Someone is Going to Get Burned, Why The Incubator Model is Dangerous

Michael Arrington posted today on why he doesn’t understand the hate about Y Combinator.

Having traveled the nation last year meeting almost 2000 early stage entrepreneurs, I can say it is pretty simple, and it has nothing to do with Y Combinator or Paul Graham.

So why the hate (not just of Y Combinator, but of TechStars, LaunchBox, SeedCamp and the many other models)?

  1. People have been burned before.
    The ‘incubator 1.0’ model blew up, in a pretty spectacular fashion.  I wasn’t there, but have heard quite a few stories about this.  One of my favorites is a friend who lost about $5M in the burst, but he says he didn’t have it bad, some of his friends were locked into an incubator where they came into their office to find their desks and computers gone, but were still expected to live up to the non compete in the contract.  This only happened a short while ago, and many have forgotten (and that is really not good).
  2. It works.
    Plenty of people have fallen on their faces, and when they see some ‘punk’ kid get acquired, they are not enthralled.
  3. The hype isn’t checked.
    When every startup out of a boot camp (incubator is still such a dirty word) is launched with praise, it is a sign of warning.  With the web2 world seeing so many wacky success stories (dogster for goodness sake), it is hard for startup enthusiast to get an actual grasp on the chance of success of a company.  We are in trouble when we think that any company will succeed, and owe it to ourselves to keep each other in check.
  4. Not my cup of tea.
    All of the boot camp type companies have funded startups that just don’t make sense to some group of people, and they associate that one investment as a sign of the logic used for all investments.
  5. Where else do you go for apprenticeship?
    This is the most surprising reason I have found for people not liking the model, they don’t see a good alternative.  For the web2 world, the ‘school of fail’ is the most common place to learn and grow.  Apprenticeship is the web world is dead, I wish it wasn’t.  The boot camp model is the first step I have seen that solves the problem.
  6. We suck at telling the story.
    I’ve used gmail everyday for the last four years, and I can’t name a person that has worked on the product.  Can you name the founders of a couple startups, boot camp or not?  The personal relationships between early stage founders and the general community is not good.  Most of the time we only read about the founders when the product is launched (but we don’t get to really know anything about them, just their name), when they blog (which doesn’t happen, and it is usually an apology) and when they are acquired or fail.  Very rarely does a company do a great job at introducing the team, as well as the product.  If we want fans, we need to be able to tell the story.

The community that participates in these companies (working for them like I do, being a selected company or just a general fan) owes it to each other to keep ourselves in check, to build the startups we can be proud of.  We must have longterm goals in relation to this model, and keep humble in all our successes.

And as an update, I am a total fan of all the boot camp type companies out there, reading it again, I don’t think I made that 100% clear.

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