The Winding Road To A Long-Term Stock Market

Eric Ries is trying to create a new kind of exchange. But do investors really want that?

- Annie Massa, with Alex Barinka

Two years ago, Silicon Valley entrepreneurial guru Eric Ries hatched a plan to bring one of his boldest ideas to life. His Long-Term Stock Exchange, which he first suggested in the epilogue to his 2011 bestseller, The Lean Startup, would address the investor shortsightedness that drives startup founders crazy. Over time he sketched out rules. Companies listing on the exchange would give more voting power to shareholders who stuck around longer. They wouldn’t be allowed to link executive pay to quarterly earnings. It turns out, however, that selling Wall Street on a more patient stock market can’t be done in a hurry.

Compared with the technology sector, where “move fast and break things” has been the motto, in the realm of exchanges the attitude is more like “move painstakingly slowly and make sure nothing breaks, ever.” LTSE has yet even to file a stock exchange application with the Securities and Exchange Commission, though it’s taken a step forward by partnering with a small stock market, IEX Group Inc. Ries has faced skepticism not only from Wall Street veterans but also from the tech world. “In Silicon Valley, people don’t think change is possible here,” says Ries. “People think it’s more likely we’ll discover time travel.”

LTSE recently moved into an office in San Francisco, keeping the neon lime-colored couches and swivel chairs left by the previous tenants. On a recent March day, the cubicles were almost bare, decorated only by copies of Ries’s latest book, The Startup Way,