The day of the technology start-ups is dead. Tech entrepreneurs were the wave in the 1990’s, but are no longer being found. If you didn’t make your fortune in the dot.com frenzy you are out of luck. Or are you?
Orn Malik recently authored an article (December 2003 Business 2.0 pulled from Gigaom.com) that claims that tech entrepreneurs are alive and well, thank you very much. How are they doing it? By taking advantage of the very commoditization of chips and other hardware that has pushed prices of these goods to rock-bottom prices. Such bargain basement hardware has allowed these new entrepreneurs to create exciting new products with off the shelf components that are running circles around products produced by the giant companies in the technology world, even in areas that they have been dominant like data storage.
Why aren?t we hearing about this trend? It is precisely because of the nature of this new wave of start-ups. Since they buy existing product off the shelf for low prices, they need relatively little start-up money. Technology start-ups have moved from the world of venture capital and IPO?s to the land of bootstrapping. Malik tells of one tech company start-up that needed only $40,000 to get up and running. George Gendron calls bootstrapping entrepreneurship in its purest form. “It’s the transformation of human capital into financial capital, sweat equity into bankable equity. That’s what we mean when we talk about ‘creating value.'”
The strategy of these companies appears to be one that is based on very short product life cycles. The large companies can move very aggressively against these small companies, so they focus on continuously looking for new opportunities in the market.
The fear that Microsoft, Dell and so forth would eventually create monopolies that will lead to higher prices over time may not be here quite yet. These entrepreneurs are keeping the technology market competitive, innovative and nimble. Free market capitalism seems to be alive and well in the tech sector after all. In an industry that most of us had written off, “entrepreneurship in its purest form” is flurishing.
Thanks to Bill Hobbs for sending this article to me.