One of the benefits of having a little prominence in the industry and a blog like this one is that you get pitched. I don't mean every once in a while you get an e-mail, I mean full-on 15-30 e-mails a day and voicemail when you don't respond. The ones I'm apparently soliciting with this blog are cloud flavored, of course. Most are from startups that run the gamut from green tech to medical to "Web 3.0!!!" Why share this information? Last weekend I had a conversation with a pair of intrepid salesman who asked me if cloud computing would kill venture capitalism. What a question!
Depending on who you talk to, venture capitalists wouldn't really be missed. Love 'em or hate 'em, they've got their place and plenty of trophies in their case. Most startups are too small with too limited an operating history to secure a bank loan or come anywhere near completing a debt offering. Enter the VCs -- very attractive for startups in this situation. VCs are willing to trade the high risk of dealing with new entrepreneurs for substantial ownership in new ventures. Let's assume our brave business adventurers are using the money from the "evil" VCs to afford the most expensive parts of their new ventures: payroll and infrastructure. In the current economy, many are willing to outsource development in lieu of hiring full-time employees. I think it's reasonable to consider infrastructure as the largest expense for a fledgling company with a small payroll.
[ You don't need to run a Web startup to put everything in the cloud. See how one young tech company pushed cloud computing to the max. ]
We've talked before about the economics of the cloud. At conferences, I've often asserted that regardless of philosophy (cloud vs. direct purchase, in this case), infrastructure costs always even out as companies scale. But when you're starting out, you're not necessarily concerned with scalability; you're just trying to scrape together enough change to buy a soda and a bag of pretzels from the vending machine. That's exactly what my two friends and I started out discussing: how startups are always either struggling or out of business. Now, back to our examination of cloud computing's potential impact on venture capitalism.