Eric Ries, author of The Lean Startup, is trying to change how startups are built, one executed idea at a time. His lean startup methodology has changed virtually every type of company, ranging from well-known corporate brands to just-hatched ideas and how they strategize, market, and grow their business. Here are some excerpts from our interview with Eric Ries. Eric has been a FoundersCard Member since 2010.
1.) How did you come up with the theory behind The Lean startup?
It mostly came up out of a lot of failure. Most of the products I have worked on over the course of my career have been failures. When I finally had some success at a company called IMVU I was trying to figure out how to explain that success to other people. We used a lot of techniques that were considered quite avante garde at that time. In 2004-2005, we were very early adopter of Steve Blank’s Customer Development methodology. We were hardcore into Agile Development. I was trying to push those ideas even further by saying not only should we have weekly or monthly sprints, we should be deploying our code to production in real time. This is something we now call “continuous deployment”.
2.) You talk a lot about building, testing, iterating around consumer needs. How do you see this changing from the standard old school entrepreneurial practice of creating a business plan?
The old school way is you make the most impressive-sounding business plan you can, use the business plan to raise as much money as you can, to buy yourself as much time as you can, to produce the best product you can, which you then launch as loud as you can. Hopefully, by the time to product is done, you do the big launch and customers will love it and they’ll flock to it and buy it. But in real life, as we learn the hard way – especially over the past ten years – oftentimes, there is some critical error in the business plan that you didn’t anticipate…We want to treat [the business plan] like a series of hypotheses, and then test those hypotheses quickly to figure out if we’re on the right strategy or if we need to pivot to a different strategy. That’s the essence of the new way: the pivot, a change in strategy without a change in vision.
3.) When starting a company, what’s the best advice that you could share with a new entrepreneur?
The number one most important thing is to realize that everything you do in a startup is an experiment, no matter how big, no matter how small, no matter how confident you are that it’s going to work, or how uncertain. It’s always an experiment. If you’re going to recognize that it’s an experiment, you’re going to always ask yourself this one very simple question, which is the thing that I’m doing right now, it’s an experiment, what’s the experiment supposed to teach me? What am I trying to learn with this experiment? If the answer is nothing, then stop doing it immediately.
4.) You talk a lot about failure and learning a lot from those failures. What is the biggest lesson that you took away from one of your failures?
When I was in college, I was in an Ivy League university and I had an experience that was not so different from The Social Network, in the movie at least the first half of the movie. We got all of our friends together, we built a cool company, we thought we were really smart, we were taking on the world, we had a pretty good idea, which was that college students at Ivy League universities should create online profiles for the purpose of sharing. That turned out to be a pretty good idea a few years later. This was in 1999 during the dotcom bubble. It didn’t work out. It failed and the dotcom bust took us out and we didn’t make a dollar. Now, it’s easy to say it was a good learning experience and I’m glad I did it, but at the time I was really devastated and really upset that it didn’t work out…The lesson for me was that learning how to build a company is skill that you need to develop and if you want to do that, the only way to make that work is to have a vision to do something that matters that you really care about, that will sustain you through the very difficult process of entrepreneurship. In retrospect, I learned that lesson very early and very cheap, but at the time it didn’t feel that way.
5.) Aside from your own, what books do you recommend for a new entrepreneur or somebody building their first company to read?
None. No books. First, do something.
6.) What’s a company or product that you think that people should keep an eye out for that they might not have heard of yet?
There’s some really cool stuff coming up. The most recent company that I invested in is a company called Sqwiggle. It is an entirely peer-to-peer video conference system for teens that are working together remotely and it is just the coolest thing since sliced bread. I can’t even do it justice you just have to go check out the demo. If you work in any kind of remote team or do work from home, you will say this thing is awesome I predict.
7.) What’s one mobile app that you can’t live without?
I am especially grateful to PostMates these days. I do a lot of PostMates.
8.) What’s something that you’re working on now or what’s coming next?
I’m working on something that is either the most brilliant or the most crazy idea I’ve ever had depending on who you ask, which is to create a new stock exchange called the Long-Term Stock Exchange, or LTSE. This would be a new place to take companies public, where management and investors would operate by different rules that are designed to foster long-term thinking as a way to try to solve the problem of relentless short-term pressure that public companies are under.
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