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Iterative Startups

Jonathan Ortmans

While the startup genome in Silicon Valley is always mutating, some formulas are becoming basic tenets in the science of startups. A critical mass of email about my use of the word “iterative” in my blogs prompts me to revisit one such startup fundamental—the so called “Lean Startup” formula.

Eric Ries, an engineer, entrepreneur, author and now an entrepreneur-in-residence at the Harvard Business School, coined this new concept, which has became a movement in the startup world. Steven Blank, a serial entrepreneur, lectures at Stanford about the model. In short he says: experiment in the marketplace from day one with the lowest-cost possible viable product and improve the product or service according to how customers react—the critical ‘pivot.’ This approach is less linear in the sense that students are no longer encouraged to follow the process of first drawing up a business plan, building a final product and then taking it to the marketplace. It is a lower-cost, much more “iterative” approach that quickly transforms mistakes and failures into business insight.

Mentors and investors seem to be looking out for this approach. Dave McClure of 500 Startups advised Sao Paulo web entrepreneurs during a Startup Weekend last November to stay lean through “feature killing” or testing whether users miss a feature when removed. This, he stressed, is much more important than the tendency to overbuild website features that do not increase user engagement.

Further, the higher flexibility which underpins this new startup model seems to be fueling a new wave of companies that find opportunities across fields. As Steve Lohr from the International Herald Tribune noted in his recent article “Silicon Valley's Brand of Start-ups,” Lee Redden, a PhD candidate in engineering at Stanford with skills in artificial intelligence and computer vision, provides a good example of this. Redden is applying those skills to agriculture with his startup, Blue River Technology, by developing a robotic weed killer for organic farms. His computer-vision software can distinguish lettuces from weeds. Many entrepreneurial minds are doing the same, recognizing opportunities to apply Silicon Valley technology to medicine and transportation, among other fields.

Others are starting to listen to these ideas. The Kauffman Foundation for example, took that cross-disciplinary approach to its Kauffman Labs initiative. Kauffman Labs is designed to accelerate the number and success of new high-growth, scalable companies by offering a new method for teaching and training entrepreneurs in a lab setting. As part of this initiative, the Kauffman Education Ventures Program offered an intensive, hands-on, immersion program designed to catalyze the creation of high-growth, transformative companies in the education market. It will likely become a critical element of other initiatives to educate and support entrepreneurs. It also helps us better understand how and why company formation happens—and why they fail.

It is, as the dictionary says, “a procedure in which repetition of a sequence of operations yields results successively closer to a desired result”. It is smart, flexible, customer-centric, new firm formation.

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