MYTH: Starting a Tech Company is Cheaper than Ever

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I love watching the tech market. The nuanced ways in which it works are fascinating to me – especially around talent.

The common myth today is that it’s cheaper than ever to start a tech company. Rackspace, Amazon, & Heroku have made it so quick and so cheap to get started with no hardware needed for servers. Server software has been free for years since LAMP.  git push heroku and you’re live.

Not an engineer? Good luck – in LA & everywhere salaries are on fire right now. I regularly hear rumors of mobile devs making more than MBA’s. Stanford grads routinely make 6 figures – starting. Equity levels previously reserved for executives are going to the top tech talent.

And if you are an engineer – it might be easy to hack together a rails & iOS app over the weekend, but putting together a great team has only gotten more expensive, not less – that is, unless you want to move at a snail’s pace coding everything yourself (I’m sure your competitors will love that move).

There’s fascinating market forces at work here. Literally everyone can make an app or new web tech now, no expensive infrastructure to setup, and it is faster than ever to get started. And that liberation of technology creation has ignited the competition for talent like a rocket ship. With competition, prices go up – and have they ever.

A modern startup needs growth hackers, engineers (Android, iOS, backend, frontend, specialists, QA), designers (UX & design both), marketers (social media, brand, pr), and sales (biz dev, inside sales, outside sales, support). All of these professions are in high demand, and there’s just not enough great people. You’re competing with big companies with unlimited budgets, startups with unlimited equity, and the fact that it’s easier than ever to start a company – great people are becoming entrepreneurs earlier and earlier now.

More money is spent on grabbing and retaining talent than ever before. So while bootstrapping might seem tempting, a well funded venture backed company can man itself with the talent firing power to take marketshare faster with better people than one with a small team.

Starting a tech company is faster than ever – cheaper with this market for talent? No chance.

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