Source: Forbes, Nov 2010
He’s taken money only from close contacts who aren’t worried about returns so he has the flexibility to incubate and develop companies without pressure from investors for quick returns. Indeed, YouWeb isn’t even structured as a fund. Relan himself takes no management fees, so he doesn’t ever see a return on his investment unless the companies ever have an exit. But he has a long game in mind and is in no rush.
YouWeb’s model differs too in that it doesn’t look at deal flow or business plans like other firms do. Whereas an incubator like Y Combinator looks for applicants who already have a strong startup idea in mind, YouWeb prefers those who don’t. “I’m not looking for the next Facebook, Microsoft or Google,” he says. Instead, Relan is decidedly people-focused. He wants “brilliant technical developers” who are not necessarily passionate about one concept or idea, but about the bigger industry in general. YouWeb then works with young, unproven entrepreneurs to target markets that are “interesting” and create the idea and the company.
It’s not easy to get Relan to take you under his wing, however. Whereas Y Combinator has about 40 spots in its three-month boot camps, YouWeb takes only two to three entrepreneurs a year. Applicants need to pass a two to three month-long interview process. This involves not only the normal get-to-know you questions and technical tests of programming skill. Applicants who get far enough also get sent home with several books on entrepreneurship and innovation for a month. Afterwards, Relan probes them with questions about what they learned. The point, he says, is to build up a “mental map” of the person he may be investing in.
And if YouWeb takes only a few people each year, that’s because it invests a lot more in them. Y Combinator gives its startups an average of $18,000, and training in a three-month boot camp. But YouWeb gives its first-time entrepreneurs $60,000 for an entire year, “no questions asked,” and provides seed money if and when they create a startup. Relan likens his model to Google employees’ “20% time” they get to spend working on side projects. In YouWeb, entrepreneurs get to work on any ’side project’ they want, with the goal of creating a successful startup, for a year. Relan takes the role of co-founder during a startup’s incubation phase and then becomes chairman of the board when the company is spun out.
Relan has already coached six entrepreneurs in YouWeb’s three-year history. His mission is to “touch one hundred entrepreneurs before I leave this planet,” at a rate of two to three per year. Why one hundred? He figures if even just two of them go on to do the same (and likewise for each of them), what he has done will have positive exponential effects. “For me this is not work,” he says. “This is the most fun I can possibly imagine having.”