One mantra that is often brought up for entrepreneurs is to “fail early” (and some add “and often”). The theory is that if your business is not working it’s better to fold before you have spent a lot of money and try something else instead from scratch. There is not just the money - if you go too long in one direction you build an organization that has inertia in that direction making it difficult if not impossible to change direction. I have certainly seen this happen firsthand many times and one of my biggest investing mistakes was trying to take a consumer company in the personal finance space and help turn it into a B2B content provider.

But this mantra may no longer apply in a world of lightweight web services and cloud computing. For starters the amount of money required to start something has declined dramatically. So has the number of people required to build and operate a service. In a world where one or a couple of people can run a meaningfully big service (e.g. plentyoffish, tumblr), maybe “fail early” needs to be replaced with “iterate early.” Get something out there. Let people bang on it. Not working? Try something slightly different (or radically different for that matter). As long as you keep your burn low and your team small, you should have a lot of flexibility. We are beginning to see some examples of this approach, such as iminlikewithyou which launched as a dating site and is now a game platform.