Whether you help run a web-based startup, are a member of an online production team, or earn your living in part by understanding how things get done on the web, it's important to get a sense of how the most innovative Internet companies create their products and build their businesses today.

Even though the current economic climate is not so hot, amazing advances in the open-source software movement, coupled with vastly reduced costs for such things as infrastructure, bandwidth and software services are allowing web-based companies to develop online products and services faster than ever before. And Internet companies themselves are developing non-traditional strategies that best meet the needs of the hyper-paced modern web marketplace.

Rapid Iteration Model/"Ship It!"

socialmedian founder and XING Chief Product Officer Jason Goldberg discusses the utilization of a rapid iteration model that allows development of "great products and enhancements that meet your needs." Goldberg has evolved this model into something he terms "Ship It!" Boiled down, "Ship It!" means that product development cycles are run in quick succession, making user feedback explicitly part of the build process. Goldberg goes on to define an ethos that many cutting-edge startups live and breathe today: launching features publicly before they are "fully baked," with the expectation that avid users will provide the feedback and direction needed to allow development teams to put on the final spit and polish.

We will launch new features before they are finished. Our plan is to get new stuff out there on the site and learn from our users as to how to make them better. You tell us what you like, don't like, and want to see improved — and then we'll do our best to keep up with your input.

Whereas for most industries it would be sheer folly to release products that were not yet perfected, on the Internet this is beginning to be more rule than exception, particularly for free and advertising-supported products.

Goldberg further strengthens his company's policy of transparency by making himself available for answering questions and receiving feedback both on his XING profile and on Twitter.

The Lean StartupWeb-based startups are getting faster and more responsive, and they're also getting leaner. Eric Ries, entrepreneur and co-founder/CTO of IMVU, defines the lean startup as "a disciplined approach to building companies that matter":

It's designed to dramatically reduce the risk associated with bringing a new product to market by building the company from the ground up for rapid iteration and learning. It requires dramatically less capital than older models, and can find profitability sooner. Most importantly, it breaks down the artificial dichotomy between pursuing the company's vision and creating profitable value. Instead, it harnesses the power of the market in support of the company's long-term mission.

So not only are startups becoming faster and more adept in rolling out product iterations, the lean startup concept allows startups to conserve resources while utilizing feedback and a rapid iteration model to find the fastest and most efficient path possible to maximum profitability.

The Microstartup

In November, Mahalo founder and CEO Jason Calacanis issued "The Future of Startups," a proclamation on the state of startups and the Internet. Calacanis lays out that the era of "The Zero Cost Startup" (vastly lowered overhead, servers, hosting costs, and so on) has led to "The Age of the Microstartup." Echoing the trends of the Rapid Iteration Model and the Lean Startup, Calacanis muses that "[m]icrostartups are amazing because they can try ten different things over a year with very little pressure to "break out." This leads to a lot of people taking a lot more risk, starting a lot more crazy ideas."

Low costs and freedom to "crowdsource" feedback allow, then, for a "Try Everything" era in which startups can spin out ideas, fail, and try again in rapid succession until finding the idea, product and business model that gains traction. In the microstartup model, the most important resource is the founders' and team members' time.

What do you make of the trend of web-based startups going rapid, lean and micro?

Source: Gigaom