In response to my last blog post about the startup ecosystem in Europe, my good friend John Girard, CEO of Clickability, sent me the following thoughts:

Here's the flip side: when you have a little too much help, you do more harm then good. Two examples: (1) small business subsidies don't work and (2) "incubators" suck.

You can see evidence of #1 in a lot of Europe. It's not that they don't want start-ups, but they have gone about seeding them in a bass-ackwards way. Money given away to small biz is money thrown away. They haven't figured out the incentives yet in any real way.

For #2, look at the incubator craze in silicon valley in 99/00. Granted there was a lot of air in a very big bubble, but my pet theory is that incubators made it far *too* easy for companies to start-up, and as a result otherwise good, capable companies tanked.

The reason: it just wasn't painful. And without pain, there is no resourcefulness. And without resourcefulness, there is no growth. I remember going to a meeting with a semi-competitive company back in 2000 that was being "incubated" and seeing all of the aeron chairs and the foosball table(s) and thinking "these guys are screwed." And in fact they were. . . Meanwhile, we were eating top ramen and had 9 people working out of a $1500 a month apartment in the mission (where 3 of us were also living). Now we're not microsoft yet, but we have certainly outlasted those other punks 🙂

There is little question that John and Clickability have done a great job of making it through the nuclear winter that was the early 2000s and building a meaningful and growing business while many of their competitors, incubated or otherwise, have disappeared. But I have a different theory about incubators.

It isn't necessarily a problem that incubators make things too easy for startups. The problem is that they don't promote true independence. It is one thing when an incubator provides fungible services (accounting, HR, etc.) to its companies. It is another thing altogether to provide help with core functions like strategy, business development, engineering and the like. These are critical skills that each startup requires, independent of the incubator. Yet, often times, those areas are supplemented by resident executives from the incubator. Sure, those execs may do a great job in the roles, but they will not be members of the permanent team and are therefore doing a disservice to their incubated companies by playing any core role whatsoever. When it comes time for the baby bird to leave its incubator nest, it won't actually know how to flap its own wings and, rather than soar, will fall like a rock.

Regardless of what are the true failings of incubators, I ultimately completely agree with John. Traditional incubators and economic grants can do more harm than good to a startup culture when there is not already a well-engrained and robust entrepreneurial ecosystem upon which these startups may grow and thrive.