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The basic question is whether what you need to get to a competitive level today is more labor (or better labor) and less capital than it was then. It seems to me that the answer almost has to be "yes"; there was no iPhone, no Android, no AJAX, no Comet, no Django, no memcached, no Varnish, almost no CSS, JavaScript didn't work, and Perl was your only option on the server side. Nowadays, knowledge gives you a much bigger slice of what you need to compete.

Also, lots of web startups then couldn't get by on a shared-hosting account or a used Sparc 20 in a colo, because it cost so much more to render a dynamic web page or to store data. And lots of people were paying Solaris licenses, Oracle licenses (MySQL didn't exist, and Postgres was still pretty flaky and slow), Netscape server licenses, and didn't F5 start selling BigIPs for load-balancing about that time? And your domain name cost $100 a year.

Well, both MySQL and PHP appeared in 1995. My got my first paid web development job in 1999 and we already had MySQL and PHP in production.

My memory of 1998 is still pretty fuzzy, but I thought MySQL was still pretty new at the time. (And of course it wasn't free software, but you didn't have to pay for it.)

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