Start-up as comodity, start-up as nine-to-five

Fred Wilson points to Paul Graham's essay on the falling barriers to start-ups and concludes that, yes, start-ups are becoming a commodity and that this will make it harder for VCs to choose which of 10,000 possible ideas to invest in.

For my money, the lower barrier to entry won't create a problem for VCs because fewer and fewer of these start-ups are going to need the VC stage. A number of entrepreneurs I've spoken to in the past year have seemed perfectly happy to singlehandedly set up a website that addresses a market or an interest that appeals to them personally; watch it get to the point where it generates anything from a nice-to-have supplemental income to a good living wage that lets them quit the day job; and then leave it at that. VCs think in terms of exits. Lots of people - the sort of people who are now marginally able to set up their own web companies - don't think like that at all.

If you don't want the hassle of taking on employees and trying to increase year-on-year returns for investors but do want a job in a field you know and like, working for yourself, the barriers to entry are low enough to make that attainable. VCs aren't going to face the difficulty of filtering 10,000 possible investments. Instead, they're going to face the difficulty of seeing many of the founders of the next wave of start-ups simply ignoring them. It just doesn't cost VC-scale capital for one guy (plus perhaps a handful of mechanical turks) to create a website that makes enough money for that one guy to live on.

Update: since this post was picked up by Y-combinator, the conversation about it is going on there, rather than here, should you wish to join in.

Comments

[Paul Sweeney]

Saw him at FOWA and must say there is a lot of enthusiasm, but lots of holes. Yes, there are clusters of innovation, yes, education systems are largely structured to reflect the needs of the industrial revolution, but his analysis on each of these is "wide and shallow". Nothing against the guy in person, I'm sure he is a lovely guy, but I wouldn't go quoting him any time soon.