Guest Post: Incubators are less important than the people in them
Editor's Note: This is a guest post from Tom Chapman, director of entrepreneurship and innovation for the Greater Omaha Chamber of Commerce, in response to a post published earlier today: "Could the Silicon Prairie use a slice of PIE? A look at the Portland incubator".
Outside of this post, Chapman is a regular guest contributor to Silicon Prairie News with his series, Innovation Chamber: A Look Outside the Chamber for Innovation. Also worth noting, Chapman will be departing the Chamber at the end of August to join Nebraska Global, one of the companies mentioned in the post earlier today.
I have heard a lot of discussion regarding incubators recently. There are many advocates, but I would offer that more important than the physical space for an incubator are the people who will go inside of it. I wanted to write a longer post rather than simply commenting on the PIE article because I wanted to be more long-winded than I thought appropriate for the comments section.
There is an incubator at Scott Technology Center right now, and so I would offer to those who say that we need one – why not this one? Ken Moreano and his team have helped companies raise money and provided valuable introductions to customers. In addition, the Halo Institute is open for business on Creighton’s campus and with an excellent entrepreneur-in-residence, John Blazek (who also is a partner in a funding entity – Corporate Ventures), in house. I will admit that with both of these examples, companies and founders have complained to me about certain features of the incubator in which they were disappointed – access, more help finding customers or funders, less expense, parking, etc. However, I am unsure how a new incubator would solve any of those problems simply by being new.
So, I think that the desire for an incubator stems from some other unmet need – and it reminds me of the conversation that was circulating about three years ago around Jailbreak Omaha.
Here is what I gleaned from that conversation as a listener (and an occasional participant). The necessary components of a good incubator are these:
- A perception of cool space;
- Good parking;
- Great anchor companies;
- Excellent peripheral efforts that include links to money, customers, other technical people, and mentors;
- Strong rules to ensure graduation and good behavior;
- Open access;
- Free or nearly free food; physical (not virtual) storage; and wi-fi;
- Good phone reception for cell phones;
A short way of comparing this thought with other models – is that a new incubator should be set up in a way that startups LOVE coming to work in the morning, can get their work done – growing their business in an efficient manner, and interested parties are welcome without getting in the way.
Here's what else I gleaned from that conversation. Running an incubator is deceptively expensive and the operator needs to be prepared to take losses. Also running an incubator is a fine art – where too much intrusion is bad and too little is equally bad. The operator must also be very patient regarding space because filling the space fast in Nebraska – typically leads to reaching on companies. So, for example, non-profits should not be allowed into a business incubator, neither should professional businesses, or other lifestyle types. This means that many of the companies that are in Nebraska’s incubators – probably should not be there.
My personal belief is that incubators are not that important. I think that incubators sprung up for very rational reasons in places like Boston, Silicon Valley, New York City and even Austin – the cost of rent in those places is exorbitant for a startup's budget. The value add of programming and mentoring was actually added later. So, building an incubator should be a low priority when it comes to ecosystem construction. [I do think that there is probably an exception around spaces that are uber expensive – such as wet labs and certain types of advanced lab space.]
However, I also understand that in the right hands and with the right people/companies in the incubator, it suddenly becomes an acceleration engine. I believe that the ethos around certain incubators – like PIE or Dog Patch Labs (which is more of a co-working facility) – is significant and helps companies overcome both emotional and real business obstacles. But, I would emphasize that this is about the people involved and the engagement of those people and companies – more than it is the physical space. Thus, the incubator takes on the life of the community around it rather than being merely a place of business.
So, I probably disagree with the long-term importance of an incubator. But with the right people and value proposition an incubator could be a helpful organizing and accelerating tool for Omaha. I think this is true of existing and/or new facilities. So, if I were thinking about starting an incubator or trying to juice an existing one, I'd focus on getting really smart, engaged and entrepreneurial people involved. Then, I'd focus on how to stay afloat financially without losing the point.