If You Don’t Have a Discrete Hypothesis You are Incapable of Failing

There are very few people in Silicon Valley who have such a precise grasp on what defines success of early-stage startup companies than Eric Ries. And there are very few people who so consistently exceed my expectations when I hear them speak. I find myself nodding – even when the topic is one I don’t expect to agree with such as “fail fast.”

This week was no exception. I interviewed Eric for an hour for - This Week in Venture Capital. What’s awesome is that the ThisWeekIn team now does time coding so you can go directly to the section in the video you want to hear (you need to click on link for video and then below the video in YouTube the links to the exact times will take you to that section in the video). We had a wide-ranging discussion which included discussions of Eric’s early career (including his failures), how he came to focus on the Lean Startup movement (at the encouragement of Steve Blank who was an investor in the company he co-founded) and what he wants to do next.

Importantly we also discussed:

  • should startups raise small amounts of money or large?
  • should companies do spreadsheets / plan / have a hypothesis for success?
  • what is the difference between a “pivot” or a “double dribble” (changing your business completely)?
  • when is the right time to go big with PR?
  • how do you handle internal company morale?
  • how should you organize teams in a startup? (functional workgroups vs. product workgroups)
  • what is the importance of social media? what is wrong with today’s social media?
  • what lessons can we draw from Steve Jobs successes?
Eric is so damn good. I could have gone 2 hours. If you have some time I promise he doesn’t disappoint. Or if you’re pinched on time the summary is below and the time coding can help you watch a brief snippet on topics that interest you.
Oh, and if you didn’t guess, the title, “if you don’t have a discrete hypothesis you are incapable of failing” is, of course, an Eric Ries quote. There are many in this episode. Check it out.

Timecodes:

00:00 Welcome, our guest is Eric Ries, founder of the Lean Startup Movement.
00:45 Intro to Eric
01:17 Background, before the Lean Startup
01:53 Yale during the Dot Com Bubble
3:35 The real entrepreneurs come out during a down economy
4:15 Eric’s startup history
6:30 Why did it take so long to ship?
8:17 How did you decide to go with either shrinkwrap or web only product?
9:14 What was the root cause of the failure of your first company?
11:00 Mark on over-hyping PR
11:50 Startup problems!
13:43 Why would you talk to journalist? Why waste energy?
14:20 People go too fast to internationalize
14:45 Eric: The vital function of a startup is to learn how to build a sustainable business
15:40 Discussion of Awe.sm
17:30 Can you make startups science?
19:30 A teachable moment for entrepreneurs: HAVE A HYPOTHESIS! What do you do better, different, or what do you want to achieve?
20:42 Looking for the “Up and to the Right” charts
21:20 Starting points for business should be a problem
22:10 Eric: Innovation Accounting
22:53 Eric’s book: The Lean Startup
24:00 Big money vs. Little money
25:40 The fundamental goal should be to eliminate waste
26:44 Too much capital is not good
26:54 Mark on the negatives of the “Fail Fast” movement
27:45 Eric: The thing that is supposed to fail fast is your bad ideas, not your company
31:10 Mozy Pro Ad
34:00 Imvu
35:29 Why people use social media. Will these norms change?
36:30 Eric: Social media is great for people with social capital
38:00 Should you use avatars?
40:05 What happened after Imvu
41:00 Transitioning from software to writing
42:20 Did agile development influence you?
43:20 The inception of Lean Startup
44:45 Telling an entrepreneur to focus is like telling a fat person to lose weight
46:18 iOS Vs. Android
46:50 Engines of Growth
48:30 Vanity metrics
49:00 Startups are all naked in the mirror
51:10 Astrology and causality in startups
52:00 Actionable metrics
53:35 Opposition to departmental silos
54:20 Semi-autonomous teams
57: 00 How do you rectify company mission and customer demand
58:00 Apple is iterative
1:01:01 Why Steve Jobs got fired
1:01:45 Fenwick and West AD
1:03:03 So what comes next?
1:03:35 Eric: what is society going to do? Most people are working on failing ideas.
1:05:35 Middle class job of the next generation: software development!
1:06:05 The skills gap
1:07:15 The “College Deal” and why it needs to change
1:09:50 We need education!

  • http://twitter.com/tglee Tom Lee

    Most (all?) of the time code links appear to be broken.

  • http://bothsidesofthetable.com msuster

    It turns out I can’t link to time code within my post BUT if you click on the video link and go to YouTube then the links below the video on the YouTube post DO work. I tested them. Thanks for pointing out. 

  • http://twitter.com/thesash Sash Catanzarite

    I think you can link to time codes by adding a parameter to any youtube url like this: http://www.youtube.com/watch?v=EMysvIXmbl0&t=21m24s

  • http://bothsidesofthetable.com msuster

    I tried taking your link but just changing the time parameters (m, s) to a different time. Doesn’t seem to work. How did you generate the link in the first place?

  • http://bothsidesofthetable.com msuster

    OK, I figured it out. If you use your link it DOES work but you need to do it in a separate browser because your session remembers the last place you watched and goes straight there even if a link to a different time. Thanks.

  • Manuel Medina

    Thank you Mark for posting this video.  I was very familiar with Steve Blank’s work  (we had to live it as part of TechStars – thanks to Andy Sack who is a big fan of yours) but did not catch on to the hype of the lean startup movement and Eric Ries.  Watching this video brought it home for me.  There are a few nuggets of wisdom here such as “failure helped groupon understand what they were sitting on” and milestones based on learning that I feel will serve me well in the future.  Brad Feld did tell me to go read Eric’s book on our first TS call, and now I now why :-)

  • http://bothsidesofthetable.com msuster

    Thanks, Manuel. yes, make sure to read Eric’s book.

  • http://twitter.com/ScotchGuyDan Dan Bowen

    I like your views on a hypothesis particularly because I find myself struggling to understand how so many companies (particularly the ‘me too’ crowd) continue to find funding in the SV.  My question is whether or not you feel the lack of a sound hypothesis is a derivative of entrepreneur’s lack of experience and inability to truly understand who they’re building for, or is it the seemingly easy money flowing from the VC’s?  I look at 500,000+ mobile apps and think it looks like a complete lack of a solid hypothesis coupled with a congress-like money policy than any sort of definable success (except for Apple of course).

  • Dave Velardo

    Mark, when you remark that you’d like to see more major cities become software centers… I’m trying to prove this “need” for an upcoming presentation – do any writers/resources/articles/data come to mind that you could lead me into?