Web 2.0 Entrepreneur

How much money do you need to start a Web 2.0 business?

• Posted by Tengku Zahasman on June 8th, 2007 filed in Web App Development, Thoughts, Entrepreneurship, Financing/funding


• (2,286 Views)

There’s actually no definitive answer to how much capital you need to start a Web 2.0 business. How much you need may depend on so many factors that it can sometimes be a thousand bucks, 5 thousand bucks, 10 thousand bucks, 20 thousand bucks, or down to only a few hundred bucks. Those factors include what type of application you’re building, your own skillset, existing resources, whether you need staffs (if you need then how many of them?), whether you need an office, outsourcing, additional machines, servers and whatnot. Even though I can’t really estimate how much you need to start a Web 2.0 business, I can roughly say that if you spend more than 10 thousand bucks just to develop and launch your web application, then I think you’re overspending. And you better think of how you can mitigate your spending fast because touching that 10 thousand threshold shows that you’re spending too much on unnecessary things. Spending too much money before you even start making money is bad because that means it’ll take longer for you to be in profit. Not only that, if things doesn’t turn out the way you planned it to be, you may even go bankrupt for spending more than you need on the beginning phase.

Sometimes I find it rather disturbing when some of the new Internet startups claimed to have spent over millions of bucks just to get their Web 2.0 ideas developed and launched. That is totally unacceptable in my opinion. Even the overall cost of development, launching, marketing and maintaining of the web app should not take up to millions or even hundreds of thousands of dollars a year. Why? Because we’re on the INTERNET business. And when I say INTERNET that means things that used to be 10,000 bucks in real life can be absolutely FREE in the cyber world. Consider some of things below:

- Development tools are free (Komodo Edit, PHP+Apache+MySQL, Linux?)
- Open source scripts (which are free) can be leveraged for creating your app’s blog, forum or support center.
- Communication is free via E-mail, Skype, IRC or Instant messaging.
- Outsourcing is cheap.
- Existing programming components can be reused. Think about rapid PHP frameworks and Ajax frameworks
- Google is your library for doing researches
- Advertising can be free by leveraging search engine marketings, social networks, blog marketings, forum marketings, the good-ol “word-of-mouth” marketing. Or even if you purchase advertisings on certain websites, Google Adwords, Advertlets, or other PPCs, it won’t take up so much to kickstart the hype.

There you go. I just can’t help but wonder what have some of these companies spent on that took up millions of dollars for their web application business. Internet business is meant to be cheap but highly profitable. Let’s just keep it that way… Truemors did it with 12 thousand bucks overall. They could’ve spent way less…