Starting Big Versus Starting Small with Eric Ries

INTRODUCTION: Welcome to The Daily Bolster. Each day we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster, and I'm here today with Eric Ries. Eric is the founder of LTSE, the Long- Term Stock Exchange, and he's the author of what I will call the world changing book, The Lean Startup. Eric, welcome to The Daily Bolster.

Eric Ries: Thanks for the kind words.

Matt Blumberg: So a question I have for you. LTSE is an incredibly ambitious startup, very broad vision, which I absolutely love. I gravitate to that kind of thing as a founder. The conventional wisdom sometimes in Silicon Valley or in startup land is start small. Start with one little thing that you could kill and then go to the next thing and the next thing, and the next thing. So the question for you is, which is better? Is it better to go after a really ambitious, long- term, seemingly impossible solution? Or is it better to start with something small, get it right and increment your way out?

Eric Ries: Yeah. This is going to sound strange coming from the person who coined the term minimum viable product, but I think people actually get genuinely confused about whether experimentation means that you should have a narrow aperture of vision or whether experimentation is a method to accomplish a larger vision. I come down firmly on the side of something that is audacious, full stack, long- term and seemingly impossible. And actually there are three counterintuitive ways in which harder is easier, that until you've actually done this as an entrepreneur, it's kind of hard to believe. But first thing is if you're trying to do something genuinely monstrously ambitious, you can attract far better talent, and I've had people come to work for me, especially on LTSE, that I have no business hiring, have no business working for me. It's not me they want to work for, it's the mission, it's the vision. They feel like finally, they can take the years of difficult work they've done in their career and put it to a virtuous use that's going to make the world a better place.

Matt Blumberg: It totally makes sense.

Eric Ries: Second benefit, you can attract and retain way better customers because when you try to pitch your product to customers, if they feel like it's just a mercenary thing that you're out for yourself, it's a totally different pitch. It's a totally different sales process. And if you're willing to say, " No, if you work together with me together, we're going to change the world in this way that is genuinely in your interest, is genuinely to your advantage." And you see that in healthcare companies where it's like, " If I'm willing to invest in your community, wouldn't you rather be my customer than have me be owned by some private equity shop that doesn't care?" But you see that in lots and lots of other ways that the beauty, the natural alignment of the human emotion to want to make the world a better place, to want to embrace the human universals like love and trust, that actually makes the product more sticky. It's a tremendous source of competitive advantage.

Matt Blumberg: ...I love that. All right, so we've got better employees, we've got better customers.

Eric Ries: And then this is the most tricky one of all. Every person I talk to, especially almost every CEO constantly complains to me about how difficult it is to communicate with their own employees about their strategy to create alignment towards some goal. And it's like you've got to repeat yourself a hundred times. Think about it all, if you read any kind of strategy book, they're constantly saying, " Basically, most companies don't even have a strategy. Give me a break. Because they can't communicate coherently." The only exceptions to that rule are the CEOs who have these monstrous visions. If your vision, if the thing you're trying to communicate is genuinely lined up with what people feel in their heart, it's actually really easy to communicate.

Matt Blumberg: ...what's an example?

Eric Ries: Yeah. It's a company called Devoted Health is my favorite example of this. They are a health insurance company full stack, trying to reinvent American healthcare from the ground up, and they've got crazy growth, unbelievable revenues in just a few years, is really working. And part of the reason it works is their ethos is to treat every customer with the love you would show to your own parents, which sounds absurd. People are like, " That sounds so crunchy," but that's a fierce source of competitive advantage for all the reasons we've just talked about. Think about the doctor who wants to work there instead of having to work in some corporate health environment where they don't actually get to take care of their patients. Think about how empowered your employees feel when they have that as their mission. Of course, think about how customers... Customers call their customer service agents guardian angels, not customer service reps. It's very powerful. But the most powerful part of it, I think, is that that is a very easy strategy to communicate, understand and implement. So instead of having to spend 50% of your time constantly berating your employees to do the right thing, constantly having to design compensation systems to get them somehow through some trickery to do your abstract, most strategies are hard to communicate because they don't actually make any sense to ordinary people.

Matt Blumberg: That is just phenomenal. I feel like I needed to take notes this whole five minutes. What a counterintuitive, easier to solve the harder problem. Three phenomenal pieces of advice. Eric Ries, thank you so much for being here.

Eric Ries: My pleasure. Thanks for having me.