It doesn’t seem very thoughtful to say never pay more than 3%, full stop. If you get more than 3% value out of the incubator, it’s often a good idea to pay more than 3%. You should make the decision after talking to many people who’ve chosen the incubator, and there are many companies that will say they got much more than 7% benefit out of YC – and also companies that didn’t.
It’d be great if every incubator charges much less than they do today, but I’m doubtful it’s a perfectly competitive market, with stickiness in things like alumni networks and reputation (it does seem like it has some similarities to the education market). Entrepreneurs would obviously benefit from more competition amongst incubators – and maybe you’re right that change is at hand.
I’m sorry that you didn’t get in to YC specifically (and maybe it wasn’t the right idea to apply, if you felt so strongly about how incubators provided so little value) – but I hope you won’t let your disappointment and anger get in the way of thoughtful business decisions, including in cases like future customer rejections.
Anyway, back to building our businesses – good luck with your own!
Karthik, disclosure, I was a YC founder.
It doesn’t seem very thoughtful to say never pay more than 3%, full stop. If you get more than 3% value out of the incubator, it’s often a good idea to pay more than 3%. You should make the decision after talking to many people who’ve chosen the incubator, and there are many companies that will say they got much more than 7% benefit out of YC – and also companies that didn’t.
It’d be great if every incubator charges much less than they do today, but I’m doubtful it’s a perfectly competitive market, with stickiness in things like alumni networks and reputation (it does seem like it has some similarities to the education market). Entrepreneurs would obviously benefit from more competition amongst incubators – and maybe you’re right that change is at hand.
I’m sorry that you didn’t get in to YC specifically (and maybe it wasn’t the right idea to apply, if you felt so strongly about how incubators provided so little value) – but I hope you won’t let your disappointment and anger get in the way of thoughtful business decisions, including in cases like future customer rejections.
Anyway, back to building our businesses – good luck with your own!