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New Rules of Startups: Start Small & Grow with Your Customers

The rules of startup are changing. It used to be that before launching a business or product, the well-prepared entrepreneur was expected to have a crystal ball, says Donald Lipham, Course Director for Full Sail’s Innovation and Entrepreneurship Master of Science degree program.

To attract financing, the innovator had to have an extensive business plan with the product and marketing plan rigidly defined and projections for growth outlined five years out.

Nowadays, savvy entrepreneurs are focusing on the concept of a ‘lean startup,’ says Lipham. In this startup scenario, entrepreneurs don’t assume their vision is exactly what customers will want, nor do they assume they can predict what will happen in five years.

With this approach, Lipham says it is imperative that entrepreneurs first go to their potential customers to find out if their idea is even desired, and if so, in what form.

Within the Innovation and Entrepreneurship program, the faculty refers to this as “SmartStart.”

“In the program, the students are developing a ‘business model,’ which is a very small-scale approach,” says Lipham. “And in that model, we clearly identify our customers, and then we try to talk to them as best we can. We say – ‘Is this something that there is a need for? Would you buy it?’ That kind of thing.”

“And then if not, you revise it, because if the customers don’t want it, you don’t need a business plan anyway,” points out Lipham.

If you’re doing lean startup right, your initial idea should go through many iterations, as you adjust your product based on the feedback of your potential or emerging customers, says Lipham. In some cases, ideas might be scrapped altogether.

There are plenty of examples of products that were created without any testing or feedback, and which customers rejected. Some famous examples are New Coke, Crystal Pepsi, and the XFL. More recent examples are the thousands of apps developed every year that never find success because they just aren’t something people want.

Lipham, who teaches a class called Ideation and Feasibility Studies, says it can be hard for people to accept that their idea needs revision.

“We get very personally involved and attached to our ideas, and it’s hard to separate your personal feelings from reality,” says Lipham.

However, starting out slowly and being open to feedback can save entrepreneurs a lot of headaches down the road.

“What we’re trying to help our students within the program and anybody that’s doing this to understand is going back to restart it is not a bad thing because it doesn’t cost you anything in the early phases,” says Lipham. “If you launch it, and it fails, and then you have to go back, you’re already behind the curve. Financially it makes a big difference for you too.”

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