People's wants seem unlimited, at least in the near term. If you accept that, the only limitation on the number of web startups is how many needs can be satisfied by software. (The web is just the current default software platform.) And since everything is turning into software nowadays, it seems likely that the infinite demand for new stuff translates into an infinite demand for new software.
What do you mean by "everything is turning into software"?
Also, while I agree that there's effectively infinite demand for new software (I can't imagine a day where all software companies and open source projects stop writing code), it doesn't mean that there's infinite room for new software businessnes -- especially the ones that start with a few hackers in an apartment cranking out a webapp in 2-4 months.
What do you mean by "everything is turning into software"?
Can't answer directly for pg but I know my whole field (electrical engineering) has pretty much been converted to software. Musical instruments, medical diagnostics, anything that deals with information processing, which in this day and age, seems to be migrating to a software function.
No. I can have needs I'm not going to pay for. Or I can have needs whose solutions are too expensive. Or many needs can come from people who have not too much money so not all needs are an interesting market.
What is an "interesting market"? It's a non distinction.
If you aren't going to pay for a solution to a need, then it isn't a need. If you can't afford it, that is a technological issue. There is no such thing as someone with "too much money".
[edit: there are certainly things that money can't buy. Though I'm sure you can mail-order a lovely bride, a Zen Buddhist sensei fresh from Japan, and adopt some children in need to give your life meaning]
Sorry if I didn't express myself correctly. I'm not a native English speaker.
I say: you can have a need, but you can have not enough money to pay for a solution to that need. For example, you can say that as there is so much poverty, there is a big need for food so there is a big market for food right? But probably, the sector that is suffering poverty wouldn't make an interesting market, as would not have money to pay for the food you might offer to it.
That's an exaggeration, but the same can happen with other stuff. There are lots of human needs you can point to, but the segments that would pay for solutions to these needs are, as I think, more limited, for many reasons. Maybe your solution is expensive for them, maybe they don't want to use credit cards online, etc...
About "too much money"... that was where my "non-native" English came along. I meant: maybe the people that have the needs have not enough resources (money) to buy your product/service, making that an uninteresting market despite being an unattended need. I was not saying you can have "too much money".
The two of you have a disagreement, but it's not here, this is just conflicting names for ideas. Putting words in your mouths:
You: if people don't know how to make something cheaply enough it's not a market.
Ivan: it could be a market if you solve the technological problem of making it cheaper.
You: making food cheaper isn't a market because the poor have no money.
Ivan: making food cheaper isn't a feasible market because nobody knows how to make it happen.
There, now you can return to the interesting question, continue arguing about what fraction of the needs you can think up are technologically feasible :)
Actually, I was just trying to be precise. I think market != needs and I was giving some examples... in the best of the cases, all needs are potential markets, but you haven't markets for all needs. And, what is more important and what was my original comment: not all needs generate interesting markets for you (because of tech possibilities, as you said, because of costs, because of logistics, etc).
I can think of all kind of needs: a google maps with 2d shading would make it fun for kids (to say something stupid). But they wouldn't pay for it, it would be very expensive to do unless you are google, and it would probably be expensive _even_ if you are google (because the raw data are photos and no 3d info excepting some selected places), etc etc etc. That's not an interesting need if you look from the market perspective... but if you fall in the trap "anything useful for anybody is worth doing" you might fall in the trap of creating that kind of worthless project.
Now that their kids are starting to get laptops, it shouldn't be too long before you could make a web app which helps third-world poor people learn to farm better, or do other types of work more efficiently. It's easy to come up with things which poor people want. And web hosting is cheap enough for targeting them to be feasible.
Not sure whether people's wants - and needs - are unlimited in the short term. In fact they are probably limited by what people themselves perceive is a want or a need, what they know and experience, and their ability to assimilate and absorb new technology. In the long term though...
That's where market-making comes in. People didn't know they needed to search the web until they found out it was easy. They didn't know they needed a computer they saw games, spreadsheets, etc. They didn't know they needed a dishwasher until they saw this amazing machine that washed your dishes. People (the market) might not think up the things they want, but they sure know if they want something when they use it.
