Entrepreneurs Talk Successful Startup Strategies at Lean Geek Smackdown

Tech entrepreneurs Dave McClure, former marketing director of Paypal, and Eric Ries, cofounder of IMVU.com and author of the blog “Lessons Learned”, talk about strategies to build a successful startup.

By Avery Fellow | March 9, 2010

Tech entrepreneurs Dave McClure and Eric Ries, visiting Washington, D.C., to rally support for the Startup Visa bill, sat down with a group of local entrepreneurs on March 5 in Arlington, Virginia and talked about successful startup strategies.

"Just because you’ve been successful once, doesn’t mean that what you’ve done is actually a recipe for success," said McClure, former marketing director at Paypal. "By testing advice you’ve given over time, you might be able to determine if it is valid and useful."

Ries, author of the blog "Lessons Learned" and cofounder and Chief Technology Officer of IMVU, talked about the value of startup companies being honest with themselves.

Lean Startup SmackDown from Frank Gruber on Vimeo.

"One of the things we have to do as a community of entrepreneurs is to get really comfortable talking about failure candidly. Actually talking about failure is key to lean startup practices," Ries said. "I’ve had some epic failures," he said, recounting starting a company in his college dorm room during the dot com bubble. "We thought if we built a great product, everything else would take care of itself."

Ries’ second company also failed. The company focused heavily on research and development, growing to 200 employees before the product launched. And then it didn’t catch on. "We subscribed to the IQ theory of entrepreneurship: get the smartest people in a room together and nothing can go wrong."

The third time, Ries’ company IMVU, a social networking and 3D virtual reality site, built a product end-to-end in six months, and it was a success. "Part of the reason we were successful we were really determined to make new mistakes," Ries said. "That was our goal."

"When I’m working with early stage companies, I usually get the question, ‘Why won’t more people use my product?’ That’s the wrong question," Ries said. "The vast majority of the world’s population, 99.9 percent, is not using your product. There is this tiny minority that are using your product - why? If you really get serious about understanding who those people are, you can discover things about what they experience in their lives that makes your product worthwhile."

Ries said a startup should focus on early stage adopters until the company has $10 million in revenue. Then it can focus on mainstream customers. 

"This is a necessary part of a new technology development," Ries said. "You have to sell to early adopters before you can sell to mainstream customers. It’s not a choice. The only people who will buy your product in the early days are people who are willing to overlook the inevitable defects."

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