Incubators are Bullshit

I am often asked what I think about incubators.

Short Answer

Incubators are bullshit. Most incubators are like the McDonalds edition of starting a company. Craftsman founders don’t need them.

Incubators are like birthing classes. They take up a lot of time before doing the actual work, and then when the time comes for the real thing, all your classes often do you no good because the baby is coming one way or another. The baby doesn’t care if you planned on a perfect water birth on the summer solstice, sometimes an emergency C-section will just have to do.

Long Answer

I love startups. I love founders. I love the people that run incubators. I hate incubators. Here’s why:

1. “Incubator work” is not the “real work” of crafting a startup

Incubators keep you very busy all the time, but the wrong kind of busy (see mistake #2 in top 30 mistakes of startup founders).

If there is one thing I have heard from everyone who has gone through incubators is that they are incredibly busy. Unfortunately, they are not busy doing the things that will make them successful.

Look at the most successful companies that have come out of the incubator you are evaluating, where is the incubator track record. Of course only 1 in 10 startups are supposed to be a big success, but only one incubator has a track record that good, Y-Combinator. Every other incubator has a much poorer track record, if any track record at all.

The vast majority of the business of incubators comes from “networking” and “mentoring”. This is bullshit that we will get into in point #4.

2. Incubators give you a false sense of making progress

I have talked to many incubator founders who are so proud of being accepted into an incubation program, like that was an accomplishment (see mistake #5 in top 30 mistakes of startup founders).

When building a company, time is your only asset and “incubator work” is not only a waste of your time, but it makes you feel like you are making good progress which means you don’t even realize how big of a waste of time it is.

Real progress includes…

• building your product
• validating product-market fit
• talking with customers
• getting customers to pay you
• building your personal network
• building relationships with investors

I can hear the response already:

But isn’t that what you do in an incubator?

It certainly is what incubators promise you will do. I have rarely seen people accomplish these things.

Instead I see people accomplish these things…

• taking tons and tons of meetings, rarely following-up
• scatter-shot advice gathering with little time to contemplate or synthesize the advice
• no deep or lasting relationships with mentors
• no deep or lasting relationships with investors
• most importantly, no deep or lasting relationships with customers
• wishing they had more time to work on building their product

Because people end up too busy doing introductory meetings.

And somehow, they feel good about it all, because they were busy.

Busy != Progress

Incubators seem to think that they add the most value by filling your time when I think in fact the opposite is true, time is your only asset as a startup founder and misplaced time is death.

3. Networking is better done outside the context of an incubator

Your personal network can be the single biggest asset you own as a professional.

Many people agree with me about most of my points about the bullshit of incubation programs, but their counter-argument is:

But incubators are good for people who don’t have a network to start building their network.

When I started AppFog, I had no network either. I built it the old-fashioned way. I reached out to one guy who introduced me to three people, those three introduced me to three people and I built a deep relationship with as many people as I could until I built a strong network.

I am still in regular communication with all of my network including the people I met at the beginning.

The problem with “incubator networks” is they are not curated with as much care and nurturing as is necessary, because incubators keep you too busy to do it right.

Real personal networks stand out with:

• medium volume, high fidelity

Incubator networks stand out with:

• mega volume, low fidelity

The difference is quality. You need to put time and effort engaging with your network, understanding not just the advice they give you, but asking about them as people. Who are they? What do they like to do in their free time? What are their hopes and aspirations? Do they have a family? Is there anything you can do to help them?

Your network is not a thing, it is people. If you are rushed and overwhelmed with busy-work, you don’t put the effort into getting to know the people behind the network, which means that the relationships are brittle and vapid. They don’t really exist. It is not a real quality network.

A lot of light conversations != Network

There are no shortcuts. There are no excuses to doing it right. Being busy is not a valid excuse. Being in an incubator is not a valid excuse.

4. Who are you modeling yourself after?

When evaluating incubators, always ask for introductions to the founders of the most successful graduates. Then get to know those founders, nurture them into your network. Ask them about their experience with the incubator. Do you diligence. Ask yourself if you want to be like that company in 7 years.

For example: Y-combinator includes Dropbox, Airbnb, Reddit, Cloudkick, OMGPOP, Heroku. If you are modeling yourself after Dropbox, that is not such a bad thing.

Another example: TechStars includes Next Big Sound, Occiptal, CrowdTwist, Orbotix, OnSwipe. I am sure these are great companies, but it is yet to be seen how big a success they will really end up being. Also, TechStars is highly dependent on location. TechStars Seattle is different than TechStars Portland or San Francisco. Do your diligence on your specific location.

Do you want to be the next Occiptal? Is that who you are modeling yourself after?

I am not saying Occiptal is a bad company (honestly I didn’t even know about them until researching this essay), what I am saying is that you are already doing something very risky and now you are modeling yourself after another very risk company.

What about modeling yourself after Microsoft? Or VMware? Or Apple? Or if you are looking to use newer business models, how about modeling yourself after companies that either recently went public or are likely to go public soon like Box.net or Cloudera.

We have not yet seen a single “incubated” startup go public yet. There is a long heritage of companies that didn’t get coddled in a startup incubator. If you are going to waste spend your time at an incubator, know up front whether you are doing it because it will increase your chances of success (bullshit), or because you are too scared to try to do the real work on your own (likely the real reason).

5. Incubators are for companies that can’t raise money traditionally

If a company is in an incubator (except for YC), it is because they weren’t good enough companies to raise money the regular way. I have heard this from various industry veterans including VCs and angels. It is a stigma, not a badge of honor.

Go do the real work. It is not easy. It is not fun. It takes more time and effort than what people do inside an incubator. It is not the same work you do inside an incubator.

Don’t waste your time. Don’t know what a time waste is? Don’t worry, just go figure out how to make money, if you are doing that you are not wasting your time. If you don’t know how to make money, go build your real personal network and find out how others have made money before you. This is a beaten path, you do not have time to re-discover the path for yourself. This is a path beaten by decades of tech entrepreneurs before you.