Just over a decade since his bestselling business book was released, Eric Ries, author of The Lean Startup, recently joined Pagefield for a virtual roundtable chaired by Pagefield CEO Oliver Foster. The Silicon Valley guru spoke to a selection of startup founders and business leaders about the success of The Lean Startup as well his latest project, the Long-Term Stock Exchange (LTSE).
A voracious reader
Before putting pen to paper and championing the lean startup movement – a framework to test and grow products and services in an efficient and risk-mitigating way – Eric revealed that he was a “voracious reader” of business books, spanning over 100 years of management philosophy. This knowledge helped Eric refine his own writing and thoughts around how he wanted to publish and shape The Lean Startup, which started life as a blog entitled Startup Lessons Learned.
When questioned whether he would change or update the book, Eric admitted that he was reluctant as second editions of books are “almost always worse than the original”. One possible exception was updating the case studies because “we have some way better ones now,” according to the author. That said he also acknowledged that it would be “misleading” to have only successful case studies and the reason the book was so successful was because the Silicon Valley-based businessman was learning about the concepts and ideas as he wrote about them. “The reason it works is because it’s at the right level of complexity,” he stressed.
Using capital efficiently
Beyond fulfilling Eric’s goal of building a minimum viable product which can be tested and updated quickly in the marketplace (part of the build-measure-learn feedback loop core to The Lean Startup’s manifesto), the author urged startup founders to use their capital efficiently, warning that companies that raise too much money too soon “still have the same mortality rate as companies that can’t raise money in the first place”.
He added: “If you have too much money it makes it hard to be disciplined because you have the luxury of this big cushion that protects you against the stakes.” For Eric, companies that have a very strong focus on their unit economics will win out.
Saving the world
Eric also pushed back on the cynicism around startups which claim to be saving the world, arguing that products and services can and do make a substantial difference to the way we live our lives and have a wider impact on the world. He set up LTSE to provide a financial ecosystem that can support these businesses.
As to how those startups dealt with investors, he urged them to have a highly structured plan mapped up, including the experiments and key milestones they needed to surpass to become a “miracle” company. “You decrease the uncertainty as you go,” he said.
We come in peace
LTSE, which officially launched in September 2020 after receiving approval from US regulator the SEC in May 2019, is not a competitor to the NYSE or NASDAQ, Eric stressed. “We come in peace,” he declared, explaining that the exchange was encouraging businesses to seek dual listings. Team management tool Asana and cloud company Twilio will be the exchange’s first listings when they come onto the market on 26 August.
The exchange champions long-term holding and welcomes companies with strong environmental, social and corporate governance credentials onto its platform.
“It should have taken a year to 18 months, and we told people that we thought we would be ambushed and attacked, and we expected to have to do it multiple times – that turned out just about right,” he said.