It's also arguable that Internet businesses tend toward a few winners take-all scenario and that drastically increases the tech start-up failure rate. Whereas there are 150,000 convenience stores and 72,000 pizza restaurants in the US.

The number of businesses that can be supported in the physical world is dramatically higher than for Internet services. Why? Geographic restriction and franchising.

There are going to be two dozen major cloud hosting companies, and maybe 50-100 smaller players. There are 7,000 frozen yogurt shops.