The art of the steal: Serial founder Eric Ryan on finding inspiration

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1:16When I told my mom I was going to do this, she's like, I've never seen you make it better. Are you really the right person to start a cleaning products business? Well, that was a fair question from mom. but it turned out that Eric Ryan was exactly the right person to found Method, the cleaning product's powerhouse. Eric scaled the company to incredible heights before selling it, but then he faced a new question. What to do next? I felt kind of wireless. I was not happy. And I realized I had lost my identity as an entrepreneur, which I viewed myself since the third grade as somebody I aspired to be.

1:56in the second I decided to start my next company, I like snapped out of it. And I was like, okay, I've got purpose again. I've got a dream.

2:09This is Masters of Scale. I'm Jeff Berman, your host this week on the show, Eric Ryan. He's the brilliant serial founder behind companies like Method and Ali, whose bright, bold branding has probably caught your eye many times as you've strolled down the cleaning and vitamin aisles at your local store. Eric has successfully sold both Method and Ollie, but he still has an insatiable entrepreneurial itch. In this episode, he shares his winning formula for blending artists and operators into companies capable of disrupting entire categories. Eric, welcome to Masters of Scale. Thank you for having me.

2:46I've been such a fan of this podcast since it launched, so this is a thrill to be here. Well, long-time customer, Happy to be first time conversation with you. I'd like to go back to your ad agency days. How did you end up in the world of advertising? When I was in high school, I read every book I could on entrepreneurship and I knew the odds of launching something, particularly the first time and being successful were so incredibly low. And at heart, I'm a fairly risk averse person. So the idea of like actually having a career first and creating that safety net as well as hopefully useful skills that I could do as an entrepreneur was really important to me, even though I was constantly dabbling with ideas, even in college.

3:26And I went to do an internship in London and just got lucky that I knew I wanted marketing and I was given an internship at an agency. And I absolutely just fell in love with that agency culture, working across every element of a brand from packaging design and that agency world. What did you love about it? I love the problem solving. When you start to work on a brand, whether it's a piece of business that that agency already won, or for the Don Draper fans out there, like the thrill of the pitch, I just loved. But it's all about problem solving, reframing, finding ways to tell stories differently.

4:06And so that challenge I truly love. But then being around artists. I was always hanging out in the creative studio and with the design teams, and I have zero gifts in that area. But to be around the people who did have those gifts, I just got such a high from. And then walking grocery stores in London, it was just like, to me, it was like the Super Bowl of capitalism. And I realized in that moment, I just, I love the way brands get expressed through a physical product. What did you see walking through the supermarkets in London? You know, I think it's still arguably my best tactic for developing new ideas is to be in a foreign market, ideally with a creative or a couple of creatives with you.

4:50So you can sketch as you go, cup of coffee in hand, incredibly jet lagged. Nobody can bother you because you're on a 12 hour time difference. When you walk through a foreign retail store, you just look at everything a little differently, particularly if you can't read the language. So you have to rely a little bit more on like form and graphic design. And I also think better when I'm in motion. We were just in Sicily and first thing I hit was a grocery store. We landed there. I still find I get so much inspiration from being out there versus ever flipping through Instagram or anything else that just feeds you up lots of ideas.

5:26There's just no substitute for me. Yeah, you know, I remember I was sitting with Jeff Curl from Stance a few years ago. Jeff was saying that part of where he found product inspiration was walking the aisles at Target or Walmart and looking at product categories where everything looks the same. and trying to envision how something could look different. So as you're walking through these grocery stores outside of the US, is that part of what you're doing is saying what's here that isn't in the US? Yeah, for sure. I just play this little mental game of like, what if this was this? What if that was this?

6:02A lot of my innovation approach is really just stealing. That belief of like real artists steal, but I never steal from our competition because then you're just a hack. That's embarrassing. I try to steal from as far away from what we're working on as possible. So it could be stealing an idea in a museum that you could apply to a brand. And if you look at my body of work as an entrepreneur, you'll see that through line in everything I do. So with Method, I really stole from personal care and I stole from housewares. And I mean, this is back in the, sadly now, the turn of the century in 2000 when cleaner was so ugly.

6:39of course you hid it underneath the sink, out of sight, out of mind. So stealing from personal care, bringing great fragrances and design and something was a product you wanted to use. And then housewares was really where I thought a lot about the industrial design. And if you look at method, a lot of it is designed to look like a vase that'd be sitting on your countertop. So that's always been a big part of my formula of innovating. You could have stayed in agency world and ended up doing incredible work, working at phenomenal companies, but you did make the leap. How did that come to pass? I mean, I always knew I would.

7:10I knew like that was my real love language, this product. And I didn't know how long it would take me to write the business plan, launch it, or even if I had a great idea. But it took me about a year before I got the confidence that the way we were thinking about Method was worth quitting our jobs and going to do. Why Method? Why this category and why this company is your first step into this world? So I was spending a lot of time in grocery stores and I just started looking at the cleaning aisle because it was like this giant sea of sameness. So that was the clue dig here. And then going back to my planning skillset, trying to figure out like, okay, what is the big category insight or what I would call like a culture shift that the category was missing?

7:48And then I realized it was lifestyleing of the home that you look at these products more than you actually use them. Like dish soap has prime real estate in your kitchen. And I was like, why can't those be objects of desire versus it's like really designed to be bought, but not to live with. And I was really into home design and decor. And so it was kind of connecting the passion of that of like, okay, well, what if we reframe this category as really part of lifestyling of the home? And then Adam was my roommate. We live with like six guys, this dirty flat in San Francisco. Like this is not the Martha Stewart story by any means.

8:22And my roommates called me Marvin because I didn't like to clean. I think when I told my mom I was going to do this, she's like, I've never seen you make your bed. Are you really the right person to start a cleaning products business? And then as Adam and I started formulated the product, you know, we were in our twenties, he had a degree from Stanford in chemical engineering. And we realized like, wow, like cleaning is a dirty business. You pollute when you clean, use poison to make your home healthier. So we were lucky enough to be successful. Essentially our business plan was to leave pretty little bottles of poison sitting on everybody's countertop, which there was just no way we were going to do that.

8:54So we realized there was a second culture shift, which was really sustainability and wellness. And so I guess I'm to take credit for it because nobody's told us they've done it first of really combining high design and deep sustainability. And those were the two trends that that brand still today, 20 some years later, drives its growth off of. Makes sense. Like we can kill two birds with one stone here. Was it all instinct and this honed understanding of consumer behavior from the agency and consulting world? Or did you have research against this as well, buttressing your assessment of the opportunity?

9:28Yeah, no, definitely both. So I was trying to de-risk it in every way that I could. But it's still to the way I work. I try to set like, what is a vision and kind of back into that vision, see if I can prove it. So I do top down and bottom up in the way that I develop concepts. And so what I did was I wrote this concept book. I gave it to the 20 smartest people I knew across a wide range of industries. And I didn't tell them like, you know, hey, tell me if you like it. Because nobody's going to ever step on anyone else's dream. They're always going to like be like, yeah, it's great. Good luck.

10:00so I gave them the assignment, come back with three reasons why you think it's going to fail. So that way I empowered them to like beat up my workplace. And nobody could come back with a really tangible reason why it would fail other than it just seems odd that given, you know, you have these huge multinationals, which were the first multinationals, like Unilever, Procter & Gamble, and that none of them are doing this. So I was like, and that was my point of insecurity. I was like, this seems so painfully obvious. Why is nobody else doing it? Why couldn't P &G or Unilever at the time see the opportunity and beat you to method?

10:35You know, I think big companies where they struggle to innovate is in areas that is going to compete against their core brands, of course, right? The innovator's dilemma. And the way I also thought about it was I couldn't create a new brand. I really had to create a new category to be successful. When you're building a brand, if anybody else can line extend their way and compete against you, you're really going to struggle to compete against a big company unless you create a huge lead. So that's the way I thought about it. It's like, I'm not creating a new brand. I'm creating this new category that I call premium home care.

11:07And it was premium because it was good for you, good for the planet, but yet formulas that worked, but also really the design and the fragrance. So trying to elevate the whole experience. How did you and Adam go from business plan beaten up by 20 smart people, asked to give you the reasons it'll fail to actually launching the company? What's the inflection point that actually gets you there? So we, and this is the same advice I give entrepreneurs all the time, of just break it down to like little bite-sized steps. Like at the beginning, like you don't have to worry about how to start a company.

11:38You just got to figure out, do I have a good idea? And that's the process we followed. And I always recommend other entrepreneurs to follow. So step one, like I said, dreamed up the concept, made sure there wasn't a blind spot on that concept that we were missing. So that gave us a little bit more confidence. So the next step was we created the prototype products and we gave it to friends, family, asked them to use it. And when people were asking for more and coming back and us using it ourselves, we realized like, okay, we've got a really great product. So gave us a little bit more confidence.

12:09Then what we did is we started going to all the local Bay Area in San Francisco, upscale grocery stores, the independents where you can go in 6 a.m., you track down a really grumpy store manager. You've got like 20 seconds to give him the pitch while he's stocking a shelf. And I didn't know how to sell a product. We just had to figure it out. And then I realized like, okay, they're saying yes because they realize our persistence. We're just going to keep coming back till they say yes. And then we got in about 20 stores. Adam and I would take turns hand delivering every week, putting it in the shelf, writing up a little invoice and seeing how it would turn.

12:43And so each step just gave us a little bit more confidence to keep going. The company was growing, but not fast enough. Method was still losing money on every bottle it made. These are categories of scale. And the only way this company is going to be successful was to get a national customer. So I assumed it was going to be Target. And we were raising our next round. Of course, I shut off my mouth and I'm like, Target's going to love us. Like, about design, their guests, our customers, like it could not be better, more aligned. And the first meeting we piggybacked off of a distributor who got us a meeting and the merchant didn't like the name.

13:24I'm like, your target. How do you not like the name method? He didn't like the size of the bottles. He didn't like the coloring. And he looks at us. He's like, guys, he's like, I hate to say it, but it's a bit of a snowball's chance at hell. And, you know, Adam and I are like dumb and dumb. You're like, so you're saying there's a chance. as an entrepreneur, like the road backwards of failing is always so much scarier than the road forward. So you just got to keep figuring it out. So at the same time, I was trying to hire an industrial designer. So at this point, like our first line of spray cleaners, I found like this camping fuel bottle in Norway.

13:59We just kind of knocked it off. But I was a big believer that we needed industrial design, one to be able to like, going back to what I was saying of like embodying the brand through product and the love of product design. But also I realized like the barriers to entry are so low that if we didn't bring in industrial design graphically, it'd be much easier to knock us off, which did start happening. So I had this list of like the most famous industrial designers. And I was just gonna go through down the list until someone said yes. And top of that list was Kieran Rashid. And Kieran Rashid talked a lot about democratizing design.

14:33And I loved his shapes. He did a lot of stuff in housewares. like he was perfect. So I sent him a cold email pitching him this idea to do a hand wash for us and a dish soap. And I was like, you know, these are products that sit across every sink within the landscape of America and they sell for under$3 and a chance for you to like really, because most of his stuff was quite expensive still. And shockingly, he got right back to me and agreed to take it on in the meeting. And I probably looked 12 at the time when I went in to brief him. So we then used Karam to get a meeting with the marketing team at Target because they were doing the Philippe Stark line at the time and we knew they wanted to work with Karam.

15:13So I used Karam as my carrot to get a meeting with Target marketing who then invited the merchants. Worst thing you could ever do is go over a merchant's head. Right. And we spent so much money on blowing out our vision for this category. Our first Karam product, which was this inverted dish soap. So you don't have to like a stapler. You just pick it up, staple it. That's where I got the idea. So instead of flipping it over, each time you go to use it, you just like squirt from the bottom. That prototype showed up in FedEx that morning and the buyer who said snowball's chance in hell, when it got to him and he squeezed it, he goes, oh my God, even I would use this.

15:48And that was the point where it's like, okay, we're gonna live to see another day here. There's so much to love about this story, including kind of the bank shot approach of being like, okay, what do I know about my, no pun intended, target customer and what might get them over the hurdles that they put in front of us, right? And the idea that they want to work with an industrial designer who is now your partner on the product. It's a really interesting approach to give yourself a better chance than the snowball in hell. Definitely part of what my success has been as an entrepreneur is relying on the gifts of others.

16:23Where again, when we play Pictionary as a family, my kids can't stop laughing at how bad my drawings are. And I think also the way I've always been attracted to being around creative and design talent, but I'm not a threat to them because I can't do what they do. But then leveraging and being able to connect the dots has been a big part of my success. Fill ahead, why Eric Ryan focuses so much on building culture.

17:01Hey, folks. Jeff Berman here. Exciting news. Applications are now open for the Masters of Scale Summit. It's happening October 20th through October 22nd in San Francisco, and it is a really special event. Please join our curated community of founders, innovators, and leaders shaping the future. Expect ideas that challenge your assumptions and connections that move your business and maybe even your life forward. It's an experience that can change literally everything. Apply now at mastersofscale.com slash apply26. That's mastersofscale.com slash apply26.

17:46Business and the ways we do it are changing in ways that are both more subtle and more radical than you realize. Welcome to Compound Interest from Samo4 Business. I'm Liz Hoffman. And I'm Rohan Goswami. We've been covering the forces behind this revolution, but now we want to talk directly to the people driving that change. Each week, we'll talk to the operators, the experts, and the innovators to go beyond the headlines. We'll dig into everything from hospitality companies that no longer own hotels to companies that will finance through sushi order. We'll unpack the transformation of how business and consumers engage with our economy and figure out what lies ahead.

18:18Listen to compound interest from Semifor Business wherever you get your podcasts.

18:29Welcome back to Masters of Scale. You can find this conversation and much more on our YouTube channel. And be sure to check out the show notes to find a link to our newsletter. there's this um theory of organizational growth and factors of one and three you're one company one person at three at 10 and 30 100 and 300 etc and in particular in that kind of 30 to 100 growth phase it feels to me like it's increasingly difficult to maintain and grow culture in the right direction because most companies literally create things called divisions right right i mean it's crazy, right? We're going to intentionally separate ourselves rather than unifying ourselves, uniting ourselves.

19:12And look, below 30, kind of everyone knows what's happening in the company, right? Just by nature of how you work, especially in an in-person world. Given how important culture has been for not just Method, but your companies and for you personally as a leader, how have you managed through the scaling journey, keeping the culture heading in the right direction? I think, you know, it goes back to advertising where I recognized that was an industry where your assets went down the elevator every day. And I was lucky enough to work for an agency like Fallon where they cared so much about the culture.

19:48I mean, the joke was, if you don't show up Saturday, don't bother showing up Sunday. Like, it was a hardworking culture. And at that stage of my career, like, I loved it. But I recognize within advertising how important culture is. And I always carry that forward with everything I do. So for me as an entrepreneur, I have two things I care most about. It's people and products. And I feel like if I can get the people right, which is just culture, and I get the products right, generally everything else will get easier. And I also think about the products are just really a souvenir of the people. And if you want to be one of those companies that truly leads and does things differently, you have to kind of create for yourself.

20:26And I think the best company, if you look at like Apple or Nike, the best companies create for themselves. I don't know how you can't lead the consumer if you aren't the consumer. And then within CPG, that goes back to why some of these companies can't innovate is because they have to rely on the consumer and consumer research to be able to make decisions to drive their vision, which is always going to be a rearview mirror. And, you know, at the end of the day, I want to go to a place and work around people that really are energy giving and we're having a lot of fun together. And it shows in the work.

20:55I want to ask you one other question before we get to selling method, because you referenced your experience at Fallon where the culture was, if you don't come in Saturday, don't bother coming in on Sunday. Jeffrey Katzenberg's famous line. Is that where they still live from? He may not have originated it. He gets attribution for it. And if we don't give him attribution, we'll hear about it. It sounds like you and I had similar formative experiences where we're making a living wage, but not much more than it in the early days of our careers. and you're putting in 80-hour weeks as a norm and 100-hour weeks are not unusual.

21:29And I'm not saying that that's the healthiest. I'm not saying we can't have better integration of work and life or work-life balance. But I learned so much in those years, not just from getting more reps, go back to Gladwell and 10 ,000 hours and all that, but because I got to be in the room watching other people do it and usually do it incredibly well and learn from that, but also learn from where they didn't and try to pick the things that could work for me and figure out how I shaped the things that I knew wouldn't. And one of my challenges and my concerns right now leading a largely remote company is how do we give our more junior people the exposure, the opportunity to learn, to grow, to mentor them, even the walk to the coffee shop after the meeting where you can debrief.

22:17And I'm just curious how you're leading through this era having come up the way you came up and clearly invested in the success of your people. No, and I agree. And we were talking about earlier with like my daughter at NYU and just like, I was always such a believer of the role of in-person. And we did remote Fridays at Ollie got long before COVID ever showed up just because I always thought it was important to give people one day to work from home. And we were so efficient doing it. But one thing that I think people find also surprising about me is I'm very right brain, left brain. Like, so I call it creating cultures of artists and operators.

22:51So I want to build organizations that are incredibly innovative, that are creative, but also have operating rigor. Because if you operate the business well, it gives you more time for the fun stuff on the creativity. And so I use this OKR system and we write these like really rigorous operating plans every year. And then we go starting Jan 1, execute the crap out of this plan. But I use it as a way also to bring everybody along with me. is one of my criticism early as a founder. You know, when you're a founder, you think about your business 24 seven. You're just naturally gonna be way ahead of your teams.