I'm talking about sites like twitter, myspace, facebook, myheritage, youtube and many others. All of these have taken countless millions of dollars in investment money to fund the startup or growth of their websites. My question is, why would a new website require so much money? I can buy one years hosting with Bluehost for 100$ and it promises me unlimited bandwidth. Am I missing something? Advertising shouldn't be an initial issue, because revolutionary sites like the ones mentioned above sell themselves to users. And I doubt a college kid would just take out 20 million in advertisement loans for a website he created as a hobbyist and never expected to become rich off. So what are these loans used or necessary for? I've been under the impression that creating a web business is far cheaper than creating a brick and mortar business. You need some hosting which is dirt cheap nowadays and you're ready to go. What am I missing?
Because no business can be run by 1 single person once it reachs a certain level of income. If you are getting a substantial amount of traffic your own server(s) is needed which means being in a data center. Once your website kicks off you have to innovate new ideas and this takes a staff that can do the work and be like minded. It all comes down to time vs money and when you have a great idea your time to market is short so instead of trying to do it yourself over the course of 5 years you need money to shorten your time-frame and quality people don't work cheap. I am sure I have missed hundreds of reasons but it's just a forum post not a marketing proposal.
The sites you mentioned are not little hobby sites. Not only do they require multiple servers to run on, the companies dwarf most "brick and mortar" businesses when it comes to office space and employees. Yes, Myspace and Facebook, even though they are social networks, have real-life office buildings. You can sit in a college dorm room and code a site and then host it real cheap, but you can only carry on so long like that. At the very least you'd need good developers besides yourself, which isn't cheap.
Is IS for advertising. Even sites like these starting out didn't sell themselves to users right away. Askmen.com started out with a 4 million dollar venture loan.
I can buy a Ford Focus at an MSRP of roughly $16,000 but that doesn't mean I can transport 50 people from Florida to California with it in one trip. I would need something like a Greyhound bus for that, which is much more expensive than a Ford Focus.
I'm also wondering about this, I'm starting a site with a high xx,xxx investment but I thought in case it gets popular I can pay off hosting with advertising dollars, who knows maby hosting these days are cheaper and it's much more easier to get advertisers.
ali hosting will get cheaper as time comes. for 2 reasons 1) Renewable Energy (drops the cost of running the servers) 2) Fiber Optics + advance in tech. (makes faster interent, thus more hosting companies, thus more competition resulting in cheaper prices)