
Think Before You Incubate: How Incubators Can Hurt Your Startup - MRonney
http://techli.com/2012/06/how-incubators-hurt-startups/
======
dariusmonsef
You talk about what goes on behind closed doors, but provide no proof that you
actually know what goes on behind those doors. As a YC alum, Mentor with 500
Startups & PIEPDX and friend of the family to Techstars... This post couldn't
be more wrong. It looks like mostly it was written to cause drama and generate
pageviews.

"Since 2005, Y Combinator has funded 460 startups with only a handful of big
wins."

We were just at the 7 year birthday party for YC in a room filled with
successful founders. The collective valuation of the group is billions of
dollars... and regardless that some founders have had their companies fail
along the way, the network they're a part of adds huge value.

I'd go point by point and explain the counter for this entire post... but I
don't have the time.

I think there is a valid argument about which incubator you participate in and
the pros and cons each bring... but to warn people about the top incubators is
almost comical.

------
tptacek
This is a little facile.

 _Incubator programs can hurt your startup. Since 2005, Y Combinator has
funded 460 startups with only a handful of big wins. The rest have faded away,
been acquired quickly without growing out of a feature company, or continue to
hang on as zombie companies, which are not dying, but not really doing
anything either. Who knows how many of these companies could grow into
something bigger without the pressure of generating a return for early
investors in just a few short years._

This is always going to be true of every incubator. No startup program can
promise to vault a majority of its participants to Heroku or even Reddit
levels of success. Similarly, the top tier of VCs famously get the best
companies; what's the win rate at Sequoia? It's truism regarding the whole
market that the success of 1 startup in 10 pays investors for the other 9.

Also, while it may be worth scrutinizing less successful startup programs,
this advice...

 _Take a look at the list of current mentors on the program’s website, and try
to identify businesspeople that you admire. Do you recognize at least 50
percent of the names? Are there mentors who have proven themselves in your
industry?_

... seems to miss a pretty important attribute of the successful startup
programs like YC: they have vast alumni networks. Has Paul Graham started a
successful streaming company? No; neither has John Doerr, Ron Conway, or Greg
McAdoo. But I'm pretty sure Graham can get you a meeting or 10 with Justin.tv.

------
nickler
Great post, a few of the incubators/accelerators we looked at had very few
mentors that could help us get to market, and in our discussions we discovered
that none of them knew our space like we did.

The flipside is that if you're not already in a tech hub, you face a grim
prospect for attracting tech savvy, forward thinking angel investors. The
local incubator may be the best shot you have at rubbing elbows or warm
intros.

In an era where barriers to entry are crumbling, too many people see
incubators as a path of least resistance to success or funding, but the real
acceleration will usually be found by networking with your customers and users
instead.

~~~
timjahn
"but the real acceleration will usually be found by networking with your
customers and users instead".

Amen. Regardless of whether or not your startup is participating in an
accelerator/incubator, you need to be networking constantly and always have a
pulse on your customers.

------
redthrowaway
The immediate reaction here appears to be to pan the article as though it was
written from a position of ignorance or as flamebait, but consider that
Techstars, YC, etc are not the only incubators out there. Far from it. There
are a plethora of copycats, few of which boast any bonafide credentials or
success stories.

If you can get into one of the tier-1 incubators, then it's almost certainly a
good idea if you're building a consumer app. For the lower-tier accelerators,
however, it might just be a waste of time and equity.

Just as an incubator can offer great assistance to a startup, it can also be a
hindrance or waste of time and resources. Pick your incubator like you pick
your cofounder. If you can't find the right match, then be prepared to go it
alone. It's better than making a poor choice.

~~~
larrys
"For the lower-tier accelerators, however, it might just be a waste of time
and equity."

Is it? First of all the equity only matters if you are a success. The time
only matters if there is an opportunity cost of the time (unclear with the "18
to 20" year olds). Hard to believe someone that age is going to not get some
benefit from the mentoring that is worth the equity and psychic benefits. And
of course we don't have good data and controls to compare non incubator
startups either.

I would argue that, similar to "psychic income" there is a certain "psychic
bump" to feeling that (even wrongly) you are on your way to something because
of the structure of the incubators. Something similar might be companies back
in the day (not sure if this is done anymore but it was in the 80's) who would
take groups of laid off workers and have them show up at an office to work on
resumes and look for jobs. Being in the presence of other job seekers
apparently did some good for them in terms of their self esteem and how they
approached that task (as opposed to doing it from home). (My first hand
experience with this was as a vendor to a company that became the leader in
this field, Manchester Career which landed large contract after contract and
expanded greatly because of what they were able to achieve).

So I would question that there isn't some benefit to the lower tier incubators
that is worthwhile to experience and I don't believe that has been proven out
in any research of them and in fact there is this story which was widely
discussed here:

[http://www.forbes.com/sites/tomiogeron/2012/04/30/top-
tech-i...](http://www.forbes.com/sites/tomiogeron/2012/04/30/top-tech-
incubators-as-ranked-by-forbes-y-combinator-tops-with-7-billion-in-value/)

------
Alex3917
These are interesting as discussion points, although it's a rather weak
argument overall. Among other things there is no discussion of the benefits of
incubators, which are not at all insignificant.

------
phildionne
Incubators are becoming more and more like a popularity contest where the
outcome is a crazy valuation. To me it looks like a broken system or one
that's going to break sooner or later.

I was planning to submit my application to FounderFuel, a fairly new
accelerator in Montreal, and decided to wait a bit. I'm still not sure if
there is any value for my actual project in that kind of thing. The main
drawback for me is the difficulty to focus on coding during the session.

Is this a problem for anyone else or is there incubators with a focus on
coding?

~~~
alexro
Good incubators won't let you to code with one focus. They will shift your
attention sideways so that you might discover new opportunities and validate
your vision. Often it leads to abandoning the original idea completely.

------
bascule
Don't incubate, thinkubate

------
michaelochurch
Incubators are the new MBA. The top few programs bring connections, which
unfortunately are by far the most important asset in the VC-istan startup
game-- especially now with all the carpet-baggers and summer soldiers and
unsavory scene kids. (You also have the option to learn things, but that's
tertiary.) The next few are well-run, generally good programs but don't have
the prestige to bring the leadership positions (or, for incubators, the
funding) to allow a person to make use of that knowledge... so it's only worth
it if you have those resources already. Those in the bottom set provide
neither knowledge or connections and are generally a waste of time.

Incubators, I guess, are a bit better in the sense that they only collect if
you do. For that alone, they deserve a better name than MBA programs, which
take their share regardless.

