So we conclude then that space is empty, the universe is empty, but instead imagine the universe is a dark forest at night. You also might listen and think there's no one there because it's empty and you make a sound and no one answers. But the truth is that the dark forest is full of life. Everyone just learned it's too dangerous to show yourself.

(01:31:17):
And I said that the internet had become a dark forest and that I no longer felt comfortable sharing what I really thought on any open channels because there were just rats everywhere, trolls, hype, advertisers, all these things. And that the internet had just become a battleground for power. And so instead, what I had realized I was doing and what I thought other people were doing is that we were retreating from these main spaces to our own real dark forests where-

Eric Ries (01:31:48):
Absolutely.

Yancey Strickler (01:31:49):
... we can be honest, but it's within the context of a group chat or we can have a conversation on the podcast where I will be honest here about things I would never say on Twitter because the whole context and meaning of it changes. It's a safer space. And so I was just identifying that that was happening in my own behavior and just imagine what does that mean for the internet if we're all being not our real selves in the main spaces anymore, where does that ultimately go?

Eric Ries (01:32:18):
And we still conclude that what's happening in the main spaces is what's happening.

Yancey Strickler (01:32:22):
Yeah.

Eric Ries (01:32:22):
We've seeded that territory to the worst of us. Yeah.

Yancey Strickler (01:32:25):
Yes. And so I sent that, that was an email in my tiny letter to 500 people, and it ended up going super viral, hundreds of thousands of readers. And then Venkatesh Rao built on that to say that there's this cozy web, a place where it's a dark forest, not because you're doing conspiracies, but just because you just want to have more protection. And then as we go into COVID, these dark forest spaces suddenly became mainstream and what we were all doing, and this theoretical concept of maybe these little group chats are like littles, our own little societies became actually, "No, these are like," to use a Bellagio term. "These are states, these are networks." It's like accelerating this process. And yet now a piece that, it's a final piece in this most recent book that I'm going to post online soon. It's called the Post Individual.

(01:33:26):
And it's this idea about how the internet has redefined individuality and to go online is to be reborn as an individual where you are no longer tied to what you look like, where you come from, anything about you, you are invited to redefine yourself. And to me, the historical parallel is the creation of western individualism itself. And this happened about 1100 AD, and it happened when in Southern Europe the Catholic Church banned cousin marriage. And at the time, the power that existed was through plans, families and the patriarchs and matriarchs of the family would marry the children of the family to each other to keep the bloodline. The Catholic Church wanted to break this power, so they banned cousin marriage and within a century of cousin marriage being banned, the city took off in a way had it never had before. The guild was invented and the university was invented because suddenly newly liberated individuals were going places to meet other individuals, and they needed this shared context in which they could work or learn or love or make a society. And so society shifted from family clan blood power to networks of liberated individuals.

Eric Ries (01:34:50):
Individual power.

Yancey Strickler (01:34:51):
And that world has overtaken the world it came from today, and it's like all of our values today really originate from that point. And I think the same thing's happening on the internet and that we have become re-individualized, but what we have discovered is we need shared context. We need safety, we need institutions, we need love, we need all these things in this new space. And so all of us have all of these alts we're using that represent slices of ourselves, and all of our alts are meeting with the alts of other people online and making a new society. And that the values and structures that we're making in this society I think will define the next thousand years. I think, because even the notion of what an individual is has changed. We've gone from one person, one vote, now it's one identity, one vote. We're cool with that. It's an idea that we're quickly becoming accustomed to and so I feel like the whole dark forest people going into these spaces, all this, I believe that this is a smoke and a fire and that this is like a-

Eric Ries (01:35:51):
Something really [inaudible 01:35:53].

Yancey Strickler (01:35:53):
This signals a big change that we're bobbing on the surface of in the early days, but to me, there's a trend line here that I can't even imagine where it will go.

Eric Ries (01:36:10):
Yeah. Well, it's interesting because people have so far in our lifetimes have seen the internet as an institution destroyer breaking of barriers and frankly the destruction of the civic infrastructure and institutions that most of us live with. But I think we have not yet really realized its power as an institution creator. And so the new civic fabric that will be built out, new institutions, I'm glad we started with the high five because like Kickstarter right now, we can't imagine creative life without that tool in our toolbox. That's hopefully the harbinger of a lot of really cool things to come that our kids and grandkids will think as obvious as the high five is to us.

Yancey Strickler (01:36:48):
Yeah. I think online first institutions will be to the 21st century, what the corporation was to the 20th. It's going to be the dominant form by which culture is shaped and made. And an online institution is something any one of us can create and be a part of. There's zero barrier to entry and that is the track we're on. And it's wild and it's wide open, and this is where being a classic liberal is helpful because there's going to be things that you believe in and things you don't believe in. But you know what? We need to see them as all valid, real part of our truth and we just have to learn and accept and evolve. And I'm very open to it, even as I'm threatened by it in other ways too, but it just feels to me like what's happening. Again, I'll return to the theme of just humbling myself before it and just, hey, I'm such a tiny speck on a long timeline and God knows where this is going.

Eric Ries (01:37:51):
That is a great note to end on, Yancey. Thank you so much for stopping by. Thanks for writing this book, This Could Be Our Future and really good luck with Metalabel. I look forward to being a customer and hopefully a creator and involved in lots of ways. So keep us posted and best of luck. Hope the launch goes really well. If it's happened by the time that this is released, then congratulations on the launch going really well. Otherwise, I hope it goes really well, either way.

Yancey Strickler (01:38:16):
Appreciate it so much. Thank you.

Eric Ries (01:38:18):
Thanks for all you do. You've been listening to the Eric Ries show. Special thanks to the sponsors for this episode, DigitalOcean, Mercury and Neo4j. The Eric Ries show is produced by Jordan Bornstein and Kiki Garthwaite. Research by Tom White and Melanie Rehak. Visual designed by Reform Collective. Title theme by DP Music. I'm your host, Eric Ries. Thanks for listening and watching. See you next time.