Something
Ventured:
October 7th, 2005
By Brent
Holliday
Greenstone
Venture Partners
Two Point Oh No
Saw things so much clearer
once you, once you...
were in my rearviewmirror... Pearl Jam Rearviewmirror
Theres a new hype sweeping the Internet. No, wait.
Theres a new hype sweeping the investors looking to
cash in on the Internet. As with every hype bubble, if
you are looking to cash in and are just learning of it
now, you may have missed it entirely. The bubble might
be popping as we speak.
Im talking about the idea of Web 2.0. The OReilly
sponsored conference of the same name wraps up today in
California. It was meant to be a gathering of the
geeks that are using new technologies, and more
importantly, integrated new technologies, to change how
we see, use and get utility out of the Web. As a
developer of Web software, the concept of Web 2.0 goes a
lot deeper with the web as a platform mantra allowing
you to use others data and others use yours in a
collective way. Let Tim OReilly explain it better (O'Reilly:
What Is Web 2.0),
after all, he coined it. Last year, the meeting was
attended by 300 or so of these geeks who have since,
it seems, all started blogs so that we can track their
Web 2.0 thoughts. This year, they capped the attendance
at 800 and most of the new people were VCs, analysts and
general hangers-on that all wanted to see Dick Hardts
presentation (www.identity20.com/media/OSCON2005/)This
is really presentation 2.0.
By the way, Yes, I do feel the irony of talking about
Web 2.0 without a single mash-up or RSS feed from this
column. And there will be no trackbacks to me or from
me. Im so Web 1.0!!! If labels are important to you,
please leave now.
To get a sense of what I am talking about, just go to
Emily Changs eHub (www.emilychang.com/go/ehub/)
to see the myriad of Web 2.0 applications that have been
made. Interestingly, one of the senior members of the
Web 2.0 literati is Flickr, Vancouvers own photo
tagging technology that Yahoo bought earlier this year.
The concept of tagging information to photos instead of
creating a taxonomy for categorization is sooooo Web
2.0.
Now before you think I am mocking this revolution, let
me get you some opinions from elsewhere in the
blogosphere:
Rick Segal (ricksegal.typepad.com/pmv/)
- Enough already with this Web 2.0 nonsense. We are
doing the same thing we always do when new has newer
come along. We hype the snot out of it and crap all over
the old stuff.
The modern version of a Tired vs. Wired chart is
currently floating around the web. This attempt to
categorize stuff as Web 1.0 vs. 2.0. is, well,
interesting.
For example: Content Management is Web 1.0 while Wikis
are Web 2.0. Gimmie a break. Wikis ARE content
management dressed up a web service on top of a database
engine that tracks content and, wait for it, changes to
that content, in other words: Content management.
Paul Kedrosky (paul.kedrosky.com)
Can anyone point to a mash-up that they continue to
use after the first Whoa, cool! moment? I use Paul
Rademachers
housing maps service now and then (mostly to cringe
at the prices of homes here in La Jolla), but as near as
I can figure, thats the only mash-up I use. And as far
as technologies go, the only so-called 2.0 technology
that has really penetrated my daily work/play life is
syndication feeds, which I have
waxed about many times. So, does that mean Web 2.0
is a waste, a sexy phrase to suck in venture
capitalists?
As you travel around the blogs and run into Om Malik,
Jonathan Schwarz, Larry Lessig and other huge fans of
Web 2.0, you hear a few recurring themes about the
promise of Web 2.0:
1)
It means the end of the desktop, essentially blurring the
lines between on-line and off-line, finally (the
software as a service promise).
2)
Through leveraging the work of other developers and your
own users (collective intelligence) and building
word-of-mouth through the connections created by these
linkages, your costs of gaining critical mass are much
lower than they used to be (the long-tail of
interconnected smaller sites of content at work).
3)
Innovation comes from how you assemble all of the
open-source, lightweight parts, not what software
innovations you develop. Further, your ability to
constantly improve, monitor and support (i.e.
operations) your software as a service will
differentiate you.
So after swallowing all of the buzzwords in those
themes, lets see if I can validate any of them.
If Web 1.0 was the web page, then, yes I have to admit,
Web 2.0 is the application that does not feel like it is
inside a browser. And through AJAX and other
technologies that help the client end (Java Server
Faces, Avalon) we will see the browser disappear
altogether. As I have already pointed out, this is not
a revolution, but an evolution first envisioned in the
late 1990s when the limitations of HTML led to the
development of better data models like XML and UI
improvements that have steadily taken us towards a
Windows like front end. So, stop the heavy breathing,
it is a mantra, but it always has been a mantra.
As for the lower start-up costs because of the
leveraging of the user base as content providers and the
other data sources provided by your developer brethren
and their user base, I buy this. Absolutely. It is a
shift that has been happening with the help of the Web
2.0 crowd. It is a much better way to acquire a
meaningful user base through useful applications, not
branding through Super Bowl ads. Hallelujah! The end
of the first mover advantage mantra and $50M
financings of the land grab dot-com era! The gotcha
here is that the pure Web 2.0 companies in the list at
eHub are all cool things but are they businesses. Do
they have a subscription model? Can they be ad or
targeted search supported? In the consumer world, the
applications with social interactions seem to be
businesses, but they have to attract hundreds of
thousands or even millions of users. Some of the more
obvious social interactions (Dating, photo sharing) are
pretty crowded. In the enterprise world, useful
applications abound, especially in vertical industries
or small business markets.
On the last theme, about how you innovate and
differentiate in the new world, I completely buy this.
The shift in running a software as a service company is
that you have to assemble your offering in a novel way
and support the heck out of it. Building on a scalable
architecture for you back end and your data is
critical. You dont want to be a victim of your own
success and have traffic end up killing your
capability. Once more, this is an evolution of how we
run businesses, not some breathless new world order.
We live in a cynical world, made even more cynical by
the free and vast flow of information out there. The
hype of Web 2.0 had barely arrived (you can find very
few references to the term prior to the summer of 2005),
and already it is being assailed (again, irony. Blogs
are part of the Web 2.0 claim to fame and those blogs
are killing the hype machine). The thirst for a new new
thing among the cash rich US VCs and the analysts that
cover the public markets is huge. They are longing for
the days of 1999 and deals like Skype, $4B for $7M in
2005 revenue, make them fairly drool over the prospects
again. If you arent sure that Web 2.0 is a hype
machine or you are one of the Web 2.0 elite that sneer
at less intellectual folks, like VCs, I leave you with
one last point (dagger?):
This week at Web 2.0 from True Believer Om Malik:
Spotted Henry Blodgett and Mary Meeker. Add AOL buys
something, and the Web 2.0 is truly over. Yup, Om, if
Henry Blodgett, Mary Meeker and AOL are in the house,
your time is up.
What Do You Think? Talk
Back To Brent Holliday
Something Ventured is a bi-weekly column designed
to supplement the T-Net British Columbia web site with
some timely, relevant and possibly irreverent insight
into the industry. I hope to share some of the
perspective and trends that I see in my role as a VC.
The column is always followed by feedback (if its
positive or constructive. I'll keep the flames to
myself, thanks).
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