But What If It Isn’t Cool?: The Story of Eric Ries and IMVU


Photo by pixelsebi

Eric Ries, with a few others, started a company called IMVU in 2004.  As in IM (Instant Message) VU (view) – the novelty of the concept was the introduction of avatars to instant messaging.  He tells his story through the following five core principles of the Lean Startup Movement:

  1. Entrepreneurs are everywhere: in other words, the constraints to being an entrepreneur are minimal, if they exist at all.
  2. Entrepreneurship is management: or, a start-up requires a different set of management principles than a mature company does.
  3. Validated learning: One of Ries’ core concepts, basically stating that start-ups exist to learn how to build a sustainable business
  4. Build-Measure-Learn: a critical feedback loop that Ries developed – he advocates that all successful start-up processes should be geared to accelerate this feedback loop
  5. Innovation accounting: traditional accounting doesn’t properly measure what matters to him (and on this, I wholly agree with him), so he set up a different process to measure progress, set up milestones, and prioritize work.

Eric and his colleagues eventually grew IMVU to annual revenues of more than $50 million in 2011 (and some level of profitability, which he doesn’t disclose).  It’s important to note, however, that Ries is in no way shy about admitting the repeated mistakes that he and his team made at the outset.  You can read all about his adventure in The Lean Startup.  One of the more amusing issues was the unwillingness of test users to tell their friends about it.  After all, it was new to them, and they weren’t quite sure whether or not it was cool.  And as well all know, it’s totes obvi that you gotta protect your rep.

Of course, there is another way to look at what Eric did to create his organization.  Eric’s success can also be deciphered through mental models…  

It appears to me that what Eric really did was to apply a variety of mental models from other disciplines to his work as an entrepreneur.  Now he doesn’t describe it this way.  He mentions the five principles listed above as helping him in his success.  But principles 3-5 reflect one overriding concept: Feedback Loops.  And Eric mentions multiple other models that helped him craft IMVU into what it is today.  Here’s a list of the most prevalent models he mentions:

  1. Feedback Loops: These are critical to the success of IMVU.  Eric is constantly finding ways of installing feedback loops to quickly deliver to him the results of product adjustments.  To Ries, natural feedback loops speed the acceleration process, which is critical in this type of environment.  This is the central tenet, at least to me, behind the Lean Startup concept.
  2. Minimum Effective Dose: Eric recommends a Minimum Viable Product (MVP) as the fastest way to get through the Build-Measure-Learn feedback loop with the least amount of effort.  In other words, do just enough to elicit a response, then adjust accordingly.
  3. Creative Destruction: Ries is a fan of Joseph Schumpeter’s pioneering concept of creative destruction.  As Ries says, “I believe a company’s only sustainable path to long-term economic growth is to build an ‘innovation factory’ that uses Lean Startup techniques to create disruptive innovations on a continuous basis.”  Agreed.
  4. Adoption Curve: Ries recommends reading both Geoffrey Moore’s Crossing the Chasm and Clayton Christensen’s The Innovator’s Dilemma.  I would start with Geoffrey Moore, but the key concept here is that the early adopters are the customers who feel the need for the product most, so cater to them at first.
  5. Reductionism: Ries makes a good point about breaking down both an organization to the people that compose it, and the organization’s vision into its component parts.  Reductionism will often lead to insights otherwise overlooked.
  6. Quality Control: creating natural feedback loops at key points in the development process acts as a quality control measure on inventory (because you catch problems earlier).  This is a concept borrowed from lean thinking, which is borrowed from supply chain management (and further from engineering).
  7. Batching: In a further effort to control quality, working in small batches helps identify quality issues much sooner.

So we have concepts borrowed from Economics (Feedback Loops, Creative Destruction), Physics (Reductionism), Biology (Minimum Effective Dose), Marketing (Adoption Curve) and Supply Chain Management (Quality Control, Batching) – all coming together to create an integrated concept of transforming an idea into a profitable venture.  This, to me, is how success is born: by the pairing of mental models in a unique way.  Eric Ries has done exactly that with IMVU.