How to Decide on a Startup Incubator
I think I’m asked twice a day. Ponder that a moment. Countless are trying to grasp IF, WHY, HOW, and WHICH startup program to join. Just today I was pinged to answer the question on Quora, of which of a few popular local programs should a founder join. It’s a good question, a critical question, but the fact that so many are asking suggests that we’re failing to deliver such programs in a way that it’s clear to entrepreneurs what the programs offer.
Can we instead better evaluate our need of startup programs?
I’ve been in Austin, Texas a bit (Silicon Valley before now), work with lots of startups, and let’s be honest, there is no definitive answer to the question of which startup incubator one should join.
So, which you should join and why? Let’s first establish a few foregone conclusions about doing business today:
ONE — Everything is online. Two ways to look at that:
- We’re in the information age meaning you can get/find the answer to / advice about anything. Note what we’re doing here.
- Everyone is accessible online. While true that information is there, perhaps more important is the notion that so too is everyone.
TWO — A number of the traditional distinctions about the work we do — B2B, B2C, and B2E and Technology being an Industry, in particular — don’t apply as they once did. If you aren’t grasping why, see ONE
THREE — “But I don’t work in technology, I work in [replace with your non-tech industry such as CPG]” — See ONE
FOUR — Data is the new oil. A wonderful concept given the fact that I live in Austin… hours away from Houston. Why is data the new oil? See ONE
To figure out WHERE you might get help as a startup we have to figure out what you really need, given these realities of the new economy. What can’t you accomplish that you need from such services? There’s no right/wrong answer, it’s an exploratory question, not definitive.
An interesting way to approach such a question is not to ask based on what you’re doing, nor even what you need, but what you intend to accomplish. Work backward from your personal objective as a founder.
- Make a difference
- Build a solid business
- Get acquired
- Have a massive exit
- Disrupt an industry
- Get some experience
- Solve a problem
- Try it
Simon Sinek’s book Start with Why is a favorite and something I talk about all the time as startups generally fail for one of two reasons: 1) Issues withing the Team 2) [Because] Why isn’t clearly aligned from market opportunity throughout the organization.
Why are you doing what you are doing? (that stressing is the key)
It’s not Why are you doing what you are doing? but Why are YOU doing it?
These are drastically different professional objectives and no matter whether you are inventing an AI for hardware manufacturing or crafting the next tasty beverage, your personal objectives best define where and how you should spend your time.
Why? There is a cost/benefit to any program with which you get involved. The question you have to ask is how it’s a cost (of dollars, time, ownership, and focus) and benefit that helps you achieve your goal. Does it align with your why?
Startup programs are businesses and the product is actually you.
Think about that. Startup work spaces, incubators, and accelerators, absorbing the same rate of failure as investors (greater perhaps), have to accommodate the fact that you likely won’t last. Turnover is high and the opportunity to monetize you, directly, is low.
While the product such programs offer seems to be space, advice, and a framework for your success, that’s actually the development of theirproduct, you, which is then monetized by sponsors, investors, events, and more.
Not so sure? Think about it this way
- WeWork is a data company: At WeWork, Humans Supply Data For Its “Giant Computers”
- 500 Startups…. 500 startups! They can’t possibly work one on one with every founder. 500 startups comprise a data set and portfolio product… for investors
Commercial property (office space) is a long established business model and in spite of what you perceive through the explosion of coworking, commercial property terms aren’t changing that much. There is zero reason for property owners to put their very successful business model at risk by fractionalizing liability, disrupting property values, and averting predictable income, by making their property available to startups. You need an office? You sign a 2 year lease and the property owner sleeps at night. Ergo, who is leasing that dirt in which you find an incubator and thus, what is your role? WeWork, Betahaus, Galvanize, Impact Hub, and other such sizeable coworking brands are the consumers of the property, developing what you’re doing, to monetize the use of the space.
Granted that is a bold way of thinking about such programs so don’t necessarily take me literally, use a grain of salt, but consider the idea.
With all that in mind, with what must you start to succeed as a founder?
Let me ask that a different way as I tend to work with VCs (not Angels, VC firms) so my perspective tends toward entrepreneurship that yields $200MM+ companies — what is it that an investor will expect you are capable of doing on your own? What are the core fundamentals of a new venture?
Some ideas of what you must already have or quickly find:
- Solid team — CEO, CMO, CTO. Resources, Market, Product. Fundamentals of entrepreneurship established decades ago by economists such as Peter Drucker.
- Network — remember, see #1 above. Can you get the advice, talent, customers, and partners you need? You can reach everyone; the extent to which you already have some of the right folks matters but importantly, your ability to connect with others matters more.
- Know how — remember, see #1 above (tell me when we’re beating that horse dead). How to pitch, where to find money, which tech stack to use, what salaries will run you, an appropriate cap table, what corp structure to use… pick a question, you have the answer. You know how
Whether or not you can is the question.
Forget the startup advice, books, blogs, and guidance that you need customers, revenue, product/market fit and all that jazz. Go right to the core fundamentals of what you need before anything else: team, network, and know how. Right?
That drives us to the answer to the question at hand: in which startup oriented resource should you be?
Ask yourself what you really need to accomplish your personal goal, keeping in mind what’s actually readily available.
Once you’ve done that, your decisions as a founder become a clearer cost/benefit analysis.
What can’t you?
Therein is the answer. Which resource best addresses that which you can’t, at a cost that yields greater benefit?
Bottom line is that there is no right answer. You could tell me that you got into YCombinator and I’d still ask you why. You decision should reinforce a reason that makes sense — that which you can’t personally accomplish, fulfill by way of your team, or achieve by way of the realities of the new economy.
Impact Hub, Galvanize, Techspace, ATX Factory, Tech Ranch, Techstars, Founder Institute, Mass Challenge, Concordia… I’m not even sure there is an exhaustive list of startup programs in Austin and if there is, I’m sure it’s inaccurate tomorrow. To figure out where best to be work backward from your thoughts herein:
- I don’t know how to… and I intend to IPO… I can’t get get that online…
- I can’t reach… and I am disrupting…. I need a better connection to them
- I lack a technical founder… to fix… where might I find such a person?
The best ROI on what you need is your answer.