Incubators and Transferrance of Resonance

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The concept of an incubator keeps coming up in my travels. Everybody knows about the big Internet incubators like IdeaLab during the Internet boom years. Lots of investors pouring money into these operations, big plans and huge infrastructure was built to support the development of business ideas, on the assumption that certain resources could be pooled together and shared to increase efficiency and cost. These were building space, internet access, servers, expertise - you name it and you could find it at an incubator in the late 1990s.

The spectacular demise of these incubators put a damper on the creation of new huge incubators. Even now, the lawsuits still go on where angry investors, having lost hundreds of millions of dollars in these investments, are litigating to get some of that back. When I started into this investing business, my ex-venture fund partner and I tried to form an incubator called Ignited Brains where we would employ inexpensive outsourcing to Internet ventures and try to let the marketplace decide on their viability. When we went out to get advice on our operation, we were met unanimously with negativity; incubators, we discovered, was a dirty word in the venture/investing community. Nobody wanted to have anything to do with us at all, which caused us to switch gears to try to raise a traditional venture fund.

As we worked on our traditional venture fund, we also discovered that incubators did exist in other forms. Some venture funds developed the concept of Entrepreneurs in Residence (EIRs), where entrepreneurs with a track record got office space and sometimes were paid staff and they were free to work on whatever projects they wanted. If they were on to something good, the venture fund would then finance it and off they would go. In fact, we had an "lab" in our venture fund which we would activate, with permission of the investors, to operate essentially as an incubator for our own ideas. Another interesting model came up with YCombinator where the two principals would get college students to work with them for 3 months and they would fund them for that time and help them get an Internet business prototype out the door. This is interesting to employ college students who have lots of energy, are super smart, and have skills to throw at a given problem. Another incubator model was tried by those who came through the Internet years with at least one large exit, and thus could fund their own ideas. Basically, they would get some of their smart buddies together, form an LLC or corporation, and work on an idea with minimal cash to see if they could get traction with it.

For me, I think I would have tried the last model, which was to take my own ideas, form a team, and run with it to see if it would work in the marketplace. Upon further thinking and research into this, I think there are limitations on this model. In short, my belief is that you can't work on many ideas, if they are your own AND expect them to be successful in the way you envision them.

The problem has to do with resonance with an idea, and transferring that resonance to other people.

First, an idea has to resonate with me. I must love the idea, understand it, and know how it could be successful. So naturally, I get how to make it work, what a target user might want from it, how to market it, etc. You might say I would be a natural to lead the business.

Herein lies the problem. You can only work on so many things so that they get enough of your time and benefit of your ideas and leadership. It's pretty hard to be CEO of one company, let alone 2 or 3.

And you can't rely on others to take your idea and run with it. That's where the transferrence of resonance comes into play. Since everybody is different, it is a very rare event, in my experience, to be able to transfer your own resonance with an idea to another person so that they feel it as deeply as you do. Without that shared resonance in others, they'll never be able to take an idea to the place you can take it to.

Over the years, in various jobs, I've tried to sell concepts time and time again. And I can't recall a single time that an idea survived longer than me driving it. As soon as I stopped working on an idea, it was impossible for the people there to continue work on it. I believe the same applies to incubators. In fact, I talked to an entrepreneur who actually launched a personal incubator with all his own ideas in it and he also had the same experience I had, which caused him to kill all the other projects and focus on the last two. Once he did that, the two are now flourishing, whereas previously they were actually languishing without his focus on them.

If someone can figure out how to transfer resonance to others, please let me know. Otherwise, are we ADD entrepreneur types doomed to only work on one or two things at a time?

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This page contains a single entry by DShen published on November 14, 2006 12:07 PM.

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