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Christensen’s Classic The Innovator’s Dilemma, helped a generation of business management understand the tsunamic affect that “disruptive” technologies or processes can have on a market leading company. Maybe its time to go to the bookshelf and have another look. The competitive landscape for Startups is being “disrupted” and this tsunami may be closer to the start than the end.
Michael Dell did not quit college and start building and selling computers from an apartment? Legend states that he stayed in school selling out of his dorm room until it was clear that he had reduced his opportunity cost enough to make a move. In how many school’s was “The Facebook” generating escalating usage & how much VC money did Mark Z have in hand before he actually quit Harvard? The point is that until recently, entrepreneurs would transition methodically toward starting a new business. Gathering data and market traction until the decision was not just a leap of faith. The right answer was for entrepreneurs to hedge their opportunity cost before stepping out on the Startup plank.
“Immersive Accelerator” is the term we are using for businesses like Y Coombinator. There is no room for discussion in the fact that these businesses are “disrupting” the the Startup landscape in a material way. Young, smart, motivated individuals, generally, however, with *low opportunity cost are lined up like American Idol hopefuls for a chance to check out of their current careers and lives, physically move and put 100% of their energy and talent into a Startup that was vetted via a 10 minute pitch to previously successful entrepreneurs. The operators of the “Accelerator” provide the external resources required – which are plentiful at for now.
Most importantly, the applicants to these “Immersive Accelerators” understand that they will have the opportunity to pitch their Startup to what is an actual crowd of potential investors all at once and have a great chance at attracting capital at a valuation that is attractive. This is a material change from the traditional process which required Startup industry connections, longer timeframes and pitching opportunistically to potential investors.
The Big Question
Is Y Combinator – the head and shoulders leader in the Immersive Incubator model an “Outlier” or is this the methodology that will become the standard until it is unseated by some disruptive force at some point in the future?
Certainly, the fact that according to www.Seed-DB.com, there were over 170 of these “Immersive Accelerator” Startup factories conducting business world-wide indicates the potential of a bubble forming. For now, however, the traditional process of Startup discovery and funding…from Seed to “A” Round is experiencing classic “disruption”.