When Does the Party End?
As 700 or so people sober up from Michael Arrington's TechCrunch7 party, I wonder when the Web 2.0 party is going to wind down or end? Or is it just starting to get going? To be fair, we're not partying like it's 1999 (dot-com boom) yet but the signs are there: lots of enthusiastic VCs, a new wave of launch/networking parties, companies with no profits and uncertain business plans thinking about or doing IPOs, etc. There's a general sense of euphoria within the Web 2.0 community that is encouraging and troubling. It's great to see entrepreneurs develop new ideas by taking advantage of low cost programming, bandwidth, software and hardware BUT disconcerting to see so much hype (and VC) descend on these entrepreneurs. Perhaps the poster child is YouTube, which has a service that is running far ahead of its “business”. Who knows what YouTube is worth but it's probably worth a lot so YouTube's founders face an odd but wonderful dilemma: do they stay the course and develop the business and/or prime the M&A/IPO pump to get people (Google, Rupert MurdochN etc.) to show them the money? It's these wild valuations that torque the Web 2.0 landscape because they give everyone (entrepreneurs, VCs, investors) unrealistic expectations of fame and riches. (TechCrunch does a great job of stirring the pot!) Don't get me wrong: Web 2.0 is great because it puts thousands of cool services at your fingertips but as Cindy Lauper once said “money changes everything”, and this applies to Web 2.0 as well. Maybe, my gut is wrong and Web 2.0 is alive and well but something doesn't seem right.
Note: Check out Dead 2.0's personal take on TechCrunch7. Meanwhile, VentureBlog contends Web 2.0 “boom” is not like 1999 at all given the talk is about new companies, ideas and products rather than who's the newest millionaire.
August 20th, 2006 at 11:41 am
AMEN!
August 20th, 2006 at 12:33 pm
Hi, Mark. My gut tells me that Web 2.0 is only beginning. Most of that stems from the fact that VC's and Web majors (Google, etc.) don't seem to have made too many outrageous investments into the sector. The poster child to date is still MySpace and the recent Google ad deal makes Murdoch's $500M + acquisition a smart one.
The fact that YouTube, Digg, etc. haven't been snapped up by anybody tells me the majors are sitting back and waiting to see the value propositions pan out. If we were at the end of Web 2.0, we would have seen a feeding frenzy evidenced by bidding wars and outrageous prices. I don't see a feeding frenzy. The blogosphere hype may be trying to create frenzy but that hasn't spilled over into actual $$$ yet.
True, VC's have been making investments but you and I both know they have no choice but to deploy their funds. Nonetheless, outflow seems to be restrained and patiently waiting/hoping for deals with real value attached to them.
At the end of the day, I believe VC's and the majors have learned their lessons from the past and won't get sucked into deals that have no value on their face. During dot-com, buying/investments were driven by an urgency of missing the boat. They won't make that mistake again.
Best,
George