
A horrifying startup accelerator story - awwstn
http://www.davidgcohen.com/2013/08/29/a-shocking-accelerator-story-that-youll-need-to-read-twice/
======
brandnewlow
This story is really frustrating and sad to hear, but I have to say, in the
three years I've been working on my startup, never once has anything good
happened from paying for access to any type of person (investors or
customers), using any currency (equity or cash).

We did YCombinator, which could be described as an "access" play, but apart
from that, every time someone has offered us access to something in return for
something else, we've always politely declined and then just gone and won the
business or relationship on our own merits.

Gatekeepers suck, and doing business with gatekeepers leads startups to doing
sucky things and pulls them down as well.

The minute I read him deciding to do a second accelerator so he could get
access to "his vertical" I started getting a sinking feeling in my stomach.

~~~
mathattack
Paying someone for access never ends well. Do you think the people whose
access is being sold are happy with the arrangement? By definition you're
entering into a sleazy area. This is why apartment brokers selling access to
apartments are sleazy.

~~~
einhverfr
Probably not in the US, but keep in mind that very often in many other places,
what the person selling access is also doing is screening for the person whose
access is being sold.

This sort of arrangement works pretty well if the person selling the access is
actually offering a decent service to both sides. However, it needs to be
mutual, pre-arranged, and with plenty of duties all around (in most of the
world "duties" end up meaning "kickbacks" but the system won't work if it is
limited to that).

~~~
mathattack
I get that screening is a service, but it's very gray. US (& UK) companies
need to act with a higher standard globally. Barclays got in trouble with some
corporate matchmakers.

[http://www.telegraph.co.uk/finance/newsbysector/banksandfina...](http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9514166/Barclays-
Qatari-ghosts-haunt-bank.html)

------
JonnieCache
Came here hoping for a particle accelerator horror story. Bo-ring.

For anyone else who thought the same, here's an article about a russian who
got his face caught in a proton beam:
[https://en.wikipedia.org/wiki/Anatoli_Bugorski#Particle_acce...](https://en.wikipedia.org/wiki/Anatoli_Bugorski#Particle_accelerator_accident)

~~~
meepmorp
This was what I thought - some poor guy was doing maintenance at the wrong
time.

~~~
wwweston
And didn't even get superpowers out of it. :/

------
jedc
I'd just like to say that the reason I created Seed-DB ([http://www.seed-
db.com](http://www.seed-db.com)) is because the world of seed accelerators
_should_ be more transparent. I've currently got a list of 170+ accelerators
around the world, and the list makes it pretty clear which ones get results
and which don't. (Or don't care enough about publicizing results).

If you have any feedback for me as to what would be useful to you when
choosing between accelerators, please let me know. Email is in profile.

~~~
arbuge
How do you update that list? I'm familiar with a few of the lesser known
accelerators on it and I'm aware of some pretty nice exits they've had, but
their exit column is listed as $0 on your list.

This is probably complicated by the fact that many of the smaller acquisitions
(<$100m) are for undisclosed sums. Not sure how you can ever account for that
unless you make wild guesses.

Also it looks like companies which are very valuable but not formally exited
yet (AirBNB, Dropbox etc.) aren't accounted for here... a column for "current
portfolio valuation" might be more valuable. Again, if it were ever possible
to put such a thing together accurately, which I doubt.

~~~
jedc
There are a couple of different lists. The first is the list of accelerators,
which I update as soon as I learn about a new accelerator. (Often I add it
before they've funded any companies.)

The next list is the list of startups for each accelerator. This is a pretty
manual process, though I do give admin permission to accelerators to go in and
add their startups themselves. I suspect for the accelerator you're thinking
either a) I don't have their full list of startups and/or b) the startups that
have exited aren't marked as such on Crunchbase.

You're correct that for many acquisitions I do have to make guesses about exit
value; I clearly mark each exit value on Seed-DB with a H/M/L icon to indicate
my level of confidence in the value. (Where people have come to me afterward
my guesses have been roughly 50/50 over/under.)

I've got some ideas about calculating a valuation, but even if I put that
together I would likely not make it public since it's just guesses multiplied
by guesses. Plus, there are companies that just buck trends in trying to guess
valuation based on funding signals... my favorite example here is Weebly. They
went for 4 years on ~$600k of funding before raising a monster $45million
round.

------
woodchuck64
This doesn't seem to be about an accelerator as much as about a person with a
behavior disorder that sounds very much like narcissistic personality
disorder. NPDs cope with their incompetence by abusing and blaming those
around them, creating chaos and misery yet still managing to escape
responsibility 9 times out of 10.

The right thing to do here is anonymously expose the managing director.

~~~
rhuppert
My thoughts exactly. In my business experience, I dealt with two individuals
diagnosed with borderline personality disorder. Of course, I did not see their
medical records; it was hearsay. However, it explained much about their
behavior. It's a sad story, but it is also the face of mental illness, which
is all too real. Learning to recognize and deal with this is another thing to
store in one's experience quiver.

------
angelhacksucks
This is a throwaway account because I want to publicly expose AngelHack (or
HACKcelerator): After we "won" a local hackaton -that had an entry fee- they
didn't help us with the housing, zero, no cash for any of the 20 "winner"
teams and only gave $1000 (per team, not person) for fly expenses (hint: not
enough) then suggested us to stay in one of the worst hostels in San Francisco
(European Hostel).

Later on I also found out that they are already searching volunteers around
the world to help them out organizing the 2014 competition... in my opinion
all this is pretty shady but we the teams are holding up just in case the demo
day brings something good (a.k.a. investors and new contacts).

------
citricsquid
Design tip: if a quote is a quote, have a quote style. If a quote is the
entire content of your article and is many paragraphs long, rethink styling it
as a quote and instead label it, or something.

~~~
rblatz
Absolutely agree. It was very difficult to read, and I ended up having to
remove the italic and color styles applied to that section, just to be able to
read the article.

~~~
dredmorbius
Readability that shit. Though honestly, in this case, I couldn't even be arsed
to do that.

------
slaven
I've read several posts where people are trying to identify a female-lead
accelerator - exactly counter to the warning in the story:

"I may have also changed the gender of certain people (i.e. he/she), again,
with approval of the author."

So lets not point fingers based on gender alone.

------
kumarski
Have fun figuring out which one it is: [http://www.seed-
db.com/accelerators](http://www.seed-db.com/accelerators)

~~~
throwaway98765
[https://angel.co/socraticlabs](https://angel.co/socraticlabs) seems to fit
the bill. Of course, keep in mind that this could very well _not_ be the
accelerator.

~~~
tlrobinson
The MD seems to have confirmed it:
[https://twitter.com/heatherg/status/373318278833135616](https://twitter.com/heatherg/status/373318278833135616)

"I've emailed @davidcohen and asked him whether he would be willing to share
my response. Awaiting word."

~~~
anoncowherd
I wonder if "it's not us" would have sufficed.

------
fizx
A word of warning: these personality types are incredibly common in the
startup world, for a number of reasons: Driven, strong personalities are
valued. It's easier to hide in a small company. As a founder, it's relatively
easy to build a team that will tolerate your excesses.

Don't be afraid. Moving on after one month is ok. It won't irrevocably stain
your resume. The self-aware hiring managers know this dynamic exists, and
won't hold it against you.

There are thousands of amazing, hard-working, kind, creative, interesting
people and teams. Find one and cherish it.

~~~
RougeFemme
I think a fair number of those personality types hide in larger companies,
too. They don't have the clout/vision/cult-leader personna of a founder with
that personality type. After a number of years of observing people like that
who should be marched out the door - but aren't - I've concluded they must be
blackmailing someone powerful within the company.

~~~
quanticle
It doesn't have to be blackmail. It could be that the person has so entrenched
himself or herself in his or her role that even their boss can't really fire
them. This is especially true in companies that tend to hire top management
from outside or do a lot of lateral transfers. It's entirely possible that the
middle manager here knows more about that part of the business than his or her
boss, and so the boss can't let this person go, because the boss doesn't know
enough about the requirements of the position to hire a replacement.

------
brianmcconnell
Classic narcissistic personality disorder. Run for the hills. With NPDs, it is
always everybody else's fault. Add pathological lying, some bipolar, and maybe
just for fun booze/drugs and they'll drive you insane too.

~~~
hedwall
where do you pick bipolar from?

~~~
6d0debc071
Assuming you're trying to reply to auctiontheory, I read that as borderline
personality disorder -
[http://en.wikipedia.org/wiki/Borderline_personality_disorder](http://en.wikipedia.org/wiki/Borderline_personality_disorder)

------
auctiontheory
Startups looking for accelerators remind me of authors looking for agents and
publishers - we don't realize how much power we have in the relationship, and
also how much we can do for ourselves without someone to "help" us for a chunk
of our equity.

Of course the right accelerator/VC/agent/publisher, at the right time, can
help. It works best if you see them as a piece of YOUR plan, rather than see
yourself as a supplicant to their network/deep pockets.

~~~
mgkimsal
Amen

I've been approached by a few startup-ish projects in the past few years, all
wanting to 'partner' up and 'join an accelerator' or 'apply for startup
program XYZ'.

I proceed to ask "what are you going to do with the $50k you'd get if you get
in?"

There's typically a blank stare.

Now, I get that you get more than just money; hopefully you're getting
connections and introductions and press you couldn't get on your own. But not
always.

But I'm still shocked that typically there's _no_ answer at the top of their
minds. And they're asking _me_ to _invest_ the next 6 months or more of my
life with them to 'do a startup'. As a tech/dev, I _am_ an investor, investing
my time, knowledge, energy and passion in to something. If they can't convince
me to invest, they're not going to convince an accelerator.

------
accelanon
My experience was not nearly this bad, but still horrifying for me, my co-
founder, and our families.

We had been talking off and on with an accelerator for about a month. We had
pitched them, had a few calls, but lived on the other side of the country.
They wanted to meet in person which was really not feasible for us. We worked
at full-time jobs while hacking away on the side and scraping together
whatever money we had to fund our company.

A little flashback, first: I had dropped out of grad school and taught myself
programming to start my first company. After a year of living on my wife's
student loans, I got "acquihired" by a startup that was run by one of the
accelerator's mentors. They gave me 3% equity, a $10k moving bonus, $15k for
the company, and a $75k/year salary. I said yes.

Three months later, I decided to quit. I was the only technical person in a
company consisting of the two non-technical co-founder, co-CEOs, a project
manager, and myself. They had burned through $700k already and hadn't built
anything yet. It was becoming clear that my product was going to be their
product. In the best case scenario I would spend the next four years working
on my original startup, only now for pennies on the dollar.

The purchase of my assets still hadn't gone through and I hadn't yet been
paid, aside from the moving bonus and salary. The co-founders claimed I had
acted in bad faith and asked for the moving bonus back. I explained that I
wouldn't have moved had the moving bonus not been offered (as I couldn't have
afforded it). If they had wanted that money back in case I quit, our contract
should have specified as much. They relented, and we went our separate ways.

Fast forward another year, back to our accelerator story. The accelerator
decides they want to afford us the opportunity to meet in person. They agree
to pay for flights so long as we pay for our own hotels and car rental. We
also have to talk up the trip on social media, talking about how they paid for
our trip, our meetings with investors, etc. Small price to pay, we think.

We make the trip and have some pretty productive meetings. They seem to like
us. We fly back, and after some back and forth, they decide they want to
invest. Of course, they still need to do their due diligence, so it's going to
take some time. In the meantime, my co-founder and I get fired from our jobs.
You see, our boss found out about our trip to the accelerator since it was
broadcast over social media. It was cool when we were working on a startup
after hours. It wasn't so cool when we were talking openly about actually
starting a company.

It doesn't matter, though. We made it into the accelerator. They send over the
paperwork. It's a convertible note with pretty standard terms, fully signed by
all the partners. We sign and send it back. We can't believe it's happening. I
sign a lease on an apartment in the new city and my wife and I pack up our
apartment. My co-founder does the same.

Suddenly the music changes. They go dark for a couple days. I'm nervous
because I have a U-Haul scheduled. I finally get a call with one of the
partners; I'm supposed to start a 3,000 mile move the next day. He explains
that they can't do the deal. A check isn't coming. He can't explain why.

My mind races and I think: it couldn't have been that mentor, could it? My
resume was fully transparent. They should've seen the connection. And they did
their due diligence before they made the deal. How could that have slipped by?

I ask for an explanation but to no avail. They can't explain it. Not even a
little bit.

Now I have to try to reorder my life. My job is gone. My apartment is already
rented out to someone else. Luckily the landlord at the new place lets me out
of my lease. I reschedule the U-Haul to take us to my wife's parents' house
instead.

My co-founder was devastated. He wasn't used to startups. In fact, to this day
he's been bouncing around trying to find a similarly stable job. I can't help
but feel responsible. I recovered better. I decided to start consulting for
other startups and have made a pretty good go of it.

That's my accelerator horror story. Anyone else have others?

~~~
Domenic_S
Thanks for writing this up.

> _They agree to pay for flights so long as we pay for our own hotels and car
> rental._

This seems crazy to me. In my head, if a few hundred bucks for flights &
lodging is too much to ask, how much dough could they really have to invest?
Is this standard?

> _It 's a convertible note with pretty standard terms, fully signed by all
> the partners. We sign and send it back. [...] He explains that they can't do
> the deal. A check isn't coming. He can't explain why._

Is there any legal recourse available in this situation?

> _My mind races and I think: it couldn 't have been that mentor, could it?_

Which mentor are you talking about here?

> _Now I have to try to reorder my life. My job is gone. My apartment is
> already rented out to someone else._

You know, I've seen deals fall apart so often that until cash is in the bank I
don't change my life. Maybe it's from my time as a car salesman in college -
until the bank funds the loan, I wasn't counting my commission. Deals fall
apart in all sorts of crazy and ridiculous ways.

~~~
beachstartup
> until cash is in the bank I don't change my life.

if you're in sales, this is EXTREMELY important, doubly so if you sell for a
startup. the deal isn't real until the money shows up.

customers will take advantage of your kindness, lie to you, manipulate you,
appeal to your vanity, and they can smell desperation from a mile away. "give
an inch and they'll take a mile" \- these folksy old timey sayings don't come
from nowhere.

there are all sorts of shitty people out there that will play napoleon for a
day just because they feel they have power over you. it's sickening.

do not start work until you get the money. do not ship product until you get
the money. do not pay your suppliers until you get the money. do not pay your
sales people commission until you get the money - money didn't show up? well
that wasn't a sale, now was it?

if they don't want to pay at LEAST a deposit, they're not serious. END OF
STORY.

very simple in concept - very difficult in practice because there are some
people who are just plain naive out there. one of the most important skills
you learn as a startup is how to say no.

~~~
jtheory
This is an important lesson, but it's not an absolute rule.

You need to have a sense for your customers, how much power _they_ have over
the money, and how much they'll suffer if you're inflexible.

I've spent years working with teachers, who (as patio11 will tell you) are not
a great target market for ready cash, but who are very honest. I used to have
an informal policy where a teacher would just _tell_ me they were working on
getting a purchase order, and I'd credit their subscription. I changed that to
only crediting them a month at a time (after one situation where I realized
towards the end of the year that one PO had never arrived.. it was stressful
for the teacher, but all resolved amicably), but still, there's trust
involved.

If I didn't trust them, a lot of these teachers would just be stuck without
access for weeks -- the site would be far less useful to them.

\- Edit: "until the cash is in the bank, don't change your _life_ " still
applies in my situation; payment was slow and unreliable (though paid in the
long run), and that does affect planning.

~~~
hga
In your case you have an established business, and you have a class of
customers you understand and therefore who you can extend tailored win-win
credit policies to. As you note in your edit, that's a different thing than
the stuff that changes your life, like all that went in to establishing your
companies up front.

------
ballard
I've walked away, shaking my head, from several YCombinator-alikes. They're
too often about trying to put together deal-flow without understanding what's
helpful. Now I'm all for new things if there were solid principals, strats and
connections, but that's rarely the case.... anyone with half an aptitude is
likely already in play. Basically, their "help" is a waste of my time and
something I can do on my own, better, without giving up an iota of equity. My
conclusion is you don't need most of them, most of the time, even the ones
that try not to be instant wantrepreneur bootcamps. If you're focused, hungry
and persistent... you already have what it takes. So where's the value?

------
api
I had an awful experience years ago that reminds me of some of these stories.
I'd have to tone it down to make it believable.

Short short version: a guy with no money pretended to be a deep-pocketed
investor, talked me into leaving my day job. At least that's how the story
begins. Then it gets progressively more insane.

~~~
amorphid
I met a one of these faux investor, charlatan, stone soup types a few years
ago. When he talked about making investments, it took a while to figure out
he'd invest time and no cash. When he talked about how was was affiliated with
some impressive named and organizations, he really meant he'd done a shitty
website for a semi well known author and he'd visited the Harvard campus once.
At every turn when I asked him for a hard commitment of something I could use,
actionable advice or hard cash, he never produced.

I recommend demanding excellence from your investors and expect them to demand
excellence from you. Strong relationships improve when tested, others buckle
and fade away. That's been my experience anyway.

------
philzdelish
Nothing as bad, but heard of bad experience by teams at Microsoft + Techstars
accelerator in Seattle where both sides lost interest in the class in the
middle of the program. Not sure how good/bad the fundraising was across the
board.

~~~
jedc
Details are here: [http://www.seed-
db.com/accelerators/view?acceleratorid=95003](http://www.seed-
db.com/accelerators/view?acceleratorid=95003)

------
johnrob
With that many red flags, why would anyone accept an investment and enter a
relationship with such an organization? The things people will do for
funding... I'd rather have a day job or a consulting gig in a heartbeat
compared to a situation like that.

~~~
BWStearns
In college I flailed around for funding for an idea for a bit. I accepted the
first offer I found. Said "investor" jacked half of his money back out of the
account (he needed a card because he was supposed to do some work on the
financial end) and spent it on parties and shit. Very similar tendencies to
what was described in the article and lots of the same red flags. He then
threatened to sue me if I talked about the whole thing. Thinking about posting
the whole story somewhere.

But the broader point is: if you need investment and can't find anyone else,
it's very easy to convince yourself that it won't be as bad as it will.

------
gojomo
Seems mostly a story about one problematic manager with some personality
disorder(s).

------
buncle
I've become very wary of accelerators that make bold promises, although my
experience is nowhere near as bad this story.

Having been approached by 3 different accelerators, the story is always the
same:

1\. They offer a very nice chunk of funding

2\. Declare how fantastic their team of mentors and legal connections are

3\. They say they have some very low equity requirements

... fast forward ... about to sign an agreement ...

4\. Funding is suddenly limited, or is now a range, with the upper figure as
what they originaly offered... but with additional caveats

5\. The equity requirements are now greater, since they 'forgot' to mention
that additional equity is required at the end of the program

6\. There is also suddenly an 'entry fee' to cover various expences that they
also conveniently 'forgot' to mention

7\. Many of their so called mentors/connections have not even agreed to be
part of the program

There are certainly many good accelerators out there, but there are many more
two-bit players out there willing to screw over early stage startups just to
get themselves some funding (and equity, on the off-chance one of the startups
actually become successful despite their 'help').

------
pavel_lishin
> _At this point we decided that some of this behavior was pathological_

I want to say that this fact should have been obvious long before, but I have
the benefit of third-person hindsight.

------
swamp40
It seems to me like a lot of accelerators would be better off throwing this
one to the wolves ASAP before they all get tainted by a stench of unknown
origin.

------
ryguytilidie
I've always been scared to death at how many people who add zero or negative
value are involved in this process.

------
jmartens
I had the displeasure of meeting this MD earlier this month. She was one of
the most offensive people I've ever met. Treated the employee she had with her
like shit. Was a total bitch. I knew nothing about her, the accelerator, or
this story when meeting her, and I still knew instantly that I never wanted to
talk to the women again.

How did the founders of companies in her accelerator not see the same thing I
did in our first meeting?

------
6d0debc071
The accelerator went back on their word fairly early on in the arrangement.
When someone does that, that's basically the time to start looking at walking
away IME - dishonesty is a matter of habit, chances are they're not going to
turn over a new leaf and everything else is going to be fine from there on in.

------
zabramow
Was just having the discussion of whether or not to accelerate your company
with one of the leaders of Bizdom accelerator in Cleveland.

[http://www.replyall.me/zach-talks/to-accelerate-or-not-to-
ac...](http://www.replyall.me/zach-talks/to-accelerate-or-not-to-accelerate/)

One issue I haven't brought up yet (but will) is whether a young company wants
that kind of "access" or whether having to crawl before you walk makes
companies iterate and get it right and get the "access" the old fashioned way.
Sometimes think accelerators give companies access a little too quickly for
the company's own good.

------
arbuge
Just as there are horrifying VC stories, so there are bound to be horrifying
accelerator stories. With VCs it's really the top tier firms that are the ones
you want to work with; many of the others are under pressure at all times to
make up for mediocre returns, which is not a formula for a happy working
relationship with them. It's going to be the same with their earlier stage
cousins...

------
photorized
It's stuff like that that just made me launch my own accelerator on the East
Coast (in addition to running a few startups):
[http://www.colodesk.com/](http://www.colodesk.com/) We don't trick people,
but we do "force" them into success or failure quickly.

------
wiradikusuma
I actually received an email from "Pre-Accelerator", submitted just now:
[https://news.ycombinator.com/item?id=6301565](https://news.ycombinator.com/item?id=6301565)
which seems to be in the same theme with this topic.

------
jbjohns
Site is down for me: "Error establishing a database connection"

~~~
astrodust
That's one hell of a horror story.

------
jnty
Obviously their webhost only accounted for people reading it once.

------
taroth
Site down. Not cached by google. Anyone have a link?

------
aioprisan
what is the real recourse here? you can't out them because of their
connections in the community and needing to do business with their business
partners in the future? I wish someone like David Cohen or PG would out them
publicly and let the court of public opinion do the rest.

------
RyanZAG
_" The weird thing is that the MD keeps making intros, speaking highly of us
and sending people our way. We think she does it because she doesn’t want us
talking about our experiences._"

Well that doesn't seem too bad, it even feels like the story had a happy
ending as it sounds like they've been able to get investors and the startup is
working.

~~~
jmspring
It more feels like the MD wanted to keep schmoozing and acting important
ignoring the reality of the situation.

There have been a few stories over the passed couple of years where someone
name drops and schmoozes to elevate their own profile. In the end, they are
found out to be frauds or worse.

Any area that gets a lot of hype will have those that want to cling on.

~~~
BWStearns
>> It more feels like the MD wanted to keep schmoozing and acting important
ignoring the reality of the situation.

I wouldn't be surprised if "she" demanded something if she even knew of an
investor OP's company ended up taking on.

------
caycep
maybe a noob question but usually, the agreement to do an accelerator program
is usually overseen by an attorney? or is it just a handshake between
accelerator and acceleratees?

~~~
jedc
The 'agreement' between them is meaningless (in a legal/financial sense) until
they both sign the docs to officially transfer money for an equity stake.

------
aioprisan
is there a glassdoor for startup accelerators?

------
FridayWithJohn
Error establishing a database connection... that is all I get.

