Harry Max: 0:00

If we start to make small changes now in how we are thinking about looking at asking questions around structuring organizations, we can do a lot to create a better world.

Jorge: 0:27

Hey, Harry. It’s good to see you

Harry Max: 0:29

Jorge, I appreciate the opportunity to talk with you today. I had family in town, and I am so looking forward to getting back to work and doing our stuff. I brought a great reading today. I’m so excited to share this with you.

Jorge: 0:40

Lay it on me.

Harry Max: 0:41

Okay. As is our typical protocol, I’ll tell you the title after I’ve done the reading. But this really, really hit home on so many levels. It’s a new book that just came out from somebody in our world who’s very well known. But let me start this. The section title is called Who Is the Bank? And it said… And I’m skipping ahead a little bit here. It says, “Tenant farmers are being evicted from their land during the Dust Bowl, but when they confront the men carrying out the evictions, they get a clear answer as to who’s making the decision to devastate them. The men sent to do the dirty work answer to the bank manager, who answers to the distant owners, and those owners answer to shareholders. Each of them has a role in the organization, but somehow none of them is in charge. This leads to the farmers’ bewildering question, who is the bank? Steinbeck portrays it as a faceless system in which no individual can be held accountable, even though real people are losing their homes and livelihoods. He calls the bank, quote, “The monster. Men made it, but they can’t control it.” Unquote.” My friend, the CEO, grappling with resistance he couldn’t locate, experienced the same bewilderment. If the person at the top is not in charge, who is? The CEO I was counseling wasn’t fighting his own people on the AI initiative. He was wrestling with a different kind of living being that had developed its own character, its own preferences, and its own will. His personal ethos of innovation was at war with the organization’s emergent character, which craved safety, certainty, and predictability. The fact he had created it mattered very little. Life is defined not by flesh and blood, but by specific properties. Living things maintain boundaries between themselves and their environment. Resources into energy. They grow, adapt, and reproduce. They exhibit behaviors that emerge from their parts but can’t be predicted by studying those parts in isolation. Most importantly, they display a will to survive that shapes every action they take. Organizations exhibit every one of these properties. They maintain legal and cultural boundaries that define who’s inside and who’s out. They metabolize capital and raw materials into products and services. They grow through hiring, adapt to market pressures, and spawn subsidiaries or merge with others. A company’s culture emerges from thousands of daily interactions, but can’t be found in any employee handbook or org chart. And when threatened, organizations exhibit a tenacity that can override the preferences of any individual within them, even their nominal leader. Each one is a superorganism unto itself, according to its own rules of existence. Now, we can answer Steinbeck’s question: who is the bank? An emergent intelligence, every bit alive as you or me, a superorganism.“This is who the bank is.”

Jorge: 4:10

Okay, so I haven’t read this, but I think I know what book this is, uh, just because of your little preamble about this being, uh, someone in our circles. I think that this is “Sentient Design” by Josh Clark and Veronica Kindred.

Harry Max: 4:26

Wrong.

Jorge: 4:28

Okay.

Harry Max: 4:30

Good guess, but wrong. No, this is the book“Incorruptible” by Eric Ries. Uh, the subtitle of which is “Why Good Companies Go Bad and How Great Companies Can Stay Great.” And it is fantastic. Um, I have experienced sides of this equation. Companies that are very mission-driven and then have mission drift and eventually get bought out by a private equity firm or whatnot. And I’ve been involved in companies that had very, very strong founders who didn’t necessarily structure the company in a way that allowed it to continue pursuing its mission and its vision, but were able to do so. And “Incorruptible” is about what Eric Ries calls financial gravity, the force that pulls at organizations are structured to make money, save money, avoid costs, and feed the financial markets, and how companies like Whole Foods, for example, can go from being the best place to work one year being a subsidiary of Amazon the next. It is an unbelievably interesting book for founders, for leaders, and frankly for anybody who wants to understand the dynamics underneath how it is that seemingly good companies go bad and how to prevent that from happening. Um, I’m easily gonna guess this is gonna be my 2026 book of the year.

Jorge: 6:12

Wow. Okay, that’s high praise. Um, and that book has been on my radar, and it now moves from my radar to my bedside table because of your high praise here.

Harry Max: 6:28

Well, and some of the ideas in it are not new to me because I was a developmental editor of a book called Great From the Start by John Montgomery, and this book came out, I think, 10 or 15 years ago. But in one of the later chapters, he talks about how corporations go bad and how that happened. He was the, uh, Mont- John “Monty” Montgomery. Monty was my lawyer for my last startup, and he was the co-chair of the Califor-- uh, co-chair and co-architect of the California B Corp law. So he really understood the mechanics of what it meant to set up an organization so that it was resilient to and potentially immune from some of the destructive forces of capitalism. And then most recently, I worked for about a year as a consultant with Planet Labs, which is a public benefit corporation. And for those, I don’t know if you’re familiar with public benefit corporations, PBCs, but they’re really designed to serve stakeholders other than their shareholders. And that’s really kind of at the essence of some of what’s necessary in order to prevent a company from being a monster and then being consumed by a bigger one.

Jorge: 7:54

When I was hearing you read the little excerpt from the book The first image that came to mind was Back in the, I think, 1980s, there was a show on PBS where Bill Moyers interviewed Joseph Campbell. It’s a series of, um, I think six interviews where they talk about mythology. And what drew me to those conversations was Star Wars. And I knew that Star Wars had been influenced by Joseph Campbell’s work. And there was something that Campbell said in those interviews about Star Wars, and he was talking about the first three Star Wars movies, the original trilogy, right? Where it’s the story of Darth Vader in some ways, right? And he talks… And I’m not gonna remember the quote verbatim, but Campbell talks about Vader’s relationship with the system and the fact that that’s kind of a story about the individual and the relationship of the individual and the system. I can’t remember exactly what he said, but that struck me as like, okay, this, you know, you’re, you’re participating in this thing. You’re, you know, maybe you’re getting along in society and all of a sudden, oh no, here’s the Galactic Empire and they’ve taken over. And in some ways, Vader becomes this machine within this broader system that has few traces of humanity. I mean, I don’t wanna dwell too much on Vader. But where I’m going with this, and the reason why I bring up that image, is that it feels like a very high level idea, this notion that the bank is this impersonal organization, this complex adaptive system that is under the control of no one individual, and it has its own incentives and its own reasons for wanting to do things, and it’s going to crush the farmers or what have you. What agency do humans have in that? Because this is a podcast about gaining traction, and you can look at these huge systems and go, “Oh no, what can I do?” So, you know, what’s the traction story here?

Harry Max: 10:22

Well, and I think there’s a big one, which is I think why the book is so important. And reading through the book, I’m almost done with it now. You know, I think, as I mentioned earlier, Eric’s deep insight here is that the concept of financial gravity, it’s a force that’s gonna exist whether, you know, whether we like it or not, right? And if you, you know, open the aperture up to include all of, uh, you know, it’s easy to think that capitalism works the way it does, and we have no agency. But in fact, what Eric does is I think a brilliant job of laying out historical reasons that things work the way they are. He does an outstanding job of helping us orient in it to show us how we have become complacent and perhaps immune from even thinking that we have agency. But in fact, that’s not true at all. The system, this capitalistic system, if you open the aperture all the way out, actually allows for a much greater variance of structures, that inhibit certain things and promote other things. It, um, this amorphous capitalistic system does not necessarily force us to, for example, take a set of bylaws from your lawyer at the lawyer’s recommendation and start your company using standard bylaws as your, um, as the foundation of your corporate charter. That’s just a practice.

Jorge: 12:16

A choice.

Harry Max: 12:17

It’s a choice. And because we don’t challenge that choice, or when we do challenge that choice, we’re often not confident enough in our own understanding of what that choice means and what the implications of it are, we go along with it. And he talks about how it’s always too early until it’s too late, reminds me a little bit of some of the conversations you and I have been having, which is how do these failures happen? A little bit at a time. And you said it brilliantly, a little bit at a time, and then suddenly or something, I can’t

Jorge: 12:52

That’s a Hemingway thing.

Harry Max: 12:54

Yeah. And it’s the same thing here, right? Eric Ries is quoting Steinbeck, but now we’re talking Hemingway, and that have an enormous amount of control over how we structure the organizations that we and the organizations that we steward. And even stepping into an organization that may have a structure, we have a lot of agency about… As leaders, let me qualify it there. As leaders, we have a lot of agency about the kinds of changes we may want to make in order to set those organizations on a path that will allow them to be more beneficial to humanity. And in fact, it’s our own ignorance which is really standing in the… And I don’t mean ignorance in the kind of a capital I, pejorative way. I mean ignorance as in we just don’t know. We don’t know what we don’t know, right? And by not knowing what we don’t know, we don’t even know to ask the questions. And by not asking the questions, we can’t sort of formulate some kind of theory of a better way of working. And Eric does a great job of laying out, “Hey, look, here’s how we got here.” The current system as it is has only been around about 100 years. I mean, there’s a long history of how we got here, and there’s long prospective history going forward, I don’t know what to call that, you know, future, where if we start to make small changes now in how we are thinking about looking at asking questions around structuring organizations, we can do a lot to create a better world. Any of us, you know, sole proprietors, people who are creating S corps or C corps, like any of us that are in a position, any of us that get hired in as leaders to participate in a system that is basically structured to some of the de facto, you know, rules and protocols and quote-unquote best practices, don’t have to live by that. We have to know enough to ask the questions, well, how is it structured and what do we want and what are we willing to do to create a better world?

Jorge: 15:16

What I’m hearing you say is that as leaders of organizations, we have agency. And the agency that you’re talking about or that I’m hearing in what you’re talking about is agency around how our own organizations are structured, how they are governed, how they provide services And that is certainly true for those of us who run organizations. Like, running an organization sounds really grandiose. I’m talking like in my case, like a one-person LLC, right? Uh, but I do have agency over that in the sense of like, I can choose how it’s structured. I can choose, um, you know, I could choose to incorporate as a B Corp or something like that. That’s with regards to your own, the things that you have control over with your own organization. Then there’s the question of The ecosystem that your organization participates in and the example that you read from the book, of a bank, I was thinking of like JPMorgan Chase, right? That’s a big entity that neither you or I have any degree of agency over. Is the agency within the socioeconomic system that we’re talking about, is it the agency to choose other providers? It’s like maybe I don’t want to do banking with JPMorgan Chase. I’m, I don’t wanna Like, I have credit cards with JPMorgan Chase, so I don’t wanna sound like I’m saying don’t work with them. But I’m saying, like, is the agency, like, you can pick who to do business with? Because it sounded like the example of the Dust Bowl farmers, it sounded like they did not have a lot of agency there, right?

Harry Max: 17:16

Right. And I think that’s one, right? Who you choose to do business with. But it also may be that who chooses to do business with you, right? So how you’re structured may affect what ecosystem you’re a part of. So that works two directions, right? Number one. And then number two, you and I both work within other organizations. You know, I as a player-coach, you as a consultant. We have a lot of power in our ability to get people to ask themselves questions about the kind of world that they wanna participate in. It may be that for people like you and me, it’s not so much about my little LLC or your sole proprietorship. It may be about the leaders that we’re working with in other organizations that think that they’re on a good path and have never really considered the possibility that their mission orientation is subject to them being alive and well and healthy as a leader in that business, and that if they were to execute some kind of succession plan or some kind of financing, they may, without thinking through the broader set of questions and the broader set of implications, they may be setting themselves up for failure, exactly as John Mackey did with Whole Foods. He never considered, or perhaps he did, I think he did not realize how much power he had early. And had you been a consultant there, and it seemed like, you know, why wouldn’t you have been a consultant at Whole Foods? Or me or any number of people that we know may very well have worked at Whole Foods, either as an employee or as a consultant, and we may have been interacting with the leadership team there. We may have had the opportunity to ask questions about what kind of decisions do you want to make to influence the future you want to have? And our ability to influence change is perhaps the big lever here.

Jorge: 19:33

Hmm. It sounds like a really refreshing message in this book in the current media ecosystem. And I’m saying that intentionally because, again, thinking in terms of how do we make this actionable, one other thing that I’m hearing in what you’re saying is maybe reframing your relationship to your agency in the world is something that you can do. Uh,

Harry Max: 20:06

Yeah. I think that’s right.

Jorge: 20:08

And I’m going to say something hopefully helpful without verging into politics because I don’t think that we want to do that. But I think that you want to take a long, hard look at the media that you consume and pay attention to because I do think that particularly social media revels in a kind of mindset of complaint without… And a kind of disempowering mindset, a mindset of like,“Everything is wrong.” You know that meme of the dog sitting in the room that’s on fire? To me, that’s like the social media mindset. It’s like, “Everything is on fire,” and, “Oh, woe is me.” And I just find that tremendously disempowering, and I… And yet I see so many people drawn to it. And I think it’s… I don’t blame individuals, I blame the medium. There’s something about that medium that I think disempowers people. And I’m hearing here that this book, one of the things it does is it encourages you to not just accept the current framing as it comes to you via our information ecosystems, and maybe kind of look for a way to have more agency. I don’t know if that’s fair because I haven’t read the book.

Harry Max: 21:57

I think it is fair. I mean, I think it would be very easy to be depressed about the state of capitalism and what it is doing to the world. And yet, what this book does is says,“You are implicated in that, and you have choice, and it is possible to make changes, and it is not only possible, it is doable.” So this is perhaps the most hopeful document that I’ve read and encountered in many, many years that makes me feel like I can do something to make the world a better place. You know? Every once in a while, I think,“Oh, I’ve written the most important book. How to prioritize,” right? But I think this goes beyond that in a realm that I personally was really struggling with because I’m working… One of the companies I’m working with right now is a PE-backed company, and I have to say, most of the companies I’ve worked with that have been backed by private equity, things have not gone well. And this company that I’m working with now is an exception, but they have a very strong visionary founder. But that company, I bet, is not structured the way that Eric Ries is talking about here. I’m interacting with that CEO on a regular basis. I’m probably gonna hand him a copy of this book, which he’s probably not gonna read, but he’s gonna ask me questions about it, and that may prompt a conversation that allows him to make a series of changes over a period of years that ultimately benefit his customers, his suppliers, his employees, his community, and I think Eric has done a tremendous service here.

Jorge: 23:38

Well, this is fabulous. I’m definitely gonna buy the book and read it. It feels like of all of our conversations, this has been one of the most enthusiastic, just go and buy the book conversations. I have more to say about some of these things, but I realize that we’re kind of running short on time here. Should we try to summarize maybe in like three bullet points? What would you say are like three concrete takeaways that people can use to increase their agency?

Harry Max: 24:11

I think the probably the big one is that things don’t need to be the way people tell you they need to be. You really have a lot more choice than you think, but you need to know what questions to ask, and you need to be relatively clear about what you want. And if you have enough information about what kind of questions to ask and you’re relatively clear about what you want, you can start to chart a path that is not terribly difficult to get you, your family, your company, your community in a better place. So I think that’s number one: you have a lot of choice and you have a lot of agency. Number two, the default world that we’re in is just a construct; you really have an enormous amount of flexibility. You have many more degrees of freedom than you are probably aware of. It doesn’t serve the system to inform you of what those are because those degrees of freedom give you more control and give you more agency. And finally, the book offers a pretty clear map about what to do. So it’s not like you need to go read a book and then, uh, you know, go figure it all out. He lays it out pretty well, and it’s not all that complicated. It’s gonna require some money. It’s gonna require some time. But if you’re interested in building organizations, if you’re interested in building companies, if you’re interested in selling products, there is no founder that I know of that shouldn’t read this book. And to turn that around, every founder should read this book. And I don’t care whether you’re starting a company, whether you’re building a company, or whether you’re the CEO of a large company that you found

Jorge: 25:57

Wow. Um, our conversations are costing me money, Harry, because I’ve been buying so many books. Um, I’ll add one more. I haven’t watched this, but I noticed that Eric did one of the Long Now, uh, long-term thinking seminars. And, uh,

Harry Max: 26:15

Love

Jorge: 26:15

yeah, and I believe that’s online. Um, I saw it come through my podcast feed, so I—and I believe it’s around the topics in the book. So now I’m gonna go back and listen to that, and I’ll drop the link in the show notes. Um, thank you for bringing this. Like I said, it was on my radar, but now it has moved up the queue. This is awesome.

Harry Max: 26:35

Awesome. Thank you. I really appreciate the opportunity to share with everybody