Sputnik 11

Dear reader, if you are viewing this blog post, chances are good that some variation of the following scenario played out recently:

1. You told me about your startup.
2. I asked if you considered joining an incubator.
3. You badmouthed incubators.
4. I was too buzzed to talk through it then, so I suggested that you read this post.

Since I closed down my company, I’ve attended several “networking events” at local bars. In case you want to steer clear of me, my nametag usually looks like this:

Even in the Bay area, I’m amazed to run into so many people who doubt that joining an incubator will help their business. If this applies to you, one of the following is true:

1. You’re a rock star.
2. You weighed the pros and cons, then concluded your business doesn’t fit the incubator model.
3. You don’t know what you’re talking about.

Just in case you fall into category #3, allow me to assist.

The Benefits

• Getting accepted is difficult. For a Tier 1 or 2 incubator, the odds are worse than getting into the Ivy League. Of course, most applicants have no serious shot–sort of like a highly selective college–so it’s not as daunting as it looks. The upshot is that being accepted is a proof point by itself. To an investor, you’ve already been vetted.
• It’s a great alumni network. Let’s be honest: your startup is probably going to fail. Most do. Mine did, and it was way better than yours. Since you’re unlikely to get rich off of this idea, why not hang out with people who will?
• The 5 or 6% an incubator takes is non-dilutive capital. Forget the money they provide: that’s trivial. Hanging out with really smart people for 3 months is going to increase the value of your company by far more than 5%.
• You get to know your cofounders really well. In my case, we moved across the country, rented a house together, and managed to not murder each other. That’s called chemistry, my friends.

Weird Stuff That’s Not Immediately Obvious

• Incubators work best for businesses where substantial progress can be made in 12 weeks. If you have a long sales cycle, or if your app requires a year to build, you’re not a great candidate.
• Simpler businesses work better. Nuance doesn’t fly when you have 2-4 minutes to present on Demo Day.
• 

  Speedometer > odometer. This car has lots of miles, but it’s not going anywhere.

  Joining an incubator is a corporate reboot, and being a more mature company isn’t necessarily helpful. Growth rate trumps traction.
• Incubators are getting huge, and some are specializing in either a vertical or a geography. Not surprisingly, the former (for instance, here and here) makes more sense to me. YMMV.
• Some animals are more equal than others. Let’s pick on YC for a second: 3 companies are responsible for the overwhelming majority of YC’s success. If I were running an incubator, I’d place my bets early, and I’d spent most of my time working on the home runs. This isn’t the end of the world for the base hits, however: it just means that the next step will be more work.
• 

  Some of us needed a little help to get through Demo Day.

  Voilà: you’re now a stage actor. While speaking in front of +/- 1000 people is an interesting talent, so is hacky sack. They’re equally applicable to growing a business.
• The whole “We’ll accept a team without an idea” thing is crazy talk. Yes, some startups change their ideas. But there’s a big difference between having the wrong idea and having no idea. Plus, the whole thing is too Pygmalion and Galatea for me.

My Personal Experience

As I mentioned, we shut down our company, so the result was not what we hoped it would be. But one should never conflate correct decisions with good outcomes, and joining Imagine K12 was the right call. If I had a time machine, I’d do it a thousand times over.

TL;DR version

1. An incubator will likely help your company, so you should apply.
2. But don’t sweat it: you probably won’t get in.