Yes, but the question the essay is setting out to answer is: what happens when the VCs recover?
I think one of the last points I need to buy into the essay is that it isn't just the starting up costs which have gone down. The commoditization of computing in the cloud means that as long as you're profitable on a per-user basis the cost of scaling is also way down (although the amortized cost might be up).
The other danger is not being able to hire enough of the right people, but the number of people necessary does seem to be going down as the tools get better. The startup I'm working for has just decided to stop looking for funding and do our hiring more slowly over the next year, so I suppose we're a part of that trend.
Yes, but the question the essay is setting out to answer is: what happens when the VCs recover?
I've been thinking about this a lot recently. I think that the answer is, that VC's aren't going to be able to fund web based software startups as much. We just don't need the money.
Who does need the money? Green Tech, Biotech, hardware/embeded, enterprise software. Those companies can use the capital and might actually be willing to jump through the hoops necessary to IPO. VC's only really get paid off when companies IPO or get acquired for huge sums of money.
I think that this is going to be a water shed in Silicon Valley culture. One of the reasons that there are so many software engineers in the Valley, is because there have been a lot of VC funded startups and jobs since the first bubble in the 90's.
VC money is going to start chasing different kinds of companies, which means more green tech, biotech and hardware/embeded, enterprise software jobs. That means more electrical, genetic and chemical engineers and less software engineers in the area.
This in my mind is the interesting question ... does cloud computing provide the means for scaling. No doubt a web business can achieve profitability on much less than before, but the question of whether VC is needed is in scaling that business to something other than a small profit maker and/or an exit to a larger company.
I think one of the last points I need to buy into the essay is that it isn't just the starting up costs which have gone down. The commoditization of computing in the cloud means that as long as you're profitable on a per-user basis the cost of scaling is also way down (although the amortized cost might be up).
The other danger is not being able to hire enough of the right people, but the number of people necessary does seem to be going down as the tools get better. The startup I'm working for has just decided to stop looking for funding and do our hiring more slowly over the next year, so I suppose we're a part of that trend.