How incubators hurt startups
swombat.com
swombat.com
Some particular points:
* "Startup incubators don’t guarantee that your startup will be successful when you leave the program after three months — although the big profile programs do hint at success through association." If you get involved with an incubator thinking it's a guarantee for success you are naive indeed. And where exactly does, say, YC "hint at success".
* "Since 2005, Y Combinator has funded 460 startups with only a handful of big wins." This is the meat of the article. Since so few YC companies are successful, the YC experience must be hurting the applicants. The ratio "handful" to 460 must be compared to successful startup which didn't participate in an incubator to all start ups founded since 2005. BTW, for an analysis of "handful" see this discussion: http://news.ycombinator.com/item?id=2608440. Big hands indeed!
* The only two points that are of importance, I think, are the uncontrolled publicity and relocation stress. Relocation is absolutely necessary, to cut you off from you usual surroundings. It's similar to the monks's shaving off their hair when they start their new life: a big step to show, especially to yourself, that you are starting something new. The uncontrolled publicity is a problem, but this dogs many a Kickstarter company, too.
I've never done a YC round and am not a YC fanboy (in particular I'm worried about the uncontrolled publicity that YC itself is getting and its increased class size may dilute it.) but from what I read from HN over the years it seems to be a seminal experience.
The first two make sense, but I have no idea what a zombie startup is. The only real example of something like that would be Color. Those in Palo Alto have seen their giant office space with nobody in it, but whenever I walk by I get the feeling its a bit more like Willy Wonka's Chocolate Factory than a ghost town. These startups are churning away in a quasi stealth mode and who knows what they might produce.
For example, Hough says "There are concrete examples of how some startups have been seriously damaged thanks to their participation in startup incubators"... but she doesn't even list one example?
Here is the meat of the issue - - They are not for everyone. But, it is a perfect model for many. There is a Darwinian aspect that does weed out many who are not ready for that particular startup path. But there are many paths to success.
Like most endeavors - approach with eyes wide open. Understand the expectations and value delivered and if it matches up with your goals - welcome. Sounds like taking on VC investors.
But accelerators don't hurt startups.
It seems to me like this is part of a more general trend - namely that a lot of startups might do well to figure out how they can make a profit first, instead of going the venture/acquire/cash out route. It's not incubators that are hurting startups - it's that a lot of startups should probably figure out how to be profitable first.
From my point of view there are definitely bad incubators out there - the ones that get started by random people which the OP mentions - but these are no brainer: if you part with your equity for their pitch you don't deserve to be an entrepreneur anyway.
There are also top-notch ones - YC the hottest one - these are no brainer too.
And finally there are about a dozen of in-between. And that's where it stops being black-n-white. There might be some benefits in going through their programme, it just all unpredictable. You get different experience being in a different bunch, but still, I have no idea how it could "hurt" a startup if they get 3 month pay and advance their idea.
1) The "pay" might slow down the founders' progress into a proper founder mindset, i.e. "we need to make revenues, dammit". In that way, it would hurt.
2) Many incubators I've encountered think they're adding value by imposing some kind of structure... requiring milestones, etc. For some startups, this may be suitable, but for others, it's completely wrong and will slow them down, discourage them, or even lead them in the wrong direction.
3) Good advice is worth its weight - bad advice can be the opposite. Get some convincing advice by someone who has no idea what they're talking about, and it could be very costly.
For less than top 10 incubators, I think they could be great for inexperienced founders or someone looking for some help. Building connections are a big part of the incubator experience as well.
ADD: the biggest drawback I can think of is requiring to have a co-founder when sole founder would do just fine.
Look, an incubator may or may not be good for your startup. I don't know for your own situation. But I do know this: articles like this one are certainly not good for honest discussion, information, or the image of tech journalism.
One possible defense of incubators could be that their value increases with time.
The first class of companies may not benefit much, but as time goes on, some of those companies will certainly succeed. And those those successful companies will offer value to the current/future batches.
Of course, YC has the advantage of already having several successful alumni. And like the Matthew Principle says, those who have will be given more.