The Business Incubator Teaches: Test Your Hypothesis and Be Fiercely Competitive

This autumn HSE Business Incubator came 14th overall and 7th in Europe in the rankings of best university incubators around the world. HSE News went to meet the team to find out how it works and how it helps prime startups.

Get real

‘You know you have a product but it needs packaging. You need to sex it up because sex sells.’ At HSE Business Incubator they are discussing one of the resident startups. It’s an open and emotional discussion as usual - invited mentors don’t pat the heads of future entrepreneurs, they weigh up their projects and efforts in the cold light of reality. In this sense maybe the name Incubator is misleading - this is no place for cosseting weaklings but for tempering the strong.  

‘Yes, we harden ourselves, we learn how to take criticism and defend our projects, there’s no other way,’ explains Incubator resident Karina Melnikova. ‘Future clients won’t fuss over you, they’ll just turn around and walk away if you can’t convince them.’

‘It isn’t cruel, it’s honest and fair,’ insists Denis Kozminykh, one of the Incubator’s regular experts. ‘It’s time to stop lying to startups - there’s far too much of it and they start to see things through rose-tinted spectacles, and pump out goods that no one wants to buy. We want to avoid that happening, to stop wasting everybody’s time.’

We try to sift out people who think we going to do everything for them at the start

Svetlana Alexandrova
Curator of the business incubator residency programme

A resident gets 10 things - educational courses, international expert and mentoring support, a personal coordinator, PR support, office space for a team of three in the coworking, etc. What the incubator doesn’t do is a much shorter list - it doesn’t give money, buy ideas or take a percentage. 

‘We teach you to be flexible’

Over the ten years since it began the HSE Business Incubator has launched several dozen startups, TimePad, LinguaLeo, Whisla and Out of Cloud among them. Many who started here are already successful businessmen and they come to us as experts now to various Incubator events (several times a month the Incubator organises something interesting for the public) and to consult for the next batch of young entrepreneurs.

The Business Incubator itself has changed massively over the years, in fact it’s in a permanent state of change. ‘We constantly change our programmes with the times and try to improve them,’ says Mikhail Erman, the Incubator’s director. ‘To ride the crest of the wave, we have to move fast and adjust ourselves to the circumstances which dictate our lives. We teach everyone at the Incubator to be flexible and adaptable, to react instantly.’   

Be flexible is one of the main things curator of the Incubator’s residency programme, Svetlana Alexandrova advises young entrepreneurs. ‘We’ll make you to look at your business from a different angle, you might even decide to give up a part of your product,’ she warns. They also advise getting a team together. ‘It’s hard to develop a project if you are on your own,’ continues Alexandrova, ‘It’s too risky, supposing you get ill or change your mind and you get fed up with it, when you’ve already spent so much time, your own and an expert’s, and your efforts haven’t paid off.’  

Come to us to get out of your comfort zone

Mikhail Erman says the Incubator targets two kinds of groups. ‘The first is simply people,’ he explains, ‘usually students, techies and non-techies, from HSE and outside, some have been in business before, some are in it for the first time. We want it to be a mix, to use them to generate projects. It’s a kind of cross-pollination - we put the techies in projects where the business side is strong and managers in where the technical side is strong but the business is lacking.’ The second group is the teams who arrive ready-formed and they can go straight ahead to the residency.’ 

But to get on it you have to go through a selection process and show that as well as having ideas, you want to work on them. ‘We try to sift out people who think we’re going to do everything for them at the start,’ says Svetlana Alexandrova. ‘It’s not by chance that we have several cycles of selection - first we gather the applications, then we evaluate them, then we invite some of them to come and make a pitch and then we talk to them again face to face.’ 

Sometimes Incubator graduates bring new startups to us. For instance, Karina Melnikova and Liubov Sakhno were sent to the Incubator by their company directors and it turned out their bosses had been through the HSE Business Incubator in their time. Now Karina and Liubov are developing a corporate mobile app for big companies with personnel in more than one place.

In the past, some residents have sat in the Incubator for rather long. It’s understandable, the hothouse atmosphere, you have an office, and PR...Nowadays the residency has a tighter timeframe. ‘We push all the projects out of their comfort zone because it’s the only way to move them forward,’ says Mikhail Erman. ‘How we decide when it’s time to let the team go it alone is very simple, we just ask, can the Incubator bring any more added value to the project or not?’ 

Music brought us together

There are no limits on startups in the Incubator. Historically the projects just so happened to be connected with internet technology, but it isn’t a requirement for joining. Nikita Naumov, from the Faculty of World Economy and International Affairs is involved in music events and wants to organise concerts for foreign bands in Russia. But an organiser always risks his own money - he pays the musicians but then what if they can’t sell enough tickets to recover the fee? Nikita and his partner thought of a way to minimize the risk by selling concerts through crowdfunding.

Every year the Business Incubator runs an elective practical course for HSE students on how to run a business. It’s thanks to that Nikita got his residency at the Incubator. ‘The elective taught us how financial models are constructed, how markets and competitors are analysed all of which helped us to launch our project,’ says Nikita. ‘But we realised that we couldn’t do it ourselves, we weren’t strong enough, so we came on the residency programme. They were the craziest and best months of my life because I got more experience than in all the jobs I’d done before put together.’

Let the guys screw up now, even kill the startups but they’ll learn how to make new ones and have great success stories in the future

Denis Kozminykh
A regular HSE Business Incubator expert

‘Our project turned into something else,’ Nikita continues, ‘we changed our business model, took some things away, reworked some things, made a good reckoning about how to earn money. And even if something doesn’t work out, although everything is going well now, I know for sure that the knowledge I have can be transferred to any other project.’

The Business Incubator has its own social accelerator programme for social entrepreneurs. It has its own experts and mentors and its own selection process.  

A new hypothesis every week

For Incubator residents the basic time unit is a week and the key word is probably ‘hypothesis’. ‘We ask the projects to formulate hypotheses about their business which they have to test in one week,’ explains Svetlana Alexandrova. ‘The hypothesis shouldn’t be abstract but concrete and measurable so we can understand how to test it.’

Is it really possible to do this in seven days? ‘It depends on the level of the task,’ says Alexandrova. ‘You can break any of them down into stages, we try to go only into so much detail as we can in the time limit.’

The experts and mentors decide whether a team has managed to test their hypothesis or not. The Incubator has a huge network of contacts so there’s never a problem to get someone in to evaluate and teach the startup teams. Mentors are distinguished from ordinary experts because they work individually on specific projects. 

How businesses like Google and Apple appear

‘For me it’s a challenge because I have investors who want to put their money into interesting projects. Here I see them in the early stages and I understand who can be financed in the future,’ says Denis Kozminykh. ‘On the other hand, I’m building up my own consulting skills. It’s useful experience so that in accelerated programmes I run in future, I can propose better ways to make them more efficient. And for me it’s fun. It’s great when people listen to you and really absorb what you say.’

Fierce competition. criticism, success and even failure, Kozminykh is convinced, are all invaluable experience for startups. He believes, ‘it’s only natural selection that produces a Google, Apple or Facebook. Let the guys screw up now, even kill their startup, but they’ll learn how to make new ones and have great success stories in the future.’

‘If you want to do business you have to start doing it, start working, don’t wait for it to organise itself and other miracles to happen,’ Svetlana agrees. ‘If you want to do it, just do it.’