Future of Web Startups: Time & Money Are Finite

11 10 2007

Paul Graham (founder of YCombinator) has a tremendous article on The Future of Web Apps. In a very straight-forward way, he lays out that web startups will increase probably by orders of magnitude.

Indeed, people’s desires are infinite as is the web. Commoditization continues to push the price of a web startup to zero.

Two things are finite: time & money (resources of any kind). Today, web startups must be fueled by either. It’s interesting glossing over some of the comments that cover the rich kid advantage. As such, the rich kid advantage is still prevalent. It can be surmounted by enough ingenuity and persistence, but it’s still present.

Where the time & money limit really applies is in user adoption, ultimately what matters in a web startup as Mr. Graham also points out.

So, I will still reassert that the time is ripe to start a startup. Mr. Graham again says as much in the post that you have to move on your idea immediately or someone else will, faster than ever.

However, the finite nature of time & money will further require that your startup produces value for the consumer. Businesses are still ultimately measured by the amount of value they create. Value can be created by way of increase of time or money in magnitude or in efficiency. If you take this definition broadly, it means save me time, make my time spent more valuable (enjoyable is a subset of value), save me money, or give me more for my money. This is the definition I would use as a user, as a founder, and as an investor.

Creating value is a very basic test, but it’s the true test in the picture of an efficient future of web startups.

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