Eric Ries and the Origins of the Lean Startup Theory—The Full Xconomy Interview

7/6/11Follow @wroush

I spoke with Eric Ries, founder of the Lean Startup movement, on July 5, 2011, at Peet’s Coffee & Tea in San Francisco’s startup-rich SoMa neighborhood. If you’re pressed for time, a much shorter summary of our conversation is available here. But at least a few readers—the types who attend Ries’s conferences or go to Lean Startup meetups—will be interested in this full, 11,500-word writeup.

Xconomy: How did you first get interested in entrepreneurship?

Eric Ries: The idea of being an entrepreneur wasn’t really something that I grew up with or resonated with. I was excited about technology. I grew up working on computers. From as long as I can remember it’s something I’ve always done. To me, I was excited about building technology. Creating software was the most creative, most satisfying thing I did growing up. I couldn’t believe you could get paid to do it as a career. It was the best news I ever heard in my life. I was, from a very early age on the Internet, playing online games, getting involved in programming as a component, that was my introduction to this—MUDs, multi-user domains, that was heaven to me.

And so I was very precocious in terms of going on the Internet and trying to get jobs. I got my first software writing jobs through Usenet without revealing my age as a teenager. There was a bit of misdirection required in order to get people to pay you to do stuff, but on the Internet no one knows you’re a dog. That was very cool. But at that time, entrepreneurship was not a concept I was even aware of. My parents were doctors. This was outside the box. It wasn’t until I got to college and the dot-com bubble just swept through everything that the idea even occurred to me.

X: You were at Yale, right? What years?

ER: I was there from ’96 to 2000. By ’98, things were just crazy, the stuff we were reading at magazines. I did an internship at Microsoft my freshman year summer, and my relatives were asking for stock tips about whether they should buy Microsoft stock. That just was crazy. Why are you asking me, first of all? I have no idea about that. And B, why are my relatives, who have no interest in technology, all of a sudden interested in Microsoft and in tech in a way they never were before? In retrospect, it’s such a clear sign of a bubble, when people who really have no business are excited about something they don’t know.

X: That infected college campuses as well.

ER: Well, we just kept reading these magazines, and the magazine stories were like, two college kids walk into some VC’s office and say “I need $10 million,” and they get it, and a year later they have something worth $100 million. My friends and I were like, why aren’t we doing that?

X: Was the Yale Entrepreneurial Society active back then?

ER: There was no such thing. The very first clubs happened in 2000. It was the last place on earth to catch the bug. It was almost too late for us. I remember the first incubator frenzy from the bubble—I was involved with two or three incubators in New Haven, CT. I was an advisor to a VC firm. All I had at that time was a half-baked startup. But I’m skipping ahead. In 1999 I started a company at Yale that turned out to be a big disaster. It was called Catalyst Recruiting. We had this idea to have college students create online profiles for the purpose of sharing. So it sounds promising, right? Except that our idea was that you would create those profiles and share them with employers, whom we would then charge for access to the best college students. On the face of it, it was not a crazy idea. It was certainly in the vicinity of things that turned out to be really valuable later, but we had no idea what we were doing. The idea of building a company—they don’t cover that in the magazines.

X: In what way did Catalyst Recruiting fail?

ER: Entrepreneurs only fail at one speed, which is full speed into the wall, leaving a startup-shaped cutout. That was us. The proximate cause was when the dot-com bubble collapsed, we couldn’t raise more money. The kind of people who would invest in us obviously didn’t have great investment judgment. A lot of them just were killed when the NASDAQ crashed. They were completely overinvested in risky stuff. They all cut back and moved. All of a sudden … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://www.chasminnovations.com Robert DiLoreto

    Wait…now that we built it leveraging Lean Start-up principles…”THEY WILL COME?” I understand the “Customer Development” component of Lean Start-up…but am still missing ideal strategies to generate new customers and users, especially for B2B startups providing a “disruptive technology/solution”

    It sounds like all you now need to do next is implement a sales/marketing 2.0 tool, add a “PRICING AND PLANS” section on your website and hire some internal telemarketers?

    Sounds like a single point of potential failure to me…Should these start-up’s also target big company “C-Suites” and communicate their value prop towards “C-Suite” sponsored initiatives? Should a “top down” sales approach be ignored? “Bottoms up” / viral approach only?

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