On The Forge of the Unicorns with Michele Brissoni
I’ve been in hundreds of cities working to support entrepreneurs and ecosystems. One thing I’ve seen over and over again, whether I’m in Boise, Bogotá, or Brussels, is this illusion that we can bootstrap startup economies by launching accelerators. We treat them like vending machines: plug in some public money, out pops innovation.
On The Forge of the Unicorns podcast with Michele Brissoni, we dug into this problem and found that what most won’t say aloud is that most accelerators fail. The subtlety in my saying that, is not that they go out of business, it’s that throughout hundreds of cities where I’ve been engaged, it’s participation that is celebrated (it looks and feels good to appear to be trying) while the outcomes that matter to founders (funding, or at least accelerated growth) are ignored.
We talked about what’s broken and what needs to change, as well as how AI will change things and why venture studios and platforms might be the real infrastructure appropriate for civic investment.
Article Highlights
Most Accelerators Aren’t Built for the People Who Need Them
The accelerator model was built around a very specific kind of founder in a very specific kind of place: Silicon Valley, 2007, Web 2.0. And that model has since been copied endlessly by people who often don’t understand why it worked in the first place.
The challenge throughout the world is that most accelerators are run by business professionals, not entrepreneurs. And what I’ve come to confirm, as 3rd party research emerges, is that entrepreneurship is behavioral before it’s ever operational. It’s not enough to teach someone how to write a pitch deck or run a sales funnel if they can’t live inside ambiguity and grit, adapt in real time, and stay curious under pressure.
Too many accelerators measure progress by inputs and activity: how many startups, maybe desks occupied as a coworking space, the number of events, and size of the community. But none of those metrics tell you whether the work being done is resulting in net more sustainable companies, notable job growth, or meaningfully more funding.
“What I have observed lately is that a lot of these companies that go through incubators, accelerators, or even digital transformations, they have a social behavioral tendency to apply a process by the book. They are not able to evolve the idea, the recipe, to a taste that fits their culture and their own unicity,” shared Michele Brissoni. “This showcases that our industry is in such an evolutionary stage due to technology disruption that what was working yesterday is not working anymore tomorrow.”
Before I go on with my brief of our interview, tune in here:
So, What Actually Works?
On the show, Michele and I got deep into this: what do we build instead?
One answer, I believe, lies in venture studios. Not pitch competitions. Not demo days. Studios.
Unlike accelerators, studios don’t just coach, they build. They co-found companies, provide infrastructure, embed cross-functional teams, and most importantly, they focus; they go deep on a vertical (climate tech, fintech, or health) so the expertise inside isn’t generic, it’s specific and immediately applicable.
Venture studios are startup version of Labs: they reduce early-stage risk, support entrepreneurial behavior, and deliver real ROI on public or corporate investment. They’re not programs in the sense of a cohort of entrepreneurs, they’re companies that build other companies, and that distinction matters because in my discussions of how cities allocate resources or support, it’s reasonable that public funding is allocated to operating (funded) businesses from which startups emerge, and people are employed. That’s not to say that an accelerator isn’t capable of accomplishing the same outcome, but we should have more discernment about the impact of an accelerator when supporting such programs without funding and infrastructure of their own.
Think of most of what’s happening throughout the world by considering accelerators as non-profits whereas a venture studio or a platform for startups is like a for profit. Bear with the idea, this is an analogy, not how things really work. When a city is allocating grants to a non-profit, we should demand a much greater rigor around whether or not it’s causing what we all expect: a higher rate of success from startups than is otherwise average in the community. We should have that greater demand for outcomes because an equivalent allocation of support to startup platforms or venture studios, instead, means we’re supporting infrastructure that is itself funded and operating as an impactful business – from which startups emerge. We’re not floating potential; we’re supporting effective impact.
AI, Ice Cream, and Everything in Between
One of my favorite parts of our conversation was when Michele brought up the ice cream paradox – a simple metaphor I wish I’d come up with. It goes like this: ice cream sells in Italy, but good luck launching it in the Arctic. Same product. Wrong environment.
Startups work the same way. We’re too focused on whether the idea is good and not focused enough on whether the context and team make it viable. Are they the right people for the terrain? Do they know how to adapt when the market shifts? Are they even in the right place for what they’re doing? These are the questions locally developed accelerators tend to ignore because they’re oriented to helping all local entrepreneurs. Contrarywise, that venture studio is sector specific, so it’s meant for *those* ventures while a startup platform, such as Founder Institute, enables infrastructure upon which local entrepreneurs could reach everyone, while program directors provider specialization.
It’s a subtle but important difference, for another time; connect with me and we can work through what you should be doing.
“If the startup is designed to create disruption, how can we expect it to succeed by following a canonical process?” added Michele as we explored how sector specific programs can work but that startup programs need to be designed for entrepreneurship, not business development, “Disruption comes from critical thinking, from behavior, not from templates. And that’s why these programs often don’t deliver results.”
So, we explored AI, a space where capital is pouring in at staggering levels. Michele raised a real concern: what happens when 80% of global innovation funding is captured by companies chasing AI? My take is that yes, most of those companies will fail, but the money’s not wasted. Failure in the experimental phase is how we get to the next Internet – this is why Angel investors and Venture Capital shouldn’t be affiliated with business investment and why businesses chasing VC have been steered in the wrong direction..
Unlike past fads (remember NFTs?), AI will change everything. But ecosystems need to stop treating startups like businesses. We need to build infrastructure, programming, and mentorship for AI ventures, not just sponsor hackathons and hope for the best.
Listen to the Episode
? The Forge of the Unicorns – with Paul O’Brien <- Spotify version
This episode is one of the best conversations I’ve had on startup infrastructure in years. Michele is a thoughtful, globally minded host who understands how ecosystems really work and who isn’t afraid to call out what doesn’t.
If you’re a founder, policymaker, investor, or anyone who’s ever asked, “Why isn’t this working?” – this episode will will explain as we talk about:
- Why 90% of startups fail, and how shaving that to 80% would double our output.
- How personality traits, not playbooks, drive entrepreneurial success.
- Why government-funded accelerators are often misaligned and what to do about it.
- Why venture studios aren’t a trend; they’re infrastructure.
- What it looks like to invest in what really attracts venture capital
If we want to build real startup economies, ones that work not just in San Francisco but in Stuttgart, São Paulo, and Seoul, we have to stop copying the Silicon Valley form and start replicating its function. That means focusing on behavior, specialization, and co-creation, to develop the ecosystem that itself is meaningful to entrepreneurs.
Ask more than “How do we bring investors here?” Ask “Are we giving founders the environment to thrive?”
This is great Paul. I was literally having a conversation with someone about this topic the other day. This article just gave me “company security”!
Darlisa I’m having this conversation with a few cities every day (I’ve had 1 tell me I’m wrong)
Funny you mention “company security” because that’s exactly what most accelerators fail to provide when, ironically, they’re at the stage when a startup should be accelerating, not hoping to survive. They give founders pitch polish and demo day vibes, but not the structural stability that actually secures a company. That stability comes from operator-led mentorship, validation frameworks, and repeatable activation… not just handing out free coffee and coworking desks.
Tt’s the difference between feeling secure because you look like a startup, versus being secure because the foundations are actually in place.
This is an insightful piece, rich with valuable observations. The ice-cream paradox effectively illustrates that a promising concept alone is insufficient; context and team dynamics are crucial for success. Furthermore, the text correctly highlights that while inventors are important, they do not solely guarantee a thriving startup ecosystem. Valuable information for all stakeholders in a startup ecosystem!
Timothy P. Washington exactly the point. Ideas melt fast without the right context, team, and structure around them. That’s where ecosystems either create real companies… or just more sticky fingers trying to pull cash from them.
Paul O’Brien BINGO!!! You are speaking my language!! I love it!! Will you be at the SCN summit in November?
Darlisa Diltz, MBA, MIS you know… I just heard from Eric Parker, AIA and I’d love to get there but have to see if I can make it work.
That aside, I will be on your side of the state if you can manage INNOVIBE with TiE Dallas in a few weeks, SMU Cox School of Business: https://www.linkedin.com/posts/tie-dallas_we-are-excited-to-announce-paul-obrien-as-activity-7370803142726250497–db3
Paul O’Brien I appreciate the insightful and substantive nature of your posts, which consistently offer valuable perspectives derived from lived experiences.
Incredible insights Paul O’Brien and 100% spot-on. All of this relates very well to Andrew Ackerman’s What Most Startup Support Gets Wrong (a great read/listen) and shoutout to Radial Ventures, Buffalo’s own venture studio.
Andrew! Been since… DreamIt? Maybe. Rodney, brilliant share, thank you. I’m going to dig in, everyone, check it out: https://www.techfornontechies.co/blog/What-most-startup-support-gets-wrong-and-how-to-fix-It
When most of the (private) money is chasing the next big thing – it is not a level playing field – and many would be founders chase the money, not the best or most unique ideas.
It’s a new type of filter/funnel – geared to growth and exit strategies, not rewarding risktaking to upsize the envelope of possibilities and tolerance.
The filter has shifted from bold innovation to financial engineering. Chasing growth and exits isn’t risk-taking, it’s risk-avoidance dressed up; that’s why ecosystems stall instead of expanding an ecosystem.
The analogy I like to use is a 6 year old’s soccer game – they don’t play a position, or anticipate a set of passing or sequenced moves that lead to a goal – they all just chase the ball around the field – focused on the ball as the endpoint, not the goal zone… because everyone else is also chasing the single ball currently in play…
no way. One of my earliest articles trying to teach founders marketing used 6-year-olds playing soccer: https://seobrien.com/startup-marketing
Being in motion is enough for some… never going to find a unicorn by standing still, right? some investors simply got ‘lucky rich’ in the first wave of tech, and are not individually smart enough to do anything but follow the ‘big dogs’ – networking hard to stay connected to the grapevine… A flock of birds, a school of fish or a nest of ants may seem chaotic, but they are ruthlessly efficient in survival. Six year old humans have no such natural purpose when the cluster together…
Curious how you came to the conclusion that “most accelerators fail”? Where’s the research to back up this claim?
Maybe I’m not following, I neither made a claim nor did I say there was research about it. It’s in the second paragraph and we get into it more in the interview, “On The Forge of the Unicorns podcast with Michele Brissoni, we dug into this problem and found that what most won’t say aloud is that most accelerators fail. The subtlety in my saying that, is not that they go out of business, it’s that throughout hundreds of cities where I’ve been engaged, it’s participation that is celebrated (it looks and feels good to appear to be trying) while the outcomes that matter to founders (funding, or at least accelerated growth) are ignored.”
I’m not saying it, cities are.
Michele adds his own observation, “If the startup is designed to create disruption, how can we expect it to succeed by following a canonical process?” added Michele as we explored how sector specific programs can work but that startup programs need to be designed for entrepreneurship, not business development, “Disruption comes from critical thinking, from behavior, not from templates. And that’s why these programs often don’t deliver results.”
In my line of work, I use research to then ask more questions. We know VC isn’t moving meaningfully beyond Silicon Valley, New York, and Boston; except for the fact that Austin, Texas just overtook Boston in seed stage capital. Austin’s ecosystem has been developing for about 10 years, and it took that long, as well as the ecosystem maturing beyond local programs and a disconnected community. There is research about that (or data, rather, which we talk about in the interview). And my work is then asking why that’s the case, which is what we’re doing here. I work in First Principles thinking and as an entrepreneur, never presume things are good enough, because there is no reason to think so – they can always be better. To help do that, I included a link to that principle in point out that if programs aren’t delivering what founders are seeking, cities should be asking, “Why?” but then going deeper, “and why is that?” -> https://paulobrien.substack.com/p/venture-capital-avoids-your-local
Pop to the thread here if you want more perspective; quite a few cities, SDOs, and economic development people have already added their voices to it being a fact.
https://www.linkedin.com/pulse/why-most-accelerators-fail-what-comes-next-paul-o-brien-fmbpc/
The title is “Why accelerators fail.” That makes a claim that they do in fact fail. But this claim contradicts a good bit of research to the contrary, including research by me and my coauthors. Studios can add to an ecosystem and can have a valuable place regardless of the efficacy of accelerators.
Hallen, Cohen and Bingham, Do Accelerators Work: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2719810
Fehder. Coming from a Good Pond: https://journals.sagepub.com/doi/pdf/10.1177/00018392231204839
Fehder and Hochberg, Spillover Effects of Accelerators: https://www.semanticscholar.org/paper/Spillover-Effects-of-Startup-Accelerator-Programs-%3A-Fehder/f5dd31005acd3cec266aefce9a9f711a352fa600
Thank you for sharing all that. Notably, the first is from 2016 and almost all experiences are since that time. Anecdotal in my article and the interview, that what may have been asserted as true almost 10 years ago now has cities saying, “it isn’t delivering.”
I appreciate the academics in this but research is irrelevant when people are saying, “yeah, but it’s not.”
So, we dig deeper and ask why…
I’m familiar with Fehder’s work and it’s very meaningful but what it misses is establishing clearly what defines “Accelerator.” It providees a serviceable, literature-based description of accelerators (early-stage, mentor-driven programs), but then it includes things like Mass Challenge, which I know very well (I helped launch it in Texas), and Mass Challenge is not at all the same as Techstars – indeed, Mass Challenge is more business oriented (a point of distinction I make in the article and interview).
None of that is me saying Fehder is wrong! Rather, he is illuminating a cause of the inconsistency in expectations and that contributes to WHY cities and founders are not getting what they expect out of accelerators.
More, success isn’t ever defined. Many cities still claim successful (and research looking into such Accelerators would bias toward successful, because look, it’s right there and popular) when it’s merely making money doing little more than hosting events, office hours, and building commuinity. That’s wonderful, but it’s a coworking space, not an accelerator – and so founders and people are in the community are now saying after years of its existence, “It doesn’t do what we’re expecting.” <- my characterization of failure.
Bringing us to the last paper, "The arrival of an accelerator is associated with a significant increase in the volume of seed and early stage deals external to the accelerator cohorts; an increase driven both by outside investor groups and the emergence of new local early-stage investors, and supporting the notion that an accelerator can lead to peer effects and provision of role models in the ecosystem that encourage additional local entrepreneurial spillover activity."
Yes. YES! Absolutely. And 6-10 years later, again, as is in my article, what is the NET improved rate of success from that program vs. the community at large (i.e. if 90% of startups fail, it's not unreasonable to expect that only 80% of startups in the program fail – net improvement) and have venture capital meaningfully developed locally or from external sources such that founders are no longer struggling to raise capital?
I never put forth that there is research. Yes, I said, "why accelerators fail," it's communication and if took it as concrete evidence of a point of fact, that's your interpretation because the statement also means, "people are saying they are and let's explain why."
Let's do the study.
The rate of success of startups, 5 years after founding, comparing those that went through an accelerator and those that didn't, by city / program.
To do that, we need an explicit definition of Accelerator so we're not comparing apples and oranges.
But to validate the anecdotal evidence we then need to still study everything that calls itself "accelerator" so as to distinguish the results from those that are from those that aren't but say they are.
Finally, a leading indicator that is a fair expectation: how much additional venture capital has development because of the accelerator, how much has come in from other regions, and what is the rate and round of funding for the startups through the program vs. not.
That's where we are today and studying that is the meaningful next step when so many cities are saying "our accelerator isn't delivering."
“Ecosystems need to stop treating startups like businesses. We need to build infrastructure, programming, and mentorship for AI ventures, not just sponsor hackathons and hope for the best.”
Highly recommend reading this article by Paul O’Brien. He brings up some interesting points!
Great post, Ayhan, thanks for sharing!
Money is wasted!
“forge of the unicorn” is a cool name! Will take a listen, thanks.
Paul O’Brien say less!! I will see if i can make that work!!
Great article.
Terry D. French see you tomorrow and we can chat a bit about it for Texas
I agree that personality traits drive entrepreneurial success. But no one has yet determined which traits, or how to measure them. Giving founders ‘the environment they need to thrive’ is important, but first decide which founders deserve that gift. How to find the 10% of founders that have a good chance to build a high-growth start-up (as opposed to a SME). That’s the secret sauce that everyone is looking for.
Steve Jennis not a fan of this?
https://www.sciencedaily.com/releases/2023/10/231017215925.htm
Steve Jennis many studies were made about personality traits, and when we apply them to behavioral engineering observing how people behave with others then you see immediately what doesn’t work and requires behavioral retraining. Is the dynamic that matters and it’s what I’m researching about in the past two decades. Thursday I’m releasing a deep dive on the topic. Stay tuned
Paul O’Brien Hadn’t seen it before. We need more of this (in practice not just in academics) to help potential founders know if they have ‘the right stuff’. Like top athletes, founders need some God-given attributes, as well as education and support. It would help everyone to test these attributes earlier rather than find-out through failure. Does the VS model test founder aptitude up-front?
Michele Brissoni Like telling a skinny white kid they aren’t going to be a NFL RB earlier rather than later.
Steve Jennis venture studio model is owner operator investor so no, not necessarily. But that’s why I also refer to startup platforms as civic investment, rather than accelerators that take everything so they can play the 500 Startups investment game and then just celebrate their wins as though they picked them. That, funding infrastructure or platforms is something appropriate of cities to help everyone discern.
Venture Studios could also have these platforms in place, as a service to the community and to see potential deal flow.
A stack that makes sense to me is something like this:
1. City funds platform that profiles and connects everyone
2. Universities get a cobranded version of that, on which they run their entrepreneur programs but students also get profiled and connected.
3. A venture studio is sector specific, so say we have a CleanTech one. They invest in and build their own CleanTech but they also use the infrastructure to identify and promote other CleanTech opportunities.
4. On any of those, someone who wants to run their own program, easily could, standing up on top of it, where entrepreneurs ready have already been identified.
Paul O’Brien Adding a founder aptitude evaluation wouldn’t hurt. Even VCs seem to have no idea how to test founder aptitude (given their 95% early-stage investment failute rate). Surely we can do better at giving aspiring founders some idea of their strengths and weaknesses?
Steve Jennis you should see what Founder Institute has
Timothy, I actually created the ice-cream paradox after a conversation with an Italian friend who had emigrated to Northern Europe. Every winter, he would shut down his ice-cream shop and move back to Sicily. The reason was simple, and it perfectly illustrates why so many leaders struggle to understand why their efforts don’t pay off as expected.
It doesn’t matter how much grit or “skin in the game” you bring, if you’re playing in the wrong playground, the outcome won’t change. That’s why, with Paul, we’ve emphasized the need for sector-specific venture studios: you play in a field you deeply know, with players carefully chosen, and you adapt the way you play to fit the team and the challenge. That data and behavior-driven alignment gives you far higher odds of success.
I often use the ice-cream paradox as a conversation starter. Leaders quickly lower their defenses when they realize it speaks directly to their own hidden doubts, without blame, but with empathy. And that’s where the real dialogue about ecosystems, context, strategy, and organizational evolution begins. 🙂
Thank you Paul! Loved this!
Paul O’Brien I love this article. It feels like my voice is in there somewhere based my experiences with accelerators: the good, the bad and the ugly. I would love to hear what makes good venture studio and where and why might have they failed
Noel let me tag Matthew Burris and JT Benton as some of the best voices in Venture Studio. Love that it was helpful.
Most people are unaware of the distinctions between various entities that support and invest in startups, including accelerators, incubators, venture studios, and corporate innovation labs. The right fit makes all the difference in the world!
The book “AntiFragility” offers some insights into the disruption + behaviours. Here is the link to the book: https://share.google/shvsHBlGcymabBrHe
Thanks for sharing Paul – great insights on the startup and entrepreneur ecosystem. I have found that many founders hesitate to give up control/ownership to a venture studio. Agree that investors focus on the character of the management team when evaluating startups. Great article!
Deborah Pfeifer For sure, not saying Venture Studios are the only answer; rather that as Cities (civic investment) that’d be more effective. I lightly touched on platforms too, that investment in infrastructure upon which to make incubators and accelerators more effective, would help (though I barely suggested that so easily missed)
Accelerators struggle because the folks that would be able to actually help startups succeed(beyond what they are capable of on their owen) are often too busy working on their own companies and projects, etc.
I’ve also recently seen the trend of accelerators adding a fund/investor capability, which I believe will meet the same fate as most companies entering accelerators.
Ramsey, yes… sort of. Because what this underserves is the fact that many people happily pay it forward and advise, that Angel investors should be, that VCs could have Principals and Associates who do.
A bit of underlying my point is that most don’t (which is kind of your point as well) and thus the question is… WHY doing they?
If the ecosystem isn’t valuable, if the program isn’t working for people, if the events are pretending investors are available… then the value to people volunteering to help isn’t there.
Everything has an ROI. Not just investors as you’re seeking funding; people showing up to help (advise) has to have an ROI (be worthwhile to those people). If it’s not, they don’t.
Noel Lourdes, B.A. (hons), FCCA a few resources:
Fractal – A Case Study in Studio Design
https://www.linkedin.com/pulse/fractal-case-study-studio-design-matthew-burris?utm_source=share&utm_medium=member_android&utm_campaign=share_via
https://newsletter.venturestudioforum.org/p/the-fatal-flaws-in-the-venture-studio
https://newsletter.venturestudioforum.org/p/the-three-role-framework-of-venture
Excellent point..your clarity on why many accelerators struggle really stands out.
I’ve also seen many founders unconsciously resist wealth creation, equating it with limiting internal beliefs and, in turn, sabotaging growth. On the surface it shows up as external challenges, but often it all traces back to this one hidden factor.
Do you think the next wave of founder support should go beyond skills and strategy to address these deeper wealth patterns that quietly decide outcomes?
Arvind Khandelwal Absolutely and I think that’s where most accelerators miss the mark. They coach the pitch and the spreadsheet but ignore the psychology. Founder beliefs about money, risk, and value shape every decision, and when those patterns aren’t surfaced, the best strategy in the world still collapses.
The next wave of support has to tackle both: operational rigor and rewiring those internal constraints. Otherwise, we’re just producing polished decks, not resilient entrepreneurs.
Hello digital warriors and Startup Economist readers!
As promised, here’s my deep dive follow-up to the powerful points Paul nailed in his article. If his take opened the door, this one walks you through it, exposing the behavioral traps behind today’s failing models and showing how to turn your software investments into predictable, profitable wins.
Read, share, and subscribe to The Forge of Unicorns for more punchy data and unfiltered truths about building organizations that last.
https://open.substack.com/pub/theforgeofunicorns/p/ep72-escaping-the-industry-black-240
I’ve always said Silicon Valley, though changing, is difficult to recreate due to a mixture of personality trait and environment.
Most accelerators focus on copying their growth stage without the recipe and traits. Many are too business minded over being eccentric and open. Many focus on being bureaucrat and meeting focused over common energy and openness. You need a bit of independent-mindedness, idiosyncrasies and an environment that attracts learners.
Because startups are initially projects and experiments before they’re a business. The experiment is can it scale into a genuine business and you need people who genuinely enjoy experimenting and learning to have such of an environment. You need genuine risk takers.
Not just one who wants prestige and to start a business or be an entrepreneur. It’s a different way of being and thinking.
You need genuine planters and adventurers.
The research keeps mounting that it’s certainly personality traits more than skills, that matter.