It wasn’t that long ago that if you wanted to develop a website or web application, it would potentially cost you hundreds of thousands of dollars before you even had a prototype. So, you probably needed investors willing to step up to fund your venture. For a chance at a healthy return, wealthy angels or companies would plunk down enough change to get you through to market.
Problem is, it seems that as time and technology progresses, it becomes cheaper to actually develop for the web. There are now enough standards, backend modules (both open source and paid) that allow a lean startup team to get a product to market for a fraction of what it would have cost earlier. That means the later venture, compared to a similar venture started up several years earlier, could be more profitable earlier and wouldn’t be saddled with the startup costs of the earlier venture.
Result: lower cost to market; higher return on capital invested. Consequently, the newer startup has a healthy chance at displacing the earlier startup in both market share and profitability. I think only way to avoid this situation is if the earlier startup has become so dominant in its industry that that itself becomes a barrier to entry.
