In 2005, the hacker-saint Paul Graham and other luminaries launched Y Combinator. It was the tectonic shift that set off the incubator tsunami¹.

Dozens, if not hundreds of incubators have since sprouted in cities around the world. The growth is partly due to the effectiveness of the model in creating successful companies, but I think its success stems from it being the perfect model for attracting the autonomy hungry Generation-Y.

Mixed Models

The Firm as an organisational structure brings many benefits – big pockets to fund R&D, great minds abound (at least in the good firms) and tentacles across many social networks. The only problem is, the bureaucracy often employed to manage such enormity can suffocate innovation and creative young-hackers ².

A startup, however, offers professional autonomy and freedom to its founders. There is little legacy code or bureaucratic policy to hold them back. Founders can pivot ideas and pounce on opportunities at the drop of a dollar-bill. The only downside – the organisation is resource starved and not just financially – with only a few minds comes limited intellectual capital and empty rollodexes.

Gen-Y’s Lust for Autonomy

When I was in my last year of my undergraduate degree, I felt a strong trend when discussing career ambitions with other students. Colleagues echoed a variant on one phrase so often, it bordered on a mantra:

I’m taking a graduate job with Big Corp. But I’ll go out on my own after a few years.

This was before the financial crisis and the career-conservatism that followed, but even post crisis, Gen-Y’s lust for autonomy remains.

I was only young, but I knew any business betting on the growth of entrepreneurship would be riding a tsunami, while those businesses relying on hiring the best and brightest were in for a drought.

Enter the Incubator

So what’s a market to-do? You’ve got all these cocky 20-something hackers who refuse to work for others. But large organisations offer distinctive advantages required for success.

Generation Y’s hackers needed a Y Combinator.

The incubator model gives Gen-Y’ers autonomy to prove their worth and be the boss. Through mentorship, they also give startups much-needed intellectual resources and bulging rolodexes. Last and least, they offer the seed-money to help the founders make the business their focus.

Rise and Rise of the Incubator

Despite the huge growth in startup incubators, I think we’re riding the early stages of this wave. The model has proven success with tech businesses. Many other industries are also brimming with members of the autonomy hungry generation and startups in those industries may benefit from similar models.

¹ I’m not ignorant to the fact that many business incubators existed before 2005, but I don’t think any compared to the intensity or profile of Y Combinator.

² Granted, some firms, such as Google, offer a shining counter example to this traditional shortcoming. Marissa Mayer revealed in 2006 that Google’s Innovation Time Off, or 20% time, was where half of all new products started.