Joe Kraus posts his thoughts on why this is a great time to start a new company:
Excite.com took $3,000,000 to get from idea to launch. JotSpot took $100,000.
Why on earth is there a 30X difference? Theres probably a lot of reasons, but here are my top four. Im interested in hearing about what other people think are factors as well.
Hardware is 100X cheaper
In the 10 years between Excite and JotSpot, hardware has literally become 100X cheaper. Its two factors Moores law and the rise of Linux as an operating system designed to run on generic hardware. Back in the Excite days, we had to buy proprietary Sun hardware and Sun hard drive arrays. Believe me, none of it was cheap.
Today, we buy generic Intel boxes provided by one of a million different suppliers.
Infrastructure software is free
Back in 1993 we had to buy and continue to pay for maintenance on everything we needed just to build our service — operating systems, compilers, web servers, application servers, databases. You name it. If it was infrastructure, we paid for it. And, not only was it costly, the need to negotiate licenses took time and energy. I remember having a deadline at Excite that required me to buy a Sun compiler through their Japanese office because it was the only office open at the time (probably midnight) and we needed that compiler NOW.
Compare that to today. Free, open source infrastructure is the norm. Get it anytime and anywhere. At JotSpot, and startups everywhere you see Linux, Tomcat, Apache, MySQL, etc. No license cost, no maintenance.
Access to Global Labor Markets
Startups today have unprecedented access to global labor markets. Back in 1993, IBM had access to technical people in India, but little Excite.com did not. Today, with rent-a-coder, elance.com and just plain email, we have access to a world-wide talent pool of experts on a temporary or permanent basis.
SEM changes everything
Ten years ago to reach the market, we had to do expensive distribution deals. We advertised on television and radio and print. We spent a crap-load of money. Theres an old adage in television advertising I know half my money is wasted. Trouble is, I dont know what half. That was us.
Its an obvious statement to say that search engine marketing changes everything. But the real revolution is the ability to affordably reach small markets. You can know what works and what doesnt. And, search not only allows niche marketing, its global popularity allows mass marketing as well (if you can buy enough keywords).
Rather than me copying the whole post you should just go read it.