The following text is meant to be an addendum to the original essay on Hyper Incubator. In order to keep the original text from bloating beyond reasonable limit of comprehension, any explanatory notes and/or new ideas have been added to this addendum.
The concept of a startup [business] as a dynamic information system
This is one of the salient points of the essay and thus it requires some explication. The fact that most businesses have some intellectual property (IP) as part of its competitive advantage should not surprise anyone. However, that is but a small part of its informational structure. Even in the merchant days of the Roman Empire, a successful business owner differentiated himself from a failed one by his knowledge and personal connections (which can be viewed as a channels of personal affinity, favors and information). Knowledge and information are of course different things — one can think of knowledge as information applied in a specific context. For our purposes, they are interchangeable, because all information is viewed as existing in some context.
In the startup context this information centrality is even more obvious. Startups emerge at a conceptual level — a novel business model, a new product "how-to", a new combination of the previous two, etc. It does not stop there — the assembly stage requires information — who is going to comprise the founders team — who is going to be key resources that will be integral to the startup success. It does not stop there — information is needed to connect the "idea" to investors, partners, customers, vendors. All of this means that the quality of informational content will play the pivotal role in every stage of startup transformation or disintegration.
What does this have to do with the hypercycle concept and Hyper Incubator? Well, the idea of a hypercycle is a continuously self-catalyzing business reaction cycle — dozens of reaction cycles, when considering the entire Incubator. Remember activation energy? It is a threshold that a reaction needs to overcome in order to proceed. In a startup context this activation energy is typically very high, in direct proportion to the lack of information on the part of the founders — knowledge of the “how” and the “who”.
In chemistry one way you overcome or lower the activation energy barrier is by using catalysts. In the startup context this means involving existing successful businesses as information carriers — making them partners of a nascent startup. Does a startup need to know how to run an ad campaign? Well, hopefully there are other startups that have done this already — so let's bring them into the room and see if we can re-use their information content when it comes to this particular question. (More on the incentives for doing this in the next section).
A familiar picture of the Borg-like "hive mind" is not out of place here — as the Hyper Incubator's advantage will be primarily along the lines of the speed and effectiveness of information sharing. A daily stand up meeting (virtual or physical in nature) involving founders from multiple parallel startups — where everyone presents their upcoming hurdles — could be a practical way to get this going, while other avenues are certain to emerge, given an overarching structure.
This first aspect of information sharing (or creation and maintenance of information connections between actors) is just one aspect of a startup as an information system; the other aspect is that it is a dynamic, an evolving information system. The "hive mind" aspect of Hyper Incubator is about conservation of existing useful information pathways — the discrete re-usable packets of particular business processes (reminiscent of genes in a genetic code). However, information needs to be both conserved and created — new information is needed as new ideas are constantly flowing in via new startups.
The strength of startup mentality is its agility — ability to pivot, to get feedback quickly and react to it. As an information system, this can be viewed as a process of "directed mutation" (similar to simulated annealing) — an exploration of possibilities via incremental changes to the business process. The history of failed attempts, and of course, of the successes, would be a treasure trove for nascent business to have access to — it would most certainly result in increased efficiency and lower the "mortality rate" of new startups. Imagine the difference of flying blind vs. having a map showing treacherous spots to avoid and currents that could speed up your progress.
The Emerging Picture of the Hyper Incubator
Hyper Incubator most salient difference from other incubators/accelerators is the strongly connected nature of startups to each other - they evolve together, they use each other's services and provide feedback, they share information, - the more mature ones catalyzing and directing the progress of the newborn ones - the sharing of information being the primary way those connections are created and maintained. All of the above features would need to be built into the structural and procedural make up of the Hyper Incubator - i.e. these would not happen just by chance (although spontaneous processes must be given room to emerge on their own) — this inter-connectivity should be enabled by the specific capabilities of the Hyper Incubator platform and process.
The incentive structure that promotes this process is not necessarily obvious — it may emerge on its own or it may initially be motivated by some reputation/transparency metrics that translate into increased investor confidence. As was mentioned earlier, information is the primary currency of business systems — thus one can see material compensation for information that translates into actual business connections — a residual income stream flowing to those founders who discover it from all those who benefit from it — for as long as that connection stays viable (one is thus motivated to find new ways instead or resting on past accomplishments).
The Hyper Incubator corporate entity will have some degree of ownership and ability to monetize given information pathways in contexts external to the incubator per se. One could see the Hyper Incubator's business model becoming primarily a Business Process Data provider — both internally and to external clients. In addition, Hyper Incubator could become a broker in establishing formal business connections (contractual agreements) for external clients that might want to avail themselves of its growing cache of reputable sources of goods/services.
Practical Implementation Details
This section is not meant to be strictly normative, but an aid, an illustration to how one might go about implementing the ideas presented thus far into a real-world Hyper Incubator.
- While the long-term goal for the structure of the organization has to be based on some software platform that can bring member entities together and keep them connected regardless of spatial/temporal divides, the initial momentum is likely to be gained via existing local startup organizations that decide to pivot in this direction.
- One of the main values provided by the software platform will have to do with business connections ; specifically, these will likely fall into the following two categories — a) existing connections and their metrics b) suggested connections and associated probabilities of longevity/success
- In order to provide raw data as input to the previous item, the platform will have to utilize some low-friction way to collect and enforce connection information. This could be accomplished via mobile apps that simply track their respective GPS coordinates (as a time series) and formalized contractual connections. Those two types of data should be sufficient to make data inferences about connections and how they formed. Members should be incentivized to share this information by translating it into advertising of their services, reputation score, transparency score, etc.
- Another main value provided by Hyper Incubator platform will be to offer low-friction, no-hassle contractual templates for common business contracts, possibly providing legal assistance where one size does not fit all. Specifically, information sharing should be made a contractual connection between two firms — resulting in exchange of equity, revenue or some combination of the two or their equivalents.
- The platform could provide a structure to guide a startup from its concept stage to planning an execution — involving all other interested parties in such a way that everyone is incentivized to participate (i.e. it’s not charity — it’s business, incentives have to be transparent and aligned).
These are just some initial brush strokes, more to come…
