Saturday, November 05, 2005
Retooling the entrepreneur
Citing the book Flow: The Psychology of Optimal Experience, by academic Mihaly Csikszentmihalyi, Kraus suggests that people performing at a high level -- in sports, the arts, and other endeavors -- attain Csikszentmihalyi’s “flow state”: Time slows down, concentration comes effortlessly, distraction melts away. “I think the flow state is addictive,” Kraus says. “And the only way I know to get there is through being in a startup.”
1 Hardware has become insanely cheap. As Kraus recalls, Excite ran on Sun Microsystems (SUNW) servers that cost as much as $60,000 a pop. “Today JotSpot runs on commodity hardware -- Intel (INTC) chips inside boxes with no corporate logo, made by companies no one’s heard of.” And instead of $60,000, those anonymous boxes cost $1,000 each.
2 Infrastructure software is even cheaper. Excite paid a vast amount of money to companies such as Oracle (ORCL) just to license the software needed to build its service. “We must have spent $250,000 before we’d written a line of code,” Kraus says. But now open-source -- Apache, Linux, MySQL, Tomcat, and so on -- has reduced that cost to zero.
3 The labor market has gone global. In the 1990s, only monster companies like IBM (IBM) had tapped into offshoring. Today JotSpot, using Elance and RentACoder, has programmers on the payroll in Germany, India, Romania, and Russia -- at a fraction of what they’d cost in the Valley.
4 Search has rewritten the rules of marketing. Before Google, advertising on the Web was all about big marketers paying big bucks to reach as many eyeballs as possible. “But now,” Kraus says, “pay-per-click advertising, placed in an automated fashion, with no money spent on creative, lets me reach small or medium-size markets incredibly efficiently.”
1 Hardware has become insanely cheap. As Kraus recalls, Excite ran on Sun Microsystems (SUNW) servers that cost as much as $60,000 a pop. “Today JotSpot runs on commodity hardware -- Intel (INTC) chips inside boxes with no corporate logo, made by companies no one’s heard of.” And instead of $60,000, those anonymous boxes cost $1,000 each.
2 Infrastructure software is even cheaper. Excite paid a vast amount of money to companies such as Oracle (ORCL) just to license the software needed to build its service. “We must have spent $250,000 before we’d written a line of code,” Kraus says. But now open-source -- Apache, Linux, MySQL, Tomcat, and so on -- has reduced that cost to zero.
3 The labor market has gone global. In the 1990s, only monster companies like IBM (IBM) had tapped into offshoring. Today JotSpot, using Elance and RentACoder, has programmers on the payroll in Germany, India, Romania, and Russia -- at a fraction of what they’d cost in the Valley.
4 Search has rewritten the rules of marketing. Before Google, advertising on the Web was all about big marketers paying big bucks to reach as many eyeballs as possible. “But now,” Kraus says, “pay-per-click advertising, placed in an automated fashion, with no money spent on creative, lets me reach small or medium-size markets incredibly efficiently.”
