In the span of twelve hours, two interesting comments passed my way. The first was a tweet by Steve Cheney regarding what he feels to be the excessive number of startup accelerators in NYC. While he noted seven such programs, I have, at last count, found 67 startup accelerators, over 40 of which are focused on tech startups. That does seem to be a lot, but is it truly excessive like Steve states? Are we in an accelerator bubble?
The second was a comment by Dave Lifson in response to a post about the value of MBA programs today. Rather than going the route of spending money on an expensive MBA program, Dave suggests:
“Just about anything else you might want can be had by joining a startup, where you get paid to learn.”
While I do believe there is still valuable educational content and formative experiences found in many top MBA programt does seem to be a wildly expensive choice. In many ways, startups offer the type of direct, hands-on and impactful experience that’s impossible to replicate in a classroom setting. Plus, getting paid to learn certainly isn’t a bad thing. But this begs the question, could you be missing some foundational steps in building your skills by relying on self-learning? Are startups the best environment for learning on the go?
I don’t see MBA programs going away any time soon. For certain career paths, the MBA is pretty much the only way to advance to upper management and the executive suite. And in many circles, there’s a cachet that comes with having an MBA from a top-tier university. But more importantly, from the perspective of college administrators and the economics of higher education, MBA programs are huge moneymakers. Killing the MBA would be like an SEC school killing its football program. However, if you’re an entrepreneur, an MBA provides little value for the expense. So where does the entrepreneur turn to in order to fill in the gaps of his or her own entrepreneurial experiences?
Almost in lockstep with the rise of tech startups has been the growth in resources for entrepreneurs, especially in education. Some, like General Assembly, are innovating the formal structures of higher education. The institution has been expanding rapidly with courses and programs from technology to business, targeting entrepreneurs, designers, programmers and marketers. The sheer growth in “learning to code” resources from live classrooms such as Hacker School and Flatiron School to online platforms like Codecademy and Code School has been remarkable. Most co-working facilities, such as WeWork and Alley NYC, have been offering a variety of classes and developing communities that can easily collaborate with each other. And then there are those startup accelerators that got us started on this post.
Startup accelerators are the new MBA. Maybe the analogy isn’t perfect, but I do believe that startup accelerators have many of the elements that are lacking for entrepreneurs with typical MBA programs. Think about it, where else would you get paid* to test your business concept, get introduced to a deep network of industry luminaries and have access to the knowledge, expertise and resources of a community to round out the gaps in your own experience? Where else could you turn to get trusted, unbiased, critical and unfiltered assessments of your startup concept? You might be able to cobble together some of these things yourself, but what would be the point? The whole reason for accelerators is to accelerate startup growth by putting in place the people, programs and platform that best enable successful (and profitable) outcomes for entrepreneurs and investors. In many ways, it’s the “MBA-in-a-box” for entrepreneurs, without the outrageous cost.
Of course, just like MBAs are not for everybody, accelerators generally cater to certain types. For one, you generally need to have a startup that has a working product and some amount of traction (though that’s not always the case). The competition is pretty intense and the most well-known accelerators are harder to get into than any Ivy League school, where acceptance rates hover around 1% or less. Also, the application process plus three months in the program (the typical program length) can be a detriment to focusing on developing and selling the product. Most folks don’t realize how much time is spent in various review sessions, mentor sessions and other events, which could prove to be distracting. Lastly, you might have a fairly experienced team in place, so the benefits gained in an accelerator may be minimal.
That being said, if you are just starting out as an entrepreneur and you have launched your startup, an accelerator might be worthwhile. Obviously from the accelerator’s perspective, they would prefer their classes to have profitable exits, but as we already know, that’s not going to be the case. There is scant evidence to prove that accelerators are any better at predicting or enabling more positive financial outcomes. However, many folks have shared the immense value they have gotten from their attendance in an accelerator, the networking and community and the experience and knowledge gained. In addition, even for startups that ultimately failed, the founders and early employees often went on to have solid careers at other tech companies. Come to think about it, in many ways these stories sound an awful lot like what people say after graduating from an MBA program.
So, are there too many accelerators? Only time will tell. The worst programs will fail, the best will continue to grow and most will plod along without any significant startup successes. But for building up the next generation of innovation entrepreneurs, I don’t think there are enough accelerators. This is the type of educational experience that should only continue to grow and spread, even down into the high schools and middle schools of the traditional educational system. It sure beats the heck out of home economics and wood shop.
* Nothing in life is a free ride, so you’re “paying” in equity, but given the success rate of most startups, there are very few instances where this would result in losing out on big money.
This article was originally published on Strong Opinions, a blog by Birch Ventures for the NYC tech startup community.