The scene is a Starbucks in Downtown Toronto, Canada. I am sure similar scenes are happening in London, Amsterdam, San Francisco or Boston. Four young men and women are doing a five-minute web 2.0 idea pitch from a Macbook to two venture capitalists. One of them asked how much it had burnt so far for the prototype. The reply was "Five". I think the VCs thought they meant $50,000 until another question revealed it was $5,000, and the total funds being sought a mere $350,000 – definitely pocket change for the VCs who think in millions.
This story is exceptional something that shows the lean and mean face of the new startup boom, and thanks to low cost infrastructures, cheap and powerful bandwidth and the ease with which websites can be set up - it costs 1/3 the price it costs to set up a site than in 2000. This is not another bubble. This is the real thing. These days the creative class of young men and women are working on something that is actually a working part of a larger shift - not just a piece of napkin with an idea scrawled on it.
The new boom is turbo-charged by a new generation of entrepreneurs who are investing money made from the previous boom. The trend for low-cost startups is generating a new class of venture capitalists prepared to invest small-ish sums of money, unlike big capitalists which prefer to spend millions on one startup. Many are small millionaires who made their money working at the Google of the world and are now ready to play for themselves. There is no way for organizations (even Google) to retain these people as they beleive they owe it to themselves. Hundreds of the 2,321 Googlers (hired before their IPO) in Aug 2004 have passed their fourth anniversary. Now they are free to cash in the final portions of their pre-IPO options, collectively worth about $2.6 billion before taxes.
"There's the notion that it's not as much fun and that you don't have to stay there if you don't want to," said Doug Edwards, a senior marketing guy who resigned in 2005, shortly after his boss left. "You start looking for excuses, and they are not hard to find."
This is the new class of entrepreneurs who are not motivated by greed or lavish lifestyles or big egos. They simply do what they're supposed to do. This is a new eco-system that powered the web 2.0 wave into the next stage.
I am sharing a presentation here for those who are ready to take this path or exploring the idea. You can start a web 2.0 company for $5,000. Some ideas may still require $5 million. But there is never a better chance than now. May be it’s time for me to join the game. Oops, I need to start writing my "next-big-idea" business plan now.
