I have an ominous feeling of deja vu. But it may not be all bad. The “accelerator” business appears to be at a strategic inflection point. The indicators are increasingly pointing to the need for a rethink.
In 1849, thousands of aspiring gold miners arrived by ship at San Francisco. Very quickly, enterprising citizens in San Francisco set about selling premium priced shovels and mining pans to the fortune hunters, as they set off for the Sierra foothills. Even the crews jumped ship and headed for the hills, leaving their ships to rot into San Francisco Bay, until 150 years later the San Francisco Giants spectacular new AT&T Park was built on top of the old shipwrecks. Very few of those original “49’ers” hit pay dirt. Most lost their shirts.
Having been in the entrepreneurship business for many years in Silicon Valley, the current entrepreneurship industry environment feels more like the 49’ers bubble than did the 2001 Internet bubble. In that period, I was bemused by all the “dumb money,” and the experience of breakfast at Buck’s in Woodside, or Il Fornaio in downtown Palo Alto, both packed with VC‘s and wannabe entrepreneur’s. The voices were muted to avoid being overheard, and the wine flowed freely. This time it is worse. There is no Il Fornaio. There is no money. It is more like an industrial ghetto out there. Erin Griffiths’ PandoDaily December 3rd post (URL above) “We know accelerators are headed for a shakeout-but do they?,” adds additional evidence to my earlier November 18th post on the depressing state of the app development industry and the dearth of Big Ideas. The new “49’er ” is the Web entrepreneur.
This does not appear to be specific to any particular location or geography. It’s happening in New York, Boulder, Austin, as well as here at home. It’s everywhere. Investors’ are openly bemoaning that there are too many accelerators cranking out too many mediocre ideas. It used to be that bad ideas died quick deaths in the Colosseum of competition. Erin’s description of a typical company’s “demo day” fiasco was painful to read, but so dead on the mark. I have seen it a hundred times. Some of the problem stems from the lack of meaningful accelerator performance metrics. Some of it stems from a lack of will to enforce “up or out” rules.
So seeing the writing on the wall, Y Combinator, most often ahead of the curve, is scaling back significantly without prompting from any source or market force.
There may be a silver lining in some hopeful signs. Communities that are focusing like a laser on their local economic environment, and working to enhance their core competencies, encouraging entrepreneurs in those niches, are winning. Those lost in the froth of trying to reinvent Silicon Valley are increasingly losing.
Too much foam. Too little Guinness.