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

7/6/11Follow @wroush

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those guys wouldn’t take our phone calls. They were just gone. And we had built a company, as was the trend, that had the expectation of further funding. We spent the money as fast as it came in. We didn’t have any revenue. We just didn’t know what we were doing. It was a very dot-com-style failure.

X: At that moment—not with the benefit of ten years of experience, but in that moment—what did you feel like you learned from that failure?

ER: Well, I didn’t understand until later what a good learning experience it was. At the time, it was hard, it was really depressing. I was very upset. I felt very embarrassed. I had put all of my social and political capital into this thing. I had promised all kinds of people that this was going to be a big success. My roommates were employed there. We always joke—we had the first two-thirds of The Social Network experience. It was just like the movie. But the part where anything good happens, we never had that part. But this was actually a good experience, because so much of what I work on with entrepreneurs now [is similar]. When you are on the brink of failure, it often looks just like the movies. You always expect that that customer will walk in magically, just in the nick of time, just like in the movies. But hey, you know what? They don’t. So I was embarrassed. I was very scarred from the experience. But I also had a taste of what it meant to be an entrepreneur. And it was kind of exciting.

It was kind of incredible. When I graduated, I wasn’t sure what I wanted to do next. I interviewed at startups and at big companies. I feel like I’m such an entrepreneur now, I can’t imagine even considering going to work at VA Linux or Microsoft or even, like TellMe, which at that time was maybe 1,000 employees. I didn’t yet understand what an entrepreneur was. I was in love, still, primarily, with technology.

X: You wound up at There. That was in LA at the time?

ER: No, that was here, it was in one of those disgusting warehouses along the other side of 101 in Menlo Park, where that marsh is. Now it’s going to be cool, Facebook is moving there. But Sun hadn’t even built that fancy campus yet. It was row after row of blank warehouses. I randomly had sent my resume there. I don’t remember sending my resume there, and they don’t know where they go it. It was like cosmic. Divine intervention. I was luck. Will Harvey, who had just stepped down as CEO, he was the founder, he turned on his reality distortion field and he recruited me to go join the company and have that experience. Really, it was perfect for me. I wanted to apprentice myself to professional entrepreneurs. I wanted to work for people who were off the charts smart. And at the time, this was 2001, There just seemed unstoppable.

X: What were your duties at There?

ER: I was hired as a regular software engineer. Bottom-of-the-totem-pole engineering. The company was maybe 20 or 30 people at that time. It was pretty small. Very well capitalized. It had been going for a year or a year and a half. It had enough operating history that it had been through some stuff, but had a somewhat working product, a very cool demo. And they put me in the core technology team, and I kind of earned my way into the core of the organization, because I was a good fit and they thought I was talented.

X: What were you working on? The world itself, the artifacts, the animation?

ER: My very first job was about the coolest job you could ever have. Literally, on day one, my first assignment was to build a jet pack. I was in heaven. And so yes, I started out building objects and content but pretty soon I was helping to build the core system.

X: There lasted a long time. You left at some point. Why?

ER: It’s really a painful and sad story, for a team that had so much going for it. It’s such the classic Silicon Valley failure story. I didn’t really understand how perfect it was. Talk about a good learning experience. A ton of money, stealth R&D, years of development, an amazing product with the biggest bang launch you can imagine. It’s not even fair to call it a failure in the objective sense. It just failed to live up to the expectations that five years and $50 million of investment built. I mean the company had … 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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