Reflections on a movement | Eric Ries (creator of the Lean Startup methodology)

1. 0:00 – 4:46

   Eric’s background

   1. EREric Ries0:00

      ... people act like having a startup fail is the worst thing that can happen to you. I'm like, "Man, that's not even in the top 10." Like it's b- it's bad. I mean I've d- I've done it. It's awful, okay? It's really bad. But far worse is to be in a company that won't die, a zombie undead company that you hate but you can't leave. Oof, have I met people like that. And like, we're having a mental health crisis among founders that's like not talked about enough. You know, people have started to talk about like the downside mental health risks. Obviously the stress of being a founder is hard, but like look what's happening to the people that are so-called successes. Like, I, when you build a company and you sell it out and it becomes something that you find abhorrent, like yeah, maybe you get rich but it's, it's not, it's not good. And so building a company you hate that, that becomes a malign force in the world, you know, that you have to go pretend you weren't involved with or that like you feel complicit in what ... Like, that's way, way worse and I wish more founders would take that more seriously early on.

   2. LRLenny Rachitsky0:56

      (instrumental music) Today my guest is Eric Ries. If you're not familiar with his work, I would be shocked. He is most famous for creating the Lean Startup methodology and movement, and also his incredibly influential book, The Lean Startup. He also coined more terms and concepts that are part of the tech culture than anyone I could think of. He currently spends his time advising founders and startups. He was a former founder and CTO, and currently is the founder and executive chairman of The Long-Term Stock Exchange. This is now my favorite episode of the podcast and I can't wait for you to hear it. In our conversation, we cover a lot of ground, including the current state of the Lean Startup movement, where he sees things heading, what Eric would re-do if he could do it over again, misconceptions about the methodology that frustrate him most, how AI will likely impact product development in startups, how to think about MVPs correctly, when to pivot and when to stay the course, also how to build a business with values that are aligned with human flourishing. Also, tons of amazing stories and lessons, and there's just so much gold in this conversation. And so with that, I bring you Eric Ries after a short word from our sponsors. This episode is brought to you by Sanity. Your website is the heart of your growth engine. For that engine to drive big results, you need to be able to move super fast, ship new content, experiment, learn, and iterate. But most content management systems just aren't built for this. Your content teams wrestle with rigid interfaces as they build new pages. You spend endless time copying and pasting across pages and recreating content for other channels and applications. And their ideas for new experiments are squashed when developers can't build them within the constraints of outdated tech. Forward-thinking companies like Figma, Amplitude, Loom, Riot Games, Linear, and more use Sanity to build content growth engines that scale, drive innovation, and accelerate customer acquisition. With Sanity, your team can dream bigger and move faster. As the most powerful headless CMS on the market, you can tailor editorial workflows to match your business, reuse content seamlessly across any page or channel, and bring your ideas to market without developer friction. Sanity makes life better for your whole team. It's fast for developers to build with, intuitive for content managers, and it integrates seamlessly with the rest of your tech stack. Get started with Sanity's generous free plan, and as a Lenny's Podcast listener you can get a boosted plan with double the monthly usage. Head over to sanity.io/lenny to get started for free. That's sanity.io/lenny. You fell in love with building products for a reason, but sometimes the day-to-day reality is a little different than you imagined. Instead of dreaming up big ideas, talking to customers, and crafting a strategy, you're drowning in spreadsheets and roadmap updates and you're spending your days basically putting out fires. A better way is possible. Introducing Jira Product Discovery, the new prioritization and roadmapping tool built for product teams by Atlassian. With Jira Product Discovery, you can gather all your product ideas and insights in one place and prioritize confidently, finally replacing those endless spreadsheets. Create and share custom product roadmaps with any stakeholder in seconds, and it's all built on Jira, where your engineering team is already working, so true collaboration is finally possible. Great products are built by great teams, not just engineers. Sales, support, leadership, even Greg from finance. Anyone that you want can contribute ideas, feedback, and insights in Jira Product Discovery for free, no catch. And it's only $10 a month for you. Say goodbye to your spreadsheets and the never-ending alignment efforts. The old way of doing product management is over. Rediscover what's possible with Jira Product Discovery. Try it for free at atlassian.com/lenny. That's atlassian.com/lenny.

2. 4:46 – 6:23

   Eric’s recent activities and projects

   1. LRLenny Rachitsky4:46

      Eric Ries, thank you so much for being here. Welcome to the podcast.

   2. EREric Ries4:50

      Thanks for having me.

   3. LRLenny Rachitsky4:51

      This just feels very surreal, to have you on the podcast feels like a surreal experience. You're such a legend in product and in startups-

   4. EREric Ries4:57

      (laughs)

   5. LRLenny Rachitsky4:57

      ... and I'm just really excited to get to learn from you and for listeners to get to learn from you. And my first question is just, what are you, what are you up to these days? I know you work on The Long-Term Stock Exchange. What else is going on in Eric Ries' life?

   6. EREric Ries5:09

      Yeah, you know, if you can believe it, The Lean Startup came out in 2011, so it's, it's been a little while now and it's been such-

   7. LRLenny Rachitsky5:16

      Wow.

   8. EREric Ries5:16

      ... a crazy ride. And basically every year since it came out, I keep thinking, "All right, that- that's the end. That's- surely that's enough." And, and just each year it gets crazier and crazier and new things come my way. So yeah, it's, uh, I definitely, you know, I'm, I'm building The Long-Term Stock Exchange, uh, LTSE I'm sure we'll talk about, and you know I spend a lot of time still with, you know, with founders and with big company execs, you know, trying to answer their questions about how to build companies in the right way. Obviously been sucked into a lot of AI stuff of late, uh, as, as everybody is. And one of the interesting things that actually surprised me is I spent a lot of time the last 10 years working on the issu- you know, issues of governance and corporate governance and how companies should be structured, not really with an eye towards technology in particular but just, you know, with long-termism and, uh, and humanism really at its, at- at its core. And it turns out that those questions have just become, like, really acute-... uh, for, for AI companies. So, so because of my work on governance, I wound up meeting with and, and getting to work with, uh, some of the top AI companies, so it's been ... That's been really interesting. But yeah, I, I feel like I just, I go where the issues that are on people's minds go and it, it kind of pulls me into new and really interesting things all the time.

3. 6:23 – 10:56

   Eric’s start in advising and first-principles thinking

   1. LRLenny Rachitsky6:23

      Amazing. Okay, so um, I'm gonna wanna talk about all those things as we get into this. Something I wanted to mention is I feel like people don't give you enough credit for how many core concepts of startups and product building you've either invented or popularized. So, what I know, obviously lean methodology, then there's the term MVP, then there's the term pivot, and then a- also I think A/B testing, customer development, continuous deployment, vanity metrics as a term. I'm guessing there's many more. And then the long-term stock exchange, and I think the theme I get from this is there's a lot of first principles thinking that you've done. And so just a couple questions here. One is, did you think you'd have this much impact on startup culture and language? And then just where do you think this comes from, this first principles thinking that you seem to be really good at?

   2. EREric Ries7:13

      Well, first of all, thank you for saying all that. That's, that's, that's, that's giving me too much credit, but I, I like the idea that it's gonna balance out the too little credit I, I ostensibly get somewhere else. That's, that's, that's great. (laughs)

   3. LRLenny Rachitsky7:22

      (laughs)

   4. EREric Ries7:22

      You know ... No, I mean to answer your question, no, I didn't know this was gonna happen. This is so embarrassing to admit now, but just to give you a sense of how different the world is now than at the time of the financial crisis. I was so embarrassed to be blogging that I didn't put my name on the blog. I published it anonymously because it's like a- a wasn't a thing that people did and people told me it would be career suicide, and there were so few startup bloggers at that time, that like the big, the top three all reached out to me personally because they saw in their referrer logs on their website. That's how little traffic they got, that like when a new person started writing about their thing and linking to them, they were like wrote, "Who is this guy? What's going on?" I like, it was, it was a very different, it was a very different time. And I had, you know, I had just finished a startup. I left a startup that was being successful, and I had this reputation among VCs that, you know, I could make engineering teams be supernaturally productive. I had like the magic pixie dust. And so they would ask me to come in and work with their teams and I would be like, "No, listen. Uh, honestly I'm not that special. It's nothing to do with me, it's just, you know, uh, this framework. I have this, these ideas that are, that are helpful in a team if they adopt them." And they were like patting me on the head and be, "Yeah, kid, I'm sure that's great but, uh, can you please bring the magic pixie dust to my company?" You know? (laughs) Anyway. And I would go and have these meetings, and I'm not making this up. People would yell at me in the meeting. I would get yelled ... In fact, I would be like asked not very kindly to leave. And, and I'd be like, "I don't understand. What are you yell- like why are you mad at me? I, you asked me for this meeting." And they'd be like, "What?" And I'm like, "I'm just telling you what I witnessed with my own eyes, that we at IMVU, we, we ship product 50 times a day on average, in a time when people were like lucky to be doing it monthly if they were really advanced." Remember like it wasn't that long ago that we put the year the product came out in the name of the product. That tells you what cycle times used to be. That was considered normal. And people were like, "That's impossible. That could never work." And at, at that time, I wasn't even propounding a theory or anything. I was just explaining what I had seen and people couldn't, uh, couldn't believe it. And so I had this great idea if I write some of these stories down, then when someone asks me for these meet- I was doing these meetings all the time. I didn't understand the way Silicon Valley worked at that time. I didn't understand why this was happening to me. Having these meetings and I, so I would write this story down and then I'll send people the essay and if they think it's crazy, then we don't have to have the meeting and I won't get yelled at.

   5. LRLenny Rachitsky9:38

      Hm.

   6. EREric Ries9:39

      Like that was really as far ahead as I was thinking at that time and then, you know, it, it basically took over my life and I was being asked to speak. Um, people really wanted to unmask the anonymity. Who is this person? Uh, and so I came clean. I, I (laughs) identified myself and, and started writing and, um, speaking and working with companies and it just, it, it became, it became a whirlwind. The first principles part of it, I just, I don't know, I've always been wired that way. I, I feel like maybe I'm a failed scientist. Like I wish, I wish I was actually good at chemistry or something, I could have actually been a real scientist. But I, I always really had a respect for the truth, for scientific thinking. That was big cultural value that I was raised with. My parents are doctors, you know, just definitely part of my upbringing and, and I was really into reading stuff that, that worked that way. So it was very natural for me, I felt like as I had success as an entrepreneur, I wanted to know why does this work and what, what ... People gave me advice, you know, all the advice used to be of the form, you know, Steve Jobs once did this thing, so if you do it too, you'll be like Steve Jobs. And it's like well, he also wore the black turtleneck, is that, is that also part of it? Like what ... Help me understand why does it work and is it still appropriate and

   7. NANarrator10:40

      (laughs)

   8. EREric Ries10:40

      ... does it make sense for that industry or not? I didn't like these just so stories. And I realize looking back, I didn't have this understanding at the time, but looking back, I feel like well first principles thinking, it really has two components that people pretend are one thing, and it's more one than the other.

4. 10:56 – 14:04

   Lessons from designing the Lean Startup process

   1. EREric Ries10:56

      A lot of my work is just descriptive. It's not actually telling people what to do, it's simply giving a name and a concept to a thing that already happens. Like that's the funniest part. In the early wave of criticism against Lean Startup, people were very angry at the idea that I was saying that a startup is an experiment. Like you can't treat a startup like an experiment. I was like, "Well, you can treat it however you want, but it is an experiment." People will be like, "Well, I don't think it ..." You know, like people don't like the concept of pivot. There's still, there's anti-pivot people, anti-MV people every once in a while come out of the woodwork still to complain about it. It's like, "Well, I'm not telling you that you should pivot. I'm just saying like that is what it's called when you change the strategy but try to have fidelity to the vision." Like we, it needs a name because we do it all the time and even when we don't do it, we talk about doing it-

   2. LRLenny Rachitsky11:37

      (laughs)

   3. EREric Ries11:37

      ... and we can't reason about it if we can't ... And, and so uh, so that, like there's this descriptive part, and then that's the real work honestly is just saying like what is ... Like to me the big question wha- from the beginning was like what is a startup really? Why is it so different from a big company? Why does, why did none of the best practices that I learned in my career work? You know (laughs) it's like it wasn't ... It was just like a survival mechanism, I wanna know. And then once you've identified what it is and laid out the, the, the original principles of like what you're trying to do-The prescriptive parts are just a matter of deductive logic. It's like, well, okay, given that we've made this hypothesis, like what does that ... what are the implications of that? And of course the prescriptive parts are important because that's how you learn whether your hypothesis is correct. So that's the other thing I think people don't appreciate. People, pe- people call me a first principles thinker, which I, you know, I love that. I always take it as a big compliment but I feel like it conjures up to people this idea that I, like, sit in a cave for years and years and, like, conjure up, uh, the magic idea. It's like, no, I wish people had all the outtakes of all the concepts I've tried. (laughs) You know, like, a- at least I know it wasn't my first try, you know, the conceptual vocabulary. It was not the first time I got it right. It came through a lot of trial and error, a lot of trying to figure out what works and doesn't work. First in my own career, my own work, then trying to give advice to other people and trying to translate what worked for me to see what would work for them and then to answer the questions that I thought were the natural ones. Under what circumstances does it work and what are, or wha- when, when would it not be appropriate? What predictions does a theory make that we could then go see if are true or not true? And then the kind of the bigger picture thing is like what are we really doing here? Like what does success even look like? And so like ho- like that, I think, is the thing we all really grapple with is, you know, it's very easy to come up with a theory or a method or a process that produces the maximum of something. But then it's like, well, is that ... is that thing good? You know, is that actually helping us accomplish some kind of goal? And so that, you know, I think that first principles thinking is very helpful for, for that too. But yeah, I don't know. I guess I've ... uh, but to, to really answer your question, the truth, true answer is I don't know. I was just ... I've just always felt like I was wired that way. I, I have a love of ideas and, and want to know why things work.

   4. LRLenny Rachitsky13:39

      So to me, a couple of takeaways from what you just shared. One is just you're wired to think in a specific way of thinking very logically, scientifically. I have a similar, uh, feeling where someone tells me a story. Like the way I started writing partly is people kept asking me questions about how Airbnb did stuff because they're building their marketplace. I'm like, "Here's what they did but who knows if that was the way to have done it?"

   5. EREric Ries14:00

      Yeah. Yeah. Exact- exactly. (laughs) Did they succeed because of that or in spite of that?

5. 14:04 – 22:33

   The current state of lean startup methodology

   1. EREric Ries14:04

   2. LRLenny Rachitsky14:05

      Let's d- dig into The Lean Startup method and methodology. Feels like we haven't heard an update on just, like, how things are going, where it's going, the s- how popular it continues to be. I'm curious just what's your sense of the state of the lean methodology and the lean startup movement?

   3. EREric Ries14:20

      Oh, it's an interesting question. You know, we used to do a lean startup conference every year and then I j- I stopped because of COVID and we haven't, we haven't resumed yet. So it was like we used to have, like, an annual opportunity to, like, bring people together, assess the state of things, hear the latest updates and stories, and then we ... I, I've, I really feel the, the lack of it. I miss it. Um, we tried to do online versions but it just, it wasn't ... e- uh, I, I really feel the, the lack of it. I miss it. Um, we tried to do online versions but it just, it wasn't ... e- I didn't, it didn't feel right to me. So part ... and that's partly, you know, it's COVID and, and the thing th- our world has been going through the last few years but it's also partly I didn't understand what it would be like to start a movement until I'd actually done it. And I just ... I remember the first conferences we did, the first events we did had the feeling of a religious revival. People were like, "We've got the new thing. We are gonna stick it to the man." And I, I really thought, "Okay, my job is gonna be to lead these hordes into battle." I really had a, like a martial metaphor. I even used it just a second ago. Combat of ideas. I was ready for, like, the old ideas are gonna, like, fight us to the death and we're gonna win. And, and it's not like that at all. We, we charge onto the field and no other army ever came to charge us back. Like, it just ... we won by default because the people who were doing it the old way didn't really like it or want ... Like, there was very few defenders of the old way. Like, very few people came out and said, "Actually, no, stage gate is actually still the correct product idea. You've, you know, you've got it wrong." It just ... it never, it never happened. And in fact in the h- like the, kind of the, the, the fancy startup people went from dismissing it as, like, totally pointless to complaining that it was over-hyped and over before ever passing through the intervening stage of finding out what it was. That was really interesting. I'll never forget, like, TechCrunch, like, had an article, this is years and years ago, about how, like, lean startup was over-hyped and I was like, "You haven't even talked ..." Like that's your, that was the first entry point to talking about it. I was like, "Would you, could you at least learn to use the word pivot correctly and then, then criticize it for being over-hyped? Is that, is that at all possible?" So it went from, like, insurgent revival to just the default thing that people did. Even the people that disagree have to carry the meme in order to criticize it. So it's, it's, it's ... it was fascinating to find myself on the other side of this thing and, and, you know, when I would meet young founders coming into the industry for the first time and they're like, "Seems obvious." And I'm like, "What? It was only five years ago that people thought this was, like, cra- so crazy they're yelling at me. Now you think it's ob-" It's, like, it's really interesting to have something go from controversial to obvious.

   4. LRLenny Rachitsky16:51

      Mm-hmm.

   5. EREric Ries16:51

      And, you know, and of course tons of people who were really opposed to it at the beginning came back. You know, now they say that they knew it all along and they were my big ... You know, just you see, you see how it changes peoples' minds. So it's hard to generate that religious energy and excitement around something that everyone views as obvious and it, it, it really was hard for my ... Just, like, as a, as an ego matter I want the validation of the winning and the this. And I realized at a certain point that, like, the victory is not that this fancy company, you know, used it or whatever. Like, it ... The, the victory actually is in the stories that people tell me about how the book was helpful to them. And that's, that's really, that's the whole ballgame. We don't have to do ... No one ha- no one had to lose in order for us to win. You know, there's not ... People will some- used to ... I don't do this ... People don't do this as much any more but occasionally someone still who wants to, like, make a fight between lean startup and agile or agile and design thinking or this and that. And, you know, I tried really hard. If you look at Lean Startup it is full of citations and connections to Six Sigma and lean manufacturing and design thinking and customer development and, and DevOps and software craftsmanship and every- everything I could fi- 'cause I, I really wanted to show how these things work together. And, and then, then, then we went through a phase where people wanted, wanted me to, like, make it into a religion for real. Uh, people used to write me and say, "So-and-so on the internet is writing about Lean Startup and they're wrong. You need to make them stop."It's like, "What, what power do you think I have to make someone stop writing?" And I'm like, "They can write whatever they want." And then the other thing that people said was, "Well, Lean Startup is about this particular set of practices. If someone finds a new practice, they're a heretic and need to be excommunicated." And it's like, "Guys, no, no, no, we... I wrote extensively in the book, did you read?" It's a scientific theory which means that, that whatever works is Lean Startup. So if someone comes up something new and it works, we can't be threatened and upset about it, we have to adopt it. Well, when you have that attitude that whatever works is the thing, that like the truth is what matters and like people's quiet moments of helpfulness, like that's, that's our metric of success, it kind of takes the, like, hype and drama and, you know, stuff that drives, like, press coverage and what- it takes it all out of it. And I don't miss it at all. Like I think it's... I feel much happier doing that than I ever did when we... when I- I used to travel a lot and do a lot more, uh, uh, public stuff and I think partly, again, partly the change is COVID and not... you know, conferences went away for a while, so there was like a quiet, quiet time. But I feel like it's actually been really amazing, like that's what victory looks like. It's not about... they, they don't throw you a parade and say the thing... and even though people who are your critics just don't grumble about it, but like at the end of the day, the new entrepreneurs who come in just take for granted that this is the conceptual vocabulary of entrepreneurship and then they do with it what they will. And I've learned to really, you know, appreciate that as much as my ego, of course, likes to get into fights with people. (laughs) It's like, "No, that's actually... that's, that's better and that's what winning looks like."

   6. LRLenny Rachitsky19:42

      Yeah, it's so interesting that it's just... you've done so well in communicating these ideas that it's just become part of the culture and people don't even think about, "Oh, Eric Ries came up with all these things." I also feel like people push back at you on the things they disagree with and then they never give you credit for, like, the things that work great. It's only like, "Oh, no MVPs don't work anymore."

   7. EREric Ries20:03

      Yeah, yeah. People p-... once a year at least, someone still writes to me and says that they... "We should have used a different term for MVP, that the misccon- the misconceptions around MVP are, are driven by the choice of the term." And I always write them back and say like, "Please tell me the better term and popularize it and I'll use it." (laughs) You know, it's a great idea. Like I, I'm, I'm more aware of the limitations than anybody else. And I'll tell you another thing that I think people don't appreciate, and everyone wants to be a thought leader these days, it's like a, a disease. When Clay Christensen died, you know, I knew him and admired him a, a, a great deal and, you know, his endorsement of my work was like one of the most important... like for, for me like, uh, from the old guard of management thinkers, for him to say that it was worthwhile was like really a big deal to me. And yet there was this big debate, it's now a little bit older now, about whether he's responsible for all the bad things people have done in the name of disruption. And the first part of me is like, "That's an outrageous slander on Clay, like that's so unfair, a bunch of tech bros, like, use disruption as a code word for all kinds of dumb stuff, has nothing to do with his theory, has nothing to do with his work." It's like, "Have they even read the work, man?" So, so I wanted t-... like, I was one of his defenders, you know, and especially after he passed I was feeling... I was very emotional about it, it's not fair. But then the more that I've sat with it, the more I thought, "Gosh, maybe we are a little bit responsible for the things we put into the world." And it's terrifying because of course you can't control what people do, you can't control... like people, a lot of people are willfully ignorant. You know, wh- whenever someone says something where I'm like, "Gosh, five seconds on Wikipedia and they could have found out the truth about the thing they're talking about." So, you know, we live in an era where ignorance is optional. That's cool. And also a little bit scary. So like, I think taking on that responsibility... this is true for anyone who makes a product, I think, it's not actually unique to authors at all, when you make something to put out into the world, on the one hand, you don't have any control about what happens next, and yet I do think we bear a certain responsibility about, was it in fact net positive, but was it helpful to people? And so I try... it's like part of what motivates me to try to really get it right and not just get it right for my own satisfaction, but get it right as evidenced by what happens when people use it. And that's why... I mean, that's why testing and experimentation is like such a big part of my life and my theory. Like, like to me that's how we, we square the circle of our responsibility in a highly uncertain world, is you go find out what happened when people use the idea, and if it's not right, you know, even af-... even after their misunderstandings, it's still not right, then you've got to make it better and find a way to communicate it more clearly. So it's kind of a, uh, an eternal challenge,

6. 22:33 – 24:28

   Common misconceptions about the methodology

   1. EREric Ries22:33

      but I think an important one.

   2. LRLenny Rachitsky22:35

      Along those same lines, is there a misconception of Lean Startup or any of the other things you put out that just kind of really frustrates you, that just is a recurring misconception that people just continue to get wrong?

   3. EREric Ries22:46

      You know, I wrote an article, God, five or 10 years ago, God, I can't even remember how many years ago now, it was like top misconceptions about Lean Startup.

   4. LRLenny Rachitsky22:55

      (laughs)

   5. EREric Ries22:55

      And it was like, number one, lean means cheap. So you're doing Lean Startup, it means you're not raising money. It's like that's, that's not true. And then, you know, I'm trying to remember what they are

   6. NANarrator23:03

      (laughs)

   7. EREric Ries23:04

      ... (laughs) what they are, it's like... they're... and they're all still prevalent, you know, like nothing's changed, I could write that same article today, it's like Lean is opposed to having a vision, you know, if you have... yeah, if you were really visionary, you wouldn't do experimentation, experimentation leads to local maxima and, you know, it, whatever. It's just like... I, I'm... I read it in somebody's book that, that they were like, "That's what Lean is about." And I was like, "Man, did I forget to write it in the..." like, I was so gaslighted that I went... I actually went back and cracked open a copy of The Lean Startup and I was like, "On what page do I address this?" It was like on page nine in the introduction. It was one of the first things in the book. I was like, "Okay, phew, I did say it." So like that's pretty common. You know that turn the crank thing about optimization, that's pretty common. And then like pivots, people perennially misunderstand what a pivot is and like wha- whe- again, whether that's a descriptive or prescriptive thing, I... you know, it's... is, is really tricky. And so, you know, like, it's like those are... I feel like at this point people are just being willfully ignorant. It's like it's okay to criticize Lean Startup, there's no problem, that doesn't bother me. I think you shou- it's, it's good to do s-... it's healthy to do so, but like to just trot out those same old things, you know, doesn't... like what are you... like how does that advance the state of the art and how does that help entrepreneurs in any way? And it's like... and I'm not even really sure what they're trying to accomplish.... by doing that. That's the thing that I've, I've grown confused about is like what is the purpose of this discourse?

   8. LRLenny Rachitsky24:20

      Hmm.

   9. EREric Ries24:20

      Other than just to kind of be reflexively contrarian, I don't know.

   10. LRLenny Rachitsky24:23

       Get some likes on Twitter/X.

   11. EREric Ries24:26

       Hmm. Maybe

7. 24:28 – 27:52

   Changes Eric would make in an updated version of Lean Startup

   1. EREric Ries24:28

      you're right.

   2. LRLenny Rachitsky24:28

      (laughs) So along those same lines. So you wrote the book 12 years ago. If you could go back and change something in the book, is there something that you would want to change?

   3. EREric Ries24:39

      Oh man. I would, I would change everything about it.

   4. LRLenny Rachitsky24:41

      Hm.

   5. EREric Ries24:41

      It's why actually why I won't let myself do it. When I wa- when I was a consumer of books, I hated it when authors would come out with a second edition that would destroy what was beautiful about the first edition, including the mistakes. Because like in their attempt to put disclaimers on everything and make everything more nuanced, you'd like totally lose the thrust of the argument of the thing they were trying to do and their own, you know, like becoming famous like really messes with you psychologically. So like you don't, you don't want to expose your readers to that. Like go, go get therapy. Don't, don't make me, don't like destroy the thing that made your book amazing. So like as an author, of course I think it, uh so many elements of it could be, could be improved. The one that is the most glaring to me ... Well, I guess there's two. I'll mention two just, just 'cause they're relevant. One is I'm a little embarrassed. There's a chapter in kind of towards the end of the book where I talk about the scaling of Lean Startup. So it's like okay, you've, you've had success now. What are the principles for which how you scale up a big enterprise now? You know, that has many lean startups within it, and stuff like that. And I don't think I wrote anything wrong in that section, but I really cringe to read it now because it, it's so blithe and just like step one, do this. Step two, do that. Like (laughs) you know? It makes it sound so easy, it is so simple. And of course like I've subsequently written a whole book longer than Lean Startup just to illuminate those principles and explain how they work in real life 'cause I actually had the privilege of getting to go do that with companies of like really extraordinary scale. So uh, I'm a little embarrassed now to be like I, I made it sound so easy. I hate to, I hate to mislead any entrepreneurs into thinking any part of entrepreneurship is gonna be easy because that's, uh, it's just setting people up for disappointment. And the other funny bit is, you know that meme on Reddit, the Star Wars meme where, where Anakin Skywalker says, "I'm gonna change the world." And Padme's like, "For the better, right?" And then pause and she's like, "For the better, right?" I feel like that is like the meme of our time for the tech industry. Like every company was about changing the world, and we forgot to ask for the better, right? I always just took it for granted that our goal was to make the world a better place. Like that's how, that was the values I was raised with. That's what I thought we were doing. And I was railing about it for a while and I got really, I would get depressed. Do you remember Don't Be Evil? And there's been all these moments in the tech industry where it seemed like we were gonna really do something extraordinary and then just like the things that these companies become is so depressing. And I was like, "Well, I, I at least made it clear." And then I was like, "Did I?" Again, I, like I went, I actually went back and reopened the book and I was like did I tell anybody that they should change the world? And if I did, you know, I assume I specified for the better. And it's actually right there in black and white, like right in the introduction of Lean Startup, one of the lines. It's like a throwaway line, you know. "This is the technique that will give the entrepreneurs of tomorrow the tools they need to change the world." Period. And I'm like, "No, I should've said for the better. I didn't know I had to say it."

   6. LRLenny Rachitsky27:26

      (laughs)

   7. EREric Ries27:26

      I thought it was obvious. I thought we all agreed. So I kind of feel like that is also a major oversight. And you know, I'm making light of it now, but like it's had catastrophic consequences. Not really I think s- I don't think Lean Startup has led people in that way. I think it has much more to do, you know, with other, with other social forces. But like, but I feel bad that I missed my chance to like take a stand on something that, that has turned out to be quite important.

   8. LRLenny Rachitsky27:47

      So you saw me tweet uh, a call for people to ask questions-

8. 27:52 – 37:36

   An explanation of minimum viable product (MVP) and why Eric still stands by the process

   1. EREric Ries27:52

      Ooh yes. Yes, I'm really excited.

   2. LRLenny Rachitsky27:53

      ... in the chat today. So I have a few questions from the audience. The first is around the concept of MVPs, MVPS. Um, so Kari Saarinen who was actually on the podcast recently-

   3. EREric Ries28:03

      Oh great.

   4. LRLenny Rachitsky28:03

      ... founder of Linear, had a question around MVPS. And his question is essentially if you still believe that MVPS, essentially shipping very basic versions and iterating is the way to go given that user expectations have risen a lot in-

   5. EREric Ries28:17

      Hm. Yeah.

   6. LRLenny Rachitsky28:17

      ... many markets. IOS apps for example where productivity, software, things like that.

   7. EREric Ries28:21

      Yeah. Yeah, yeah. Oh, I love that question because first of all I get it, I get it a lot and also it's, it's important for us to really understand like people, people think that MVP is about a specific tactic. So like an MVP is like a bare bones, stripped down thing that will crash your computer. But it's not. That's not anything to do with MVP. MVP is simply for whatever the hypothesis is that we're trying to test, what is the most efficient way to get the validation we need about whether a hypothesis is true or not? And so part of a successful test is to understand what are the demands of customers in our market? Now the funny part is people have a real fear of failure in product. I mean, we all have this deep, deep, deep fear. So the first answer is like what, like you think user expectations are high in the iOS App Store, you should try like the purchasers of, you know, battery backup systems for data centers or like people who build deep sea oil drilling machines or, you know, like jet engine pro- Like I've worked with companies where the standards are like actually really high and it makes iOS apps seem like pretty, pretty basic. You know, it's like yeah, okay, well nothing blows up if people don't like your app. But like even in these really high-end industries and really high stakes situations, like the cost of offering someone to buy something that they don't like is probably not that high. They just say no. And like a lot of MVP is just about containing the liability of making a mistake. So like yes, one, one of the things I really encourage people to do is like go find 10 customers. Not 10 million, but like find 10 customers, get them to use the product, and have them tell you it's awful. That's okay. And like I used to be so upset when I used to launch a product if customers would argue with me. Like people used to be like, "You idiot. I can't believe you lost- launched this product without features X, Y, Z. They are so essential." And I would be like, "You're wrong. I did the ..." I'd get mad at them. But then I got a little smarter and I'd be like, "X, Y, Z you say?" And I'd be like-... taking notes, right? Like, "Oh, interesting." Now sometimes X, Y, Z would be the exact next three features on my roadmap. And again, I wanna argue with them and say, "I know! I was, you know, like you sh- ... uh, I knew that ..." And I eventually used to be like, "Oh, thank you for that wise feedback." And then when we launched X, Y, Z, they would feel a sense of ownership, "Wow, I'm the one who told him to do that. He wouldn't have been done it." But of course, the thing we're really afraid of as entrepreneurs, I think, if we're really honest, it's not that people say, "You idiot. You didn't launch without X, Y, Z." People say, "You idiot. You launched without A, B, C." And you're like, "What the hell's A, B, C? Never heard of that." That's how ... tha- that's the much more common response that I get. Like, let's say, so let's grant the premise of the question that, like, expectations are high, and if we launch an app, um, and it doesn't meet people's expectations, they won't like it. First of all, what are re- what really are the consequences of that? In, in a m- in early part of Lean Startup we had to do a lot to explain to people the difference between a product launch and a marketing launch. Like, you know, you can launch the product to customers without telling anybody that you did that, and it's okay. Like, no one's gonna find out. It's not gonna be big news. And of course, like, when, once you're a big, successful company that's a totally different issue, where, like, now you got to put your corporate brand on stuff. But, like, if you're a s- if you're an actual startup, nobody cares. So, like, it's okay to try it. But, like, the other thing that I think people don't appreciate is that MVP is very flexible. So if you tell me ... Like, when I work with entrepreneurs and they're like, "Listen, I'm sorry. Our customer is ... the bar is here, and the thing just has to be that good." I'm like, "Excellent. Then it can't have very many features, I guess, can it?" They're like, "Well, what do you mean?" I say, "Well, you just told me the bar is way up there, so we better do, like, just the one critical feature at that level of quality, and then if that works we'll do the next one." And then of course they're like, "Oh, no, no, no. I, I need to do all the features at all the quality." It's like, "Well, then what are we testing?" It's like, by the time you find out whether, like, that's any good ... And look, if you look at the s- the Pivot stories, I'm sure you've found this too, like, very often 90% of the work in the first version is thrown away, no matter how high qua- how high quality it was. And in fact for ... as an engineer, that was part of my, like, original disillusionment with the agile software movement and ultimately Lean Startup, is that people promised me that if I followed these best practices, I would eliminate waste from my work. But if I build something that customers don't want, that's the ultimate waste, and nobody protected me from that. So, I don't really care how high quality the initial MVP is, because quality is defined by the customer. And if we don't know who our customer is, we literally don't know what the word quality means. So, that's where I think founders really run into trouble when everyone's like, "Well, I'm Steve Jobs. I'm this g- ... I have the magic taste." And it's like, well first of all, do you have the years and decades of failures and experience that, that from which that taste derives? Okay. If you do, then I'm like, "I'll give you the benefit of the doubt." And if you don't, then, like, definitely don't rely on that. Definitely do some experimentation. Go get those scars. But even if you have the taste, like, if you're completely right, what can it hurt to double-check? Like, my view is like, well, let's have 10 customers look at it and have them throw up about how it's so horrible. That at least confirms that we're on the right track. Okay. And then we est- ... we call it establishing a baseline when we talk about innovation accounting and the, and the metrics side of Lean Startup. Let's go find out how bad the situation is right now so that we can then know that we improve from it. 'Cause, like, the thing I actually see from people who, in the name of quality, will wait a long time to ship a product, is they ship it with really high quality and nobody uses it. And now we don't know why. Is it because our idea of quality is wrong? Is it because the value prop is fundamentally ... Like, I feel like building a high quality, wrong value prop is nothing to be proud of. There's no craftsmanship in that. Or is it, you know, like ... I, I once had a company that, um, built a really beautiful product, amazing land, everything was awesome, but there was a JavaScript error where when you clicked the download button, the sign-up button or whatever, it just, it didn't click. So they launched this thing, it had 0% sign-ups, and they were like, "It's a catastrophe. We made the wrong value prop." It's like, well, how do you know? From one experiment you can never know. You have to be willing to do a series of experiments. And though ... again, the logic of MVP is just ... products take time to build. Like, the best products in the world, e- ... everything takes time. And it'll be, takes a m- ... tell me it takes a month, a year. You're like, "AI will ... may not can build any product I want and, you know, instantly." But, like, it's not instantly. It's gonna take time. So, during that time that the product is under construction, there's going to be some moment in time when you have half the product, logically speaking. You first have 10%. Like, so when you have half the product, let's have customers use half the product. What, what ... it doesn't cost you anything extra. You had to do what you ... you build a natural experiment anyway. Have them use it and tell you if it's only half as good. Or it's, it's unusable 'cause it's so bad. Excellent. Good. But the startup literature is, is littered with examples of people where less is more, where the crappy small thing they did turned out to be more valuable than the, the competitor. And I'll just give you one example, one of my favorites. Um, I come from 3D graphics, you know, and, and avatars and metaverse stuff, which of course now is bad. Or is it ... I ... it's one of these things that goes with these hype cycles and I'm like, "Are we actually in the hype cycle or are we in the trough?" Like, it's a parag- Yeah. I think it's, I think it's trending up right now. Is it? Are we trending up again? Okay. I think so. I think so. It's really hard for me to keep track. Um, even while I was working on it, every few years it was either the future or nobody wanted to do it. Yeah. Um, I, I bet y- ... I bet sales of, uh, of, um, uh, Snow Crash, you know, probably have that cyclical thing to them. I bet it's hot, people read it, otherwise not. Anyway, we built a version, our first version of IMVU we built with 3D avatars, like in a cafe or in a scene. And the avatars were all anchored in place because we didn't have the technology called inverse kinematics. We didn't have the technology that would allow an avatar to, like, stand up and walk. You know, when you do this in 3D graph it has to work perfectly. The feet have to, like, actually glide along the surface. And it just ... if it doesn't look right, you wind up in the uncanny valley and people find it, uh, horrible. So we're like, "Can't have that." So we'd have the avatar just sit there. And people felt the product was claustrophobic. They would always be like, "The Sims lets me move around. Why am I stuck here in the chair? I feel ..." Yeah, it was a very common thing in feed, customer feedback. But we were like, "We can't afford to do the expensive thing." We couldn't do it, couldn't do it. And one day, like, as a hack, as, like, a little demo, I was like, "Well, I'll just change it so that when you click in the scene to a different spot, we'll just stop rendering the avatar in the first place and we'll put it in the second place."So it was like really ... Uh, we didn't even do the proper cut. The camera would zoom over there. It was really ugly. I was really embarrassed about it. But I was like, "Let me just like play around with it and see what happens." And we, we shipped it to client. I was like, "This is not, this is below the quality bar. This is like an abhor- Like I just like, I ... People ... I felt bad as the engineer." Everyone involved felt really bad, but we had like committed ourselves that we're gonna try to experiment with stuff. We're gonna see what happens. This is before Lean Startup existed, so we didn't even have like concept of MVP. We're like, "We gotta try it and just see what happens." And we shipped it and nothing happened. No one cared. I was like, "Phew." But then we used to do these daily tracking surveys where we just sample people and ask them what they think of the product. And in the tracking surveys people started to say that IMVU was the most advanced avatar product they'd ever used. We were like ... It was ... People would be like ... We used to be compared to The Sims unfavorably. Now people would be like more advanced than The Sims. And I was like, "What does this mean? How do we get more ... Like, did we improve our 3D graphics or something?" Like what ... And, and we turned to do ... Uh, we couldn't ... No one could understand why they were saying that. We used to do customer interviews. And finally a customer was like, "Oh, oh, it's so great man. In IMVU, when you wanna go somewhere, you teleport. With The Sims, you gotta wait for the guy to get up and walk around. It's so annoying." And we were just like, "Oh my God, how embarrassing." And for ... I mean, we didn't do inverse kinematics for a really long time.

   8. LRLenny Rachitsky37:34

      Wow. I, I love that

9. 37:36 – 41:24

   An example of “Less is more”

   1. LRLenny Rachitsky37:36

      story.

   2. EREric Ries37:36

      Yeah.

   3. LRLenny Rachitsky37:37

      Something that I'm learning as you talk about MVP is that the idea of minimum is very fluid and very context-specific.

   4. EREric Ries37:44

      Very much so.

   5. LRLenny Rachitsky37:44

      And essentially, the message isn't build something low-quality and simple. It's figure out what is that minimum bar for your market and product, and just ... Like the message is just build as little as possible, whatever that is.

   6. EREric Ries37:57

      Yeah. As little as necessary.

   7. LRLenny Rachitsky37:58

      For you.

   8. EREric Ries37:59

      So like w- what's so ... It's fascinating. I mean, I'm done joking about having worked on jet engines and robotics and cancer therapies and all kind ... I've worked on stuff. Anyway. And LTSE, I mean it took, took us 10 years to build the MVP for LTSE. So like it doesn't even, it doesn't necessarily mean cheap, low-quality. Like it's just whatever your hypothesis is, whatever you actually believe is going to work, let's put that thing to the test. That's all I really want. When I work with companies, like, you know, uh, first-time founders especially are usually very stubborn about this and they don't wanna do it. It's like, "Look, you tell me what you believe. I don't have to be right, and I wanna just double-check that you're right by however we do it." And then, you know, once people actually start to, to turn that idea over in their mind, they often will be like, "Well, you know ..." Like, you know, a classic one is like, "W- well, we, we can't s- we can't sell the thing till we build the physical equipment." It's like, "But do people buy ... Is your product bought in a showroom where people see the physical equipment?" "No, they buy it from a brochure." So it's like, "Okay, well how about we send them a brochure and ask them to pre-order it?" And then, then it's like, "But, but Hala, I can't do that. My ... I can't have a crappy brochure." It's like, "Who said a crappy brochure?" Right? Like, "We can build a really high-quality brochure in a lot, like in a tiny fraction of the time it takes to build the actual machine." And then it's like, "Well then what does ... W- what are you talking about? It has really good fonts and it has pretty pictures?" "Maybe. What's your theory?" Right? Like, "You tell me. What do you believe about ... " And they're like, "Well actually what matters is the quality of the specifications of the equipment in the brochure." It's like now we've got the leap of faith assumption. Let's go find out. And they're like, "But hold on, but we don't know what those specifications are going to be yet." It's like, "Oh, but I saw this 500-page plan over here." "What do you want it to be?" It's like, "Well, it'd be really great if customers would accept this set of performance characteristics." Like, "Well, let's go promise that." Because maybe they'll be like, "That's great." And I'll just, I'll give you one example. I was mentioning data centers. This team that sold equipment in data centers. And we ... They had a serious da- uh, a high-end team of PhDs working on research to make the thing way more efficient. I mean, they were gonna win like a, a Nobel Prize in material sciences in order to make this product a reality. And they put ... And I, and I convinced them instead of paying three years and $18 million to, you know, make the thing, "Let's go take a brochure, take it to some customers." And I'll never forget. They took the thing into the brochure, they took it into customers, and customers like laughed them out of the room. And it was like nothing to do with anything they cared about. It was nothing to do with efficiency, where they were like, "This is ... We would never buy this." And they're like, "But you haven't even looked at page two to see how efficient it is." They're like, "We don't pay for efficiency. We build data centers. How much they cost to operate is somebody else's problem." You're like, "Oh my God." Right? Like, that's the thing people don't appreciate is like these insights are so obvious in retrospect that everyone's convinced that they won't, it won't happen. So then when I teach students in Lean Startup, they are like, "This is so dumb." Uh, they do, they do one case after another in business school and they're like, "Dummy, dummy, dummy, dummy, dummy." Right? Like, they're like, "I would never make that mistake." And I'm always like, "Look, you don't have to argue with me. Just call me back when you get a job and you make, when you make one of these mistakes, like remember we had these conversations and go read the book then." And I guess by, by random chance, there are some people in the world that just never made a mistake. Just-

   9. LRLenny Rachitsky41:11

      (laughs)

   10. EREric Ries41:11

       ... the dice ... You know, you roll enough dice, somebody had the experience that dice came up, you know, double sixes every time. Okay. So there are those people and they, they give a lot of the advice in the world. But I don't know that it's necessarily those of us who have, (laughs) who don't have the double six luck should

10. 41:24 – 48:37

    More on MVPs and the importance of testing your hypotheses

    1. EREric Ries41:24

       necessarily be following it.

    2. LRLenny Rachitsky41:25

       This will be a really good segue to talk about pivots, because again, a big part of your message is a lot of the work you're doing is just gonna go to waste anyway. Why spend all this time building it? But just to kind of put a final point on this idea of MVP, 'cause a lot of questions came in around just like, what is an MVP? Ben S- uh, Silbermann, the co-founder of Pinterest has this quote. He didn't ask a question in the thread, but he has this quote. Uh, hard quote.

    3. EREric Ries41:47

       That makes more sense.

    4. LRLenny Rachitsky41:48

       Yeah. (laughs) And his quote is, "The hard part of it, about MVP is that you don't know what minimum is and you don't know what viable is." And so just to give founders who are trying to figure out what that line is some very succinct advice, how would you describe just helping them understand here's how far you should go with your MVP?

    5. EREric Ries42:04

       He didn't, he didn't say you also don't know what product is.

    6. LRLenny Rachitsky42:08

       (laughs)

    7. EREric Ries42:09

       But, but that's true. I can't tell you how many times a service has turned out to be a product or vice versa.

    8. LRLenny Rachitsky42:13

       Mm.

    9. EREric Ries42:13

       Like people embody their insight about customers in the wrong way all the time. That's super common.

    10. LRLenny Rachitsky42:18

        That's funny.

    11. EREric Ries42:19

        No, but that ... Like all, all the criticisms of MVP are really just people expressing their frustration with how uncertain startups are.It's like, yeah, it really sucks.This is not a good way to make a living if you want to retain your mental sanity. If you can't ... If cognitive dissonance, if you find that painful, like this is not the right job for you because it's really hard to hold in your head, "I have this ambitious vision. I know what's going to work." Um, you gotta exude confidence, get everyone together. You gotta ... There's no substitute in this world for a human being stepping forward and just saying, "I am gonna make this thing happen." And if you do that, it ... you're putting yourself way out on a limb. It's really difficult. It's really hard to admit that, "And I also do not know how to make it happen." That's the truth. Whether you admit it or not, (laughs) that's the truth. So we have to just ... That's why I say let's just double check. So, so simple succinct advice. First, the first tip is write out the list of features that are necessary in your MVP, cut it in half, and cut it in half again, and build that. Honestly, if you just do that, that's really not that bad. The nice thing about MVP is it's one of those U-shaped curves where, like, if you get even in the vicinity of optimal, you're gonna be fine. And most people's natural idea of what is necessary is so laughably wrong. People are naturally off by, like, usually one or two orders of magnitude, right? O- very common for me to meet a team that is trying to do 100 times more work than is necessary to test their assumptions. So first thing is just try being uncomfortably small in the thing that you actually make. And if you're having trouble with that in, in a, in the startup way, in the sequel Mm-hmm. ... startup, I really go through, 'cause it's really more, more for a corporate or large company audience. I, I really go through, like, okay, if you want to have a process for determining what to do here, like, you should first brainstorm your leap of faith assumptions and you ... here, and categorize them this way and select them like this. Okay, now for each assumption, brainstorm the metrics you might use, you know, select the metric you want. What is your learning metric? And then from there, brainstorm MVPs, score them according to this formula, and then, like, use that to, to help people. Anyway, it ... if people can, can follow that they want. The, the thing I learned is that if people are having trouble coming up with MVP, the problem is usually upstream in the chain of deductive reasoning from the vision down to the MVP. It's like usually people are just not super clear on, "What do I want to learn?" And it's ... The most common reason is because people don't want to admit that they don't know. So to say ... As an entrepreneur, to say that we want to test to find out what customers want is really hard. I'll give you an example from my own experience. You know, LTSC, I said it's taken us, like, 10 years to get the, the thing approved and going. I mean, it's a really very difficult product to build. One of the early iterations of it, um, you know, that didn't work, we were building on partner infrastructure, and it was just ... it was a very different product back then. I don't want to get into all the legal nitty-gritty 'cause it's kind- it's kind of dry, but anyway, it took us six whole months. It took us, you know, time to ra- to raise the money, build the team, do all the stuff, you know, get all of the lobbyists and lawyers and everything in place, and then we had to go par- do this partnership agreement. Partnership agreement itself took, like, six months to get in place, and then we had to go to the SEC and get approval. And so it was, like, a very complicated multi-stage process, probably took ... I think I just described two years of my life, uh, you know, end to end there. And the whole time, I was talking to the team about our goal with this whole thing is to learn what is actually necessary to get customers to list on our stock exchange. Our goal is learning. People were like, "But I thought our goal was to get this contract done. I thought our goal was to ..." It's like, well, yes, but the reason we're doing those things is so that we can learn whether this is actually gonna work or not. And so I remember ... Now, I'll never forget, they were in the contract negotiations. People were like, "You know, we gotta take an extra week to deal with this point." I'd be like, "We don't have an extra week." It's like, "But this thing's taking two years. What's one week?" I'm like, "No, every day is soap. We have to get the learning as soon as possible." And I was, like, constantly haranguing everybody involved. "We gotta go faster, faster, faster. You've gotta give on this point, get ..." people were walking all over us. We were getting just destroyed in the negotiation. I was, like, the weakest, lamest person rather, just like, "We've got to raise the money." I was anything to, to get speed. Anyway, long story short, we get all the way to the end. We get the- we get the thing approved by the SEC staff and then, like, we get ambushed. And, like, long story short, uh, the SEC withdraws their approval and the whole thing is dead. The partner, uh, you know, we have to break up the partnership agreement, everything goes to hell. And, and I thought the company was gonna die. And it was a mi- ... It was a totally miserable time. It's one of the worst things that ever happened to me in my life. I was, I was totally upset. And then, you know, and in retrospect, I can laugh about it 'cause it turns out, of course, it was the worst thing that ever happened to me, but it's actually the best thing that ever happened to me, as a lot of startup things are, because from that, we were able to pivot into the thing that ultimately got us, got us approved. What's ... The reason I tell this story is every bit of work we did that went into that partnership agreement for almost two years turned out to be a waste of time, 'cause in the end, partnership agreement fell apart. So, like, if we had won a few extra cl- or m- our margins would've been higher if we'd extracted more fees from the partner, or like the ... we would've had less liab- but people were always like, "Well, we'll have the liability for this and the liability for that, and who's ..." Right? Think about all the things. It's like this thing was hundreds and hundreds of pages long, this document. None of it mattered. In the end, the, the partnership was never consummated. No, no customer ... No- nothing ever happened. And the, the interesting thing, the reason for this story is that the people who went through that experience with me were so much faster on the next thing that we did. It was really amazing to see, 'cause they were like, "Now I understand what you mean." Most people live very coddled lives and have not actually really dealt with this kind of failure in their business career. Obviously, like, in their personal lives, they'll have all kinds of trauma and, you know, like they'll work at a crappy company and have a horrible experience. But they haven't experienced this specific thing where, like, you are the hero of the hero's journey, you are the protagonist of the story, and the thing is not just a setback, but you just die, actually fails. It's so psychologically damaging that even people that have had that experience, a psychological defense mechanism is to tell themselves that that didn't happen. And, like, you, you know it better than anybody, how many startup founders are, like, adamant that they didn't ever fail, they didn't pivot, everything's exactly the way they saw it, you know, at the beginning. And it's like, I've been around enough startups to know how often that is just not true, but, like, we need to tell ourselves that story. But anyway, if you ... The, the number one lesson of the scientific method is if you can't fail, you can't learn. Mm-hmm. And so if you set yourself up in a position where psychologically you can't admit that something didn't work, you can't learn. And that's ... Like, that really is the essence of MVP. It's just like whatever the ca- catastrophic thing that's gonna destroy your company is gonna be, you just wanna find out as soon as possible so that there's still time to do something about it. We don't just die and

11. 48:37 – 53:36

    Eric’s take on the concept of craft

    1. EREric Ries48:37

       move on.

    2. LRLenny Rachitsky48:38

       I'm actually seeing this a lot right now. I'm an investor in a bunch of startups, and so many of them are failing right now. And they built such beautiful products, such amazing products that they spent s- like years just, like, crafting, making so great, and then it's all, it's all for naught. And there's actually been a theme on the podcast recently around the importance of craft and design, and I'm curious just to get your thoughts on just when it makes sense to invest deeply into the craft and experience of a product versus, you know, the minimal viable product approach. Do you start very simple and then invest? Any thoughts there for people?

    3. EREric Ries49:16

       Yeah. Well, that's, I think that's a great question. People use the word craft to refer to so many different things.

    4. LRLenny Rachitsky49:22

       Mm-hmm.

    5. EREric Ries49:22

       Like, I personally find a tremendous beauty in simplicity. So like, I would much rather people do one thing extraordinarily well than, like, 20 things half-assed, you know, personal- And like, how many products do you use where you're like, "God, could you have," like, there's like 92 buttons on here of which I only ever press one.

    6. LRLenny Rachitsky49:39

       Hm.

    7. EREric Ries49:40

       Could you have made that button, like, like, have a really nice feel? You know, did I, could y- I, I would have sacrificed all this other stuff. And I mean, I've, I've actually worked on microwaves and refrigerators and stuff with actual physical buttons and, like, even your crappy kitchen microwave that you paid $60 for at Walmart or whatever, if, if you've never seen one of those things, um, m- manufactured, it's actually inc- The amount of craft that goes in behind the scenes to wire up every one of those buttons that are never pressed by a human being, it's actually really painful if you start to think about, wow, that's a lot of human energy being wasted. So the, the elements of craft I think are critically important. First of all, part of craft is perfection. Perfection is an attribute of quality and we have to go back to the first thing. In order to know what perfection is, you have to know what the customer believes. Right? You have to know your, you have to, it has to be perfect for some purpose for some person. Some people just say, "Well, I'm just gonna build for myself, and that way I solve the problem." That's totally fine, that's true. If that's you, go nuts. You might only have a market of one, but you'll be happy. So be it. And I think there are, and there are startups like that where it's like, "Well, I don't care how big my market is. I'll just build for all the people like me and we'll... And if I, and if I have a huge tribe, then I'll be hugely successful. If not, I'll just be an artist doing my thing." I have total respect for that. That's like the ends and the methods are totally, uh, totally aligned. Where people get into trouble, I think, is when they wanna use craft as an excuse to not get any feedback. So what I tell people is, is like first of all, there's an element of craft that is just like whatever you do, how are you going to go about it? You know, like whether you're building an MVP or a fully featured whatever thing you're do... Like, you know, I'm a, I'm a software engineer by training. Like, my code is a certain way. You know, I have a certain craft in the way that I write software, because I think that's the best way and it produces the best outcomes. I won't ev- I would never compromise that. And compromising that in the name of going fast is stupid, right? Like, if you write crappy code, you spend more time firefighting than you do writing code in the future. So a certain amount of craft is just about keeping your options open. And actually it's, it's very much, like, favorable to speed. Using the, like the right, the right primitives, having the right abstraction layers, like using the right tools in the right way, m- having high quality people on your team. Like, all those things let you go faster, um, not slower. And a big part of Lean Startup is about helping teams get into that optimal configuration by acting as a speed regulator, 'cause there's such a thing as optimal speed, which we can, we can get into if people are interested. But another part of craft is just an excuse for just avoiding feedback, like making things pretty, that, you know, pretty in the way that I want them to be because I want them to be that way. And even there, if I, w- when I meet people like that, people are just like, "Sorry, my artistic ethos is this and it has to be this way." Then I'm like, "Excellent. Then that's not one of your leap of faith assumptions that you're willing to test. So like, so be it." I, don't, don't pretend to test it, just be like, "I'm not te- Like, we're just gonna do it this way because that's how we do things and it's fine." And I think, like, that's a big, like when company has like a core value, like, "I'd rather go out of business than violate my core value," I also respect that too. But like, then that to me, that means like having a respect for craft, for design, for perfection, that increases the need for experimentation and testing for all the other stuff, because we've already invested a huge amount of our energy and force into this thing that we really care about. Well then, the other stuff, you know, like, then do we also have to do like this fancy press campaign? Do we also have to, you know, go put the founder's face on billboards and put them up around town? Like is that, are those all part of your craft? Like, I just feel like people use that as a, as a, as a catchall excuse to do all kinds of stuff. But I think, you know, the idea that, like, craft is a signal to your customers about the things that you actually care about and that, that you're gonna take care of, that's like, it's part of making a promise to the customer, like, that they're gonna believe. Like, if that's your thesis, then doing an MVP that lacks craft doesn't test the thesis. So I, I, I p- I think people wanna set up a, a, a dichotomy here that doesn't really exist. I'm, I'm totally in favor of that when people have that authentic desire, but I also meet a lot of people that are just faking it. They don't have taste. They don't have a design ethos. They don't ha- So like if you don't have that stuff, where are you gonna get it from? Well, good news, experimentation will get you there if you let it, because you will eventually learn the habits of mind, the patterns of

12. 53:36 – 55:17

    Why getting fired for standing by your conviction can be a career accelerator

    1. EREric Ries53:36

       the things that work that make sense.

    2. LRLenny Rachitsky53:38

       I really like that advice of, as a founder, build the company you want. Like, if you want to build... Like, why create a business and a company you're not excited to be working on? And if you end up failing, like, it's on you. That was a big mistake it turned out, but at least you tried and you're not building a company you don't wanna work at. And then as a product leader, and I don't know how m- if you have as much control to build a c- product the way you want, but, but try basically.

    3. EREric Ries54:00

       Um, I always tell people to just get fired for doing it the way you think is right. Like, there's nothing that is a faster career accelerator than being known in the industry as the person who stands for that principle so much that you got fired over it. Like, the people that that magnetizes to are gonna like be way happier. You're gonna be so much happier being at a place that appreciates that. That was a big, uh, that was a big career accelerator for me. Not that I actually got fired, but I was willing to be fired for, for the, for my beliefs. And I remember sitting there, I was going to a board meeting where I was sure I was gonna be fired, and I was like, "Well, I just don't believe in building products the conventional way." This was, again, before Lean Startup, so I was like, I didn't even have a language for it, but like I had a strong conviction that the way I was doing it was the right way. And I was like, "Well, I'll just..."I'll be known as the guy who ... that got fired for that. And eventually someone will wanna work with me 'cause that's what they want to ... If nobody wants that, then I'll go f- I'll go find a job in a different industry, like I don't wanna be in an industry that doesn't ... Like I, that's how I want it to be. And I think that people, um, people don't appreciate the extent to which ... Like people act like y- having a startup fail is the worst thing that can happen to you. I'm like, "Man, that's not even in the top 10." Like it's b- it's bad. I mean I, I've done it. It's awful. Okay? It's really bad. But far worse is to be in a company that won't die, a zombie undead company that you hate but you can't leave.

13. 55:17 – 56:28

    Tech’s mental health crisis

    1. EREric Ries55:17

       Oof. Have I met people like that? And like, we're having a mental health crisis among founders that's like not talked about enough. You know, people have started to talk about like the downside mental health risks. Obviously the stress of being a founder is hard, but like, look what's happening to the people that are so-called successes. Like, I ... When you build a company and you sell it out and it becomes something that you find abhorrent, like yeah man, maybe you get rich but it's, it's not, it's not good. And I mean, I just the other day a friend was telling me about a friend of his who sold his company, exited for like say $300 million or something, made a lot of money, and committed suicide like not that long later. People follow the Tony Hsieh story. I mean I knew Tony. Uh, it was a horrible tragedy. Like, what's going on? So I just feel like there are worse things than having your startup fail, and so building a company you hate that, that becomes a malign force in the world, you know, that you have to go pretend you weren't involved with or that like you feel complicit in what ... Like, that's way, way worse and I wish more founders would take that more seriously early on.

    2. LRLenny Rachitsky56:16

       That is such a, an important point and something I see a lot too. Just companies the founders started that are just like alive but they were almost never gonna succeed, and they're kinda stuck. They, they don't wanna shut it down,

14. 56:28 – 1:00:16

    Advice for founders stuck in a “zombie company”

    1. LRLenny Rachitsky56:28

       they don't wanna give money back. What advice do you give those sorts of founders that you feel like are just stuck in a zombie company like that?

    2. EREric Ries56:34

       It's, it's really hard. I mean, of course if it's gonna fail you should shut it down. But then everyone's like, "But I ha- I thought it's always darkest before the dawn." And it's like, sometimes it is. It's ... You know when else it's really dark? Like, when you're dead. (laughs) Right? So like what's the di- ... I mean, everything comes back to ... I used to tell people I ... The, the, the most uncomfortable laugh line in my early talks a- about Lean Startup was when I talked about the, the ... People used to talk a lot about Steve Jobs and the reality distortion field, and I would be like, "Okay. You're in the reality distortion field. You're on the flat part of the hockey stick. How do you know?" And the business plans ... I actually lived through this once. There's a business plan. Business plan says, "Six months after launch we will have almost no customers and almost no revenue, and that's when the hockey stick will commence." And I remember being there in month six being like, "We are on time, on budget. This plan is ge- ... Everything's happening just like the plan. Hockey stick to commence." I'm walking my watch. And then we just stayed on the flat part into the far horizon. And then people would laugh and I'd be like, "Okay. Now, if you're following a startup leader and you're in the real- or you yourself are in the reality distortion field, and you're on the flat part of the hockey stick, how do you know if it's ever gonna stick or you're just gonna be ..." And people would be like, "Ha, ha, ha, ha, ha, ha." And that's like, that is the really scary situation. It's like we all have these moments of doubt and sometimes the right answer is to overcome the doubt and go for it. And it's actually part of the genius of the startup system. You know, the people as much as people criticize venture financing and all the problems with the Silicon Valley and of course, (laughs) w- we do it to ourselves so there's plenty of things to criticize. Like one of the genius things about it is like at the end of the day you do run out of money. And the thing ... The, you, you're forced to declare bankruptcy. That's actually a really positive feature of the system. So a lot of founders just can't do it. But I will say like the thing I, I try to a- uh, ask people to do is like take a, ta- really take some time to introspect and just ask yourself do you actually want to be here? If you, if you could magically wave a magic wand and you were to start a new company right now, would it be this one? If it's not, just there's no indentured servitude anymore. It's okay. You know, it's okay to, to move on. And then, then the question is like then there's like e- everything moves into a tactical conversation about shut it down, give the money back, do a h- a really hard pivot into the new thing. You know, it depends a lot on the, the specific factors of the situation. But it's ... I think we do fact- founders a disservice if we act like this is easy. Or is it? I mean it's, it's just, it's gut-wrenching and it's really difficult. And like not to be too spiritual about this but like it, it really goes right to the issue of ego identification. For so many people, they are their company. And so for the company to die, they also must die. Like it feels like you're going to die. And I think that is like that's part of the mental health problem. So like people you know as they get older, as they mature, as they have a spiritual practice, I hope they can learn to disidentify with the company and not feel like it's so personal so that it is possible for the company to die without them dying. And then they can take what they learned into the next company or the, or into the next pivot or the next iteration of what it should be. Or sometimes the right thing to do is just to step aside and let a, a different CEO take over. Or you know, there's just so many ways you can go about it, but as with any pivot situation the hardest part is always just to admit the facts as they are. And then it ... And then you do it yourself versus like what is the situation? Is it working? Can't tell you how often I ... People just can't accept it's not working. And you get investor updates. I ... How many investor updates we ever receive where it's like, "We're crushing it. Everything's going great," and the very next investor update is we're out of business, giving money back. It's like well, you had no s- ... Your last investor update said you were crushing it. There was absolutely no indication there was any problem. Like, "No, of course there was an indication but you were just lying about

15. 1:00:16 – 1:08:20

    How continuous pivots shape a company’s vision, with a real-life story

    1. EREric Ries1:00:16

       it." So don't, don't be that person.

    2. LRLenny Rachitsky1:00:17

       That's actually an amazing segue to where I wanted to move to which is around pivoting. So I've done a bunch of research on consumer startups, B2B startups, and the numbers I see, and I'm curious if you see similar numbers, is around a fifth of consumer startups ended up pivoting to a completely different product, and almost half, like 40% of B2B companies ended up pivoting to a completely different product. Does that sound right from your experience?

    3. EREric Ries1:00:42

       Yeah. That does sound right. Well, so it, so it's interesting.Um, I used to do this exercise for founders where I would tell them the story of IMVU two different ways. The first way is i- one in which, you know, we got everything completely wrong and just sounds like we were complete idiots and we had to pivot so many times. And then I would tell the same story again but where we got everything right and we were geniuses and everything that happened vindicated. And then people wouldn't believe me. I'm like, "Both stories are true." Like, like choosing which elements to, of what actually happened to emphasize and where to put your weight you can tell the story. So like yes, I would say there's like a percentage of people that know that they pivoted and then there's another percentage of people that didn't admit it. (laughs)

    4. LRLenny Rachitsky1:01:21

       Hm.

    5. EREric Ries1:01:21

       But they actually did. And it's really hard to assess from the outside. I mean just, I know this from having worked with ano- enough startups where I know the outside story and I know the inside story and they're just really different. I mean, Paul Graham used to boast about that as one of the features of Y Combinator that the founders they would get to come to the dinners would tell you the true story of what really happened and that was cr- critical information you couldn't get anywhere else except at Y Combinator. And I was like, "Wait a minute. Is he saying that everyone just lies on stage when they tell the story publicly? I don't know if that's something to boast about. Like, you're calling all your guests liars?" And then like I've, I've hosted a lot of those events. I'm like, "Oh yeah, people, people lie on stage. I see." Like, so I think part of the problem is just like trying to find out the truth of what happened is really challenging. But there's another element that I think is interesting which is ... So you know pivot is defined as a change in strategy without a change in vision, right? So we have this idea that the founder has the vision, then they try to figure out how to make the vision happen and they find a different way, but like the vision stays constant. But the truth is a little bit more complicated than that because the founder's vision also evolves. Founders discover what the vision actually is through the process of building the company. So again, not to be spiritual about it but I actually believe that building a startup is, is in, in large part a, a process of self-discovery. You actually are discovering what is true about the thing that you yourself believe. And part of that's because when we fantasize about the vision then we never have to make any trade-offs. You know, the product is infinitely popular, infinitely cheap. You know, everything's good. It's just like there no, no trade-offs to be made. What real life forces us to make trade-offs and then you find that like oh, I have to choose. Would I rather have a high-end product only for really rich people or would I rather have a product for this industry or this sector or this group or that group? Like it can be, it can be painful. But also founders learn to talk about the things they care about over time. So I mean go on YouTube. If you've never watched the interview with Zuck on his couch at Stanford talking about Facebook, it's, it's a remarkable video. Just some college ca- some college news person was like just happened to catch an interview with this guy like at a critical moment in his life when he just didn't know what he was talking about yet, and like now he's really ambitious. You know, now Facebook's vision is this really ambitious thing and people are very at pains to say that he always had that vision from the beginning and he talks about it all the time. And like that may be true but you, but the documentary evidence exists and I'll just give you one of my own stories about that. In one of my companies we moved offices, um, relatively early on because we, we started out in a really, really crappy small office then we moved to a larger space. And I remember sitting in that office when there was just five of us and we sat down and we had a meeting where we specced out what we would now call the MVP as well as the longer-term vision for the company. And we had this whiteboard and we, we, all of us debated what sh- what features should be in and out or what should be on the whiteboard and, and I can remember writing down, I have a, my visceral mem- I have a physical memory of writing down the things that were gonna be necessary for the company to succeed and being right and my co-founders arguing with me about not having their perspective in there being wrong. And I'm like good thing I'm, you know, like I can, I can, I can ... It's one of the things I remember telling this story. Anyway, we moved offices shortly after that time and that whiteboard was lost. And then years later we moved offices again and someone was cleaning out an old storage closet and that whiteboard was just happened to have gotten shoved in the closet. Someone pulls it out like, "What's this?" And I looked at it. I'm like, "Oh! That's the whiteboard we used to hang in our main conference room." And it still had the notes from that meeting are sitting there on the whiteboard. I was like this is so cool. Historical moment. I'm taking a picture and then I'm like wait a minute. This is weird. It's in my hand. I mean it's recognizably in my own handwriting but many of the things that I'm writing there are horrible ideas. I'm like, "That's not what I thought back then." I was on the other s- my co- that's my co-founder's bad idea. That's not my idea. And I had this realization that like it's not just that I learned something through the course of building this company about strategy. My own understanding of the vision of what we were doing was different but I don't ... Like the thing that's so critical to understand is I even to this day have no psychological memory of having changed my mind about it. I still have the original memory of writing those things on the whiteboard. And I thought, I really thought someone was playing a trick on me at first because what I could witness with my own eyes on the whiteboard contradicts my actual memory of the thing. And I was like which of us is right? And of course I had to admit the physical evidence got to win out. But I think it's important also to understand how much that is true. And that's like again go back to like why science is so important. Like why do we write our ... Like all the elementary things about science we write our hypotheses down, we subject our things to test. Like we do that because human psychology is so buggy and, and people who are fighting with their like generative AI you know chatbots and stuff are starting to see like those are nothing but a reflection of human theory of mind. So like we're starting to see it in an alien creature that like wow our intelligence has all these (laughs) weird behaviors and gaps and things and of course we want our robots to be perfect. But it's like well first look in the mirror and realize that you yourself carry all those cognitive biases and you got to put in place a structure to get around them or they're going to destroy you.

Episode duration: 2:14:14