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.

 

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