Future of Sharing: The Author of The Lean Startup Has a New Project: Reinventing the Stock Exchange

Eric Ries, the bestselling author of Silicon Valley bible The Lean Startup, wants to accomplish something that many in the business world think will be harder than nuclear reactors: reinventing the stock exchange to prioritize long-term, rather than short-term, gains. The problems with our economy are so obvious that for the most part we don’t talk about them anymore, says Ries, and many of them stem from the fact that elite decision makers have adopted an unusually short-term framework. This problem is further compounded because the number of decision makers today is much smaller than it used to be—there are half the number of public companies in the U.S. today as there were 20 years ago, according to Ries. He attributes this sharp decline in public companies to three factors: 1) private companies tend to delay going public much longer 2) the amount of private equity has increased significantly and 3) there’s much more consolidation in today’s markets. Ries believes that we need to address the root causes of the problems in our economy, not just the symptoms. His litmus test for developing practical solutions and weeding out pie-in-the-sky fantasies is whether they are doable while we’re still alive.

Ries’s latest venture, the Long-Term Stock Exchange (LTSE), is an institution that regulates managers and investors at the same time. The LTSE offers CEOs the same access to liquidity as today’s public markets, minus the short-term pressure. Companies can list solely on the LTSE or dual list on the LTSE and another stock exchange, as long as they promise to adopt the LTSE governance model of focusing on long-term economic viability. Short-term traders are like tourists, Ries says. He isn’t arguing that there’s no place for them, but he also doesn’t think they should get to cast a vote for mayor. The benefits of LTSE, according to Ries? These companies are going to have to go public eventually, Ries says, and if they go public using standard governance, they’re going to struggle to maintain the culture and division of their companies over the course of the century.

Despite Ries’s pull within Silicon Valley, many business leaders view his optimistic vision for the future of our economy as too far-fetched. Nuclear reactors are considered a lower bar, Ries says. But this hasn’t dampened his enthusiasm, nor has it changed his conviction that Silicon Valley needs to proactively address the growing tech backlash, mitigate inequality, and cushion the risk of entrepreneurship to make innovation more accessible to everyday citizens—not just those who are already wealthy. “We’ve been given this incredible opportunity to build a more just future,” Ries says. “What are we going to do with it? What’s our plan? I hope we start to take it more seriously.”