CHAPTER 1The Emergence of Startup Accelerators

The accelerator model has become a “graduate school” for startups.

Alex Friedman, co-founder and president, Ruckus; Member, Forbes Councils

Emergence

In 1995 Paul Graham and Robert Tappan Morris co-founded Viaweb. They sold the company three years later to Yahoo for $49 million. Prior to founding Viaweb, Graham had received an undergraduate degree in philosophy from Cornell University, a Master of Science degree, and a PhD from Harvard University. Robert Tappan, on the other hand, had graduated from Harvard University and attended Cornell as a postgraduate student—before being suspended1 and becoming one of the first people to receive a criminal conviction for hacking.2 In early March 2005, almost seven years after the sale of Viaweb, Paul Graham was in conversation with Robert Morris and Trevor Blackwell (who had also been part of the Viaweb team) about possible ways of continuing to work together.3 At that same time, Graham had been contemplating becoming more involved in angel investing. Later that week, he was discussing the venture capital business with Jessica Livingstone, a friend who was contemplating moving from investment banking to work for a Boston-based venture capital (VC) fund. In this conversation, Graham had been pointing out all the things that were wrong with the VC business and that needed to change—investors needed to make smaller investments, they needed to be funding hackers rather than suits, and they ...

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