How to build consumer internet companies

Excelent article of Sarah Lacy explaining how to build consumer internet companies, using Color as a counter example.  

WEB 1.0

• Winning was seen as a race to get as many resources as possible, buy a pricey domain, do as splashy a launch as possible and do whatever marketing you needed to land-grab users.

 WEB 2.0

• The entire economics of how you build a company have changed. The costs are far lower, so raising money for the sake of a gaudy press release has given way to the luxury of raising less and retaining control. The marketing game changed too. 
• First mover advantage is no longer valued. 
• Commercials only work once you have a successful product and a solid user base and are looking to grow well beyond it.
• People no longer get told what products to use in a Web 2.0 era, they use them and spread them to their friends if they’re good (Color wasn’t– as was evidenced by its two star rating). Money and grand articulations of a vision can’t shortcut that. The Web has become too crowded and users are too smart
• There is no trick the way there was in the late 1990s. “You just can’t force users to get up off their asses and use your product” 
• Crowded space where the quality of the product and whether your friends are using it are the only two things that matter to users. 

The way you build a company is to raise a modest round, get a minimum viable product, push it out, and iterate like hell until people use it or pivot and try again.