Bill Burnham made an interesting observation at the end of last year ..he was discussing the change in the investment climate for Consumer Internet companies (typically, companies who would like to be the next Facebook or Twitter, and who serve the same set of consumers). Startup costs for such companies are low, and it is possible for them to quickly get to a point where they have rapid traction (defined as millions of users) - if they don't get traction the VCs aren't interested, if they do there's a rush to invest as much money as the company will take, since the VCs typically have big funds.

Money to get to the point of achieving traction is coming from early stage seed funds, and from angels. " VCs increasingly perceive the market success of Consumer Startups to be almost a Random Walk."

Cunning Systems is interested in helping investors who would like to reduce their investment risk by taking technical advice about the feasibility of the proposals which they are considering. When developing any business idea there are trade offs to be made between costs, of either capital or labor, and availability. Ideas which use Internet infrastructure have great capacity to be developed in small steps, with the possibility of more or less public testing and validation at each step. The systems architecture and the choice of platform affect the relationship between gaining traction and burning through money.

For example, we keep a close eye on the capabilities of the various hosting and cloud services providers - given requirements, we can advise on likely performance and costs when using the growing list of Amazon Web Services, the Rackspace Cloud, or Linode. Not all businesses can afford a success disaster (so many people want to see what is on offer that the site falls over) - the Twitter Fail Whale syndrome.

Paying for advice on this topic could save several days of investigation.

References:

http://billburnham.blogs.com/burnhamsbeat/2009/12/the-great-abdication-c...

Cunning Systems evaluates product and service ideas in computing and communications. If you would like to discuss an idea, contact us at info@cunningsystems.com