The word “Incubator” is a holdover concept from the dotcom bubble days and has been a four letter word to investors after Idealabs spectacular implosion, it makes sense to rethink the idea in terms of the new Web 2.0 landscape. The idea is that you collect talented people, and give them the time and resources to create businesses, while they in turn give you a percentage of the company. VC’s used to call this their “entrepreneur-in-residence” programs. A lot of these incubators looked more like executive suites in that they provided the resources like desks, phones, net access and secretarial support for a fee. Times have certainly changed.
What if instead of the classic scenario of a small group of founding programmers starting up a company, and then looking for money, the investors themselves get into the game directly? The costs of bootstrapping a web company have been drastically reduced – to the point where almost any cash strapped student can do it nowadays. This is of course based on cheap hardware and web hosting hosting, simplified programming languages and tools like Ruby on Rails and most importantly the maturing market where 55% of the US has broadband access and more and more people are figuring it out what to do with it.
Instead of waiting around for entrepreneurs to come to investors with ideas, some forward thinking investors are taking a proactive approach by creating the foundation to do projects “in-house” themselves. This is the exact opposite of what a true startup should be - discovering an existing problem and then solving it. Its more like starting up a tool factory -we build the hammers, you find the nails. Sites like elance and programmermeetdesigner along with job boards on Web 2.0 sites like alarm:clock, Techcrunch, Good Experience and 37signals makes it exceedingly easy for investors and entrepreneurs to find the talent that they’ll need.
Some groups I know personally who are doing this right now are:
I have one friend of mine who after hearing me rant about how great Web 2.0 companies are, put an ad on Craigslist asking for entrepreneurial minded programmers to work on start up ideas. I wasn’t surprised when he told me he had 40 responses in a day, and 10 of them being good enough to pursue. The temptation is too strong to resist for me and I’m very seriously considering this myself.
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