Where are the big ideas?
Right now, a small team with no money can start a real online business. If the founders are very lucky, they generate revenue and begin to grow. If they are exceptionally fortunate, they get sold to Google for $1.65 billion. But most of the start-ups we cover on Webware.com will languish for a while in obscurity and eventually die. The problems they are solving are not big enough.
This is one of the reasons that venture capitalists are having a hard time. Many are are sitting on funds of hundreds of millions of dollars, looking for places to put large chunks of that money. But you can't put more than a few hundred thousand into a typical Web start-up without drowning it in funds it can't use. Over-funding a company can kill it, just as surely as starving it of resources.
This is a problem, because if a business can be funded by credit card debt, a competitor can come in and start the same business, and undercut whatever profit margin the first business is relying on to keep the Ramen cupboard stocked. Big businesses have defensive walls around them, and often these walls are built with stacks of money.
These are the businesses that I really like--big plays that take big money and major industry expertise to start. If they work, they change the landscape.
The bigger the If, the better. And these are businesses that the VCs are salivating for. While it's possible for Web entrepreneurs to build nice earners funded only by debt, the efficient start-up economy is pushing the big VC money into energy, transportation, and health care.
But there are interesting Web ideas that require big funding. For example: Earth Class Mail (review). This company takes postal mail, digitizes it, and sends it to customers electronically. For it to work at a large scale, it requires industrial scanners, sorting equipment, warehouses for storage, and so on. You can't start this company in your basement.
See also: RevolutionMoney. Steve Case (co-founder of AOL) is creating a new credit card. Competing with Visa can't be done cheaply.
Or: Powerset (preview). This company is trying to revolutionize Internet search by applying semantic analysis to the same billions of pages that Google has done only lightweight link analysis on. Powerset's method is computationally intense and very expensive.
Are the above businesses great ideas? They might be, but that's not the point. The point is that they are big bets with big buy-ins. These companies will have limited business competition simply because it costs more to play in their leagues. It's companies like this that attract the big venture money--money that's desperately looking for a place to work.
It's great that so much can be done today for so little. But that shouldn't stop entrepreneurs from also going for the really big scores. To win big, bet big.
Rafe Needleman writes about start-ups, new technologies, and Web 2.0 products, as editor of CNET's Webware. E-mail Rafe. 
My goal is to make my website as one stop information on career, family, education, technology etc. Http://web500.us
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Your site seems to try and emulate something like google.com/ig or the Yahoo/MSN equivalents - perhaps even MySpace or Facebook, except without the personalization.
Your site is apparently aimed at the English-speaking market, yet its full of grammatical errors and spelling mistakes. More than anything else, it doesn't have anything useful on the site itself. It's a giant aggregater and/or link farm, linking to big sites and little more. I might as well just refer to my own bookmarks.
To be honest, sites like this have been done to death.
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I'm not saying I have anything better, really, but I have 7 projects that I am working on, which I hope *do* produce something useful; and yes, I am actively going after VC capital for 3 of them.
I have to agree. Solving the big problems today does take a lot of cash. I think it's partly because the solutions have to cover so much figurative ground, or require the construction of an expensive infrastructure.
One example might be municipal wireless Internet. The ROI on muni WiFi isn't immediately obvious, and may be some time coming. It's not easy to get people to invest in long-term projects. Deep-pocketed VCs and companies like Google are going to be the ones to fund new, vital programs like this.
Off the top of my head, with respect to transportation, the obvious need is for a light, 100+ mpg single or two seat commuter car than I can drive to work in any weather: something more than a motor scooter, but less than a car, a microcar or enclosed trike, priced to sell for around $8,000.
Auto X-prize contender, for sure. A Carver for the price of a Kia?
Ideally it would handle like a Lotus 7.
The real challenge is marketing: convincing Joe or Jane Suburb to park the SUV during the week and drive the commuter (my discussion group calls it a "cabin scooter") to work.
Miles-long coils imbedded in roadways used to power electric vehicles, extending range and reducing the size of the battery pack. A pickup coil on the bottom of the vehicle would pick up energy from the imbedded roadway coils. Wireless energy transfers already exist in limited applications; the challenge is not so much technical, but in devising a method of measuring the amount of energy used, identifying and billing the user.
Huge investment required for R&D, enormous potential payoff.
- by gunygoogoo July 21, 2008 5:26 PM PDT
- Great Post. As a startup website with no funding that is done by 2 people in their spare-time, we feel strongly that our site, http://www.thesuggestr.com , offers something really unique. We use collaborative filtering to predict how well users will like a restaurant, bar or hotel before they've been there. It's amazing how hard it is to compete against funded sites even when you have a unique spin on things.
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