

How incubators hurt startups - paulsilver
http://swombat.com/2012/6/29/incubators

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Jun8
Hough's article that's linked in the OP seems to be the classical definition
of linkbait to me: outrageous claim backed up with little than simplistic
reasoning. It does not even have anecdotal evidence, e.g. I talked to X's
founder and he told me that YC or Techstars hurt their startup in so and so
way.

Some particular points:

* "Startup incubators don’t guarantee that your startup will be successful when you leave the program after three months — although the big profile programs do hint at success through association." If you get involved with an incubator thinking it's a guarantee for success you are naive indeed. And where exactly does, say, YC "hint at success".

* "Since 2005, Y Combinator has funded 460 startups with only a handful of big wins." This is the meat of the article. Since so few YC companies are successful, the YC experience _must_ be hurting the applicants. The ratio "handful" to 460 must be compared to successful startup which didn't participate in an incubator to _all_ start ups founded since 2005. BTW, for an analysis of "handful" see this discussion: <http://news.ycombinator.com/item?id=2608440>. Big hands indeed!

* The only two points that are of importance, I think, are the uncontrolled publicity and relocation stress. Relocation is absolutely necessary, to cut you off from you usual surroundings. It's similar to the monks's shaving off their hair when they start their new life: a big step to show, especially to yourself, that you are starting something new. The uncontrolled publicity _is_ a problem, but this dogs many a Kickstarter company, too.

I've never done a YC round and am not a YC fanboy (in particular I'm worried
about the uncontrolled publicity that YC itself is getting and its increased
class size may dilute it.) but from what I read from HN over the years it
seems to be a seminal experience.

~~~
phamilton
I also found his claim that the non big win YC companies were either acquired,
failed, or in a zombie state.

The first two make sense, but I have no idea what a zombie startup is. The
only real example of something like that would be Color. Those in Palo Alto
have seen their giant office space with nobody in it, but whenever I walk by I
get the feeling its a bit more like Willy Wonka's Chocolate Factory than a
ghost town. These startups are churning away in a quasi stealth mode and who
knows what they might produce.

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startupfactory
I am an accelerator "fanboy" having run LaunchBox Digital in Durham, NC and
recently launched Triangle Startup Factory in January.

Here is the meat of the issue - - They are not for everyone. But, it is a
perfect model for many. There is a Darwinian aspect that does weed out many
who are not ready for that particular startup path. But there are many paths
to success.

Like most endeavors - approach with eyes wide open. Understand the
expectations and value delivered and if it matches up with your goals -
welcome. Sounds like taking on VC investors.

But accelerators don't hurt startups.

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grammaton
"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."

It seems to me like this is part of a more general trend - namely that a lot
of startups might do well to figure out how they can make a profit first,
instead of going the venture/acquire/cash out route. It's not incubators that
are hurting startups - it's that a lot of startups should probably figure out
how to be profitable first.

~~~
phamilton
Or those providing valuable exits for companies that don't make money should
stop doing so.

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alexro
The OP doesn't really say how startups get hurt. I didn't went through any
incubator but I'm planning to.

From my point of view there are definitely bad incubators out there - the ones
that get started by random people which the OP mentions - but these are no
brainer: if you part with your equity for their pitch you don't deserve to be
an entrepreneur anyway.

There are also top-notch ones - YC the hottest one - these are no brainer too.

And finally there are about a dozen of in-between. And that's where it stops
being black-n-white. There might be some benefits in going through their
programme, it just all unpredictable. You get different experience being in a
different bunch, but still, I have no idea how it could "hurt" a startup if
they get 3 month pay and advance their idea.

~~~
swombat
A few ways:

1) The "pay" might slow down the founders' progress into a proper founder
mindset, i.e. "we need to make revenues, dammit". In that way, it would hurt.

2) Many incubators I've encountered think they're adding value by imposing
some kind of structure... requiring milestones, etc. For some startups, this
may be suitable, but for others, it's completely wrong and will slow them
down, discourage them, or even lead them in the wrong direction.

3) Good advice is worth its weight - bad advice can be the opposite. Get some
convincing advice by someone who has no idea what they're talking about, and
it could be very costly.

~~~
ragincajun
Agree completely. It really all depends on the startup and the founders, but I
wouldn't consider anything other than a top 10 incubator.

For less than top 10 incubators, I think they could be great for inexperienced
founders or someone looking for some help. Building connections are a big part
of the incubator experience as well.

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toddmorey
I think the implication in Kate Hough's article that incubators encourage you
to lie on stage is more than ridiculous; it's irresponsible. I knew a guy who
lied once in college. It had nothing to do with his own weak backbone: the
pressure of college forced him into it and the whole institution is on trial.

Look, an incubator may or may not be good for your startup. I don't know for
your own situation. But I do know this: articles like this one are certainly
not good for honest discussion, information, or the image of tech journalism.

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adjwilli
That is a well balanced critique of accelerators.

One possible defense of incubators could be that their value increases with
time.

The first class of companies may not benefit much, but as time goes on, some
of those companies will certainly succeed. And those those successful
companies will offer value to the current/future batches.

Of course, YC has the advantage of already having several successful alumni.
And like the Matthew Principle says, those who have will be given more.

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tlogan
Are there any Dropboxes, Herokus, or similar startups from other incubators? I
have felling that there are only a couple incubators worth applying for.

