Although the question might seem rhetorical, I was actually interested in people`s responses to the question. I wanted to know what others thought of such a strategy and if they had done something similar in the past.
Steve, our situation was somewhat favorable because one of my partners is a web designer with his own design company. Not only did that help in the planning of the project itself, but also took care of the design and navigability of the site. The $500 was used to pay for coding. An agreement was reached with a programmer who was familiar to us for him to apply code to the HTML. When the clock started, there was no code. As for the server, our partner at the design studio had a couple of servers that he was already paying for. We used his. As far as marketing and promotion goes, we used the $500 challenge as a public relations story for people to pick up on. We put the story from our company blog on digg.com and it reached the front page, getting us much needed attention. Soon after that, some contacts of ours in silicon valley helped us spread the word in that community and also amongst the bloggers. Once bloggers picked up on it, news of the service spread like wildfire (one of the most valuable reasons why blogs are so important in a company`s PR plans). The fact that our company was successfully promoted and written about by bloggers only strengthens and proves the value of the service that our company provides: connecting companies and their public relations efforts with the blogging community through our niche newswire which is specifically catered to bloggers.
To be fair, we actually took two weeks from the minute the idea was conceived to launch. Still, the concept of starting a business with a minimal budget in a short period of time is definitally possible. It helps to have connections with people who are in a position to help you at little or no cost. The unknown (at least in my case) is whether the company can grow to be successful. My company is growing steadily and has progressed a lot, but it has a long way to go before I can call it a success.
Co-Founder of TheWeblogWire.com