Eric Ries

Okay, it's gonna sound radical at first to people who are not used to rethinking what profit is, but I assure you it's backed by really good evidence and I'll walk you through the logic of why I think it's right.

So I think to make a profit is simply to maximize human flourishing.

That's literally what it means to be a for-profit company.

So already you can see that our current labels of for-profit and nonprofit make no sense.

because um you know the smithsonian institute is technically a non-profit from a tax status perspective but it creates lots of human flourishing and makes pretty good net income too philip morris is a merchant of death so although it has a lot of net income it's not actually making profit it's um extracting money value out of the bodies the human bodies that it destroys so that's um

That's just a statement of fact.

I don't think that's actually that radical when you think about it.

But people say, well, okay, but if that's true, then we need to have a new term.

We can't redefine profit.

We have to have double bottom line, triple bottom line.

Fred Reicheld, who I really admire, has a concept he calls good profits and bad profits.

And it's basically like good profits are the profits that create long-term sustainability and allow customers to trust you and build your brand.

Bad profits are anything else.

But I actually really want to push back on that.

I don't understand why we have to say that bad profits are profits.

Because these terms, we can define them however we want.

And the most important thing I learned while writing this book was I really studied like, how did we wind up in this shareholder primacy situation in the first place?

And if you look at, you know, Milton Friedman and the other thinkers who really advanced this idea that the responsibility of a corporation is just to maximize its profits.

It was a relatively small cabal of academics, judges, board members, lawyers, who became enamored with this idea starting in the 60s and 70s.

And it only really became like,