

Commodity Web Startups (personal reflections on a web startup's fundraising) - mattculbreth
http://www.stubbleblog.com/index.php/2007/10/commodity-web-s/

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falsestprophet
It is really denotationally impossible for a start up to me a commodity. Come
on folks, you are in business; you really need to stop mucking up the
fundamental concepts of economics.

<http://en.wikipedia.org/wiki/Commodity>

(Don't tell me its a metaphor either, because it makes really terrible one.)

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waleedka
One reason he might need funding is to stay ahead of the competition. He has
identified a good market, but now that the word is out, competition will
emerge. And if he doesn't move fast enough he might lose his niche to faster
competitors.

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nostrademons
In software, though, having more resources often makes you move _slower_. Your
communication overhead scales with the square of team size, yet work done only
increases linearly. This has been known since _The Mythical Man Month_ was
published 35 years ago, yet people still think that raising $5M and hiring 20
programmers makes you faster.

I'm not scared of a big company or a venture-backed startup, because I've
worked at both big companies and 10-20 person venture-backed startups, and
know how slowly both of them move. Any feature they implement, I can implement
in a couple of days. I _am_ scared of a couple guys in a garage that start
with a slightly different take, positioning themselves in an angle I don't
expect that gives them an advantage in market share.

It's a lot like sailing, I guess. A dinghy will outsail a yacht nearly every
time. However, among dinghies, initial positioning at the start of the race is
_crucial_. If you find yourself too close to the edge of the line and the wind
shifts, you can lose so much time tacking and trying to get back in line that
the race is practically over before you start.

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waleedka
Funding can slow you down, or make you faster. It depends on how you use it. I
know what you're talking about; and yes, if used the wrong way, more resources
are actually bad for you. But notice my emphasis on "speed", not number of
employees.

For his case, he's losing time to consulting work which distracts him from his
main product. Also, he's doing the development and marketing at the same time.
A little funding that allows him to focus on building his product and hire one
or two people to pick up the marketing tasks could make him faster.

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edw519
I love posts like this! Finally, case studies that make sense for this
audience. Keep 'em coming.

~~~
foodawg
It was a great article. I think the most important part was:

"Software development got cheaper but communication didn't. Pure
idea/sales/marketing founders are losing value against founders who can build
their own product."

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waleedka
This is a very good observation, and being a programmer I do see and feel the
change. However, there is another force at play at the same time which pulls
in the other direction: because software development got cheaper, there is
more competition, and that makes it more critical than ever to be able to get
the word out and build market share quickly before the other 50 competitors
take it. So, the marketing guys can still make a huge difference. The idea
guys, probably not so much.

~~~
edw519
"there is more competition"

Maybe. OTOH, you can find a more fertile niche. I'm one of those idealists who
still believes that all of us can win.

"Two roads diverged in a wood and I took the road less travelled by and that
has made all the difference." - Robert Frost

I know it sounds nerdy, but I really believe those words are as applicable now
as ever.

