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I get what your saying, but you're looking at it from a purely economic point of view. Actually, when I started reading your post I thought to myself, "seems li

by coryl 17y ago

I get what your saying, but you're looking at it from a purely economic point of view. Actually, when I started reading your post I thought to myself, "seems like this guy just finished his chapter on Perfect Competition". Even though there are benefits and differences to high capital vs low capital requirement markets, you have to look at the human aspect of it. There are failures on both sides, and probably a higher failure rate for web startups. But the main difference is that regular people have the opportunity to actually strike it rich. High capital requirements tend to mean you need social connections to people with money. In society, this means political, industry, venture capital, and business connections. If you're the wrong race, sex, religion, or just don't fit the profile of someone who tends to be able to have access to money, you won't get it. Low capital requirement markets means anyone can play; everything is more competitive, all products are higher quality. The discriminator is the market, and thats fair for all. If you take these into consideration, than you see low capital requirement markets are in fact a blessing, regardless of the economic returns of high capital markets. They are two completely different beasts.

apsec112 17y ago
"Actually, when I started reading your post I thought to myself, "seems like this guy just finished his chapter on Perfect Competition"." I will admit to being an economics student, but I've known about this principle for years, I didn't just learn about it yesterday. I made this post because five people on a forum I frequent were all talking about how great it was for them that startups required very little capital. "But the main difference is that regular people have the opportunity to actually strike it rich." Regular people have always had the opportunity to strike it rich, and for most of the US's history, it was easier than it is today. The idea that technology startups are some sort of fundamental shift in US social mobility dynamics is a harmful, dangerous lie. http://en.wikipedia.org/wiki/Andrew_Carnegie http://en.wikipedia.org/wiki/Andrew_Carnegie http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/dp/0671015206 http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/d... "High capital requirements tend to mean you need social connections to people with money." You need those connections anyway. Or, at least, you need to be part of the upper third of society. It's not an accident that Bill Gates's father was a name partner in the largest law firm in Seattle. Why do you think Y Combinator has so many applicants? It's because they provide the connections people need, and the applicants know that. "than you see low capital requirement markets are in fact a blessing," Low capital requirements are good for the customer, and I explicitly stated that fact. What I was saying is: they aren't necessarily good for the entrepreneur.

by coryl 17y ago

apsec112 17y ago

"Actually, when I started reading your post I thought to myself, "seems like this guy just finished his chapter on Perfect Competition"." I will admit to being an economics student, but I've known about this principle for years, I didn't just learn about it yesterday. I made this post because five people on a forum I frequent were all talking about how great it was for them that startups required very little capital. "But the main difference is that regular people have the opportunity to actually strike it rich." Regular people have always had the opportunity to strike it rich, and for most of the US's history, it was easier than it is today. The idea that technology startups are some sort of fundamental shift in US social mobility dynamics is a harmful, dangerous lie. http://en.wikipedia.org/wiki/Andrew_Carnegie http://en.wikipedia.org/wiki/Andrew_Carnegie http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/dp/0671015206 http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/d... "High capital requirements tend to mean you need social connections to people with money." You need those connections anyway. Or, at least, you need to be part of the upper third of society. It's not an accident that Bill Gates's father was a name partner in the largest law firm in Seattle. Why do you think Y Combinator has so many applicants? It's because they provide the connections people need, and the applicants know that. "than you see low capital requirement markets are in fact a blessing," Low capital requirements are good for the customer, and I explicitly stated that fact. What I was saying is: they aren't necessarily good for the entrepreneur.