Is 'Web 2.0' Another Bubble? 209
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.'"
There is no such thing as Web 2.0 (Score:5, Insightful)
Federal Reserve (Score:3, Insightful)
A bad thing? (Score:5, Insightful)
High Startup Cost (Score:5, Insightful)
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.
Just ads!?#@! (Score:3, Insightful)
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.
To point out the person pointing out the obvious. (Score:2, Insightful)
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.
web 2.0 (Score:2, Insightful)
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.
Figures dont lie... (Score:5, Insightful)
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.
Real Web2.0 Profits (Score:4, Insightful)
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.
Re:Web 2.0 Url Please (Score:5, Insightful)
http://www.flickr.com/ [flickr.com]
http://www.wikipedia.org/ [wikipedia.org]
http://del.icio.us/ [del.icio.us]
http://docs.google.com/ [google.com]
You might try Tim O'Reilly's [oreillynet.com] 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.
5 Web 2.0 URLs (Score:2, Insightful)
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
Re:There is no such thing as Web 2.0 (Score:1, Insightful)
When the steam clears we will have a handful of new services, but nothing amounting to the order of magnitude in evolution the people keep claiming that "Web 2.0" is.
Heck the "Semmantic Web" concept would be more of an evolutionary step than the reality of what "Web 2.0" really is.
I've opted to stick with a big name software co. with a plump salary, nice benefits, and stable future. It might be boring to some, but I believe statistically I am more likely to make more over the next few years there than I would at one of the Web 2.0 vapor-startups.
This isn't the 90's folks. You can never go back. Computers happened already. Software happened already. The Internet happened already. Move on!
Let's face it. The Next Big Thing will blind side most of us.
Re:I hope Web 2.0 is another bubble (Score:4, Insightful)
High-skill jobs do go unfilled because the requirements to fill the job are unrealistic. i.e. someone with 10 years experience in
Re:Federal Reserve HEY MODERATORS! (Score:5, Insightful)
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.
Re:Web 2.0 Url Please (Score:3, Insightful)