Cheap startups

David has another good post here where he talks about how cheap these companies are to start these days.  I almost don’t want to say anything so that the teeming masses don’t all come rushing into the space.  Between rails and open source it is so cheap and so fast to get to proof of concept.   All the money we have raised for Triggit is just sitting in the bank right now and I am not sure where I am going to spend it until we get to proof of concept.  Compared to back in the bubble when it cost a couple mil to see if someone’s crazy idea worked this is a very different world.  It just changes the entire paradigm on so many different levels. 

For the VCs it gets harder.  We just don’t “have” to have VC money anymore.  We can test our idea and if it works not only are we in substantially more powerful position (revenue and profitability make negotiating financing a whole different ball game) but we have other choices when it comes to scaling our company.   

For the entrepreneur it gets harder in some ways and easier in others.  No longer is the first goal to get financed and then worry about things from there (that is for those of us who don’t have VCs begging us to take their money).  Now we have to execute from the very beginning and prove that we have what it takes to make a real viable product and company.  That makes things very hard for those people who come from big company backgrounds where throwing money at problems is the usual solution.  For those of us who like the execution part of the game where we have to make something out of nothing this is a great thing.  We no longer have to ask permission, we can just do.  Trust me, that is very cool.  I hate asking permission. 

For the big companies –G,Y,M,AOL-etc this is going to be an interesting time.  Remember 90% of Google’s revenue comes from the fact that they have a better search engine.  All that has to happen is one of us crazies out here in the wilderness makes a better search engine and Google is in big trouble.  You saw how fast Google replaced Altavista and company.  Now speed things up ten times.  That’s how fast a better Google will take over.   Yahoo seems to be in better place since it would be awful hard to build a competitive media entity in one go, though it may die a death of a thousand bites as all these little companies like Kayak attack its most profitable parts.  That’s the problem with conglomerates like Yahoo, the competition concentrates only on the most profitable portions and can focus all their energy on one thing while the conglomerate has to focus on it all.  Tough stuff.   In general this is going to be an interesting spectacle to watch.

In all I think we have entered a pretty cool era in the online space.  Lucky us.