The navel gazing and gnashing of teeth over the Web 2.0 category reminds me of a chat I had with Joe Firmage back in 1996. He was on the road in Silicon Valley chatting up all the media types and analysts on the extraordinary potential for USWeb, the website building and intranet services company he'd put together with Sheldon Laube, after both checked out and cashed out of Novell.
You gotta give Joe and Sheldon credit for excellent timing.
Nonetheless, I told Joe as we sat in my office in San Mateo overlooking the low bay bridge and incoming flights to SFO that I didn't think USWeb would do as well as he was predicting. I believed that Web development and supporting runtimes were just going to become another part of enterprise IT, another gadget on the Swiss army knife of full IT functions. I said that the other large vendors, SIs and regional boutiques would offer these same technologies and services right along with LAN, WAN, database, app server, integration, middleware and the other mainstays of enterprise IT work.
We were both right, of course, just that the timing worked well for Joe, and ultimately vindicated me. USWeb went on to acquire lots of dot-com companies, made an IPO splash, making Joe and Sheldon quite well off and ready to pursue other matters. But I was right too, because USWeb went through an ownership trip to become acquired and then mashed up into MarchFirst, which imploded during the dot-com bust. Divine got some remnants, though not to a happy ending either.
This is a story worth noting at this juncture of Web 2.0. There were not enough new pure dot-com companies to support the service industry that sprouted up in the mid-90s, and you could get your Web server from Microsoft (sort of free albeit a security nightmare) or via Linux and Apache (sort of free). We were dealing in "Internet time" back then, where industries were shifting on a yearly basis. It was astonishing, we thought, the speed that things were happening. But it was slow enough for Joe et al to build up USWeb, see the growth on the top line, and get out before the bottom line told a different story. Not everyone got out.
The ultimate winners were enterprises that could usher in huge productivity by moving their communications, collaboration, publishing, data-facing applications, and integration points to portals, portlets -- all IP and all viewed via a browser. The users won big time, and the biggest vendors did well too (selling lots of servers, database and middleware) after the dust cleared. Most of the start-ups came and went over a 3- to 4-year period, up to 2002.
With the current 2.0 bubble, as some call it, the timing is even faster -- the perceived value and ability to exploit them shift on a quarterly basis, sometimes less. Google has soared to its heights amazingly fast. Same with its YouTube unit. These are not benchmarks but harbingers of risk -- the time available to be first in, first out is a handful of quarters, a fistful of months. That's high risk. If you're not one of the exceptions, or acquired by them, your revenues may not look rosy enought for an exit.
Sure, you can set up a Internet company fast and cheap these days (comparative to anything before), but so can anyone else -- including an enterprise, a service provider, a vendor. The Microsoft Live offerings may seem slow in coming, but it's perhaps the fastest Microsoft has moved in some time history (and they're using Windows!).
So the Web 2.0 timing today makes it hard to make a buck -- with just a few notable exceptions. But again, as in the Web 1.0, the users are the winners. Web 2.0 is a subset of Enterprise 2.0, which is a subset of enterprise IT. It's great that you can choose to acquire these productivity benefits as SaaS or a stream or download. It's great that you can move your legacy toward SOA principles and benefits, while using the same methodologies to absorb Web 2.0/Enterprise services. Mashups make sense for all kinds of apps, not just Web 2.0 ones.
It's a bonanza for enterprises, service providers, and larger vendors -- but is there much left for startups that depend on advertising (with the pressure on CPMs downward)? Will the investors in the Web 2.0 ecology have the time or the chance to cash out before the bottom line tells a different story?[poll id=17]