Everything you know about starting a company is wrong. At least that’s what Eric Ries says. The former entrepreneur has developed a counterintuitive strategy he calls the Lean Startup. The philosophy has been endorsed by Silicon Valley royalty like Tim O’Reilly, Marc Andreessen, and Mitch Kapor. It’s all explained in his new book, Lean Startup, but we still had a few questions.
Wired: What are the most common misconceptions that people have about starting a company?
Eric Ries: We still believe that entrepreneurial success is about being in the right place at the right time with the right idea. But there’s no empirical evidence that’s true. In fact, there’s actually tons of evidence that it isn’t true.
Wired: Like what?
Ries: There was a study done in the early 20th century of all the entrepreneurs who entered the automobile industry around the same time as Henry Ford; there were something like 500 automotive companies that got funded, had the internal combustion engine, had the technology, and had the vision. Sixty percent of them folded within a couple of years.
Wired: What was Henry Ford doing that his competitors weren’t?
Ries: Well, we say it was about his vision, but if you look at the documentary record, you see a different story. He didn’t know what was going to happen, but he had a process for adapting to situations as they revealed themselves.
Wired: So the key is to be able to change your vision—or your entire company—on the fly?
Wired: How do you do that?
Ries: Continuous deployments. People believe that if you go slower you’ll get a better outcome—you can fix the bugs. But that’s not true. The slower you go, the bigger the batch size and the more things go wrong. What if customers don’t want your product? Do you want to find that out after you’ve built the whole product or only a tiny sliver of it?
Wired: But isn’t it dangerous to release a product before it’s ready?
Ries: The mistake isn’t releasing something bad. The mistake is to launch it and get PR people involved. You don’t want people to start amping up expectations for an early version of your product. The best entrepreneurship happens in low-stakes environments where no one is paying attention, like Mark Zuckerberg’s dorm room at Harvard.
Wired: Does that mean it’s better to have just a few customers when you’re first starting out?
Ries: Exactly. It means that you can get to know those customers extremely well and you’re not under pressure to succeed. You can take your time to figure out what’s working and then really blow it up later.