Looking past the hype of Web 2.0

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I’ve been listening with interest to a number of Podcasts lately and a few of them have prompted this post. The first one was the 2web.com.au crew on the G’Day World Podcast. Ben Barren and Nik Cubrilovic were discussing their passion for Web 2.0. They were fairly critical of Jason Calacanis for rallying against the bubble (or froth as Calacanis calls it) in Web 2.0 and argued quite passionately for Web 2.0. Nik, I think it was, argued that we aren’t in a bubble, but we’ve moved back to normal VC funding after the dot com bubble. Moving over to the Gilmour Gang, someone (don’t know who it was though) argued that we aren’t in a bubble because there wasn’t the huge amounts of money being burned by the Web 2.0 start ups. They stated that Newsvine “was only” burning about $120k US per month, and many start ups were only seeking small amounts of VC funding, not the huge amounts we saw in the dot com boom and bust.

I’ve been fairly critical of the hype surrounding Web 2.0 for some time, but having listened to the passion of some of i’s stronger advocates, it was worth some more serious thought, and I came to an interesting conclusion.

As much as Jason Calacanis is right, we do have some “froth” in Web 2.0, I don’t think we really have a bubble. What we do have though is a “hype bubble” where Web 2.0 is being used as an excuse for lacking a business plan and as a term in which to promote many products, half of which have no real substance.

I’d note on the like of Jason Calacanis and Nick Denton: Nick in particular has ALWAYS played down the prospects for new firms entering the blogosphere. If I had his market position I would. It’s called protecting your business by trying to dissuade competition. Now I’m not saying Calacanis is totally motivated in this way, but it’s a natural reaction for any market leader to state that it’s too difficult to enter and go well in a marketplace.

But back to Web 2.0:
Basically folks: the marketers and PR professionals are the ones giving Web 2.0 a bad name. It’s the hype that creates the appearance of a bubble, but beyond the hype there is substance behind Web 2.0.

Now, before people start stoning me for having mysteriously converting to a Web 2.0 advocate, I think in many ways I’m living the Web 2.0 dream anyway. As Nik and Ben were joking about in the GDay World Podcast, the criteria for a Web 2.0 entrepreneur is giving up a high paying job and working for nothing aiming a building something great. Many argue that blogging is part of Web 2.0, so I suppose in that regards it’s exactly what I’m doing now.

As for AJAX, it aint just a bathroom cleaner anymore. We’ve just going through upgrades to the b5media blogs to make sure they are all running the latest version of WordPress, and there is more AJAX than you can poke a stick at. Some of it is just annoying, some of it is rather nifty, so we get to say we are working with AJAX as well.

Now will Web 2.0 companies fold? You betcha they will. There is only a finite market for Flickr clones, De.li.co.us clones and what not. On the other hand amongst the new start ups there are some amazing things going on as well.

But I ask this question: how is this really any different to any other marketplace? For memory in Australia something like 50,000 small businesses fold every year. In Web 2.0 we are talking about, what…maybe 1000 or so companies. Sure, the marketplace is currently smaller, but like any field of business some firms go on to become huge, some get taken over, some can sustain a business on a smaller scale, and others fold. Web 2.0 companies are NO different to any other form of business enterprise, once you exclude the marketing hype.