Infrastructure startups are difficult to fund. Most infrastrucuture startups require a significant amount of upfront VC investment. Web 2.0 startups are much easier to fund although it's becoming clear that as most of these sites head into the end of year two (i.e., running out of money), finding Series B investors is getting pretty tough. So, I have a bright idea. And, my idea is worth a million dollars ... minus $999,999.99. Just promise me that you won't share it with others because this is my one and only plan to become the next Mark Cuban. Why shouldn't I be the one who Carl Icahn pushes down Yahoo's throat? Mark's busy micromanaging his new Dallas Mavericks head coach anyway.
The only thing a Web 2.0 site needs is users, users, users! It's all about user acquisition. Get the users, the money will come. But, you don't really want to own a site with a bunch of users but no revenue. All the VC money in the world won't change that reality. So ...
Set up a second company - an infrastructure company. This second company is the startup you really want to kick start. But, raising funding for it is nearly impossible. That's ok though. Use the Web 2.0 site to raise $5 million. Use the money to build your infrastructure product. You have tons of users for your Web 2.0 site so no one will really get heartburn over it.
When you've finished building the infrastructure product, turn every one of the millions of your Web 2.0 users into commissioned sales and marketing people. Your Web 2.0 users get paid to market and sell your infrastructure product!
What just happened here?!?! A startup that couldn't raise money gets money. A startup that can't make money now raises money for a startup that can make money. Users who won't pay for a tool will now get paid to promote and sell something. A product that is hard to sell gets a million people actively spreading the word! VCs love it. Founders love it. Who loses in this scenario? It's a win-win-win-win-win scenario. Now, that's a keiretsu.
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