Randy Holloway Unfiltered

The challenge in scaling a web start-up

Posted by: Randy Holloway on: October 6, 2007

Fred Wilson has some interesting comments on the commoditization of web start-ups. From the vantage point of a VC, this creates some interesting problems. How do you filter through the “noise” and find great companies to invest in? Since the bar is so low for creating a web start-up, many start-ups are moving without VC support with no plans to take on VC money.

This leads to a parallel question for those considering a web start-up. With so many web start-ups competing for user attention, how do you scale a new start-up? Can the “attention-based” business models that are prevalent today continue to support so many new web start-ups? For the folks I know, the interest in doing new web start-ups is starting to wane dramatically. Much of this is really driven by the goals of the entrepreneur. If your interest is to create a small company that is a “feature” or specific function, then your options for being successful are to flip that company or to form a new strategy (or strategies) as you mature your initial service. For other entrepreneurs that see a demand for a good or service with long-term viability, they may be more inclined to view the web as a channel rather than the core of their business.

What defines a “web start-up” in an age where almost every new business needs to leverage the web to be successful? The answer isn’t always clear. But for those start-ups whose core offering is a web-based application or service, the challenge in gaining user attention and scaling those businesses is becoming greater all the time. And as Fred Wilson points out, that isn’t likely to get any easier for start-ups anytime soon.

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