It was a great article. I think the most important part was:
"Software development got cheaper but communication didn't. Pure idea/sales/marketing founders are losing value against founders who can build their own product."
This is a very good observation, and being a programmer I do see and feel the change. However, there is another force at play at the same time which pulls in the other direction: because software development got cheaper, there is more competition, and that makes it more critical than ever to be able to get the word out and build market share quickly before the other 50 competitors take it. So, the marketing guys can still make a huge difference. The idea guys, probably not so much.
It is really denotationally impossible for a start up to me a commodity. Come on folks, you are in business; you really need to stop mucking up the fundamental concepts of economics.
One reason he might need funding is to stay ahead of the competition. He has identified a good market, but now that the word is out, competition will emerge. And if he doesn't move fast enough he might lose his niche to faster competitors.
In software, though, having more resources often makes you move slower. Your communication overhead scales with the square of team size, yet work done only increases linearly. This has been known since The Mythical Man Month was published 35 years ago, yet people still think that raising $5M and hiring 20 programmers makes you faster.
I'm not scared of a big company or a venture-backed startup, because I've worked at both big companies and 10-20 person venture-backed startups, and know how slowly both of them move. Any feature they implement, I can implement in a couple of days. I am scared of a couple guys in a garage that start with a slightly different take, positioning themselves in an angle I don't expect that gives them an advantage in market share.
It's a lot like sailing, I guess. A dinghy will outsail a yacht nearly every time. However, among dinghies, initial positioning at the start of the race is crucial. If you find yourself too close to the edge of the line and the wind shifts, you can lose so much time tacking and trying to get back in line that the race is practically over before you start.
Funding can slow you down, or make you faster. It depends on how you use it. I know what you're talking about; and yes, if used the wrong way, more resources are actually bad for you. But notice my emphasis on "speed", not number of employees.
For his case, he's losing time to consulting work which distracts him from his main product. Also, he's doing the development and marketing at the same time. A little funding that allows him to focus on building his product and hire one or two people to pick up the marketing tasks could make him faster.
Hear hear. I've worked for big and little organizations too, and software is the only place I know where 3-5 guys in a basement can kick the butt of the biggest company on the planet. Some people say those days are over, but I think they're just beginning.
