Your Undivided Attention - Spotlight — How might a long-term stock market transform tech?

Episode Date: August 25, 2022

At Center for Humane Technology, we often talk about multipolar traps — which arise when individuals have an incentive to act in ways that are beneficial to them in the short term, but detrimental to the group in the long term. Think of social media companies that compete for our attention, so that when TikTok introduces an even-more addictive feature, Facebook and Twitter have to mimic it in order to keep up, sending us all on a race to the bottom of our brainstems.Intervening at the level of multipolar traps has extraordinary leverage. One such intervention is the Long Term Stock Exchange — a U.S. national securities exchange serving companies and investors who share a long-term vision. Instead of asking public companies to pollute less or be less addictive while holding them accountable to short-term shareholder value, the Long-Term Stock Exchange creates a new playing field, which incentivizes the creation of long-term stakeholder value.This week on Your Undivided Attention, we’re airing an episode of a podcast called ZigZag — a fellow member of the TED Audio Collective. In an exploration of how technology companies might transcend multipolar traps, we're sharing with you ZigZag’s conversation with Long Term Stock Exchange founder Eric Ries.CORRECTION: In the episode, we say that TikTok has outcompeted Facebook, Instagram, and YouTube. In fact, TikTok has outcompeted Facebook, but not yet YouTube or Instagram — TikTok has 1 billion monthly users, while YouTube has 2.6 billion and Instagram has 2 billion. However, we can say that TikTok is on a path toward outcompeting YouTube and Instagram.RECOMMENDED YUA EPISODESAn Alternative to Silicon Valley Unicorns with Mara Zepeda & Kate “Sassy” Sassoon: https://www.humanetech.com/podcast/54-an-alternative-to-silicon-valley-unicornsA Problem Well-Stated Is Half-Solved with Daniel Schmachtenberger: https://www.humanetech.com/podcast/a-problem-well-stated-is-half-solvedHere’s Our Plan And We Don’t Know with Tristan Harris, Aza Raskin, and Stephanie Lepp: https://www.humanetech.com/podcast/46-heres-our-plan-and-we-dont-know

So often, if you're a company that's focused on the short term, you create harm unintentionally in the long term. But if you try to be a conscious company that's oriented for the long term, you'll just lose to the companies that optimize for the short term. Think about social media. If I'm a social media company and I want to be less addictive and optimize for the long term, well, I'm just going to lose to the companies that don't do that and go for the most addictive next video in the short term. If I realize that social media is driving polarization and I don't want to optimize for the most engaging personalized news in the short term, well, I'll just lose to the companies that are optimizing for the most engaging personalized news. So the problem of, if I don't do it, the other guy will, is everywhere. We see it behind what's going wrong in all the systems that are driving harms across the environment, public health, salt sugar fat, social media, the race to the bottom of the brain stem. and we call these problems a multipolar trap

because it's not up to individual companies to do the right thing. And if you ask CEOs, what can we do to change this? They'll often say, well, this is just gravity. You can't change gravity. But our guest, Eric Rees, believes you can change it. Today on Your Undivided Attention, we're airing a conversation with Eric Rees from the long-term stock exchange. This episode is actually from another podcast

that, like us, is part of the 10th, Head Audio Collective, a podcast called ZigZAC with Manusse Zomerode, which is a business show about being human. Now, the long-term stock exchange is about tying executives to the long-term value their companies create by requiring all listed companies to consider a broader range of stakeholders and their success, to measure success in years and decades, and to align executive compensation and board compensation with the long-term performance of the company. So we're going to air that conversation here, and then at the end, we're going to debrief it and tie it back to our work at the Center for Humane Technology and the problems of social media.

So stick around through the end, and with that, here we go. Let's kick off ZigZag Season 5, Episode 1, and delve into some of the effed-up fundamentals of our economy with this guy. My name is Eric Reese. I am the founder of the long-term stock exchange and author of The Lean Startup. Isn't his voice so soothing? To understand Eric's wild project called The Long-Term Stock Exchange, we first need to talk about his book, The Lean Startup. When the Lean Startup was published a decade ago,

it changed how the tech industry worked. Want to start a company? This was your Bible. It was a template for making faster decisions about how, to build your business, it still is. Terms we all use now, like iterate and pivot. That's lean startup talk. Anyway, Eric Reese pretty much became the king of the tech bros and nerds,

or maybe more like the chief tutor. But unlike some of those bros, Eric is not into moving fast and breaking things, as that old Facebook mantra went. In fact, his latest project is a radical financial experiment, a social justice movement in the form of a new stock exchange. And there are only about 13 stock markets in the U.S.,

so launching a new one is kind of a big deal. And Eric's personal journey from Tech Wonder Kid to realizing we need a new way to measure success for companies and ourselves mirrors much of what has happened to this country over the past 10 years. I had really worked in the technology industry and in Silicon Valley almost exclusively,

So I had had a very self-contained, very local experience doing the classic tech founder, computer programmer-type career path. And then all of a sudden, because of the book, I got this world tour. It was remarkable how wide the applicability turned out to be of those concepts and the interest all over the world in every conceivable industry, in different companies from, you know, three days old to hundreds of years old, from, you know, two founders in a garage up to hundreds of thousands. thousands of employees, you know, non-profit, for-profit government agencies, you name it. There were people who wanted to talk to me about lean startup. So my life became very broad and all of a sudden I got to kind of go backstage and see how the world really works. It was really fascinating.

So as you were getting your world tour, as you mentioned, presumably you were also seeing, like you've just listed some of the more productive and constructive side of building a company, but I'm guessing that you became more and more aware of some of the more destructive, not so societally helpful parts of building companies. So that's a really interesting way of framing the question. So as I went to more and more places and work with more and more companies,

you know, if you talk to any middle manager in any organization of any size, almost anywhere in the world and ask them, how's it going? What's the health of your organization? you will immediately start to hear about these antisocial problems that their organization has that have their origin in short-term thinking and short-term behavior. I mean, any of you have had a – if you have a colleague who works a middle manager in a public company,

how often do they complain about the quarterly returns and the slavishness, which companies are run quarter-to-quarter, target-to-target without the ability to make the long-term investments in the humanity of their employees, that problem is on everybody's lips. And it was actually a bit of a shock to me. Why was it a shock to you? You know, I was a former business reporter at Reuters, and, you know, you wait for the quarterly earnings. And it just, like, I didn't, when I started as, like, a young business reporter,

I didn't know any better. I was like, okay, this is how it's done. That's right. And then, you know, then you start to see, like, markets react to how the quarterly things went. And then you start to get older, and you're like, well, wait a minute. We're living our whole lives in, like, three-month cycles. that's how it works? It's almost

it's something that our grandparents would not understand. We have gotten used to it through this slow process of decay. So everyone views it as normal. But if you really think about it,

even for a few seconds, think about how the pressure there is, think about how sales for everything spike at quarter boundaries. You know, December 31st is always a way better sales day than January 1st.

And the unnatural acts that are conducted to make sure that this arrangement happens, are they actually in the enterprise's best interests? As soon as you start to run the company to produce the correct report, the report is no longer useful as a tool of accountability, and then you've got to ask yourself,

what is it for? So you were surprised by this. Why were you surprised? I guess I had a very poly-anish, or I don't know what's the right word, I had a very naive view living in Silicon Valley. You know, we build great companies. We all have very much the rhetoric of building companies for decades and centuries, changing the world.

That's like almost to the point of cliche. So I just assumed as I went on to the wider world that I just assumed that they knew what they were talking about and knew what they were doing. And then as I met more and more of those people and I saw the look of incomprehension on their face as we would start to talk about these issues. What can we do about this problem? Like if you ask even a senior manager, CEOs, boards, what's the top problem afflicting you? The issue of short-termism is always one of the top three things they mention. And they'll go on and on about it for hours and hours, but if you say, but what should we do about it, they look at you like you're nuts. Like, well, that's like asking, what should we do about gravity? You don't really do anything about it. It's just a fact of the universe. That's how it is. And I, for something, I don't know, for whatever reason, I was surprised by that. I thought that the culture of business at large was that one of a can-do attitude and we can change things and things are always improving. And so why is this one issue, one where we have such fatalism about, especially as I learn more, you see it in the root causes of so many of the problems in the world,

you know, around sustainability, around inequality, around inclusion. You know, you name it, corruption, the like disintegration of social fabric and communities. Is there an example you're thinking of that sort of like, I mean, you don't have to name names if you don't want to, but of a company that maybe illustrates this issue that you're describing? Well, I'll start with the most boring and mundane, but actually the one that would radicalize. me first. You would think, with the ideology of business that we have in the 21st century, that companies would continuously invest in innovation, understanding that's to stand still in this day and age is to see your profit margins and opportunities be eroded by an infinity

of new competitors. And in fact, I get called into companies quite often because they want to make those investments. And the strange thing I learned was companies have this kind of like boom-bust cycle they go through, where they invest in innovation, they get some projects going. And then the second they have a bad quarter, the first projects to be canceled or cannibalized are the innovation projects. It's like eating the seed corn. It makes no sense. It's counterproductive. You may as well not invest in innovation if you're going to cancel it before it's had a chance to run its course. Innovation takes longer than three months. So this is like an epidemic in our corporations. And I kept meeting with the people tasked with doing innovation and I would watch them go through

this cycle over and over again, you know, get funding, have their projects canceled, get fired, get hired, go through the same cycle again. It's just, once you get to see all that stuff up close and personal, the human cost is what I come back to again and again. It's really painful. So, Eric Rees is this entrepreneurial strategist in Silicon Valley. He writes this mega book, the lean startup, and then big companies are asking for his advice. And he realizes those companies have a big problem. They are so focused on quarterly earnings,

making the most money they can every three months, never mind what would actually be good for the company, for their products, their customers, their employees, or society. Things like investing in a community full of workers who need training takes time. Strategizing with city officials over how you can grow your workforce without making the city too expensive for anyone

but your own employees to live, there. That takes time. Figuring out new technology that doesn't destroy the planet, it takes time. And so how do you give a company more time? Well, you change the incentive. And that brings us to Eric's nutty plan, the long-term stock exchange, the LTSE. So I can remember coming up with the idea. I was sitting in an airplane flying all over the country doing workshops and lectures about the lean startup when I was writing the book. So this is 2009, 10, quite a while ago.

And if you study the research on what makes companies great, the idea of having a philosophy of long-term thinking is really well-established in the literature about it. At first I was thinking about Silicon Valley, but I eventually realized it had much broader applicability. What could we be doing to create more great companies that have this long-term view? When you first had the thought of creating a new stock exchange, did you try to talk yourself out of it?

I mean, were you like... So many times. Oh, my God, I can only imagine. Well, Annie, what's funny is I didn't intend to build this, you understand. This is the best part of being an author. You may be familiar. Oh, yeah, you have big ideas. Big ideas.

You have a whole chapter of things that other people should do. Yeah, yeah. So if you actually go back to the lean start at the last chapter is kind of future directions for the ecosystem and a whole bunch of ideas that people should do, this was just one of several. I didn't ever dream that it's something that I would have to do. And for years after the book came out, it was like my cocktail party conversation. People say, oh, yeah, hot shot. I remember doing a Wall Street Journal interview where they were like, well, what other,

you know, Lane Startup's big, what are your other big ideas? And I was like, oh, here's one for you. And they later wrote a column that was like, this guy is crazy. Look at his crazy idea. I think I read that article and was like, oh, oh. Yeah, right, right? Yeah, this would change everything. It's amazing.

So it was just, it was my conversation. I would just say, hey, I think this is an interesting idea. Someone should really do something about it. And what was wild is to watch, people had just very extreme reactions to it. We should just lay it out. What is the idea? Like, just lay it out for me. So the long-term stock exchange is in the same regulatory category as NASDAQ or NYSE.

We are the first new way for companies to go public, really since the creation of NASDAQ in the 60s. And we believe that in order to be listed on our market, companies should have to be held to a higher standard around things like having a philosophy of long-term thinking about being multi-stakeholder, taking care of their employees, their communities, the environment, and having their investors have better disclosure to really understand what the company's long-term strategy is. So at its heart, it's actually a very simple idea. Companies that want to go public have to be listed on a stock exchange. Every exchange has listing standards that companies are held to, and ours are higher than the legacy players. Okay. So, like, how does one go about, like, clearly you floated the idea for a while, and then when did you decide, like, crap, if somebody's, I'm going to have to do this myself? Yeah, so I spent years in the wilderness just trying to understand how do you even create a new stock exchange.

You know, you talk to people and, like, lay people about this, and you say, I'm going to create a new stock exchange, and it's like you're saying, let's create a new moon. It's like, that's just not really how it works. We have one already. we don't really need another moon and it's like not a human thing even to contemplate and I spent a long time just trying to understand how do you were they carved on the stone tablets where do they come from?

How do we get stock exchanges and finally I met a securities lawyer who said oh it's not a big deal you just fill out the form one application What? And I was like I'm sorry I don't follow what you're saying What? He's like you know how government forms are all numbered?

Sure everyone knows that He's like well this is SEC form number zero zero one The application to establish a nationalist. It's just a forum. Now, it's a complicated forum. It's 200 pages long. And, you know, it takes several years to fill out. But, like, it's not mystical. Congress, in all its wisdom, laid out a process by which new stock exchanges can be created. It's kind of old, creaky infrastructure. It's a lever we don't pull very often. But we still know how to do it. And that's been my journey, you know, over now several years. We first raised money for this in 2016, I think. So if you think about

from like 2012 to 16, it took me all that time just to figure out how you would do it. It took us about three years to get the SEC approval, which we got last May. Congrats on that. Yeah, thank you very much. And yet part of this is just taking a monumentally big idea like this and just breaking it down one step at a time. It was like, okay, well, what has to be on the forum? Who has to fill it out? What kind of expertise do you need?

What kind of lawyer do you need? What kind of lobbyist do you need? What kind of engineers do you need? Just help me understand the pieces. And it took thousands and thousands of conversations, of course, to figure all that out. But I think, I hope that this will serve eventually, you know, for successful as inspiration to a new generation of civic entrepreneurs who will say, you know what, we don't have to take the institutions of our society as a given. We could try to build new and better ones. Huh.

Can you help me figure out what that might look like? Yeah. The whole idea is for a company to be able to say, look, we're going to make binding commitments to do the right thing. whether or not the stock prices up or down. So we're going to take our stakeholders into account. We're going to measure the impact that we have on them, and we're going to be sure that we're taking care of not just our shareholders, but also our customers, our employees, our communities.

And for me, the acid test of this is what happens if, God forbid, it is discovered someday that your product is actively harmful to your customers. It's addictive or it makes them depressed or it's unhealthy or it harms their communities or the societies that they live in. The people who are in charge of the company at that time, and when I do this exercise with founders, I always ask them to imagine, like, after they've passed away, the next CEO, why will they do the right thing and come clean?

Think about like when Johnson and Johnson had that famous Tylenol recall. Now it's taught as like a case study in business schools where even at the possibility that there might be poisonous products out there, they recalled everything voluntarily to build that public trust. Will they do that or will they try to bury it and punt the problem down into the future? That's the acid test. So here we want to have kind of layers of protection around the company that kind of remove the temptation to do those things. So that then when a company goes to the public and says, you should trust me, I'm here to stay.

I will be your partner. I will take care of you. When they go to their employees and say, we'll be a good employer. When they go to communities and to politicians and to all the partners that they have to deal with and say, we would like to be your long-term partner. You can trust that we are looking out for win-win opportunities for you and for us, that any of those people would have any even iota of reason to believe them. I remember talking to someone I knew who, we were talking about someone who was on a board,

and they had voted for this company to be sold to a right-wing company. And I was like, I just can't believe they would vote like that for this company to be sold. And they were like, well, I get it because her obligation is to the board and the shareholders. It doesn't matter what would be good for society or what she thinks is the right thing to do. That's irrelevant. Yeah, and it's absolutely mind-boggling that there are people who really believe that that is the right way to run business. So a big part of LTSC is just to say, why don't we partner with the long-term shareholders and figure out with them what's really in the company's long-term benefit? And that's where I think you can reclaim the kind of unity of purpose between corporations and a healthy society.

Since for most companies, it's actually counterproductive to harm your employees, to harm the communities in which you operate. That can help you in the short term. But we've seen so many examples over the years where that's really counterproductive in the long run. So if somebody listening is like, okay, I want in on this, what companies can I invest in if I believe in this idea of companies that are thinking about, the long-term effects of the products they make and the well-being of their employees and all those things. We're working on it.

We're not quite there yet. You know, I like to joke that we have acquired, it's like we acquired the world's most expensive taxi medallion. We've gotten the license to operate this new exchange. We are not yet driving the car around. So we're still in the process of working with the regulators to get the servers and the infrastructure booted up. And what we will do then is we'll act almost like a certification

agency that the companies that are willing to list or dualist under our standards that there'll be the ones that the public can trust have this long-term philosophy. So I'm not allowed to talk about the specifics of who those companies might be, but suffice to say we're very optimistic about this new, this next generation of companies and the investors that work with them, I think have a really different value system, a really different ethos around what actually creates value for the long term and this is what gives me hope because I now know several companies I think that are gearing up to meet this standard and the standard is if I come to you the public and say I'm a good citizen I'm going to be a good company not like the ones that have come before I'm going to take care

of people I'm going to do right not just for the sake of like virtue signaling and social justice I'm going to do right because that's ultimately what's in the interest of my long term shareholders and the longest term stakeholders in any company they're your employees and the founders themselves and the communities that you're going to be operating in, potentially for decades. I think if you could somehow arrange it, just to do this as a thought experiment, imagine that every corporate executive in America, by magic, had their entire net worth tied up in the value of their company 10 years from today. So they lived in poverty for the next 10 years,

but then they would have reap this massive reward. They could access their complete net worth, but only if the company was healthy and solvent at that time. Does anyone really believe that under those incentives, the same people would be obfuscating the climate crisis or would be not investing in communities or all these problems that we're dealing with? They'd be like, well, it's not my problem, it's somebody else's problem. They would feel those problems so much more acutely because they'd be like, oh, my God, if this problem is still happening 10 years from now, my company's not going to be worth what I want

it to be worth. And isn't that really what their shareholders would want them to be doing? We want to move in that direction. And I think if we do, we will start to see corporate actors and because of their influence on political actors, also political actors start to take those long-term problems much more seriously. But it sounds like you're explaining to me why some people, particularly in Silicon Valley, are kind of hostile to the long-term stock exchange

because what you're saying to them is, like, you are going to have to give something up in the short term. It's a trade. We've always conceived of this as a bargain, a grand bargain between investors and managers. Everyone give up a little bit in exchange for we have more valuable companies. So yeah, our standards are hard, right? Everyone, like, you won't make as much money in the short term potentially.

We don't allow companies to have, like, really short-term oriented compensation systems for managers. We require companies to do more, not less disclosure. And we ask that corporate power and economics be shifted away from the short-term investors and toward the long-term investors. Like, those are real, like, for something to be meaningful as a certification, as a signifier, it has to be real. it has to actually be painful. The fact that it's somewhat difficult is the thing that makes it valuable. So at the end of the day,

will anyone really be willing to sacrifice the short term for the long term? I don't know. It's an experiment. We're going to find out. But let us have an end to all this rhetoric about changing the world if we're really just in it

for the quick return. Can we dispense with that, please? So we're actually, we get confused really easily about what actually creates value. And you've got to go back to the fundamentals, I think Peter Drucker said, the purpose of a corporation is to create a customer, like serving humans in a positive sum way. That's why corporations exist. That's why

capitalism is a moral system. If we ever break that connection, rent-seeking behavior, crony capitalism, all this stuff where people get paid without creating value, not only is that corrupt and kind of, I don't know how those people live with themselves, but it kind of breaks the fundamental promise of capitalism and therefore brings the morality of the whole system into question. I guess my last question to you is, you know, Eric, you were really young when you lean startup became a big bestseller. And, you know, a lot of people looking to you to lead them into the future at a really

young age. And like, here you are. I think you're in your 40s, right? Yeah. I'm really fascinated by how people gauge time or think of time in their own lives. wonder how has working on the long-term stock exchange affected you in terms of how you view your career and your life trajectory? Gosh, that is a great question. I noticed something that in the early days, it was important to look the part of what people wanted. So there were

like a certain segment of the population. They liked the idea of the young guru who would come, you know, teach them this avant-garde stuff. So one lesson you get right away is that the world projects onto you the things that it wants to be true, and eventually you become like a character in people's lives. It's not even really about you as a person. That's very surreal. But the other thing that really got to me was, look, this has been an incredible ride, so gratifying, you know, so rewarding in so many ways. So, you know, it created just an immense amount of freedom for me to do whatever I want to do and to spend my time on the things that I think are valuable. And then on top of that, I had kids. I got young kids at home now.

when they're old enough to understand what I do for a living what do I want to tell them I was working on and do I really want to be like you know what I did I helped like shareholders incrementally get more value

under the Delaware business judgment rule by blah blah blah like who wants it to say that to their children you know like you gotta have a better story than that and I don't know my other kids see right through me so if I try to BS them with some kind of like you know I dress it up as oh I'm changing the world for the better like they're going to know

And they're going to inherit these problems from us. And what are we going to say that we did about those problems when we still had the chance, when prevention is so much cheaper than mitigation after the fact, which of us is going to be able to stand up and say, I give it my all. I actually tried to do something to address the root causes of these problems. And I don't know about other people, but I just want to be able to look my kids in the eye and say I was on the right side of this one.

What do you want to be able to say that you did, hopefully, if the long-term stock exchange experiment succeeds. It's so funny because people act like it's such an audacious thing and it's so big, but to me this is just one brick in a new foundation for our civic society. We do not have the institutions that we need to survive the 21st century. Business, nonprofits, and educational institutions, and religions, and governments, and politicians, and everybody rowing together to kind of reinvigorate what it means. to live in a democracy in the 21st century,

I don't think the status quo is tenable. So it's up or out, as they say, and I hope this will help inspire people to take those steps. You never can look into someone's soul and know for sure if they're being sincere on what they say, no matter how well you know someone. So I know a number of founders who are saying the right things.

And they're starting to say it publicly, too. You know, they're going to be good for society. They're going to be climate neutral or they're going to be multi-stakeholder in their view. But to me, this is all about actions speak louder than words. Eric Grease, I am so excited to introduce your big idea to our zigzag community because it's really what exactly what they're thinking about. And I think people are understanding there are problems, but now it's time we need to talk about the solutions.

So I'm really grateful to you for your time. Oh, thank you. It's really my pleasure. And thanks for the interview. So how is the long-term stock exchange connected to our work at the Center for Humane Technology and the issues that you all know about from the social dilemma? So that's the question I'm going to explore together with our executive producer, Stephanie Lepp. Hey, Stephanie. Hi, Tristan. All right, well, let's get into it.

You know, the thing listening to Eric that comes to mind is the recognition that he starts with that he was a former tech entrepreneur. And normally the way you solve problems and change the world is you build a new thing. You build a new company that does it the better way. But then he realized that he was in a trap, or what we in this podcast have called a multipolar trap. And just for listeners, just to remind them what are multipolar traps. Okay. So a multipolar trap arises when individuals have an incentive to act in ways that are beneficial to them in the short term,

but detrimental to the group in the long term. So think of a person at a concert who stands up to get a better view, and then that forces other people to stand up until suddenly everyone is standing and no one has a better view. And think of companies that reduce costs by polluting more, which then forces the other companies to follow suit and thereby destroy the very resources on which they all depend. Think of social media platforms that compete for our attention

so that when Snapchat introduces a new even more addictive feature like streaks or like the three-second videos, Facebook and Twitter have to start mimicking that kind of design in order to keep up. And that sends us all in what we call the race to the bottom of the brainstem. So multipolar traps are the trap that we're collectively bound by. And the world's issues are most of the world's issues are just traps on a bunch of interlocking perverse incentives. And so what I really want to point our listeners to, and we covered this in our episode called Here's Our Plan and we don't know. And that episode is really about how much these traps govern our lives

and why we aren't seeing progress on climate change or on economic inequality or on, you know, name any issues, salt, sugar, fat, and food or bad social media, it's that if I don't go for the dopamine and create the most addictive next version of TikTok, then the other guy will. And in fact, we have seen YouTube and Facebook and Twitter try to make changes in the positive direction, sort of, like in small ways.

But then recently, because TikTok has actually out-competed Facebook and Instagram and YouTube, there's now this trend called the TikTokification of Facebook, Instagram, and YouTube. They're becoming more like TikTok. They're actually having to migrate to that format. And so they're all part of this trap. And that's why I'm excited about what Eric's doing is a way to get out of that trap. The long-term stock exchange is one experiment in an attempt to do that. And we could just ask the question, what are other experiments?

how else might we experiment with creating playing fields that incentivize playing for the long term or that align the incentives of the individuals with the collective? So Tristan, maybe I can kick it back to you and you can give another example of a new playing field that would orient players towards the long term. Let's say Apple, you know, they currently keep 30% of the revenue on the app store for an app,

and they give back 70% to the developer. So right now you have apps that are making, making all this money, pay to check by Apple every month, you know, that 70% of the revenue that they earn. Well, what if Apple said tomorrow, hey, we're going to change the Constitution, we want to incentivize things that are good for the long term, and we're going to actually have some metrics for what good for the long term means. And the better you satisfy those metrics, there's going to be this part of that 70% of the revenue that we're going to hold on to. It's like a pot of money, and we're going to distribute a part of it based on the degree

to which you satisfy the long term. You could also think about it the other way, which is if you are creating externalities in society, if you're shortening people's attention spans, if you are harming people's mental health, if you're creating more perception gaps in the way that people make sense of the world, we're going to have taxes for those things. We're going to have a regret tax

for the more addiction you create. We're going to have a perception gap tax for the more gaps in perception that you create. And we're going to actually enact that tax higher and higher in the long term. So sure, TikTok might look successful today, but if I'm TikTok, how do I tell future investors that, by the way, five years from now,

the early indicators on the amount of regret I'm creating in society are really bad. And if we know that Apple's going to charge me 5x the amount of regret that I'm currently generating, that deters investors from wanting to invest in TikTok. So these are kind of, I'm just playing around with ideas here, but they're representative of the kind of thinking that would align the incentives of those who make technology

with the long term and identifying that there is an actor like Apple that is in the position to do this. I think one of the things with Apple, and I said this on the Joe Rogan podcast a few months ago, that Apple thinks that it can be one of the good guys by not being one of the bad guys. And that's true. I mean, it is not one of the bad guys.

It's building technology that they sell to you. You're the customer, not the product. And I want to really commend Apple for all the things they've done, on privacy, on app tracking transparency, on the screen time features that are now in every iPhone, on the focus mode and do not disturb features. These are all examples of moving in a humane direction. But they get away with being the good,

guy by simply not being one of the bad guys. And I think we could change the goalposts and say, actually, if you really wanted to do what's good, you would change the entire incentive landscape, meaning all of the incentives that govern what apps do and don't do, you just make a change in your constitution for the app store policy and all the apps have to follow. And I want to give one clear example of this. This has happened about a month ago. Apple actually changed the app store Constitution, and they basically said to be in our app store, you have to have a button in the app that says, delete my account. Now, this is a perfect example. Because if you think about it, if I'm the social media app that doesn't let you delete your account from within the app,

and the other guys let you do that, the ones that let you delete the account from within the app are going to lose to the guys that hide it behind seven clicks on the website. So just to make a concrete, you know, if I'm Instagram and I say the only way for you to delete your account is to actually go to Instagram.com, log in through a web interface, go seven layers deep into the interface, and then hit delete your account. No one's going to do that, right?

But if all apps are required to say, delete my account, and that's in the interface, and every app does that, that changes the game. And with one change, they actually did this. So what we want to do is just say, hey, instead of just that one thing, we want you enact an entirely new digital constitution for a symbiotic, humane relationship

between technology and humanity. And the way to do that is to account for all the externalities that are currently showing up on society's balance sheet and it's all the things we've talked about on this podcast.

How much regret are you creating in society? How much addiction are you creating in society? How much breakdown of community or sense making are you creating in society? And those are the externalities or the shadow of tech.

And the way we help the tech industry incorporate an integrated shadow and become a better collective tech industry is by making visible those externalities and making sure that preemptively the world knows that the marketplace will value value them differently. Amen. And just in case it wasn't clear for listeners, these kinds of

rivalrous dynamics, short-term games are playing themselves out across industries, right? Obviously, not just in tech, hence the long-term stock exchange for any company. And not even just in the world of business, but we can make a very clear analogy to politics where politicians are just constantly playing the short-term game of getting re-elected in the next term. I think a lot of what this conversation brings up for me. And I recommend listeners go back to our episode with Daniel Schmachtenberger. You know, we talk about how we can have sustainable, peaceful tribes that are in peace with nature and get their food and lumber and energy in a sustainable way. But the problem is they just get killed by the warlike extractive tribes that grow way faster,

get faster GDP, more resources, more weaponry. And they just come and take the sustainable tribe stuff. Think China versus Tibet. You know, China just kind of overpowers Tibet. and this is true of so many different human experiments at smaller scales is how does the small guy doing the values-driven thing actually out-compete the larger guy? Well, we need to change the game. So when it comes to this work, I think the critique I would have is how do you change the rules

for how all businesses compete? What we really want is the long-term stock exchange principles embedded in how the normal stock market works. So, you know, I suspect that it's going to be hard for the long-term stock exchange to get the kind of traction that it would need to on the timelines that we have for various problems, climate, existential risk, all the things that we talk about in this podcast. The reason why I keep going to Apple is if you also take into account how much time do we have to address these problems that we're talking about. We're talking about

eminent polarization conflict escalating in very short numbers of years. Imagine if Apple were to implement this, they could change this tomorrow. One of the beautiful things about when they've made these changes starting in 2018 with the screen time features is they make one change. And in September, of the next year, 2 billion iPhones are running a totally different culture. And now there's this phrase called screen time. And now kids are talking to each other about their screen time. And they can compare the numbers of their screen time. So they can actually instantiate a new cultural conversation. They can change the app tracking transparency features, which a year ago they launched on the iPhone. And when Tim Cook launched it, he said, we can't allow a social dilemma to become a

social catastrophe. And that privacy change actually dropped $10 billion a year. off of Facebook's profits. And it also dropped their stock price, combined with Francis Hauken, coming out, by about half. So they went from a trillion-dollar company to about a $500 billion company. These are significant changes. And Apple can make them on the time scales of months and within a year. So out of just pure logic and practicality, I think this is the move. Yeah. So maybe Apple should join the long-term stock exchange and change its app store and feed multiple birds. There you go. That's a more inclusive answer. To Eric's point, the other thing that's created by moving to the long term is trust. You can actually hire and retain

better employees because your employees know that you're not just greenwashing the story of your company. And we have an entire marketplace that's greenwashing the actual truth. So you have more inspired and passionate and retained employee talent base. You have a better legacy. You have a better story to tell your children every day. And that's recursively true fractally all the way down to the trickle-down effects of the company and everybody working there. So I just think that it's a really inspiring option. I want every member of the Apple App Store and design team listen to this. The Long-Term Stock Exchange launched in September of 2020,

and current technology companies listed on the exchange include Asana and Twilio. You can learn more about the long-term stock exchange at LTSC.com. You can find more episodes of the ZigZag Podcast at zigzagpod.com. And if you enjoyed this episode, check out our recent episode with Zebras Unus. night about new ownership and governance models that can incentivize the creation of long-term stakeholder value. You can find that episode in our full catalog at humanetech.com slash podcast. I'm Tristan Harris, and thank you for giving us your undivided attention.