Industry analysts are starting to worry that the trend for high tech ‘incubators’ – where fledgling programmers can nurse new ideas to health – are spreading too fast, and getting nowhere.  Struggling managers try to minimize risk and set their sights low.  However by the next financing round, they’re dead in the water.

There’s a lesson there for owners across industries, and especially if you are starting a small business or working with an internet-based companies.  Concern is growing among business leaders like Max Levchin, the PayPal co-founder who just left Google to launch his own venture.

He believes the broad, low-risk, grab-bag model that these tech ‘boot camps’ apply is deeply flawed.  They’re siphoning off talent that could be put to more productive use, and worse yet, they’re too short-sighted to accomplish anything meaningful.

Baby Wants His Bottle

Hungry, talented new recruits flowing into Silicon Valley are being lured to the hundred new start-up companies built on the ‘incubator’ model – the gingerbread house of the high tech business.  The ambitions are usually low, and the new team can develop the tiny software application without many resources over a relatively short time.

It seems like a promising way for many programmers to get their start in the industry, so it draws a lot of first-rate talent right out of college.  In many cases, it’s their first experience with a company in their field.  They’re excited, and they work hard towards making the best possible final product.

Home Alone

By the time the company wants to sell it, most other businesses have lost interest.  The sights were set so low in the design phase that it arouses very little excitement in the market once it’s finished.  Although the team accomplished the goals it set for itself, the original idea wasn’t promising enough to pay off.

It was something they could do cheaply and quickly, and it’s why managers arranged things the way they did.  Unfortunately, it wasn’t even worth the small effort they put into it.  The shelf life of this kind of business model is like milk.

For the eager younglings charged with carrying through a doomed project, it leaves a sour taste in their mouths at the outset of their careers.

Supervision

Max Levchin of Google plans to go against the grain by actively increasing the risk in his new model.  There’s such a thing as being too careful in business, and for start-ups, that’s a bigger failing than not being careful enough.  If you’re going to be altering the landscape, you need to find a place in it for yourself.

Nobody wants to be part of a company that fails in two years, but it’s worse to be part of a company where success means the same thing as failure.  You should be giving yourself and your staff something to shoot for; something they can get excited about.  Think of it like a business proposal – if you do this kind of work for me, this is what you will get in return. Without that kind of energy, your operations are likely to be dull and yield nothing in the long run.

Look towards the future.  Try to develop a business plan that’s worth the risk, and marshal the talents of your staff towards achieving a difficult end.  That way, when you ask for more capital in two years, you won’t just have done something.  You’ll have something left to do.