Tuesday, January 26, 2010

The Chinese Incubator

I was at an Asian American institute meeting a while back and a prominent Chinese American web entrepreneur was explaining his revolutionary new incubator concept for entrepreneurs in China. He borrowed some parts of it from Google, and others from HP, and added a few unique twists of his own. Basically he is recognizing a wonderful trend–-in the past, successful expat entrepreneurs returned to China and brought the “American way” back with them. They were successful at raising money and often successful in business too ;-)

But Chinese people are, at their heart, some of the greatest capitalists on earth and the local team rapidly recognized the loosening rules of the government and moved to build their own home-grown wealth. The Chinese incubator concept is to combine the best idea with the best entrepreneur with the best team--and these three groups will be different people grinding out of an entrepreneur factory.

My problem with this approach is, having been an entrepreneur before the black blood of venture capital seeped into my system, I can't imagine wanting to go to some institute or incubator to be told my idea is great but they have someone better able to execute it; and in fact there is a whole separate team who will build the company around it.

I can't imagine any of those people would be particularly passionate or entrepreneurial because they will surely have their own ideas and won't need me to think for them, and certainly will be entrepreneurial enough to find a way to fund their ideas without the help of an incubator.

My fear of these approaches, one of which is being currently tried in Australia as well, is that they become jobs programs for consultants who also aren’t very entrepreneurial. Further, when the government knocks on your door because they are there to help you, many entrepreneurs (and probably all bankers) will be too rapidly heading out the back door to realize the benefit of government “help” … this wonderful entrepreneurial alchemy that enables transmutation of nothing into gold also enables entrepreneurs to conjure up the resources they need whether it be $, advice, leverage or …

In other countries, and frankly outside of Silicon Valley and Israel, culture is often the impediment--fear of failure (see previous BLOG), and societal scorn for entrepreneurial behavior are more often the place where change can really help. Most education systems are designed to create better employees, not employers; and frankly, given the nature of most people drawn to teach at university level (66% NP types if you follow personality types), it should be possible to find entrepreneurial traits but perhaps as a result of those systems the entrepreneurial professor that one finds so readily at Stanford, is hard to find elsewhere.

It's extremely hard to stimulate innovation and quite hard to “help” it – most entrepreneurs will tell you the best help they can have is $, the next best is deep domain market expertise preferably from someone who has built a similar business in the same space they are building--operative word is “built,” not someone who has read about it or studied it or consulted to a company about it, but actually done it. This is why some of the best angel investors are exactly that, a former entrepreneur/CEO … VCs can help too, really :-)

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