Nice little note there - I especially have to agree with your point on Capital Efficiency.
Incredibly low costs will make the current crop of web start-ups much more immune to crashing. This could mean some will take exit strategies on the cusp of success (when, with more money committed, they may have slogged it out), but by and large it will only encourage more people to dive in and try it.
The difference between a landing and a crash? You can take off after a landing...
Dharmesh, not everyone has (or maybe needs) to become Bill Gates or Steve Jobs.
Building a concept you have, having a chance to work freely and be creative and then earning money that many executives would envy, by selling your product (or feature), does not sound like a bad scenario to me. Especially for someone at his 20's.
Lee: I'm generally an advocate for going th e"organic" route (bootstrapping) for as long as possible. Most software companies, and particularly Web 2.0 companies, are not usually very capital intensive. As such, it is usually in the founders interest to grow organically and get something out there to see what market acceptance is.
But, this is not necessarily specific to Web 2.0 (I'd advocate bootstrapping for most software companies). Of course, there are always exceptions.
Couldn't agree more. Most of the start-up nowadays actually builds up with an exit strategy in mind, less and less people want to build an empire like Microsoft or Apple. I mean that is not a bad thing at all, you get to do what you believe in, get a hefty pay check if it work out, even if it don't, you don't really lose much, and there is always next try.
Once again, I completely agree with Dharmesh here. I am anxiously waiting for the person whose new Web 2.0 idea is an "Ebay for Web 2.0 Companies/Assets". To answer Lee with my own 2 cents - Organic growth, offset by Friends and Family/ Angel investment is really the only way to go to build a sustainable business in the Web 2.0 space. The amount of money you should raise is equal to your reasonable burn rate until you have reached positive cash flow. Once you're at that point, second round "professional" money makes much more sense for both the comapny and the investors for both valuation and potential exit purposes.