Moving beyond the fuss over RSS Investors, two prominent internet economy figures shed a liitle light this week on a shift in investment models.
Fred Wilson, whose high-flying Flatiron Partners invested in our alma mater Inside.com: “You have to believe in what you invest in and work hard to get others to believe in it too. But you also need to be bring a dose of reality to everything you work on. Entrepreneurs are also unbridled enthusiasts and one of the main roles for an investor is to pull on the reins from time to time.” More on Wilson’s Union Square Ventures and its Web 2.0 investment thesis at Business 2.0.
Across the country in Palo Alto, entrepreneur Joe Kraus, formerly of Excite and now beta-testong JotSpot, explains his current shoestring approach: “There’s never been a better time to be an entrepreneur because it’s never been cheaper to be one. Here’s one example. Excite.com took $3,000,000 to get from idea to launch. JotSpot took $100,000.” (When I visited JotSpot’s office, trust me, it was bare bones.) His four top reasons for the difference: Hardware is 100x cheaper. Free infrastructure software. Access to global labor markets. Search engine marketing.
Adds Kraus: “Ten years ago to reach the market, we had to do expensive distribution deals. We advertised on television and radio and print. We spent a crap-load of money…It’s an obvious statement to say that search engine marketing changes everything.”
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