stay-out-of-the-water-there's-sharks feeling circa 1998

What a great line from Caterina who says think twice before starting a company right now.

I think much of what she says is true but the devil is always in the details.  If you have a truly great idea, have incredible passion for it, and you've got a wide enough opening to run through, then you might as well go for it.

Comments

[Erik Schwartz]

It's always bad time to start a "me too" company. That seems to be most of what is being built these days. But sometimes you have an idea that you have to chase after, something that can change the way something is done in a fundamental way. If you have that passion then timing is moot because you have to do it.

Now the "me too's" do have some impact on the others. Her point about hiring is particularly well taken. Her point about others getting funded is moot if you're not a "me too". You certainly can operate in obscurity (if you choose to). I also agree that the social scene in the valley causes more damage than good. But if you're focused on impressing the customer (instead of Arrington, Malik and the Web 2.0 community) you'll be ok.

Now if you're building a product FOR the Web 2.0 community you're in trouble. The market is way too small and way too crowded. You'll have too much early success (which will screw with your perspective) and never break out of the 2.0 crowd niche. There's way more smoke than heat in this conflagration.

[maniac]

Fred,

Love your blog. I have a question that needs your honest answer. I agree with Caterina that too many me-too companies seem to be getting funded circa 1998. What is the main reason for this?

I heard your podcast with heather green where you point to entreprenuers as the main reason. I agree that it starts with entrepreneurs, but it still doesn't answer why VCs are funding so many copycats with no real differentiation (video space is a good example). You will always have many entreprenuers coming up with the same ideas or copying each other whether it was 1998, 2002 or 2006. But why are some many me-too ideas getting funded again?

Is it demand vs supply (large funds vs not enough unique companies coming to the VCs)? or is it VC herd mentality all over again where each firm wants to have a portfolio company in every space?

[Rodger]

Great point Erik. People should look to the utter failure that is Edgeio to see that all the Web 2.0 hype in the world means nothing if your product is crap.