“Lean Startup” evangelist Eric Ries is just getting started

May 26, 2011

— Connie Loizos is a contributor for PE Hub, a Thomson Reuters publication. This article originally appeared here. —

“Except in very narrow cases, where there’s breakthrough science that needs patent production, worrying about competitors is a waste of time,” Eric Reis told me. “If you can’t out iterate someone who is trying to copy you, you’re toast anyway.”

Ries speaks with confidence, likely because people seem to listen. In fact, he’s become one of Silicon Valley’s best salesmen, largely by preaching what seems to be common sense: in order to maximize resources, companies need to find out what customers want as quickly as possible and capitalize on those findings.

Just one indicator of Ries’s power: entrepreneurs from 100 countries watched his sold-out, second-annual “Startup Lessons Learned” conference streamed live recently from San Francisco. (Its aim? “To unite those interested in what it takes to succeed in building a lean startup,” said Ries.) Another indicator: Ries’s new book, “The Lean Startup”, doesn’t come out until September, but is already the 11th-most popular book in the business and investing section of Amazon.

Ries, 32, never expected he would make his mark as a tech evangelist. A Yale grad who studied computer science, he began his career as an entrepreneur while still in school. (He now calls his short-lived startup, Catalyst Recruiting, “a footnote to a footnote.”) But even then he found himself “considered not only an expert in programming but in startups” by local incubators and two venture firms who asked him to be an adviser.

He’s quick to note the absurdity of the situation. “We spent all (of Catalyst’s) money on marketing, thinking there would always be more. Based on what I was reading in magazines at the time, I thought the rules for entrepreneurship meant being at the right place at the right time, working hard, breaking all the rules, having great perseverance, then pounding the keyboard some more and having a beer.”

A broader network of people began listening to Ries in 2008, after he began espousing lessons he’d learned as the CTO and co-founder of the 3D virtual world IMVU. Many of those lessons centered on figuring out what works as quickly as possible through constant iteration and customer feedback. (IMVU, which Ries left four years after its 2004 founding, used to toss fresh code into its production cycle 50 times a day, he said.)

Indeed, partly because of his emphasis on trying new code in live environments, he said, “I was always (asked to sit) on advisory boards. But when I’d suggest that you don’t need to trade off between time and quality, people thought I was nuts.” They also kept calling Ries, so eventually, some of his mentors suggested he write it all down. Within six months of writing his first blog post — titled “The Lean Startup” – the “idea took over my life,” he said.

It might be more accurate to say it took over Silicon Valley. Though the term “lean” was first coined in the late ‘80s to describe Toyota’s business process, Ries’s pronouncements about lean startups began to strike a new chord last year. Perhaps the high point came when venture capitalists Ben Horowitz and Fred Wilson publicly debated whether the concept of “lean startups” made sense. (Said Ries of Horowitz, who wrote a widely read post entitled “The Case for the Fat Startup”: “I was flattered that Ben would use me as a straw man to knock down for his own purposes, but his argument was really orthogonal, about having the courage of conviction. It was just controversy-making.”)

The question at this point is whether the “movement” has become too popular. Though Ries argued “lean” has never meant cheap – “‘Lean’ has nothing to do with how much money a company raises,” he said – countless “lean startups” have taken root in the last three years. And some critics grouse that they’re so “efficiently” run that they’re keeping talent away from truly promising companies.

It isn’t a new problem, argued Ries. “It’s a fact that a lot of skilled people are working at doomed companies, and that’s bad, because the most precious resource (in business) is the time, energy, talent, and creativity of these people,” he said. “But when this boom or bubble ends – this insanity won’t last – we’ll still have doomed companies.”

In the meantime, Ries will keep honing his own business — as a sought-after expert on constant iteration.

Ries points to the wild success of the daily deals service Groupon, which switched gears before going out of business and has since become a multi-billion dollar phenom. “We are just at the beginning of this movement,” Ries said. ”I think we’ll look back and laugh at the way we’ve been building companies.”

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Are there any truly successful startups who used the lean startup methodology?…

“Ries points to the wild success of the daily deals service Groupon, which switched gears before going out of business and has since become a multi-billion dollar phenom. “We are just at the beginning of this movement,” Ries said. ”I think we’ll look …

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