Not to get beef with anyone, because I generally respect the crap out of all the perpetrators… but I have to respectfully ask some of you Web 2.0 entrepreneurs to reconsider whether it’s truly responsible of you to go around telling people how it’s so cheap to start Internet businesses now that folks should all just quit their jobs and follow their entrepreneurial dreams. It’s a very sexy line, but there are so many caveats buried in there that I get deeply uneasy whenever I hear it.
First off, let’s look at the whole “hardware and software are so much cheaper” theory. Maybe companies at the very beginning of Web 1.0 were prone to blowing tons of bucks on custom appservers and Oracle licenses and the like — but the truth is that by 1999 or so, a lot of Web companies (like the one I was working for at the time) had wised up to Open Source software. We used pretty much all no-cost software — C, gdb, PHP, Apache, Bugzilla, etc. — and it was just understood that no engineering budget would be going towards commercial software except where absolutely necessary. Yes we ran on Solaris boxes in production… but we only had like 24 of them. I can assure you that the Facebooks and MySpaces of the world have more than 24 servers, and those fatty dual-core dual-proc Opterons aren’t all that cheap either. So I can’t personally agree that hardware or software costs were a huge factor in why most Web 1.0 companies blew though all that money. When you come right down to it, staffing and possibly user acquisition are still the biggest expenses in this business.
Which brings me to my next point: even though it’s easier than it used to be, it’s still almost impossible to get a Web product out there without financial backing unless you’re an engineer, or are in a position to get engineers to work for you without cash. Now let’s look at the ways this can be true:
1. Your devs are students. Hey, it worked for Zuckerberg; but it’s not an option available to most people over 21.
2. Your devs have jobs and are working on your project in their spare time. As many an Open Source project lead can tell you, this is an inherently unstable situation for any length of time. One thing that happens frequently is that an unfunded project gets a certain amount of buzz and then the members start getting job offers from better-funded business that need similar skills… and how you gonna keep those devs down on the farm when they have a full-time well-paid job doing what they love?
3. Your devs are already rich from previous jobs, and can afford to work without cash remuneration. My question here would be whether these developer’s skills are really up to date. I know a gazillion enterprise Java types right now who are very interested in learning LAMP and AJAX and Ruby on Rails… but are they going to be your best bets for an innovative Web 2.0 business? With all due respect, I have not personally hired any. I recruited engineers with cutting-edge skills who could not have afforded to work without pay — and you know, even though I’m a webdev we had very little overlap in our skillsets, so it’s not like I could have produced a working alpha without the other guys.
Even if your product team can afford to work without pay for some time, there’s a limit for anyone. So the question is, how long does a Web 2.0 beta take to create? This is where I think people can sincerely but severely underestimate how long it will take to complete development on what I call “a complete thought”: getting your software project to a state where users can complete at least one core transaction smoothly, and therefore beta testing even starts to make sense. We all look with envy on the projects that were able to get a complete thought to the users after two or three months of intense effort but minimal cash — like Del.icio.us, Meebo, Tailrank, Meetro, Reddit, Upcoming, PBWiki — but a quick glimpse of TechCrunch’s Web 2.0 index will show you that these are sort of exceptions to the rule. For all that Web 2.0 is supposed to be about “just get something out there fast”, it turns out that a lot of what I would consider the most valuable and useful new applications — Jot, Ning, Skobee, Zimbra, Google Calendar, Dabble, etc. — took months if not years to get to the “complete thought” stage. And I am not giving myself a pass here either: I originally thought Renkoo would be a complete thought at about 6 months, but a usable and scalable beta turned out to take closer to 14 months. I wish it weren’t so, but that is the fact Jack.
This is not to suggest that people shouldn’t start the projects that make them happy. But I’ve had some bad experiences recently that lead me to believe that the “you too can start a Web 2.0 company for no money down and no money a month!” meme may have gotten out of hand. I’d advise anyone who is serious about starting a company to listen to other entrepreneurial types — like Caterina, or the folks at 106 Miles — before drinking too much Kool-Aid.