It has been more than a few weeks but I was just made aware of a couple of blog postings by some serial entrepreneurs about how inexpensive it is to start a web services company these days. Joe Kraus’s blog (a founder of Excite) and Mark Fletcher’s blog (founder Bloglines/ONElist) have both chimed in on this very true fact. However, you cant do it for free. It depends on the complexity of the engineering, but starting a web services company is a lot cheaper if nothing else one just looks at the cost of servers, bandwidth, and development tools. Labor is getting A LOT cheaper too but that is a whole other discussion.
While I cut my teeth in the venture backed conventional software publishing world, the past several years I have been involved in a sophisticated infrastructure development project AND the conventional software business as a leader, partner, advisor and investor. The challenge with web services for the entrepreneur (experienced or otherwise) is that the more technically complex projects STILL can require significant capital and a year or more of engineering effort. Moreover, if the business is in a technology or market spacethat is really early in its evolution (left of the chasm) then attracting significant dollars quickly becomes a catch-22. So, if possible, the founding team needs to redefine their solution into smaller chunks so it can be rolled out and “proven” to prospective investors and early adopters on a shoestring budget.
It is certainly not the early days of the internet when Sun, Oracle, and the ISP got half of the VCs investment…but even today, with newfound VC activity (especially in the blogosphere) Series A investors more often than not want the product “done” before it can attract investment. So, if you need more than friends and family investment to make your dream fly - get to a demonstrable milestone and find a VC who is already drinking the same Kool-Aid as you, and do it "right."
Whether before, during, or after the bubble...i think it has ALWAYS been a great time to be an entrpreneur. Yeah, it cots less now, but there will be entrepreneurs saying the same thing 10 years from now..just wait until the Indian, Chinese, and others have a truly level playing field. This is going to be fun, i expect to be working on my tenth company or so by then laughing at how expensive and slow things were back in 2005!