Dave Johnson

JotSpot is a wiki and Excite is a search engine, right? Apples are apples and oranges are, well they are oranges.

Ever since Paul Kedrosky’s presentation at VEF in November (at which Andre also famously presented), I have been contemplating the four factors that cause the 30x difference in the amount of money required to start the two aforementioned services over 10 years apart.

From the post it says the top four factors are:
1) Hardware is 100x cheaper
2) Software is free
3) Access to global labour markets
4) SEM

However, I wonder how much more difficult it is to actually build a search engine vs a wiki? Even today could you do it on cheap hardware and free software? I am also sure that building a search engine from the ground up during the first nascent Internet boom given Joe Kraus some idea (or maybe he already knew) about what it takes to build a company.

Is the market flooded with start-ups today due to these factors? Yup, open source software and cheap hardware is helping them a bit but for a small three person startup (which is of course so fashionable these days) that focuses on only a few high quality features (another popular thing to do) then you don’t need that much in terms of software and hardware anyhow. Speaking of small three person teams, they generally work in the same room and not half-way around the world to take advantage of the low cost of living in Biharipur India. Sure SEM is important but in this day and age getting air time on influential blogs like TechCrunch is certainly the way to go - this is possibly the factor that is most influential in creating an atmosphere where $100k can really get a small project out of the basement and into the bookmark(let) list of everyone who uses digg.

In my mind the real challenge always has been and always will be finding the right balance between complexity and value. Way back when Excite was founded the value of something like JotSpot might not have made it worth raising $3 million (even today) whereas the value and market potential of a search engine was. Can someone go out today and build the next Google (or even Excite) on $100k all thanks to offshore programmers and cheap hardware?

These days everyone and their pet goldfish has a startup doing something about RSS or blogging or tagging. Sadly few are providing much value and the three founders (of course) will have no choice but to go back to working as “consultants” once the $100k dries up and there is no sign of profitability in the long tail.

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This entry was posted on Monday, January 30th, 2006 at 10:16 pm and is filed under Web, Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.