Eric Ries, the Face of the Lean Startup Movement, on How a Once-Insane Idea Went Mainstream

7/6/11Follow @wroush

Many Internet startups these days release new code several times a day, in the belief that the faster they can iterate the sooner they’ll discover a profitable business niche. The concept, of pushing out products that aren’t necessarily ready for prime time, gathering customer feedback, revising code, and starting again, would have been considered insane just a few years ago. For starters, there was no way before the spread of Web-based software to push code to users instantaneously, much less gather or analyze their feedback in real time. But now those technologies are here, and new Internet companies commonly claim to subscribe to at least part of the theory of the “Lean Startup,” a phrase popularized—trademarked, in fact—by one Eric Ries.

Ries, a 31-year-old entrepreneur and author, says he came up with the term after reading about the “lean manufacturing” concepts refined to a high art by Japanese industrial engineers in the 1980s and 1990s. Manufacturers, that philosophy goes, should eliminate all processes except those that create value—meaning features or services that customers are willing to pay for. The slow, expensive way to find out what customers will pay for is to build a product and then try to sell it to them. The faster, cheaper way is to build something minimal and ask customers what they think. So lean startup methodology emphasizes rapid software development through such methods as agile programming, plus robust analysis of what customers actually do with the software. It’s one of the fundamental ways many Internet startups today differ from their dot-com-era ancestors. The hope, though it hasn’t been proven out yet by quantitative studies, is that the methods will help reduce the rate at which these early-stage companies fail and go out of business.

But who is Eric Ries, and how have his ideas spread so quickly through the community of startup entrepreneurs? Not so long ago, Ries was just another Silicon Valley software engineer with a list of failed to modestly-successful startups on his resume. There were tales of the unusually rapid development cycles he’d imposed on his team of software engineers at IMVU, the avatar-based social networking service he co-founded in 2004, but his talk on these methods at O’Reilly Media’s Web 2.0 Expo in the spring of 2009 was relegated to a side stage and wasn’t even recorded on video.

Since then, however, Ries’s Lean Startup concept has caught fire. It’s often boiled down to the mantra “Build, Measure, Learn,” and applied in combination with the “customer development” methodology developed half a decade earlier by entrepreneur Steve Blank. Ries himself travels almost constantly to promote his message at technology conferences—including his own, called Startup Lessons Learned—and he estimates that the Lean Startup meetups in cities around the world attract some 20,000 regular participants. Venture investors from Mike Maples to Kleiner Perkins Caufield & Byers call on him for advice, and Ries says he’s “very well compensated” for his consulting work and speaking engagements. (No wonder that at the 2010 Web 2.0 Expo, he was moved up to the main stage.) Ries’s wave of popularity has won him a book contract with Random House, which this fall will publish The Lean Startup, a $30 tome that he says is full of tactics that entrepreneurs can use to measure how close they’re getting to the nirvana of “product-market fit.”

Eager to know more about the man who launched a thousand meetups and his own history as an entrepreneur, I met with Ries yesterday at a Peet’s near his apartment in downtown San Francisco. We talked for about 75 minutes, covering everything from his early experiences of startup failure—at a small employment site he founded while still a Yale undergraduate called Catalyst Recruiting, and then at a much larger virtual-worlds startup called There—to how he’s dealing with his new fame. For lean startup junkies who want the really deep dive, I’ve typed up the full 11,500-word transcript, which you can read here. Below, I’ve distilled the most quotable parts of the conversation into something more digestible.

I wanted to know how Ries’s own experiences as a software engineer contributed to the Lean Startup theory, so we spent a lot of time on his years at Catalyst and There, a virtual-worlds startup where he first met key mentor Will Harvey. But later in the conversation, I pressed him on elements of the theory that, to me anyway, seem overly cold-blooded, practical, and market-driven. In particular, there’s a tension in Ries’s theory between the need for a strong product vision and the need for constant adjustment of that vision in response to customer feedback. The more often a startup “pivots,” to my eyes, the less likely they’ll end up building anything that corresponds to their original inspiration. Ries’s entirely reasonable rejoinder is that if parts of the original vision are crazy or superfluous, it’s better to find out early. Here’s Ries in his own words.

Introduction to entrepreneurship during the dot-com era:

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. I couldn’t believe you could get paid to do it as a career. 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 … Next Page »

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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  • Concerned Reader

    Sick of this guy those who can’t do….teach.

  • http://www.xconomy.com/author/wroush/ Wade Roush

    @Concerned Reader — Ries may be overexposed, but I don’t think you can write him off as a practicing entrepreneur so easily. IMVU is a pretty successful company, with $22 million in revenues last I checked. Ries has constructed a *very* successful one-man business around his speaking, writing, and consulting work. And he surely will be able to raise as much venture funding as he wants, once he decides to get back in the game. I’d say it’s important for those who *can* to stop *doing* occasionally and share what they’ve learned.

  • 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?

    Possibly a single point of potential failure to rely only on this strategy?…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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  • Sam J

    Arm yourself with decades of business wisdom within 2 daysChk out http://www.TheBillionairesBrain.com