Getting outside the frothy bubble

Thanks to Geek and Poke for the cartoon.

When I was eating sushi and chatting with Jeremy Wright, CEO of B5 Media, and Don MacAskill, CEO of SmugMug, Don, at one point, pointed out that SmugMug had 150,000 paying customers and was profitable. I answered back “oh, I guess you aren’t a Web 2.0 company then” and we all had a big laugh.

But that laugh has been bothering me. Comedy works best when it’s reflecting a truth no one wants to admit in public. I’m noticing something in the valley. The newer companies are struggling to get noticed. Are struggling to figure out how to get outside the TechCrunch/TailRank/TechMeme/Reddit/Digg/Slashdot/Om/Scoble bubble.

I’ve been awfully cheery of late, but I’ve been comparing traffic notes with bloggers, journalists, CEOs, and other geeks and there simply isn’t that big a pool of traffic out there unless you can get some hot search term on Google or Yahoo.

Hint: what’s Jeremy’s most profitable blog? It ain’t about Ruby on Rails. It’s about Lindsay Lohan.

The thing I’m noticing is that outside the valley most people use search engines to find things. Google, Yahoo, AOL, MSN, etc.

How strong is that? Well, insiders tell me that one of the top search terms over at Yahoo is actually “Google.” And one of the top search terms at Google is “Yahoo.”

Why is that? Because most people outside the little tech bubble we live in every day don’t know how to use Web browsers. They have been trained to use the search box.

Not many people are talking about how to get outside of our little tech bubble. At least not in public.

But Joe Kraus, CEO of Jotspot, let slip that he’s hired a person who is just analyzing how good their keyword advertising is working. He wouldn’t tell me his favorite Google keyword. Why not? Cause that’s how he’s going to escape the bubble and provide a return on investment for his investors.

I wish we had a conference on “how to find customers outside of the tech bubble?” The entire industry could use some creative thinking there.

Other things that are catching my eye on this topic this morning? Renee Blodgett wrote a post about “Web 2.0 out of control” and Paul Graham, VC behind “Y Combinator,” which is a grouping of companies in the Web 2.0 space pulls out his best Richard Nixon impression in a TechCrunch interview and says “this is not a bubble.”

Of course it’s a bubble, but it’s not bubble 1.0 (actually, I’m agreeing with Paul’s interview, he did say it’s not a financial bubble).

Kraus, again, told me last week that “it’s a bubble.” He should know. He cofounded Excite at Home, which was one of the biggest companies in the last bubble. But, he detailed the differences in bubble 1.0 and this bubble.

First, retail investors are not involved. Translation: your mom and dad can’t buy stock in any of these Web 2.0 companies so they won’t be hurt this time around like they were last time. Web 2.0 companies aren’t going IPO. They aren’t getting big.

Second, the amount of money involved is still small. Yeah, the company I work for got $5.5 million. Digg. A couple of million. And so on. But you aren’t seeing the total pouring in of capital without any oversight like last time around. I disagree with Graham that stupid things aren’t being invested in, I’ve seen a few.

The capital being invested today is being done by professional investors who keep a great deal of oversight on their money, Kraus says. He also points out that these are people with billions under their watch, so $5 million invested is like when you or I go into Las Vegas and put $20 down on a Blackjack table. Yeah, it bothers us when we lose it, but it doesn’t really hurt. Patrick won’t go hungry if I lose $20.

So, what kind of bubble is it if it’s not an investment bubble? It’s a froth bubble. MacAskill has a post titled “Flickr doesn’t suck” where he details some of the froth. The biggest businesses, or the most profitable ones, don’t always get the PR and attention. Heck, working at Microsoft, I learned that in a pretty deep way.

It’s getting harder to pick good ideas out of the froth. Why? Cause there’s so many more things coming at all of us. Look at some of those Web 2.0 lists. They are hundreds of companies long. I remember back when blogging started taking off. The entire industry fit into one coffee house in Mountain View.

So, how do we pop the froth? I don’t know. I’m trying to listen to people outside of Silicon Valley, for one. For two I’m trying to find companies that normal everyday people are interested in (ie, non geeks) and I’m listening to the grapevine to find companies that are making money with the Web 2.0 business models (dating site Plenty of Fish, for instance, is making their payroll with Google ads and doing darn well at it).

How can we detect the difference between real businesses and froth? How do you?

I do like Paul’s point of making things that you want to use yourself. That’s how I come at this too. I try to point out when I actually use something instead of just am pointing to it.

UPDATE: I agree with Dead 2.0, mostly. One thing, though. Web 2.0 is largely funded by advertising. Advertising is an AUDIENCE business. So, when Paul Graham is telling his companies to worry about building audience first, that’s actually a good point of view to take. It’s like building a magazine. If you don’t have any readers you won’t get any advertisers.

179 thoughts on “Getting outside the frothy bubble

  1. Robert, like JotSpot, we also have someone on staff who’s sole job is working on AdWords/AdSense/Overture/AdCenter keywords.

    Given our small size, that means 6% of our workfoce does nothing else. And truth be told, some of the rest of us also pitch in and help fairly regularly.

    Google keywords (and the rest to a lesser extent) are our 2nd biggest driver for signups. They’re that important.

    If you’re curious, our biggest (at least 60% of our growth, and possibly as high as 80% – there’s a gray area we don’t have enough insight about) driver is easily customer referrals.

    Don

    Like

  2. Robert, like JotSpot, we also have someone on staff who’s sole job is working on AdWords/AdSense/Overture/AdCenter keywords.

    Given our small size, that means 6% of our workfoce does nothing else. And truth be told, some of the rest of us also pitch in and help fairly regularly.

    Google keywords (and the rest to a lesser extent) are our 2nd biggest driver for signups. They’re that important.

    If you’re curious, our biggest (at least 60% of our growth, and possibly as high as 80% – there’s a gray area we don’t have enough insight about) driver is easily customer referrals.

    Don

    Like

  3. Robert,

    One of the reasons there’s so much froth is because it’s super easy to put a web-based business into motion now compared to 2000.

    Hosting is a commodity, and bandwidth and storage is cheap.
    Development tools are cheap and plentiful, whether Microsoft or LAMP based.

    Many web based businesses are started by people who treat them as a hobby or something that isn’t a make or break thing for them. Start up costs and maintenance costs are so low that it takes a long time, if ever, for a web business to shut down from lack of money.

    Look how Digg, Reddit, and Del.icio.us started. Small teams and low overhead. Good ideas will rise to top eventually, it just will take a bit longer unless the good ideas have people behind them who are good marketers and understand networking (the people kind, not the wires kind).

    Like

  4. Robert,

    One of the reasons there’s so much froth is because it’s super easy to put a web-based business into motion now compared to 2000.

    Hosting is a commodity, and bandwidth and storage is cheap.
    Development tools are cheap and plentiful, whether Microsoft or LAMP based.

    Many web based businesses are started by people who treat them as a hobby or something that isn’t a make or break thing for them. Start up costs and maintenance costs are so low that it takes a long time, if ever, for a web business to shut down from lack of money.

    Look how Digg, Reddit, and Del.icio.us started. Small teams and low overhead. Good ideas will rise to top eventually, it just will take a bit longer unless the good ideas have people behind them who are good marketers and understand networking (the people kind, not the wires kind).

    Like

  5. Larry: yeah, good ideas do get found pretty quickly even if run by people who don’t understand people networking. The word-of-mouth network is hyper efficient now.

    Like

  6. Larry: yeah, good ideas do get found pretty quickly even if run by people who don’t understand people networking. The word-of-mouth network is hyper efficient now.

    Like

  7. Paul: I don’t and the person who writes it doesn’t even like writing it, but she says it pays her rent so who am I to argue? It’s not the kind of thing I want to read, though.

    Like

  8. Paul: I don’t and the person who writes it doesn’t even like writing it, but she says it pays her rent so who am I to argue? It’s not the kind of thing I want to read, though.

    Like

  9. The web 2.0 bubble is incredibly apparent in my world – I talk to the people in the bubble, but also those outside (yep, I’m that Lohan blogger). The contrast is amazing. People outside the bubble may not even know what Gmail is (really, I’ve had to explain it).

    We make the assumption inside the bubble that it’s about being tech savvy or not. I really don’t think it is. It’s just the real world. And the needs are different. 99% of the world doesn’t need or want most of the Web 2.0 tools we build. Truth is most of what we build is for ourselves then we wonder why we don’t have the audience.

    You’re right, we need to turn the tables. Think about the audience first. I’ve got a marketing degree and my advice is to listen outside the bubble. Ask real people what frustrates them, what they want, and how you can simplify what they do. If you want a large audience, you have to sit back and realize most of your cool ideas are not for them.

    Like

  10. The web 2.0 bubble is incredibly apparent in my world – I talk to the people in the bubble, but also those outside (yep, I’m that Lohan blogger). The contrast is amazing. People outside the bubble may not even know what Gmail is (really, I’ve had to explain it).

    We make the assumption inside the bubble that it’s about being tech savvy or not. I really don’t think it is. It’s just the real world. And the needs are different. 99% of the world doesn’t need or want most of the Web 2.0 tools we build. Truth is most of what we build is for ourselves then we wonder why we don’t have the audience.

    You’re right, we need to turn the tables. Think about the audience first. I’ve got a marketing degree and my advice is to listen outside the bubble. Ask real people what frustrates them, what they want, and how you can simplify what they do. If you want a large audience, you have to sit back and realize most of your cool ideas are not for them.

    Like

  11. Yes, I read that on your blog, but do you believe everything people tell you about this crazy internet game?

    How can a blog without passion be successful?

    Like

  12. Yes, I read that on your blog, but do you believe everything people tell you about this crazy internet game?

    How can a blog without passion be successful?

    Like

  13. And to clear it up, the Lohan Groupie blog that I write has different traffic patterns than what you’d see on a tech blog. The search ranking is steadily increasing on Google, second page and PR 6, but traffic comes to it in ways you would not expect. And lots of it.

    Looking at Alexa and Google for a blog in the Entertainment world is like trying to judge wine based on its color instead of its taste.

    Like

  14. And to clear it up, the Lohan Groupie blog that I write has different traffic patterns than what you’d see on a tech blog. The search ranking is steadily increasing on Google, second page and PR 6, but traffic comes to it in ways you would not expect. And lots of it.

    Looking at Alexa and Google for a blog in the Entertainment world is like trying to judge wine based on its color instead of its taste.

    Like

  15. Everyone that went to college knows that to “pop” froth, you wipe your thumb on this side of your nose and put said thumb in the middle of your keg cup. Its pops a lot of the little bubbles in the middle and the rest start to pop after that.

    So I guess thats like Google sticking its big thumb on top of all the Calendar startups or web office offerings (or something bigger down the road that we haven’t thought of yet). Once group of little bubbles pop, others will pop along with it.

    …of course thats only if the “new” internet works the same as beer. Not sure if thats 100% the case, but I have seen a few people that looked quite drunk off of Web 2.0 lately.

    Like

  16. Everyone that went to college knows that to “pop” froth, you wipe your thumb on this side of your nose and put said thumb in the middle of your keg cup. Its pops a lot of the little bubbles in the middle and the rest start to pop after that.

    So I guess thats like Google sticking its big thumb on top of all the Calendar startups or web office offerings (or something bigger down the road that we haven’t thought of yet). Once group of little bubbles pop, others will pop along with it.

    …of course thats only if the “new” internet works the same as beer. Not sure if thats 100% the case, but I have seen a few people that looked quite drunk off of Web 2.0 lately.

    Like

  17. Arieanna: that’s a good point. The word of mouth network is really where the action is. Even for Smugmug (see Don’s comment above).

    Condor: a good blog (to me) is both passionate and authoritative, but getting a large audience doesn’t require either. Having good food isn’t a requirement for building a restaurant chain either, unfortunately. MacDonalds comes to mind.

    Like

  18. Arieanna: that’s a good point. The word of mouth network is really where the action is. Even for Smugmug (see Don’s comment above).

    Condor: a good blog (to me) is both passionate and authoritative, but getting a large audience doesn’t require either. Having good food isn’t a requirement for building a restaurant chain either, unfortunately. MacDonalds comes to mind.

    Like

  19. Mike: the drunkeness comes from Stormhoek. No bubbles in its wine. But they were serving a variety of beers at the TechCrunch party where there were a few drunk people. Luckily I was kept busy working at that party with my video camera.

    Like

  20. Mike: the drunkeness comes from Stormhoek. No bubbles in its wine. But they were serving a variety of beers at the TechCrunch party where there were a few drunk people. Luckily I was kept busy working at that party with my video camera.

    Like

  21. If bursting the Web 2.0 bubble does not have a negative impact on mainstream investors or the economy as a whole then how do we tell if and when the bubble has popped? Will small tech firms just decide to stop innovating because some analyst says it’s not worth the effort? I don’t think so. In fact a frothy tech economy might be a good thing. We might just need an enterprise to establish a system for identifying the best Web 2.0 feature providers as Amazon.com did with the long tail of books.

    Like

  22. If bursting the Web 2.0 bubble does not have a negative impact on mainstream investors or the economy as a whole then how do we tell if and when the bubble has popped? Will small tech firms just decide to stop innovating because some analyst says it’s not worth the effort? I don’t think so. In fact a frothy tech economy might be a good thing. We might just need an enterprise to establish a system for identifying the best Web 2.0 feature providers as Amazon.com did with the long tail of books.

    Like

  23. 1998: eyeballs, eyeballs, eyeballs…
    2006: AJAX, AJAX, AJAX…

    More “masterpieces”:
    – create AJAX-enabled podcasts
    – incentivize blogging network effects
    – integrate user-centred ad delivery
    – undefined citizen-media widgets
    – integrate rich-client tagclouds
    – post Cluetrain synergies
    – share standards-compliant folksonomies
    – beta-test A-list life-hacks
    – remix data-driven web services
    – post blogging blogospheres
    http://www.emptybottle.org/bullshit/

    Stop this madness! Solve real problems! There are lots of them… Create useful services!

    Like

  24. 1998: eyeballs, eyeballs, eyeballs…
    2006: AJAX, AJAX, AJAX…

    More “masterpieces”:
    – create AJAX-enabled podcasts
    – incentivize blogging network effects
    – integrate user-centred ad delivery
    – undefined citizen-media widgets
    – integrate rich-client tagclouds
    – post Cluetrain synergies
    – share standards-compliant folksonomies
    – beta-test A-list life-hacks
    – remix data-driven web services
    – post blogging blogospheres
    http://www.emptybottle.org/bullshit/

    Stop this madness! Solve real problems! There are lots of them… Create useful services!

    Like

  25. “How can we detect the difference between real businesses and froth? How do you?”

    You who? Was that question directed at venture capitalists?

    Because the rest of us don’t care all that much. If someone wants to give me a free online word processor and spreadsheet and it serves all my needs, saves me from having to buy a server for my small company etc., then why should I care how or if they finance it all?

    Now I’ll answer that question: Because I want the free service to be around for a while and not shut down one day with all my data in it.

    The reality is that even when these companies fail, they don’t fail over night. Usually you have some warning signs, including outright notification that the free stuff is going to end soon. That’s a move they always make as a last ditch effort to pay the rent. Time enough for you to make other arrangements. “Hey they’re about to charge for the service. Abandon ship!”

    I don’t think end-users of web technology get burned all that bad, if at all during these bubble bursts. The people left holding the bag are creditors… office buildings with unpaid rent, CBS, NBC,ABC,etc that have run expensive ads for a company now working out of a PO box (again), credit card companies, and so on. Couldn’t happen to nicer folks by the way.

    One of the few forms of free entertainment us underclass long taaaaaaailers have is watching the big guys club each other to death. We hope it never ends, and if it does we’ll just go back to watching TV for a while.

    Like

  26. “How can we detect the difference between real businesses and froth? How do you?”

    You who? Was that question directed at venture capitalists?

    Because the rest of us don’t care all that much. If someone wants to give me a free online word processor and spreadsheet and it serves all my needs, saves me from having to buy a server for my small company etc., then why should I care how or if they finance it all?

    Now I’ll answer that question: Because I want the free service to be around for a while and not shut down one day with all my data in it.

    The reality is that even when these companies fail, they don’t fail over night. Usually you have some warning signs, including outright notification that the free stuff is going to end soon. That’s a move they always make as a last ditch effort to pay the rent. Time enough for you to make other arrangements. “Hey they’re about to charge for the service. Abandon ship!”

    I don’t think end-users of web technology get burned all that bad, if at all during these bubble bursts. The people left holding the bag are creditors… office buildings with unpaid rent, CBS, NBC,ABC,etc that have run expensive ads for a company now working out of a PO box (again), credit card companies, and so on. Couldn’t happen to nicer folks by the way.

    One of the few forms of free entertainment us underclass long taaaaaaailers have is watching the big guys club each other to death. We hope it never ends, and if it does we’ll just go back to watching TV for a while.

    Like

  27. Even if it isn’t a bubble for the credible reasons you outline, that doesn’t mean web 2.0 isn’t over-hyped. Too many people are talking about audiences and business models and not about meeting consumer needs and it is only from the latter that you can expect cashflow to follow.

    Like

  28. Even if it isn’t a bubble for the credible reasons you outline, that doesn’t mean web 2.0 isn’t over-hyped. Too many people are talking about audiences and business models and not about meeting consumer needs and it is only from the latter that you can expect cashflow to follow.

    Like

  29. Heh. Need to focus on getting eyeballs. Advertising-based revenue models.

    Sounds eerily familiar to web 1.0. Yet you’re convinced it’s different this time. Goodbye.

    Like

  30. Heh. Need to focus on getting eyeballs. Advertising-based revenue models.

    Sounds eerily familiar to web 1.0. Yet you’re convinced it’s different this time. Goodbye.

    Like

  31. Robert

    Good post. really.

    one point: I believe that Web 2.0 is driven by advertising because that’s the path of least resistance. There’s no need to sit down and actually figure out how to sell a product to customers or relate revenues to the product in anyway – just generate “buzz” and get money from Google.

    In an advertising driven model, the product *is* the associated marketing, hence the requirement for parties, a-listers, groupies, etc. It’s strangely much like how I perceive the process to value “products” (actors, directors, etc) in the movie and TV industry ….

    Booger

    Like

  32. I’m going to go out on a limb here and suggest the froth is because there is too much me too. Ajax is not the problem. Creativity is not the problem. Doing cool for cool sake is the problem. Understanding the size of a market, the potential customers, existing solutions and possible new products – those are the things that a person should ask before venturing out on a new company/product. Look at the list of Dead2.0 and the other web2.0 lists and give an honest assessment as to which ones make you say “oh, that’s a problem I have.”

    Napster is great for this. Before Napster, it was a total pain to find and get MP3s. Flickr too solves a problem in that is makes is remarkably easier to put your photos out for other people. Many of the others out there…honestly, what are the real problems that some of these other companies are solving?

    The one thing from the last bubble (and I had a spectacular set of seats for that implosion) that I hated hearing was “you just don’t get it.” I’m starting to hear more and more of that when I hear new business ideas and suggest that perhaps there’s nothing interesting there. That, to me anyway, is a sign of that we are in a bubble.

    What is the problem you are solving? Ask the neighbor of your parents if they have that problem. Then ask some kids at a movie theater. Then some of your college/grad school friends who did not major in a technology field. If they say you will be solving a problem for them, you are on to something.

    Like

  33. Robert

    Good post. really.

    one point: I believe that Web 2.0 is driven by advertising because that’s the path of least resistance. There’s no need to sit down and actually figure out how to sell a product to customers or relate revenues to the product in anyway – just generate “buzz” and get money from Google.

    In an advertising driven model, the product *is* the associated marketing, hence the requirement for parties, a-listers, groupies, etc. It’s strangely much like how I perceive the process to value “products” (actors, directors, etc) in the movie and TV industry ….

    Booger

    Like

  34. I’m going to go out on a limb here and suggest the froth is because there is too much me too. Ajax is not the problem. Creativity is not the problem. Doing cool for cool sake is the problem. Understanding the size of a market, the potential customers, existing solutions and possible new products – those are the things that a person should ask before venturing out on a new company/product. Look at the list of Dead2.0 and the other web2.0 lists and give an honest assessment as to which ones make you say “oh, that’s a problem I have.”

    Napster is great for this. Before Napster, it was a total pain to find and get MP3s. Flickr too solves a problem in that is makes is remarkably easier to put your photos out for other people. Many of the others out there…honestly, what are the real problems that some of these other companies are solving?

    The one thing from the last bubble (and I had a spectacular set of seats for that implosion) that I hated hearing was “you just don’t get it.” I’m starting to hear more and more of that when I hear new business ideas and suggest that perhaps there’s nothing interesting there. That, to me anyway, is a sign of that we are in a bubble.

    What is the problem you are solving? Ask the neighbor of your parents if they have that problem. Then ask some kids at a movie theater. Then some of your college/grad school friends who did not major in a technology field. If they say you will be solving a problem for them, you are on to something.

    Like

  35. Robert – you’ve said on many an occasion that you’re a geek. Why then should it be a surprise if you don’t reach the non-geek audience? This I think is where Hugh McLeod scores in spades. He reaches out to a geek audience to detect a buzz but that’s not where his ultimate focus lays. And he’s playing with ideas that are ripe for innovation. Tech is intrinsically innovative but there’s always been the ‘oh that’s geek stuff’ image. Changing the perception, concentrating on the UI, making it all intuitive has to go a long way.

    I think the industry can learn a great deal from the work being done at FreshBooks, where a simple problem, which has, traditionally been difficult to solve, is chugging along very nicely. It was conceived and directed by users. Not geeks or, god forbid, accountants (of which, as you know, I’m one)

    That’s where the geek learning, if I can use that term, comes in. IMO.

    Like

  36. Robert – you’ve said on many an occasion that you’re a geek. Why then should it be a surprise if you don’t reach the non-geek audience? This I think is where Hugh McLeod scores in spades. He reaches out to a geek audience to detect a buzz but that’s not where his ultimate focus lays. And he’s playing with ideas that are ripe for innovation. Tech is intrinsically innovative but there’s always been the ‘oh that’s geek stuff’ image. Changing the perception, concentrating on the UI, making it all intuitive has to go a long way.

    I think the industry can learn a great deal from the work being done at FreshBooks, where a simple problem, which has, traditionally been difficult to solve, is chugging along very nicely. It was conceived and directed by users. Not geeks or, god forbid, accountants (of which, as you know, I’m one)

    That’s where the geek learning, if I can use that term, comes in. IMO.

    Like

  37. Differentiate between froth and businesses? Businesses have a business plan, marketing plan, products, customers, revenue, traffic, etc.

    Froth says “I just need 1% of X” and “It’s like Flickr + YouTube” and “we’re planning to do Office, but online” and “our search will revolutionize the Y industry”…

    Without the core tenets of business, any idea or feature is just that – an idea or a feature.

    Like

  38. Differentiate between froth and businesses? Businesses have a business plan, marketing plan, products, customers, revenue, traffic, etc.

    Froth says “I just need 1% of X” and “It’s like Flickr + YouTube” and “we’re planning to do Office, but online” and “our search will revolutionize the Y industry”…

    Without the core tenets of business, any idea or feature is just that – an idea or a feature.

    Like

  39. I’m sure that most Web 2.0 companies have yet to get anywhere near critical mass because they assume that the average Joe knows how to use all the stuff on offer. Even the best assume too much – so progress will be slow. Which is disappointing for a market segment that offer lots of services cheaply to occasional users but hasn’t a clue on how to build mutually beneficial relationships – must use services in return for payment.

    So they will either remain in ‘beta-land’ or die.

    Like

  40. I’m sure that most Web 2.0 companies have yet to get anywhere near critical mass because they assume that the average Joe knows how to use all the stuff on offer. Even the best assume too much – so progress will be slow. Which is disappointing for a market segment that offer lots of services cheaply to occasional users but hasn’t a clue on how to build mutually beneficial relationships – must use services in return for payment.

    So they will either remain in ‘beta-land’ or die.

    Like

  41. “… Are struggling to figure out how to get outside the TechCrunch/TailRank/TechMeme/Reddit/Digg/Slashdot/Om/Scoble bubble.”

    Whoah…… Tailrank is part of the bubble! Sweet! 😛

    Like

  42. “… Are struggling to figure out how to get outside the TechCrunch/TailRank/TechMeme/Reddit/Digg/Slashdot/Om/Scoble bubble.”

    Whoah…… Tailrank is part of the bubble! Sweet! 😛

    Like

  43. Ah, Scoble, I love this post. For months I’ve been thinking that it must’ve been the fact that I’m not in the valley, or in America, or even anywhere near the tech epicenter that caused me not to get why this ‘web 2.0’ (to pick a name) thing was important. Because apart from me, and I’m a geek and I love these things, noone else around me is giving a shit.

    But it’s not that I’m weird, it’s that all the other people who’se blogs I read are stuck in the bubble. Okay, I can live with that 🙂

    I really don’t want to step on anyone’s toes, but I’m a fish out of water. I study communications (the oldfashioned kind, where you talk to each other _without_ the cellphone) and as such all my friends are serious non-geeks. They don’t understand blogs, or AJAX, or social content, or what not. They don’t understand the things I like on the ‘net. They get Hyves (the dutch MySpace equivelant), some of them get Flickr. But that’s about as far as it goes. So until a fellow student of mine comes up to me ranting on about a web 2.0 company he just got MSN’d about, I’ll just mellow out a bit. Things aren’t happening as rapidly as I thought they were, after all.

    Like

  44. Ah, Scoble, I love this post. For months I’ve been thinking that it must’ve been the fact that I’m not in the valley, or in America, or even anywhere near the tech epicenter that caused me not to get why this ‘web 2.0’ (to pick a name) thing was important. Because apart from me, and I’m a geek and I love these things, noone else around me is giving a shit.

    But it’s not that I’m weird, it’s that all the other people who’se blogs I read are stuck in the bubble. Okay, I can live with that 🙂

    I really don’t want to step on anyone’s toes, but I’m a fish out of water. I study communications (the oldfashioned kind, where you talk to each other _without_ the cellphone) and as such all my friends are serious non-geeks. They don’t understand blogs, or AJAX, or social content, or what not. They don’t understand the things I like on the ‘net. They get Hyves (the dutch MySpace equivelant), some of them get Flickr. But that’s about as far as it goes. So until a fellow student of mine comes up to me ranting on about a web 2.0 company he just got MSN’d about, I’ll just mellow out a bit. Things aren’t happening as rapidly as I thought they were, after all.

    Like

  45. “How can we detect the difference between real businesses and froth? How do you?””
    ———-
    Instead of hangin with geeks, stop in on commoners. As expressed earlier, most don’t know about Google apps, all they know is search.
    —–
    Next time you take a road trip, instead of calling ahead for a geek get together, just roll into town and hit their local coffee/bars/clubs and strike up conversations. When you go to Montana, don’t meet with the local geeks, meet with “real, every-day” people.
    —-
    It’s not real hard to determine if there’s a bubble. Look at the last one, ask the locals about which ones they have heard of, discard the other thousand.

    Like

  46. “How can we detect the difference between real businesses and froth? How do you?””
    ———-
    Instead of hangin with geeks, stop in on commoners. As expressed earlier, most don’t know about Google apps, all they know is search.
    —–
    Next time you take a road trip, instead of calling ahead for a geek get together, just roll into town and hit their local coffee/bars/clubs and strike up conversations. When you go to Montana, don’t meet with the local geeks, meet with “real, every-day” people.
    —-
    It’s not real hard to determine if there’s a bubble. Look at the last one, ask the locals about which ones they have heard of, discard the other thousand.

    Like

  47. PXLated: the fact that they only know about Google search is what’s driving this bubble. That’s exactly where the traffic for these things is coming from.

    Like

  48. PXLated: the fact that they only know about Google search is what’s driving this bubble. That’s exactly where the traffic for these things is coming from.

    Like

  49. Robert, as usual, I write to you with tough love.

    The cognitive dissonance of your posts is getting hard to ignore.

    You revisit Channel 9. (As do I.) You lust after Vista RC1. (Me too.)

    And it’s somehow a joke to you that no Web 2.0 company makes any money.

    But you work for one of them.

    Microsoft makes more money — earnings as a percent of operating cost — than any other company on the planet.

    You need to get your ass back up to Seattle while they still remember who you are.

    Like

  50. Robert, as usual, I write to you with tough love.

    The cognitive dissonance of your posts is getting hard to ignore.

    You revisit Channel 9. (As do I.) You lust after Vista RC1. (Me too.)

    And it’s somehow a joke to you that no Web 2.0 company makes any money.

    But you work for one of them.

    Microsoft makes more money — earnings as a percent of operating cost — than any other company on the planet.

    You need to get your ass back up to Seattle while they still remember who you are.

    Like

  51. Last week, Guy Kawasaki linked to a Google video of a panel discussion he moderated. On it was the Carmen San Diego guy, Lauren Elliott, now of Personal News Network. PNN is trying to market to mom, dad and grandma. This excited me. I thought finally, someone is going to address the folks outside the teen (MySpace) crowd and the early adopters. A group that may not even use Google or Yahoo.

    Unfortunately, Elliott revealed nothing or is frustrated by the process of reaching this group outside of running USA Today spreads and advertising on the big four networks. For all I know, that is PNN’s plan.

    Let’s take the small business owner who doesn’t have a web site, which there are many of in western Michigan. How do you reach this group? Google adwords won’t help. Chances are if they don’t even have a one page brochure-styled web page, they’re not browsing the web much. Door-to-door?

    Or, do you write-off this group and say, ‘Hey, maybe you don’t get it but your kids will.’ And, with luck, you can pass your business on before it is margilized by Wal-Mart or Starbucks or some large regional player.

    Do web and web-related businesses geared to help these types of companies simply die?

    Hugh McLeod had a great line in his interview with Seth Godin: “The best ideas are always last to reach the people who need them the most.”

    How do we reach them, Hugh? Robert? Lauren Elliott?

    Like

  52. Last week, Guy Kawasaki linked to a Google video of a panel discussion he moderated. On it was the Carmen San Diego guy, Lauren Elliott, now of Personal News Network. PNN is trying to market to mom, dad and grandma. This excited me. I thought finally, someone is going to address the folks outside the teen (MySpace) crowd and the early adopters. A group that may not even use Google or Yahoo.

    Unfortunately, Elliott revealed nothing or is frustrated by the process of reaching this group outside of running USA Today spreads and advertising on the big four networks. For all I know, that is PNN’s plan.

    Let’s take the small business owner who doesn’t have a web site, which there are many of in western Michigan. How do you reach this group? Google adwords won’t help. Chances are if they don’t even have a one page brochure-styled web page, they’re not browsing the web much. Door-to-door?

    Or, do you write-off this group and say, ‘Hey, maybe you don’t get it but your kids will.’ And, with luck, you can pass your business on before it is margilized by Wal-Mart or Starbucks or some large regional player.

    Do web and web-related businesses geared to help these types of companies simply die?

    Hugh McLeod had a great line in his interview with Seth Godin: “The best ideas are always last to reach the people who need them the most.”

    How do we reach them, Hugh? Robert? Lauren Elliott?

    Like

  53. Robert,

    I feel uncomfortable about your use of the word “froth” here and in the last post. They are very different things – the previous post was a conference on how existing companies should adopt Web 2.0 strategies, and here you use it to describe Web 2.0 companies.

    Secondly, I think you are either not very ambitious about PodTech, or else don’t understand the nature of a bubble. Yes, the money is small, but if PodTech gets 5 million and gets quadruples that in their share of the market, someone else will come along and say “we can outdo PodTech, but need 20 million” and so on and so on. A company making a profit in a market sector will attract other companies and the amount of money to enter that market or continue to grow in that market will grow and grow and grow. That’s the nature of bubbles – they are great and resilient when small but they grow and grow until they pop.

    Like

  54. Thanks for the shout-out Robert. I must agree with going to Joe Kraus for good insight, he’s a bright fella. I just can’t figure out what he’s doing with the whole wiki thing…

    I will tell you this, the secret keyword?

    Rosebud.

    Like

  55. Thanks for the shout-out Robert. I must agree with going to Joe Kraus for good insight, he’s a bright fella. I just can’t figure out what he’s doing with the whole wiki thing…

    I will tell you this, the secret keyword?

    Rosebud.

    Like

  56. Robert,

    I feel uncomfortable about your use of the word “froth” here and in the last post. They are very different things – the previous post was a conference on how existing companies should adopt Web 2.0 strategies, and here you use it to describe Web 2.0 companies.

    Secondly, I think you are either not very ambitious about PodTech, or else don’t understand the nature of a bubble. Yes, the money is small, but if PodTech gets 5 million and gets quadruples that in their share of the market, someone else will come along and say “we can outdo PodTech, but need 20 million” and so on and so on. A company making a profit in a market sector will attract other companies and the amount of money to enter that market or continue to grow in that market will grow and grow and grow. That’s the nature of bubbles – they are great and resilient when small but they grow and grow until they pop.

    Like

  57. Kudos to Hugh MacLeod’s GapingVoid for pointing to your excellent post. I’m one reasonable example of those millions of non-technologically advanced users of the Internet.

    Web 2.0 is a label, possibly meaning to suggest something to some potentially much smaller audience group. As a contrast, “beer” is another label, meaning something to a much greater audience.

    In March of this year, I began researching the net in an effort to understand the social phenomena giving rise to Blogs (circa 1995), YouTube (much more recent and faster acceptance), up-to-the-minute TechCrunch news of new tech offerings, Digg as a participatory Tech News aggregator et al.

    The “froth” is not important to me whereas innovation/fresh original ideas (that work are very important. There also exists so much copying of ideas… Yuk! And yet, copying is rather to be expected.

    At the same time, there exists so much of use to so many people. For example: Hugh MacLeod is truly creative and original. Tara Hunt is so passionate and enthusiastic (even if you disagree). YouTube is used by so many people to share and connect with others, all with their specific interests. PBWiki, Blogger, GoogleVideo, GooglePages, Gmail et al… Mostly all free to users (excepting the presence of ads).

    Peter Drucker observed that it is difficult if not impossible to appropriately evaluate societal changes in real time, rather it takes time to see the picture and to reasonably understand the impacts on and for society (nationally and on a global scale). Nonetheless I feel a sense of optimism because of the the tremendous amount of creativity and effort being expended by millions of people around the work (and facilitated by the World Wide Web).

    Business models and the economic impacts for people and organizations. Although I think that companies are many times spending foolishly on advertising (including Internet advertising spend), various individuals and people are earning a little money (sometimes not so little). Hugh MacLeod and the Global Micro Brand concept as evidenced through his efforts on behalf of Stormhoek may hold great potential for the future. The young fellow who came up with the Million Dollar Homepage was truly original and creative… Imagine selling pixels! What fun! And, he made a million dollars in less than six months!

    I empathize with your angst in attempting to find the meaning amongst all this creativity and effort. Somehow I sense that you will find an answer, although it is unlikely that the answer will come from VC’s or the copycats. Keep reaching out, as I for one (of many) appreciate and applaud your efforts.

    Like

  58. Kudos to Hugh MacLeod’s GapingVoid for pointing to your excellent post. I’m one reasonable example of those millions of non-technologically advanced users of the Internet.

    Web 2.0 is a label, possibly meaning to suggest something to some potentially much smaller audience group. As a contrast, “beer” is another label, meaning something to a much greater audience.

    In March of this year, I began researching the net in an effort to understand the social phenomena giving rise to Blogs (circa 1995), YouTube (much more recent and faster acceptance), up-to-the-minute TechCrunch news of new tech offerings, Digg as a participatory Tech News aggregator et al.

    The “froth” is not important to me whereas innovation/fresh original ideas (that work are very important. There also exists so much copying of ideas… Yuk! And yet, copying is rather to be expected.

    At the same time, there exists so much of use to so many people. For example: Hugh MacLeod is truly creative and original. Tara Hunt is so passionate and enthusiastic (even if you disagree). YouTube is used by so many people to share and connect with others, all with their specific interests. PBWiki, Blogger, GoogleVideo, GooglePages, Gmail et al… Mostly all free to users (excepting the presence of ads).

    Peter Drucker observed that it is difficult if not impossible to appropriately evaluate societal changes in real time, rather it takes time to see the picture and to reasonably understand the impacts on and for society (nationally and on a global scale). Nonetheless I feel a sense of optimism because of the the tremendous amount of creativity and effort being expended by millions of people around the work (and facilitated by the World Wide Web).

    Business models and the economic impacts for people and organizations. Although I think that companies are many times spending foolishly on advertising (including Internet advertising spend), various individuals and people are earning a little money (sometimes not so little). Hugh MacLeod and the Global Micro Brand concept as evidenced through his efforts on behalf of Stormhoek may hold great potential for the future. The young fellow who came up with the Million Dollar Homepage was truly original and creative… Imagine selling pixels! What fun! And, he made a million dollars in less than six months!

    I empathize with your angst in attempting to find the meaning amongst all this creativity and effort. Somehow I sense that you will find an answer, although it is unlikely that the answer will come from VC’s or the copycats. Keep reaching out, as I for one (of many) appreciate and applaud your efforts.

    Like

  59. Robert:

    Any time you use phrases like:

    “Because most people outside the little tech bubble we live in every day don’t know how to use Web browsers. They have been trained to use the search box”

    You’ve lost me in what you are talking about. If you make assumptions like that you are destined to be sucked into the collapse of the next bubble. Stop making generalization and start making product. There is a market out there but beware it may be somewhere in the long tail.

    Like

  60. Robert:

    Any time you use phrases like:

    “Because most people outside the little tech bubble we live in every day don’t know how to use Web browsers. They have been trained to use the search box”

    You’ve lost me in what you are talking about. If you make assumptions like that you are destined to be sucked into the collapse of the next bubble. Stop making generalization and start making product. There is a market out there but beware it may be somewhere in the long tail.

    Like

  61. How long was Mosaic around before anyone that wasn’t a supergeek used it? How long was Google around before Joe Average started using it instead of AOL or Yahoo? How long was web-based mail around before typical users started using it instead of Outlook?

    These things are always embraced by the geeks and tech-savy first. The products that rise to the top in the geekosphere then get a chance to filter out to the mundanosphere. It’s a slow process. Plenty of people out there still don’t really understand how to use a computer. It’s a bit much to expect them to embrace wikis and RSS.

    Like

  62. How long was Mosaic around before anyone that wasn’t a supergeek used it? How long was Google around before Joe Average started using it instead of AOL or Yahoo? How long was web-based mail around before typical users started using it instead of Outlook?

    These things are always embraced by the geeks and tech-savy first. The products that rise to the top in the geekosphere then get a chance to filter out to the mundanosphere. It’s a slow process. Plenty of people out there still don’t really understand how to use a computer. It’s a bit much to expect them to embrace wikis and RSS.

    Like

  63. Business has always gone through a boom/bust cylcle. What is different now is the Internet and related technologies lowered the barrier to starting a company, resulting in a higher ratio of attempts to successes.

    When we were in the midst of the last bubble I don’t think anyone could see where we’d end up. We crashed and were left with a handful of really useful businesses (google, ebay, amazon, expedia, craigslist, itunes, and the like). Now the second time around we’ll have another bubble which may burst depending on how well it is managed and financed, and a few years from now there’ll be another handful of really useful businesses and a lot of dead ones.

    The big difference with this Web 2.0 cylcle is it seems limited to a few thousand people who seem desparate to be part of the next big thing, even if it’s just the next little thing. I’ve been in the software industry many years and I really don’t understand most of what you talk about any more. Maybe that’s okay – you can figure it out and then I’ll use what comes out the other end. But don’t fool yourself that what’s there now is important to anyone outside your small circle right now.

    Like

  64. Business has always gone through a boom/bust cylcle. What is different now is the Internet and related technologies lowered the barrier to starting a company, resulting in a higher ratio of attempts to successes.

    When we were in the midst of the last bubble I don’t think anyone could see where we’d end up. We crashed and were left with a handful of really useful businesses (google, ebay, amazon, expedia, craigslist, itunes, and the like). Now the second time around we’ll have another bubble which may burst depending on how well it is managed and financed, and a few years from now there’ll be another handful of really useful businesses and a lot of dead ones.

    The big difference with this Web 2.0 cylcle is it seems limited to a few thousand people who seem desparate to be part of the next big thing, even if it’s just the next little thing. I’ve been in the software industry many years and I really don’t understand most of what you talk about any more. Maybe that’s okay – you can figure it out and then I’ll use what comes out the other end. But don’t fool yourself that what’s there now is important to anyone outside your small circle right now.

    Like

  65. Saul into Paul, eh? Aboutdarnedtime. 😉 Wave to us snarky toads, that have been here all along. You know it’s pretty bad when even the hypester-bobbleheads can’t dismiss reality away.

    Like

  66. Saul into Paul, eh? Aboutdarnedtime. 😉 Wave to us snarky toads, that have been here all along. You know it’s pretty bad when even the hypester-bobbleheads can’t dismiss reality away.

    Like

  67. We crashed and were left with a handful of really useful businesses

    Never mind that whole, GREATEST LOSS OF WEALTH in human history part, all hail the Oligarchies. And then the thousands of Enronish companies playing the new economy for a fraud racket, add that to the bill.

    Like

  68. We crashed and were left with a handful of really useful businesses

    Never mind that whole, GREATEST LOSS OF WEALTH in human history part, all hail the Oligarchies. And then the thousands of Enronish companies playing the new economy for a fraud racket, add that to the bill.

    Like

  69. About Rentalio

    Rentalio is something that reminds me on childhood when my family packed suitcases and started journary to the south looking for place to stay next week or two. Those are one of the best memories I have. But as a child I have noticed how stressful was for my parents to find decent place for rent.

    Rentalio is there to make trip planning easier. With Rentalio we want to give you an insight into places you plan to visit and directs you to web resources where you can actually rent properties or contact vacation rentals owners. Whole world is in front of you. Do not be affright to research. Dream your next vacation at Rentalio.

    Rentalio use modern technologies like XML to getter data for experience on site. Many friends told us that Rentalio is nice web 2.0 site. Rentalio is not started to get on front pages of TechCrunch, TailRank, TechMeme, Reddit, Digg, Slashdot or famous bloggers like Scoble. We did not raise any venture capital, running whole project from our pocket money.

    Rentalio do not need buzz and army of bloggers saying it rocks or it sucks. We need feedback from people who actually use it. If you are going to say that we should put some AJAX on our site or integrate a maps API, weather API, local news RSS feeds, Flickr images or put social elements on Rentalio you can keep your oppionion for yourself. We know about all of that but what is the point?

    As a rule of thumb if you do not understand 80% of previous paragraph, or really understand 100%, please contact us and tell us your oppinion.

    Rentalio Team


    OK Here it is now published at our site. Thank you Robert for great insight!

    Like

  70. About Rentalio

    Rentalio is something that reminds me on childhood when my family packed suitcases and started journary to the south looking for place to stay next week or two. Those are one of the best memories I have. But as a child I have noticed how stressful was for my parents to find decent place for rent.

    Rentalio is there to make trip planning easier. With Rentalio we want to give you an insight into places you plan to visit and directs you to web resources where you can actually rent properties or contact vacation rentals owners. Whole world is in front of you. Do not be affright to research. Dream your next vacation at Rentalio.

    Rentalio use modern technologies like XML to getter data for experience on site. Many friends told us that Rentalio is nice web 2.0 site. Rentalio is not started to get on front pages of TechCrunch, TailRank, TechMeme, Reddit, Digg, Slashdot or famous bloggers like Scoble. We did not raise any venture capital, running whole project from our pocket money.

    Rentalio do not need buzz and army of bloggers saying it rocks or it sucks. We need feedback from people who actually use it. If you are going to say that we should put some AJAX on our site or integrate a maps API, weather API, local news RSS feeds, Flickr images or put social elements on Rentalio you can keep your oppionion for yourself. We know about all of that but what is the point?

    As a rule of thumb if you do not understand 80% of previous paragraph, or really understand 100%, please contact us and tell us your oppinion.

    Rentalio Team


    OK Here it is now published at our site. Thank you Robert for great insight!

    Like

  71. Good points. We are also now in a media bubble. It captures the spirit to show two kids on the cover of a magazine and say they are now worth millions just months after starting a website. Suddenly, every other kid in the country wants to hop on board. And to your point, there does seem to be an ‘insiders’ bubble forming, perhaps it is simply the echo chamber effect.

    But there is nothing wrong with that. When people talked about the real estate bubble in 2005, it was because fundamentals were seriously out of whack. Large institutions to small investors were setting themselves up for finanacial ruin. That bubble represented a danger to society – not only financially, but socially. As much as I want to see housing prices become more reasonable, I have not desire to see a small family lose their home because they took out a mortgage they couldn’t handle on a house they couldn’t afford. These stats start colliding with divorce rates, and other things that you wouldn’t think are related.

    The tech bubble, while fun to talk about, is not like this for the reason’s you mentioned. There is a landgrab going on, there is some sensationalism going on, and people are captured in a spirit of success.

    Like

  72. Good points. We are also now in a media bubble. It captures the spirit to show two kids on the cover of a magazine and say they are now worth millions just months after starting a website. Suddenly, every other kid in the country wants to hop on board. And to your point, there does seem to be an ‘insiders’ bubble forming, perhaps it is simply the echo chamber effect.

    But there is nothing wrong with that. When people talked about the real estate bubble in 2005, it was because fundamentals were seriously out of whack. Large institutions to small investors were setting themselves up for finanacial ruin. That bubble represented a danger to society – not only financially, but socially. As much as I want to see housing prices become more reasonable, I have not desire to see a small family lose their home because they took out a mortgage they couldn’t handle on a house they couldn’t afford. These stats start colliding with divorce rates, and other things that you wouldn’t think are related.

    The tech bubble, while fun to talk about, is not like this for the reason’s you mentioned. There is a landgrab going on, there is some sensationalism going on, and people are captured in a spirit of success.

    Like

  73. How to tell a real business from the froth. Determine of the service solves a business (or consumer) problem. If the service fills a need, makes something simpiler, or is entertaining people will continue to use it. There are so many web sites/services that keep popping up, most people will use them for a short while when they are first discovered either by media, linking, blog article, etc. If the site doesn’t have meet the need of the new user, the user will go somewere else which does. There are so many new sites pooping up that a person doesn’t have time to use them all, or the site doesn’t stand out enough to be remembered over a longer term by the user.

    Remember Protopage? I would like to see how many people are still using it compared to when it was first discovered and covered by blogs, podcasts, etc. That’s a site that really appeals to the tech crowd, and I bet the majority barely remember it.

    Like

  74. How to tell a real business from the froth. Determine of the service solves a business (or consumer) problem. If the service fills a need, makes something simpiler, or is entertaining people will continue to use it. There are so many web sites/services that keep popping up, most people will use them for a short while when they are first discovered either by media, linking, blog article, etc. If the site doesn’t have meet the need of the new user, the user will go somewere else which does. There are so many new sites pooping up that a person doesn’t have time to use them all, or the site doesn’t stand out enough to be remembered over a longer term by the user.

    Remember Protopage? I would like to see how many people are still using it compared to when it was first discovered and covered by blogs, podcasts, etc. That’s a site that really appeals to the tech crowd, and I bet the majority barely remember it.

    Like

  75. Scoble, I’m impressed. Some lucidity for once. Great post that asks a lot of insightful questions. Isn’t a bit ironic, however, that you work for company smack in the middle of this supposed bubble? What are PodTech’s plans to avoid the bubble? What happens if the ad revenue never materializes? Will the quality of your content be something good enough people will actually PAY for? Do you plan to have PodTech lead by example?

    Like

  76. Scoble, I’m impressed. Some lucidity for once. Great post that asks a lot of insightful questions. Isn’t a bit ironic, however, that you work for company smack in the middle of this supposed bubble? What are PodTech’s plans to avoid the bubble? What happens if the ad revenue never materializes? Will the quality of your content be something good enough people will actually PAY for? Do you plan to have PodTech lead by example?

    Like

  77. I would suggest that while we are transitioning over the next few years, most of the mainstream does not use the computer to the extent we all do. In other-words, beyond scouring for a picture of Suri, the MSM audiences are not out there yet taking action.

    I can’t tell you how amazed I am regularly when people I talk to have never heard of BoingBoing.

    Though this is ok. Froth is made up of lots of little bubbles. You don’t really need VC money to make it and you don’t need for it to grow into a million dollar business, ever.

    So there is no need to bring it all together into Google and Yahoo, you just need an original idea that people respond to.

    If I didn’t have greater aspirations, I could run Rocketboom off of t-shirt sales.

    Micro-payment is the new macro.

    Like

  78. I would suggest that while we are transitioning over the next few years, most of the mainstream does not use the computer to the extent we all do. In other-words, beyond scouring for a picture of Suri, the MSM audiences are not out there yet taking action.

    I can’t tell you how amazed I am regularly when people I talk to have never heard of BoingBoing.

    Though this is ok. Froth is made up of lots of little bubbles. You don’t really need VC money to make it and you don’t need for it to grow into a million dollar business, ever.

    So there is no need to bring it all together into Google and Yahoo, you just need an original idea that people respond to.

    If I didn’t have greater aspirations, I could run Rocketboom off of t-shirt sales.

    Micro-payment is the new macro.

    Like

  79. Key to success is to look past the bubble hype. Of course we are in a bubble there is a massive shift in the economics and wealth of the ‘netarchitecture’ going on right now.

    There will always be ad revenue in user or audience based models. The issue is that the ad model doesn’t and will not translate from what it is today to the new market environment that is developing.

    Keys to avoid the bubble is to enter the market with a clear sustainable plan: build a great team and execute a business/revenue model that generates cash flow and market position. From that point on competing on value will determine who stays around.

    Like

  80. Key to success is to look past the bubble hype. Of course we are in a bubble there is a massive shift in the economics and wealth of the ‘netarchitecture’ going on right now.

    There will always be ad revenue in user or audience based models. The issue is that the ad model doesn’t and will not translate from what it is today to the new market environment that is developing.

    Keys to avoid the bubble is to enter the market with a clear sustainable plan: build a great team and execute a business/revenue model that generates cash flow and market position. From that point on competing on value will determine who stays around.

    Like

  81. The business model is somewhat proved for web advertsing: if one can get a lot of traffic with reasonable cost, you can make money. The baseline cost for most web-based companies increase very slowly vs traffic. The difficult part is to generate traffic (without costing too much).

    I have compiled a list of websites and their effective CPMs (monthly revenue vs pageviews) based on public information.

    http://lifeisaventure.wordpress.com/2006/08/28/how-much-money-do-you-generate-per-pageview/

    Like

  82. The business model is somewhat proved for web advertsing: if one can get a lot of traffic with reasonable cost, you can make money. The baseline cost for most web-based companies increase very slowly vs traffic. The difficult part is to generate traffic (without costing too much).

    I have compiled a list of websites and their effective CPMs (monthly revenue vs pageviews) based on public information.

    http://lifeisaventure.wordpress.com/2006/08/28/how-much-money-do-you-generate-per-pageview/

    Like

  83. I do love to read your big picture take on all things soap related, Robert. Listen why don’t you tell me what in web 2.0 (apps, ideas, services….)corporations can benefit from–Fortune 500 to less that 10 employees. A laundry list please–I want YOUR take. Let’s get real with no froth and bring the worthy developers and ideologues to the stage, to the table, this May–face-to-face with real customers with deep wallets eager to get it and use it. I wait.

    Like

  84. I do love to read your big picture take on all things soap related, Robert. Listen why don’t you tell me what in web 2.0 (apps, ideas, services….)corporations can benefit from–Fortune 500 to less that 10 employees. A laundry list please–I want YOUR take. Let’s get real with no froth and bring the worthy developers and ideologues to the stage, to the table, this May–face-to-face with real customers with deep wallets eager to get it and use it. I wait.

    Like

  85. LayZ: we already have, gasp, real revenues and real clients. They are on the “Corporate” bar on our home page. So, no need to worry about us. At least not short term. Now, if the entire world blows up again like it did in March 2000 and everyone cuts their budgets way back? Then we’ll definitely feel pain. But I’m working on diversifying our revenue streams outside the tech world so that we can ride that out.

    Like

  86. LayZ: we already have, gasp, real revenues and real clients. They are on the “Corporate” bar on our home page. So, no need to worry about us. At least not short term. Now, if the entire world blows up again like it did in March 2000 and everyone cuts their budgets way back? Then we’ll definitely feel pain. But I’m working on diversifying our revenue streams outside the tech world so that we can ride that out.

    Like

  87. Brotherhood: the problem is that if your cappuccino has only froth and no cappuccino then it isn’t a good cup of joe.

    Like

  88. Brotherhood: the problem is that if your cappuccino has only froth and no cappuccino then it isn’t a good cup of joe.

    Like

  89. Robert, in your update, you talk about the Paul Graham’s approach to “worry about building audience first” and that “that’s actually a good point of view to take.”

    Doesn’t that sound like the last few internet bubbles in the Valley? 🙂

    I still maintain that “grow big and” [insert GET ACQUIRED BY GOOGLE or SLAP GOOGLE ADS ON MY PAGES] is still a poor business model (if you can call it that).

    Let’s not forget that Yahoo had “won” because their portal and search got more eyeballs than anyone. Only what happened? Someone with better innovation and execution (Google) came along and suddenly that vast audience switched. Why? Because the product was better.

    Audiences are fickle and they vanish. Better businesses, with better products, can come along and take them away.

    Like

  90. Robert, in your update, you talk about the Paul Graham’s approach to “worry about building audience first” and that “that’s actually a good point of view to take.”

    Doesn’t that sound like the last few internet bubbles in the Valley? 🙂

    I still maintain that “grow big and” [insert GET ACQUIRED BY GOOGLE or SLAP GOOGLE ADS ON MY PAGES] is still a poor business model (if you can call it that).

    Let’s not forget that Yahoo had “won” because their portal and search got more eyeballs than anyone. Only what happened? Someone with better innovation and execution (Google) came along and suddenly that vast audience switched. Why? Because the product was better.

    Audiences are fickle and they vanish. Better businesses, with better products, can come along and take them away.

    Like

  91. Don: I don’t think that many of the 1999 businesses actually had audiences of any real size or depth. And, if they did they certainly didn’t have a way to monetize those audiences. Today we do.

    But, yeah, you’re right. I’d rather own Printing for Less than Digg, for instance. But that’s just me.

    Like

  92. Don: I don’t think that many of the 1999 businesses actually had audiences of any real size or depth. And, if they did they certainly didn’t have a way to monetize those audiences. Today we do.

    But, yeah, you’re right. I’d rather own Printing for Less than Digg, for instance. But that’s just me.

    Like

  93. Yes Don, some folks improve on others but why are you techies (I am not one) persistently fixated on who leads and who’s got something better at the expense of another. There is so much room in the sandbox. Yahoo and Google are good. Microsoft and Apple are good. Tehnorati and Wiki are good. And not to tout oligopolies there’s plenty of room for also rans. There is such an appetite. But I will tell you this: you have to reach the mainstream to succeed. You must end the esoteric edge. Adopt the user POV. At our web 2.0 conference (corproate audience) this May we will limit techie vitriol–for everyone’s beneficial engagement and to actually galvanize them. It will be a lovefest not a hatefest so common in tech blogs. You see it’s about resonating with one user. We cause self-destruction somewhat like the Republicans and Democrats cause America to be seen in the wrong light around the world day-by-day in their “conversations”. Let’s call on the carpet those who do wrong–this is the power of our beneficial transparency. But let’s encourage everyone too. I am fan of every lab, every creator–they will empower our future. Remember almost all including Bill G. and Sergei B. started virtually alone. I don’t think Sergei can even accept his own accomplishments in his persistent reference to “luck” for his success. C’mon guys let’s celebrate and let’s reach out to the non-techs, the masses of users yet to be born. Where your riches are. Graham is right to the extent that you have to give audiences something they want. Contrary to some bloggers cynical view it is not pornography and free videos they seek. Who have they been talking to? People want ease, speed, knowledge, help, functionality, ubiquity, pleasure… C’mon. Let’s get real. Navel gazing won’t generate revenue. Applaud Paul for believing in “three guys” and putting money behind them. There’s plenty of room for all.

    Like

  94. Yes Don, some folks improve on others but why are you techies (I am not one) persistently fixated on who leads and who’s got something better at the expense of another. There is so much room in the sandbox. Yahoo and Google are good. Microsoft and Apple are good. Tehnorati and Wiki are good. And not to tout oligopolies there’s plenty of room for also rans. There is such an appetite. But I will tell you this: you have to reach the mainstream to succeed. You must end the esoteric edge. Adopt the user POV. At our web 2.0 conference (corproate audience) this May we will limit techie vitriol–for everyone’s beneficial engagement and to actually galvanize them. It will be a lovefest not a hatefest so common in tech blogs. You see it’s about resonating with one user. We cause self-destruction somewhat like the Republicans and Democrats cause America to be seen in the wrong light around the world day-by-day in their “conversations”. Let’s call on the carpet those who do wrong–this is the power of our beneficial transparency. But let’s encourage everyone too. I am fan of every lab, every creator–they will empower our future. Remember almost all including Bill G. and Sergei B. started virtually alone. I don’t think Sergei can even accept his own accomplishments in his persistent reference to “luck” for his success. C’mon guys let’s celebrate and let’s reach out to the non-techs, the masses of users yet to be born. Where your riches are. Graham is right to the extent that you have to give audiences something they want. Contrary to some bloggers cynical view it is not pornography and free videos they seek. Who have they been talking to? People want ease, speed, knowledge, help, functionality, ubiquity, pleasure… C’mon. Let’s get real. Navel gazing won’t generate revenue. Applaud Paul for believing in “three guys” and putting money behind them. There’s plenty of room for all.

    Like

  95. This class is worth attending. Robert posed THE question–and because his blog powers remain strong he induced wise participation from the commentarium. Thanks all. Keep it coming. I’m taking notes.

    What’s a product? Something that attracts customers. What’s a good show? Something that puts asses in seats. What’s a leader? Someone with followers. What’s a good web 2.0 service? Something that attracts clicks.

    At the end of the day, it isn’t the inventers, entrepreneurs or VCs who can define success: it’s the audience. They either click or they don’t.

    So what’s the recipe for success? I don’t have it, but I can tell you where to look

    An unsolved problem is a product opportunity. A customer pain-point is a product opportunity. But a solved problem is also an opportunity–provided you can offer a substantially easier, faster, and/or cheaper solution.

    When you play the feature war on a small scale, the best you an hope for is to trade some of your audience with your competitors. But the big win is not to seduce customers away from competitors (though that’s always fun), the big win is to pull non-customers into the circle.

    Anyone who wants to break out of the froth can find hugely valuable clues and tools in “Blue Ocean Strategy” by W. Chan Kim and Renée Mauborgne. Their subtitle captures their premise very well. “How to Create Uncontested Market Space and Make the Competition Irrelevant.”

    Enough with thinking outside the box. “Blue Ocean Strategy” can teach you how to think outside the bubble.

    Like

  96. This class is worth attending. Robert posed THE question–and because his blog powers remain strong he induced wise participation from the commentarium. Thanks all. Keep it coming. I’m taking notes.

    What’s a product? Something that attracts customers. What’s a good show? Something that puts asses in seats. What’s a leader? Someone with followers. What’s a good web 2.0 service? Something that attracts clicks.

    At the end of the day, it isn’t the inventers, entrepreneurs or VCs who can define success: it’s the audience. They either click or they don’t.

    So what’s the recipe for success? I don’t have it, but I can tell you where to look

    An unsolved problem is a product opportunity. A customer pain-point is a product opportunity. But a solved problem is also an opportunity–provided you can offer a substantially easier, faster, and/or cheaper solution.

    When you play the feature war on a small scale, the best you an hope for is to trade some of your audience with your competitors. But the big win is not to seduce customers away from competitors (though that’s always fun), the big win is to pull non-customers into the circle.

    Anyone who wants to break out of the froth can find hugely valuable clues and tools in “Blue Ocean Strategy” by W. Chan Kim and Renée Mauborgne. Their subtitle captures their premise very well. “How to Create Uncontested Market Space and Make the Competition Irrelevant.”

    Enough with thinking outside the box. “Blue Ocean Strategy” can teach you how to think outside the bubble.

    Like

  97. @marie germain:

    I think you’re misunderstanding me. If you read my linked blog entries and such, you’ll find that I’m an advocate of lots of competition. I’m a Flickr competitor, in some sense of the word, yet I blogged about ‘Flickr doesn’t suck’.

    I could care less who has more market share than I do, because I don’t want to be the market leader. It’s part of our corporate strategy to NOT go for market share but rather for ecstatic customers who drive profit. I’m sure we could have offered free accounts away and grown like a rocket, too (we were on the scene years before Flickr), but that wasn’t our target.

    Ask anyone who knows me and my company – we’re fixated on the customer experience and customer service, not on who’s in the lead. I have to have ready answers, because everyone I meet says “But how are you different than Flickr?”, but that’s life. 🙂

    Don

    Like

  98. @marie germain:

    I think you’re misunderstanding me. If you read my linked blog entries and such, you’ll find that I’m an advocate of lots of competition. I’m a Flickr competitor, in some sense of the word, yet I blogged about ‘Flickr doesn’t suck’.

    I could care less who has more market share than I do, because I don’t want to be the market leader. It’s part of our corporate strategy to NOT go for market share but rather for ecstatic customers who drive profit. I’m sure we could have offered free accounts away and grown like a rocket, too (we were on the scene years before Flickr), but that wasn’t our target.

    Ask anyone who knows me and my company – we’re fixated on the customer experience and customer service, not on who’s in the lead. I have to have ready answers, because everyone I meet says “But how are you different than Flickr?”, but that’s life. 🙂

    Don

    Like

  99. Success in web 2.0? Both the idea AND the execution make you smile. Often you get the first but not the second (Riya springs to mind). Wikipedia has both (though is it 1.0 or 2.0?), as does Flickr.

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  100. Success in web 2.0? Both the idea AND the execution make you smile. Often you get the first but not the second (Riya springs to mind). Wikipedia has both (though is it 1.0 or 2.0?), as does Flickr.

    Like

  101. Hey Don: Nice web services powered by Smugmug. I promise to look into it more. Sounds like you have great service there. Hope you find ways to get that to the masses. It’s nice that it’s not an advertising model. People are slowly learning that great things are worth $$ from the web–not just off the shelf. I cannot tell you how behind the photo shops are!! I have a client (a big retail chain–I am a markerter) that still has a guy hiding in a backroom printing photos at a snail’s pace for a price per photo that is not competitive–and the customers have to doddle in the mall for an hour+ while they wait. SmugMug is a print service killer. Everybody these days in the photo print biz: grocers, Walmart, pharmacies. It is all so archaic. You just have to induce trial. I will celebrate you and SmugMug too.

    Like

  102. Hey Don: Nice web services powered by Smugmug. I promise to look into it more. Sounds like you have great service there. Hope you find ways to get that to the masses. It’s nice that it’s not an advertising model. People are slowly learning that great things are worth $$ from the web–not just off the shelf. I cannot tell you how behind the photo shops are!! I have a client (a big retail chain–I am a markerter) that still has a guy hiding in a backroom printing photos at a snail’s pace for a price per photo that is not competitive–and the customers have to doddle in the mall for an hour+ while they wait. SmugMug is a print service killer. Everybody these days in the photo print biz: grocers, Walmart, pharmacies. It is all so archaic. You just have to induce trial. I will celebrate you and SmugMug too.

    Like

  103. What a great post. What a great topic. I couldn’t agree more. And on top of that, I like the way the thought’s put. The thing is, I think, that there’s so much pathos involved, so much money tied up and ultimately, by those who are really in it, so much uncertainty, that the issue’s hard to get to. Hopefully this is only one of many posts like this, by Robert and the rest of the blogosphere. I do think it’s coming. The anti-froth. The see-it-as-it-is kinda folks and consequently their posts and the repercussions of them. Well, maybe that’s just wishful thinking, but we’ll see.
    The most important thing I gather from your point, and what I’ve been thinking about in much the same way is the concept of perspective. For example, the now famous 53,651 Kopelman post is a great example of how even while being a VC but just out of the Valley one can get a more accurate perspective (he’s from Philly).
    Another example, now that I think about it, is my own. I follow the industry closely, very closely, I know my startups, my big players and the top bloggers, but I still have the luxury of seeing it from the outside. I’m in high school still. Yep, I said it, high school. I guess I have a way different perspective for that matter then. And well, I couldn’t agree with you more, like I said. I love this stuff, I really do, but I want more and I want it better and I think it’s going to take some pretty major changes. Not to self promote, but I just wrote a post on this myself at joshwais.blogspot.com .

    Like

  104. What a great post. What a great topic. I couldn’t agree more. And on top of that, I like the way the thought’s put. The thing is, I think, that there’s so much pathos involved, so much money tied up and ultimately, by those who are really in it, so much uncertainty, that the issue’s hard to get to. Hopefully this is only one of many posts like this, by Robert and the rest of the blogosphere. I do think it’s coming. The anti-froth. The see-it-as-it-is kinda folks and consequently their posts and the repercussions of them. Well, maybe that’s just wishful thinking, but we’ll see.
    The most important thing I gather from your point, and what I’ve been thinking about in much the same way is the concept of perspective. For example, the now famous 53,651 Kopelman post is a great example of how even while being a VC but just out of the Valley one can get a more accurate perspective (he’s from Philly).
    Another example, now that I think about it, is my own. I follow the industry closely, very closely, I know my startups, my big players and the top bloggers, but I still have the luxury of seeing it from the outside. I’m in high school still. Yep, I said it, high school. I guess I have a way different perspective for that matter then. And well, I couldn’t agree with you more, like I said. I love this stuff, I really do, but I want more and I want it better and I think it’s going to take some pretty major changes. Not to self promote, but I just wrote a post on this myself at joshwais.blogspot.com .

    Like

  105. Well – I’m not in the valley and I’ve been saying for some time my website stats reflect far more the influence of start pages than search engines. So me no valley boy but life’s a changing – just that netvibes is a techcrunch boost so not exactly outside the bubble.

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  106. Well – I’m not in the valley and I’ve been saying for some time my website stats reflect far more the influence of start pages than search engines. So me no valley boy but life’s a changing – just that netvibes is a techcrunch boost so not exactly outside the bubble.

    Like

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  108. In your article, you mention that people “outside the bubble” just know how to “search” when they are looking for something. I consider myself to be very technically savvy. However, I must admit that “search” is my main means of finding things on the web as well. For those of us in the “great unwashed” outside the bubble, what should we be doing besides using Google or Yahoo?

    Thanks for your help.

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  109. In your article, you mention that people “outside the bubble” just know how to “search” when they are looking for something. I consider myself to be very technically savvy. However, I must admit that “search” is my main means of finding things on the web as well. For those of us in the “great unwashed” outside the bubble, what should we be doing besides using Google or Yahoo?

    Thanks for your help.

    Like

  110. Greg: if you’re a geek you probably can name a few other Web sites as well. What’s your favorite travel site? Mine isn’t Google. What’s your favorite real estate site? Mine isn’t Google. What’s your favorite mobile site? Mine isn’t Google. What’s your favorite news site? Mine isn’t Google’s search engine. What’s your favorite blog? Mine isn’t on Google.

    People outside of the tech world usually have trouble naming all these things. Then I watch how they use the computer and they mainly use the main search page they got used to.

    Like

  111. Greg: if you’re a geek you probably can name a few other Web sites as well. What’s your favorite travel site? Mine isn’t Google. What’s your favorite real estate site? Mine isn’t Google. What’s your favorite mobile site? Mine isn’t Google. What’s your favorite news site? Mine isn’t Google’s search engine. What’s your favorite blog? Mine isn’t on Google.

    People outside of the tech world usually have trouble naming all these things. Then I watch how they use the computer and they mainly use the main search page they got used to.

    Like

  112. Q. insiders tell me that one of the top search terms over at Yahoo is actually “Google.” And one of the top search terms at Google is “Yahoo.” Why is that?

    A. One reason is because ordinary people know it’s “Yahoo!” but they don’t know whether it’s dotNET, dotCOM, dotORG, dotGOV or something else entirely. Worse, with some sites, if you guess the extension wrong you get a NSFW squatter page. So it’s easier to search.

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  113. Q. insiders tell me that one of the top search terms over at Yahoo is actually “Google.” And one of the top search terms at Google is “Yahoo.” Why is that?

    A. One reason is because ordinary people know it’s “Yahoo!” but they don’t know whether it’s dotNET, dotCOM, dotORG, dotGOV or something else entirely. Worse, with some sites, if you guess the extension wrong you get a NSFW squatter page. So it’s easier to search.

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  115. >I wish we had a conference on “how to find customers outside of the tech bubble?

    robert, you’re invited to seoroadshow (this is a test, see if you can find the details all by yourself, hhh)

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  116. >I wish we had a conference on “how to find customers outside of the tech bubble?

    robert, you’re invited to seoroadshow (this is a test, see if you can find the details all by yourself, hhh)

    Like

  117. > Q. insiders tell me that one of the top search terms over at Yahoo is actually “Google.” And one of the top search terms at Google is “Yahoo.” Why is that?

    As a long time web designer/SEO/marketer who talks to non-Web people on a constant basis, I’d say that this statistic is due to the fact that most people don’t understand how browsers work (heck, they don’t even know what a “browser” is and have never heard the word). Either their browser’s home page is a search engine page and all they know is how to *search* for something (e.g., “Google” at Yahoo) or they simply don’t know that they can type a domain name into their browser address bar — and this goes for most people, be they living in remote mountain areas or CEOs of billion-dollar corporations. What you’ll hear is this:

    Me: go to my website, blahblah.com
    Them: Don’t worry — I’ll find it!

    Find it? What’s to find? But that statement is your first clue, and the reason why Web marketing *must* take the search engines into consideration. It’s not like paper advertising, which you must somehow place into the hands of the consumer. Nor like TV, which is another medium altogether. Different medium; different delivery solution.

    As to the other questions here, I’d say that sorting out a business plan comes immediately after any “bright idea” … that is, how you’ll make money from it. Yes, it’s exciting to build an audience. Even more exciting is making a living from something you like/love.

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  118. > Q. insiders tell me that one of the top search terms over at Yahoo is actually “Google.” And one of the top search terms at Google is “Yahoo.” Why is that?

    As a long time web designer/SEO/marketer who talks to non-Web people on a constant basis, I’d say that this statistic is due to the fact that most people don’t understand how browsers work (heck, they don’t even know what a “browser” is and have never heard the word). Either their browser’s home page is a search engine page and all they know is how to *search* for something (e.g., “Google” at Yahoo) or they simply don’t know that they can type a domain name into their browser address bar — and this goes for most people, be they living in remote mountain areas or CEOs of billion-dollar corporations. What you’ll hear is this:

    Me: go to my website, blahblah.com
    Them: Don’t worry — I’ll find it!

    Find it? What’s to find? But that statement is your first clue, and the reason why Web marketing *must* take the search engines into consideration. It’s not like paper advertising, which you must somehow place into the hands of the consumer. Nor like TV, which is another medium altogether. Different medium; different delivery solution.

    As to the other questions here, I’d say that sorting out a business plan comes immediately after any “bright idea” … that is, how you’ll make money from it. Yes, it’s exciting to build an audience. Even more exciting is making a living from something you like/love.

    Like

  119. Ok, that makes some sense. Yes, there are lots of sites I use to look for specific items. However, I do spend a great deal of time at Google looking up things that I don’t already have committed to memory.

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  120. Ok, that makes some sense. Yes, there are lots of sites I use to look for specific items. However, I do spend a great deal of time at Google looking up things that I don’t already have committed to memory.

    Like

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  122. I am working with a professional online IT community that’s been in business since 98 and have been looking for other successful, professional communities in other verticals. Know of any?

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  123. I am working with a professional online IT community that’s been in business since 98 and have been looking for other successful, professional communities in other verticals. Know of any?

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