Time To Thin Out Ineffective Startup Accelerators

If properly managed and matched to local economic need, resources and capabilities,  local accelerators can be a significant local economic asset. However, the problem with so many of these “everywhere else” accelerators, is highly unrealistic expectations to be “the next Silicon Valley“, failure to connect with local economic needs, excessive focus on any and every new Web app, and most importantly, poor management.  It is also apparent to me that many of these more remote smaller communities are so distant from the mainstream economy, that many of the “great ideas” that come out of them, are embarrassingly late.

My guess is that of the estimated 7500 accelerators worldwide, perhaps less than a couple hundred are providing real benefit. The rest are enjoying the current overenthusiastic entrepreneurship bubble,  chewing up vast amounts of public funds and resources without much to show for it.

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RT @bcic: “The Problems with Incubators and How to Solve them” http://t.co/vkS0cnMsZD #bcacceleration

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Two examples of local accelerators doing things right, and winning awards for their efforts, would be Andy Hamilton’s Ice House in Auckland, New Zealand,

Read more: Ice House, Auckland, New Zealand

and the Walla Walla Valley (Washington) Wine Cluster Economic Development Project,

Read more: Walla Walla Valley Economic Development Cluster

The background story  involves the economic decline of Walla Walla, whose economy had been based on grain farming, and establishing a wine industry accelerator in the local community college.  The result has been an astonishing revival of the town.

The author of the article below, is making a much too sweeping argument in favor of local accelerators, essentially “all” local accelerators, without much critical investigation or thought as to the vast sums of money being wasted in small communities that can ill-afford it.

6 Reasons to Keep Accelerators Everywhere Else.

There’s an accelerator bubble.

Accelerators, except for Ycombinator/TechStars, are irrelevant.

We should get rid of the Demo Day.

If you’ve been in the startup space for more than a minute, you’ve probably heard someone say something like this. Founders and startup advocates have naturally critical minds; it’s why we can solve complex problems in innovative ways. But, that also means we spend a lot of time second guessing and rethinking every single thing we do.

I’ve had my own doubts about the accelerator model, and they mimic most of the concerns people bring up. There are so many (2000 around the world). What company can really be built in 3 months? It seems that the only real success comes from the big names, so why bother with smaller, local accelerators?

But, this week I was convinced that accelerators everywhere else can be just as beneficial to companies as the more publicized YCombinator and TechStars. Yesterday I attended the Investor Day for Jumpstart Foundry, in Nashville, TN and was duly impressed with what I saw. Of course, they had the bells and whistles–cool venue, great food, open bar. But more impressive were the companies that presented.

Every company had made significant strides in the 3 month program. Most could give detailed explanations of revenue. Quite a few already had traction and are well on the way to making real money already.

Vic Gatto, founder of Jumpstart Foundry and partner at Solidus Company, is well aware of the negative perception accelerators carry.

“We’re definitely a young industry going through definitional challenges,” he told me. He talked about meetings with other accelerators around the world. The leaders of these accelerators are talking about what defines success. Is it funding? Exits? Revenue? Level of mentor networks?

By most metrics, Jumpstart Foundry is finding success. 65% of its graduates are still in business, either bootstrapping or with funding. They have over 100 mentors, and that network grows each year. Gatto insists, though, that another real metric of success will be future exits, and most of the industry is still too young to really see that achieved yet.

One mentor told me that this year’s cohort may be the best she’s seen. “And they didn’t start off particularly special,” she said. “I think that really speaks to how the program itself is growing.”

And, as far as getting rid of Investor Day, Gatto won’t be doing that any time soon.

“That pressure is important,” he said. It’s the deciding factor sometimes when a new founder is tired and wants to call it a night. With Investor Day looming, it’s easier to focus and do the hard work of a young company.

Make sure to check out Jumpstart Foundry’s latest cohort because there are definitely some companies to watch. We’ll cover some of them here on Nibletz in the coming weeks.

In the meantime, here are a few reasons we shouldn’t give up on the accelerators everywhere else just yet:

1. In the life of a young company, it can be easy to let an idea go when it gets hard. Surrounding yourself with mentors and good advice in an accelerator can help you push through those first stage challenges.
2. The pressure of Investor Day can give you more traction than you thought possible in 3 months.
3. Accelerators everywhere else understand companies everywhere else.We’ve talked before about how companies outside of Silicon Valley are innovating in industries besides the Internet and apps. Local accelerators inherently “get” that more easily than accelerators that are used to churning out consumer-facing apps.
4. A good accelerator can be a rallying point for a whole ecosystem. Yesterday in Nashville, it was a packed house. Not just investors, but anyone interested in the startup scene showed up to support the cohort.
5. Even if your first company doesn’t succeed, the 3 month MBA you get by doing the hands on work of an accelerator will be invaluable to the next companies you build.
6. Accelerators may not be perfect, but what is?Anything that spurs innovation is good for the local community as well as for global issues that need creative problem solvers.

Social Media May Finally Have Become Radioactive to Investors…

Extraordinary Popular Delusions and The Madness of Crowds…

One would think that this should have happened sooner….but, well, there is a human tradition here…Wikipedia currently lists 342 social media apps, emphasizing up front that their list is not exhaustive. I can think of at least two more local social media startups, one of which has just announced significant new investments.  Extraordinary Popular Delusions and The Madness of Crowds, the now legendary book by Charles Mackay, first published in 1841, remains a classic text revered for its insights into social psychology and economic bubbles.

Investors of all stripes are so-called “birds of feather,” meaning that they tend to flock together. The risk averse nature of investing makes this inevitable… Like flocks of birds, the slightest unexpected and unwanted sound can set them off into flight.   This is even more true of much higher risk early venture investors.. The very term “due diligence,” meaning thoroughly investigating everything and anything related to a potential investment, implies “covering your ass,” (CYA).  No high risk investor wants to commit to any investment without partners.  Not being able to recruit other investment partners, suggests that you may be making a poor investment decision, and leaving yourself open to questions about the wisdom of your investment decision, or worse.

Over the years, there have been a number of “hot” venture investment industries, that attracted hundreds of millions of dollars, only to see the investment funds go up in flames, from over enthusiasm..  After these financial disasters, investors, like the birds, were unlikely to return to the same area again, no matter how attractive it may have seemed.  Only one of many examples, would be the “traffic shaping” networking equipment opportunity just before the 2002 Internet bubble. After being burned in this debacle, venture capitalists could not be enticed to invest in new opportunities in this area, no matter how promising..  A local Okanagan company here suffered from this phenomenon and eventually faded away.  It appears that the now very crowded and maturing social media industry may finally have joined other such oversubscribed areas of investment.

It’s About Time!

REBLOGGED FROM PANDODAILY

BY CARMEL DEAMICIS
ON AUGUST 14, 2013

VCs are cooling off their social media fervor. A new study out today surveyed hundreds of investors around the globe. VC’s in 11 out of 13 countries had less confidence in the social networking/new media sectors than last year. That dip was even more dramatic for the US, with VC’s ten percent less sure about social then they were in 2012.

The National Venture Capital Association conducts the “Global Venture Capital Confidence Survey” every year with Deloitte.  They ask general partners at different sized firms from the Americas, Europe, the Middle East, and Asia Pacific how confident they feel about a ton of sectors — clean energy, mobile, cloud computing — and geographies — domestic economy, global economy, emerging markets. This year’s survey took place in May and June 2013 and 35 percent of the responses came from investors in the States.

There’s a lot of interesting factoids to be found in the flood of numbers, but the stat about VCs losing confidence in social jumped out at me. It mirrors a trend others have noted: the social media bubbleis quietly, slowly, timidly deflating. This latest NVCA report shows that confidence is still high in social media compared to other sectors — it’s just less high than it was last year.

Social is not going out in a big pop, and it’s not disappearing anytime soon, but it’s also not what VC’s look to invest in first. CBInsights, a research company that studies VC investment trends, foundthat in the second quarter of 2013, social media companies got only two percent of VC Internet funding. They’re getting a much smaller piece of the puzzle now than they’ve seen in past years.

So why isn’t social the hot kid on the block anymore? I have a few theories: Facebook’s IPO was a bust, the market has gotten saturated, and there’s perpetual questions over mobile monetization of social platforms.

Facebook’s face flop of a public offering made people question whether its valuation was founded on real earning potential. Investors got nervous about social’s money-making potential. And given that Facebook is the biggest social beast of them all, investor anxiety may very well have informed decisions about funding smaller start-ups focused on social.

The market has gotten saturated, some people are tired of social, and there’s a cultural pushback ranging from mocking social media job titles to compiling lists of how social is ruining your life. How many networks can a person possibly join?

And as always, there’s the struggle to monetize social networks on mobile. Facebook and Twitter have gotten small pieces of the mobile ad pie, and Instagram has no mobile monetization plan. Granted, Facebook showed a possible turnaround with its recent earnings report, but it’s by no means out of the woods.

As always looking forward, time will tell whether VC interest in social media picks back up again, or whether they’ve moved on to a new sector love. Last I heard, VCs were the Romeo to cloud computing and big data startups’ Juliet.

[Image courtesy Wikimedia]

 

Now This Is Funny: Top Ten Reasons You’re Not Ready for Today’s Online World

This is not the Letterman Show.  But it is very funny..  Scott McNealy, former CEO of Sun Microsystem‘s keynote address at an enterprise computing conference held in Pacific Grove a month or so ago. Scott is not particularly well known for his humor and perhaps better known informally for his appreciation of ice hockey.  Someone must have helped him with this Top Ten list list of “reasons you ( or your Chief Information Officer) is not ready for today’s new online world.”

Top Ten List of Reasons You Are Not Ready For Today’s Online World.

10. “GolfShot” is the #1 cloud app on your mobile phone. This is McNealy’s poke at himself, a long time golf nut. 

9.  Your StarTac blurts out that “you’ve got mail.”  

8. You think Gmail is a typo

7. Myspace is your social media site

6. COBOL programming is a requisite for all your new hires.

5  Your grade school child is your tech support at home

4. You believe Computer Associates the leading an open source software provider

3. When someone mentions “Google glasses,” you type “glasses” into the search bar.

2. You are planning to implement OS2 on the desktop.

1. Big Data is a rapper.

My Tour de Silicon Valley: The 10 Most Popular Food Trucks

The history of mid-day dining in Silicon Valley has been through some very tough years, but has recently experienced a revolution.  Food trucks.

I will be on my home turf in Silicon Valley this month of August, to see how things have developed with the food trucks, and I will report back here.  I also begrudgingly support the San Jose Sharks….so I will see what I can uncover on the hockey front, but it is starting to feel like the Boston Red Sox curse.

Read more:  Slideshow: Top Ten Silicon Valley Food Trucks

Not long ago, Silicon Valley from North San Jose through Mountain View and all the way up to Palo Alto‘s University Avenue and California Avenue restaurants, there was very little in the way of quick and easy midday eating options.  Silicon Valley is a victim of industrial sprawl.  It takes a car to get anywhere and public transportation is still lacking. It was a cultural wasteland of warehouses and vacant lots.. The few restaurants on the El Camino strip were normally jammed, and you could depend on being stuck there for over an hour.  My favorite secret lunch  option was the food stall at Shoreline Park Lake in Mountain View, tucked away behind Shoreline Amphitheatre and the current Google headquarters.   The food trucks were the only other option, at that time were pretty gruesome old fashioned rigs with steamed burgers and soda pop.  Many of the old Silicon Valley food trucks were operated by Vietnamese families, but served Mexican burritos. Huh?  You waited to hear the truck arrive playing “La Cucaracha”  on its horn.

There just were not many options. The big Silicon Valley companies had awesome cafeterias, but unless you worked there you could forget it.  Google’s food service is legendary. The Sunnyvale area around Plug & Play is still a good example of  limited food options. There is one Greek place down the street from Plug & Play but not much else.

But the new food trucks have been an example of entrepreneurial initiative….designed to serve a severely underserved market, they now offer excellent cusine from around the World: Mexican (of course), Indian, Chinese noodles, Japanese miso and sushi, Vietnamese (Pho and all), Indian cuisine, Middle Eastern falafels and shawarmas, Greek,, you name it.. The key to all of this is that the Silicon Valley customer base is multicultural and demands the variety.

Reblogged from Silicon Valley Business Journal

Slideshow: Silicon Valley‘s Top 10 Most Popular Food Trucks

View Slideshow

Click through the photo gallery to see the top 10 food trucks in Silicon Valley, according to how they are ranked by Yelp.

Shana Lynch

Managing Editor–Silicon Valley Business Journal

 

Used to be food trucks were a way to feed the masses at a big job site — construction zones or farm fields. But now these meals on wheels are showing up everywhere in the Bay Area, enticing foodies with tasty treats (and sometimes surprising price tags).

The focus this week takes an in-depth look at food trucks, their growing trendiness, and how that’s impacting people just starting up in the business.

Find out from Porky’s SJ how the prices of trucks and truck designs have skyrocketed.

Meet Vince Guasch of the always popular Louisiana Territory and learn which is harder to run, a bricks-and-mortar or a rolling restaurant.

Then find out which corporate offices bring the best trucks to their yards (LinkedIn is a big fan of CurryUp Now).

Check out the top-rated food trucks in the region, according to Yelp, in this slideshow. Click on the food truck image to the right.

So what’s your favorite food truck?