Incubators

2009-09-04

It seems like every successful entrepreneur I know at one point or another kicks around the idea of creating an incubator. The appeal is the idea that you can do not just one startup but many, and just focus on the “fun stuff” in each one (idea generation, product features, strategy, etc).

History has shown that incubators are really hard to pull off. In fact, the results from incubators in the 90s were apparently bad enough that the word itself carries a bad connotation in VC/startup circles.

Here’s why incubators are so hard to make work. Every successful startup requires a great entrepreneur focused solely on that company’s success. You can’t just take a great idea and have a great entrepreneur work on it for a while and then pass it off to a mediocre entrepreneur. It just won’t work. Maybe you can do that after the product is launched and gaining traction. But this is hardly an incubator. It’s more just like an early-stage entrepreneur transitioning to an advisory role – a pretty common practice a few years into a venture.

And maybe you can find exclusively great entrepreneurs to take over the companies, but then what you are doing is much more like active advising/investing, or “hatching” companies, as some VC’s now call it, presumably to avoid the dreaded I-word.

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