Most first-time founders are being fed the wrong incentives. And if they follow them, it will kill their companies before they ever get a chance.

The Incentive Trap

From every angle, new founders are pushed toward the wrong game:

• College students and high school kids are told to chase pitch competitions. The prize is nondilutive capital, but the cost is hours spent on business plans and slide decks instead of talking to real customers.

• First-time founders are typically told the way to “make it” is to get into YC. And YC itself reinforces this by framing acceptance as the ultimate badge of legitimacy.

Both systems reward optics, not outcomes. You learn how to posture, not how to sell.

My Own Trap

I’ve fallen for this myself.

With my previous startup, I spent far too much time in pitch competitions, especially at my alma mater. For Quasi, I devoted the first 12 months almost entirely to chasing notoriety this way. On paper, it looked like a win. I ended up earning close to $100,000 in nondilutive capital.

But here’s what I had to show for it:

• No paying customers.

• Pivots every three months, roughly the cadence of pitch competitions.

• No clarity. No focus.

And worse, we fell into a cycle of stretching the truth just to keep up appearances. We inflated our metrics almost as a gut response to the constant need to show progress. We called our users “customers” even though only a fraction could truly be classified as such. The numbers were flawed because we were naive, but no one caught it. The system rewarded the optics instead of the outcomes.

There was not a single person who ever told us the obvious: none of what we pitched meant anything. We didn’t have customers. We didn’t have revenue.

I thought we were on the right track because of the signals we got from winning competitions. I believed that credibility would translate into investor interest. So we went out and pitched VCs. Most laughed us out of the room and told us we lacked focus. I got defensive and thought, “they just don’t get the idea.” The truth was harsher. I was the fool.

The Other Side

In retrospect I should have thought about these opportunities from the organizers’ side. The truth is that the incentive system for the people running these competitions, especially collegiate ones, is not aligned with reality. Their incentive is to increase the number of people “starting companies.” That means they do not reward the teams with meaningful traction. Instead, they give money to teams that might abandon their ideas without a cash prize.

On top of that, many organizers are hesitant to give hard feedback. They worry that if they tell a founder the truth (that without customers and revenue their idea means nothing) the founder will feel crushed, “hate” them, and never try again. So everything is cushioned to protect feelings and preserve the image. The result is a pipeline of teams that look good on stage but are not being forced to confront the real market.

And here’s the kicker: the competition winners rarely use the money to grow their startup. They use it to pay tuition or rent. I have literal quotes from competition organizers telling participants they could even spend the money at bars if they wanted.

If the system is designed to keep you playing the game rather than building a business, it should not surprise anyone that the game produces weak outcomes.

The YC Problem

I want to be clear about my bias here. I have not gotten into YC myself, so this perspective comes from the outside, shaped by conversations I have had with founders from the last seven batches.

The incentive to get into YC is supremely strong. And I do not believe YC intends to create these dynamics, but they are a byproduct of the culture and the type of founder who gets in. The gravitational pull of YC shapes behavior in ways that are not always healthy:

• Founders optimize for showing traction in three months rather than building something sustainable.

• Acceptance itself becomes the milestone people celebrate, when it should only be the starting line.

• Technical skill is often overemphasized, while sales and customer development get diminished.

• Once inside, the primary incentive shifts toward raising a round by the end of the batch rather than focusing on building long-term customer value.

And this is where I think accelerators need to recalibrate. The job of an accelerator is right in the name: to accelerate. In my mind, that should mean you admit people for their competency and ability to build, then you give them the unfair advantages to get in front of customers as well as gain distribution to set them up for success. It takes years to earn meaningful paying customers, so pushing founders to raise before they get there feels premature.

I do not want to take away from the incredible track record of YC. By and large, it has produced some of the best companies in the world. Every batch will have startups fail. That is expected. But the thesis has started to feel more like “no child left behind” than “raise the ceiling faster and better.”

This is just my outsider perspective, but it feels like the wrong incentives at play.

The Reality Nobody Tells You

The truth is simple: nobody cares about your startup if you do not have customers and revenue. Least of all investors.

Revenue is the ultimate forcing function. Customers voting with their dollars is the only real proof that you have built something worth continuing. Everything else (pitch competitions, accelerators, demo days) are side quests at best, and distractions at worst.

Accelerators are supposed to accelerate development. That is good. But it cannot come at the expense of the bottom line. Customers and revenue must remain the center of gravity.

A Different Playbook

Zooming out even further, it raises a bigger question: why should you start a company in the first place? The answer should be to create value and make a meaningful difference in someone’s life. If you are not focused enough to reach the point where someone is using your product and paying for it because they need it, then what are you doing?

We need to flip the incentive structure for first-time founders:

• Celebrate early revenue over pitch prizes.

• Celebrate retention over accelerators.

• Teach founders how to sell before teaching them how to fundraise.

Competitions and accelerators should not disappear, but they need to be reframed. Use them for visibility, community, and relationships. Do not confuse applause for traction.