Web2.0 Road to Riches
Posted by Jacob Harris Wed, 05 Oct 2005 16:06:00 GMT
Back in the day of the first Web boom, it seems like a lot of companies were started on the simple premise of
- Make a web site
- IPO or maybe get bought out
- Cash out with millions!
And so, a boom and bubble was born. The problem here was a lot of VCs and rational investors found themselves swept up in the frenzy back in the day, and placed their bets even though there was no real knowable way to accurately estimate the future profitability or net worth of their investments. Sure, there was a risk of failure, but that wasn’t viewed as negatively as the risk of not getting in early while it was still cheap. Add that to the later shared delusion of being able to cash out before the bubble burst, and the shortsightedness of those days is a lot more understandable. It seems though we’re on the verge of a new way of thinking:
- Make a web site
- Get bought out by Yahoo or Google
- Cash out with millions!
Maybe I’m being a bit pessimistic (and I will freely admit I’m no business expert), but I am slightly concerned about there being a new web bubble that could lead to disillusionment over Web2.0 technology. I like Google, but I think their stock is too overvalued at over $300 a share; thankfully, the company seems interested in correcting this problem. And Web2.0 has become such a hype word among investors, it’s led to a wave of people trying to define what it is, offering alternative definitions, and mocking the business world for caring Investors looking for the next big thing are starting to latch onto the Web2.0 excitement and I think some people think Google and Yahoo can do no wrong; I only hope they do their homework first this time.
On the technical side of things, I have a fear of web developers starting companies with the sole goal of being bought by Google or Yahoo in a few years or less. There’s a big difference between planning a business for the long haul and hoping to get snatched up before you burn through all your cash in two years. So, I must admit it was with some dismay today that I read that Yahoo has acquired Upcoming.org, just like it had with Flickr. This is not to begrudge Upcoming their success (it’s a great web app), but I’m just afraid of where the combination of lazy web developers and over-eager investors will take us. We’ve been there before, and I don’t want to see it again.
And of course, the biggest problem with all this is the way in which this weaking leads to the end of the openness and choice out there now. How many options are there really if your choice for web applications is between Yahoo and Google? Will this lead to a segmentation of content and communication? And more importantly, if you think that the Web2.0 is all about the free flow and interchange of data, won’t the growth of Google and Yahoo into all areas of the Internet choke that off?
