Silicon Valley's Audacious Plan to Create a New Stock Exchange

Five years ago, when Eric Ries was working on the book that would become his best-selling entrepreneurship manifesto "The Lean Startup," he floated a provocative idea in the epilogue: Someone should build a new, “long-term” stock exchange. Its reforms, he wrote, would amend the frantic quarterly cycle to encourage investors and companies to make better decisions for the years ahead. When he showed a draft around, many readers gave him the same piece of advice: Kill that crazy part about the exchange. "It ruined my credibility for everything that had come before," Ries said he was told.

Now Ries is laying the groundwork to prove his early skeptics wrong. To bring the Long-Term Stock Exchange to life, he's assembled a team of about 20 engineers, finance executives and attorneys and raised a seed round from more than 30 investors, including venture capitalist Marc Andreessen; technology evangelist Tim O’Reilly; and Aneesh Chopra, the former chief technology officer of the United States. Ries has started early discussions with the U.S. Securities and Exchange Commission, but launching the LTSE could take several years. Wannabe exchanges typically go through months of informal talks with the SEC before filing a draft application, which LTSE plans to do this year. Regulators can then take months to decide whether to approve or delay applications.