As many of you know, 17 weeks ago I announced that my team would host our first incubator class. We came at it with a very simple strategy: six companies, 12 weeks, and a big debut at the LAUNCH Festival.
We had over 150 companies apply and my team wanted to accept 20 of them. My gut told me 20 was way too many, so we accepted seven.
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Here are the five things I learned from doing this.
1. Seven is the right number
It turns out that seven is a magical number for running an incubator. Why? Well, every week each company was able to give their pitch to the speaker for five minutes and get a massive 10 minutes of feedback.
I was speaking with a YC founder this week and I asked them how much time they got with the weekly speaker and they said zero minutes. It turns out that YC’s latest class has 110+ startups, so with three founders coming to each talk, they have 300 folks in the audience (at least, according to this founder).
YC is the gold standard, but with that many per class, the startups are relegated to having office hours with the founders. There is just something magical about all seven startups getting feedback from the most powerful and smart people in the world — for 12 weeks straight!
Additionally, if you say no to two out of three companies you WANT TO ACCEPT you are going to create a competitive climate for your incubator. This means everyone realizes that they got a coveted slot and they should do everything they can to a) keep it, and b) milk it.
Presenting your Startup is a Forcing Function
Every week we forced every startup to present their product in the four-minute fashion we do at the LAUNCH Festival. One founder challenged me and asked if this was a waste of time, “Is this pitch school?”
I gave it a lot of thought, and I explained to them that presenting your idea and process each week was forcing function. Nothing sucked more for the founders than the week when their presentations went sideways, or in some cases, backwards.
It creates a healthy competition, although that is not why I came up with this device. It turns out that if you see three of your peers absolutely crush it this week, and the other three get crushed, you are going to up your game.
Pick a Winner!
Every week I asked our speakers to pick their #2 and their #1 startup from the bunch. I thought this would result in the same companies getting picked week after week, but it didn’t. Some companies ran out to an early lead, winning the first 2-3 weeks only to fall to obscurity for the next three while others replaced them at the top of the charts.
When two startups weren’t picked as winners for the first couple of weeks, their peers were over the moon when they finally broke through. This “supportive competition” blew me away: people were actually excited to lose to their struggling peers!!!
It was almost like, “I’ve won enough, I want to see you win a couple of weeks, pal!”
Tactical presentations over Fireside Chats
We had a couple of speakers do fireside chats but most of them prepared presentations. The speakers who prepared presentations were 5-10x better.
Truth is, anyone can do a fireside chat, but very few investors and founders will stop their week and dedicate five hours to making a killer presentation. I’m so thankful to those speakers who actually made a deck and blew the audience away. Some of the most talked about were:
Teams without a design on staff suffered
Because we were iterating on product so quickly, the teams with killer designers on staff were able to mock up InVision links that, combined with their four-minute presentations, helped kick the tires on new models.
The folks who didn’t have designers did PowerPoint decks and were in the mud. We were lucky enough to have a “designer-in-residence” for the incubator who gave people hardcore feedback. Sadly, this wasn’t enough to break people out and some folks suffered until the end of the last weeks of the program before FINALLY landing a designer.
Design matters — a lot.
The Magnificent Seven
The seven startups from the first Incubator class crushed it last week at the Festival. They have all raised a ton of money and have bright futures. They are:
The most exciting part of the last year for me professionally was spending 3-4 hours every Thursday with these companies. I’m thrilled to announce we are going to do it again starting the second week in April.
- You should have an MVP, or at the very least a completed mockup of your product.
- We are not accepting folks with a business plan or an idea. That’s what the Founders Institute does really well. Go there and THEN apply to the LAUNCH Incubator.
- You need to have a team that can iterate on the product every week. This typically means you need one to three engineers and one designer. We’ve typically had teams of two to four folks who can actually build product.
- You have to quit your day job and be in San Francisco for 12 full weeks. You should expect to bust your ass for six long days per week during the incubator.
- We may have desk space available for some of the companies this semester at cost ($600 per month, per desk).
- It’s a simple deal: we give you $25k for 5% of preferred shares on a convertible note at the start of the incubator. We then give you another $25k from our fund and syndicate your deal to my AngelList Syndicate at the end of the incubator at a higher valuation ($2.5-3.5m). This is the influencer round, and I try and get very powerful people to invest in your company at this point.
- Our fund will, in all likelihood, continue to invest pro-rata.
- You’ll be on This Week in Startups 6-12 months AFTER the incubator to do a check-in!
- You’ll get a demo pit table and tickets to the LAUNCH Festival for the next five years after the Incubator.
- We are doing in-person interviews with the top 30 startups on a rolling basis starting next week. These interviews will take place with my team and three alumni from the first class. This means you’ll get to ask a TON OF QUESTIONS to the folks who just graduated!
If you’re in doubt as to whether you should apply I suggest you just go for it, because at the very least we’re going to give you a ton of kick-ass feedback on your startup.
I’m loving doing the incubator … it’s just a blast!
best – @jason