The Lean Startup isn’t just a method for your favorite, angel-funded startup to build a product and raise another round. Its author, Eric Ries, has helped catalyze a way in which great product is created whether you’re in a startup or a Fortune 100 company.
On September 20, Ries’ will share his ideas at AdExchanger’s Human Centered Automation conference in New York City.
AdExchanger spoke to Ries last week…
AdExchanger: How did you come upon the “Lean Startup” approach and the success you’ve had with it?
ERIC RIES: No one is more surprised than I am by how it all came about. I was a computer programmer by training and thought that I would be working in technology companies my whole life.
It turned out that I kept working in start‑ups – some of which I founded – where the technology worked great, but the company failed. I kept trying to fix it and believed better and better technology would solve the problem, and then I learned about marketing and thought about hiring a superstar marketer, and then I thought about hiring the best VPs in the world, and so on. But, I kept having the same results over and over again – and I wasn’t alone.
Finally, in my last company, it all came together where we had an opportunity to try things differently. We built the company from scratch with a different method that produced a better result than the things we had done before. Still, people thought what we were doing was crazy even though it was working better.
Investors, PR people – everybody we met with – said, “Hey, this sounds like a great company, but now that you’ve had so much success, you should really consider using a more traditional method [for building a company].”
I was flabbergasted because the reason we were successful is we didn’t follow the “traditional” advice. Thereafter, I got a lot of practice explaining not just what we were doing differently, but why it worked. That’s how the “Lean Startup” got started.
How is the “Lean Startup” methodology relevant to not only startups, but larger corporations such as advertising and media companies represented by AdExchanger’s audience?
Just two days ago, I was at a large, familiar, multi-national corporation. We were talking with some of their senior leaders about applying “Lean Startup” ideas in all kinds of divisions and across their products. “Lean Startup” is no longer a small company phenomenon.
One of the realizations in the Lean Startup movement is that entrepreneurship is actually a form of management. It’s a special kind of management that you use when the situation that you find yourself in is really uncertain.
That’s just a statement of fact. It doesn’t say anything about how big your company is or what industry or sector you’re in.
Anytime you’re trying to create something new and you’re not quite sure what’s going to work, that’s an entrepreneurial situation and these techniques can be used.
There’s a tremendous uncertainty in any new campaign or product. If you take that uncertainty seriously you might think it makes sense to change the way that you work – to address an uncertainty explicitly instead of firing the rocket and hoping for the best.
Relating to AdExchanger’s conference, how much is data driving the product design that the Lean Startup drives? And when does the human get involved here?
This is very paradoxical. Data is at the heart of this revolution, for sure, because we’re trying to take a more scientific approach in developing things that previously were thought to be unmanageable for an unpredictable percent.
But, to say that it is data driven is very misleading because most people have way too much data already, and the data just causes more confusion. If you login to a typical marketer’s Google Analytics account and you ask them, “Which of these graphs do you actually look at when you’re trying to make a decision?” The answer is none.
If we’re being honest, what happens is, when it’s time to prepare for a board meeting and you have to present something that shows progress, you boot up the Google Analytics account and so that everyone can look for a graph that’s up-and-to-the-right -that’s what is presented. And that’s Eric’s Law of Google Analytics: no matter how bad you’re screwing up, there’s at least one graph that’s up-and-to-the-right – so, you present that one.
But you don’t learn anything from that exercise. That’s not science, that’s just “fact cherry picking” or “astrology,” if we were being honest.
Lean Startup is about finding the least amount of data necessary to test if our hypothesis is true or false. A lot of data that we look at is not necessary or helpful. So, the Lean Startup is easier in a lot of ways. We can strip out a lot of the data that’s not essential and pair it down to one or two key [areas].
Is there anything peculiar about the ads and marketing world that you would suggest keeping in mind when you’re working with the Lean Startup methodology?
Sure. I’m, personally, more of a user of technology than a developer of it. But several of the prominent Lean Startup example case studies have been in that category. I will point to Sharethrough as a good example. They do video products and were early adopters of Lean Startup. What they were good at – and that I think most ad tech startups fail at – is that they were willing to talk to their customers in order to understand who is the decision maker and who understands the value of a new campaign.
Tech people are really bad at this. Every big ad campaign, there’s at least two or three parties involved, sometimes more. But you have the client, and separately, you have the agency and maybe you have a separate creative agency – or maybe even a separate creative director. Within the client company, there’s probably an ad buyer that’s separate from the person in the marketing department who works maybe for a CMO.
Each of those constituencies cares about a different theme in the campaign, and yet ad tech people assume that they already know what the right thing is to try to sell to one of those constituencies.
The person who gets paid to buy more ads is not the person with whom the message of ad efficiency and lower budgets is going to resonate, because their job is to have higher budgets. If you look at the durability of television advertising – it’s not true in every case – but, in a lot of cases, the very fact that it’s hard to measure the impact of a TV ad is a big part of why people want to run TV ads.
It creates an accountability free zone. It’s tricky to get to the bottom, “How do you help people be more successful at their job that they care about? How do you not only make them more successful, but their clients and customers more successful?” Having those conversations is [critical].
So, is creativity important to building a start‑up?
Yes and I’m glad you asked that question because when we think that we’re being “more scientific,” people have a flawed set of associations with that phrase that have to do with – I think – how we teach science in grade school. Some of the most creative human beings that have ever lived were scientists. If you think about the Einsteins of their time, you wouldn’t say, “That’s someone who lacks for creativity.”
We forget how creative you have to be in order to come up with the right hypothesis in the first place. Science is only as good as your hypothesis and startups are only as good as their vision.
So, to me, human vision, someone who sees something different, creativity is such a precious commodity that we can’t afford to waste it on just bringing things to [market] and hoping for the best. And, [Lean Startup] is an effort to try and redeem that creativity and make it more special.