Invention is Reinvention with entrepreneur Eric Ryan

0:01You may not recognize Eric Ryan's name, but you definitely recognize his products. He is best known for co-founding Method products. Yes, those beautiful soaps that come in those gorgeous bottles and bright colors that we see on the shelves at the supermarket. He's managed to turn hand soap and shampoo into home decor items. The reason I respect Eric so much is not just because he has an eye for design. It's because he's one of those rare entrepreneurs that has been able to repeat his success over and over and over. After Method, he founded Olly, the vitamin brand. Welly, a line of first aid kits.

0:41Cast, a fine jewelry company. And he's still not done. I wanted to ask Eric how he does it. And what follows is a conversation about serial creativity and why reinvention is the key to repeating creative success. This is a bit of optimism. The reason I really wanted to have you come in, beyond your spectacular energy and optimism and joy of life you are like the entrepreneur's entrepreneur you know you're like the patron saint of entrepreneurs and i think that's a great place to start which is what is an entrepreneur because i've always made the distinction that small business owners own small businesses entrepreneurs solve problems because you can find entrepreneurs inside large corporations yeah right they don't necessarily have to start a small business and Some small business owners are entrepreneurs, but not all of them.

1:32Yes. And so how do you define entrepreneur? Because you define yourself as an entrepreneur. Yeah. No, it's definitely like who I see as part of my identity. And I think to your point of like a small business owner is kind of more of an, you're doing something a little bit more independent. Right. And I think an entrepreneur is really about inspiring a lot of people. Whether you're doing it inside a company or you're creating something independent from scratch. And to create change, you need to inspire people and bring people along with you. That's a big difference versus somebody who's just working independently, whether it's a small business owner or a contractor.

2:07So when you meet a young entrepreneur, at least self-defined entrepreneur, and they say, Eric, I've got this amazing idea. I've got this amazing idea for a business. I want you to invest in me. What are the things you're looking for in their personalities? I mean, I buy into their ability to inspire, but that doesn't seem enough. My first company method, the soap company, we were fundraising. and I noticed a huge difference when I would sit across somebody who was an entrepreneur and then was investing. And there was two notable individuals, Jim McCain who started 1-800-Flowers and Howard Schultz who started Starbucks.

2:42They were so less interested in my plan and my like fictional numbers. They were so much more interested in me as an individual. And like regardless of what your plan is, if I give you money, can I bet on you? And then I would sit with funds and professional money managers, and they would dive so deep into the detail of that plan that I knew was fiction. And that was the first lesson I really learned of they really understood at the end of the day, ideas are easy, execution's hard. Are you somebody who's going to run through walls and have, to your point, that belief, that work ethic, whatever it takes to make whatever your idea is successful?

3:18So this raises an interesting question, which is, should entrepreneurs, especially for their first go, ever try and raise money from numbers wonks, from money people? I mean, it's kind of a necessary evil, depending on where you are. I mean, that's why they're called angels in the beginning, because they're people who save you from business death. And so those first investors are people who fundamentally don't believe potentially in your idea, but they believe in you. And that's why they're called friends and family rounds. because you need your friends. People who love you. Exactly. They're like, look, I think you're an idiot, but I love you.

3:53Here's$10 ,000. Good luck with that. I never expect to see that money again. And then there's like the beauty of taking money from friends and family, people you love is like that puts a lot of pressure on you. You don't want to show up at that dinner table telling grandma, I'm sorry I lost your money. People may not know your name, but they definitely know your products. Method being, as you said, your first and I think probably your most successful, your biggest one. Yeah, I think Ali's getting there. I think Ali and Method are about the same size. Yes, I am in your homes. Yes, but Method, I remember when Method came out all those years ago, and it took the world by storm because nobody had ever thought to make the hand soap that sits next to the sink, the dish soap that sits next to the sink, like these things that are out in our homes.

4:40They're part of the landscape of the kitchen or the bathroom. No one ever thought to make them nice. And that's fundamentally where it started, right? You just made the packaging beautiful. Yeah. I mean, you look at a dish soap more than you use it. Yeah. And nobody thought about these products as a form of self-expression, a form of, you know, decor, lifestyling of your home. And this is back in, you know, 2000. I was working in the business plan and like Home and Garden TV was just taking off. MTV, Rock the Crib. Like, so for the first time, Ikea was arriving in America. It was like the first time that people really started to think about their home as a form of self-expression.

5:15And the products just felt like so. You know, they were products that said, buy me, not live with me. And we wanted to create something that said, live with me. But the problem was when Adam and I started creating it and we, you know, we create this beautiful packaging and then we dug in. We're like, ah, cleaning is like a really dirty industry. You pollute when you clean. You're asked to use poison to make your home healthier. So we're like, great. If we're successful, we're going to leave pretty little bottles of poison on everybody's countertop. So we had to solve another problem, which is like, how do we make sure these products are non-toxic, healthy for you, healthy for the planet?

5:48Yeah. I mean, it's very similar to what Jobs did, right? Because there was a gray box that was the early personal computer, and nobody wants a gray box on the living room, so they put it in the basement. And Jobs and his infinite genius says, if I want this to become an integrated part of our lives, then if I make it pretty, you'll put it in the living room. And it's a very similar mentality, right? Yeah, I mean, it's product placement, right? It's product placement. And I think people forget, like, the importance of aesthetics and how it does contribute to functionality. It's why you just said pretty.

6:15Like, I always, like, I have a hard time when people look at something through just the vanity of, like, pretty. I'm like, no, no, no, like, you know, design always has a purpose. I want to know where the inspiration for Method came from. But then I also want to know the actual slug of making it happen. You said Howard Schultz and the 100 Flowers guy. They invested in the person, the people, you and your partner, who they believed would run through a brick wall. And we'll get to the brick wall. And by the way, neither of them invested in me. Oh, they didn't? They both said no? No. They both said...

6:44Actually, no. So Maveron Howard Schultz's fund, they did invest. And we ended up going with Tim Kugel, who is another individual who believed in us. At the time, he was running Yahoo. He was employee number six. They were CEO. Okay. But we ended up going with somebody else over them. Oh, that's very interesting. Yeah. Can I ask why? Interesting. They... Their first... So their first term sheet came in at a really low valuation. And when we said something about it, they doubled the valuation overnight. And it didn't feel like a great way to start off a marriage. It was like you tried to... They were bullshitting you out of the gate to see if you would take it.

7:16Yeah, yeah. Oh, that's... Yeah. Yeah. And it didn't like... At the end of the day, these are people like, they're going to be your true partners. And I just... I adored Tim and just thought the guy was just built of incredible integrity. Yeah. And character mattered more than anything else. Oh, this is such a great segue to a bigger conversation, which is how to choose a partner, right? And like I get this question all the time. I'm sure you get the same, which is the number of times I've had entrepreneurs who literally their investors are forcing them to make decisions that are bad for their companies, that they know are bad for their companies.

7:46And I've seen friends who've been fired from their own companies, you know? Creating anything from scratch, it's an iterative process. Yeah. And it's not linear. And I think a lot of times, too, when you make decisions about partners, they're often very linear thinkers. And to your point of like, you're going to fight, there's going to be tension because ultimately you're going to do something that is this iterative, you know, launch, learn, optimize, launch, learn, optimize. And to be able to kind of work through that process, you need somebody who fundamentally, you know, going back to believes in you, but also has the flexibility to work through you.

8:19When things go really wrong, which they always do when you're creating something from scratch. Every time. I'm sure you've been there many times. Too many times. It's the game. It's the game. And when they're in the trenches with you, can you work through it together? Yeah. Or do they look to dismiss you because their ego gets bigger than yours? Yeah. So one of the reasons you're special to me and you're special in the entrepreneur world, there's many successful entrepreneurs, but they've done it once. And was it their genius or did they win the lottery? And some of them go around giving speeches equivalent to, let me tell you the numbers I picked on my lottery ticket and you too can win the lottery.

8:56you know and i have so much respect for the entrepreneur that does it a second a third a fourth time tell me how that happens because you know when you're young and hungry it's a very different mentality than you've had your first you know you've sold your first business you got you're rich and now you have to do it again the the hunger isn't quite there the same way like what did you learn about what you did the first time that you actually had to adapt for the second and third time that's made it still work? Yeah. First of all, I was like going back to the journey of like, why do this again?

9:29It's hard. It's really, really hard to start a company from scratch and try to scale it up. And after we sold Method to S.E. Johnson, for the first time in my life, I was like, I was a little grumpy and I couldn't figure it out as I felt a little rudderless and grumpy. And yeah, we had financial foundation now. And like, it's kind of funny. It's like entrepreneurship is the one thing like when you exit it or you finish it, you get congratulated. Like, you don't get congratulated for like exiting your first marriage. Like it is all about entrepreneurship. Like when you exit it, that's like the celebration.

10:00And I realized like so much of my identity since I was a kid was this idea of being an entrepreneur. And I was no longer an entrepreneur. Like I wasn't scared at work. I was still a method, but it was super comfortable. There was no risk anymore. And it wasn't until I decided to go do Oli and create my second brand, like I snapped out of it. I was like, all right, I'm back. Like I'm an entrepreneur. I'm a founder again. Yes, I'm scared. But I was also terrified, to your point, on the first one, I was like, am I, did I just get lucky? Which, like, there's always luck in a success story. That's why you can never have an ego.

10:32Like, luck always plays a role. So when it went to go start it again, a lot of it was this idea of, like, okay, what, you know, trying to find a playbook. And I studied a lot of serial entrepreneurs, like Richard Branson, and really understanding the ones who did it over and over again. There's got to be some key lessons or principles. or like you with like, I'd love to hear as you, each time you go to write a new book, like there is start a playbook that you learn. And so I did, I was very conscious of like, okay, I want to take what worked, but more importantly, all the lessons I learned of what didn't work and apply it again to, to Ollie the second time around.

11:05For example, at the end of the day, it's about great people and great products and being a good steward of capital. If you can do those three things, your chances of getting lucky enough to have a successful company matters. So for me, I mean, I've got like some really geeky ways that I think about it. So, okay, we'll geek out on branding. So I don't start with ideas. I start with categories or spaces. I was not passionate about cleaning. Like when I started Method, my mom was like, are you sure you're right one to do this? Like, I've never seen you make your own bed. And my nickname was Marvin for my roommates, for Messy Marvin, because I never did the dishes.

11:45I got the angriest email from a good friend of mine, still good friend, who is my roommate in Minneapolis, who's like, you motherfucker. He's like, I never once saw you do the dishes. Now you have a successful dish soap. So I don't start from this place of passion. But by the way, this is apocryphal, because the belief has always been the sacred cow is you have to have a passion for the thing that you're making. Totally. In your case, you're calling bullshit. Not at all. I hate cleaning. I love it. But what I did love was home decor and design. Right. And so I found a way to find my passion through method, through design.

12:19Okay, so there has to be a passion. Yes, you find it. Same thing with Ollie. I never took vitamins. Welly, I rarely bleed. But what I do is I start with categories. So I was literally looking at the sea of sameness of cleaning products in a grocery store. And that becomes the clue of dig here. Or in the case of Ali, I just started looking at that vitamin aisle and saw people like literally stressing out trying to choose something healthy for them. So that's a clue, like dig here. And then I break it down. I try to figure out, okay, what is like the big cultural shift this category missed? So in the case of Method, we realized like, all right, lifestyle in the home and sustainability.

12:55With Ali, it was like millennials view health and wellness through the lens of a lifestyle pursuit. Like, so this is when SoulCycle was taking off. So it's like, okay, what if we reimagine the vitamin as a lifestyle product? And to a certain extent, I'm a bit of a thief. So I steal between categories. So if you look a lot at what method, I stole from housewares. I brought over this idea of making them look like little vases sitting on your countertop. But then I also stole from personal care, where it brought in great fragrances, beautiful colors. Ali, I stole from the beauty aisle. I tried to design something that would look at home in the beauty department and then bring that into the nutrition department, which was like a dog's breakfast of design before Ali arrived.

13:34The reason I find this so sophisticated as a thought is it directly answers the question why old brands or old categories miss, to your point, miss changes in society. So it's embarrassing that Apple invented iTunes and not the music industry. It's embarrassing that Netflix pioneered streaming and not the television and movies industries. It's embarrassing that Amazon invented the e-reader, not the publishing industry. It's because they're so fixated on their model that pulls in whatever money it pulls in that they just have their heads down that they're just missing that the world is changing around them.

14:08Because every single one of them could have adapted but missed it. And here, too, it's embarrassing that the traditional packaged goods companies, they could have done this. There wasn't like some earth-shattering innovation here. They just weren't looking. That's right. That's why outsiders disrupt. because once you're comfortable in your business model. Yeah. And I think too, like, you have to be a bit naive. Like you have to be able to look at a category or a product or a brand, like, and not realize how hard it's going to be. And it's like that beginner's eye of looking at a space through a fresh lens is so much easier than when you're like, you just, I always tell people when they come join us at work, I'm like, in the very beginning, make sure you get all of your ideas out to us while you've got a fresh perspective before you know too much like the rest of us.

14:57Yeah. Orson Welles talks about this. He's plotted for his courage challenging the movie industry. He was very vocal. He says, no, no, no, no. I had no courage. What I had was naivete. I asked for things I didn't know that I could get. They said that I was courageous to stand up to Hollywood. I was just asking for things they didn't know that they would say yes to. And there's something to be said for naivete. It's definitely been one of my superpowers, which is just stupid enough to think I can make the change that I can. Well, you also just said you have such a talent at getting to the kernel of the truth of something or simplifying in a way that is just so powerful, and then representing it back in a way that is just so powerful.

15:39Thank you. Like from a branding model, like I just admire your work and your ability to do that. And I think people give me too much credit. You know, going back to the naivete, so you repeated what worked from business to business. You found the creative underpinnings that worked and repeated them. That's not my method. It hasn't worked that way. So when I wrote my first book, when I wrote Start With Why, it's kind of a funny little journey because nobody knew that I could write. I didn't know that I could write. The longest thing I ever wrote in my life was like 10 pages, 15. I think I had this like if there was a 10-page paper, I could write it in six.

16:17If it was a 30-page paper, I could write it in six. You know, it's like I was really good at six pages. That was sort of like... That's your right. So for me to write like 15 pages, that was like real work. But I'd never written anything long form. I didn't do a thesis or anything like that. And so when I got my first book deal, I cleared my calendar. I was already doing the speaking thing. And I was like emptied out my calendar. I was like, all right, I'm going to have to write a book. And I was struggling. And then the few gigs that I had to say yes to because I had to pay bills, I would bring my computer on the plane with me.

16:45And this was pre-internet on the plane and pre-plugs on the plane. And so I had a battery that would last about... That was the golden era. You could actually just disappear on a flight. So I would have a battery on my laptop that would last, if I was lucky, three or four hours. And I'd sit down and I'd start writing. And my most productive times were on these flights. Oh, yeah, right. And it sort of dawned on me that this was the thing. I called Delta Airlines and I got on the phone with the agent. I was like, okay, here's what I need. I need to be in the sky for three and a half hours minimum.

17:13I don't care where I go. And the agent was amazing. It helped me plot all these flights. I went to Orlando for the day. I went to Arizona for the day. I even flew from New York to Los Angeles and right back again. Like I went for the day. And I would show up at the airport with my laptop under my arm and nothing else. I wrote 2 ,500 words in a flight. So that helped me write this book. Okay, flash forward. Second book deal. Leaders Eat Last. Okay, I started booking flights to nowhere. Going to repeat the whole system. And what I'd failed to recognize is that I'd been on the speaking circuit for so long that like getting on planes is like, it's exhausting.

17:51And I remember I booked my first flight for my first writing trip. I was going to the airport. I had my laptop. I was sitting in the back of a taxi. And I was literally, my heart was pounding and I was having dread, dread. And I told the taxi driver, turn around. And I turned the cab around and went back home and missed my flight. But the problem was now, how am I going to write a book? And so each book that I've written, I've actually had to reinvent the creative process that would work. because the system that worked for the prior book never worked for the next book. But is there a common thread of finding a state of flow?

18:23I mean, of course. I mean, of course, finding a state of flow is always the thing. And I always will try the thing that worked before. And it doesn't. And it hadn't worked. And so this is where I learned the lesson. It's so fascinating. But why do you think that is? Like, why can't you replicate that? You have to reinvent your creative process. This is why I think what you do is fascinating, which is your ability to repeat, because I think that as you go through life and as you sort of learn things, I'm not the person I was then that I am now. And each stage, I'm a different person. I have matured differently.

18:59I've learned new things. I have different tolerances. Like I don't want to be on a plane flying nowhere anymore. Unless I have somewhere to go, I don't want to be on a plane at all. So I have different tolerances. I think this is why a lot of companies, going back to the original analogy, which is why publishing missed the e-reader or why the music industry missed iTunes is because they're repeating. These executives who'd made their way up the ranks been doing the same thing for 20 or 30 years. They're simply repeating what worked the first time. And so they're unable to reinvent themselves or their categories.

19:32Right. I find out about you, but I find part of my creative process is kind of going back to that. I don't start with ideas. I start with looking for the opportunity. Which I love, by the way. I start with a space rather than an idea so sophisticated. Because I find like if it's hard, it's probably wrong. And so I open lots of little doors and windows. And then once I kind of find that little nugget, if it flows really fast and easy, then I know it's right. When I look back at my career, when something failed, it was the same pattern over and over of like it was really hard. And we kind of forced our way through it.

20:05Can you give an example of one of your spectacular failures? Oh, so we just launched a space. So I've had this. I wanted to go after the pharmacy industry. And I think when you go shop those categories of NyQuil, Tylenol, like it's just dated. It's unnecessarily confusing. And I love like part of my formula is kind of what you said before, but taking like an inner child approach to a category that takes itself too seriously. Yeah, yeah, yeah. And therefore. Which is most things. Most things. And then therefore overly complicates it as well. Right. And that's where I get kind of the greatest joy if I can break that down.

20:35And so we launched this, you know, big pharmacy OTC line. and my whole goal was like really simplify it, make it more delightful. And the consumer didn't respond. They're just so on autopilot of their choices, but every part of it was hard. The design was so hard. Trying to create these child-resistant caps, but they were still beautiful and functional was hard. Getting the pharmaceutical vendors to work with us was like, every part of it was like moving water uphill. And in the end, like - It didn't, it flat. It was beyond flat. and I mean I love our team and we all gave it our best shot and worked so hard on it where I'm about to launch a new product in June here coming up pretty quickly we were on vacation in Greece last summer and within a couple days I concepted the entire thing took it back talked to a couple partners put it in front of Target very high concept they're like great we love it and then the end result on shelf I know if I have a really good idea or if it's going to win if it's so painfully obvious that it scares me Like you can't believe that nobody else noticed.

21:37Cannot believe. And that's like with Method, not only the world's first, but largest multinationals like dominate these categories. They have 150-year head start. This is before e-commerce. So barriers to entry were brutal, getting into grocery stores and mass retailers. And the thing I struggle the most with is like this is so painfully obvious. Why of all these companies with resources, back to your point before, have not done it? So I put it together as a concept. I gave it to the 20 smartest people I know. And I told them, go shoot holes in this. tell me why this is going to fail. And everybody came back with the same answer.

22:07Like, the only reason is because no one else has done it. So therefore, it must be a bad idea. Wow. Okay, new line of questioning. Yes. What is innovation? Every company says they're innovative, which clearly is bullshit. It's creative thinking applied to business. It's a fancy word. Creative thinking applied to business. Say more. I think innovation is often used as a fancy word for just like thinking creatively. Yeah, but why do companies think that adding product and features, adding features and benefits is innovation, which you and I know it isn't? Because innovation sounds, it sounds like it's harder than it really needs to be.

22:46Therefore, you can charge more to do it or take greater credit than what you really did. So let me give you an example of what I think is innovation and call bullshit if you think it deserves it, right? It's such a loaded word. So we often confuse innovation of adding a motor or a flat screen to something. Look how innovative it is. I'm like, you just got rid of the switches and the dials and made it a screen. Like, that's not innovative. So, for example, there used to be a time when you and I, we can remember this, where they had a screen in the conference room and there's a little string hanging from the ceiling.

23:18And you pulled in the string and the screen came down. And when you pulled in the string again, the screen went up. And somebody decided in their infinite wisdom to put a motor in. And I don't remember a conference room where that motor ever worked. It was always broken down or broken up, right? Or halfway. Or halfway. Like there was no need to put a motor in. It wasn't broken. Now, if it's a home and it's an aesthetic thing, you don't want a string hanging from the ceiling, add the motor, add the button instead of a light switch. Love it, right? But in an office, it literally solved no problems, right?