Episode Summary
Executive Summary: In this episode of 'This Week in Startups,' Jason Calacanis interviews David Brown, CEO and co-founder of Techstars, about the impact of the COVID-19 pandemic on startups and accelerators. They discuss Techstars' pivot to virtual programs, the advantages of small cohort sizes, and the global entrepreneurial landscape. Brown shares insights on founder resilience, the importance of coachability, and how the pandemic is accelerating trends like remote work and telemedicine. The conversation also covers Techstars' business model, its global reach across 50 cities, and potential future opportunities, including a possible IPO.
Main Topics: Impact of COVID-19 on Startups and Accelerators (Priority: 5/5): David Brown discusses how the pandemic forced Techstars to quickly pivot from in-person to virtual programs, leveraging lessons from their four-year-old Techstars Anywhere program. He notes that while some startups saw revenue plummet, others doubled due to increased demand for digital solutions. The crisis is accelerating trends like remote work, telemedicine, and online education, creating new opportunities for entrepreneurs to solve big problems. Accelerator Model and Cohort Size (Priority: 5/5): Brown explains Techstars' philosophy of limiting cohorts to 10 companies to maintain high-quality mentorship and attention. He contrasts this with Y Combinator's larger batches, arguing that smaller groups allow for deeper engagement and better outcomes for all participants, especially those in the bottom third of the cohort. Founder Characteristics and Investor Decision-Making (Priority: 4/5): Brown emphasizes that coachability is a key trait for startup founders, sometimes more important than prior experience. He also delves into how investors choose which startups to back, noting that personal connection and likability often outweigh purely financial considerations. He warns against over-reliance on FOMO and 'party rounds' that can lead to misaligned incentives. Global Entrepreneurship and Silicon Valley's Role (Priority: 4/5): The conversation explores how entrepreneurship is a global phenomenon, with rising hubs in India, Berlin, and Scandinavia. Brown argues that Silicon Valley's dominance is waning as other regions develop their own ecosystems, and local entrepreneurs are better positioned to solve local problems. He also comments on the cultural differences in hustle and ambition between the U.S. and developing countries. Techstars' Business Model and Future Plans (Priority: 3/5): Brown outlines Techstars' revenue streams, including investment carry, corporate partnerships, and sponsorships. The company is profitable with 300 employees and has raised a Series B from Silicon Valley Bank. He discusses the possibility of going public to create an evergreen funding mechanism, though it's not a near-term priority. Adapting to Virtual Demo Days and Remote Work (Priority: 3/5): Brown shares how Techstars ran 16 virtual demo days simultaneously, attracting over 2,000 attendees for each, including for remote locations like Abu Dhabi. He highlights the importance of high-quality AV (e.g., Ethernet connections, proper headsets) and the need for an initial in-person bonding moment to replicate the benefits of physical interaction.
Key Arguments: Small accelerator cohorts (10 companies) provide better outcomes than large ones (e.g., Y Combinator's 150-250) because they allow for more personalized attention and prevent weaker companies from being overlooked. Coachability is a more important founder trait than prior startup experience, as experienced founders with egos may resist valuable mentorship. Investors often prioritize personal connection and likability over purely financial returns when choosing which startups to back, especially at the angel/seed stage. The pandemic is permanently accelerating trends like remote work, telemedicine, and online education, creating opportunities for startups that address these shifts. Entrepreneurs should focus on building great businesses rather than 'gaming' the fundraising process with FOMO tactics or vanity metrics. Running multiple accelerators (e.g., before Techstars) can be beneficial for founders, but doing so purely as a fundraising mechanism is a red flag. B2B startups are easier to build than B2C because they can secure revenue from a few large corporate customers rather than millions of individual consumers. The pandemic will lead to a surge in entrepreneurship as big societal problems need solving, and startups are best positioned to address them.
Data Points: Techstars graduates: Over 2,000 - Total number of companies that have graduated from Techstars programs as of the recording. Annual companies through Techstars: 500 - Number of companies that go through Techstars accelerators each year across 50 locations. Cities with Techstars programs: ~50 - Approximate number of locations where Techstars runs accelerator programs globally. Cohort size: 10 (maximum) - Standard maximum number of companies per Techstars accelerator cohort, chosen for optimal mentor attention. Techstars mentors: 7,000+ - Number of mentors involved in Techstars accelerators, plus more for Startup Weekend events. Techstars unicorns: 7 - Number of portfolio companies that have achieved unicorn status, including SendGrid and PillPack. Virtual demo day attendees: 2,000+ - Number of attendees for each of Techstars' 16 virtual demo days held simultaneously during the pandemic. Techstars employees: 300 - Number of employees at Techstars, which is described as a profitable business. Techstars Anywhere first-year cohort: 4 - Number of companies in the first year of the Techstars Anywhere virtual program, intentionally kept small for learning.
Pivotal Quotes: "The world has taken this big box of problems and dumped it out upside down. And who's going to fix those big problems? Entrepreneurs and startups." — David Brown: In response to Jason asking for advice to founders during the pandemic recession, emphasizing the opportunity for startups to solve major societal issues. "Our mantra is it's your company, which means everything from a mentor, a really great mentor, tells you to zig. If you want to zag, go for it." — David Brown: Explaining Techstars' non-prescriptive approach to fundraising and decision-making, empowering founders to follow their own judgment. "The way we describe it is the accelerator is at most half the experience with the rest of your life being the other half. And our expression that we use is Techstars is for life." — David Brown: Describing the long-term commitment Techstars has to its alumni, including post-graduation support and community events like FounderCon.
Implications: The pandemic is accelerating the shift to virtual accelerators and remote work, making startup support more accessible globally. Founders should focus on coachability and building real businesses rather than gaming fundraising. Techstars' profitable model and global reach suggest accelerator-as-a-service could become a public-market investment option, reshaping how startup ecosystems are funded.
About This Week in Startups
Jason Calacanis covers startups, tech, markets, media, and all the hottest topics in business and technology. He also interviews the world’s greatest founders, operators, investors, and innovators.