Provo Labs is a Utah firm (run by Paul Allen) that incubates web-based companies, providing funding and guidance to young firms. It has experienced some recent difficulties, and some people have asked, has Provo Labs failed?
No.
Paul Allen wrote a post about how Provo Labs has made some changes to return to its original vision and trim back on some over-extensions it has made in the last few months. He was very open about admitting some mistakes he’s made and about how what Provo Labs can achieve in the immediate future is more limited than the original scope of his vision. However, he didn’t use the words fail or failure in his post. Provo Labs still exists, and can still do amazing things.
Lindsey Snow posted a comment on Paul’s blog post that stated “I use the word failed because Provo Labs has failed many people.” In one sense, she’s right, Provo Labs didn’t live up to many people’s expectations, least of all founder Paul Allen’s. However, I would disagree in other senses. Provo Labs is a startup incubator. To work for a startup is to take a risk—many startup businesses fail or don’t live up to expectations. Estimates range from 40 to 80% of new businesses failing in the first 1 to 5 years! Your chances are 50/50.
Is a Startup That Folds a Failure?
Sure, people depend on the company they work for to support themselves. But is the startup that folds a failure? How did the employees of the startup support their families for several months or years? Did they learn anything? The skills that got employees hired at a startup and the skills they acquired while there will help them to do better in a new firm. Besides, jobs in stable, established companies often last just a few years anyway. This seems to me like a case of unrealistic or overoptimistic expectations, not a case of abject failure.
Is it the Incubator Firm’s Fault?
If the firms that receive funding from an incubator fail, is it the incubator firm’s fault? In this particular case, is it Paul’s fault? Paul apologized for being spread too thin, but who can be the CEO of 12 firms? The small teams in each company receiving funding from the incubator firm are ultimately responsible for the success or failure of their venture. It is dangerous to rely on the incubator firm too much for guidance and focus—especially as the sole source of inspiration or ideas. If you don’t believe in the idea, or if you don’t feel as passionately about it as the originator, or if you can’t see how to guide a company based on that idea, then you are in trouble even if the originator of the idea can hold your hand every step of the way.
In Paul’s case, he is reducing the number of firms he is personally working on because the firms in the incubator were unable to function without his attention, and no one can be expected to spread his or her attention so far. Paul is just realizing that, as the head of an incubator firm, he can’t personally attend to every firm. As the head of an incubator company, he is more of a portfolio manager than a business manager. Paul’s meeting to set things straight was meant to realign employee expectations to the way they should have been from the beginning—you will sink or swim based on you, whether we assist you or not.
All that being said, don’t take me or Paul as unsympathetic towards the employees and families who worked hard because they were promised much and were then let go. It’s a hard place to be in. I just don’t think that they can justifiably feel offended or unfairly treated. What startup begins without high expectations?