Echoing many of the things I’ve been saying, Joe Kraus has a great piece on how cheap it is to start a web company. I can provide a couple of additional data points. I started ONElist with $5K. That lasted from January 1998 to June 1998 (it was cheap even back then to launch a start-up). I then raised $50K from a friend and that carried us through the rest of 1998, at which point we had 1M users and raised VC. I started Bloglines with $50K. That lasted the first year. You don’t pay salaries at these levels of funding. Everyone works for stock. The main costs end up being hardware and hosting (and possibly development if you outsource some stuff to eLance or another service). I took different approaches to hardware with ONElist and Bloglines. WIth ONElist, I rented machines from Digital Nation. With Bloglines, I purchased the machines and hosted them at a local co-lo. The advantages of renting machines are that you have a lower up front cost and you don’t need as much sysadmin experience, because they will handle a bunch of the work for you. The advantages of purchasing are that it’s cheaper in the long term and you’re not limited in your hardware selection. Now that I have experience with both approaches, in general I’d probably go with renting. Renting saves a lot of effort (configuring and racking machines is work), and costs less in the beginning. This lets you get your start-up out the door more quickly and cheaply. And that’s a good thing.