If you're into the Web, these are interesting times - what with all the talk about Web 2.0. Every day, there are new services/sites launched - many of them chronicled by the ever-industrious Emily Chang, whose eHub site is a must-read. While these sites are cool, few of them appear to have business models, which reminds me of the dot-com era. If you can explain, for example, how del.icio.us, searchfox or Remember the Milk plan to make money, can you let me know. Om Malik describes all this activity as "Froth 2.0" rather than "Bubble 2.0". I think what he means is the investment needed to develop new Web-based services is minimal these days so they can be easily and quickly launched. This environment contrasts with the dot-com era where interesting ideas demanded - or at least attracted - lots of cash, which the VCs were more than happy to provide. What puzzles me is the end-game for these new services. Are they being created simply because they don't require a lot of money to develop and distribute? Maybe they're "lottery tickets" like Skype: you throw an idea onto the Web and if you suddenly have a viral , low-budget hit, then you're foced to come up with a business model. In the beginning, Skype was more of a disruptive technology than a business. Once it got millions of users did management realize that it had to come up with a way to make revenue, which led to SkypeIn and SkypeOut. If you can make it to the lots of users/revenue stage and then get snapped up, the return on investment can be tremendous. This could be described as the "build it and they will come" approach and you could get rich approach. Maybe these services are just goodwill/vanity gestures so people can show the world just how smart they are. Regardless of the motivations of the people behind this flurry of services, the "winners" are people looking for new and different ways to use the Web. The prospects for any of those services to make money, however, seem, at best, unclear. Any thoughts?
For more thoughts on Web 2.0, check out Jeff Clavier, who puts the spotlight on how many of these business plan-free companies are running as fast as they can to attract users so they can "flip" their companies to one of the Big Web companies looking for acquisitions. In particular, this paragraph resonsated with me:
"It is now clear that successful Web 2.0 companies will be the ones managing to reach "escape velocity", which basically means attracting millions of users, with a big zero cost of acquisition, at a rate of tens of thousands new users signing on per day."