What history teaches us about startup incubators (via @OM)

Let’s start with a story. The story goes like this. An incubator has a class of companies, they give them a little cash, they have a weekly session with a mentor or whatever, time goes by, demo day, no one gets funding, fail, fail, FAIL.

They tried to copy the Y Combinator model, and by ‘copy’ I mean cargo cult. They performed the outwardly obvious ceremony, but didn’t understand and thus couldn’t replicate the mechanics of cause and effect. Y Combinator has had impact on the dynamics of startup formation and funding not because of the exact details of a program. But the details are what cargo culters can see: three months, a dollar figure, weekly sessions, gogogo, demo day… the end, most of the companies dissipate.

At the end of the day, there is a fairly narrow band in the total spectrum of business opportunities that are venture fundable (though that band still represents infinite opportunities).