Web2.0 and history recurring

It is a new Web 2.0 economy! All the rules have changed!

Yeah. Sure they have. Right.

It’s the same shell game of no revenue that everyone has played before. Actually, I think it’s a little worse this time.

It is worse because companies like Google, and everyone else because of them, are over-valued in the extreme.

These companies can buy other companies by issuing more stock; they are printing the currency that is used to buy other companies. They better act quickly because their value will not last forever.

Add to this the suspension of disbelief that you don’t need to make money to be in business. That the wings of never ending VC investment, or the deep pockets of someone else, will keep your office lights on and you in beer to drink while making your podcasts. While you ramble on about whatever was a meme on the internet that week.

If you’re browsing around for 20 hours a week reading blogs, are you getting any work done?

Some of these businesses have a shot if they are adding a level of efficiency from other carrier solutions. Take for example twitter vs sms as a platform replacement. Most though, are sitting around and hoping that one of the big dogs will give them a crate of stock certificates for their cute (hastily developed and full of vulnerabilities) web application which they built with other peoples money who want their investment returned.

So before the next tech stock apocalypse, I would urge you, dear reader, to think about the following mindsets and how incompatible they are in practice and concept.

First, Craigslist.

Chief exec of Craigslist, Jim Buckmaster, is in the news frequently. Mostly because he doesn’t want to cash in on his community. Why doesn’t he want to do this? I’m sure that he does actually believe that offering a service to people for the good of the community is his primary mission. It is not a means to an end, but an end. That should be kept in mind when attempting to appeal to your culturally-entrenched audience. I submit to you in addition that it would kill, or at least dramatically decline, the website’s rate of growth. Unlike Google, Craigslist does not have to placate hordes of investors. They can do what they want for real instead of a “do no evil” vague clause which will, as we all know, go away as soon as push comes to shove.

Don’t believe it? Just wait and see.

Second, Facebook.

Facebook began as one man at Harvard cataloging his conquests of fellow student bodies. Now, based on creating a userbase before cashing in, they are in an interesting market position to compete with Google.

Allow me to explain by way of another Web 2.0 startup company that’s burning venture, Yelp.

Some time ago, I noticed that Yelp listings of restaurants were no longer coming up in Google maps searches. Yelp and Google had a falling out of some kind and Yelp’s growth and visibility dropped dramatically. Valleywag put it as a “battle in the streets” in their usual overly dramatic way. What is a website founder to do to replace the amount of traffic that comes up from Google Maps and search results? Is there any other way?

In fact yes. There is something that can be done. You can open your API and use Beacons to spread more content without the use of search engines. Remember that Beacons opt you in by default and that you must explicitly deny interaction. I find this behavior a morally objectionable and, more importantly, customer alienating. It is already regulated in Japan and EU countries, and will very likely be here in the United States as well.

I have started calling this practice of non-opt-in website-to-website trade of user information data promiscuity. Based on the terms of service of nearly all of these leading providers of cute web stuff, it is only getting started. Apparently some are calling it Hyper Targeting. Does “hyper targeting” mean anything to you? It sounds like sales babble to me. If you’ll notice, this is intentional with no attention given to preserving ownership.

I mention this because, as consumers will begin to notice eventually as I touched on in a past entry, they can pull the plug at any time by moving their content, which they do retain the rights of ownership, to another site that will not be so promiscuous with their data. This is what Lessig closed with in his indirect Creative Commons pitch at his oddly choreographed talk at the University of Washington that I attended.

What is my point? Ok. Here’s my point.

The lesson that is learned repeatedly and at great cost to those who make capital investments in consumer-facing investment redundant is that that consumer can move – and do so very quickly. The same could also be said of employees no matter how many should-be-worker-drones you have reading the how-to guide on being a disposable worker: Who Moved My Cheese?

How many other fortunes will fall before they learn the example of Craigslist in taking a longer view instead of the get-rich-fast crap shoot of the market capitalist? It will be interesting to see.

In the mean time, try to sell Google, Microsoft, or Yahoo your next startup business for a billion dollars.

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