[LINK] Re: Time's Person of the Year and Web 2.0!

Roger Clarke Roger.Clarke at xamax.com.au
Tue Dec 19 14:20:20 AEDT 2006

At 12:51 +1000 19/12/06, Linda Rouse wrote:
>  ... last para in the Time's Person of the Year article?:

[Pleasant.  Another article in the series is useful too:

Web Boom 2.0

Dotcoms are hot again. But this bubble is different from the last 
one. Here's how
Posted Saturday, Dec. 16, 2006

Technology, San Francisco Bay Area old-timers tell me, blooms in 
four-year cycles. When I first moved here in 2002 to edit a biz-tech 
magazine, that was still open to debate. The dotcom bubble had burst, 
and 9/11 had squelched whatever was left of the old irrational 
exuberance. You didn't have to look at a balance sheet to see that 
the gold rush had up and gone. Silicon Valley was lined with tattered 
for lease signs, traffic flowed smoothly on Highway 101, and you 
could eat virtually anywhere without a reservation. Although lots of 
people were out of work, the ex-dotcommies I met were calmly 
unemployed, acting more like kids waiting for the next pickup 
softball game than anxious, self-doubting adults.

That should have been the tip-off. Now, four years later, most of my 
neighbors are employed-this time, at thriving Web 2.0 start-ups. 
Rush-hour traffic is getting worse, and you need a dinner reservation 
everywhere but the In-N-Out Burger (and there the lines are pretty 
long). The Bay Area is a relentlessly optimistic place, but even in 
this climate, it feels like springtime for business once more. And 
that naturally prompts the technorati out here to ask, Are we 
entering another bubble?

The way I see it, the answer is a resounding "no, but..." The Web is 
taking off again, but not in the same way. Here are five things that 
make this boom different from the last:

1. PAIN.

Most of us probably won't get hurt this time. Then again, most of us 
won't get rich either. The dotcom run-up was a public bubble, funded 
by Wall Street, and this is a private one, financed by venture 
capital. Today's venture-capital investments, especially in Web 2.0 
companies, tend to be nanopotatoes compared with their mega 
dotcom-era investments. That's partly what made the dotcom bubble so 
wrenching. Through initial public offerings, it fleeced a credulous 
public, whose money propped up companies that should never have been 
in business. Remember when day trading, not baseball, was the great 
American pastime? I doubt most of you can name three IPOs from the 
past five years. That's because the most common business model now is 
"build to flip"-start a small company and quickly sell it to the 
highest bidder. Ideally, the buyer is Google, Microsoft, Yahoo! or 
AOL, the sugar daddies of Web 2.0.


Start-ups want to be profitable, fast. Too many first-generation 
dotcoms thought they were Amazon's Jeff Bezos (Time's 1999 Person of 
the Year), who, in the early days, famously used to deflect questions 
about profitability. (It took eight years after the website was 
launched to turn a profit.) But he had a real business plan, unlike 
too many ipo-fueled dotcom-era companies, which too often had neither 
users nor a path to profitability. Nowadays Web 2.0 companies want to 
be profitable-or at least show that they have huge numbers of 
users-ASAP. Why? Because otherwise none of the sugar daddies will buy 


Who's he? This time it's mostly about Google. Some pundits go even 
further and assert that the whole Web 2.0 phenomenon is entirely 
dependent on Google. Dave Winer, who helped popularize blogging, 
podcasting and RSS, argues (on his blog) that most successful Web 2.0 
start-ups are little more than "after markets" for Google, meaning 
that without Google, there would be less opportunity to sell their 
content. These new companies thrive, he writes, by "acting as sales 
reps for Google ads."

4. FOOD.

This time there's no such thing as a free lunch. "I'll know it's a 
bubble when I can eat for free," says my pal Om Malik. Malik's a 
blogger and Business 2.0 columnist who has been covering Web 2.0 
since its inception. Back then, he said, he could go three months 
without buying dinner-San Francisco was one big movable feast, with a 
buffet of dotcom parties every night. Now he gets just two or three 
invites a week.


Web 2.0 companies don't live large; they live small. Under the old 
model, start-ups took a ton of IPO money, then quickly burned through 
it by hiring too many people and supplying them with Foosball tables. 
Web 2.0 start-ups are monastic by comparison-and the smartest of them 
get you, the user, to do all the work. Malik's commercial venture, a 
tech blog called GigaOm, has only four paid employees and no office. 
Malik works out of his one-bedroom apartment. When he needs to see 
his customers, he meets them at the nearest Starbucks.

Last time, everyone knew we were living in a bubble, but few got out 
before it was too late. This time, writes Winer, it will be easy to 
tell when to head for the exits: "Google stock will crash. That's how 
we'll know." Which, according to the four-year rule, should happen 
any day now.

[So 'Web Boom 2.0' the existing 'Business 2.0', may be what we should 
focus on;  and use techno-terms like AJAX in paralle with them;  and 
drop the 'Web 2.0' meme altogether.  *After* I deliver my paper in 
June  (:-)}  ]

Roger Clarke                  http://www.anu.edu.au/people/Roger.Clarke/
Xamax Consultancy Pty Ltd      78 Sidaway St, Chapman ACT 2611 AUSTRALIA
                    Tel: +61 2 6288 1472, and 6288 6916
mailto:Roger.Clarke at xamax.com.au                http://www.xamax.com.au/

Visiting Professor in Info Science & Eng  Australian National University
Visiting Professor in the eCommerce Program      University of Hong Kong
Visiting Professor in the Cyberspace Law & Policy Centre      Uni of NSW

More information about the Link mailing list