Internet start-ups: today vs. yesterday

by Fredrik Savin on 28/11/2007 · 0 comments

I found a great magazine last week called Entrepreneur. It is an American magazine but can be found at selected bookshops such as Borders in London. The magazine offers some great information and interesting reading on sales and marketing, management, technology and business strategy.

The November issue features an interview with Guy Kawasaki, known as the former chief evangelist for Apple. He has recently launched a social media site called Truemors and shares his start-up experience so far.

What I found most interesting with the interview was his comparison between the old internet start-up and his way of doing it – which I think applies to a lot of new internet based businesses today that does not require a significant amount of funding from VCs to get functioning.

For example, Guy launched his site without a proper business plan, with less than $13,000 in start-up funds, outsourced the development, worked from home and then hosted the site at an ISP rather than having his own servers to minimise costs further.

The “old-way” of doing it would according to Guy have involved frequent pitching to VCs to raise the funds required (some $1m over 6 months period), having 3-4 people in-house to carry out the development of the site for one year and to maintain 2-3 servers and have an IT guy to run them for a total cost of $100,000 per year.

Sure, there are still many technology related businesses that take millions to start, but there are many ideas that can be done using personal savings or credit cards by using great open-source tools such as WordPress to minimise costs. The model that Guy Kawasaki illustrated in the interview proves this.

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