Stimulating Startups
500 Startups First Class: Oh, To Be a Fly in This Room
Government Incubator Heats Up
Silicon Valley has long been a magnet for engineers and tech enthusiasts drawn to the idea that it’s a place where everyone—from Ivy League MBAs to high-school dropout hackers—has a real shot at startup success. But that same liberating lack of structure can also be a hazard: When faced with a completely open landscape, many first-time entrepreneurs find themselves with “analysis paralysis,” unable to form a distinct plan of action to turn their brilliant concept into something more.
Turns out, even the most naturally gifted tech visionaries can benefit from seeking outside advice, says Steve Blank, a retired serial entrepreneur and investor who now teaches classes at U.C. Berkeley, Columbia, and Stanford.
"Most entrepreneurs never get past the idea that 'It's my vision, so implicitly I know what's best for my company,'" Blank says. "It's Shakespearean, because what makes entrepreneurs start companies is often the same thing that puts them out of business."
According to Blank, working with outside advisers can give a new company the kind of tools needed to grow beyond the startup phase and into a real, scalable business. "No startup that ever made money ended up where their initial plan said they would be, and they didn't get smarter by sitting and talking to themselves," he says.
Fortunately, several new programs aimed specifically at helping fledgling entrepreneurs navigate through the noise have cropped up in recent years in Silicon Valley and the San Francisco Bay Area. Of course, since services like mentoring, networking opportunities, and investor introductions can be highly valuable, they don't come for free: Each of these programs requires that startups provide something in exchange for their services, whether it's intellectual capital, equity, or straight-up cash.
Some might argue that new businesses should be focusing on making money, not spending it on advice. However, Blank says that for tech-industry newcomers, cash invested in learning the ropes could be money well spent. "The word entrepreneur means something really different inside Silicon Valley," he says. "I don't believe you can make an entrepreneur, but I do believe you can make them better, faster, and stronger…and I can imagine paying for those things."
Sponsored Co-working
What it is: For years, solo tech entrepreneurs have rented space in shared offices to combat cabin fever. New invitation-only co-working programs like Sunfire Offices, Dogpatch Labs, and Founders Den provide more than just camaraderie: The rent is covered by sponsors (A-list industry veterans, angel investors, and top-tier venture capital firms) who regularly drop by the office to mingle with the folks they hope are building the next blockbuster.
Sunfire co-founder Niniane Wang says they house a diverse group of techies that range from first-time entrepreneurs to experienced founders with several startup successes under their belts. "People exchange product feedback with each other and discuss technology over hallway meetings and lunch, much like you would with colleagues in a traditional workplace," she says.
What it costs: Monetarily, it's free. But they do require members to regularly mingle with their sponsors by attending events like weekly happy-hour mixers and disclose what they're working on with tech demos.
Specialty Consultants
What it is: Startup consultants like Venture Archetypes and Sramana Mitra's One Million by One Million offer services like business-plan analysis, strategy consulting, and introductions to potential customers, channel partners, and investors. One of Venture Archetype's most recent client success stories is Clicker, the Web-video startup acquired this month by CBS in a deal reported to be higher than $50 million.
What it costs: Mitra charges $1,000 for a year's worth of access to One Million by One Million's services; Venture Archetypes doesn't publicly disclose its prices.
Seed Incubators
What it is: Mentorship-driven investment funds like TechStars, Y-Combinator, Seed Hatchery, and BoomStartup provide early-stage startups with seed funding (typically around $15,000 to $20,000) along with intensive mentoring and strategic advice. These incubators boast a "frat-house for geeks" feel: Think pizza-fueled programming hackathons and office fridges stocked with Corona and Red Bull.
What it costs: Incubators take small but significant stakes—typically between 2 percent to 10 percent—in each portfolio company.
Pay-to-Pitch Conferences
What it is: Startups chosen to exhibit at conferences like DEMO and TechCrunch Disrupt get the opportunity to pitch their ideas to a room full of the tech industry's MVPs: Venture capital investors, journalists from big-name publications like the Wall Street Journal and CNET, and M&A executives from firms like Google and Microsoft. These conferences are several days long and chock-full of networking opportunities, with business meetings by day and boozy parties at night.
What it costs: Charges range from $9,000 for a full-size exhibitor table at Disrupt to $18,500 for a full presenter package at DEMO.
Outside of Silicon Valley
Of course, tech success is not exclusive to the Silicon Valley—entrepreneurs who live outside of the San Francisco Bay Area have access to a number of the above options, as well. In fact, many Bay Area-based techies swear by taking a trip outside of the Valley bubble to foster creativity and break out of a mental rut. For example: Dogpatch Labs has outposts in Boston and New York City; TechStars has locations in NYC, Boston, Boulder and Seattle; BoomStartup is headquartered in Utah; SeedHatchery is based in Memphis, Tennessee; One Million by One Million offers videoconferencing services to startups based around the world; and TechCrunch Disrupt holds events in New York and Beijing in addition to San Francisco.
Colleen Taylor is a writer and video producer based in the San Francisco Bay Area.
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