The makeup of the founding team thing will be the make or break. I've barely seen a recent success story of a startup where less then 100% of the founders were technical. It used to be possible but I expect that times have changed in this regard.
Bluntly, this approach sounds wrong to me from an investment portfolio strategy point of view but I'm glad you are taking the risk and try it.
I definitely think that being in Minnesota will be a competitive advantage however. The area is vastly underrated and pretty incredible talents live and work there. Best of luck to your team and project.
What is your sample size for your observation about 100% of the founders being technical? a) "startups" doesn't just cover high tech and social networking. b) There are a lot of quiet successes out there.
I agree, I think there are a ton of quiet success out there now.
I'm currently working for a Minneapolis startup (based in the skyway downtown coincidentally) that has raised 10M+ in VC funding in the health insurance area. None of the original 3 founders are technical.
You won't see us on techcrunch because health insurance isn't sexy, but we're having more of an impact on big businesses than 99% of what you will see on there.
I'd be interested in hearing more about it. Health insurance may not be sexy, but solutions to extremely complex business problems are, and I imagine there's some element of that in a health insurance startup.
That domain seems to be one of the most intractable around these days. It seems the gist of the situation is: There are four parties - doctors/staff/hospitals, patients, health insurance industry, and government/taxpayers. Effective reform is going to mean at least one of them gets [screwed|insert nicer word here]. There just isn't enough margin for all of them to make out comfortably.
Or is there some elegant solution hiding in the morass, waiting for some clever entrepreneurs to find and implement it?
There are actually 5 parties, you missed the Employer and that's the part of health insurance that we're trying to solve.
Currently in America, if you're not on medicare/medicaid, the vast majority of people get their health insurance through their employer (this is called a Defined Benefit). Providing this benefit to employees is a huge burden on employers for something that has nothing to do with their core business model.
What my company is doing is moving this to a Defined Contribution, where an employer gives $X/year to each employee and the employees can use that money to purchase whatever kind of health insurance fits their situation best.
Employer benefits:
- known, controllable costs
- get out of health insurance negotiation/shopping for their employees
- better awareness of employees in how much employer is contributing
Employee benefits:
- more plan choice to fit needs (ex: mental health, substance abuse, pregnancy coverage as options)
- many times cheaper for healthy individuals (encourages more responsibility for employees staying healthy)
- more transparency into total compensation by employers
The same transformation happened in the 80's with pensions moving to 401k. The move from Defined Benefit to Defined Contribution is coming, and there's a huge market out there to make that transition happen.
Pension : 401k :: Defined Health Benefit : Defined Health Contribution
There's also a HUGE opportunity coming up with Health Reform where companies that didn't previously provide health insurance to their employees will now be mandated to (or pay a big penalty). Going with a Defined Contribution model is their easiest route to satisfying the mandate. Simply fork over a pile of money and you're done. No other screwing around with health insurance companies/brokers every year to do something new.
That's silly. We are discussing a tech accelerator here. But even if I accept your rebuttal I'd like to see the amount of Plumbing businesses that are bootstrapped by people other then plumbers.
Correction: Andrew Mason actually is a programmer. He built Groupon in Rails.
Also, as the other commenter pointed out, Mark Pincus's co-founder Justin Waldron is a programmer, but Zynga's probably a bad example anyway because Pincus was very much an accomplished entrepreneur with a lot of resources at hand prior to founding Zynga.
Incorrect, at least one of Zynga's co-founders (Justin) is a programmer -- though he's probably not doing much of that anymore. One of the common misconceptions is that Zynga has only one founder ... it actually has many.
But I get the point you're making and it's still valid.
Fair enough but both of them are highly technical people. Not programmers but that's not the yard stick that I put down here.
Additionally it's not a good idea to use critical successes like that to extract any kind of lessons from. Groupon won the business plan lottery and found a real need in the market that wasn't being served. Zynga rode the coattails of facebook.
Obviously i'm not dismissing those companies accomplishments. The founders are idols to me.
The makeup of the founding team thing will be the make or break. I've barely seen a recent success story of a startup where less then 100% of the founders were technical. It used to be possible but I expect that times have changed in this regard.
Bluntly, this approach sounds wrong to me from an investment portfolio strategy point of view but I'm glad you are taking the risk and try it.
I definitely think that being in Minnesota will be a competitive advantage however. The area is vastly underrated and pretty incredible talents live and work there. Best of luck to your team and project.