Veteran entrepreneurs who have raised several million dollars or who have had a startup acquired will often talk about how there’s a “startup bubble” – they will say how there is too much attention on early stage tech startups right now, and how being a tech entrepreneur is the new “I’m in a band”.

In short, veterans of the startup scene or venture capitalists with a pessimistic outlook will assert that 5 or 10 years from now, tech startups might go “out of fashion.” In other words, the real entrepreneurs who have been building and exiting for years will be left behind.

But I’ll defend the new startup economy.

I believe that though there is a great deal of focus on new entrepreneurs and the new web startup, this is not a fad and this is not a startup bubble. Quite the opposite – I’ll argue that we will see more and more tech startups filling smaller and smaller niches because, in one form or another, a loose network of lean and interconnected startups can out-compete corporations themselves for solving basic economic inefficiencies.

Not to get too academic on you, but the Theory of the Firm, as described by Ronald Coase, illustrates that corporations exist to lower transaction costs. This means that it is easier for a corporation to setup 50 franchise offices where it can allocate its own funds internally; where it can share its own business processes required for franchising internally; and where it can engage in legal contracting with real estate development and hiring using designated lawyers and risk management professionals.

Conversely, all of those actions (or ‘transactions’) of resources could have been executed by separate, non-collaborating, non-associated entrepreneurs who would each raise their own funds, each negotiate and engage in contracting, each create business processes for franchising. Corporations are great at reducing the transaction cost for large scale redundant business development.

That ‘theory of the firm’ does not work so well for solving extremely niche and possibly risky economic problems.

Tech entrepreneurs are scrappy, lean and fast. They can attempt 12 solutions in the time it takes a company to approve one solution. Tech entrepreneurs experiment with consumer behavior, inventing the “mobile check-in” and “microblogging”. They solve old industry problems such as customer acquisition using social media monitoring through Radian6 or Scout Labs. Techie entrepreneurs like risk, because they can usually assume a company is too slow to try dozens of risky solutions. The transaction cost of experimentation is lower for entrepreneurs than for corporations.

Which leads to my theory on the startup economy.

What does a corporation do at the most basic level?

A corporation solves a market problem by taking resources, adding value to the resources and then, distributing the new product or service to the market for a profit. McDonalds and Walmart create low-cost and generally trustworthy goods that independent entrepreneurs cannot out-compete on price alone. They take in resources, add value, and distribute them.

However, many market problems currently solved by corporations could just as easily be solved by tech startups. Book publishing operated well at scale when the market only needed a few thousand mainstream books, but blogging has created micro economies of digital publications. McDonaldsand TGIFridays achieved efficiency at scale for food preparation, but the market demands more options in restaurant consumption, like how your Groupons and Yelps enable small vendors to target niche audiences with specific food types.

In short, the digital economy has created lower barriers for entry and lower transaction costs for startups to solve market problems.

To bring this back to my major point, the “everyone is an entrepreneur or knows an entrepreneur” phenomena will likely (in the next 5-10 years) increase because the tools, resources, know-how and opportunity to start your own company will increase. This is just as the transaction cost of solving a market problem will decrease.

We will see networks of loosely associated startups who are sharing and licensing one another’s data and intellectual property, utilizing the positive externalities of open source and finally, gradually becoming the new economic infrastructure.

In this sense, the fad of the tech startup is not a fad, but is a new economy of hyperspecific and interdependent entrepreneurship.