Advice for start-ups: Don't solve cheap problems

Brightcove's Jeremy Allaire's advice for start-ups: Tech problems that can be solved cheaply aren't defensible businesses.

Boston -- I'm at the MIT Enterprise Forum's Brave New Web event today, and later I'll be moderating a panel about starting Web 2.0 businesses. But this morning we're all listening to Brightcove CEO (and local hero) Jeremy Allaire talk about how to start a technology business today.

He said that unlike a lot of current Web 2.0 businesses, he started a business that "we knew would require a lot of capital." He raised $6M early on, far more than most current Web start-ups have in the bank when they get going.

Jeremy has a history of success, so raising money was easier for him than it would be for a college student with a clever idea and Ruby on Rails chops. But his point is important: If you can start a business on your Visa card, somebody else can too, and they can compete with you directly and immediately. There's a lot to be said for solving expensive problems. "It's radically easier" to build products today, but that is not necessarily to the benefit of the entrepreneur who wants to build a business. Money is a natural barrier to entry, and if you build a company that doesn't need much of it, in some ways you're just making life difficult for yourself.

On the other hand: Digg launched at a cost of $2,000.

A detailed blog post on Jeremy's talk is on CenterNetworks.

Tags:
Software
About the author

Rafe Needleman reviews mobile apps and products for fun, and picks startups apart when he gets bored. He has evaluated thousands of new companies, most of which have since gone out of business.

 

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