If you read TechCrunch or any other news site focused on startups, you have noticed that there is a lot going on. However, the majority of the startups mentioned are focused on one of two things: social networking and media (music and video). He is why I wouldn’t touch one with a ten foot pole:
- There is too much competition. Unless you’re a well-rounded genius, you’re not going to be much different than those competing in the same space with the same ideas.
- Their business models are weak like all the startups that went belly-up in 1999. Most rely on advertising revenue. Although revenue is based on click-throughs instead of impressions, the same ads shown on multiple sites will become noise and people will stop clicking.
- They are based on fads. Don’t get me wrong, I love Facebook and I love YouTube, but they can be an incredible time sink. The first two or three months I was on FB, I generated a lot of activity, as did my friends. I would have to visit FB at least twice a day to not miss anything. Now I see two to three days worth of activity on the homepage. The novelty of “Josia is eating gummy bears” is wearing off.
So what’s a budding entrepreneur to do? Solve a current consumer or business problem. Find a niche market or monopoly that you can beat at their own game because they’re just too big and bulky and outdated and used to doing things the old way. Create a novel device with BUG. Just don’t do what everyone else is doing because they’re all doing it.
Ian Lotinsky 
I wanted to add something:
Youtube and FB were built by incredibly smart people, but I wouldn’t call them geniuses. We shouldn’t underestimate ourselves.
You’re right. Let me clarify by saying that I think it’s a waste of time to build a Facebook or YouTube-killer unless you’re really, really smart and know you can beat them.