Another change: Incumbent technology companies increasingly control the platforms startups use to reach users.
“Facebook grew based on saying ‘give me your email addresses, and I will send out emails inviting your friends to try Facebook,’” Yelp’s Stoppelman told me. “Does Facebook allow that on its own platform? Hell no. They say ‘pay us $4 an install and we’ll help you get one user at a time and make a lot of money in the process.’”
So while the technical costs of building an online service are cheaper than ever, it has become common for companies to spend millions of dollars on advertising to get their app or service in front of potential users. And a large share of that money flows to Google and Facebook.