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

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you had to listen to customers. Will Harvey is a more traditional visionary. He has that power. I think he is a brilliant guy. I am not, in the way that he is. He would always say, correctly, that customers don’t know what they want, so why would you talk to them. I wanted to talk to customers, but I never had a good answer to that objection. I just knew that I didn’t want to have a There experience over again. So it was very fits and starts. We didn’t reconcile how you have a vision and talk to customers. We didn’t understand how vision, customers, and analytics go together. We had the classic divide: “We have to do analytics for our board for some reason we don’t understand, that can’t actually help us do this stuff.” I wanted us to be more scientific about our decision making, so I wanted us to do things like split-test experiments. Again, that was considered so crazy. It’s so commonplace now that it’s hard for me to explain to entrepreneurs today why they get weird looks when they talk to older people. It just was considered very strange.

X: Well, it was clumsy and difficult, for one thing. There were no tools.

ER: There were no tools. You had to build everything yourself. You had to figure out what data mattered and interpret it yourself. Just to give one example, we had to show progress to our “board,” which was basically a group of industry luminaries that Will had gotten together. Will is the guy with the stature to recruit talented people to want to be involved with us. They didn’t know me from Adam. But we wanted to show progress from the beginning. We had given ourselves revenue targets. We thought that would be a good way to kind of prevent us from going off the rails. So we had these revenue targets—really small, I mean $300 a month, $350, $400. But we had a plan and we wanted to show progress every month. So the way it worked was, the night before the board meeting, we’d run our home-grown analytics and make reports. And we’d have fancy graphs. And we’d take them to the board meeting. We expected every time that the numbers would be up and to the right, because we worked really hard the last six weeks and made the product way better and surely the numbers will reflect that. And we had several board meetings in a row where they weren’t. We were really disturbed. It’s a hard board meeting to have. You have to come in with a lot of razzle-dazzle to show progress elsewhere.

And in fact, ironically it really helped to build my stature. I was the engineering leader, and part of the razzle-dazzle was showing off cool new product features we had built. Our team was supernaturally productive, partly because of these techniques and partly because of the talent of the team. The board thought I was a magician and that I could pull features out of a hat at a crazy pace. Anyway, so, it took us a little while to realize that we should run the reports more frequently than the night before. Any entrepreneur that did not have that level of understanding today, you would just smack them around and say “Come on.” Everyone knows analytics are a core part of business. But that wasn’t the belief. So Steve was the one telling us, “Get out of the building, go talk to customers.” But if we hadn’t also been making these analytics-based decisions, we never would have done it. Because part of the disease of having too good of a vision is that you can’t fail. And if you can’t fail you can’t learn. So the analytics had to create a feeling of failure for us to take Steve’s advice. Otherwise we would have just paid lip service but not really done it.

X: Maybe we should fast-forward a little bit. How would you describe IMVU’s ultimate success or failure?

ER: Oh, I think of it as a success. I’m not there day to day. Its ultimate fate is still to be determined. It is a profitable company. It’s more than 100 employees now, doing really good work on top of the organization we created.

X: And the product concept is one that you feel found its market?

ER: Yeah. Look, I have big big hopes for the level of mainstream adoption it could have. We’ve created tens of millions of avatars. I hope one day it will be hundreds of millions. I think the current team really has their eyes on the prize. It’s very good, but it could be bigger. But what I’m proud of is I feel like I left a legacy there of it being a value-creating, well-run organization. That’s the management thing I’m most proud of.

X: Was it a straight line from IMVU to your current life? What happened in between?

ER: I have no idea.

X: You didn’t really go out on the lecture circuit until 2009.

ER: Listen, I am an introvert. So public speaking does not come that naturally to me. Being in the public eye like this, I never sought that out. I had a very low profile, even by Silicon Valley profile standards, when I left IMVU. But I had enough of a profile that I was being asked to … Next Page »

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Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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2 responses to “Eric Ries and the Origins of the Lean Startup Theory—The Full Xconomy Interview”

  1. 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?