Slashdot Mirror
Is 'Web 2.0' Another Bubble?
Carl Bialik from WSJ writes "Two tech VCs, Todd Dagres and David Hornik, debate whether there is a bubble in so-called Web 2.0 companies looking to cash in on a resurgent online ad market. In the WSJ.com debate, Hornik writes: 'Venture capitalists will rationally stop investing in ideas that don't bear fruit. Those that do bear fruit will gain traction and either be acquired or go public. Those are the traits of a rational market in my mind.' Dagres responds: 'I think the Web 2.0 space will have a higher mortality rate than other segments of the overall media and technology industries. There are far too many MySpace and YouTube genetically challenged clones. All but a few will fail. The winners are generally the ones that get in early and out before the bubble bursts. There are rare examples of bubble companies making it through the bust and going on to become successful and valuable companies. By the way, the combined cash flow of Spot Runner, LinkedIn and Facebook is less than that of one Costco store.'"
And the only bubble to burst is the term 'Web 2.0'. The sooner the better.
It's a bubble because the FED is printing too much money. Eventually foreign investors will figure it out and the dollar will go down the toilet. You've been warned.
Please sign petition to restore sanity to our banking system!!!
http://financialpetition.org/
If the Web 2.0 is about user-generated content, is it a bad thing if it can't be monetized easily? I mean, I thought the point was our Web, our way?
While I agree that we're probably about to have a minor watershed of dead web 2.0 companies, something that's often neglected is that websites are relatively inexpensive to maintain when compared to a brick and mortar location. You pay for bandwidth, new development, and storage.
If managed correctly, this is far less expensive than maintaining a 'real world' location.
If I were an investor, I wouldn't write off the Web 2.0 companies as a whole, but I would be leery of things like high salesman salaries, a large management to production employment ratio, and an absence of realistic business plans.
We still have the best of the Web 1.0 bubble with us, and they're profitable. Five, ten years from now, we'll have the best of the Web 2.0 bubble with us and will be speculating about which of the 3.0 companies are next to go.
The next Slashdot story will be ready soon, but subscribers can beat the rush and slashdot the links early!
Really, if all web2.0 is about ad supported services, then we are truly heading for a bust. Ads are like having prostitiution support your schools. Also, features such as "more collaboration" is great, but it not a revolutionary thing.
Great, another fine use of all those MBA degrees on Wall Street.
'I think the Web 2.0 space will have a higher mortality rate than other segments of the overall media and technology industries.'
Wait a moment, the characteristics of a fast moving segment of the business world is that it moves faster than the other segments?
Wow. I wish I could be an analyst.
My prediction for 2007: Thirsty people will continue to buy water.
there is no "bubble" in web 2.0.
the point of websites such as facebook, youtube, digg, etc. are not to stay aronud forever. instead, the point is to take advantage of technologies and trends today (broadband, social networking on the web, etc.) to create something interesting for people.
sure, ad revenue off a website is nothing compared to a costco store. but for paying a few hundred bucks to get your site colocated or hosted and then running ads, you can sit back, relax in a chair, and watch money pour into your bank for doing essentially nothing -- IF you made a hit site, that is. And if you didn't, oh well, small investment, a few bucks of hosting. big deal. and if you really made a hit, perhaps someone will buy you out and give you even more money and start taking care of your lawsuits.
i think the real characteristic of web 2.0 sites is low initial risk, and lots of money if you do it well. and then sooner or later your website gets superseded by something else, just like google took over altavista, just like firefox and ie took over ncsa mosaic, and so on. when that happens, you just move on with life, happy that you did something cool for a few years, and happy that you can retire with enough money already.
it's not about keeping the bubble forever. it's all about making a really pretty bubble for as long as it lasts, and then retiring.
By the way, the combined cash flow of Spot Runner, LinkedIn and Facebook is less than that of one Costco store.
Cash Flow != Profit.
Costco has a incredibly high cash flow and an absurdly minimal margin. So do grocery stores. Facebook, on the other hand, has what im willing to bet is a pretty high margin on its fundamental product. This has to be one of the most utterly stupid, biased, half truth lines ever.
Heres an equally accurate (and equally misleading and biased) half truth in the other direction:
Facebook has nearly 50 times the profit margin of a Costco, walmart, and target combined. Clearly Retail is a bubble about to burst.
Id take Reaganomics over this kind of bullshit financial analysis any day.
The real profits of Web2.0 come directly from the areas we don't think they're coming from. People are very likely, because of the supposed anonymity of the internet, to post things publicly that they normally would not discuss in person. Also, they are more willing to post their tastes publicly than would normally be discussed.
When was the last time you read someone's favorite books, movies, or TV shows off of a Facebook or Myspace profile? What about the comments on some recent product purchase in a blog (that's even what my blog is about)? What goods could you see in the background of the latest hot YouTube video? Ever wonder why your Gmail doesn't want you to delete old messages, even if they're useless, but instead "Archive" them?
"Web 1.0"'s advertising-driven model was about getting users to click on their ads. Companies would throw ads everywhere, with the hope that people would bite. Web 2.0 is more about gathering background on customers so that retailers and manufacturers can market more successfully to them. The ads on digg can look at what you've dugg in the past, so that they can have a more informed base for what they're going to pitch to you. It's one thing to say that a sporting goods company should advertise on ESPN.com and a software developer on Slashdot, but if you take your market research further than you can advertise for the perfect place to go after your team's next home game on ESPN.com or where you can find some good reference books for your language of choice on Slashdot.
It's not about getting in and getting out. It's about the data you collect. And if these companies are smart then they can bill on a subscription model for their customer information databases and be in business for quite some time. This is because background data is vital to marketers, and they will pay exorbitant amounts of money for the data. This should more than offset the operating costs of a website.
freeflux-powered open-source blog
http://calendar.google.com/
http://www.flickr.com/
http://www.wikipedia.org/
http://del.icio.us/
http://docs.google.com/
You might try Tim O'Reilly's explanation, since he coined the bloody term in the first place.
Oh, and of course you heard of and used web 2.0 sites before anyone called them web 2.0. Think about it. Tim O'Reilly didn't sit around and think, hmm, let's come up with something we could call web 2.0. What would it be? And then went and made a bunch of people start implementing his ideas. It is descriptive, and the term to describe something (as happens pretty much always with history) came after that which is described. There had to be a web 2.0 before anyone could recognize it as something different from what came before and name it.
SIGSEGV caught, terminating
wait... not that kind of sig.
flickr.com
/.
technorati.com
digg.com
youtube.com
wikipedia.com
Not one of those sites provides it's own content - all content is users generated "for free". Every one of those sites allow you to publish the content on your own site "for free". You can keep up to date with new content without visiting the sites "for free".
If you don't understand the difference between this and nytimes-registered-users-only content, then it's no surprise you don't get the difference between the old web and the direction the web is going.
If you think Web 2.0 has something to do with AJAX, you need to read more sites than just
Low unemployment does not mean high numbers of people employed. People move to other geographic areas, other careers, retire early, or stop looking for work. I live in a city that has 'improving' unemployment numbers. But that is because tens of thousands of people have left the area. Actual employment numbers have not increased.
.Net with a master's degree who will work for under $40k per year. If the job really needed to be filled, the market would make it happen by paying the right price.
High-skill jobs do go unfilled because the requirements to fill the job are unrealistic. i.e. someone with 10 years experience in
I reckon you're basically on the right track, but it's very unlikely to result in armageddon. What'll happen instead is that china, japan, opec etc will get tired of losing money on their dollar reserves and will diversify (are already diversifying) and start selling the US bonds, the dollar will fall further, interest rates will rise further.
It will however balance out. China, Japan and OPEC can't simply dump 2-3 trillion dollars worth of bonds, they would be insane to do so. Instead they'll simply make Americans pay their debt. The US is just going to be saddled with high interest rates and high inflation for a while. At the end the dollar probably isn't going to be such a favoured reserve currency and Americans will have to work that little bit harder, just the same as the rest of the world.
They do currently have another option. Stop printing money and start running a surplus budget.
Oh Btw, the big problem isn't Iraq, that's just causing a gradual slide, it's the retirement of the baby boomers, we should start to see the effects fairly soon.
Deleted
SIGSEGV caught, terminating
wait... not that kind of sig.