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The future of web startups.
Paul Graham of Y Combinator has expanded on a keynote presentation to provide a detailed view of the future of web startups:
There's a pattern that we see over and over in technology. Initially there's some kind of device that's very expensive and custom made in small quantities. Then someone figures out a way to make them much more cheaply, and orders of magnitude more get built. And that allows them to be used in ways that would have been inconceivable before. [...] Now as well as being produced by startups, this pattern is happening to startups. It's so cheap to start web startups that orders of magnitudes more will be started. And if the pattern holds true, that should cause dramatic changes.
It costs virtually nothing to start a startup these days.And Rick Segal has already mentioned how easy it is for a university professor and a couple of bright students to throw something cool together for next to nothing - and beat the big guys to the punch.
Paul breaks it down into ten factors:
| Lots of Startups | When starting a startup was expensive, you had to get the permission of investors to do it. Now the only threshold you have to get over is whether you have the courage to. |
| Standardization | We often tell startups to release a minimal version one as soon as possible, then let the needs of their users tell them what to do next. In essense, let the market design the product. We've been doing the same thing ourselves. We think of the techniques we're developing for dealing with large numbers of startups as like software. Sometimes it literally is software, like Hacker News and our application rating system. |
| New Attitude to Acquisition | Another thing I see starting to get standardized is acquisitions. As the volume of startups increases, big companies will start to develop standardized procedures for acquisitions, so they're little more work than hiring someone. |
| Riskier Strategies are Possible | If startups are easy to start, this conflict goes away, because founders can start them younger, when it's rational to take more risk, and can start more startups total in their careers. When founders can do lots of startups, they can start to look at the world in the same portfolio-optimizing way as investors. And that means the overall amount of wealth created can be greater, because strategies can be riskier. |
| Younger, Nerdier Founders | If startups become a cheap commodity, more people will be able to have them, just as more people could have computers once microprocessors made them cheap. And in particular, younger and more technical founders will be able to start startups than could before. |
| Startup Hubs Will Persist | It's true that you can now start a startup anywhere. But you have to do more with a startup than just start it. You have to make it succeed. And that is more likely to happen in a startup hub. |
| Better Judgement Needed | If the number of startups increases dramatically, then the people whose job is to judge startups are going to have to get better at it. I'm thinking particularly of investors and acquirers. We now get on the order of 1000 applications a year. What are we going to do if we get 10,000? |
| College Will Change | If the best hackers all start their own companies after college instead of getting jobs, that will change what happens in college. Most of these changes will be for the better. I think the experience of college is warped in a bad way by the expectation that afterward you'll be judged by potential employers. |
| Lots of Competitors | If it gets easier to start a startup, then it's not just easier for you, but for competitors too. That doesn't erase the advantage of increased cheapness, however. You're not all playing a zero-sum game. There's not some fixed number of startups that can succeed, regardless of how many are started. |
| Faster Advances | If people get right to work implementing ideas instead of sitting on them, technology will evolve faster. |
Cross posted at the Communitech Blog.
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