The Beginning of the End, or the End of the Beginning?

7 Jan ’07

Mathew picks up the thread today, started by Mike Arrington I think, on the unsurprising news that cash is running out and staff headed to the doors on a growing number of Web 2.0 companies. This is, of course, as it should be. The relief is that this time around precious few have made it to the point where the bankers, suppressing giggles behind closed doors, shovel the stock out to greed-addled investors in gravity-defying IPO’s. My 2007 prediction: business bloggers whose livelihoods depend on the continued feverish pitch of Web 2.0 will continue to insist that there is no bubble (whatever that means) and that Web 2.0 is healthy.

{ 2 comments… read them below or add one }

Rob Hyndman January 9, 2007 at 11:36

Agreed, George, although I do think that the proliferation of companies that are really just features or ideas is at heart the nature of the beast – part of the ecosystem, as it were. Unformed businesses or ideas that have been taken as far as they can be, by their creators, and waiting in an inchoate state for someone else to notice them and perhaps take them further. Just part of the inevitable organic process of formation and re-formation that accompanies innovation ….

Thanks for the comment.

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Agoracom January 8, 2007 at 19:54

Rob, this is the end of the beginning. Web 2.0 tools are useful but they can only be profitable when applied to a solution that either business or people are willing to pay for.

My Greek immigrant father turned Greek immigrant success story told me a long time ago that paying customers = business…and everything else is just having fun.

Amazing that so many intelligent people could have saved so much time and money listening to a grade 10 graduate. I learned that lesson years ago and created a web business that generates more revenue and/or profit than most VC backed W20 companies.

My frustration at Mesh and on the blogoshphere since that time has been listening to people praise “companies” that had no revenue and no chance of revenue other than a few AdWords dollars. The confusion over cool vs. cash was driving me crazy and, at times (very short times), had me wondering whether my father’s advise was obsolete.

In order for this phase of the Web to be taken seriously, we have to start seeing investment and praise in companies that actually generate a real service for real customers that pay real money.

Freshbooks is a classic example. Online invoicing may not be the coolest app in the world and 3,000,000 people a month won’t come flocking to the site to exchange useless information…but it generates cash and can be scaled to generate many more multiples of cash/profit in the coming years.

Once we start investing, praising and growing these kinds of companies, Web 2.0 will grow outside of the geekosphere and into the real world.

My prediction/hope – this is the shift that takes place in 2007.

Best,
George

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