HitForge is an entrepreneur cooperative composed of independent small teams, where people can apply with their ideas, join the team, and see their idea go from idea to product in a few weeks, largely with help of an offshore engineering team.
If it works, then the product is turned into a company. If it doesn’t work, the product is killed, and the team moves onto something new. HitForge is out of a few thousand dollars. The team whose product got killed still gets to share in the hits that come out of the cooperative, Ravikant says.
Ravikant argues that the start-up creation model – have an idea, start a venture, raise capital and then release a product – might have worked in the past, but now it doesn’t, at least when it comes to consumer web start-ups. In the world of consumer Internet start-ups, only the hits win. Today while it takes less capital to start and launch a company, it doesn’t necessarily mean it is going to be a hit. As Ravikant says, “Web businesses are unpredictable despite the best of intentions and execution.”
“What these are, are products that needed to be tested out in the market before becoming a company,” says Ravikant. Only the hits should become companies, since hits are the only ones that get consumer adoption, and have some sort of an exit event. Hedge funds use this “momentum investing” philosophy, and so does Sequoia Capital, that has done well by betting on growth.
The concept is very similar to that of Ev Williams, who has established Obvious to try out new web products, spinning out the ones that show sufficient adoption into companies — as he did last week with Twitter.
Others will argue that the smaller projects being snapped up by Google and Yahoo shows that it’s about hitting singles, not home runs. But like in baseball, it is the homers that fill the stadia and line the pockets. HitForge hopes to take the two approaches and mash them up with current industry trends – offshore developments, using Amazon S3 and EC2 services, open source, and new web marketing strategies.
Ravikant, when we met with him said,”Give me your tired, your poor, your huddled engineers yearning to code.” We thought he was joking. Instead he was dead serious. “But that’s how I feel about engineers with great passion who can’t raise money, usually because they were born in the wrong country or under the wrong circumstances. I want to create an abstraction layer that allows them to be entrepreneurs.”
Will it work? I am no expert on this, but given the success of YCombinator, it has a fighting chance. When thinking about this over the weekend, I remembered a similar experiment was tried in the music industry in the 1990s. Jimmy Jam and Terry Lewis created a hit factory that churned out R&B hits by the dozen and gave us stars like Janet Jackson. In England, Stock Aitken Waterman did the same and brought to us musical acts like Kylie Minogue. But there was Sonia, Sabrina, and Samantha Fox.
So question to all the readers: you think this twist on incubator model is going to work?