In other words, starting a business isn't much different than it was in the past - capital and connections are essential. Sure, there're exceptions when someone with little money and hard work managed to grow their business, but they're that - exceptions. The older I am the more I realize how naive thinking "I just need to create something better than my competitors!" really is. You can have a mediocre product but with capital for heavy marketing and connections to acquire early customers you've much bigger chance of success than "just" having a good product.
Distribution is crucial, but I think pkorzeniewski was highlighting how marketing and networking can trump product quality, and his disillusionment with realizing how often this happens.
For many products distribution is correlated with marketing and networking, this isn't true for all products (e.g. web-apps).
I think it's quite different in the software startup industry. You usually don't need much capital, it's more that you need to have a failsafe in case you go bust to not end up unemployed and unable to pay bills.
You still need the capital to feed, clothe, and shelter yourself. If you don't have a hereditary source of wealth, you need to work for that, and if you don't have enough wealth to pay for the education necessary for a living-wage job, even working won't be enough.
Software is still made by people, and people have basic needs, and if you don't come from a family with sufficient wealth to support you, you have to work your way through.
In the USA, you have to do that in a nation that does not open doors for you based on birth, despite the myth the feudalist-owned media perpetuates. This is a feudalist society, the most feudalist society ever known to man (at least in the preserved history).
Networking is still invaluable, but capital isn't a necessity in software startups. I do think that either bravery or a nesting egg to fall back on is though.
It depends upon the market. You couldn't really do health-care software without connections or capital, for instance. Same for anything finance related.
Also, the markets that require the least capital/connections tend to be low margin and flooded with competition.
That is certainly true, but you can work the deal on parallel tracks. With the customer (say HSBCor MD Anderson) you spec what you are planning to build, to be installed/deployed in 4 chunks, every six months over two years. Call this a $20M project. Then you go to the investor and say that you need the funding to satisfy the contract.
Now, you usually would need to work this out in advance with the investor. After they've looked over your deal and poked at you some, tell them that you are going to go get a big customer with the permission to declare that funding is lined up pending contract.
It doesn't seem to take much more time out of your day than doing one after the other, and often the investor will get so distracted by the large pending customer that the due-diligence process becomes a pretty cursory check-box affair.
There are a million free or extremely cheap distribution channels on the internet. My current business with 7 figures ARR was launched almost exclusively on industry forums and there are no connections required to create an Adwords account. There are countless businesses that started on Reddit or even here on Hacker News with a $0 advertising budget.
It's a matter of effort/reward. Yes, you can advertise for free or very cheap on the Internet, but it's harder to achieve the same amount of success as if you were paying and requires you to put in more work, like engaging with the community (which is not trivial).
Of course it's possible to get extremely good ROI on free advertising (especially if your product is excellent or unique), but it's the exception, not the rule.
I was responding to the original claim that a distribution channel requires capital or connections, which from my own experience is a false statement.
You are right that free advertising requires work like engaging in the community, but all startups require a considerable amount of work, and if you have a little bit of online savviness engaging with a community is very easy.
I know that from the time I went from $0 to $10,000 MRR I spent about $100 in online advertising, and I know countless other businesses that have done the same. Maybe if your plan is to create the next Facebook it is harder, but if you have a high quality niche startup, being able to effectively and cheaply advertise yourself for free is hardly an exception. You can always broaden your scope later.
Jack Ma had neither when he started Alibaba. And whatever handicap not having connections is now in the west, it was a much larger one a decade ago in China.
Fair enough, but his job at the ministry of foreign trade was after he had made a (for the time) fortune with a different venture. His parents were traditional musicians, not powerful party members. He absolutely was not from a privileged or politically connected background.
Hmmm if your grandfather was successful in some significant way then your father benefited from that security which is exactly what the article is about. So claiming both were those exceptions is a bold claim indeed.
