Business

Cheap Infrastructure

(Page 2 of 2)

  • Wednesday, April 23, 2008
  • By Erica Naone

Dharmesh Shah, an investor and entrepreneur who runs a website for software entrepreneurs, agrees that venture capitalists' investment practices are unlikely to change as a result of cheaper infrastructure. "There's no correlation between the amount of money an entrepreneur actually needs and the money a venture capitalist puts into the business," he says. Shah explains that venture capitalists become personally involved with the companies they invest in, taking seats on boards and serving in an advisory role. They need to keep all their money invested, but they only have so much time for board meetings. As a result, it doesn't make economic sense for them to offer Web startups less money.

Shah says he thinks that, rather than building infrastructure, many startups now use venture capital to build staff and increase research. He says that his own company, an Internet marketing system called Hubspot, based in Cambridge, MA, raised $5 million last July but needed only about $150,000 for infrastructure. Much of the additional money, he says, has gone into human resources.

Shah says that he sees human resources as a better use of excess venture capital than the advertising expenditures that were common during the last Internet bubble. He adds that outsourcing infrastructure "just makes practical sense, and allows the entrepreneur to focus on solving the problem the company set out to solve in the first place."

Shah says that while outsourcing infrastructure does free up funds for other things, there are potential problems. He notes that using infrastructure services does put startups at the mercy of those companies' pricing structures and whims. He adds that this could be a reason that larger companies have done better with these services, since they have a name brand to offer.

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demiart

1 Comment

  • 1391 Days Ago
  • 04/24/2008

IP and AppEngine

The sad thing is in the fine print: if one reads the terms and agreements, which unfortunately one does not see until download it is clear that any intellectual property created using AppEngine is Google's regardless of any other claims.  That means to the developer that their work belongs to Google.  I find this shifty at best....

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pmmucsd

1 Comment

  • 1390 Days Ago
  • 04/25/2008

Developer's ownership rights

Erica, thanks for writing this article. Its great to see more attention on the problems we are working hard to solve. As one of the product managers of App Engine I want to clarify our stance on the ownership of IP and user data in response to a comment left by one of your readers.

Our terms of service is clear about ownership of the IP and user content.  Section 8.1 of the our terms of service says "Google claims no ownership or control over any Content or Application. You retain copyright and any other rights you already hold in the Content and/or Application..."  The trust of our developers is paramount to the success of App Engine.

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techreview2me

1 Comment

  • 1379 Days Ago
  • 05/06/2008

My Review [how it is helpful for Web developers]

Hi all !
let me know how it will supportive for Web site developers & on which terminology it will more helpfull??

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