It doesn't cost much to run a website, but it can still cost a lot to grow a business. Look at all the companies in the local space. Their limiting factor is ho

It doesn't cost much to run a website, but it can still cost a lot to grow a business. Look at all the companies in the local space. Their limiting factor is how many sales reps they can hire; the company that raises $10 million beats the company that raises $1 million. The same holds true for long-tail content generation. If you want to build a better Demand Media, you need to spend like they spend. As transaction costs in general decline, it will make less and less sense to rely on friends and family, the way I don't rely on friends and family to make my shoes, even though shoes are (adjusted for inflation), much cheaper than they have been in the past. Your "Two types of capital" division is arbitrary, both because you're turning a continuum into a binary decision, and because that's just one way to divide things. I could divide capital-raising businesses into those with limited scale and those with unlimited scale. There are more and more businesses with unlimited scale, and the optimal way to run such a business is to maximize risk, and to use someone else's capital to place bigger bets.