Plug'n'Play - part Two

As already mentioned, I scheduled two meetings at Plug and Play Tech Center (PnP) which according to people I've met up till now is the new rising star in tech business incubation in Silicon Valley... It only started in 2006, when Saeed Amidi and his family spotted the opportunity in seed and early stages of tech companies (well they might have spotted earlier, they were one of the early investors in PayPal) and they decided to create this venture-type of an incubator... The two people I met today were Saeed Amidi (again) and Maud Pasteuraud (again)...

Comparison to the U.S. MAC is very difficult as they are totally different - PnP is very venture oriented, buzz- and ecosystem-creating type, privately owned and very for-profit run; USMAC on the other hand is supported by the City of San Jose, it is non-profit but also aims at providing services, not just space (but there is not as much focus on creating an ecosystem there)... First impression is almost not comparable - PnP is buzzing, hectic, busy place with a super duper new technology for visitors' badges, whereas USMAC seems almost sleepy, with one friendly woman at the reception which brings the bottle of water in 10 mins (in PnP there are drinks and coffee everywhere for grabs)...

I really spent too little time in both places to judge which model works better or worse, I must say that I was pretty impressed with Chuck who runs USMAC, but I was impressed and excited about the whole Plug and Play (including Saeed) - at the end of the day, PnP is something that I had in mind when I co-founded Incubator 2.0 in the Czech Republic back in 2001... I strongly believe that there should be the environment and ecosystem to stipulate the startups, I believe there should be VCs, bankers, advisors present there, on the other hand I am a huge admirer of track record, competence and depth - and am not sure if those things are just not something PnP don't have which may appear to be the strongest flaw in the model... Many bubbles have already burst...

Saeed insists that there are more companies applying to come to PnP than there is space -
I am just not really sure about it... The model somehow gets in conflict - they are selling space (actually for higher than market price) and at the same time they screen the entering companies... Is it sustainable...? Clearly, PnP was very expensive to build (with a $ 4m data center under the ground), so it has to return the investment... Can this be done through equity participation when they only take 1% (if they don't invest more cash)...?

Another thing stroke me about Plug and Play's approach - as I mentioned, they work as a venture incubator, so they take equity and some of the incubees actually receive further funding from them (or actually their VC arm Amidzad Ventures)... The issue might be in "some"... In my view there could potentially be a conflict of interest there and I wonder how Saeed and PnP handle such conflict...

Also, from my perspective they accent too much working with European governments, trying to set up Pavilions for countries, subsidiesed or fully paid by the countries... But what in my view usually happens when government gets in the way...? Wrong companies get selected, wrong people decide about things they don't understand and a potential lose-lose situation is born... Plug and Play does not need governments, they need to maintain the momentum, build track record of successful companies (depends a lot on selection) and pipeline of newcomers (but perhaps not in cooperation with the governments)...

Just my 2 cents... At the end of the day, huge admiration and respect to what they have built over the last (only) three years, and good luck for another 33...

Maud and Saeed promised to send me more info on conditions for setting up a Pavilion and also cooperation with VCs... After all the concerns I expressed it is for sure that whenever I will be considering a Silicon Valley presence for any company, I will be looking at PnP (as well as USMAC) as one of the possibilities... Might be really a great kick-off for a certain types of companies and entrepreneurs...