What do accelerators do? Figuring that out is hard.

“What do accelerators do and are they effective” is a tough question to answer. The best ones are continuously (and quietly) iterating on their model as the funding environment changes along with their cohorts. When you try to compare the success of cohorts from different years you could be comparing companies that have a very different set of ‘tools’ applied to their ‘acceleration’ process.

In an article in HBR entitled What Startup Accelerators Really Do the author points to some research in attempt to explain what accelerators do and evaluate if it is effective. The evaluation is interesting.

..accelerators can have a positive effect on the performance of the startups they work with, even compared with other key early-stage investors. But this finding is not universal among all accelerators and so far has been isolated to leading programs. the author gets a little more specific than the HBR article on which programs make a difference that can be measured.

In the research paper the author gets a little more specific than the HBR article on which programs make a difference that can be measured.

We find that TechStars and Y Combinator are strongly associated with ventures being faster to raise capital relative to the matched comparison ventures. Effects for some accelerators (500 Startups, AngelPad, Dreamit, and Excelerate Labs) are lower in magnitude, while still other accelerators are associated with ventures that were slower (LaunchBox Digital) or no faster in their time to raise to raise (Seedcamp). In sum, these results suggest that some accelerators accelerate venture gestation, that some accelerators accelerate more than others, and that acceleration is difficult and not achieved by all accelerators.

What the paper suggests is that accelerators work but only two (YC and Techstars) are measurably accelerating.  Other programs are not. The group of accelerators they looked at where limited as they looked for accelerators that had at least four companies with funding events before summer 2013 that are public in Crunchable.

Referring to the research paper the article does a great job of defining an accelerator and makes the point that there appears to be a secondary benefit of accelerator programs – they increase the overall investor activity in the community around the accelerator and not just for companies in the program.

Figuring out what accelerators actually do is hard

There are some challenges not discussed in this article that I would have liked to have seen mentioned: a) companies go into multiple programs over a short period of time, b) what is ‘normal’ for the average company, and c) picking the best of all companies that are applying to accelerator programs is different than acceleration as its defined.

a) Companies go into multiple programs.

Companies enter multiple accelerators over a number of years finding their way towards TechStars, 500 Startups, and/or Y-Combinator while maybe changing their name and/or product as they go.

b) What is normal?

There is no ‘control group’ — it is unknown what a ‘normal’ number of companies being founded is and whether they would eventually migrate to the valley or a larger centre with a larger network or if they stay put how would they ‘normally’ do? This opens up some questions on whether the presence of so many accelerator programs is driving the growth in investor activity or if it a result of the growth in investor activity.

Do early stage investors drive the creation of these programs as a way to manage their deal flow? Are there any companies left that choose not to go into an accelerator or at least apply to one?  My guess for both those questions is that yes they are essentially managing deal flow for early stage investors and because of that there are few to no companies founded by first time founders that are not in an acceleration program.

c) Picking the best of all companies isn’t ‘acceleration.’

No one really knows what ‘stage’ a company actually is when it enters a program. The top programs could just be better at attracting the limited number of companies that are ready (but don’t know it at the time) to raise capital. This is related to my first point.

How do we know what works and what doesn’t?

In order to learn, iterate, and grow the number of successful companies there needs to be an understanding that building a company is an art not a science. There is no ‘process’ that will be repeatable by any two individual founding teams. The real ‘magic’ is found in the network — the peer group of masters and apprentices.

Probably the biggest challenge with accelerator programs is that they try to differentiate themselves in order to attract both funding and applicants. From specializing on a particular subject (sales, hardware, etc) to how they manage a cohort or funding.

Founders of anything benefit from building a peer group across all verticals and they should be co-located as much as possible with any/all barriers removed. No teams in different buildings. No walls. No classification and specialization. Just one big ‘cohort’ of people with a company that does anything.

Accelerator programs need to focus on grooming the larger ‘network’ and focus on the quality of those network connections. If they do it correctly they will find the startup world is small.

Y-Combinator gets it. They are years ahead of pretty much all accelerator programs having made a shift away from what people often referred to as ICT to focus on everything and anything that they have a partner interested in. YC’s power is in its network of Black Swans.

What could this means for programs today? It is very likely they are not as effective as they think they are at accelerating companies. Don’t rest on positive media mentions and good marketing. Programs should avoid following a model thinking there is a ‘best practice’ to follow and focus more on the success of the companies they are helping.

The 2015 review. A goal for 2016.

Looking back at 2015 it was a bit of a personal and professional growth year as I went outside of my comfort zone and tried some new things:

  • Kicked off the year moving to a totally new role (to me) of “Business Development” at Boltmade. Jumping back into the software development world with the best team I could imagine has been awesome. In some ways it is familiar but it in so many other ways I am in a position where I am learning every day.
  • I started teaching a course at the University of Toronto – course development and execution is one heck of a learning experience. Plus it is a lot of fun!
  • Made the transition from Assistant Coach in hockey to a Head Coach of a rep baseball team and a girls house league hockey team. The number of courses a volunteer needs to take in order to coach (and they are sport specific – hockey and baseball have their own) is surprising. The experience even more so.

Overall it was a good year and I feel really lucky to have had the opportunity to move away from ‘startup everything’ thinking to try different things. I put a lot of emphasis on developing my coaching skills and it has been hugely rewarding.

The year was bookended with the loss of two really important “old guys” in my life: my grandpa, and my uncle Don. My Grandpa (the only one I knew) passed away nearly a year ago. It was extra tough because my oldest son and daughter (8 + 6 yrs old) knew him and experienced a loss.

A fresh reminder that life has a time constraint and that one must enjoy the time they have now and do as much good as you can while you are here.

For 2016 I am looking forward to building on the last year. Family wise we hit a few big milestones (big birthdays, the 4th kid goes to school in the fall) which are going to change some things.

My goal for 2016 is do as much good as I can.

Focusing on activities over results


What the critics and supporters of any accelerator or incubator program often discuss are activities backed by some calculation of ‘results.’ It makes it difficult to talk about the good things (and the bad things that are actually bad) because often the activity is seen as the result to some people and to others it’s not.

To complicate this some more the public funding often asked for metrics that are tied to activities and celebrates them (e.g., funding events, number of people attending an event). This isn’t just in the accelubation space, pretty much all government funding for any agency or service wants to see numbers that are tied to activities that reach the highest number of people over a few people that do very well. The public likes those numbers and can understand those numbers.

Think about health care. The media constantly points towards ‘wait times’ in the ER and number of beds in hospitals. The real results we would like to see would be something like the percentage of successful diagnoses, treatment success, and some number on the quality of life after treatment.

If wait times in ER are down to 5 min by giving everyone a placebo would that be better? Maybe? But a lot of people would probably be a lot worse off. Thankfully doctors and nurses take the time to provide proper care to everyone. They look for efficiencies while working inside regulations and maintaining (and improving) the overall quality of care. The numbers that speak to the meaningful results are hard for the public to consume as they all require a deep dive to fully understand them.

With accelerators and incubators there is a similar difference between what the public can consume and the numbers that point towards growing more successful companies. There is an expectation to report on the number of companies, demos, number of jobs, and the number of people expressing interest in ‘tech’ by attending events.

To drive those numbers you can just run a big events company that pack event spaces and generate media attention. That might help produce energy but it also creates noise and consumes people’s time. The numbers that would be more interesting are company growth numbers, the time it takes to grow, can these companies find the right people (how long are jobs posted before they are filled and do they stay filled), are local investors investing, etc. The interesting metrics are a long list but it takes a deep dive to fully understand, evaluate, and act on them.

Metrics are just numbers. They require context.

Success looks different for each community. What is a result and what is an activity depends on what you are trying to achieve. If the success is simply getting 50 people in a room to talk about startups, then that is what it is. There is underlying expectation that events lead to a connection that leads to a company that has 20 employees.

The trick (or the art) is to focus on achieving the metrics your stakeholders care about (number of people for example) and the important result that will help you make a difference (company meets key funder at a small event).

The events and the energy is important but what will add the most value to improve quality is something else. That something else boils down to something simple but there is a distillation process (activity) that is necessary in order to get there…

Connecting the right people at the right time.

My favourite example of this is my own experience with Communitech. There were two key ‘moments’ that gave my company a chance it would not have had otherwise.

  • The first moment – an EIR hosting a brainstorming event that allowed my cofounder and I to meet at the right time in the right context. This happened in January 2009.
  • The second moment – An EIR that just started pulled up our company profile and sat down with the founding team. We were trying to figure out if we had something real. From that inspirational conversation he became an invaluable advisor/investor and board member right until the exit. This happened over the period of January 2011-November 2013.

There were lots of other things – events, services, etc – that support meeting the right people at the right time. I don’t feel like those two key moments were ‘chance’ collisions. They were indirectly designed.

Connections like that aren’t random enough in the wider business community outside of places like the Valley (although even there you kiss a lot of frogs). There still lacks the concentration and that is where accelerators, incubators, and the larger organizations become essential community ‘distilleries.’

Over the last 10 years I have seen key ‘moments’ or a series of those moments for many founders. Sometimes the timing is off or the personalities don’t match. You just keep trying as things find a way to work themselves out.

You can’t just expect to have events and have those chance connections happen and turn into something valuable. The event is the activity, the result is relationships that are forged and what happens next. The activity can be measured on the short term but the results are measured over a much longer term. The big results take time!

Activities and their metrics are the health check but everyone needs to keep focused on the results they want to achieve. We spend a lot of time discussing how we are pushing the car out of the snowbank. The important thing is the car gets out of the snowbank.


What if accelerators and incubators went away?


Accelerator and incubators have popped up in almost every city in Canada that is supporting its ‘innovation ecosystem.’ This economic development strategy gained interest after the stock market crash in 2008. But it wasn’t until around 2012 that this strategy has gained popularity as more startups find success.

If you updated this data collected by MaRS in 2013 I would bet more than 50% would be 2012/2014 ‘founded’ years.

There is a increased profile for young entrepreneurs today as a result of the market for credit that these organizations compete in. There are also many companies that have grown with significant VC investment or had lucrative exists that were more than just paying back the investors. The challenge is that little is known on what specific role incubators or accelerators have played in these companies success.

What did they do that helped? What has changed since that company was in the program? What has changed in the larger community?

With a new government in Canada there is now a focus on an election promise that was directed at this economic development strategy – funding accelerators, incubators, and research. Recently published articles written by Marcus Daniels along with features on Jim Balsillie and John Ruffolo’s lobbying efforts to provide a ‘voice’ for technology startups focus on the need for change in the accelerator and incubator landscape in the country

Marcus sums an observation and challenge shared by many.

Across Canada there is too much duplication and isolation at the accelerator level. Solving this problem begins by recognizing that the needs of founders in both tech and other high-growth areas have changed.

While some some accelerators have evolved, many have failed to adapt and are creating initiatives that keep the lights on, as opposed to new programs to incentivize the best entrepreneurs on the planet to build their ventures in Canada.

I think the key message  from Marcus is that accelerators have failed to adapt to the things that have a meaningful impact on building companies in Canada. Instead, they focus on the activities that provide them the funding they need to keep the lights on.

Balsillie’s quote from his article focuses a lot more on building a set of business metrics for accelerators and incubators:

“If you’re going to give more to incubation, create an accountability framework that’s based on real business output,” Balsillie said.

“We’ve never had any performance metrics — there’s a lot of spin and hype. Which part of it is real outcome and which part is pixie dust?”

Great! A call for metrics that matter — but what are they? I tried to figure that out with post on startupnorth but those assume they operate as a business with a focus on profit. I posted a more detailed look at metrics that matter as well.

What we are talking about are government funded programs that are tasked to ‘hack the market’ and give early stage companies a better chance than they would have normally in Canada to grow.

The challenge, as I see it, is that it is much harder (and simpler) than most people have generally estimated. It is also a longer term commitment to the founders than most organizations are currently tooled for.

The programs are all increasing in size as they try and tackle any and all activities that might help build an ecosystem. The hard part is understanding or believing that it is much simpler to help founders (see note at the end). There are just a few key activities or opportunities that an early stage founder can use and not find themselves. But for each and every founder it takes the care and understanding to deliver personalized services/support.

Balancing services is hard and only a few have figured out how to do this well.

Helping companies exist, grow, and be successful is an Art not a Science.

The challenging in understanding this Art of building companies is likely rooted in a misunderstanding of startup ecosystems and what/who/where/how they can be manipulated.  That is where metrics for programs can get messy.

For fun, read this post on ecosystems for a perspective from Europe.

‘Ecosystem’: the problem is that the very term has become a bit of a cliché. Everyone uses it. For most people, its meaning has been lost along the way. It has become irritating to hear everyone talking about the damned ‘ecosystem’, all the more so because in reality it’s often not an ecosystem but a toxic environment for startups.

The emphasis of the post that follows the above quote is the that ecosystem is forged by entrepreneurs that are out there building companies. That is something that Brad Feld states in his Boulder Thesis as well.

Can ecosystems be forged by accelerators and incubators or by the entrepreneurs participating in them? Do those entrepreneurs require those programs? Do they slow things down or speed things up? Do they make businesses better than they would have been without the program?

No one knows with any certainty and I don’t think it will be easy to figure out because founders enrol in everything that is available. All the programs will promote their success but it is challenging to find out what is really going on because 2+ programs will be promoting the same success. Read The Market for Credit and Supporting Entrepreneurs.

Over time successful entrepreneurs will give back to the community (funding, advice, connections) but unless we know what is currently working (and not working) then it makes it possible for critics and point out the burning money.

What would happen if all the programs stopped? Would any of the entrepreneurs that will find success notice? If the truly successful programs are indeed successful should they not now be obsolete given that there is now a successful group of founders re-investing time and expertise?

My guess is that if all the government backed programs shut down the following things would happen:

  • Venture Capital firms would fund a few (1-3) as a way to optimize their lead generation.
  • Higher Education would continue to develop programs and tie them in tighter with education and their overall fundraising initiatives. But many schools might not try which I think would hurt students.
  • Less people would attend startup events and conferences in Canada (which is actually a bad thing).

In Canada we are not at a stage were shutting down programs is a wise course of action. But I think with the next phase of investment there are a few things that should be discussed or changed:

  1. Give government funded programs the goal to be obsolete in 5-10 years. How do they achieve that (it is not that they have to be)? That would help them identify what success looks like.
  2. Enlist a research group from the Rotman School of Management (or a collaboration of top notch research driven business schools) to collect, clean up, analyze, and report on the data across all programs. Graduate students are designed to do this better than anyone. Then everyone is better informed on what works and we can do more of that.
  3. Fund co-operative education for all undergraduates across the country. That experience creates entrepreneurs, open students up to products/customers, and builds global networks all young people can use to be successful.

Note: The Creative Destruction Lab is demonstrating how a program can operate on a shoe string budget and have a significant role in educating students. Metrics wise it has ~36 Alumni companies that have collectively achieved ~$200M in value in a few short years. No program in Canada comes close to that but many other programs in Canada are connected to those companies. EDIT: No program should take credit for a company’s success but they should celebrate it. Also, I had the wrong value for CDL.

Another note: This post isn’t about organizations that have a longer term vision and are trying to solve bigger problems. They may have accelerator or incubator programs as part of their larger offering but overall they are something different.


Missing a laptop…

For the first time in 15 years of having a Macbook (started with a TiBook with OS 9) I have had one stolen. It was a 4 yr old MacBook Air that was covered in stickers, its power adapter slot needed some trickery to get it to charge, the video output was failing, and I couldn’t stand using much more than a browser for email and everything else.

I re-installed the OS in May and totally wiped the drive. There weren’t any files on there but I told iCloud to wipe the HD when it appears online… if it ever appears online. I think, from kijijji it is worth $200… maybe.

If you see a Macbook Air around Waterloo with a Kik, Boltmade, TribeHR, a small tinker bell sticker, and a couple other stickers on it let me know. I don’t think there are many with that combo around 😉

Short-cuts, Unicorns, and Startup Culture


In a post by Mark Suster entitled “Why I Fucking Hate Unicorns and the Culture They Breed,” there is a message for everyone in startup land that isn’t just about the rise of Unicorns… its about believing in short cuts. The ballooning valuations that are set by investors and not the larger market encourage a gaming mentality to take over startup culture in a more intense way than normal. Founders think the game they are playing is measured in raising money and valuations.

It’s not about being on stage at a Demo Day or featured in an article in TechCrunch or closing a $20 million round. It’s about continually shipping code. It’s about putting our menacing bugs. It’s about a 6:15am flight to a customer in Detroit in Winter for a $200k deal to hit your budget for the quarter.

I would argue the “lean” everything movement along with accelerators desperately looking for positive returns (or PR in the market for credit) contribute to this. They glorify the ‘Unicorn’ and try to ‘hack the system’ to get bigger/better results faster than what is ‘normal’ with hard work.

There is no repeatable process for building a company that is specific enough to be a step by step manual to success. There is no short cut to building a great product or team! StartupWeekends, accelerators, incubators, courses, workshops, and Lean X get you on the path but you still need to spend the time to learn things.

I always tell new founders it takes 2 years to get started, 5 years to know if you have anything. There is nothing I have seen in the 10 years I have paid a lot of attention to startups that makes me think my generalization isn’t accurate 4/5 times 😉

Suster’s posts are almost always good to read – this one is great because he pulls together a commentary on politicians behaviour and a guy with a broken heart. Read it and be reminded that hard work is the only way to get real results.

Accelerators and incubators are not growth companies

More than a few accelerator or incubator programs have quietly wound down their operations or merged with other programs over the last 6-12 months. This isn’t a surprise. Even with what are essentially successful programs to most, they have a hard time maintaining momentum let alone generate any revenue to sustain themselves. The math is hard to make work.

The upside for all the people involved simply isn’t there in most cases. It takes a huge amount of effort and resources to make a program successful.

I think this highlights two potential issues that many of the organizations that support startups could have.

  1. The program operators start to think like the startups around them and they think they need to grow or scale to help more companies. As a result the things they do are focused on the good of the accelerator instead of the companies in the program.
  2. Incentives are not aligned. Program operators/coaches do not share in the upside of the successful companies. They are instead rewarded for the popularity of a particular program.

They grow. They generate PR. They position themselves as experts on early stage companies. They do all the things they know you should do to build a successful company. When you are around startups all the time there is a tendency to see the world through the lens of the startup – growth, lean, pivots, MVPs, agile, metrics, etc. What they don’t focus on is the companies they are trying to help. All those other things tie up a lot resources.

Achieving optimal effectiveness of a program

I have a theory that the optimal effectiveness (cost vs return) of an accelerator or incubator is at a very small scale. They should provide a service that benefits the founders and the company without PR/Marketing/Events/Space. There is one exception, Y-Combinator. Its scale is huge but I would argue its allowing a lot of waste because the returns are so big and there is a lot of inherent value in the alumni base that offers a ‘fraternity’ type social network.

…and YC started really small. It didn’t have a marketing or communications team. It doesn’t appear to have sought out PR to recruit or host big parties.

There are things that do scale (space to work, creating a big club house full of energy and people, etc) but the effectiveness to truly ‘accelerate’ a business is limited in terms of the ability of the organization to help companies grow faster than they would have without the program. What a program that does space and events may help is to create an ecosystem that is more accessible. It creates an environment were peer mentorship can happen. It is impossible to say whether that would happen naturally or not.

In many cases the community needs a kick start so its great accelerator programs do that.

In all cases the founders need a personal and professional kick start that only very focused coaching can provide. Each founder/company is different as well. There are some general things that can help but nothing is as effective as knowing the people, situations, and having credibility in a given founder/funder network.

Space, club houses, and events are a different business model — it isn’t company acceleration, it is community building.

How to combat this tendency to operate on a growth trajectory is to separate the business operations (space, etc) from the support directly offered to the companies. Keep something totally focused on the companies but don’t hang the success of the business operations on the success of the companies.

What a startup community needs for long term sustainability are local investors that can add more value that just dollars plus are invested in the community. Along with a few other things according to the Boulder Thesis.

If you have a great community with mediocre slow growth companies its hard to argue the investment was anything more than a community development activity.

If you focus on building successful companies the returns will go into the community. That is the optimal return on investment where incentives become aligned – investors (accelerators) see a return, founders gain wins and become investors, early employees gain experience and opportunity.

I do not believe all accelerators should just stop all that other stuff but I think they should be very clear what value they are creating vs capturing (for self promotion). Accelerators should ensure they are on the side of creating value. They need to take the time to know the founders and that is hard to do if they are out promoting their program.

Boltmade – where great software and products are built in Waterloo

For the last 6 months I have been getting to know an exciting new world that is Boltmade — after 15 years in higher education building programs that helps educate entrepreneurs at two of the top schools in the country (U of Waterloo and U of Toronto) it was time to take a pause from higher ed.

Enter Boltmade. Back when TribeHR just received funding we shared a space with a small group of talented people that build high quality software and understand products. They kept growing and would become Boltmade. Over the last year a lot people I have a lot of respect for joined their team. I am excited to work with them!

What am I doing at Boltmade? Doing stuff like bringing back StartupCampWaterloo (next week!) and talking to awesome companies from all over that are looking to have great software built. We are building something really special at Boltmade in Waterloo — the people working on the project own it, we utilize both development and design best practices it takes to build holistic products. We also help you develop processes internally that will result in a long term ability to continue to develop software products inside your organization. We even can help you recruit your team!

That is my favourite part. I know from experience that building a high quality product and team takes a lot of time. At Boltmade we can help a lot of companies grow and succeed… and have a lot of fun doing it!

We are based in Waterloo but our purpose is to help companies inside and outside of the region build bigger badder things.

…and the Boltmade team is growing!


StartupCampWaterloo15 – vikings, bikes, baseball, and organizing your time!


It had almost been a year since StartupCampWaterloo14 and it felt like it was long overdue. The folks at Boltmade opened their office up to StartupCamp so we tried a different venue and stuck to our original format. It was a load of fun!

Thanks to everyone who attended StartupCampWaterloo15! You folks made it a great event. The following is info on who presented.

From my browser history we had:


Others on the whiteboard:

TheBIKEProject – Renish Kamal
Sharebubble – Lucas Cohen
FromTheseRoots – Mic Berman

Also, our new friend from Iceland via Halifax wrote a great post about the Toronto-Waterloo communities. Take a look: http://vikingentrepreneur.com/mars-communitech-and-the-toronto-startup-scene/

Our next event will be in May. It will be warmer.

Goodbye Ralph Thili

Today I thought a lot about my grandpa, Ralph Thili. His parents were part of a generation that fled unrest in Europe (looming invasion of Poland). Born in Hamilton, he had to take on a lot of responsibility at a young age to help support his family. As with all people of his vintage he has had an interesting life full of challenges:

  • He farmed the land of what is now Burlington and somewhere in Flamborough (he could never tell me where) and had a story of how the Polish women (he was Polish) would just deliver babies in the farm field and keep working.
  • He was too young for WWII but joined the Canadian Navy to serve on the Maggie (HMCS Magnificent – didn’t know Canada had an aircraft carrier did you) and travel the world.
  • He met my grandmother on the shore leave in Halifax (so the story goes) when she was probably too young to run away with a sailor.
  • Sometime in there he was below decks on a war ship that had its engine blow up. He survived.
  • He drove a motorcycle in the 50s around Hamilton and Dundas and had “Lucky” in studs written on his leather coat.
  • He was an inventor, freakishly strong, stubborn, and knew way more about electronics than I probably ever will.
  • His company was Blue Arrow TV in Dundas. He fixed TVs and then got into computers.
  • He never went to University or finished High School I think…
  • He has 11 grandkids, 14 great grandkids.
  • He could dance and he had great hair.

My earliest memories are with him teaching me how to golf with cut off clubs and me walking around the Dundas Valley Golf Course. That is what we did together right up until fairly recently.

My Grandpa passed away today. It’s sad. I feel very lucky to have known him for nearly 40 years. It is tough to write something about him but I wanted to collect some thoughts since he was my only grandpa that I knew and the person that I got my entrepreneurial inspiration from. I will continue to be inspired by him, improve my golf game, and hope I get to see my grand kids grow into their 30s.

Update: Obituary for Grandpa