Startup Incubators or Expensive Cliques?

Over the past couple of months I visited a few startup incubators in the Chicago, Cleveland and Raleigh Durham areas.  After the first all the tours were very familiar.  “Free breakfast”, not surprising since most of the marketing for these incubators look like coffee shop ads.    “High speed broadband”.  Not sure how that matters, a commercial circuit to the internet isn’t that expensive in the scheme of things when starting a business.  “Shared conference rooms” and “multiple geographic locations” are all part of the common script too.

If you think that your companies success is going to be achieved by treating life like a social media feed, an incubator membership might be for you.  Should you believe your gateway to sales and revenue is through those in skinny jeans, with man purses man purses, possibly wearing a RomperHim man romper then I’d say it’s time to incubate your startup.  Office walls and privacy are for old men who didn’t know the value of sharing their startup secrets.  There was nothing comfortable about taking a tour with 20 somethings who peered into every glass walled, fishbowl office to try to study what was on the screens of those working in these hipster palaces.

What was truly staggering was the amount of “private” work space offered. 384 sq. feet for $3000 a month!  Fishbowl space you claim can hold seven employees?  My day job office is 192 sq. feet and I’m in it alone.  But oh, you provide the furniture.  The same furniture I can get from a failed startup on Craigslist for a few hundred dollars.  By the way, these work spaces are a damn sight from anything that can be called “private”.

But who needs any quiet, private places to be productive when you can be “collaborating”?  That is, discussing stale technology topics and up and coming video games with trendy hipsters.  Funny truth is my business partners thought I would be the one susceptible to the temptation of day wasting at the coffee counter, discussing the DSL router I put in Evander Holyfield’s house in 1999 with kids half my age.  They may not be wrong.

Truth is I did not see one thing in these incubator offices, including one called Industrious, that would lead us to be the least bit productive or industrious.  In fact you can’t get “industrious” at all.  It would be too distracting for those trying to fill their glass cubicle walls with doodles that will impress the next tour group.  Every incubator came off as a place to showboat.  So I looked into success stories.  All I saw anywhere was the lists of “Funding Achieved”.

So, an incubator is a place to go get people to invest in your startup?  What if I’m not looking for a place to lure investors?  We’ve committed to making sure we have very limited investment and as few loans as possible.  A financial business model derived from a good friend, Scott McClaughlin, who founded Strategic Connections in Raleigh and has never taken on a dime of debt in the companies history.  Scott wrote a personal check a few years ago to buy the Albemarle Yacht company.  Debt driven valuations are not success.  Sales and revenue with solid margin equals success.  I don’t hear about any such thing coming out of incubators.  The only thing I heard or saw in these incubators were sales pitches, pipe dreams and yes, skinny jeans.

Did we totally dismiss the idea of ever being in an incubator?  Sure did.  There is no math that works in their favor and we’ve honestly found many offices that work better for us than these trendy clubhouses for millennials to play pretend entrepreneur.   Give me one story of incubator startup success beyond “funding achieved” and I’ll reconsider the ridiculousness of this new real estate trend.  And that’s all these things are, real estate marketing to those with the unrelenting desire to feel cool through debt, regardless of genuine business success.

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