Rise of SFA, the 'server-free architecture'

Thanks to cloud computing and social networking resources, it now costs virtually pennies to secure and get the infrastructure needed up and running to get a new venture off the ground.

I couldn't resist thinking of the acronym SFA (for "server-free architecture") when reading Wally Kowal's latest post on the rising generation of 'server-free entrepreneurs.' And, boy, doesn't this say it all when looking at the business opportunity landscape of the 2010s.

Servers: let someone else do the worrying.

Wally was reflecting on a recent meeting with a bunch of young entrepreneurs affiliated with VeloCity, the University of Waterloo mobile and media incubator.  As he put it, "besides the fact that they were are exceedingly young, I realized that they have one thing in common: they are the first generation of software entrepreneurs that will likely never own a server." He adds this revelation:

"This is a significant milestone, as these entrepreneurs will be able to focus their hard-won seed capital on their product, not the hardware needed to develop and deploy it."

There was a time when launching a serious startup required serious capital. Seed money was required for hiring talent, marketing and promotion, office space, and for technology to make it all happen.

The technology portion of the equation is suddenly diminishing, dramatically. Thanks to cloud computing and social networking resources, it now costs virtually pennies to secure and get the infrastructure needed up and running to get a new venture off the ground.

Of course, this isn't just a benefit to startups. Even for people in large organizations, this means prime opportunities to get around the budget walls and launch new projects or "intrapreneurial" ventures.

And, Wally Kowal adds, many of these server-free entrepreneurs will end up joining the ranks of IT workers "at all manner of companies, bringing their refreshingly open attitudes about cloud computing. Because they do not carry with them the traditional 'if-I-can’t-touch-it-I-can’t-trust-it' attitude that is common among IT administrators."

Bloomberg's Ari Levy uncovered a bunch of startups that have managed to launch at very low cost, thanks to cloud resources. He cites the example of 280 North Inc., which produces presentation and Web development software:

"The founders of software maker 280 North Inc.  needed little more than a half-dozen computers and a roof overhead. Francisco Tolmasky, Ross Boucher and Tom Robinson kept costs in check by using code available free on the Web and renting storage on the cheap from Amazon.com Inc.  Expenses are about $4,500 a month, and the San Francisco company -- two years after getting off the ground -- is close to making a profit."

Levy observes that 280 North only needed to raise $100,000 to get going, and "says it has plenty of cash to get another product to market."

He cites figures from the National Venture Capital Association, which estimates that the size of the average venture round has shrunk by half to $6.3 million since the dot-com bubble in 2000.

With IT infrastructure costs low and cheap -- with other resources such as the collaborative and production sites -- prepare for an explosion in entrepreneurial activity. Unemployment is high right now, and there are many, many, many professionals who see the startup route as a more sustainable alternative to seeking full-time employment.

With this confluence of underutilized skills and cheap resources -- the DIY economy -- we may be on the verge of an explosion in entrepreneurial activity in the decade ahead that will rival anything we've seen before.

Perhaps Chris Sacca, a 280 North investor and former Google Inc. executive, put it best:

“The biggest line item in these companies now is rent and food...  A decade ago, I don’t think you could write a line of code for less than $1 million."

(Photo Credit: Jimmy Wales, via Wikimedia.)

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