Why Startup Incubator-Hopping Can Help Launch Your Business

Venture capitalists Sam Altman and Jason Calacanis both wrote posts recently on the topic of startup incubator hopping. Altman says that participating in more than one startup incubator may actually decrease your chances of getting into Y Combinator, a goal many startups are vying for, whereas Calacanis says the question isn’t about Y Combinator—it’s about whether or not you should do an incubator at all. According to his article, acceptance into an incubator depends on a scale of “seemingly invincible” to “desperate,” and takes into account the reputation of founders, strength of business, and market competition.

Our company, GiftStarter, a group gifting solution for e-commerce businesses (B2B), went through more than one incubator. We participated in 9Mile Labs in Seattle from August to November in 2014, and 500 Startups in San Francisco from July to October in 2015.

We are in a space that’s filled with many gravestones and companies in purgatory, but the opportunity to grow a business in this space has been a personal obsession for over 10 years. We have formulated and rebuilt our hypothesis to arrive where we are. We believe this space is solvable, and that we will be the ones to solve it—and our experience in two different accelerators helped us get where we are now. Here’s why.

Our First Accelerator Experience: Moving Focus from B2B to Consumer

We first approached the partial payments of e-commerce products (group gifting) from a B2B perspective, so 9Mile Labs was a good fit for us as it is focused on B2B/enterprise software and cloud technology. We joined in August of 2014, having just come out of a first-place win from a Startup Weekend and the pre-accelerator program NEXT. According to Calacanis, I’d grade GiftStarter as “weak” at that point. During the program, we launched our MVP solution for both businesses and consumer, hustled to build over 27 partnerships with e-commerce businesses, and were off in time for the holidays. But when we examined the data after the holidays, it didn’t make sense. Our company wasn’t growing from the partnerships we were counting on. We were growing from the direct business to our site.

From 9Mile Labs, we learned that hustling and passion will take you quite far as a startup founder. We have a shameless approach. We stick our neck out, put our name on it, and take risks. True passion is not a fleeting project or a hobby.

Those were dark times for the team. We quickly decided to rebuild and redesign the business as more a destination for consumers with our relaunch in May 2015. From there, our platform grew 50-75 percent month-over-month across user, gift campaigns, and revenue KPIs.

Our Second Accelerator Experience: Growing Our Consumer Expertise

Next, we knew that we had to widen our access to perspective and expertise, and quickly. We were officially all in as a consumer company. So we applied to 500 Startups as a way to accelerate as our consumer business. When we joined in July 2015, we had some good early traction, including over 420,000 dollars in angel investment, over 27 partnerships, a team of three employees and two founders, and a strong advisory board.

We decided to join 500 Startups—our second accelerator—for the following reasons:

• Access to the wealth of expertise and perspective in San Francisco (consumer, social media, e-commerce, payments)
• Consumer business knowledge and distribution methodology
• Upgrading the status of our startup strength (acceptance into an established top-notch accelerator)

And during 500 Startups, we learned and evolved a lot. We rebuilt our team to be able to evolve and update the product faster. We focused our energy inward on company values, building and documenting processes, prioritizing product features based on growth, nailing our business model, and storytelling. We learned that hustle and passion are great as table stakes, but to be a strong startup, you have to be strategic in how you lead.

As a result, we had more angel investors join the GiftStarter team and continued to have great traction. Based on what Calacanis wrote, I’d grade us as “strong” with the backing of 500 Startups. We’re now in the go-to-market phase of the startup journey.

Doing What’s Right for the Company

It’s been almost two years and our focus has been to grow quickly and build a sustainable, scalable company. We are what you call “a cockroach”: Cockroaches don’t die easily. They pivot, they are scrappy, they hustle in all kinds of directions, they have talent, they have amazing work ethic and they’re passionate. While we believe in unicorns, being one of those one-hit wonders is like winning the PowerBall lottery. We believe in data and experimentation, and doing it as quickly as possible, and our journey through two incubators illustrates that.

I don’t think that everyone wants to get into YC, so Altman’s perspective doesn’t make sense for all startups. Our priority and focus has always been doing what’s right for the company (to survive and thrive) holistically, not just to haphazardly raise as much money as possible. Our journey through two incubators has allowed us to make timely pivots based on data, quickly grow our networks and access to resources, and ultimately upgrade the strength of our company — and in that sense, made “accelerator hopping” well worth it for our future.

Author: Arry Yu is the CEO and Founder of GiftStarter.com (Emotiv Labs).  Arry got her start advising world class brands including Microsoft, Google, and L’Oreal at the intersection of where business and creativity meet technology.  Arry is passionate about building businesses with an emphasis on corporate culture and innovation, using technology as an enabler.  She’s recognized as an industry leader in the services space and has had the opportunity to offer her expertise to both startups and major brands.   Arry was recently profiled in the Puget Sound Business Journal’s special “40 Under 40” publication in 2014.

“At the end of the day, people do really matter and that human-centric focus is exactly what we are trying to bring back with the GiftStarter platform”, said Arry Yu.