Tech's Big Ideas Start Smaller

Oct. 10, 2007 — -- Silicon Valley is booming again, reminiscent of a decade ago, when precocious young minds hatched entrepreneurial ideas (sometimes admittedly half-baked) that incorporated the Internet in some way, any way, and turned themselves into paper millionaires.

Ideas are being launched at a pace that rivals the first Internet tech boom but with a decided difference this time. While the 2001 tech meltdown incinerated much of that paper and decimated the valley's one white-hot venture capitalist market, today's entrepreneurs are starting out with much less capital and investors are demanding much more in terms of results.

Signs of good times abound: The tech-heavy NASDAQ is up 15 percent for the year, and the stock price for the industry's iconic company, Internet monster Google, just peaked at more than $600, giving the not yet decade-old company a greater worth than stalwarts like Coca-Cola and IBM.

"Silicon Valley is alive and well," said Todd Greenwald, a technology analyst with Nollenberger Capital Partners in San Francisco. "And Google is by no means standing alone. The online advertising market is up 30 percent this year, and that's benefiting a lot of the players, Google included."

That enthusiasm has trickled down to the industry's lifeblood: tech startups. Venture capitalists are entertaining a growing number of startup ideas to help with next-generation Web applications as well as last-century tech like e-mail.

But unlike the 1990s, the financial investment needed to start a tech-based company is significantly lower today. Web startup costs are not nearly as prohibitive in 2007. They can even be cheap.

"There is a huge increase in the number of incoming company ideas coming to VCs," Jason Calacanis, a venture capitalist and self-described "entrepreneur in action," said in an e-mail interview. "This is due to the fact that it is easy to start companies today. A company that would need $1 million in capital to get to a beta product can be done for 10 percent of that price --