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

7/6/11Follow @wroush

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not do this on a certain day. I remember it was April 1, 2004, April Fool’s Day, so not the most auspicious day to start a new venture.

X: But if I remember right, that’s the same day Google launched Gmail.

ER: So it has some good mojo, yeah. We just said we were going to start from scratch, and instead of deciding to build a product together we are going to build a company together. So our first meetings were not even about the product, they were about the values we wanted to live by in our new company. We had identified values conflicts as one of the fatal mistakes in the previous company. Out of those conversations came IMVU. Once we knew the type of company we wanted to build, we figured out the product we wanted to build. We felt we had learned things that were valuable in our past careers. There was my first avatar-based product, but the other four guys had done tons of avatars stuff, even before that. They’d been working in this space for years, so it was a very natural evolution.

X: But apparently you had reached some level of maturity in your career, or you had had enough bad experiences, that with IMVU you weren’t just setting out with a pure software engineering mindset—you were already thinking about cultural issues and what kind of company you wanted to build. What do you think had shifted in your mind such that that was the way you started out?

ER: Well, the nice thing about burning your hand on the stove is you become more sensitive to hot things in general. So part of it was just the level of dysfunction. There was a perfect science experiment for disproving the hypothesis that if you just have a strong enough vision, a cool enough product, and smart enough people, everything will work out. Because it didn’t. It really should have. If that theory is true, I challenge anybody to show me a company that was better poised for success than that. I really believe that today. If you look at the number of ex-There people who have gone on to start other companies and do amazing things, the total market cap of all those companies, I don’t know what it is, but it is just huge. I really still believe that we should have been successful. It was very embarrassing. That was a high profile and embarrassing failure. It freed us up to try new things, because how much worse can it get? Nothing worse can happen to you in business than that, barring an ethical scandal or something.

X: Well, there were other dot-com companies that lost a lot more money than that.

ER: It wasn’t how much money was lost. It was how stupid, in retrospect, the claims were that we were making in the press. Like, if you can cast a reality distortion field onto the press and onto the influencers to tell everyone this is the future, then they move on to a new thing if it turns out that was wrong, but you were the guy who said this was going to be the future. That’s very embarrassing. I was lucky that it wasn’t me. I was a junior man on the totem pole. I can’t take any credit or blame for the good or the bad. I was a soldier in that army. But I got a front row seat.

X: Are you saying, though, that at IMVU, you set out telling yourselves “We are not going to make this mistake again”?

ER: We said let’s just make new mistakes. If you look at the failure of Catalyst Recruiting, and the failure of There, they are very different. There was two orders of magnitude of difference in the amount of money that was lost, the size of the company, the level of technology. But in the heart of hearts, it was kind of the same mistake. It was working forward from the technology instead of working backward from the business results you’re trying to achieve. At the end of the day, you can argue about what was the root cause of the failure, but that’s my stake in the ground. So we said let’s just not do that again, let’s do something different.

At There I had been introduced in my personal reading to agile development and that was all starting right then also, so I was the one trying to bring those methodology changes into the company. And I still was thinking that if we could change the engineering methodology, we could succeed. And now I realize that is incomplete; it’s a necessary but not sufficient condition for success. So I was really primed to be thinking about new ideas. And to want to change the culture, change the values, change the system of the company. To me, what was exciting about IMVU was … 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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