Tom Evslin’s post Web 2.0 – Greater Initial Investments Required suggests that early Web 2.0 companies seized the advantage of low cost technical infrastructure and low cost marketing to gain cost advantages.  These companies were able to get big cheaper and faster than the first generation internet companies.  While he agrees with Fred Willson that the technology cost will remain low, he suggest the lower promotion expense is now behind us.  The low cost of technology results in a lower cost of entry and will in fact increase promotional spending and the need for capital.

In any event, both men are suggesting there will be capital required to grow these companies going forward.  Those who are putting their business plans together without consideration for this cost increase will at least have some tough funding questions or worse some serious costs overruns.