

Ask YC: Will there really always be room for more successful web startups? - rontr

I've heard the argument (also made by PG) that there will always be room for more successful web startups. Do you think it's true?<p>Sometimes I get the feeling that the internet has gotten too crowded. Every idea I think of, someone else has done.<p>But it's more than that. I also sometimes think that mainstream users have a finite number of needs that web applications can satisfy. I think of web applications are like kitchen appliances. Once you have the essentials -- a microwave, a fridge, an oven, a toaster, a coffee maker, and a blender -- new appliances you get have decreasing marginal utility. Sure, you can always get new ones for increasingly esoteric needs, but they are just not as useful as the important ones that almost everyone has.<p>I read about all the new startups on TechCrunch and YC news, and although I think many of them are cool, I don't use 99% of them. Why? Because although they may solve some problem I may or may not have, incorporating them into my life introduces mental overhead. It's like PG's essay about stuff. Having less stuff keeps your head clear. So does using fewer webapps. I'd rather use 5-10 really useful apps than 40-50 marginally useful ones. Although the total utility I can get from the marginally useful apps is greater than zero, this utility doesn't outweigh the disadvantage of having to think about them. They solve some problem, but they also add (virtual) clutter to my life. As a user (which is different from an entrepreneur in the same field) I'd rather not think about them.<p>Will there really be the next big search engine or the next big social networking site? (By big I mean bigger than the entrenched players.) I'm not convinced. Some industries mature and their barriers to entry become too high. (How many new car companies have been started in the last couple of decades? Not many.) Furthermore, after every adoption of a new product, users have a smaller reason to switch. I don't care if ask.com is sometimes better than Google or if some social networking site is slighly less creepy than Facebook. I still use Facebook and Google. They are wired too deep in my cortex. Trying out a competing product just isn't worth the work.<p>I'm sure there will always be <i>technology</i> startups. And there will always be new marginally successful webapps that cater to small niches (I just thought of one: a hot-or-not for pets app that runs on the iPhone! Maybe that's my ticket to riches!) But will there always be the next world-changing <i>web</i> startup?<p>What do you think?
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pg
People's wants seem unlimited, at least in the near term. If you accept that,
the only limitation on the number of web startups is how many needs can be
satisfied by software. (The web is just the current default software
platform.) And since everything is turning into software nowadays, it seems
likely that the infinite demand for new stuff translates into an infinite
demand for new software.

~~~
dima
What do you mean by "everything is turning into software"?

Also, while I agree that there's effectively infinite demand for new
_software_ (I can't imagine a day where all software companies and open source
projects stop writing code), it doesn't mean that there's infinite room for
new software _businessnes_ \-- especially the ones that start with a few
hackers in an apartment cranking out a webapp in 2-4 months.

~~~
aswanson
_What do you mean by "everything is turning into software"?_

Can't answer directly for pg but I know my whole field (electrical
engineering) has pretty much been converted to software. Musical instruments,
medical diagnostics, anything that deals with information processing, which in
this day and age, seems to be migrating to a software function.

But like I said, can't speak for pg.

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cperciva
_Every idea I think of, someone else has done._

Maybe your ideas aren't specific enough.

Take my own not-yet-launched project (<http://www.tarsnap.com>), for example:
Online backups. Lots of people have done those, right? Mozy, Carbonite,
iDrive... google can easily find dozens of them.

But that's just the "30 thousand feet" view of what I'm doing. I'm not just
doing online backups -- I'm doing _secure_ online backups. Secure in the sense
that I can't steal your data. Secure in the sense that the NSA can't steal
your data.

Have other companies done online backup? Absolutely. Can anyone else
reasonably describe what they're doing as "backups for the truly paranoid"? No
-- that's something which nobody else has done.

~~~
Retric
That sounds a lot like <http://www.idrive.com/> or www.evault.com/ and or
several other systems out there. Building a secure system is a hard problem
and even if you build the best system few people can judge how well your
doing. You could market it as "The only 4096 bit system" but you end up with a
tiny market segment.

I would suggest starting with a secure chat system with good logging options.
That way you can reasonably target teenagers, bankers and the truly paranoid.
And you don't need a huge backup infrastructure or a 50$ / year price tag to
compete.

~~~
cperciva
_That sounds a lot like<http://www.idrive.com/> or www.evault.com/ and or
several other systems out there._

As I said, lots of people are doing online backups. Nobody else is doing
secure online backups.

 _Building a secure system is a hard problem_

Exactly -- that's why it's something which I can do but nobody else has done
yet.

 _and [...] few people can judge how well your (sic) doing_

Fortunately, with a doctorate in Computer Science, as the FreeBSD Security
Officer, and as "that guy who found a security flaw in Intel processors a few
years ago", I'm ideally positioned to show people what I'm doing right -- and
what everyone else is doing wrong.

Is secure online backups a smaller market? Absolutely -- most people don't
care about security. That's the price you pay for entering an arena where
there are many established companies: The best strategy is to carve off a
smaller part of the arena rather than trying to fight for the complete arena.

~~~
Retric
I am not talking about the size of the market, just pointing out there are
already several companies that _seem_ to do this. To be more clear: looking at
idrives's home page's table iDrive, Mozy, and Carbonite all do "Security:
Encryption on transfer, Encryption on storage" now I don't think these systems
are going to be NSA level security but you now have to convince people you do
security better than the existing players which tends to be hard.

In the end security is more about trust than the algorithm. I need to trust
you not to log the password somewhere etc. Established players gain some trust
because they have other things on their mind than your data and presumably
they want to protect their reputation, so IMO the new guy is bester off
focusing on something more tangible so you get a chance to build your
reputation.

Which is why I suggest a free App that demonstrates you do security. You could
build that relationship of trust and drum up some somewhat _free_ press around
how subversive your application was and turn that into a strong market.

PS: Good luck with your startup. I think you can make it work, but after
considering the same idea and talking to people about what they trust I moved
on to other areas .

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imgabe
Each individual mainstream user might have a finite number of needs, but the
number of needs of users in aggregate is effectively infinite. I agree that
I'd rather use 5-10 great apps than 40-50 marginally useful apps, but why do
you think the 5-10 apps you find most useful would be the same 5-10 apps
someone else does? No one webapp has to appeal to the entire market to be
successful, it just has to appeal to enough users to provide an income to
cover its costs.

This reminds me of Joel Spolsky's take on the 80/20 bloatware myth. The idea
being that bloated programs like Word are bad because 80% of the users only
use 20% of the features. But they don't all use the same 20% is the problem,
so you can't just remove 80% of the features without pissing off a sizable
group of people. I think the same applies to web apps. Nobody needs every one
of them, but the right set of web apps for any given person probably isn't
identical to anyone else's.

~~~
nostrademons
Also - the cost of servicing that marginal niche is now so low that it's
economically feasible to build a solution just for them. To use the kitchen
example, most people want gas & electric ranges, but a few might want eco-
friendly solar-powered cookware. This product doesn't exist (to my knowledge),
but it's because the cost of designing, tooling up, and manufacturing it is
above what people are willing to pay. In software, a niche solution could
probably be coded up by just a couple programmers. It'd have more economic
value than the code they wouldn't produce at their day jobs, so it becomes
economically feasible.

~~~
pchristensen
Actually, it's probably because no one knows how big that market was. If you
produced market evidence that there were 1 million people that would buy a
solar powered stove in the next year, there would be product rolling off
assembly lines in less than 6 months.

Read Seth Godin's book Permission Marketing if you want to learn about market
creation and demand-driven design.

------
SwellJoe
Viewing the web as a kitchen is quite limiting. There are thousands of
products in your house...many are for entertainment (TV, DVDs, CDs, ipod,
etc.), some are for news and education (TV, radio, magazines, newspaper), some
are for communication (phone, mailbox), and on and on...Software and web
applications can be involved in all of those things in one way or another.

I don't think I'm going out on a limb if I say that I think changes will come
much more rapidly in the future than they have in the past. So, while the
telephone has been around for over 100 years, I don't think Skype will last
out the next seven years. Facebook will be lucky if it gets five years at the
top (if it ever bests MySpace and makes it to the top). I don't think a better
"social network" will dethrone Facebook...I think a whole other class of
product will take its place (actually a dozen or more classes of products,
probably, since people do so many different things with Facebook). Your job,
as a technology innovator is to spot those trends and build the products that
enable them.

And keep in mind that little web applications aren't the only problem worth
solving. There's a lot of software that runs inside the firewall at businesses
--and a lot of it is moving to web-based variants. There are many worlds to
change, not just the world Facebook is addressing.

That said, there aren't many opportunities to make something as big and world-
altering as Google. There's only so many problems on the web that touch every
single human being that uses the web (that's a big customer-base). Search is
actually the only one I can think of. Email, perhaps.

------
vikram
I don't think there is demand for another search engine that is 10% better
than Google. Whatever comes along that can challenge Google, isn't going to be
a "search engine" in a traditional sense of the word. Because Google mostly
works and works pretty well. To displace Google from it's position in the
search engine market, one needs to redefine the problem. Or be 10 times better
than the leader.

I can think of many ways to make things 10% better, but that's just the next
set of features these guys need to implement. I'm not convinced that is a
business.

When Google started to work, it was definitely 10 times better than the
competition, or had redefined it.

------
fauigerzigerk
Yes there will always be room for new applications (web or not) or kitchen
appliances for that matter.

Don't make me think about my kitchen! it's awful! I can't seem to keep it
clean and the traditional solution to this problem, marriage, has apparently
run its course. My girlfriend is a software geek as well and hates to clean
the kitchen (and vacuuming) even more than I do. So where is that long
promised robot revolution? Bring it on!

And where is that website that lets me auction my food orders, to be delivered
by the best bidder? And knowing about the food I eat, the site could also tell
me which nutrients I'm supposed to consume more of and which ready meals
contain them, excluding the ones I hate.

There are so many old unsolved problems. Anonymous hassle free micropayments
for instance...

~~~
icky
> Anonymous hassle free micropayments for instance...

Someone please make this, much lighterweight than PayPal, and saturate the
market with it. Add a prepaid micropayment card anyone can buy at a store with
cash.

This is one of the things that I have great interest in using (both as a user
and as a client), but not so interested in building and running it myself! :-/

~~~
fauigerzigerk
The prepaid card is a good idea. And I wonder whether it is always necessary
to authorise individual payments. For something like newspaper articles,
payments could be pooled and transferred en bloc via some kind clearing
mechanism that doesn't require me to have an account with every magazine or
website I read. The seller wouldn't even know who was paying and the clearing
institution wouldn't know what exactly is being paid for.

The reason why nobody does it that way is probably that it's difficult to
garantee settlement and the credit risk involved. But do we really need such a
garantee in cases where no physical goods are delivered? Maybe it's enough if
it works in 90 % of all cases. That's more than the rate of legally acquired
software licenses today.

------
optimal
I think the Web may be less like the kitchen, and more like television. Shows
come and go every year, so there will always be a need for new ones.

In an attention economy you're fighting for eyeballs. And there's a smaller
group that's always looking for what's new and different. If you want to
pursue this demographic, and the larger, lagging crowd behind them, then you
have a chance at capturing attention.

I share many of your concerns, and personally use very few Web applications--
basically maps and mail. I often ask the same question: what can I build?

Perhaps it's better to choose a pre-existing category/market and try to win
through better execution. I also think success is more likely when building
software as a product instead of a free service.

------
webwright
"Every idea I think of, someone else has done."

Make a list of 10 absolutely fabulous web products that you love. Now draw a
line through all of them that came to market as the first mover. I'll bet you
don't draw a single line.

As long as businesses want more money and want to save more time, there is
always room for b2b products that can demonstrate good ROI.

On the consumer side, there's certainly plenty of room. I just read that Meebo
is reaching 30 million people per month. Twitter is functionally brand new and
kicking ass.

The good news is that most consumer sites transition from a "providing value"
stance (in the early days) to an "extracting value" stance (in the later
days). Later stage consumer sites add more advertising, do more biz dev deals,
and overall muddy up their value prop. Meanwhile, the next round of consumer
startups leap into the fray with a nimble team, the next rev of web
technologies, and a desire to provide value and build something that's better
than the big guys. Compuserve, Prodigy, AOL, Friendster, MySpace, Facebook...
They are/were all on the same road.

------
as
Whenever I think this way I remember the story of Newton's students
complaining that he'd already discovered everything.

------
cosmok
Well it is not easy to penetrate established markets. Even Google will have
trouble drawing away traffic from Naver in South Korea. One thing that I am
experimenting with is porting popular web-apps in the developed world to the
developing world and that has been working well for me so far.

~~~
pchristensen
Me too, that sounds awesome!

------
Tichy
Always is too big a word. Perhaps in 50 years we will all have plugs into our
brains, and we will just KNOW things - we don't have to read stuff anymore, we
are just connected to the information. No more need for web applications, so
no, I would not say that there will always be web applications, although there
might be.

Will there always be new opportunities? Of course. At the moment, there are
also still lots of opportunities for web applications.

~~~
brlewis
The brain plug invention would only increase the need for automated
information processing.

~~~
Tichy
Of course, but I would not call it "Web application" anymore. Perhaps brain
application?

~~~
icky
"Aw, man... BrainBook is down again..."

~~~
eru
As long as Wikipedia is still working. ;)

------
pchristensen
Also, don't just limit your thinking to consumers. Consumers might need the
next huge improvement to consider switching. Something to replace Google would
probably need to give you a well researched and balanced report on your query,
as opposed to just a fairly accurate link to something someone said somewhere.
That's a HUGE leap.

Businesses on the other hand (rational ones anyway) will buy anything that
exceeds a certain ROI, provided it meets certain requirements. There are so
many ways to do this, but they aren't technologically sexy in the way consumer
startups are. For instance, find a way to improve measuring their ROI! Then
they're not guessing, you can point to exactly how much money they'll
make/save. Improve something by 15%, then multiply that savings times the
thousands of corporate users for one buyer. Viola, an upgrade license. Joel
Spolsky is a master of this: see
<http://www.joelonsoftware.com/articles/fog0000000052.html> There will always
be more of a market for things like this.

------
edu
I think that yo have replied yourself, 20 years ago there were not microwave
ovens!

On the XIX century people believed that everything has been invented.

Why the net should be different? It is still on a very early stage, we have
only seen what it can provide. I think that there is plenty of room for new
web startups!

~~~
icky
> I think that yo have replied yourself, 20 years ago there were not microwave
> ovens!

They didn't have microwave ovens in 1987 ?!

"20 years ago" is not a fixed date ;-)

------
wumi
One of the basic problems with this whole discussion, is that most are
thinking like Americans: that everywhere in the world is like where we are
now.

If you go to any lesser-developed countries they are not entrenched in
"google" or "facebook" or anything for that matter because they don't have
computers --but they do have mobile phones.

Everybody's talking about China & India, great. But what about the many
nations on the African Continent? In five to ten years, countries like
Nigeria, Kenya, Ghana, etc. will be the new technological and economical
hotbeds.

------
eusman
Your measures in comparison are totally wrong.

Retail products are totally different than software as service which is free.
Thus the barrier for the user to try new stuff on the internet is zero
comparing to buying something.

Also, the barrier to create automobile technology it's obvious very high and
discouraging. However, enough costly innovation is occuring from the existing
companies. Hubrid cars are becoming reality. A model car from sketch to
manufacturing to get in the roads is at least a 5 year effort. Compare that to
developing an app in 2 months!

~~~
eru
He argued that the mental cost constitute a barrier. A barrier of non-zero
costs.

------
brlewis
Get the kitchen analogy out of your brain. Kitchen needs are different from
information needs. What information do people want to get? What information do
people want to spread? That universe is a lot bigger than your kitchen.

Any time you encounter pain or desire (yours or somebody else's) that's
information-related, you've stumbled upon the opportunity for a web and/or
mobile startup. When you meet that need, people's demand for time online will
grow to encompass what you've given them.

~~~
juanpablo
The Universe IS my kitchen.

~~~
icky
> The Universe IS my kitchen.

As long as the kitchen isn't your Universe... :)

------
zaidf
"I'd rather use 5-10 really useful apps than 40-50 marginally useful ones."

You answered your own question. What this means is that if you are serious
about your start-up, you should shoot for nothing less than being in the 5-10
"really useful" list.

It is not easy by any means and pg has said before that as more and more
start-ups launch, the difference between great ones and average ones would
become more apparent.

------
dyu
The way I see it, there will always be something that takes us (the users) to
the next level. Maybe you have all the racks and detergents, then you discover
the dishwasher. Maybe some day we'll get an oven+fridge all in one. It might
be hard to think about it but there is definitely room for growth. It might
not be growing upwards, it might be sideways, or even abstract it to a
different dimension.

------
blader
I wouldn't worry about doing things that have been done. I would worry about
doing it better than what's already been done.

------
thomasfl
For the last 100 hundred years there has been a constant introduction of new
paper based magazines and newspapers. After the introduction of the web, that
has changed and now the web is where most new media is introduced and will
continue to be introduced.

------
staunch
You've identified a very worthy area to explore that no one to my mind has
solved in any definitive way. The problem of letting users get the value of
having many apps with the overhead equivalent of using very few. It's a damn
hard problem and there's a ton of value in solving it. Have at it!

------
DanielBMarkham
I tend to agree that while people want a lot of things in the world, we're
just not wired to handle, say, interacting with 50 web applications for our
needs. I think if you really studied it, people probably have 5-15 web apps
they use on a regular basis, with maybe another 5-15 they use now-and-then.
That's it.

I don't think this number is due to a lack of web applications to fit people's
needs, but limitations of the wetware itself. This implies that there is a
biological driver for web application consolidation. It also implies that
whatever your app, you're already competing for "web app" time in the user's
mind with some other site, even if it is completely unrelated. Futhermore, it
implies that great non-consolidated apps actually cause some harm, assuming
they take people away from other sites that are providing value to them.

Pure speculation on my part, of course. I just know that while I've seen a
boatload of crazy-cool web applications, the number I use is fairly static --
I just shuffle some in and out every now and then.

Great question!

------
tlrobinson
"Always", no. For the foreseeable future, yes.

------
curi
Web applications, including both code and English sentences, have unlimited
capability to express knowledge. They have universality.

There is no limit to our use for knowledge. No point at which things could
never be improved again. No end to progress.

