Who Over Promises and Under Delivers? — Incubators!

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This article is part two of a three part look at startup support institutions [see part one at DO STARTUP SUPPORT INSTITUTIONS WORK?].  The first part established that there are 8,300+ independent programs, 4200+ fee driven programs, and 200-3,200 growth programs where:

  • Independent Programs are composed of courses, business competitions, and startup weekends;
  • Fee-Driven Programs are composed of incubator and co-working institutions; and
  • Growth-Driven Programs are composed of active seed investors and accelerators.

The article entitled Entrepreneur training: minimal STARTUP IMPACT illustrates that Independent Programs under deliver.   Growth Driven Programs will be addressed in part three.

This article will illustrate that Fee-Driven Programs made up of incubators and co-work spaces also under deliver not based on my opinion but upon the opinion and study of entrepreneurial experts. 

Serial entrepreneur Faisal Hoque in a 2016 article wrote “While most entrepreneurial support programs try to provide tangible benefits – from funding and mentorship to access to investors – they often miss some basics.  And in the process, unfortunately, they wind up doing a disservice to those they’re ostensibly trying to help, while still appearing to justify their own existence.”  He went on to say “So far, many are delivering too great a share of wins only to themselves, leaving a long road behind them littered with failed startups and sterling intentions.”

Cliff Oxford in a 2014 article in Forbes echoes Faisal Hoque’s observations.  Cliff wrote …entrepreneur incubators [are] popping up in every alley, valley and country corner in the United States. … Good ideas and good intentions, but here is the deal: folks, they don’t work.”  He went on to say “Trouble signs start brewing in this startup paradise when you put unsuccessful or maybe a nicer way to put it – yet proven – people together in one location.  Great companies are born in garages, cramped spaces, kitchen tables, basements and dorm rooms, far away from incubator distractions that include what I see as wandering meetings, small talk generalities, and people who have different agendas than startup success.”

Emily Fetsch of the Kaufmann Foundation in a 2015 article wrote “After examining more than 35 academic articles, including a review paper that systematically examined 38 studies, key takeaways from the literature show that incubators might not prove more effective at creating successful businesses than unincubated businesses.” She elaborated that “We have identified only one piece of research (Amezcua 2010) which examines whether incubated businesses are more successful than unincubated businesses in terms of job growth, revenue, and overall survival. The study shows there is little difference between unincubated and incubated businesses.”

An article by The Secret Entourage, Surround Yourself With Success – You Are Who You Hang Out With, drives home why incubators fail.  Paraphrasing this article: “Seventeen years ago, a good friend told me that if you want own a Ferrari one day, you have to start by being in the company of those who already own one. Back in the day, my interpretation of that was that the longer you hung out with people who owned a Ferrari, the more motivated you would become to actually get one. There was, however, a significant piece of that advice that I was missing; if you are the smartest guy in the room, you tend to become complacent and no longer seek to become smarter. However, if you are not the smartest person in the room, then perhaps you are actually on to something and as a result are more likely to be exposed to new thinking and elevate yourself to a level that will eventually get you what you want: a Ferrari.

My biggest mistake then, was that I didn’t really understand that perceived value was just as important as real value. Therefore, I based all my assumptions in life on my own reality, not the reality of those around me. This is partly a big piece of what Third Circle Theory helps others do – to see from a different perspective – but at the time I was young and certainly didn’t know what I now know today. Here is why you should always surround yourself with individuals who have achieved everything you want to eventually achieve:

  1. You get real life experience, something no text book can teach you.
  2. They are always doing something.
  3. They don’t put down ideas.

Being in the company of those that have succeeded forces you to be better, regardless that it’s in your thinking, work ethic or personal life. Being surrounded by people who have ‘made it’ is a continuous reminder of how others have done it and it leaves no excuse for you to not do it either.”

In conclusion, Cliff Oxford says it best “I think the incubators have an implied message that it is ok to be a startup for a good while because you are kind of cool if you are there.  In other words, no pressure.”

The author can be contacted through his web site www.EnviromationInc.com or through his blog www.PanhandleProgress.com.